Back to Basics

SAS Group's decentralization process has resulted in its Ground Services becoming a separate entity.


This new deal between SAS Ground Services Sweden and the Swedish Transport Workers' Union differed from the 'National Agreement,' which applies to all other airlines and ground handling companies that are members of the Swedish Air Transport Employers Association.

And because it was actually more generous than the norm, the 'SAS Agreement' obviously hindered the company. In effect it would not allow SGS to compete on a level playing field in what is an intensely competitive market.

At the time of the new agreement, on October 6, SAS Group CEO J?rgen Lindegaard was forced into the following comment: "We have succeeded in signing a new collective agreement with 38 out of 39 trade unions to adapt SAS's cost structure to external conditions. On behalf of SAS employees, I regret that we did not succeed in achieving such an agreement with the Transport Workers' Union."

However, after further intense negotiation, on November 26, 2004, SGS Sweden and the Transport Workers' Union were finally able to agree on about 800 loaders moving to the 'National Agreement.' Rules for the transition from one agreement to the other were also reached.

"To be able to compete in the Swedish market on equal terms with the other players in the ground services industry, SAS Ground Services Sweden needed to join the National Agreement," informs Halvorsen. "We are happy to report that this has now been achieved and for SAS Ground Services it means a reduction in costs and increased productivity. Loaders at SAS Ground Services Sweden will now have the same agreement as other loaders in the industry."

The positive reaction by the Transport Workers' Union to SGS Sweden's needs bodes well for the future and should help create the conditions necessary for a profitable enterprise.

Airline focus

With what it believes to be the elements for success now firmly in place, the challenge is for SGS to realize its potential.

"Our aim is to expand and capture new market share," admits Halvorsen. "To do this, we have to become better known in the market. We are actually quite a large company with approximately 70 contracted airlines and a turnover in 2003 of ?550 million, but so far we are mainly known in Scandinavia -- even though we are represented by our own staff and sub-contractors at airports worldwide.

"So our growth will come mainly outside Scandinavia," he continues. "And since we are in a business-to-business environment our marketing plans are mainly networking-oriented rather than extensive promotional campaigns."

Achieving this growth and improving the company's processes should have a knock-on effect and allow the airline itself to benefit. "Ground services are an essential piece in the airline puzzle, since we are often both the first and last contact points with a traveler," Halvorsen notes. "Our part of the business is also among the larger cost elements for an airline, which means any reduction naturally comes into the airline focus.

"However, a professional ground service company will provide travelers with safety, punctuality and service, not to mention a smooth flow through the airport. A good ground services company must be able to show its true colors."

No longer hidden within a major airline's bureaucracy, SGS's true colors are now on display.

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