Finland, Sweden, Norway and Denmark are home to 3 airlines that are not owned by one of Europe’s three major legacy airline groups.
SAS, Finnair and Norwegian Air Shuttle have all grown over the past three years and have sharpened the differences between them. SAS has retained its capacity leadership in the region, while Norwegian has usurped Finnair’s second position.
By seat capacity in the four countries, they are approximately in the ratio 3:2:1, respectively. SAS’s size advantage versus Norwegian and Finnair, in terms of seat numbers, is mainly based on its presence within the Nordic region. This comprises the domestic markets and the international markets between the four countries in the region.
The total number of scheduled airline seats in the four countries is significantly higher than 10 years ago with annual growth around 3%. This growth has been largely driven by international markets.
The remaining airlines in the region are shared by a number of players with rather small shares in the region like BA, Thai, Qatar, Lufthansa, Turkish, KLM Ryanair, Malmö Aviation, etc.. None of them have shown any significant growth and just retain small market shares based on travel to and from their own main bases to the Nordic countries.
The international markets can be sub-divided between intra-Nordic (within the region) and extra-Nordic markets (outside the region). SAS is more dominant in the intra-Nordic international markets, with a market share of 56% of seats, ahead of Norwegian’s 24% and Finnair’s 14%.
Norwegian has been a breath of fresh air for private travellers and small exporting companies in the Nordic markets with a Braod list of destinations, excellent service and a free WiFi service. Their service and pricing has also been competitive which has forced Finnair and SAS to wake up. Even though all 3 airlines are safe and comfortable, Finnair and SAS have ben used to treat their local customers as if they are always ready to pay higher monopoly prices for a service that is no different or, in fact, a little worse than Norwegian.
However, black clouds are stirring in the skies. Norwegian’s big plans to grow at double-digit rates by increasing long-haul flights to/from the Nordic region has not yet succeeded as planned. The airline has seen its debt balloon and profitability shrink. Price-cutting to secure market share is always a hard flight path to follow. Finnair continues to focus on its niche on long haul markets to Asia, where it has resumed capacity growth. It currently has proportionately more long haul flights than either SAS or Norwegian.
However, Finnair and SAS, the two incumbents cannot rest on their laurels. Talk of takeovers by Lufthansa and BA have been floating around for years and yet nothing has happened, except both companies have had to cut costs and tighten their belts. There is increased competition from China, the Middle East and Turkey and new pressures on growth and profitability are on the way.