In the summer of 2022, it was an acute staff shortage in the European aviation industry that caused it. Ahead of this year’s high season, new threats are looming, warns Geir Karlsen, in connection with a visit to Sweden.
– The challenge is that we have a strike in Paris, which we notice. And we have a situation with the air traffic controllers in Copenhagen, which worries us. That can cause problems, he tells TT.
Otherwise, air is fine under the wings right now. Norwegian’s deep financial crisis, which took off when the pandemic hit, is a thing of the past.
The booking situation looks bright and ticket prices are at record levels. For international flights, the price in Sweden has gone up by 33 percent in one year, according to Statistics Sweden (SCB).
– It looks good, it does, says Karlsen about the development.
– The booking curve is in itself quite short. There is not much visibility into the fall. But we don’t see a big decline, we don’t, he adds.
Increased desire for leisure travel drives on. Karlsen estimates 90–100 percent of the demand before the pandemic. Business travel – which Norwegian sees as increasingly important in its new business model – has not come back as strongly.
– They have perhaps recovered by 65-70 percent compared to 2019, he says.
A factor that has affected ticket prices is the cost of jet fuel, which peaked at $1,300 a ton last year. But it has fallen to just over $700 per ton now.
Although there are other factors in the inflation shock that the airlines have to deal with, according to Karlsen.
– You have a cost pressure on most things you buy in, he says.
TT: So it’s not the airlines who take the opportunity to raise the prices?
– Ticket prices are governed by supply and demand in the markets where we operate.
TT: Are we nearing a pain threshold for what people are willing to pay for air travel?
– I do not know.
TT: Do you know where that pain threshold is?
– No. And I don’t want to know that. We only know what we’re selling our tickets for today and we’re not at the pain point today anyway.
He compares the deep crisis for arch-rival SAS – which is in reconstruction and hunting for new capital – to the crisis Norwegian went through in 2020-2021.
– We believe that SAS will come out of this in better shape than they were in when they entered this. We both believe that and hope they do.
TT: Why do you hope so?
– We know SAS very well and SAS knows Norwegian very well. I think both can thrive very well as competitors.
During the visit to Sweden, he has among other things, wooed the government with a proposal for a new strategy for aviation, together with industry colleagues. He is critical of the fact that not one penny of the five billion in aviation tax collected since 2018 has been used to stimulate the transition to more sustainable flying.
Norwegian has independently invested in Norsk E-fuel, a company that will start producing fossil-free aviation fuel in Mosjøen, Norway, in 2026.
– Today, you can mix 50 percent fossil-free fuel into jet kerosene. The problem is that there is almost nothing to buy. Today, we mix in maybe 0.5 percent, says Karlsen.
– If we don’t get production started in Europe and globally, we don’t have a chance to reach the climate goals for 2030, he adds.
