Widerøe´s Flyveselskap, styled as Widerøe, is one of the most unique regional airlines in the world. Through the decades, the Norwegian airline has developed a strong commuter network in the country, subsidized by the government. Currently the Widerøe fleet consists of 41 Dash 8-100/200/300/400 aircraft. Furthermore Widerøe also operates a few international flights from Norway to Denmark, Sweden and the United Kingdom.
During the recent decade, Widerøe has been fully owned by SAS Scandinavian Airlines. In 2013 cash-stricken SAS Scandinavian Airlines sold a 80 percent stake in profit-making Widerøe to a group of investors.
Niels Trubbach talked with Richard Kongsteien, Vice President, about the future development of the airline as an independent company.
Wideroe has just been sold to a new owner – who are they?
They are a Norwegian investor group consisting of two large transport companies – Fjord1 and Torghattan – both of which mainly operate public ferry and bus services. At present, SAS Scandinavian Airlines maintains a 20% stake in Widerøe.
With the change in ownership, do you anticipate any accompanying changes to your business model and strategy?
The new owner has no intention of changing our business model. As it stands, we are profitable and performing very well in fact. However, our biggest challenge is learning to stand on our own two feet. When we were a part of SAS Scandinavian Airlines, we were integrated into their processes – IT in particular. Now that we are independent, we have to learn how to be self-sufficient. In retrospect, our time under SAS was very beneficial because SAS professionalized our operations. All in all, we are sad to leave.
Through its feeder service, Widerøe provided SAS Scandinavian Airlines with a respectable number of passengers on domestic flights as well as on international flights. Will you continue to cooperate with SAS?
We will keep the agreement with SAS and Star Alliance. While we would be free to compete, we have no plans to do so. For example, in Norway we continue to cooperate with SAS in the 80-seats-and-less market. SAS however continues to operate all other services.
SAS Scandinavian Airlines has switched to a system of one-way fares. Do you offer the same or only return fares?
In most processes we have tried to be very similar to SAS, but in some respects we still differ. We have the same system as SAS in one-way fares.
UK-based BMI Regional plans to start Tromsoe (TOS) to Stavanger (SVG) via Harstad/Narvik (EVE) flights. Do you think they will be successful?
We fly the Tromsoe (TOS) to Stavanger (SVG) route too, albeit with Dash 8-Q400 instead of the faster Embraer jet. With time a critical factor in the oil industry, and given the high yields, you do not need high load factors to be profitable. In light of this, we currently have no plans to change either our services or pricing on this route.
Your commuter business mostly operates under Public Service Obligation (PSO) contracts. How big are the subsidies on those commuter flights?
It varies a lot. On some routes the subsidy can constitute a fair share of the revenue, while on other routes it is zero.
In 2012, DAT – Danish Air Transport won a major contract to operate flights to Lofoten. However, Widerøe managed to force a new tender and subsequently won the contract. How was this possible? In the past, we saw a lot of carriers operating domestic Norwegian PSO routes. You now are the sole PSO operator in Norway. Why could the others not survive?
Norway is a tough environment. Operations are difficult and costs high. Most of the other carriers over-calculated their fares and passenger numbers and at the same time under-estimated their operational overheads. As a result, they didn’t last long. Widerøe has always managed to keep costs low and concentrated on being reliable.
Well, the aircraft they planned to use was simply not suitable for the route in that it was incapable of landing under certain conditions. On the basis of that, we protested and won.
Are there any plans to build more airports in Norway?
There are plans to build a major airport capable of handling large aircraft in the region of Nordland. It would replace the regional airports of Mosjøen, Sandnessjøen and Mo i Rana. The three smaller airports are STOL-airports and are currently part of our network. There are, however, no plans for additional commuter airports.
In Narvik they are planning to build a bridge that would reduce the travel time from Narvik to Harstad/Narvik Airport to 40 minutes. But, as a consequence, Narvik Airport, which is located very close to downtown Narvik, is expected to close. What is your take on this?The Norwegian government is in the process of building a new, albeit costly, road network. How do you perceive this development and does road transport have an impact on your passenger loads?
In Norway, the number of remote regions with a small airport is growing. You see, air transport connectivity is very important for remote areas – If you close the airport, you essentially „close“ society. In fact, regions without an airport see their economies shrink which then impacts negatively on the size of their populations. So, while you need a good road network, the car will never be able to compete with the airplane on most routes because the airplane is always faster.
We currently serve both Narvik and Harstad/Narvik so we will probably lose some passengers as a result. But, the closure of Narvik Airport and the construction of the bridge will be benficial in the longrun because after all, a 40-minute commute is not so bad. In the greater scheme of things, it is simply not efficient to keep two airports, that are in such close proximity to one another, operational.
A lot of aircraft night-stop at remote airports so they can operate flights to major transfer airports and cities in the early morning. Their crews mostly overnight in a hotel. Have you considered basing your crews out of smaller airports instead?
Well, our planning and dispatching schedule is very challenging. We do, however, night-stop at 18 of our 34 served airports. So, establishing homebases there would be ideal for our crews and would save us a lot of money on hotel bills and the like. But, owing to economic and operational reasons, it is not possible for us to do so at this stage.
Your commuter flights are largely denominated by Bombardier Q100, Q200 and Q300 series aircraft. But, in light of your impending fleet renewal plans and that the ATR42-600 would prove unsuitable given its operational constraints, how do you intend to proceed?
We’ve been researching new aircraft and have been pleasantly surprised by some of the options available to us. Presently, our current fleet is undergoing an upgrade which will extend its operational liftspan with 40‘000 cycles. We’re also replacing some of our aircraft with equivalent lower-cycle aircraft. As such, our current fleet of 100, Q200 and Q300s has around 10 to 15 years left on the clock.
Your airline suffers a lot of cancellations. What is the reason for this?
We currently have a no-cancellation rate of 96 percent. But, among the reasons are the Dash 8-100’s very low dispatch rate – a very big concern to us. Another important reason for the high number of cancellations is the absense of maintenance facilities at some remote airports. As a result, we have to ferry technicians and equipment to the airport before we can even begin to repair the aircraft. As you can imagine, this is very time consuming. Even minor technical problems that can be quickly fixed can cause cancellations and/or huge delays. So to remedy the situation, we now have three reserve aircraft on standby which has helped us reduce the number of cancellations in comparison to say, Summer 2012 when we did not have so much reserve capacity.
Where is your fleet maintenance done?
We currently do all our fleet maintenance in-house in Bodø (BOO) and Sandefjord (TRF) where our facilities are well organized and competitive. We are also outsourcing some of our maintenance.
Do you have any plans to go international and maybe launch operations in other countries?
Prior to our sale to the new owners, we were the only regional SAS subsidiary. In terms of international expansion, we have been looking at it, but currently we have no plans to launch operations outside Norway; Sweden and Denmark included. Demand for regional air transport in these countries is not as high as in Norway. And in Sweden, for example,the market is served by NextJet and other regional carriers that cooperate with SAS. Also ACMI operators have filled the gaps for SAS.
What kind of airline was Widerøe in the beginning and how did it survive the following decades?
Widerøe was founded by Vigo Widerøe in 1934. It was run by a group of pioneers who envisioned connecting Norwegian cities via aircraft. It was a lot of hard work to keep the airline running and they nearly always struggled financially. However, by one means or another, Vigo Widerøe always managed to find funding. When in the 1960s Håkon Kyllingmark became Norway’s Minister of Transport he, together with Vigo Widerøe, planned the country’s first scheduled commuter network with Widerøe to fly to the new airports. So, after they had selected the aircraft, they constructed dozens of suitable airports with 800-meter long runways. Current regional airports were originally one-man operations in the early days; a single employee was responsible for the tower and after the aircraft had landed, was responsible for ground-operations. When finished, he would head back to the tower to direct the aircraft for departure. Over the following decades we have obviously increased capacity and improved operations.
Where do you see your airline in a few years time?
Widerøe will face several challenges over the coming years with the most burning issue likely to be that of fleet renewal. And we intend to maintain our role as Norway’s leading regional operator.
Thank you for the interview!