Norwegian strongly disagrees with the Norwegian Competition Authority’s findings that its plans to acquire regional airline Widerøe are uncompetitive. Today, the airline submitted its response to the Norwegian Competition Authority regarding the potential halt of its acquisition of Widerøe.
Norwegian and Widerøe Respond to Competition Authority
In the response, Norwegian and Widerøe strongly disagree with the authority’s conclusions and assessments. They emphasize that the acquisition will improve and enhance the travel options for Norwegian passengers. Furthermore, they express surprise and disappointment that a significant amount of the documentation provided to the Norwegian Competition Authority has been overlooked.
Norwegian has provided a comprehensive rebuttal to the Norwegian Competition Authority’s notice of a possible halt to the Widerøe acquisition. The company firmly disagrees with the authority’s assessments and argues that they have not adequately demonstrated how the acquisition would harm competition. In an extensive document, Norwegian presents additional evidence supporting their claim that the agreement would strengthen competition. Despite submitting nearly 3,000 documents over five months, Norwegian feels that regulators have not considered its input sufficiently.
“The most important thing for us has been to show that an acquisition, contrary to what the Norwegian Competition Authority assumes, will be positive for competition in the Norwegian domestic market. This will benefit customers through positive effects, especially on regular flights in Norway, and not least on the routes where our biggest competitor has a dominant position,” says Geir Karlsen, CEO of Norwegian.
“After the Competition Authority’s negative notice, we have received many statements of support from players who see that the purchase will strengthen Norwegian aviation. We have received good support from customers, from employees in Widerøe and local elected officials, not least in Northern Norway. The main competitor in Scandinavia is negative, as expected. The important thing is that the Norwegian Competition Authority makes an independent assessment,” Karlsen adds.
Norwegian and Widerøe Complement Each Other
In its response to the Norwegian Competition Authority, the company has also emphasized that Norwegian and Widerøe complement each other and are not in a real competitive situation. In practice, the companies have an overlapping offer on just two of their well over 400 routes altogether. These routes account for 1.02 and 0.86 per cent of the number of tickets Norwegian sells during a year.
“Norwegian’s acquisition of Widerøe will lead to significant synergies that strengthen both companies and make both stronger when dealing with international aviation players. Reduced costs and increased efficiency will benefit customers in the form of a better offer,” says Karlsen.
The trend in Europe is increased consolidation in aviation. The latest developments among a number of international airlines show that regional companies need partnerships with strong industrial owners in order not to weaken in the competition. That Norwegian comes in as owner of Widerøe will strengthen the company’s ability to make forward-looking and sustainable investments. This is crucial to ensure a good aviation offer throughout Norway in the future.
Two players are sufficient for healthy competition.
In a consultation statement to the Ministry of Transport, the Norwegian Competition Authority stated in 2021 that two competing airlines on the same route are sufficient to ensure competition based on data from the period before the pandemic. In the notification, the supervisory authority departs from this position. Furthermore, the authority sees Widerøe as a potential third competitor on the main route network.
“It is completely out of the question to envisage Widerøe as a third regular route operator. We have aircraft, expertise and an organization set up to operate on the short-haul network and the smaller regional traffic flows in Norway. We also lack the financial capacity to fulfil such a role. What Widerøe needs to secure a good flight offer in the future is a long-term and strong owner who can help us to renew the aircraft fleet and prepare us for the future,” says Stein Nilsen, CEO of Widerøe.
No impact on Norwegian’s prices
Widerøe’s presence on a route has no particular effect on Norwegian’s ticket prices. This is revealed in an analysis by Charles River Associates (CRA), a global consulting company with expertise in competitive economics in aviation. They have used a model similar to the one the inspectorate used. The CRA concludes that Widerøe’s impact on Norwegian’s prices is “virtually zero”. This is the opposite of the authority’s analyses, confirming that two players are enough to ensure competition.
“Based on several meetings, extensive dialogue and all the documents we have sent throughout the process up to today, I am hopeful that we will succeed in documenting to the authority that an acquisition will be positive for competition in Norwegian aviation,” Karlsen concludes.
The Norwegian Competition Authority’s deadline for a final decision is 3 January 2024.