09 juli, 2009

How to save SAS

SAS carried 12,9% fewer passengers the first six month of 2009 compared to 2008. Total load factor was unchanged thanks to SAS grounding many airplanes this year. But SAS still loses money, and money and everyone are asking why they fail? The simples answer to this question is that SAS is a too complex airline.

SAS needs to simplifyTake a look at their fleet. As of March 2009 they have 7 different types of airplane. They have 14 different subtypes making their fleet very expensive. A result of this is that they need more pilots, more flight attendants, and more spare parts. SAS very complex fleet makes it harder to shuffle airplanes around. Because they would have to shuffle the staff around as well. A simpler fleet would make it easier to use staff more efficient. To simplify the fleet would cost a lot of money, but in SAS case it would be a worthwhile investment. SAS would be in a better position to compete.

UPDATE: Reply 54 illustrates how complex SAS fleet really is: http://www.airliners.net/aviation-forums/general_aviation/read.main/4994937/

What to do about Denmark?SAS needs to make money. The unions of Denmark are for various reasons difficult to negotiate with. As a result, SAS should look at how many routes should be taken away from Denmark and flown from Norway and Sweden. Some has expressed the idea of moving long haul Asian routes to Arlanda in Sweden and the North-American routes to Oslo in Norway. This would be a drastic measure, and neither SAS nor their employees would benefit this. But as long as some employees are threatening to take down the whole airline SAS has to adapt.

What about Blue1?Blue1 is in reality SAS Finland, but with a different Aircraft Operating Certificate (AOC). Their AOC is originally from Air Botnia, which SAS bought. Blue1’s fleet is making the SAS fleet even more complex. They add 4 new airplane types to SAS making it a total of 11 airplane types and 18 different sub types. In order to simplify SAS they should consider renaming Blue1 to SAS Finland and transferring their AOC into SAS AOC. SAS is a very strong brand, even though it would be in contrast to Finnair. Instead of fearing for Finnair stealing passengers, SAS should start a bigger offensive in Finland. It goes both ways.

How can SAS simplify?They should replace their MD-80, MD-90, Airbus A319/A321, ATR72, Arvro RJ85, their older 737 (The classic 737) as well as F50 and Saab2000 with an order for more CRJ-900, 737-700 and 737-800. Then they should replace their A340-300 with the A330-200IGW that would improve the performance of their long haul fleet. They should also consider increasing their intercontinental fleet to about 20in a 10 year period so they can capitalize on size. In this downturn I am sure Boeing, Bombardier and Airbus would be interested in such a deal. After every plane is delivered the new fleet would be down to three different types of airplanes with 6 different sub airplanes. If SAS decides to do this they will be able to use simplify their staff, and they will improve their bottom line. The way I see it simplifying the fleet is the only way for SAS to be effective.

There is a reason why SAS Norway shows the best results. Their only jetplane is the 737 in different sizes. SAS Sweden has both the MD-80 and the 737. SAS Denmark has both the 737 and the A319/A321. The simpler fleet of SAS Norway helps making SAS Norway a better performer.

The picture shown is from the newest SAS 737-800 at the Boeing factory, prior to delivery to SAS Norway. Picture is used with permition from Drewski2112's photostream on Flickr. Watch that and his other picture here. http://www.flickr.com/photos/smartjunco/

6 kommentarer:

Someone sa...

SAS problems is not so much regarding their fleet, but more to do with their strategy, organisation and the product they provide. In addition to the fact that they're still searching for their identity.
Yes, SAS could and should simplify their fleet, but that's not their main problem. Also remember as due to their hub structure it doesn't matter that much whether the OSL and CPH base uses the same type of aircrafts, to use one example. Their OSL base is a good example on this, although the optimal would be a pure 737NG operation, all pilots and cabin crew can fly all the aircrafts (737-400/500/600/700/800)

lcgjoesaether sa...

Their strategy today might be a bit of, bit they can not change their organization with such a complex fleet. Look at how SAS Norway does compared to SAS Denmark. They have a simpler fleet. And SAS can get better price on parts and maintenance cost goes dorn as well

Anonym sa...

Wrong, SAS Denmark fleet consists of MD80, A319/321 and CRJ900. The main problem for SAS is not even the salarys to their employees, its how much the crew working for their salary! They should work around 1/3 more for the same salary.

lcgjoesaether sa...

It would be a lot easier to work more if SAS had a more simple fleet. If the crew came on duty and spent their entire day onboard the plane, they would be more effective. I believe that it would be easier to make the employee work more rather than cut salaries. It will be interesting to see the effect of only flying 2 pilots in the cockpit to the east coast. I imagine that will contribute to making the intercontinental routes more profitable

Anonym sa...

The problems with SAS are not with the fleet. SAS could operate a fleet of Tu-134s and Boeing 707s, and the fleet would still be the slightest of their problems. It's the salaries that are pulling SAS down.

lcgjoesaether sa...

They have high salaries, but so does Southwest, and they have been successful, because they keep things simple. Or at least used to. Southwest salaries are about the best payed in the industry. Not as high as SAS pilots, but Southwest still manage to make money. With a simpler and up to date fleet, it would be easier to simplify the organisation. SAS has to many employees per airplane. But as long as the fleet are so complex, it will be hard to have less employees per airplane.