ANNUAL REPORT 2012
SAS CASE
BALANCING MEANS AND AMBITION BY KARINA KIRK AND CARL CHRISTIAN HAMMAR
T
he challenges facing SAS in 2012 constitute a classic example of a turnaround situation: A company in serious financial distress requiring structural initiatives to address the issues at hand.
30% 30% MORE COSTEFFICIENT CUSTOMER-CENTRIC ORGANISATION
When Eivind Roald became EVP of Sales and Marketing in SAS on April 1, 2012, he entered the company with a vision of changing the approach to sales and of reigniting the SAS brand. However, his top priority in the short term was to cut costs significantly given SAS’ difficult situation. In order to deliver the change, he launched an organisational redesign process and a rebranding process. The baseline Sales and Marketing organisation was set up in line with the traditional airline sales model, leveraged by the traditional sales channels and oversized in some markets. SAS had already gone through several cost-focused restructuring programmes over the last years, and Eivind decided to start with a blank sheet this time. “We needed to consider everything. Low-cost competitors are undermining our value proposition with
PERSPECTIVE ADAPTING TO THE NEW RULES OF AVIATION
cost-efficient business models and not the same history. In most cases, price is what determines the customer’s choice, and SAS must create more value for our customers”. Accelerating the commercial vision
The organisational redesign process was part of SAS’ survival programme 4XNG and set out to define a new and more cost-efficient sales set-up and approach better aligned with key market trends. The process leveraged an analysis of key changes in purchasing behaviour and drew on the commercial excellence toolbox to identify cost-out potential based on a deep understanding of where the cost cuts would accelerate the commercial vision rather than hurt organisational execution. “SAS has a unique position in a challenging market and in the minds of Scandinavians. We need to exploit that platform and build on current trends in customer behaviour to build a new position and sharpen our competitive edge”, Eivind Roald Eivind Roald says. EVP of Sales and Marketing
The global aviation industry is in the unfortunate situation of being subject to both structural and cyclical pressure, leaving the industry incumbents vulnerable. The structural change stems from more than 10 years of intense competition and price
“SAS has a unique position in a challenging market and in the MINDS of Scandinavians”
pressure from the entry of low-cost carriers, fundamentally changing the rules of the industry game. Current cyclical elements added on top are dips in business travel demand spurred by the global economic crisis and record-high levels of jet fuel prices.
QUARTZ+CO
1,356 destinations worldwide by SAS and partners
The order of the transition was important given SAS’ situation. SAS was founded in 1946 as a consortium A 30% more cost-efof the three national airlines in Denmark, ficient customer-cenNorway and Sweden. tric organisation is in SAS is the first airline in the world to achieve IATA place. “We’re moving Fast Travel Award Platinum status. This means from a structure based that SAS offers over 80% of the IATA’s selected on geography, funcself-service options to its passengers throughout the journey. tion and channel to a global, functional organisation. Now we’re ready to launch our rebranding initiative and take SAS on a journey towards future positioning and profitability”, states Eivind Roald. COMPANY FACTS
Making travelling easier
SAS is introducing two brand new service concepts in Scandinavia and Europe: SAS Go, for customers who want a lot, and SAS Plus, for customers who want even more. These new concepts have been developed in close co-operation with customers and include a new and improved onboard service concept. As stated by Eivind Roald: “We want to make travelling easier for our customers. And this includes SAS Go and SAS Plus. When we developed the new concepts, we based our work on our customers’ needs rather than on industry standards”.
KEY MARKET TRENDS INFLICTING SAS’ SALES MODEL
$ Consumers and professionals integrate as one target group, “prosumers”, as work and free time get mixed.
Mobile devices and social media are used more frequently in purchasing.
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Increased importance of flyer in purchasing decisions.
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Clear channel shift towards online/mobile, with a decline in corporates with negotiated agreements.
Strong growth in the leisure segment.