Scandinavian Airlines: The World's Worst Run Airline

Alright, the title may sound extreme, but if SAS isn't the world's worst run then it's at least Europe's worst run carrier. SAS is majority-owned by a coalition of Scandinavian governments, and as such the airline doesn't understand how to be competitive. SAS has had a long history of service and class but that seems to have been lost due to the craze in Europe and elsewhere to cut costs to the bone.

First, SAS just doesn't have the right stuff when it comes to managing an airline. The gigantic size of SAS middle management can effectively compete for the title of "world's worst bureaucracy." Having a government run a public school system works (except in the USA), but having them run an airline is a runway to disaster. Many African carriers which are government-owned operate at the whim of leaders, especially in countries which don't have aircraft dedicated for politicians. One time (April 11, 2005 comment) and it's likely this has happened on more than one occasion, an Air Zimbabwe flight was diverted from London to Harare to Rome to pick up the president (Mugabe), which caused a delay of several hours. While SAS isn't nearly that bad they do have a management attitude which is arrogant at best. Recently, it's been announced that in a bid to cut costs, SAS will hire 35 Chinese flight attendants which will cost the airline $1,588 per month, including wages, uniforms and hotels versus the unionized flight attendants which cost the airline $7,936 per month which excludes uniforms and hotels. While outsourcing isn't the problem, it's the notion of hiring flight attendants which will cost the airline 20% of what the unionized attendants cost. That's not only going to hurt flight attendant morale big time (considering the severity of the cost cut) but the move will also anger the other unions at the airline, which are good about sticking together. The other recent major managerial failure at the airline has been the release of information stating the Copenhagen-Seattle/Tacoma and Copenhagen-Bangkok-Singapore routes are hanging on a thin thread, the Bangkok route losing 100,000,000 Swedish Kroner, or nearly $13,000,000 a year. Load factors on those flights, however, are quite high, leading to the question of whether SAS really trims costs enough (if at all) at its BKK and SIN stations?

The second part of the downfall of SAS is the failure in product. On intercontinental routes, SAS seems to have a very attractive product. However, it fails to compete. The business class is extremely expensive and few of the passengers in that cabin pay anything close to full price for tickets there. The premium economy class offers more legroom than economy, but fails to deliver in any other areas of the product, making the extra cost a hard sell for many passengers. Another area of the product, which can be seen as a shortfall, or an advantage, depending on how one views it is Wi-Fi internet access. The product can be accessed for the entire flight for only $27, which hardly seems like a bargain unless you are traveling on business. However, the business of offering the product doesn't make much sense. It's been reported that the aircraft must be taken out of service for two weeks to install the internet, which doesn't sound like much time, except when you consider the enormous cost of the aircraft and the fact that if it's sitting on the ground, it's losing money, and that can be hundreds of thousands of dollars in lost revenue. Also, guess which route the internet service is being used the most? (Hint, it's near where the company most associated with the internet, is headquartered). If you guessed Seattle/Tacoma, you're right, and yes, that route is "hanging by a thread." Aside from the intercontinental shortcomings, SAS also fails considerably in Europe. After Ryanair announced plans to compete heavily in Scandinavia, SAS launched a simplified pricing system, and a simplified product. Many customers have had a lukewarm reaction to this.  Flights within Scandinavia are now in a single-class configuration, leaving many customers who expected better from SAS out in the frigid winter. Many customers have noticed that with lower fares comes a decline in service as well. And unfortunately for SAS, its fares on routes where it competes with Ryanair and other low-fare carriers are still much higher than its competitors. Finally, one tool that low-fare competitors have used greatly to their advantage is the internet. SAS offers very high fares (in particular for the intercontinental flights) on its website, and has a layout which is slow, and can be confusing for many travelers used to the no-nonsense approach of other airlines like EasyJet and Ryanair, who do without the flash movies. Unfortunately, if SAS doesn't realize its shortcomings and soon, it very well may be run over by Ryanair, EasyJet, and others. Can you spell Swissair?