The SAS Group has scaled back its plans for acquiring controlling stakes in its eastern European subsidiaries, due to concerns about losing air traffic rights to CIS destinations. The Scandinavian airline group also says that it sees Poland as a strategic base for future growth.
Jorgen Lindegaard, SAS group president and chief executive, says the carrier now defines its catchment area as including Estonia, Finland, Latvia, Lithuania and Poland in addition to its home bases in Denmark, Norway and Sweden. Northern Germany and the Russian province of St Petersburg also feed traffic into its Copenhagen hub, he adds. "There is a market of around 100 million passengers and there are no high-speed trains, so flying is a necessity," says Lindegaard.
SAS owns a 49% stake in Estonian Air and 47.2% of Latvia's AirBaltic, and has previously indicated a desire to acquire the controlling stake, as it has done with Finland's Blue1. Estonia and Latvia joined the European Union in June, clearing the way for SAS to increase its shareholdings past 49%. Hans Ollogren, SAS senior vice-president for public affairs, says these plans have been postponed as both airlines' lucrative routes to Moscow and Kiev in Ukraine, along with AirBaltic's flights to Belarussian capital Minsk, would be at risk if the governments of those countries followed through with a threat to strip air traffic rights from any airline not majority controlled by nationals of its base country.
The European Commission has made tentative first steps towards negotiating a new air services agreement between the European Union and Russia, which could possibly be extended to cover the whole of the CIS, but insiders describe Moscow's position so far on scrapping nationality clauses as "unhelpful". Talks are expected to last several years, not least as the EC is linking the reduction of overflight charges into its demands. Such a delay could hamper SAS's plans to harmonise fleets and operations among its affiliate airlines, says Ollogren. Estonian Air has slimmed down to an all-Boeing 737-500 fleet, while AirBaltic flies four 737-500s, four BAE Systems Avro RJ70s and six Fokker 50s.
SAS has signalled its intent to buy the 25% of LOT Polish Airlines formerly held by now-defunct Swissair, once the Polish government clears it through national regulatory hurdles.
JUSTIN WASTNAGE / STOCKHOLM
Source: Flight International
