Starlet

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I'm sure this point must have alreasy been raised on the board, and I'm sure there was a post on the new co-operation between bmibaby & germanwings, but I thought I'd have a go.

There was a press release last November saying:



Star may form low cost, European units

(MUNICH) The Star Alliance, the world's largest airline group, may set up European and low-cost divisions to operate more efficiently as it expands, said SAS group chief executive officer Joergen Lindegaard.

'There could be a potential low-cost airlines set-up in Star as more and more traffic is taken over by low-cost operations,' Mr Lindegaard said in an interview in Stockholm. 'Star is looking pretty crowded with a number of airlines and potential add-ons adding to the complexity.'

Scandinavian Airlines, SAS's main brand, hopes to renew its joint venture with Lufthansa in 2005, the CEO said. Mr Lindegaard would like to see other members of the SAS Group in joint ventures with Lufthansa and Star 'but it might make it more difficult to get approval from the European Commission,' he said. - Bloomberg


Logically a pan-European no-frills airline could be created by combining the route networks of Germanwings, SAS Snowflake and BMI Baby all of which are at least partly controlled by a Star Alliance member airline, thus creating a much larger competitor to the likes of EasyJet & Ryanair.

Or at least a full alliance between all three airlines again creating a more significant competitor?

[LGS6753]

An article in this week's 'Flight' magazine says that SAS management have given Snowflake until the end of this year to turn a profit. If they fail they will be closed or sold.
Apparently they are having difficulties reducing the SAS cost base, especially since they use '5.5' borrowed SAS aircraft during peak season.

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Snowflake has an absolutely appaling cost base.
They use a fleet of three Boeing 737-800 aircraft which are permanently available to them from SAS, and two MD-80 aircraft, as well as another aircraft being used from SAS at certain times of the week when required. The fleet is all on the SAS register, uses SAS flight & cabin crews where the only difference is on Snowflake you pay for your drink instead of recieving it free. The crewing & ground handling costs onboard snowflake are the same as when SAS operated the route.
If snowflake had been launched as a stand-alone subsidiary like Germanwings, perhaps their costs would have been lower?

I think there would be a huge benefit to have a low-cost airline from the Star Alliance instead of from three different companies in their respective regions in Europe. One large no-frills airline with the backing of three major airlines, would surely create a larger & more aggressive competitor than three small airlines. Pan-European branding & the flexibility of having the combined crews & aircraft type would surely bring about many benefits?