* Norwegian boss attacks state aid for SAS
* Staff, operating costs far below those of SAS
* Carrier starts long-haul flights next year
* Chief once flew Cold War-era Starfighters
By Balazs Koranyi and Vegard Botterli
OSLO, Nov 13 When Scandinavian airline SAS
cast off a tiny Norwegian partner carrier in 2002, few
people thought it could survive, let alone threaten within a
decade to bury its former master.
Norwegian Air Shuttle, run by mystery novel writer
Bjoern Kjos who once flew Cold War-era jet fighters, has risen
again to become one of Europe's fastest-growing budget carriers.
Looking beyond SAS, Norwegian now competes with its two
bigger low-cost rivals, Ryanair and EasyJet
which together have turned European air travel upside down and
cast doubt on the future of many traditional carriers.
In some ways, Norwegian and SAS have become opposites.
SAS got another state lifeline on Monday just to survive and
runs an ageing fleet at high cost. The airline, whose major
shareholders are the governments of Sweden, Denmark and Norway,
has not made a full-year profit since 2007 and its shares have
lost 23 percent since the start of the year.
By contrast, Norwegian's shares have risen 122 percent this
year as the airline lowers costs even as it expands at a
Kjos, 66, criticised the SAS rescue. "It doesn't make sense
that taxpayer money is being used for this," he told Reuters.
"It should be food for thought that private investors don't want
to be involved in SAS. If private money is reluctant to invest,
then why should states?"
Kjos has been around planes for almost as long as he can
remember. His father built a private hangar on his land and
often took his son up in the air, surveying farmland and selling
the pictures to local landowners.
Despite having flown Lockheed F-104 Starfighters for the
Norwegian air force, Kjos later failed to find work as a
commercial pilot with SAS and spent years as a lawyer.
But then a friend, a pilot at Norwegian, called for help.
SAS had just terminated a regional service contract with
Norwegian after taking over Braathens, which had struck the
original deal. This left Norwegian with little business and
threatened the jobs of several friends.
Kjos searched for investors to bail out the company but
raised less than half the required sum, so he sank what he says
was "several million" crowns of his own money into it.
Norwegian now operates over 60 planes and placed the
biggest-ever order by a European airline this year with a deal
for 222 aircraft, worth $21.5 billion at list prices. The
aircraft are due to start being delivered from 2016, although
under previous deals it will get other jets in the meantime.
It offers free wi-fi on board many aircraft and is steadily
installing the service on the rest of its fleet.
Norwegian scores highly on cost control. Its unit cost -
measured by operating cost per available seat kilometre - is
about $0.08 compared with about $0.12 for SAS, while personnel
expenditure is just 16 percent of its revenue versus about 30
percent for SAS.
SAS CEO Rickard Gustafson earned 9.2 million Swedish crowns
($1.37 million) last year plus another 2.7 million in pension
premium. This is more than the combined salaries of the top
seven executives at Norwegian.
SAS says this is an unfair comparison as Kjos - who controls
27 percent of Norwegian through his investment vehicle - takes
far more than his basic salary in the form of dividends.
Norwegian planes fly 45 percent more each day compared with
SAS and its aircraft are less than half the age.
While SAS is selling assets, including regional airline
Wideroe, Norwegian is expanding. It has established new bases in
Spain and London and expects short haul capacity to rise 20
percent in 2013.
Next year it will also launch long-haul services as it takes
the first of eight Boeing Dreamliners, and sells tickets
to Thailand and New York at less than half the SAS fare.
Norwegian will also establish a base in Bangkok, flying to
Europe with Asian staff, allowing big cost savings.
Kjos says the biggest challenge will be coming from the
east. "There is a very rapidly expanding middle class in Asia
who will spend more and more on travel," Kjos said. "So the
future is horribly stiff competition from Asian companies."