1960s: Partners in the sky
Scandinavian Airlines and Swissair had always been close – “always” being a relative term in this case. SAS was in its teens in the late 1950s when the two airlines coordinated their aircraft investments, leasing planes to and from each other at the dawn of the jet age. They also partnered on the technical side and on some routes, and SAS offices in some parts of the world also represented Swissair.
As the competition got tougher, and the jet age investments put SAS’s finances in dire straits, working with partners was a way to ease the burden on all fronts.
In January 1961, representatives of SAS, Swissair, and the Dutch airline KLM gathered in a top secret meeting in Copenhagen to discuss a deeper partnership between the three European airlines, especially on the intercontinental routes. Put together, they would become the largest in Europe, with more than 200 planes.
Two months later, what had been said in the meeting was still top secret. SAS would not comment on the developments, but since Swissair and SAS already worked together on different fronts, any delays were thought to be linked to KLM’s resistance to join the partnership – especially since there were rumors about a possible KLM partnership with West Germany’s Lufthansa.
“And as long as there’s a chance of that happening, KLM will surely take a wait-and-see approach with its plans with SAS and Swissair,” Svenska Dagbladet wrote in March 1961.
Lufthansa didn’t wait too long, though. It just didn’t wait for KLM.
On July 10, 1963, Lufthansa signed a five-year pool agreement with SAS. The airlines agreed to coordinate traffic between Scandinavia and West Germany and to represent each other in their respective market regions. With the agreement, the two airlines had 96 aircraft at their disposal, using SAS’s Caravelles and Lufthansa’s Boeings and Vickers Viscounts on its medium-haul flights, and its Metropolitans on the short-haul routes.
The European airline market was under pressure to consolidate. Lufthansa had been a member of the proposed Air Union, a 1958 arrangement that also involved Air France, Italy’s Alitalia, and Belgium’s Sabena, but the partnership never got past the memo stage. SAS had similar pool agreements with Air France and KLM and its deal with Swissair.
In addition, SAS was a partner with Thai Airways, providing 30 percent of the capital as well as operational, managerial, and marketing expertise and training.
That the German airline now decided to partner with SAS was somewhat surprising, considering that the two were fierce competitors, and that two years earlier, Lufthansa had forced SAS out of several German routes, causing the Scandinavian airline considerable losses.
“This pool agreement has eliminated the problems that existed between Lufthansa and SAS,” SAS CEO Karl Nilsson said in a statement. “The relationship between the two companies is now very good, and when you’re good friends with somebody, it’s easier to get along.”
With the pool agreement, the two companies eliminated any overlapping operations between Scandinavia and West Germany. The two airlines already covered one of Europe's busiest air route networks, and the traffic between the two markets was expected to grow considerably faster (20-25%) than in rest of Europe (10-15%).
“The purpose of any pool agreement is to offer better service more economically,” SAS director Sven-Erik Svanberg told Svenska Dagbladet. “This way, we can improve our bottom line while also offering a better schedule, using our combined resources.”
Times were tough. Just two years after its operations had returned to profitability, SAS went through another reorganization in an effort to cut costs and find synergies.
“We have to cut out everything that is not necessary to keep up our high standard of service,” Nilsson said.
Published: May 25, 2016