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Why Is SK Not More Succesful?

Wed May 17, 2006 10:54 pm

Please don't take this as an SK bashing as it is not meant to be.

It has always baffled me that SK (SAS) is not a larger and more successful operation than what it is. Its route map seems to be getting smaller and smaller each year.

It represents 3 wealthy European countries. Is this perhaps its downfall, the fact that it is not focused on one hub.

Both Stockholm and Copenhagen should act as an ideal transit hub for European/Asia traffic. Finnair is an example of how it can work.

You could argue that it is hard to find cheap labour but I know that there are large groups of immigrant workers in both Denmark and Sweden who are happy to take the jobs that the locals wont.

I have never travelled on them long haul (only LHR-CPH) so I can't comment on their onboard product or service.

Can anyone offer any insight?
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RE: Why Is SK Not More Succesful?

Wed May 17, 2006 11:19 pm

Simple economics:

1. Relatively small O&D population base spread over 3 different hubs

2. High labor costs when compared to the competition.
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RE: Why Is SK Not More Succesful?

Fri May 19, 2006 12:46 am

Well, from a Norwegian point of veiw.

1. Prices. I find their prices are not usually competitive. Even on routes with high competition like to London or Berlin they are usually pretty expensive even if you look away from the LCCs. Last year i flew to Berlin, and SK's prices on a direct flight was 50% more expensive than a route with KL via AMS.

2. Reputation. The last couple of years there have been quite a few conflicts in SK, and this has led to a impression that they are not to reliable.

The takeover of BU might also not been handled in the best way. I'm not going to say there is a boycott because of this. But i think it still lies somewhere deep in the back of peoples heads. This may have lead to DY taking over the role of "the nations pride".

Also i think norwegians feel slightly left out of the company. That this is more a Danish/Swedish company than a Scandinavian. Morst desicions are taken in Stockholm or Copenhagen. SK does not have any intercontinental routes from OSL. More and more maintanence are moved from Norway etc.
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RE: Why Is SK Not More Succesful?

Fri May 19, 2006 3:24 am

Quoting DYflyer (Reply 2):
Prices. I find their prices are not usually competitive

Price is one reason, but I think the main reasons are:

  • SAS used to operate with monopoly status on their domestic routes and intra Scandinavian routes and with very little competition on the international routes. Suddenly there were a lot of competitors around them but they are still acting as if they still have the monopoly. The reason for that is, I guess, that SAS are partially owned by the Scandinavian governments and such organisations aren't famous for their ability to quickly adopt to changes in their environment. Just take a look at the numbers of different aircrafts in their fleet.

  • SAS is not Danish, not Norwegian nor Swedish but a mix of these three countries and cultures. To a "foreign" observer these three countries might look the same but there are differences. Differences that go against each other when it comes to run a company.

Also having the number of different unions that SAS have isn't exactly helping with all the strikes that "paralyzes" the operations now and then.

Quoting Skyhigh (Thread starter):
Finnair is an example of how it can work.

Both Finnair and Icelandair are good examples of how small airlines with small O&D markets can take advantage of their geographical position and compete against the "big guys". SAS can also use this (Just look at how Malaysian is using ARN). Let's just hope that they do that some day! [edit]Getting rid of the two big and one small hub
-system and concentrate on one big hub is one step closer to that. The tricky part is to make the politicians avare of that.

[Edited 2006-05-18 20:54:51]
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RE: Why Is SK Not More Succesful?

Fri May 19, 2006 3:39 am

These are also highly regulated countries where something like building on to the airport ( to support more operations) is not as easy as it perhaps is in the US or other countries. There are some immigrants, but the labor market is more rigid than say the US or other countries, and undoubtedly there would be a labor union situation/government stipulation guaranteeing a minimum wage that workers could actually live on, regardless of their immigration situation. Finally, tax rates are high on everything. You get taxed significantly on earnings so even though the health care and general well-being of the population is more even and higher than other nations, its not like everyone is running around driving a BMW. Landing fees are pretty high as well.

Micke as a very good point that the three countries are very distinct even though they appear to the outsider as all being the same. Theres no love lost between the Swedes and the Danes, thats for sure! The languages arent even that similar- Danish and Swedish, though they appear related, are pronounced very differently and to a Swede, Danes are almost incomprehensible.

I wish SK were more successful, and I wasnt very impressed with their long-haul product too much, but in the end they are presently a confused company with some pretty high barriers to cross compared to other flag carriers where the business environment is easier to work within.
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RE: Why Is SK Not More Succesful?

Fri May 19, 2006 4:46 am

I just flew SK938 - SEA-CPH last night/today up front. Since this is my first trans-atlantic Business class segment, I really can't comment on the service. The seats however are pretty beat up, and uncomfortable. I had plenty of room, but it was like sitting on an uneven pile of rocks. The seat I had in domestic First on US on the way to SEA was great compared to this. I know they are redoing the front, but they need to get the problems worked out, and hurry up. The loads looked pretty decent though.

I've read on another site, that SK has a lot of cancellations on their Asia routes. It seems that if a 340 breaks down, the Asia routes are the ones that suffer.

With the exception of the seat, I plan on flying SK again if the need arises.
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