SAS SURVIVES THE CRISIS
AVIATION: After six turbulent years, the Scandinavian airline SAS has rediscovered optimism and growth. The enormous annual losses since 2002 have at last been replaced in 2006 by a surplus, showing that the company’s austerity measures in the form of cost-cutting and mass redundancies have worked.
Since 2002 the Scandinavian airline SAS has implemented austerity measures to bring the company back into the black. In 2006 the company made a profit following several years of hefty losses.
But the draconian measures have also changed SAS and the way it operates. In former times, the airline enjoyed an elevated status, where an attitude of superiority prevailed. Today SAS can best be described as adaptable and market adjusted.
“From being almost unapproachable in our ivory tower, and only really concerned with business class customers, we have now come down to earth,” says director Susanne Larsen of SAS
Danmark, which is one of the four core companies in the group that contributed most to the good results in 2006. “Today we consider all our passengers to be equally important. Whether it is passengers seated at the back flying on economy tickets, or those seated in the middle paying a bit more for flexibility, or our business class passengers with all the benefits they get. Business class and economy extra are still our lifeblood, but we wouldn’t have them without the passenger volume that the economy class adds. We depend on having a good product for all three customer groups.” Susanne Larsen joined SAS Danmark in 2004 as director, and since then the company has improved its results by more than DKK 500 million annually. Larsen’s common sense, market instinct and sound business sense have clearly demonstrated their effect. She has also introduced a departure from the airline’s previously inflexible ways.
“Previously, route plans were not questioned. In essence, they were just repeated from one year to the next,” says Susanne Larsen. “But if we keep a route with too few passengers, we lose money. We must listen to customers, and make our traffic programme dynamic. By closing some routes, we can open a lot more new ones. London City, Luxemburg and Palanga are new destinations which very quickly have become so successful that we have increased the frequency or deployed larger aircraft. In a dynamic traffic programme we fly where customers are, and regularly adjust the number of seats and flight frequencies to meet customer needs.”
Cheap tickets mean more passengers
The tough measures implemented by SAS have increased the working hours of both pilots and cabin crew. The company has also cut costs by pulling several aircraft out of operation. At the same time, SAS Danmark handled 400,000 more passengers in 2006. The cutting of loss-making routes while at the same time introducing one-way and low price tickets, has helped raise the cabin factor to a record level of 72.9%.
“The good progress we have made is due not only to our introduction of low price tickets and the advance of budget airlines, but also the adjustment of our commercial products,” says Susanne Larsen. “Cheap tickets mean more passengers. The market has simply become bigger and that has benefited us all.”
Desire to travel
SAS now has a much better capacity utilisation of its aircraft and more flexible route planning. When SAS reopens a local route in Greenland (Søndre Strømfjord/Kangerlussuaq) in May, it will only operate from May to September, when the number of tourists are at its peak. A new route is also opening between Copenhagen and Pristina in Kosovo, as well as extensions of existing routes to London City Airport, Geneva, Aberdeen, Brussels, Kristianssand and Luxembourg.
“We are currently experiencing a general boom in aviation,” says Susanne Larsen. “The Danish market is growing by around 600,000 passengers annually, of which we have a 50% share. We expect to see continued growth in the desire to travel. Globalisation means more air travel, and all the exclusivity formerly associated with it will disappear. We need to be more efficient, and that is something we are en route to achieving.”
Fingerprint readers save time
Increased security in airports worldwide is a challenge to airlines. While taking accounts of these demands, SAS is making it as easy as possible to fly by looking at ways of optimising time use before, during and after the flight. SAS has introduced time-saving biometrics when luggage is checked in. Passengers and their luggage are automatically matched with a fingerprint reader. The system has been introduced in Swe-den and will be tested in Denmark during 2007.
SAS will also introduce more fast-tracks at security checkpoints to reduce waiting time at the gate to 15 minutes.
Director Susanne Larsen of SAS Danmark
Aircraft emit a lot of CO2. SAS acknowledges this, and is introducing novel ways of making flights CO2 neutral. From spring 2007, SAS is offering passengers the option to compensate for the flight’s CO2 emission by reducing it in another sector. Passengers pay an amount depending of the length of the flight (e.g. Copenhagen to London costs DKK 12-15 per passenger), which goes directly to investment programmes in renewables or CO2 reduction elsewhere in the world.-The financial transactions and investments in CO2 reduction projects are carried out by an independent company specialising in this area.
This page forms part of the publication 'FOCUS Denmark' as chapter 19 of 23
Version 1. 22-05-2007
Publication may be found at the address http://www.netpublikationer.dk/um/7889/index.htm