• PAGE ONE
• INDEX
• HOME

SAS eyes India to enhance market share

Hema Ramakrishnan

Recently in Stockholm

THE Scandinavian Airlines System (SAS) -- a consortium of three national airlines of Denmark, Sweden and Norway -- is eying India, besides countries such as China, to enhance its market share of intercontinental travel between Scandinavia and Asia.

SAS hopes to cash in on capacity augmentation through investments made in the acquisition of new fleet to woo passengers travelling on competing airlines with intercontinental routes.

The groundwork has commenced with the airline set to replace the current fleet of Boeing 767's on the India route with Airbus 340s from August 31 this year. The induction of the Airbus 340 will result in a 40 per cent increase in seating capacity as new aircraft can accommodate 264 passengers as compared to 188 passengers in the Boeing 767s.

With a broader product range, the new aircraft will provide new and more flexible economy class -- Economy Extra -- besides the normal economy and business class.

SAS, whose main hub is Copenhagen, flies out of Delhi five times a week and has a code sharing arrangement with Air India. A bilateral will be signed with the Indian Government giving SAS the rights to enhance the frequency of its flights (i.e. operate f lights seven times a week) by next autumn.

The signing of the bilateral will coincide with the scheduled visit of the President and CEO of SAS, Mr Jargen Lindegard, at the end of this month.

According to Mr Bengt Callinggard, General Manager SAS (India and Nepal), the airline is pinning its hopes high on the Indian market, given that the average seat capacity utilisation is close to 78 per cent.

Currently, close to 50 per cent of passengers travelling between Scandinavia and Asia fly on competing airlines via the European hubs outside Scandinavia. It is this segment which SAS hopes to tap as it offers direct connectivity.

Insiders point out that Star Alliance membership and its regional partnership strategy would also make it possible for SAS to compete for customers and offer effective flight connections to, from and via Scandinavia to destinations with good ongoing conn ections further into Asian, European and American sub-continents.

With close to 23 million passengers travelling on SAS last year, its share in the total passenger traffic of Star Alliance members works out to around eight per cent. The revenue passenger kilometer touched 85.2 billion and annual operating revenues stoo d at over $5 billion last year.

Notwithstanding greater uncertainty in the global airline industry, SAS Group expects income before taxes, excluding capital gains to show a significant improvement over 2000. Last year, the SAS Group generated earnings before interest, taxes, depreciati on and rentals of MSEK 5,652, up by 34 per cent over the previous year.

New ownership structure

A NEW ownership structure for SAS is under consideration, with the Danish, Norwegian and Swedish governments setting up a joint working group to analyse the effects of a possible change in the airlines legal structure.

Currently, SAS is a consortium comprising three national airlines SAS Danmark A/S, SAS Norge ASA and SAS Sverige AB. The Danish and Norwegian parent companies each own 2/7 of the consortium and the Swedish company owns the remaining 3/7. The parent compa nies are listed on the Copenhagen, Oslo and Stockholm stock exchanges respectively. Half of the shares in the parent company are owned by the respective State and half by private interests.

The mandate of the group, set up last year, includes a possible change in the share structure to issue single shares instead of the present three national companies and three shares.