Norway has proposed an amendment to its tax system, which would in particular benefit Widerøe’s smaller routes.
Norway’s regional airline Widerøe warned last autumn that it would close 18 of its smaller domestic routes, as they are not profitable and no longer manageable with the country’s tax on air travel.
The warning came despite a proposal by the Norwegian government to lower the tax on domestic routes slightly to NOK 75 (€7.67) per trip from NOK 83.
According to Widerøe, such a reduction was not enough to make it worth continuing the routes.
Now, however, the government has come up with a new proposal – which still has to be discussed politically before being passed – that airlines should not pay the tax for the first six tons of the aircraft’s weight.
This would in particular benefit Widerøe’s smaller turboprop aircraft of the Dash-8 type that fly the lesser routes, which have a total starting weight of 16-20 tonnes and would therefore get a reduced tax of up to 38%.
A Boeing 737 of SAS or Norwegian, by contrast, has a starting weight of 60 to 80 tons.
To make up for the shortfall, the Ministry of Transport proposes raising the charges for international overflights through Norwegian airspace.
With the proposal, the government avoids having to further cut the passenger-based tax while at the same time meeting Widerøe’s demands for lower taxes on smaller domestic routes.
“When there are signals like these, we will of course postpone a decision on possible route reductions. Anything else would be frivolous. Such cuts were based on completely different assumptions,” Widerøe chief executive Stein Nilsen tells the Dagens Næringsliv newspaper.
Widerøe operates both purely commercial routes and public service obligation (PSO) routes that the Norwegian state pays a subsidy to maintain.
Smaller routes include, for example, links between the capital Oslo and towns such as Leknes, Svolvær, Sandnessjøen and Brønnøysund in northern Norway.
Widerøe has suffered declining profitability over the last two years, blaming the air tax which the government introduced in 2016.