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Transportation: SAS halts Beijing-Stockholm flight

By Lu Haoting (China Daily)
Updated: 2009-02-13 09:14

Scandinavian Airlines (SAS) will suspend its Beijing-Stockholm service from May 1 due to declining traffic on that route, the carrier said yesterday. This is the first major suspension of services to China by a foreign airline since the global economic downturn deepened.

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SAS launched direct flights between the two cities in 2007. The airline will, however, retain its Beijing-Copenhagen daily service.

"Removing capacity from the long-haul fleet is vital to reduce the risk and financial exposure of SAS operations in this downturn," SAS said in a statement.

"Smaller carriers are obviously at a disadvantage when the international air travel market deteriorates," said Li Lei, an aviation analyst with CITIC China Securities.

Last week, SAS reported net losses of 6.32 billion kronor for 2008 compared to the 636 million kronor it earned by way of net income in 2007. The airline also announced a share issue worth 6 billion kronor to tide over its dire financial straits.

SAS said it would cut back on about 40 percent of its routes and sell its stakes in a number of airlines, including BMI, Air Greenland, Skyways, Sprit and Estonian Airways.

SAS' 'big three' European rivals - Air France-KLM, Lufthansa and British Airways - however have no plans to stop services to China, they told China Daily.

In fact, British Airways has just launched an aggressive special fare campaign in China to boost sales. Roundtrip tickets between Beijing and London now start from just 2,950 yuan per person.

"The 'big three' European airlines are financially stronger than smaller carriers and they all have extensive networks in Europe. They are already competing fiercely in China," Lei said.

International air cargo traffic plummeted by 22.6 percent year-on-year in December 2008. Global passenger traffic too showed a 4.6 percent drop, the International Air Transport Association (IATA) revealed.

International cargo traffic was down 4 percent, while passenger traffic showed a modest 1.6 percent increase last year, IATA said.

Based on an average fuel price of $60 per barrel, the global airline industry was set to lose $5 billion for 2008 and $2.5 billion in 2009, IATA estimates showed.