Posts: 1001
Joined: Sun Aug 22, 1999 8:34 am

SAS And Braathens Furious

Wed Aug 22, 2001 8:16 pm

Airlines furious over merger denial

Scandinavian Airlines (SAS), domestic carrier Braathens (BU) and their employees were reeling Monday after it became clear that Norwegian regulators will block a merger of the two carriers. The regulators also want to dump frequent flier programs within Norway.

"This is a major step backwards to the times before free competition in the air," said an openly irritated SAS boss Gunnar Reitan.

Norway's competition authority (Konkurransetilsynet) signalled Monday that it won't allow SAS to take over the ailing Braathens. It also said it wanted to do away with the bonus programs each carrier has to reward loyal customers.

That would affect all incentives given to individuals, travel agencies and companies for repeat business.

Employees at both SAS and Braathens, meanwhile, expressed bitter disappointment Monday afternoon over the regulators' move to block a merger of the two arch-rivals.

Many now fear that Braathens' owners may declare bankruptcy, a move that would ground the fleet, force the return of leased aircraft and spark mass layoffs.

The leader of one employees' union said the existence of two carriers in Norway's small domestic market has led to overcapacity, higher ticket prices and major losses at both carriers.

Regulators and consumer groups, however, have feared that an SAS takeover of Braathens would result in one dominant player in Norway, and eliminate competition.

SAS intends to appeal the authorities' decision.

SAS frequent flyer program = Eurobonus (Star alliance)http://www.scandinavian.net
Braathens ffp = WINGS (KLM/NWA-alliance) http://www.wings.no

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Posts: 1785
Joined: Sat May 19, 2001 9:16 pm

RE: SAS And Braathens Furious

Wed Aug 22, 2001 8:47 pm

Today seem impossible that two airlines fly in competition within the small Norwigian domestic market.But if I'm not wrong till few years ago both BU and SK were profitable in Norwigian domestic operation. The BU modell was a so called success modell and during 1996 BU bought Transwede and try to make in Sweden domestic what they have well done in Norway.

Than something happened and BU went in financial trouble.Is it BU financial situation so bad??
Did the new Oslo airport operations help to make it?? Cause I remember that FBU got few slots and in Gardermoen both SK and BU started a lot of new additional flights to town like SVG,TRD,BGO and so on.I checked recently both BU and SK Norwigian timetable and I'm very surprise of the high number of domestic flights with large plane like M80,73G,735 (Remember that Norway has only 4.6 milions). Why they don't use RJ on domestic flight?
Finally do you think that Eurobonus FF (and the big Star FF) is somenthing that real killing the competition in Scandinavia??

Posts: 980
Joined: Sat Jan 27, 2001 6:53 am

RE: SAS And Braathens Furious

Wed Aug 22, 2001 9:52 pm

Well,the last word hasn't been spoken regarding this deal,the final verdict will be delivered in November.The Konkurransetilsynet (Competition Board) does not have the power to enforce any of it's views or ideas,these will have to be imposed by the politicians,acting on information from various sources.But they rarely go against Konkurransetilsynet.
The Transwede/Malmö Aviation deal was a big mistake by Braathen's.They've lost a lot of money there.Also,BU had a hard time competing with SAS on the OSL-STO route.There was also the (very) brief appearance on the domestic scene by Color Air.They launched flights at ticket prices that could never give any profit,SAS and BU more or less matching the prices thus preventing Color Air from increasing their prices.This hurt BU more than SAS as Norwegian domestics are just a part of their much larger network.
There ought to be a place for 2 operators in the Norwegian market,but the politicians are blundering away the possibility by senseless taxes and fees on many aspects of of civil aviation.
Only 4.6 million,yes,but Norway has one of the highest rates of flights per capita in the world,caused mainly by topographical considerations.This prevents railways from being built in large parts of the country.to the north,railways only extend to Bodø,and then you're only half way to Kirkenes!That train ride takes some 16-20 hours from Oslo.Airlines win hands down!

Finally,you may make a small fortune in the Norwegian domestic market.All you have to do is start with a BIG one!  Laugh out loud
"Luck and superstition wins all the time"!

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