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Thailand still focus after SAS overhaul

February 13th, 2009 · No Comments

The global recession and the fallout from last year’s astronomic oil prices have forced the Scandinavian national carrier SAS to restructure, shedding some 3,000 staff from its payroll.

Despite the cutbacks, the company maintains its commitment to making air travel greener and has no plans to downsize locally, says Bangkok-based Hakan Olsson, the company’s director and general manager for Southeast Asia.

Citing 2008 as one of SAS’s most challenging and turbulent years, the company plans to focus on its Nordic home market, build its business traveller customer base, reduce costs and improve savings to the combined value of four billion Swedish kronor (SEK) (17 billion baht) by 2011, streamline its organisation, and strengthen its capital structure through a SEK6-billion rights issue. This will result in 3,000 job losses from SAS, while another 5,600 employees will leave the group as part of the divestment of Spanair and other subsidiaries.

Mr Olsson says the changes are ‘‘absolutely necessary’’. The firm’s corporate diversification in the past decade enabled it to more effectively access its core markets — Denmark, Sweden, and Norway — while building its international profile. But the cost and inefficiencies of four quasi-autonomous divisions, each with their own senior management, marketing and sales operations, became a drag on the company’s ability to react today’s volatile business environment.

‘‘It was the right thing to do at the time, and each division made significant cost improvements. But we had 46 business units, separate operations, CEOs, CFOs, and ground crews and so on.’’ ‘‘It became a burden,’’ says Mr Olsson. While SAS sees global demand weakening on most routes, Bangkok, down 8-12%, is the least affected.

Moreover Thailand still remains the number-one destination for Scandinavians travelling outside of Europe. Last year saw the number of Swedes visiting the country increase to 400,000 from 350,000 in 2007, according to Swedish Embassy figures. Some 30,000 own property locally.

The country’s political risk profile will do little to deter Scandinavian tourists for visiting the country, as long as the People’s Alliance for Democracy’s airports blockade last year remains an isolated incident.

‘‘SAS had 1,600 passengers stranded during the airport closures. People were frustrated and annoyed but I didn’t hear anyone say they’d never come back.’’

‘‘Scandinavians are pragmatic,’’ says Mr Olsson. ‘‘We know that rioting in Bangkok doesn’t mean Phuket is closed down. Most of our passengers only spend one or two nights in the city before continuing on to Phuket.’’

While the Tourism Authority of Thailand (TAT) and related ministries’ reaction to the PAD occupation impressed Mr Olsson, he says they must follow up on their commitment to repay operators who footed their stranded passengers’ bills. The TAT promised to pay 2,000 baht per person per night to cover accommodation and food costs, but so far SAS has not received a single baht back.

‘‘It would be a pity to see those airlines that refused to support their passengers profit from the policy when we may lose out, because in those cases TAT paid the hotels directly,’’ he says. ‘‘We immediately covered the costs for our passengers. It will sour our memory if we are not recompensated.’’

While the airport closures may not put off Scandinavian tourists, the New Year’s Eve fire at Bangkok’s Santika nightclub, which left more than 60 dead and hundreds injured, will do little to improve confidence in Thailand’s health and safety regulations and raises a red flag for Thai authorities.

SAS is positioning itself as the world’s greenest airline. It has implemented a so-called ‘‘green landing’’ programme, which reduces the fuel-use per flight through more efficient take-off and landing procedures. It shortened 350 routes in 2006, reducing its carbon dioxide emissions by six million tonnes that year.

Beyond this, the airline is investing in biofuels research and development, has a strong recycling policy, and a CO2 offset scheme where passengers can pay to reduce their carbon footprint.

Mr Olsson says SAS is immovable in its commitment to making air travel greener.

But will the 3,000 staff looking for new jobs amidst the world’s harshest recession for decades agree with the company’s precedent of planet before people?

‘‘To be honest I don’t think it would have crossed their minds,’’ he says. ‘‘In Scandinavia, where most jobs are being cut, environmentalism is so much a part of our national psyche that they wouldn’t think SAS has any choice but continuing its green policies.’’

Tags: Bangkok Post · business · news · Thailand

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