The Difficult Situation of Northern Carriers

There was a time, not so long ago, when Nordic airlines were the envy of other European operators.
It was the time when SAS (Scandinavian Airlines System) could be named the best airline in the world
in the mid-1980s and when Finnair was weaving its network between Europe and Asia by transiting
passengers through Helsinki. It should be remembered that these Nordic companies are among the
oldest in the world. SAS was founded in 1946, Icelandair in 1937 and even Finnair in 1923.
Despite difficult climatic conditions and very limited domestic markets, at least in terms of the
number of potential customers, these operators have managed to stand the test of time by
becoming models of regularity and customer reception. Unfortunately, times have changed a lot,
except for Finnair, which seems to be doing well.

Like all traditional operators, these airlines took the full brunt of the assault on “low-cost” carriers in
the mid-1990s, when European airspace was opened. The new entrants, with their model of minimal
services, additional revenues, modern aircraft, and staff managed without bearing the weight of
seniority, have been able to display totally unbelievable or even uncredible prices to traditional
carriers. The latter were used to selling a high price to a limited but loyal clientele a product that was
expensive to operate but which had proven its reliability. However, here we are, on their markets,
individuals often from foreign countries capable of operating on their territories by charging rates
that the traditional companies were unable to compete with because their production costs, their
mode of operation and even their culture were incompatible with the new proposals.

So, the old operators tried to resist and let’s say it they did so with quite a bit of success until the
damage caused by Covid. SAS, to name but one, found itself in a very difficult situation with the great
complexity of a capital split between 3 countries, one of which, Norway, announced its withdrawal.
And no one has come forward to join a company considered to be aging, even if this is not true. This
is what led it to fall under the Peter Pan forks of Chapter 11, which, by the way, allowed it to
restructure, but also to attract the Air France/KLM group, largely saved by public funds, to become a
conqueror again. Thus, the fierce independence of SAS was largely dented by the fact that it
belonged to the Franco-Dutch carrier.

In the middle of the Atlantic, in Iceland, the “low costs” had to bend the knee to reality. While
Icelandair continues its good way, the new entrants only make a brief visit. Recently, on September
25, the company PLAY, created in July 2019, filed for bankruptcy and stopped its activities almost
without notice. Its model was to sell transatlantic flights at discounted prices with a stop in Reykjavik.
Of course, the geography was respected because almost all flights between Europe and North
America pass over this island. Except that Icelandair uses the same model but using traditional
methods, in particular in terms of its distribution method. It may seem old-fashioned to continue to
go through GDSs and travel agents, except that to free yourself from them and penetrate the market,
you have to make considerable commercial investments just to buy positions in social networks. And
customers are starting to be wary. They no longer want to buy tickets without finding their carrier,
especially since these new companies are often undercapitalized and only have the cash flow built up
by customers who are forced to pay for their tickets very far in advance to benefit from fares that are
unable to bear the cost prices. This is how PLAY customers will always be able to frame their ticket,
which will make them a bitter memory.

The same adventure happened to the passengers of WOW, also an Icelandic company, created in
November 2011 and which was liquidated under the same conditions as PLAY on March 28, 2019. We
could also mention PRIMERA AIR, which filed for bankruptcy on October 2, 2018, or even the long-
haul part of NORWEGIAN, which was also shut down in 2020.

That’s a lot. The reputation of Nordic carriers for seriousness is very seriously dented. For a long time,
southern European airlines were singled out for their erratic management, now operators in
northern Europe are facing the same symptoms. Air transport is a particularly difficult activity and its
growth should not make us forget that to launch a new carrier, you need to have strong backs.