Air France-KLM Group believes Scandinavian carrier SAS will be able to expand its long-haul network by capitalising on the group’s three-hub strategy and transatlantic joint venture.
Group chief Ben Smith, speaking during a 4 July briefing, said the long-haul aspect of the tie-up between the two sides was “very interesting”.
He points out that Air France-KLM has over 120 long-haul aircraft at Paris Charles de Gaulle and another 65 at Amsterdam, but SAS only has a dozen – a mix of Airbus A350s and A330s.
“For the size of the market and the yield coming out of that market, 12 long-haul airplanes is quite small,” says Smith.
“If you look at the market sizes – in particular the Netherlands, versus Sweden, Denmark and, to a little bit of an extent, Norway – you can see that a disproportionate amount of traffic is being flown by other airlines.”
He adds that the geographical location of Copenhagen is “very attractive” for connecting passengers between Asia and North America.
Smith also points out that the Danish government’s policy towards aviation is “quite favourable”, with no restrictions on using the main runway.
The government also agreed to take over Copenhagen airport’s operator towards the end of last year.
“The strategy of the airport and the capital expenditure plan are aligned with any hub airline that wants to base itself there,” says Smith, adding that the airport will be “well designed” for connections.
Although SAS was a member of Star Alliance, it was excluded from partner Lufthansa’s transatlantic venture with United Airlines and Air Canada.
Smith says SAS has “not benefited” from US point-of-sales strength and, as a result, has been at a “big disadvantage” in the “biggest, most profitable market”.
But it stands to gain from Air France-KLM’s venture with Delta Air Lines and Virgin Atlantic.
“We’re not having to go and create new traffic,” says Smith. “There’s opportunities to regain share that SAS has lost over the last few years because it didn’t have the necessary tools in terms of sales strength outside of Copenhagen or outside of Scandinavia.”
Air France-KLM chief financial officer Steven Zaat says the company will apply for the enlarged joint venture “when we have sight on the merger control”.
He stresses that the venture partners are “very well prepared”, with a “vision” for SAS’s integration, but the timeline depends largely on the US Department of Transportation.
“That’s difficult to control,” he says, adding that the process with the current venture took around a year-and-a-half. “We have it all in place. We’ll go as fast as we can but we have the limitation…I can’t give any guidance on timing of the DOT.”
