The largest regional airline in the Nordics has announced a negative 2017 financial result, claiming taxes and fees in Norway hit hard.
The air passenger fee is the main reason
In 2016 the Norwegian government imposed an air passenger fee on domestic and international routes. The fee, currently at 83 Norwegian kroner (plus 12 percent vat on domestic flights) per passenger is one of the most criticized fees ever imposed in Norway. In 2016 it resulted in Oslo Rygge Airport to be closed whilst in 2017 the three large airlines operating in Norway, SAS, Norwegian and Wideroe paid a total of 2.7 billion Norwegian kroner in taxes and fees to fly within Norway and operate at Avinor’s airports. On some of Wideroes domestic routes, the airline pays up to 400 Norwegian krone in charges and fees per passenger. The airline claims the ceiling for such governmental taxes and fees has been reached and the commercial environment is extremely challenging, resulting in the 2017 result ends up with a deficit.
Cut routes in the north of Norway
Because of the challenging taxes and fees regime, Wideroe has started to downscale its operations in Northern-Norway and move capacity to Oslo Torp and other airports in Southern-Norway. This is the only way to get the company into profitability in 2018 and onwards. Wideroe also operates on governmental subsidized routes and this production represent 37 percent of the traffic, while commercial production generates the remaining 63 percent.
Hope and glory with the new Embraer 190-E2 jet
Wideroe was the launch customer for the new Embraer 190-E2 jet and received three aircrafts of the type in 2018 but have an option for 12 more to be delivered. These aircrafts are currently mainly flying contracted business for Finnair and charter operators but Wideroe is planning to be an ACMI (aircraft, crew, maintenance, insurance) operator and targets contracts with SAS, Norwegian and other airlines. SAS currently have long time contracts (six years) with CityJet and Air Nostrum to operate regional routes in the Nordics.
Wideroe 2017 results at a glance
Total revenues ended on 3.11 billion Norwegian kroner, a reduction of 120 million from 2016. 2.88 million passengers were carried, a minor increase of 1.5 percent vs 2016. The load factor at 61.1 percent is among the lowest of the airlines in Europe and indicates that Wideroe is in trouble. Average load factor in 2017 for the 300 airlines within IATA was at 81.4 percent. Wideroes passenger revenues per available seat kilometer (PASK) were down 2.7 percent.
The net result after tax ended on minus 106.000 Norwegian kroner, against a surplus of 247 million in 2016.