The latest news and interviews from Bergen
NORWEGIAN EYES 100-AIRCRAFT FLEET WITHIN TWO YEARS Newly restructured LCC Norwegian is planning to rapidly grow from 70 to 100 aircraft over the coming two years, but CEO Geir Karlsen is confident that old mistakes will not be repeated.
Karlsen said Norwegian experienced “a perfect storm” in the run-up to the pandemic. The company had been through supplier issues with its Boeing 787s and 737 MAXs and was already restructuring when COVID hit.
Karlsen had hoped to post a profit in 2020, but this never materialized. Instead, Norwegian went through a court-led restructuring processes in Ireland and Norway, which Karlsen described as a “reset.”
During that process, Norwegian agreed to keep 50 leased 737s and this is set to grow to 70 this summer. “It’s a 40% increase and that’s what I call growth,” Karlsen said.
A further 15 737 MAXs are slated to follow in spring 2023. Norwegian’s network expansion will be evenly spread across its bases in Denmark, Finland, Norway, Spain and Sweden.
“We have an organization at Norwegian where we can probably run close to 100 aircraft, with the same staff,” Karlsen said. “That’s why I think the sweet spot today is 90-to-100 aircraft and we would like to get up there as soon as possible.”
Karlsen plans to reach this scale within two years. When asked whether this expansion might be too rapid, he replied: “Back in 2017, 2018 and 2019, we had a lot of aircraft coming our way, meaning too many deliveries, both on narrowbodies and on widebodies as well. The growth was too aggressive, way too aggressive. This time, we have the luxury of actually growing into demand.”
When Norwegian gets above 80-to-90 aircraft, Karlsen said the airline will face a “big decision” about expanding outside of the Nordics. “We did do that back in the day. We had a pretty nice operation out of Gatwick, we were flying massively within Spain and we flew from Germany to Spain and so on. I'm not saying that's what we're going to do, but I think that at 80, 90, 100 aircraft, we will have to consider doing that.”
Despite this aggressive growth strategy, Karlsen said long-haul flights are “not on the agenda” for Norwegian. –Victoria Moores
All Photos Credit: OCEAN DRIVEN MEDIA
IATA regional VP for Europe Rafael Schvartzman
FIT FOR 55 RISKS DAMAGING EUROPEAN CONNECTIVITY: IATA IATA regional VP for Europe Rafael Schvartzman has called for changes to the European Commission’s "Fit for 55" emissions reduction package, saying the measures as they stand could damage connectivity across the region.
Under Fit for 55, the EU hopes to reduce greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels. The stated aim is for Europe to become the world's first climate neutral continent by 2050. The package, which was set out last July, includes a mandate for the use of sustainable aviation fuel (SAF), a reform of the EU Emissions Trading Scheme (EU ETS) and a proposed fuel tax.
Taken together, IATA estimates that by 2035, Fit for 55 could add €38 ($40) per ticket on an average flight in Europe, and €205 on the average transatlantic flight.
“The European Green Deal and the Fit for 55 legislative package promised new opportunities but could also damage our industry if the policies are mismanaged,” Schvartzman said.
“The recognition of the importance of SAF in the Fit for 55 initiative is welcome. But it doesn't make sense to propose that SAF must be delivered at almost every airport in Europe. A more flexible booking claim system would enable airlines to purchase SAF where it is more most economically efficient.
“Similarly, we will encourage the EU to apply the CORSIA international carbon offsetting scheme to intra-European aviation and the idea of a jet fuel tax must be dropped.”
Schvartzman added that there is “still time to make Fit for 55 fit for purpose,” but as it stands he warned the package “could mean the end of affordable European air travel and throw into reverse a process which has democratized travel for millions of European citizens.”
Overall, IATA believes that if adopted in its current form, Fit for 55 will damage the competitiveness of European airlines in exchange for a “marginal” reduction in carbon emissions. –David Casey
‘BULLISH’ SUMMER AWAITS DESPITE FRESH CHALLENGES The removal of COVID-related travel restrictions coupled with strong leisure demand means the European aviation industry can look forward to a strong summer season, according to ACI Europe deputy director general Morgan Foulkes.
However, he added that there are significant challenges threatening the pace of the recovery, explaining that rising inflation and the cost of fuel are bringing new financial burdens for airports and airlines.
Foulkes said traffic across all of Europe’s airports was 34% down on pre-pandemic levels during March 2022, but this represented an improvement of -39% in February and -46% in January. The average traffic level across the first quarter was down 39.6% on 2019 levels. The organization now expects the region’s traffic to fully recover by 2024, compared with previous estimates of 2025. But Foulkes cautioned that forecasting the recovery is a crystal ball exercise given the political and economic instability created by the war in Ukraine.
“In the last few weeks, Europe has entered uncharted territory with the invasion of Ukraine by Russia—and, obviously, attempts to deescalate the war have failed so far,” Foulkes said.
“The spike in fuel costs is going to impact the airlines we expect that this will make them more risk adverse. Many airlines are quite well-hedged until November of this year, but what happens next?”
Foulkes said the spike in fuel prices will lead to rising airfares that could result in new demand pressures and a shift in travel sentiment. –David Casey
A4E managing director Thomas Reynaert
A4E CALLS FOR REFORM OF AIRPORT CHARGES Airlines for Europe (A4E) managing director Thomas Reynaert has called for a “proper consultation” on airport changes, labeling the current regulatory regime as “dysfunctional.”
“It's natural that after a crisis, or a downside, that suppliers will try to recuperate their losses,” Reynaert told delegates.
But he stressed that airport price hikes of 10%-30% will only hinder the recovery, given the cost-driven nature of aviation.
“Proper consultation with airlines is not always happening. We know that the airport charges directive is dysfunctional. It really hasn't brought competition amongst airports, which it should have. So, I think we need to look at reopening, or continuing, discussion on the airport charges directive,” he said.
Reynaert said the main issue that airlines have with the status quo is the almost unilateral way that charges are calculated and imposed.
“I think the European Commission should put it back on the table where we can have a proper discussion on the regulatory framework, to improve the regulatory framework for these airport charges, then at least our airline members can go to the negotiating table in an honest and fair way—a transparent manner—and have a proper discussion. I think that's the most important structural solution going forward.” –Victoria Moores
Avinor CEO Abraham Foss
COLLABORATION CRUCIAL TO ACHIEVING SUSTAINABILITY GOALS: AVINOR CEO Partners from across the aviation sector must work together if the industry is to achieve its aims of becoming net zero by 2050, according to the CEO of Norway’s airport operator Avinor.
Abraham Foss said that despite the financial stress being felt by all stakeholders, the industry has no option but to collaborate and invest for the future.
“The climate change challenge is real and won’t disappear,” Foss said. “It’s not a question of if [we address it], it’s a question of when and how.” He outlined how Avinor is working to ensure its own airport operations will be fossil-free by 2030.
The airport operator’s largest source of emissions is the consumption of fuel for its own vehicles, followed by business travel and energy consumption. Svalbard Airport stands out since the airport’s heating and most of its electricity are provided by a coal-fired power plant. Other sources of the group’s own controllable emissions include the discharge of chemicals for runway de-icing and fuel for use in firefighting exercises. An important measure in reducing greenhouse gas emissions from Avinor’s own operations is the introduction of advanced biodiesel, since almost half of the group’s greenhouse gas emissions come from its fleet of vehicles. Advanced biodiesel is used in vehicles that cannot be easily electrified, such as snow blowers and sweepers.
When Avinor procures vehicles, an assessment will always be made as to whether a vehicle with an internal combustion engine can be replaced by an electric vehicle or an alternative technology that uses renewable energy sources.
Foss said the group is also working to support the development of future aircraft technologies, such as electrification. Norwegian carrier Widerøe hopes to operate all-electric flights by 2026.
“We are a small country, so we have to work together and see ourselves as part of a larger value chain,” he added. “We need to be able to come together so we can all achieve our ambitions. The target is very ambitious, but there is no other choice.”
Almost 3.7 million people traveled to, from or via Avinor’s airports in April 2022—an increase of 349% compared with the same month last year. The group, which manages a network of 43 airports across Norway, said the growth was largely thanks to the recovery of international air traffic. The figure for last month also represented a recovery of 87% compared with April 2019. –David Casey
