The decline of Scandinavian Airlines

In the business section of the Swedish daily Svenska Dagbladet there is an article today about the decline and near demise of Scandinavian Airlines (SAS).

scandinavian airlinesScandinavian Airlines is as everyone knows the national carrier for Sweden, Norway and Denmark. For a long time they did everything right and year after year they beat their competition. Now the company is close to bankruptcy. How did this happen?

For the past ten years SAS have been trying to save its way out of hyper competition. Package after package of reforms have reduced costs and generation after generation of excellent business leaders have been at the helm.

However this has not been enough to save the company in the globalized world of disruptive innovation. Low cost airlines such as Ryanair and Norwegian have reinvented air travel to be a bus service with low price, low cost, little service, but it gets you there. This insight have brought new innovative business models that are impossible for SAS to compete with.

The lesson is, the incumbents cannot save their way out of competition. Instead they should also innovate, but that is hard to do and accept when the innovation cannibalizes on the current business.

Here is a link to the newspaper article:

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