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Wednesday, May 29, 2024

Hurtigruten fights for its name, routes

UPDATED: Billed as the world’s most beautiful voyage, ships in the line known as Hurtigruten have plied Norway’s scenic coastline since 1893. Now the state, under pressure from EU competition authorities, intends to break up the 11-day round-trip routes running continually between Bergen and Kirkenes into three “packages” that would be open to bidding from various shipowning firms. The plan is stirring up waves of questions and concerns, and may result in the current company that bears the Hurtigruten name evolving into strictly a cruise line.

Hurtigruten’s vessel Finnmarken, heading out of Tromsø on another daily departure along the Norwegian coast. PHOTO:

“Hurtigruten is an important part of the Norwegian national heritage,” claims John Arnstsen, head of a group in Norway called Hurtigrutens venner (Friends of Hurtigruten). No one wants to see it disappear, be divided or diluted, least of all the Norwegian company called Hurtigruten AS that now operates all 11 routes with ships emblazoned with the name HURTIGRUTEN, literally in capital letters.

“The name is protected from being used by others, forever,” Anne Marit Bjørnflaten, communications director for Hurtigruten AS, told Norwegian Broadcasting (NRK) on Monday. Bjørnflaten said that “Hurtigruten” is a registered trademark that’s now owned by Hurtigruten AS. “We therefore won’t allow anyone else to use our trademark,” she added.

‘Quick’ and spectacular route
The name literally translates to “The quick route,” which it was when it started running along the Norwegian coastline in an era before there were roads, trains or aircraft that could serve coastal ports both big and small. NRK reported that the investors who now own Hurtigruten AS, which include TDR Capital and Norwegian interests, have attached a value to the name alone of NOK 1.7 billion (USD 218 million). Bjørnflaten said that value was set in 2014 and is much higher today.

“Hurtigruten has considerably strengthened its position globally since then, and the value of our name is independent of the coastal route agreement,” she told NRK.

It’s that agreement, between the Norwegian government and what has up to now been one operator of the coastal route, that’s subject to change. The state literally buys maritime transport services for passengers, post and cargo between Bergen and Kirkenes. The goal is to ensure “satisfactory” transportation locally and regionally from harbour to harbour, especially those so small and remote that they don’t have much other transport on offer. The agreement also ensures cargo transport along Norway’s northernmost coast, between the far northern cities of Tromsø and Kirkenes, to small places and ports that can be cut off during the harsh winter months. The state basically subsdizes such service, which otherwise would be expensive and probably unprofitable for strictly private operators.

New bidding round looms
The transport ministry’s current contract with Hurtigruten AS began in 2012 and runs until 2019, with the possible extension of another year. Now the ministry has announced that it will divide all 11 Bergen-to-Kirkenes round-trip routes into one package with three routes and two packages with four routes each. All three packages will be open to bids, possibly as early as next year,.

State officials stress there will be no changes in the routes themselves, and that all successful bidders for each package will be obliged to sail into all 34 harbours that Hurtigruten AS serves today with the same frequency. The plan could lead to three separate shipowning companies sailing the routes in each package. Transport Minister Ketil Solvik-Olsen also noted that “it’s fully possible that one single company (like today’s Hurtigruten AS) may end up with all three contracts.” Between five and 10 shipowning companies have already expressed interest in the bidding competition.

The changes come in response to European competition authorities who have objected to the current system that can seem tailor-made for Hurtigruten AS and its 11 vessels. More players can enter the market if they only need three or four vessels to serve one of the route packages. The new bidding plan that breaks up the routes can also fend off claims from the EU authorities that the government provides illegal subsidy support to Hurtigruten AS.

“We want to remove all doubt that competition for these routes is real,” Solvik-Olsen said. “It’s improbable that we can be accused of offering illegal state support with this concept.”

Legal clarification looms, too
The use of the actual name “Hurtigruten” can quickly become subject to legal conflicts, though. If another player enters the market, questions are already arising over whether “Hurtigruten” is the name of the route along the coast or the name and trademark of a company. “A judicial clarification will probably be needed,” Gisle Solvoll, a transport researcher at Nord University told NRK. “Hurtigruten is the well-known name of the coastal route but it’s also the name of the shipowning company that runs it. It’s a bit of a kinky issue and it will be interesting to see what comes of it.”

Bjørnflaten of Hurtigruten AS stresses, meanwhile, that “only Hurtigruten is Hurtigruten. If we land in a situation where we don’t win the contract, or don’t compete for it, we will still maintain a strong presence along the Norwegian coast.” It was unclear what form that presence might take. The company could relaunch itself purely into the cruise market, or even offer to sell its name to the winning bidders. The latter is unlikely, though, for a company with a substantial fleet of vessels already and more on order.

Bidding tactics emerge
Hurtigruten’s chief executive Daniel Skjeldam, has earlier said the company would seek to renew its contract on the coastal route. He told newspaper Dagens Næringsliv (DN) on Tuesday, however, that he thinks many outside the company “overestimate what the route means for us. It’s important, but the contract (amount) stands for around 10 percent of our total revenues. The rest is all cruise revenue.” The implication is that Hurtigruten AS makes its money on the cruise business, not on serving tiny ports in remote areas along the coast, and is likely to make that its priority.

Skjeldam said he didn’t want to comment on the state’s new bidding packages in detail. “What I can say, is that if we don’t bid for, or win, all the packages, we will still be sailing at least as much along the coast as today.” He pointed to alternative sailing patterns for cruiseships that, if not bound by the state contract, would not be obligated to serve all 34 harbours on the current route, every day and every year.

That could happen if new players enter the market and take on the obligations tied to the state contract, and that’s when quarreling may emerge over use of the “Hurtigruten” name. Helge Thorbjørnsen, a professor of marketing at the Norwegian business school NHH in Bergen, said there was no doubt that “Hurtigruten” is Norway’s strongest brand name, “along the same lines as Jarlsberg” cheese. “Hurtigruten AS has maintained, developed and built up its special identity around that brand name, which is worth a lot of money today,” Thorbjørnsen told NRK. The company Skjeldam runs will surely want to exploit that value. Berglund



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