The battle for the skies above Scandinavia took an interesting twist in 2012 when Norwegian Air Shuttle CIO Hans-Petter Aanby jumped ship to fierce rival Scandinavian Airlines (SAS).
During Aanby's nine years as CIO of Norwegian Air Shuttle, he introduced an online booking system using barcodes in place of regular boarding passes, which led to significant savings for the company. He was also responsible for introducing Bank Norwegian, a significant revenue earner for the group.
As SAS grew from a small domestic outfit to Europe’s third-largest low-cost carrier with long-haul ambitions, it struggled to compete with outdated infrastructure and one of the highest staffing costs in the airline industry. Three years on, Aanby has overseen the completion of a substantial restructuring programme that levelled the playing field.
Formed after the second world war as a consortium made up of the national airlines of Denmark, Norway and Sweden, SAS is headquartered in Stockholm, with hubs at Copenhagen Kastrup, Oslo Gardermoen and Stockholm Arlanda airports. SAS carried 28.4 million passengers in its 2013/14 fiscal year, serving 125 destinations in Europe, the US and Asia.
Stuck in the seventies
“When I arrived at SAS the technology was stuck in the past,” says Aanby.
“The oldest system was installed in 1972 and there was no internal expertise whatsoever. When we migrated the system we had to hire retired experts to assist. I was surprised SAS had been operating so long with so little inside knowledge about its systems. I had to take drastic action."
Aanby was given a very clear remit: cut the cost of IT in half, simplify and streamline, and develop a digital future. The first part of the job was painful, requiring a manpower cut of 70% from the bloated IT department of more than 200 employees. Along with job losses, offices in Oslo and Copenhagen closed as Aanby consolidated IT into one central office in Stockholm.
A lean IT organisation with outside help
Aanby moved quickly to end the partnership with CSC, awarding a multi-year deal to Tata Consulting Services to help transform and optimise the IT processes, applications and infrastructure.
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"To further reduce the cost base and clean up the legacy systems, it was necessary for us to look outside," he says. "We are an airline and it is neither necessary nor cost-effective for us to handle ordinary IT in-house.
“Today, our IT team consists of business experts, and most of them sit within the business units such as technical operations and commercial to truly understand the business. All our infrastructure is new, including a new datacentre in Aarhus run by Danish communications provider TDC.”
Not everything can be handled by external service providers though. “It is difficult to outsource the technical expertise required for airline-specific systems such as Amadeus – for reservations – and flight operations systems," says Aanby. "It makes sense for us retain that technical expertise in-house.”
He says SAS’s part of industry network Star Alliance adds challenges when changing systems. “Although being part of Star Alliance is an important strategic move for the company, it adds to the complexity within IT. To change one of the shared products, we must discuss specifications with 26 other airlines."
Frequent flyers demanded digital
The term frequent flyer has a different meaning in the Nordics. Due to geography, flying is the easiest way to move around the region and many professionals fly on a weekly basis. On a typical working day, SAS alone operates 30 flights between Copenhagen and Stockholm.
The emphasis on more automated and digital services is aimed squarely at easing the travel process and therefore keeping the business of these frequent flyers, who are critical to the airline. Using an SAS app, customers can book flights, choose a seat and check in, board with a quick-response code, and download digital newspapers and magazines. The airline recently announced support for the Apple Watch.
“The mobile app is just the first step in our digital programme,” Aanby says. “We will set up digital solutions for booking and auxiliary services on a common platform, with new solutions for tablets, smartphones and kiosks. The mobile app came first because it was already a requirement for a large proportion of our regular travellers."
Technology developments on-board
SAS went paper-free on its flight decks two years ago, scrapping paper charts and operating manuals that pilots need to carry on-board in favour of iPads. In January 2015, the airline deployed a Wi-Fi aggregator product from network supplier iPass across its mobile estate, providing flight crews with access to 15 million hotspots worldwide.
The mobile app is just the first step in our digital programme. We will set up digital solutions for booking and auxiliary services on a common platform, with new solutions for tablets, smartphones and kiosks
Hans-Petter Aanby, Scandinavian Airlines
Although there are marginal benefits in weight and fuel savings, Aanby explains where the real efficiencies lie. "The electronic flight bag is better for pilots because they can conduct pre and post-flight routines outside the cockpit. It’s also much easier and cheaper for us to make changes,” he says.
Aanby agrees that Wi-Fi, which SAS currently offers only on selected European flights, is a critical part of the in-flight experience of the future. He explains how this expectation is changing their plans.
“Most people already have movies and music on their mobile devices," says Aanby. "We know what they really want is Wi-Fi to work, read news and access social media. Once Wi-Fi is universal, there is little point in airlines offering movies that are available on streaming services. So our future focus will be on brand-new movies, digital magazines, video games and ancillary services.”
Baggage handling next on the hit-list
As anyone who has had to suffer the frustration of a missing bag will testify, there’s still plenty of room for improvement to the baggage-handling process. Aanby offers an intriguing glimpse into what to expect next: “Although the airport and ground handling companies take care of baggage, airlines should lead on the self-service functionality.
"Ideally we want travellers to locate their luggage through our app, by tagging each bag with a GPS chip. Right now, the technology remains expensive, but we are looking at including barcode readers in the baggage storerooms that can send messages to the app."
Crossing the bridge from Norwegian Air Shuttle to SAS caused controversy, not least when Norwegian Air Shuttle CEO Bjørn Kjos tried to sue Aanby to prevent him from joining its rival. But Aanby says he has no regrets.
“It was not a good end to my time at Norwegian and I still don’t know why they did it. I am an airline man working in the transportation industry for 30 years now. I don’t think so much about it anymore, I'm focused on the future we are building here at SAS,” he concludes.