Low-fare carrier Wizz Air is launching new airline routes within Norway this week, prompting rivals to also sell tickets that can cost less than a bus ride in the Oslo area. A professor at the Norwegian business school NHH notes that low fares can always win over Corona fears and Wizz Air’s controversial aversion to labour unions.
“Low fares trigger demand even in a market plagued by Covid-19 and much lower travel activity,” Professor Frode Steen at NHH (Norges Handelshøyskole) in Bergen told Norwegian Broadcaster (NRK). Steen follows the airline industry closely and notes that statistics show how people are most pre-occupied by fares when they order airline tickets.
“They pay much less attention to the airline’s business model or such things,” Steen told NRK, “so low fares will trigger demand.”
The Hungarian newcomer into the Norwegian market has set off criticism and threats of boycotts because it opposes organized labour. In an effort to attract passengers it’s recently been offering tickets as low as NOK 49 (around USD 5) from Oslo to Bergen, Trondheim and Tromsø, before extra charges are added for such things as baggage check. Flights will start taking off from Thursday, and later from other cities around the country.
That’s prompted rival airlines Norwegian and SAS to also slash their fares on the same routes that Wizz will start to operate before Christmas, at a time when they can least afford to do so. None of the airlines can earn any money on such low fares that will generate more losses, but Wizz clearly is most keen on introducing itself in Norway’s domestic market “and get folks to see that they’re okay to travel with,” Steen said. “But they’re losing money on every ticket when the passenger tax (in Norway) alone is NOK 75 per seat. This is clearly a way to get people on board and then charge a higher fare later.”
Terje Berge, commercial director in the travel firm Finn Reise, agrees that fares are the main driver in the airline market, which is now in crisis. He could point to booking statistics that show large increases (despite all the Corona restrictions and warnings against travel) in airline ticket sales on the routes Wizz is flying: Oslo-Tromsø bookings were up 50 percent in the week beginning October 12 and up 30- and 37 percent in the two weeks after that, compared to sales on the same routes in the same weeks last year, even before the Corona crisis set in.
“We’re also seeing an unusual increase in ticket sales (from Oslo) to Trondheim and Bergen,” Berge told NRK, “so it’s clear that Norwegians have latched on to the fares offered to these cities.” He stressed, though, that the large increases in bookings apply only to the cities that Wizz will start serving: “That’s dripped over to Norwegian and SAS, which have lowered their fares on the same routes the Hungarian company will start to fly to before Christmas.”
Price over principle
Wizz Air’s critics in Norway who have mounted boycotts because of Wizz Air’s opposition to organized labour aren’t at all happy that some Norwegians are putting price above principle. Wizz is also entering the market at a time when Norway’s established carriers, like many others around the world, are in serious trouble after months of mostly being grounded by Corona. Both SAS and Norwegian, which has teetered on the brink of bankruptcy, will now be pressured to cut costs even further, which will in turn threaten jobs and liveable salaries in high-cost Norway.
“They (Wizz) are entering the market with surgical precision,” Peggy Hessen Følsvik, deputy leader of Norway’s largest trade union federation LO. “They’ve chosen routes that are popular in Norway, and used like public transport. And that will take away earnings from other airlines who need them to survive.”
Prime Minister Erna Solberg is among those who have said she won’t fly Wizz Air. Her government also still advises against any travel that’s not strictly necessary, in order to hinder the spread of the Corona virus.