Transavia announced plans to end its operations in Denmark after two years of operating to/from the country (Copenhagen Post, 21-Sep-2010). The carrier plans to terminate all Danish operations by 01-Nov-2010, although some routes may continue until 01-Apr-2011. Transavia CEO, Michiel Meijer, said that decision is due to the airline not meetings its targets for the first two years of operations, with local overcapacity making it too difficult to perform profitably. The airline entered the Danish market following the collapse of Danish low cost carrier Sterling in 2008.
Transavia to pull out of Denmark
You may also be interested in the following articles...
Air France-KLM Group dreams of CDG airline boosting Air France; KLM again makes more profit in 2016
In 2016 Air France-KLM's long haul network generated more profit than the group as a whole. Yet the dependence of Air France-KLM's profits on the long haul business is under threat from more cost efficient competitors, in particular the Gulf based super connectors. Moreover, Air France-KLM's main European competitors IAG, and now Lufthansa, have developed a clear lead in developing commercial partnerships with Gulf airlines.
Air France-KLM's 2016 operating margin was its highest since before the global financial crisis, but remained below its pre crisis peaks and well below the rest of the world airline industry in what was almost certainly a new record year for global margins. Within the group, KLM's margin improved and was again higher than that of Air France, whose margin fell.
The planned new lower cost airline to be based at Paris CDG as a subsidiary of Air France, announced in outline in 2016 under the project name 'Boost', will now include medium haul in addition to long haul routes. This will be vital to setting it back on a path to sustainable profitability – if agreement can be reached with pilot unions to launch it. Even then, its scope and low cost ambitions will be limited.
SAS' new foreign bases in London & Spain show rare innovative thinking for a legacy airline
On 01-Feb-2017 SAS announced that it is to establish a new AOC in Ireland, with operational bases in London and Spain. It has yet to specify the airports that will become its first bases outside its three Scandinavian home countries. SAS is following a course established by Norwegian, apparently forgetting its previous objections to its LCC rival's approach.
Indeed, it seems that SAS' move is a pragmatic response to intense competition from LCCs, particularly from Norwegian. According to SAS' 2016 Annual Report, 65% of its ASKs compete with LCCs. Scandinavia's high labour costs are a significant handicap in competing with airlines that have bases outside the region.
Spain and UK are its two biggest markets outside Scandinavia, with London Heathrow its biggest non home airport. After years of cost reduction programmes – also years of initiatives aimed at enhancing the appeal of SAS' product and brand to its core target market of Scandinavia's frequent flyers – a bolder step is needed. SAS will be a very rare example of a European legacy airline with bases outside its home market, more than 20 years after market liberalisation presented the opportunity.