In a follow-up to last week’s look at how improved vaccination coverage has helped to positively impact demand for European traffic, we examine the Nordics where competition is heating up.

The air travel market rebounded in many, but not all, European markets during the summer. The bounce in the Nordic countries was a little subdued but as traffic increases, legacy carriers SAS and Finnair are preparing themselves for some fierce competition, especially on European point-to-point traffic.

Among the challengers are the radically downsized New Norwegian, and Flyr, on Nordic and European routes; Norse Atlantic on low-cost long-haul flights between Europe and North America; and established LCCs like Wizz Air, Easyjet and Europe’s largest carrier Ryanair.

For the coming winter season, the ultra low-cost airline is planning to launch a number of routes from Stockholm Arlanda (ARN) and Helsinki (HEL) airports. In fact, Ryanair is moving its operations from Skavsta to ARN, to service 21 new routes and it will launch another eight routes from HEL.

In both cases, airport operators Swedavia and Finavia will benefit from a return of at least some local passengers, gaining some much-needed aeronautical and non-aeronautical revenues.

Ryanair has 200 Boeing 737 MAX aircraft on order which they will use to fill the gap in growing demand in Europe. The airline claims it will exceed pre-pandemic passengers levels as soon as next summer.

Bold Move From Finnair

The question is: can the Nordic legacy airlines defend themselves against low-cost carriers (LCCs)? Established airlines are relying on brand, loyalty, reliability and dominance in their home markets. They are up against rock-bottom fares from LCCs in the European short-haul market.

In the long-haul market, Finnair has begun to look at new ideas for its long-range fleet while Asian routes remain subdued. The airline is set to start long-haul flights from ARN by placing three Airbus A350s outside of HEL and will intensify existing competition between hub airports in the Nordic region.

The Finnair strategy makes sense: it plans to fill the long-haul gap in the Swedish market left by Norwegian. In doing so, the airline is challenging SAS on its home turf as it starts serving routes to Miami, Bangkok and Phuket from the end of October, as well as to New York and Los Angeles. There are currently no flights from ARN to both Thailand or the US; SAS used to fly to Miami but the service was discontinued in March 2021. Flights by Thai Airways and Norwegian to Bangkok were stopped in March 2020 when the pandemic started.

Low-Cost Carriers Dominate on Short-Haul

Meanwhile, the flexible business model of LCCs has been useful during the pandemic. It has allowed them to drop routes to some destinations and look for new emerging and attractive routes. Network carriers can’t match this agility because their models rely on integrated network products allowing less flexibility, and instead focused on optimum feeder traffic to their hubs.

In the table below from the Anker Report, route changes based on weekly frequencies of five big LCCs are compared. They show scale of route flux between September 2021 and September 2019.

Though Ryanair dropped 2,808 routes it added 3,278 while Wizz Air dropped 744 but added 2,312. The rest – easyJet, Vueling and Eurowings – dropped more than they have gained.

It remains to be seen, whether these new routes, and/or increased frequencies for the winter season will attract the traffic that many airlines and airports are banking on. While there is definitely pent-up demand for the coming months, it is more likely that summer 2022 will be the season when established airlines and LCCs will see the strongest bounce-back.

[Part 1 was published on September 8]