On Tuesday 6 October, there was a double news for Norwegian aviation: The Hungarian low-cost airline Wizz Air presented plans to invest in domestic routes in Norway.
At the same time, Erik Braathen, former CEO of Braathens Safe, announced that he will start a new airline during the first half of 2021.
Braathen will also set up domestic routes in Norway, in addition to some routes to Europe.
Suddenly, competition for Norwegian air passengers is sharpening – at a time when most planes are on the ground due to the corona pandemic.
In the TV 2 program Bare business, Kjetil Håbjørg, Executive Vice President and new Country Manager for Norway at SAS, explains how the airline views the new competitive situation.
– SAS is used to competing. We already compete with low cost carriers (low-cost airlines, journ. Note) on 70 percent of our routes, says Håbjørg, and continues:
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– What is exciting now is that we get Wizz Air, which is “ultra low cost”, into Norwegian domestic. They have a completely different product than us, so we are very excited about how it will be received. It is when you can choose between different players that the competition works best, says Håbjørg.
– Attractive prices
When Norwegian began to grow in the early 2000s, competition in aviation led to far lower prices for passengers – and weaker results for SAS.
Less profitability and costly operations contributed to SAS being on the verge of bankruptcy in 2012.
Since then, the airline has undergone major changes and streamlining processes, in still strong competition with Norwegian.
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With Wizz Air and a possible new Braathen airline, there is a new dynamic in the Norwegian market.
– Will there be a new price war?
– Time will tell how prices develop. But we have very strong faith in our product range in the market. We will offer services that are attractive at an attractive price, says Håbjørg.
– But when Norwegian became a strong challenger to SAS, it contributed to you struggling financially for many years. Can you tolerate two new companies coming in?
– SAS has been operating at a profit for the past five years. This is because we have a product range that is in demand in the market, and that we have worked with our efficiency internally in our company, says Håbjørg.
Erik Braathen and his partners, several with backgrounds from management positions in Norwegian and SAS, are now working to get financing for the new company in place.
Braathen himself has been open about wanting an important part of the funding to come from the state, and has applied for public support for the start-up.
This is happening while both SAS and Norwegian have requested pure cash support from the state to get through the pandemic.
– What do you think about Braathen wanting money from the public sector to start a completely new company?
– It is difficult to assess, we do not have in-depth knowledge of those plans. But what we do know is that these are talented people, and that they know this industry. So if they succeed with the financing, there is good reason to believe that they will be an interesting and formidable competitor for the existing market, says Håbjørg.
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