Mortyman From Norway, joined Aug 2006, 668 posts, RR: 1 Posted (2 months 5 days 5 hours ago) and read 11896 times:
The Scandinavian airline SAS ( Scandinavian Airline System ) has decided to split into 4 independent comapnies, operating on grounds of their own airtravel approval.
Until now, all the different SAS aircraft been operated from Sweden where also the controls has been conducted.
New EU regulations make it difficult to upphold the way the company has been run to this date and that is why the 3 different national parts of SAS and also the international part gets their independant airtravel approval.
- It gives us an easier organisation and makes it easier for us to respond alot quicker, says Susanne Larsen adm. dir of SAS Denmark.
- The advantage of this model is that each of the countries gets a full out integrated airline, with local comercial and operational controll.
The authorities of the different countries can with this soulution conduct direct controll with their airline with their SAS aircraft, wich until now has not been possible due to combined Scandinavian apporval.
Someone83 From Norway, joined Sep 2006, 920 posts, RR: 0 Reply 2, posted (2 months 5 days ago) and read 11384 times:
Actually, SAS already is split into four different companies, where three are on the same AOC. SAS Denmark, Sweden and Intercontinental are on the old SAS AOC, while SAS Norway are on their own. What SAS are doing here is giving each company their own AOC.
Lufthansa From Christmas Island, joined May 1999, 1768 posts, RR: 5 Reply 3, posted (2 months 4 days 22 hours ago) and read 11106 times:
Is this the beginning of the end?
Honestly, SAS was once one of my first choices. Lately, its going from worse to worst and its got nothing to do with the fleet.
They've just given up competing properly. For all the things that apparently 'can't be done'... Finnair, with a rather lackluster long haul product succeeds.
Scandinavian products have an amazingly good reputation around the world. They're known for quality, style and ingenuity. SAS should be trading on this in a big way. They should be operating long haul flights to China and North Asia from ARN, stealing back the finnair traffic with high enough frequency for people all over the UK (outside london), Holland, Germany, Poland and the baltic states to be chosing SAS as their first preference.
Next the Business class product needs improvement. The seats can do but major upgrades to catering, service in general, a more impressive AVOD, add mood lighting to give the user the impression of a truly modern, truly Scandinavian style of product. Something the likes of Georg Jensen would sign off on. Modern, Trend Setting and Hip.
To do this though, they've got to lower their cost base so the extra goodies can be purchased in all classes on long haul.
Next... younger cheaper cabin crew need to be hired. This is a nasty issue to deal with but SAS's high costs are partly due to in the past it basically being run as a state airline with high paid jobs for all forever. This can't be sustained in this environment anymore... And hence carriers like Lufthansa and Finnair have addressed these issues. Yes it will cause pain..and its a very unswedish thing to do... but Do you want SAS to be around in 10 years, or it to morph into the next Alitalia?
Next, SAS's European concept needs change. It's Swedish domestic operations work far better then its European ones...particularly with the basic breakfasts included.
Particularly the 2 different economy cabins. The price difference is too much for a start. The cheaper prices that give you the LCC style service are basically the same price as what AF, LH and BA are charging, ditto for Finnair (who's short haul product is excellent!!!!) If SAS want to keep this cabin, they need to start offering Easyjet style prices in this cabin. It pisses customers off when they pay more to fly SAS from LHR, get there and get NOTHING at all. I am going suggest that cabin be kept for ultra cheap specials...with option on ALL fairs to upgrade to Economy Extra for a small fee... Say 10 or 15 euros. I've been on plenty of MD80s from LHR that end up having everybody crammed up the back while economy extra is empty. This is just stupid. It doesn't work now because the price difference is crazy. But that back cabin still isn't Easyjet style prices... hence people feel ripped off and not happy with SAS. LH and Austrian seem to have learned this lesson and reinstated some of their economy catering they previously took away. Either that or do away with this cabin entirely.
Also things like seat back advertising... god NO SAS, this is something Wrottenair does!!!!
Also a carrier like SAS needs to offer more when competing with the likes of AF for European traffic because its smaller. People need a good reason to switch carriers.
CPH needs more destinations in America, and needs to serve as a hub for American flights from all of Scandinavia, plus northern germany, poland, the baltic and even bits of Russia. There's a huge star alliance frequent flyer base here... From Berlin its just as easy to go via CPH as it is FRA.
So in a nut shell, they need:
1 - sort out the confusing european product. Either keep it and change its pricing structure to something more people will appreciate, either through real LCC style prices up the back, or a cheap upgrade for the front economy cabin, or do away with the no frills cabin entirely.
2 - Cheaper Staff. They may need to pay redundancy big time...super expensive but that status quo is doomed. Last i heard Finnair staff where 20% cheaper.
3 - More luxuries and Style in Long Haul business, and improvements in economy. Particular attn to business class though in order to become the northern area...from Scottland to St Petersburg's first preference for travel.
4 - Restructure Long Haul hubs at CPH and ARN so their destinations serve the 'general direction' they're flying in...and increase it to a size where it can actually compete seriously for traffic from Non-Scandinavian European countries. If this is dones successfully they may be able to reduce their costs by up gaging to larger a/c.
So attn needs to be made to the fleet as well...but its not the first priority. Other measures should be able to yield results on the revenue side, plus on the non-aircraft expense side. I'm not sure the solutions are politically acceptable though.
Someone83 From Norway, joined Sep 2006, 920 posts, RR: 0 Reply 4, posted (2 months 4 days 22 hours ago) and read 11044 times:
Quoting Lufthansa (Reply 3): 2 - Cheaper Staff. They may need to pay redundancy big time...super expensive but that status quo is doomed. Last i heard Finnair staff where 20% cheaper.
That one is nearly impossible as salaries are much higher in Scandinavia (especially Norway and Danmark). You can't pay peanuts and expect people to work for you. As all industries in Scandinavia, SAS has to pay higher salaries than their foreign competitors, simply due to the price levels here. Scandinavia = High costs
Lufthansa From Christmas Island, joined May 1999, 1768 posts, RR: 5 Reply 6, posted (2 months 4 days 21 hours ago) and read 10924 times:
Quoting Someone83 (Reply 4): As all industries in Scandinavia, SAS has to pay higher salaries than their foreign competitors, simply due to the price levels here. Scandinavia = High costs
Yeah I know i've spent plenty of time In ARN and got loads of friends in GOT.
I'm not suggesting they pay peanuts either...but do you know SAS's FA's are the highest paid in the industry?
It costs way way way more to live in London then it does in GOT or ARN or CPH. There is a similar thing happening at QF. QF's exisiting long haul FA's earn more then BA...yet it costs more to work in London.
New hire QF long haul will be on a more competitive rate... they've paid redundancies so some of the older ones to reduce them in numbers as a % and this has helped. The situation they face is far harsher then SAS...because SAS is competing with German, and Finish and Dutch wages...and to a lesser extent British and French. Qantas competes with Thai, Singaporean (not all that different in fairness to SIA ) Malaysian (much cheaper) and even American wages (once again, to the surprise of some of our American friends, its nearly half...) yet they've found ways to succeed. I think everybody would agree that QF's long haul product, in all classes, leaves SK's for dead. What that means is more people...including people based in places like Hong Kong and Singapore, chose to pay extra to fly QF, particularly up the front. In a nutshell... Qantas is forced to offer a premium product because it can't compete on just price alone. SAS is in an extremely similar situation. SAS's home market of Scandinavia is even about the same size as Qantas' home market of Australia. (meaning its got a similar 'natural' frequent flyer base for business class to be had on long haul etc).
Seriously, if SAS introduced something (of course it needs Stockholm's best designers to jazz it up) like NZ and Virgin's fully flat product, I think they could easy win back all the finnair customers, and gain a whole stack from places like Manchester, Hamburg, Berlin heading both to the Americas and Asia. But right now, those people haven't really got a good reason to fly SAS other then the fact they're probably members of miles and more. I'm sure Lufthansa and Swiss must just love the fact that SAS does a bad job of serving these customers, as does Finnair. It's Swedish Industry that's filling that crap finnair business class...but the price is right and its a sleeper seat and it doesn't involve back tracking to LHR or CDG which are too far away (unlike FRA and AMS... close enough to be competitive)
and KLM? They're doing amazingly well out of Scandinavia. But the dutch management style is confrontational...the Swedish management style is about Consensus. Meaning...despite being unpopular, the dutch have addressed the cost issues... the Swedish haven't because it will create political problems.
Davescj From United States, joined Jun 2007, 1250 posts, RR: 0 Reply 7, posted (2 months 4 days 21 hours ago) and read 10881 times:
Quoting Mortyman (Thread starter): New EU regulations make it difficult to upphold the way the company has been run to this date and that is why the 3 different national parts of SAS and also the international part gets their independant airtravel approval.
May I suggest the EU take notice that their directives are to be followed? May I suggest other airlines (looking South) be advised that they have to comply too????
Quoting Lufthansa (Reply 6): he Swedish management style is about Consensus. Meaning...despite being unpopular, the dutch have addressed the cost issues... the Swedish haven't because it will create political problems.
Consensus can work, provided everyone is willing to work together and give up something. Perhaps SAS will find a way to use both? Obviously, if consensus can create a workable solution where all are accepting of the outcome, it is the way to go. But if not, the Company Directors are responsible to shareholders and OTHER employees to make sure the company doesn't dissolve out from under them.
I think the idea of "airline w/in airline" would makes sense, as posted above. Some destinations/flights could be "snow" only (the super cheap no service, esp short routes), and longer routes/long haul could offer a mix. But that is just my musing.
Someone83 From Norway, joined Sep 2006, 920 posts, RR: 0 Reply 8, posted (2 months 4 days 21 hours ago) and read 10864 times:
Lufthansa, I agree with you on most terms, but you have to accept that SAS would have to pay their employees more than their competitors, and SAS biggest problem are not their salaries....it's their product.
btw Oslo is consistently ranked among the most expensive cities to live in looking at the total costs
RedChili From Norway, joined Jul 2005, 1474 posts, RR: 1 Reply 9, posted (2 months 4 days 21 hours ago) and read 10848 times:
Quoting Someone83 (Reply 4): salaries are much higher in Scandinavia
Just to put salaries into some perspective: A 20 year old who starts to work at McDonald's in Norway will get approximately 25 dollars per hour in salary on weekdays.
How much do McDonald's employees make in other Western countries?
Babybus From United Kingdom, joined Dec 2003, 1274 posts, RR: 2 Reply 10, posted (2 months 4 days 21 hours ago) and read 10830 times:
No one minds too much paying higher fares if you get a higher level of service.
I've only flown SAS about 4x and I wasn't impressed with the service. I got a high cost fare with virtually no service. The high fare also meant there were hardly any pax on all the planes.
Finnair are great on these intra-European routes. Good fares and great service.
Lufthansa From Christmas Island, joined May 1999, 1768 posts, RR: 5 Reply 11, posted (2 months 4 days 21 hours ago) and read 10787 times:
Quoting Someone83 (Reply 8): ut you have to accept that SAS would have to pay their employees more than their competitors, and SAS biggest problem are not their salaries....it's their product.
btw Oslo is consistently ranked among the most expensive cities to live in looking at the total cost
True, so base all the staff in Stockholm! We know plenty of ppl in Norway drive across the boarder to go shopping because things are much cheaper in Sweden... so use the swedish alternative! Ahh yes, politics... a history of government ownership and the associated union issues coming with it... make it tough..nearly impossible. I hear you. But if you don't...you're not gonna have to worry because you wont' be around. And unlike Italy, nobody in the EU is gonna tolerate wealthy, yet small Scandinavia breaking the rules.
SAS will always have high wages... especially when compared to somewhere like Spain. But it doesn't need to be the highest in the industry, which is what it currently is. German wages aren't cheap. And nor is the cost of living in London.... and London usually comes in the top 3 most expensive cities in the world to live in, yet BA staff aren't earning SK wages. BA is also offering a product that's really attractive. Maybe if the product improved, SK would have an easier time raising that additional money and the higher labor costs wouldn't be as bigger problem.
But SK really must start acting as a carrier for the whole of northern Europe..not just Scandinavia. Think about the Amazing amount of industry, both in Scandinavia and in Northern Germany. That alone is hell of a lot of business traffic. But they're not stupid and they don't wanna pay top dollar for a lackluster product.
Look I know nobody wants their wages cut. In fact it almost always breeds such resentment, you may be better off getting rid of the staff and starting again. If you want evidence of that...just look at our American Friends... and how their attitudes have turned to shit in terms of service. But the alternative may be that SAS goes under..and that finnair steps in and steals even more traffic, or LH purchases the remains and everybody ends up working on those conditions anyway.
It's not like SAS are paying the minimum wages in Scandinavia. They are paying a significant premium. Not to mention how much are some charter operations and LCC in the region paying? Anybody have an stats particularly on Flynordic staff pay rates? What I'd suggest is they role it in over time as Qantas have done. Remember, Thai labor costs just 20% of what Australian labor costs. I don't think Dutch labor, which is competitions so well is 1/5 of the price of Swedish labor.
I believe very strongly though the first thing that needs to be addressed is the European product mess. Then Long Haul business...then everything else. Because right now SAS is actively pissing off its customers....and destroying the brand name. If they destroy the brand it will be very hard for them ever to get a premium again.
But biggest single issue right now is, SAS doesn't give the customer a good reason to select them as first preference. This is what they've got to focus on. And you can either go price...or product.... they've failed at both.
Lufthansa From Christmas Island, joined May 1999, 1768 posts, RR: 5 Reply 13, posted (2 months 4 days 21 hours ago) and read 10750 times:
Quoting RedChili (Reply 9): 20 year old who starts to work at McDonald's in Norway will get approximately 25 dollars per hour in salary on weekdays.
I agree and see your point. But also consider this. In Australia, that same 20 year old at McDonalds, if employed on a casual basis, will earn about $17 per hour. Significantly less. But in Singapore... that same worker is on about $4.00 per hour. That's over 4 times the wage in Australia. I bet Norwegian McDonald's workers aren't earning 4 times what German McDonalds workers are?
But we need to compare apples with apples. How much less, as a % do fly Nordic staff earn? And how much lower is the aircraft to staff ratio? (and yes SAS will need to be higher for sure in order to do long haul etc... no arguments there) It would just be interesting to see, a new carrier set up for efficiency and compare it to the situation that created SAS due to years of basically government protection.
Quoting RedChili (Reply 9): Just to put salaries into some perspective: A 20 year old who starts to work at McDonald's in Norway will get approximately 25 dollars per hour in salary on weekdays.
The salary for a new employee 18 year s or older is 21,61 $ / hour
RedChili From Norway, joined Jul 2005, 1474 posts, RR: 1 Reply 16, posted (2 months 4 days 20 hours ago) and read 10593 times:
Quoting Lufthansa (Reply 11): True, so base all the staff in Stockholm! We know plenty of ppl in Norway drive across the boarder to go shopping because things are much cheaper in Sweden...
Everything isn't cheaper in Sweden. Taxes are higher. Swedish employers have to pay around 31 percent in social fees, while Norwegian employers pay between 0-14 percent, depending on where in Norway the employee lives. So, an employee in Stockholm with a salary of 100,000 will actually cost you 131,000, while an employee in Oslo with the same salary will cost you 114,000.
Also, if all staff were based in Stockholm, imagine the cost of hundreds of pilots and cabin attendants deadheading to Norway every day, the hotel costs, the increased food costs, etc. SAS would almost have to set up a separate airline just to transport their own workers to and from the flights in Norway!
Quoting Larshjort (Reply 14): The salary for a new employee 18 year s or older is 21,61 $ / hour
Is that in Denmark?
According to the Norwegian web page of McDonald's: "For medarbeidere i alderen 18-20 år varierer lønnen fra kr. 103,68-122,16 per time (avhengig av opparbeidet ansiennitet) + tillegg for f.eks. kvelds- og helgearbeid. Medarbeidere over 20 år har en begynnerlønn på kr. 122,16 per time + tillegg. For medarbeidere under 18 år varierer lønnen fra kr. 78,68-88,68 per time (avhengig av alder) + tillegg."
Using an exchange rate of 5 kroner to one dollar, we get beginners' salaries of:
Under 18 years: 15.74 dollars
18-20 years: 20.74 dollars
Above 20 years: 24.43 dollars
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