United We Stand, Divided We Fall: Historical Trajectory of Strategic Renewal Activities at Scandinavian Airlines System, 1946-2012

Although the second half of the twentieth century saw the rise and fall of ‘multi-flag companies’ in the civil aviation industry, our understanding of how some managed to buck the trend and achieve longevity remains limited. This paper advances business history and strategic management research by examining the strategic renewal activities of Scandinavian Airlines (formerly Scandinavian Airlines System) during the period 1946-2012. The study sheds light on the key roles of private and state owners, rivals as well as banks, in critical financial phases are discussed in terms of longevity in the company. The longevity of the business stems from the leaders’ ability to develop as anticipated and respond to change in their competitive arena in close interaction with the owners. Thus, incumbent firms that strategically renew themselves prior to or during market reform, such as deregulation, enhance their chances of developing the size of their networks and revenue streams. Our main contribution to business history and strategic management literatures is the development of context-specific stages, which shed light on the evolution of strategic renewal activities and shifts from older processes and routines towards customer service and efficiency

The impact of ancillaries Airline Economics and Marketing

Airline boardrooms have steered commercial departments to increasingly focus on diversifying revenue streams through ancillary revenue mechanisms. Ancillary revenues are any revenues which are additional to those generated from the sale of the different fare categories or branded fares. Ancillary revenues can be classified into four main groups: a la carte sales, frequent flyer programmes, commission-based products and advertising. Across the world’s airlines, baggage is also a big ancillary item with AirAsia for example producing 56 per cent of its total ancillaries in Q1, 2018 from baggage fees. Surveys have shown that passengers were willing to pay for specific ancillary products that were perceived as a ‘necessity’ such as seat assignment and baggage and together with food and drink, rather than ‘nice-to-have’ products. Punitive charges are another key revenue driver as consumers may be charged a penalty fee if they choose to alter their travel itineraries or for purchasing tickets with credit cards