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Tuesday, June 25, 2024

Paradox pervades Ryanair drama

NEWS ANALYSIS: The paradox could hardly be more pronounced: Norwegian politicians, bureaucrats, business and labour officials who earlier have bashed low-fare airline Ryanair now seem to be rushing to its defense. Ryanair has succeeded in hurling state budget negotiations this week into severe turbulence, all because of its arguably hollow objections to an airline seat tax of around EUR 10 that’s also being blamed for the threatened closure of an airport that relied too heavily on an airline known for setting its own course.

Ryanair may start flying in and out of Oslo's main airport at Gardermoen, despite earlier complaints that the landing fees at Norway's airports are "absurdly" high. PHOTO: Ryanair
Ryanair has earlier complained that landing fees at Norway’s state-run airports are “absurdly” high, opting instead for the regionally-run airports like Rygge and Torp, both located south of Oslo. Now Ryanair has threatened to pull out of Rygge because of an airline seat tax, while it’s simultaneously been negotiating new arrivals and departures from Oslo’s main airport at Gardermoen. “This is bizarre,” says the boss at Rygge. PHOTO: Ryanair

The drama led to political battles on the floor of Parliament on Wednesday, that were expected to dwell on use of oil money in the revised national budget, not airline traffic. Jonas Gahr Støre of the Labour Party, which earlier has called for a boycott of Ryanair, was among those now blaming Finance Minister Siv Jensen and the government’s airline seat tax for Ryanair’s withdrawal from the airport at Rygge, south of Oslo, and the impending loss of hundreds of jobs. Jensen retorted that she was amazed by Støre’s sudden desire to keep Ryanair flying from Rygge, given the labour movement’s strong opposition to Ryanair in the past.

The airline seat tax itself, proposed by the Liberal Party (Venstre) during state budget negotiations last fall, was billed as an effort to reduce carbon emissions from too much climate-unfriendly flying in Norway. It’s backfiring badly. The country’s conservative minority government coalition only went along with it because it needed the Liberals’ support to get measures through Parliament.

Now the government, which otherwise resists all forms of new taxes and instead wants to reduce them, finds itself forced to defend the Liberals’ tax, which ironically may actually result in more generation of carbon emissions, not less. The tax also generated a lot of negative reaction during its hearing round earlier this year and was briefly postponed because of some EU concerns. Now it’s due to take effect next week, on Finance Minister Jensen’s own June 1st birthday. The Liberals’ key role in the drama, meanwhile, was surprisingly absent from the massive media coverage of the Rygge airport’s threatened closure, leaving them ironically avoiding responsibility for the tax while the government got the blame.

Here follow some of the other ironies and paradox that have arisen just since airport officials at Rygge announced Tuesday evening that they would halt commercial civilian flights from November 1:

***** Ryanair has objected mightily to the airline seat tax, claiming its low-fare passengers won’t pay for it and Ryanair thus won’t impose it, because it would amount to fully 20 percent of Ryanair’s average airfares in Europe. At the same time, however, Ryanair continues to fly from the Torp Airport in Sandefjord and has secured arrival and departure slots at Oslo’s main airport at Gardermoen. Since it will have to pay the seat tax for flights from those Norwegian airports, transport ministry officials claimed on Wednesday that Ryanair is merely using the tax as an excuse to pull out of Rygge.

***** Over the past few years, Ryanair has been embroiled in labour disputes in Norway, including one from a former flight attendant’s claim that she was unlawfully dismissed. Local labour organizations rushed to her aid, because they’ve long opposed Ryanair’s controversial employment practices, even calling them “slave labour.” On Wednesday, with Ryanair’s threatened pull-out from Rygge also threatening as many as 1,000 jobs, much of that seemed forgotten. A local official from Norway’s largest trade union confederation LO was calling the airport shutdown “sad” and “tragic,” while another blamed the government for challenging Ryanair, after Prime Minister Erna Solberg said she wouldn’t bow to Ryanair’s pressure to drop the tax. The unions, like the airport officials and others commenting on the threatened closure, suddenly were effectively regretting the pending departure of Ryanair from Rygge.

***** Few were questioning the management of the airport formally called Moss Lufthavn Rygge, which already had lost most of Norwegian Air’s business (after its rival expanded at Rygge in 2010) and clearly put all its proverbial eggs in one basket with Ryanair. Rygge’s chief executive Pål F Tandberg nonetheless blamed the tax, telling newspaper Aftenposten on Wednesday that it was “extremely unfortunate for us to see that bad political handwork, a compromise (with the Liberals) in the state budget, results in us landing so considerably on the minus side that we must cease civilian operations.” Rygge’s marketing director, Silje N Thoresen, was also bemoaning the government’s tax, not the airport’s own failure to attract other carriers to Rygge to make it less reliant on Ryanair: “Without that tax, we’d be rolling here,” Thoresen claimed to newspaper Dagsavisen. “Everything changed one November evening last year, when the tax came on the table.” Prime Minister Solberg scoffed at such remarks, retorting on social media Tuesday night that “no Norwegian airport is shut down because of a tax on flights.”

***** The small opposition Center Party, which tries to project a “green” image, added to the irony by also slamming the tax that aimed to cut carbon emissions. Its party leader called the airport shutdown “dramatic” and he was gearing up to fight for repeal of the tax during the current negotiations over a revised national budget. Like many others, he didn’t target the Liberal Party, which proposed the controversial tax, but put all the blame on the government.

***** As for any environmental advantages of the tax, they appear to be quickly evaporating. Not only will travelers in southeastern Norway where Rygge is located now need to drive or otherwise travel to either the Torp or Gardermoen airports, OSL Gardermoen is already keen to build a third runway and accommodate more low-fare carriers. Newspaper Dagens Næringsliv (DN) reported on Wednesday that OSL, noting it will have a lot of “available capacity” when its new terminal opens next spring, is considering devoting Gardermoen’s relatively remote and much-criticized Gate 19 area to low-fare carriers. “We look at all possibilities to optimize the airport, and then of course the low-fare airlines are interesting,” OSL chief Øyvind Hasaas told DN. Instead of curbing flights, OSL is expanding to accommodate even more, despite the new tax.

***** “Bizarre” and “strange” is how the chiefs at Torp and Rygge describe plans to now accommodate carriers like Ryanair at OSL, which is owned by state airports agency Avinor. “It’s a paradox that the authorities impose a new tax to reduce airline traffic, at the same time they rig up for growth at the other end,” Gisle Skansen, managing director of Torp, told DN. And there’s more irony: Ryanair’s outspoken chief executive Michael O’Leary was all but ridiculing Avinor and the high landing fees and costs for operating at its airports, which don’t include either Torp or Rygge, at a memorable press conference in Oslo just less than three years ago. Now, it seems, they’re doing business together after all.

In the end, it looks like Rygge’s loss will be OSL Gardermoen’s gain, tax or no tax. Ryanair, meanwhile, was clearly watching all the fuss it created from the sidelines on Wednesday. After initially refusing to comment, it issued a statement on Wednesday morning that it had “noted” that “Oslo Rygge” had announced it planned to shut down the airport because of “the new ill-advised and damaging ‘environmental tax’ on flights that the Norwegian government has imposed.” Ryanair said it was currently reviewing its operations in Norway and would “outline our position in the coming days.”

It remained unclear what would happen to passengers holding tickets on Ryanair from Rygge after November 1. Tour operators running charter flights from Rygge said they’d arrange other flights from other airports, avoiding a question from state broadcaster NRK about whether customers could obtain refunds. Berglund



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