Max Kingsley-Jones/OSLO
AT THE LAST COUNT, the Norwegian population totalled some 4.5 million. In 1995, Norway's flag carrier, Braathens SAFE, carried more than 4 million passengers on its domestic routes, representing 52% of the total market, with Scandinavian Airlines System (SAS) taking most of the remainder. The country's domestic-route structure is one of the largest in Europe outside those of France, Germany and the UK. Its rugged geography makes air travel the only sensible way to move quickly and efficiently between major cities, hence the 2:1 ratio of passengers per inhabitant.
Braathens has experienced good fortunes recently, reporting steadily improving profits. In 1995, a healthy net profit of NKr242 million ($37 million) was achieved - a 30% increase on the NKr186 million reported in 1994. Traffic has also increased consistently, but the percentage of charter passengers carried has fallen, from 10% of the total in 1991 to 5% in 1995. Much of this decrease has resulted from charter services being switched to scheduled status.
Around 70% of Braathens revenue is generated from its domestic operations, and sees its point-to-point services as its bread and butter for the foreseeable future. It looks, however, to pursue its philosophy of adding niche routes, "including point-to-point services beyond the Norwegian boundaries", says the airline's president and chief executive, Erik Braathen, grandson of founder Ludwig Braathen.
Braathens has already taken its first major step outside Norway with its acquisition of a 50% stake in the scheduled arm of Swedish airline Transwede (Flight International, 3-9 July, P15). This move, which could lead to Transwede becoming a wholly owned subsidiary, provides a ready-made Swedish domestic operation, to which Braathens will connect from October. The airline intends to operate at least five daily services between Oslo and Stockholm.
In 1995, Braathens achieved an 8% increase on its domestic services, when underlying traffic growth was about 5%, with the remainder being achieved through increased market share. It is acknowledged that this performance is unlikely to be followed through in 1996, as growth in demand is expected be lower and competition even greater. "Last year, we benefited from SAS' problems on the domestic market," explains Braathen. "This year, SAS will probably have ironed out the problems and be more competitive."
The airline has completed its fleet-renewal programme, begun in 1989 and involving the replacement of Boeing 737-200s with 24 737-400s and -500s. The new aircraft, acquired through purchases, operating leases and financial leases, carry up to 20,000 passengers on 270 daily departures. With its reliance on the domestic market, Braathens is not unduly concerned that growth may be limited. "People have always been saying that this market could not grow any more, but it has," says Braathens. "It may now be near to its limit, but it is not true that an airline continually needs rapid growth to be profitable."
With such a large proportion of its traffic being generated on its domestic network, Braathens acknowledges that it is a "niche" company. The airline has now expanded into international scheduled operations.
In 1998, Oslo's capacity limited airport at Fornebu, will be replaced by the redeveloped Gardermoen, north of the capital. This will probably double the number of available slots from Oslo and provide more opportunities for competitors. Braathens is also preparing for the single market, which takes effect in 1997 and which invites challenges from foreign rivals.
In 1995, Braathens reached agreement to integrate its frequent-flyer programme "BRA card" with British Airways' Air Miles, but it discounts any plans for a further link, such as that of a franchise. "We are an established name in Norway and would be at a disadvantage to adopt another [foreign] identity in the market," says Braathens. "Our point-to-point operations are not suitable for any strategic or franchised hub/feeder partnership-we see no point in abandoning our own well-established identity in favour of another airline's. The BRA card tie-up with BA enabled us to expand the choice of destinations, increasing our competitiveness with SAS," the airline adds.
Braathens expects, however, that its domestic network will remain the core of its operations, as will the "niche-is-beautiful" philosophy.
Source: Flight International
