Originally Posted by
TravellingChris
Unfortunately I think that's what you're going to see...a lot of long-haul traffic routed through AMS or CDG at the expense of CPH and ARN.
SAS' network to Asia is only a shadow of what it once was, and this deal isn't going to help in that respect.
The other issue is that both LOT and Finnair have built up their East Asian business. Even if the goal was to build up CPH's connectivity to Asia following the AF/KL deal, SAS would have a hard time trying to compete with two nearby major hubs within its own group (CDG and AMS), as well as Finnair at HEL and LOT at WAW.
Of course with the Russian airspace situation many East Asian routes aren't very viable for European carriers anyway and the longer travel times aren't appealing for passengers.
I would be highly shocked if you see lots of traffic routed through CDG/AMS. Who is going to make that decision? If the board consists of 10 members, most likely, they’ll have two board representations. Regardless, BoDs job does not involve day to day planning.
AFKLM owns 19.9% of the airline. The fund and Danish state jointly control the equity, in addition, the fund controls most of the debt.
If the business plan is to route traffic through AMSCDG; the JV agreements which I don’t fully understand, would need to be significantly in the feeder airlines favour. I understand that it only applies on l/h metal, and I assume it is pro rata to seats supplied transatlantic. Feeding through AMSCDG in other words would mean more profit to AFKLM. Why would the majority owners allow this?
I think the rationale for AFKLM is as follows
- they’re a major airline in the nordics but most likely losing significant customer volumes given the EB captive base. They will now either be able to ‘control’ said customer base through a switch to FB (which may be implemented as a cost cutting exercise) or by virtue of ST, significantly improving passenger flow.
- if SAS is successful as a stand alone entity, they will have value loss through its acquisition at a later stage) but given the history, clear they’re not willing to outright acquire the business today
- if it isn’t successful, then a) they can still acquire down the line at similar or lower valuation, and regardless they would have been given to the customer base
The majority owners would not want redirect massively traffic flow to AFKLM; that’ll represent negligible value to them.
I think this will mean significant investment in the l/h network for SAS; the ones paying the worst price will be the swedes. No real staff presence, no desire to put new routes in ARN. I still believe OSL will do OK but that’s also based on the old adage it is the only profitable entity which can easily no longer be true.
I think it is a real shame that SAS as three-party cooperation is effectively over, but if being real, it was that when deregulation happened. They just eked it out for very long…