SAS to retain A340s for new long-haul operations

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Scandinavian Airlines appears set to retain three Airbus A340s in order to launch new long-haul services from Oslo and Stockholm.

The carrier’s primary long-haul hub is Copenhagen but it is intending to develop additional services from the other Nordic capitals to meet a demand for non-stop flights which might otherwise be offered by budget rival Norwegian.

While there is more capacity than demand on short-haul services, the situation is reversed on long-haul and a “large chunk” of passengers are forced to transfer, claims SAS Group chief executive Rickard Gustafson.

There are “more opportunities” to add capacity within the long-haul market, he says. Although the carrier has invested heavily in Copenhagen there remains a need for non-stop services out of Oslo and Stockholm which Norwegian is likely to pursue as its fleet expands.

“Either we supply that or someone else will,” says Gustafson.

Scandinavian Airlines is to add the new routes in 2015-16, a timeframe in which it was due to introduce new Airbus A330-300s to replace A340-300s.

When it placed the order last year the carrier pointed out that the A330s could reduce fuel consumption by 15% compared with the A340s.

But Gustafson says that retaining the aircraft is the “quickest way” to increase the fleet. The carrier is intending to modernise the cabin of its long-haul aircraft.

Norwegian’s long-haul ambitions have been hampered by technical issues with its Boeing 787s, and it is facing regulatory obstruction over its transatlantic expansion plans. But the airline has been gradually developing its long-haul network from Scandinavia to several destinations in the USA and Asia.

Yield pressure in the long-haul market has been “fairly stable”, says Gustafson, and Norwegian is “not stealing that many customers” from Scandinavian Airlines.

But the carrier remains locked in a broader yield battle with Norwegian. While Scandinavian Airlines’ yield has not fallen as fast as Norwegian’s over the past year, it expects the yield decline will continue.

During the second quarter, it says, airlines poured 7.8 million extra seats into the Scandinavian market but there were only 5.2 million additional passengers.

SAS Group is aiming to use a two-tier operation – mixing capacity from its own fleet with that of wet-lease partners – to optimise its feeder network as well as its short-haul point-to-point services. This will enable it to add new “thin” destinations, says Gustafson, and give the carrier greater flexibility.