The battle for dominance in Scandinavian skies has taken another twist, with Norway's Braathens taking over Swedish regional Malmo Aviation. The SKr600 million ($74 million) acquisition is the latest in a series of aggressive manoeuvres, redrawing the aviation map of Scandinavia. Braathens has already taken over Transwede (now Braathens Sweden), and with SAS owning minority stakes in Cimber Air, Skyways and Wideroe's, there are no sizeable independent regionals left in the region.
But there are two important differences between the two strategies. While Braathens has taken the equity route, SAS aims to keep its associates at arms length. SAS believes that partners are better left to build on their own strengths and their own cost base.
SAS' conviction may yet be tested when the option for the remaining stake in Norway's Wideroe's comes up in mid-1999. SAS fully owns Air Botnia in Finland - a move to counteract Finnair's determined foray into its Stockholm-Arlanda hub - but Vagn Sorenson, SAS vice-president, business systems division, says that taking a minority stake "was not an option".
Braathens' executive vice president Audun Tjomsland says that the full acquisition of the Swedish carriers was not only opportunistic but had good business logic. The earlier acquisition of Transwede still left Braathens without the scale of network needed to compete head-on with SAS. In particular, it lacked routes between Stockholm, Malmö and Gothenburg. It was this that has now been rectified with the Malmö Aviation acquisition.
The Norwegian carrier has now created a springboard from which to attack the SAS stronghold. It has already taken the lead in its home Norwegian market and now has a 25% share of the Swedish market, compared to near 65% of the combined SAS/Skyways operation. Braathens hopes to redress this imbalance a little, but Tjomsland says that there are no plans to match SAS in its heartland. Instead the aim is to be a "good second alternative". A strengthening of its Swedish activities through a full integration of Braathens Sweden into Malmö Aviation in the next few months would be the first step, to be followed by a re-evaluation of the combined fleet and route system.
Braathens Sweden uses four Fokker 100s, while Malmö Aviation's fleet comprises 11 BAe 146-200s. These, says Tjomsland, will be retained, but the Fokker 100s will be replaced by more Braathens 737s when the leases are up.
How much of Braathens' Swedish strategy is influenced by 30% stakeholder KLM is unclear. But there is no doubt that SAS' participation in Lufthansa's Star Alliance threatens to dominate the Scandinavian market and a full integration of the Braathens companies into the KLM/Northwest global alliance is only a matter of time. Add to that the Finnair pact with British Ariways and the Scandinavian battle lines have been well and truly drawn.
Source: Airline Business
