SAS and Norwegian are drawn into a new price war when Hungarian low-cost airline Wizz Air enters the Norwegian domestic aviation market.
”"We are going to break the cozy duopoly of SAS and Norwegian," says the company's CEO József Váradi.
However, trade unions do not cause any problems for the Hungarians.
Wizz Air plans to start flying on three domestic routes in Norway starting in just one month. Earlier on Tuesday, news also broke that Norwegian and Braathens veteran Erik G. Braathen will start a brand new airline in Norway, starting in the first half of next year.
The fact that new players are entering the crisis-stricken Nordic aviation market at a time when air travel has completely taken a nosedive does not surprise analysts.
”"The timing is very good. It's now that you might feel like going in. You're at the absolute bottom," says Lars-Daniel Westby, head of analysis at Sparebank 1 Markets to Dagens Næringsliv.
The reasoning is that when the old airlines go out of business, there will be openings in landing permits at the airports. In addition, you can get much lower costs when negotiating leasing contracts at the bottom of a slump. Companies like SAS and Norwegian have leasing contracts that were entered into in a completely different market climate than today.
”I think that's the whole game,” he says.
When asked whether it is SAS or Norwegian that risks losing the most from the new competition, Lars-Daniel Westby answers:
”"SAS has a rescue plan ready and Norwegian does not. It will not help Norwegian in negotiations with Norwegian authorities for them to provide more money, when you see that there is an alternative to Norwegian."”
Another difference between Wizz Air and Norwegian and SAS is the Hungarian company's stated aversion to union involvement. Last year, a high-profile case was decided by the Romanian Supreme Court, where the company was criticized for firing 19 Romanian employees who wanted to form a local union. Wizz Air was convicted of discrimination.
And in an interview with Aero Telegraph This summer, Wizz Air CEO József Váradi expressed his stance on trade unions:
”Unions kill business. If unions try to catch us and kill us, we just close the base and move on. The beauty of being an airline is the diversification and flexibility of the network; we can simply move our planes to another place,” he said when asked about the company’s planned new base in Dortmund, Germany.
Regarding Norwegian's plans, József Váradi said at a video press conference on Tuesday that the company will have its new base at Gardermoen with two aircraft, of the Airbus 320 and 321 models.
”This is a milestone for Wizz Air and a big day for Norway as well,” he says, adding that Wizz Air is an airline ”completely union-free.”.
”"We are proud of our company culture. We have an open and good dialogue internally in the company, including with a staff council.".
The company, which is already established at Torp Sandefjord Airport south of Oslo, from where it flies to European destinations, will start domestic flights to and from Oslo to Bergen, Trondheim and Tromsø in just one month.
”"Norway has been a cozy duopoly for SAS and Norwegian. We are going to break it up and we will offer an alternative to traveling in Norway. A more efficient, cleaner and more sustainable alternative," says József Váradi.
Wizz Air currently has 133 aircraft in its fleet, which it plans to increase to around 300 aircraft by the end of 2026. Wizz Air is the second largest low-cost airline in Europe after Ryanair.
The stock, which is traded on the London Stock Exchange, is up 3.3 percent to 3,294 pence shortly after the news was released. Since the beginning of the year, the result is minus 15 percent, compared with SAS, which is down 32 percent since the new year and Norwegian, which has lost 97 percent of its value.
Charlotte Holmbergh Jacobsson, head of communications for Norwegian in Sweden and Finland, writes in a short comment that competition is welcomed in Norway - if it is on equal terms.
”"We wish them luck," she writes in an email to Di.
SAS press manager Freja Annamatz writes in a comment that SAS has been flying in Norway for almost 75 years.
”"It is one of our home markets and there, just like everywhere else, the airline industry is extremely competitive. We respect all competition. SAS will continue to work hard to be the airline that travelers prefer when traveling to, from and within Scandinavia."”
Source: di.se
