Scandinavian Airlines parent SAS will register aircraft in Ireland and set up bases in London and Spain to serve more leisure travellers at lower cost to compete with expanding discount carriers, including Norwegian Air Shuttle .
SAS is seeking an air-operator certificate in Ireland with sites in London and Spain that will initially provide a small number of departures to complement existing services starting next winter, the Stockholm-based company said on Wednesday.
The airline has been contending with Norwegian Air’s strategy of offering a similar mix of European and transatlantic routes.
SAS said it would continue to focus on frequent travellers and the bulk of its operations would remain in Scandinavia, while trying to gain from rising demand for leisure travel.
With “intense” price pressure in that segment, SAS must address its cost base, which it estimates to be 20 per cent to 25 per cent higher than at rivals.
Cost advantage
The Irish unit will hire locally, while its cost advantage is more likely to come from lower social security expenses and taxes rather than from reduced wages, spokesman Fredrik Henriksson said.
Services will begin with “a handful of aircraft” with the same livery and service offering as SAS’s existing fleet.
SAS said on January 24th that it is selling Danish unit Cimber along with some regional jets to contract out more services on routes with lower traffic.
Start-up costs for the certificate and the new bases will hold back earnings, SAS said, without specifying figures.
SAS also reiterated that it will scale back operations elsewhere. The company said on December 15th that job cuts were planned.