Aviation expert warns of plane tickets for NOK 10 this summer – E24

Four out of five of us are planning a summer vacation to Norway due to the pandemic, a new survey shows. It seems that there will be challenges to traveling abroad normally, especially outside of the Nordic region.

– If this is the result, I think Wizz Air will attack with very low ticket prices, maybe as low as 10 crowns for a one-way ticket domestically. I don’t think SAS, Norwegian, Flyr and Widerøe will continue to have such low ticket prices, but it is in the cards that there will be a price war between SAS, Norwegian and Flyr, says flight analyst Hans Jørgen Elnæs at Winair.

He adds that if demand is high, ticket prices will rise again. This happens if airlines manage to balance demand and the number of seats.

The big question is whether airlines have ice in their stomachs and retain capacity if passengers wait until shortly before departure to book airline tickets, as opposed to what is normal, which is to book two or three months or more in advance. of the trip, says Elnæs.

– Hard

On the domestic routes in which all these airlines participate, it will be difficult. This is confirmed by economics professor Frode Steen from the Norwegian School of Management in Bergen.

– If there is not room for all the companies, you may risk a waiting game in which you sacrifice money through artificially low ticket prices for a period, he says.

Since the competition can hardly be said to be led by a dominant player as before, when SAS sold seats very cheaply in the competition against Norwegian, there is also no one who can or wants to intervene against such competition.

So it becomes a question of who has the resources to fight harder and longer, Steen says.

Aviation expert and associate professor Espen Andersen from BI Norwegian Business School believes that price competition will be interesting on routes where Wizz Air and Flyr enter. He predicts SAS and Norwegian will slash prices here.

– But they do not cover the entire market, so it will apply to some routes. Within Norway, there will be routes between Oslo and the cities of Bergen, Stavanger, Trondheim and perhaps Tromsø, he says.

Andersen believes that the three companies SAS, Norwegian and Widerøe are not interested in the competition. If they have the market, they won’t be tempted to lower prices to get more passengers.

– So you think: OK, this comes up again. Now we have ice in our stomach for a while.

Burning money

Airlines are gearing up for what will hopefully be a better summer after a record number of air travel recently. Now companies lose large sums every month.

Compared to 2019, the reduction in the number of domestic passengers is 75 percent, while the reduction is 90 percent for foreign passengers.

This spring, SAS is estimated to burn between SEK 500 and 750 million a month. At the same time, the company has between NOK 5 and 6 billion left after the 1 billion injection last fall.

Hans Jørgen Elnæs estimates that Norwegian burns up to 175 million NOK per month. At the same time, the company is in the middle of a reorganization process where they hope to reach an agreement with its creditors to secure new operations.

The new Flyr company is not yet in the air, nor do they have any aircraft, but it received NOK 600 million during the listing on March 1. Wizz Air is a solid company that at the beginning of the year had 1.3 billion euros. They can continue for up to two years without any special income.

Manual pricing

Analysts are also not sure how companies plan prices.

BI’s Espen Andersen says what happened during the pandemic was that all companies turned off automatic pricing systems. Then there was a system that didn’t work.

– What will happen now after, is not clear. Because we will go up again, but it is not known how it will be. Companies will get a little wrong and use manual pricing, you think.

As long as the corona infection is devastating, there is great uncertainty and therefore passengers can wait to book tickets just before departing.

– This makes it difficult for airlines to calculate how much capacity they will put in, where they will fly and what prices will be paid, says Elnæs.