Scandinavian shuffle

posted on 5th April 2022
Scandinavian shuffle

The pandemic has made Scandinavia’s skies a turbulent backdrop to a swiftly changing airline scene in the region, as airlines close, reorganise or – in some cases – launch.  (Alan Dron reports)

As airlines plan for a gradual return to normality from the Covid crisis, there will be significant changes in the Scandinavian market. Some airlines have vanished, others have reorganised, while, remarkably, there will even be a new name on the block.
The name most closely associated with the region for more than 70 years is SAS. Like most carriers, the tri-nation airline is trying to discern the future shape of the market through the mist of economic uncertainty. “Route planning is very difficult,” admitted Alexandra Lindgren, head of media relations, SAS Denmark. “As occurred in many countries, many companies switched over to digital meetings during the pandemic, which affected business travellers,” she says. “We see business travel recovering, but don’t know by how much. Like everyone else, SAS is looking at the leisure market and adjusting its routes accordingly. We see a changed travel pattern in general, [with passengers] booking much closer to departure.” That makes it much harder to see the future size and shape of the route network.
“We thought we would have been out of the pandemic by now and I would be giving you a more substantial answer on where we’re going,” adds Lindgren. “We’re flying around 50% of what we used to fly.” Lindgren believes that traffic will pick up over the spring and summer.
The key word is flexibility – anticipating where and when passengers want to fly. With this in mind SAS is launching two new brands this spring: SAS Connect and SAS Link. SAS Connect will operate Airbus narrowbodies out of Copenhagen and is considering opening further bases at Stockholm Arlanda and Oslo. SAS’s orders for Airbus A320neo-family aircraft will allow it to retire most of its remaining Boeing 737-700s and -800s by end 2022.
Copenhagen-based SAS Link, meanwhile, will be a new subsidiary using Embraer E195 regional jets. A small number of the aircraft will be acquired until a longer term decision is made on new-generation jets.

New entrants in Norway
In Norway, both the long-haul and short-haul scenes have new entrants. Norse Atlantic Airways will initially fly on transatlantic routes (see box story) while a second new carrier, Flyr, is the latest entrant in the low-cost carrier (LCC) sector.
Flyr started operations in summer 2021 and believes it can find a niche both within Norway and in flying Nordic holidaymakers to Mediterranean destinations. The airline has opted for the Boeing 737-800, rather than the newer Max, as -800s are readily available worldwide and many of Flyr’s personnel have moved across from fellow LCC Norwegian, which was also a major user of the type, so familiarity is assured.
Like other carriers, Flyr believes that passenger numbers will rise through the spring and summer and has pencilled in a 30-strong fleet by 2024-25.
Pre-Covid, the Norwegian domestic market had some of the busiest routes in Europe, with Bergen-Oslo and Trondheim-Oslo being served as many as 30 times daily by several carriers. Many passengers would fly to the Norwegian capital for business at the start of the week, then fly home at the weekend.

Norwegian re-emerges
LCC Norwegian, meanwhile, has emerged from a restructuring and is now rebuilding. Norwegian’s dash for growth last decade, in a bid to build critical mass, led to the company being financially over-extended and to it refocusing on profitability. This was going well until the pandemic eviscerated passenger demand. The airline ditched its long-haul services and is now concentrating again on Norway and the Nordics.
“We’re going back to our core business,” said Magnus Thome Maursund, executive vice-president, network. As others have noted, however, planning is difficult. In terms of the balance between business and leisure traffic, “I think everyone is scratching their heads, trying to find out what will happen post-Covid.”
London Gatwick was previously a major base for Norwegian’s short- and long-haul fleets. The base has gone, but London remains an important destination and is likely to become more so. Additionally, Norwegian operates into Manchester and Edinburgh.
The English destinations are popular for an unusual reason: “Everyone in the Nordic countries has a favourite English football team,” Maursund said. “They follow the English Premier League. The main reason for operating into Manchester is to get that strong catchment area for football – Manchester and Liverpool.” The traditional Scandinavian practice of heading to London for shopping trips also remains very popular.
Norwegian’s renewed focus on its home turf is understandable: high incomes mean people are prepared to pay for air travel. “It’s an attractive market but it’s also a highly demanding market,” says Maursund. Social responsibility rules have to be followed. Increasingly, those rules include environmental measures, while strong trade unions have to be taken into account, too.
Having shrunk to a shadow of its former self while undergoing major restructuring, Norwegian had bounced back to a 51-strong fleet by January “and we’re growing that back up to around 70 tails for this summer,” Maursund said. All of Norwegian’s aircraft are currently Boeing 737-800s, but there are plans to induct two 737 Maxs in the spring.

Connecting remote communities
Flying plays a significant role in Norwegian society. The country’s rugged topography means that road and rail links can be sparse, with air and sea travel often the best ways to reach remote towns. This has led to a dense network of ultra-short-haul sectors, many of them serviced by Widerøe.
Despite the pandemic, “We’re relatively stable,” said Widerøe chief executive Stein Nilsen. In March 2020 the Norwegian government provided a series of financial support measures, including loan and guarantees arrangements, and Widerøe drew on that.
The airline is unusual in that a significant proportion – around 35% – of its production consists of Public Service Obligation (PSO) routes. “We had a discussion with the ministry of transport in March 2020 on how to handle the PSO route network,” Nilsen said. “The network is basically the only transport infrastructure in some parts of rural Norway [and] the ministry wanted to keep up the offering in those areas.” That gave Widerøe a vital baseline of income.
An indication of the size of the carrier’s PSO network is that, at times during the depths of the pandemic, Widerøe became Europe’s largest airline in terms of aircraft movements. However, “65% of our routes have been a nightmare,” Nilsen admitted. International services including those to Munich, Hamburg, Gothenburg, Copenhagen, and London were all paused. The only one to continue was the longstanding sector between Bergen and Aberdeen, which links the centres of the Norwegian and British hydrocarbon industries. “We have four important customers completely dependent on that route,” Nilsen said.
Speaking in mid-January, when Norway was enduring another lockdown, he confirmed that Widerøe was operating at 30% of 2019 levels, “but I expect 2022 to be all about getting out of Covid and a normalisation of demand in the Norwegian market.”
Widerøe operates a fleet based around the De Havilland Canada Dash 8 turboprop – 26 Series 100/200s, four -300s and 10 -400s. There are also three Embraer E190 E2s, for which Widerøe was the 2018 launch customer.
In November 2021, Embraer’s Eve subsidiary and the airline’s Widerøe Zero offshoot signed an MoU that aims to develop Urban Air Mobility (UAM) solutions, with a focus on deployment of eVtol operations in Scandinavia. “We’re very interested in the concept, but of course it will only work with a small part of our route network,” said Nilsen.
Additionally, Widerøe has joined up with Rolls-Royce and airframer Tecnam, which are developing the electrically powered P-Volt, based on Tecnam’s existing 11-seater P2012 Traveller. Widerøe hopes that this will be in service by 2026.
Pre-pandemic, Widerøe offered around 400 flights per day to a network of 44 airports, with 74% of the flights less than 275km/150nm long – ideal for the new electrically powered aircraft. Shortest flight durations are between seven and 15 minutes.
Potentially, Widerøe could take between five and 19 P-Volts for specific routes, but it needs an aircraft with more than 40 seats for the rest of its network. The airline is keeping a careful watch on new developments; retrofitting its Dash 8s with electric or hybrid-electric power is another possibility.
With timelines for emission-free aircraft still uncertain, however, Widerøe is starting a Dash 8 life extension programme with De Havilland and Bombardier, to increase their service lives from 80,000 to 120,000 cycles, which will give the airline the option of flying them beyond 2030.
Nilsen is an admirer of the Canadian turboprop, and described it as “a perfect aircraft for a short-haul network”. The Dash 8 can get into 800-metre runways in very rough weather. Widerøe has bought three more 100/200s recently, to provide additional backup and improve network resilience.
The key issue facing the airline is global climate change, said Nilsen, “but there’s also an economic side to this. The price of CO2 emissions will rise sky-high towards 2030 and it’s not possible to make money on small aircraft on short routes and at the same time pay this emission cost.”

Low-cost competition
Nilsen sees the big low-cost carriers as major competitors. Ryanair has been in Norway for decades, operating mainly into secondary airports around Oslo, but he expects the Irish carrier to bid for slots at Gardermoen when the pandemic ends.
Similarly, he sees Wizz Air, which mounted a brief foray into the Nordic nation last year, only to pull out within months, to reappear. “Wizz has always been a very, very aggressive airline on international routes, especially on those between Eastern Europe and Norway,” he said. “We also expect them to try to establish something at Gardermoen.”
Nilsen foresees the capital’s main airport becoming a major battleground in the near future, with the Norwegian arm of SAS (“a really strong brand in Norway”), a resurgent Norwegian and new LCC Flyr all fighting for market share. “We’ve seen three operators in Norway before,” he commented. “That did not end well.”
In Sweden, meanwhile, both SAS and Norwegian operate services, but the largest local carrier is BRA Braathens Regional Airlines, with 13 ATR 72-600 turboprops and a network throughout the country.
Regional carrier Air Leap went into administration in late January, leaving several routes in Sweden, Norway, and Finland unserved. The company blamed a lack of financial support from the Swedish government for its plight.

Focus on Finland
Finland’s national carrier, Finnair, describes the Scandinavian market as “fiercely competitive”. Like rivals, it has learned to move quickly during the pandemic. “We saw an opportunity to launch new non-stop long-haul services from Arlanda, when other players shifted their focus,” said Ole Orvér, chief commercial officer.
“Finnair’s focus is two-fold: we provide the best connections for our home market Finland, and we provide the best connections to Asia. We have been the leading carrier to Asia from Sweden, for example, and last autumn we strengthened our offering by opening non-stop routes from Stockholm Arlanda to Thailand and the US,” said Orvér.
“In terms of aircraft, we have received our 17th Airbus A350, with two more aircraft in the pipeline for the next few years. Due to the impacts of the pandemic, we have postponed our narrowbody fleet renewal, so that is not on our immediate agenda now,” added Orvér.
A vital part of Finnair’s domestic services comes in the form of Nordic Regional Airlines (Norra), which acts as the flag-carrier’s ‘preferred partner’ on regional services. “Norra operates a part of our regional traffic, using 12 Embraer 190s and 12 ATRs,” said Orvér. “The flights are sold and marketed as Finnair flights, and it is also our name on the aircraft. Traffic and network planning is done by Finnair; Norra operates the flights.”
“The Norra partnership is well suited for our regional services. It allows us to serve also thinner routes where passenger numbers do not justify flying with a larger aircraft, and during the pandemic we have served many of our regional destinations with the smaller aircraft operated by Norra, enabling us to maintain the connections in a sustainable way,” said Orvér.
“Asia continues to be key to our strategy. Our Asian services have been supported by strong cargo demand, which has enabled us to also launch passenger services even though the passenger load factors have been low. We currently operate to Tokyo Narita, Osaka, Shanghai, Seoul, Delhi, Singapore, Bangkok, Phuket and Hong Kong.”
“As Japan and China, which traditionally have been strong markets for us, are largely closed for international travel, we have placed more capacity to the North Atlantic routes, serving New York, Miami, Los Angeles and Chicago from our Helsinki hub, and serving New York, Los Angeles and Miami from Stockholm Arlanda,” said Orvér.
Environmental aspects continue to increase in importance when customers make travel decisions, said Orvér. “We are committed to halving our net emissions by 2025. Our strength is the short northern route between Europe and Asia, which besides being the fast alternative for travellers also generates less CO2 emissions. This is something that we see cargo customers, for example, placing greater focus on already.”
In Denmark, meanwhile, the country’s sole remaining scheduled operator, DAT, has survived – and even made a profit in 2020 – through an eclectic mix of scheduled and charter services, ACMI contracts, PSO flying and aircraft trading and leasing.
Chief executive Jesper Rungholm puts its success down to its ability to turn on a sixpence when making decisions. If an airport director says, ‘I urgently need someone to start flying scheduled services to A next week’, DAT can respond, he said.
DAT is also the majority (60%) shareholder in Norra, with Finnair holding the other 40%.