1205 The Norwegian Air Transport Market in the Future Some possible trends and scenarios

The purpose of this report has been to address the Norwegian air transport market today and in which direction it is likely to develop in the future. The main objective is to address the following questions:

• Is the long run sustainability of today's well-functioning network dependent on that existing airlines maintain their position in the Norwegian market? 
• How can other airlines be expected to enter the Norwegian market if one or more of the incumbents reduces their level of service, be it from financial or other reasons? 
• Will the structure of airlines or airline ownership have an influence on the level of service that is offered to the market? 
• How will policy framework conditions and the current economic situation (influencing e.g. air transport demand and the level of competition in the airline industry) affect the supply of air transport services?

The findings indicate that there are challenges in Norwegian air transport, connected to the weak financial state of affairs for SAS, Norwegian's expansion plans with a unit fleet of larger aircraft and a network of 800 metre local airports with a limited number of competitors for the PSO routes and scarce aircraft availability. For the two first factors, possible market-driven solutions can be seen without any serious barriers to entry, whereas the situation for the 800 metre airports remains as a challenge with ageing aircraft in cases where more than 19 seats aircraft are demanded, no known plans for developing new aircraft types replacing the Dash-8 100/200, operations with demands for specialized training of crew and short time span for preparation of operations after a tender is awarded. The report gives reason to expect that perhaps the largest volatility will be on the thinner domestic commercial routes where SAS and Norwegian are competing today.