I'm unclear on the relevance. I care about fare cost, service and reach. The TATL-flying whales as you call them, provide me with a lower fare cost, a better service and greater reach. SAS seems to struggle to compete and labor cost is and has been a large contributing factor to that.

The high cost of living is largely artificial and we're at a point where cost needs to go down rather than prices go up and salaries with it. There is little rational argument for similar products and services costing half or less in other Western European countries. There are of course still plenty of people in Sweden who believe that prices there are higher because the truck driver needs to drive further than say Germany but this is of course an irrelevant factor. Globalisation is bringing corrections but at a very slow pace. I am also a huge believer in being able to live off your salary but through cost control, affordable housing, enabling competition and making sure bureaucracy isn't artificially driving up cost. Scandinavia isn't doing a great job in those areas.

Yes.

The Polish under the table cleaners that used to charge not even 50 SEK/hour in Poland ten years ago would end up in Sweden charging about 100 SEK/hour at the same time. Less than ten year later, the same kind of thing is said to go for about 150-250 SEK/hour if the very same Polish under the table cleaners stick to the same places in Sweden. Have those cleaners become 3-5 times more productive in Sweden over ten years than they were in Poland ten years ago? Definitely not. Have general or unionized Swedish wages risen that much to drive up labor prices for Polish cleaners that much in Sweden? Definitely not. And it’s much the same dynamic for other labor arbitrage efforts that require physical presence at on-site workplace to provide customer-facing service.

SAS can’t have most of its cabin crew employees based in Thailand. And when an industry’s key players are counting on being rescued from time to time by host country governments, it could turn out to be strategically risky for a business to dilute the government’s interest in resuscitating the business when the flying enterprise hits a lot of nasty financial turbulence. Gutting the local workforce and its vested interest in pushing for government bailouts in the future is risky business for the legacy majors doing TATL flying.

The reason why the US airlines can provide their service at a lower cost is that they used state subsidies and chapter 11 regulations to get rid of debt obligations they were unable to fulfil, employee pensions and benefits they did not feel like paying, and get out of leasing contracts they voluntarily entered into but wanted to get out of. No wonder they can end up with lean operations when they never really had to pay for past mismanagement.

Of course! Maybe we can learn from this in socialist Europe? :idea:

Privatizing profits/gains for top management and extraordinarily privileged shareholders while socializing the costs and negative byproducts of financial boom and bust cycles for government-privileged, “for profit” firms’ top management and extraordinarily privileged shareholders? Sounds like something SAS’s government shareholders should be wary of embracing. That’s the lesson to be learned?

I was more hinting at the not letting companies and product (and customer experience) be held back by historic mismanagement which is a notorious problem in Scandinavia with SAS being a role model example (remember the CEO who claimed Scandinavians weren't interested in long haul and where he is now?) . Work of the concept, don't copy someone else's homework.

I don't recall any CEO saying Scandinavians were not interested in long haul flying. Which one of their illustrious past CEOs was that? I remember comments about the challenge for SK to turn a profit on long haul, though never hearing that associated with a lack of interest from the market.

Mats Jansson used to write make those statements in the on-board magazine in relation to route and aircraft decisions.

I don't remember every Scanorama statement of his brief tenure. But if you read the annual reports he presided over, it is all about cutting unprofitable routes, and focusing on profitable flying that the home market is interested in.
The unprofitable state of Arlanda to BKK/PEK/PVG at the time stopped them. You can then always ask if they were truly unprofitable, or the Swedish led top management just had an interest in showing them as unprofitable. Any qualified controller working with top management could have made them look unprofitable at that time. There were enough losses to go around.

Mats joined SK as they were just starting to be profitable again. And where then hit by a whammos of the Q400 accidents, the Spanair accident, and then the global financial crisis. No wonder he had a short tenure.

Of which we saw no proof, his successors had to finally launch the profitable routes their home market had been interested in for a decade (LAX/SFO/HND). But hey, we had SVG-IAH for a while with no useful feeder flights! :o

I think that we agree what (or who?) the problem was.

There was an interesting plot of route profitability and route closures in one of the annual reports. But the devil is in details that we can't see

The challenge for the Swedish market in many areas is that the Swedish consumers are often very cost conscious and any saving is a gain. Cheaper is by definition better. Meaning the connecting competition could often have a very strong case in the market compared to the direct long haul flights.

HND was not in the SK management's own hands. That is under the control of the Ministry of Land, Infrastructure, Transport, and Tourism over here. Haneda was never a part of the open skies agreement with the EU, nor woty any other countries for that matter. I am actually still surprised that they got it, but I guess it was part of the package for Finnair and JAL to get Helsinki Haneda.

The problem as I see it is mainly a zig zag course on what they actually wanted to do, there has not been a clear direction since Carlzon tore down the pyramids. And then they just got crazily late into fixing their cost base.

I don't think that is true in general, for the BKK destined vacation Swedes yes, perhaps, for business and leisure non beach travel, direct flights and product matter for the locals no differently.

I agree, their new CEO looks competent but has been invisible since he started with little change to course other than gradually rebooting the old network and this entity restructuring. I wonder if changing course towards the Embraers was his doing.

I hope they do the Embraers well. I do find them slightly less cramped than CRJs but they are also much less pleasing aesthetically (both the exterior and the interior) and most airlines use much cheaper and worse seats in them. It's promising they seem to be going for 190 size, which is also notch bigger than the CRJs, so hopefully it will allow better service on board. Wait. No. We are not living in times when anybody is interested in improving the service on board.

I like the Swiss Embraer product generally, its better than KL/LO/SN. They can also land at LCY so fingers crossed for a restart there as there aren't any routes to LCY left from Scandinavia.

Recently I have mainly flown JAL Embraer, which are pretty nice rides. But I guess SK will not have a 1-2 configuration on the first few rows. But even the 2-2 section on JAL has a good enough comfort.