Atlantic Airways chief executive Johanna a Bergi does not equivocate when asked to name the biggest leadership challenge in running a small regional airline in Europe.
“Our biggest challenge is the economy of scale – we are a national airline and it’s difficult to grow in a very small home market,” she told FlightGlobal during the recent European Regions Airlines Association (ERA) General Assembly in Innsbruck.
“It’s expensive to be small.”
So how does the state-owned carrier – which serves the Faroe Islands, a small, self-governing Danish archipelago between Scotland and Iceland – position itself to achieve growth?
The trick, Bergi suggests, is to “do a good job and be competitive and build up a niche company in the region”.
Indeed, within constraints that are common to many regional airlines in Europe, Atlantic Airways still sees a path to expansion through the tourism market.
Among its recent announcements, it is planning to serve London Gatwick from summer 2024, adding to its main route to Cophenhagen and regular flights to Billund, Keflavik, Oslo and Edinburgh.
“We hope to attract people in the London area,” Bergi states. “We see a lot of people from the UK come to the Faroe Islands – different people, nature lovers who want to spend time away from a city.”
She notes that Gatwick would offer Atlantic Airways connections with “a little bit of a hub” at the London airport.
Atlantic Airways also wants to serve Amsterdam, in an extension of its tie-up with Air France-KLM carriers, but Bergi says the airline is yet to secure slots despite applying “for years”.
“We will still keep applying for slots as we hope it will be accepted as a new destination, but we will see,” she says.
Furthermore, the airline is working on a codeshare agreement with Icelandair, as part of which the latter will launch services to Vagar airport – Atlantic Airways’ home – from 2024.
MILESTONE SERVICE
On the carrier’s services to the USA, which began in August 2023, Bergi suggests ambitions are limited, however.
The airline operated “just one or two flights but it went very well”, she states, while describing the operations as an “extreme minority of our activities”.
“But it is a milestone and something that is possible thanks to technology,” she says. “Before we had [Airbus A320]ceos only and now we have [A320]neos and because of the fuel saving we are able to do the direct line between the Faroe Islands and the US.”
The carrier’s handful of US services connected Vagar with Stewart International airport, outside New York City.
“This route is more of a statement than a big [ambition],” she explains. “We are not going to be a big hub; we don’t have the runway, we don’t have the equipment.”
“We are trying to attract more tourism to really get the scaling”
When demand for services to the Faroe Islands is lower during the off-season, the carrier continues to provide charter services to tour operators from Billund and Copenhagen, Bergi says.
A glance at flight-tracking websites shows Atlantic Airways aircraft heading from those airports to destinations such as the Canary Islands and Sharm el Sheik in November.
“That is definitely how we optimise [our operations],” she says. “Both getting some charter outside in the off-season and then to get more passengers on our flights.”
But that can only take a small airline so far, Bergi concedes. Ultimately, smaller carriers have to accept that while they face challenges familiar to many of their larger peers, a lack of scale means some of them are felt more keenly.
“You talk about passenger rights, EU261, when you are so small it hits you so hard,” she says. “Then also about sustainability and the conversion to more sustainable solutions as well – it’s always expensive to be the first mover, but I definitely think technology will help us in the long run.
“Then more companies are merging and getting bigger and bigger, and it’s very expensive to be part of these loyalty [programmes].”
CONSOLIDATION IMPACTS
On that topic, smaller carriers are vulnerable to the reverberations of consolidation moves in the wider industry, Bergi says. For example, she is “curious to see” what Air France-KLM’s moves to take a stake in SAS might mean for Atlantic Airways’ codeshares with Air France and KLM, given the Scandinavian carrier is one of the few operators – alongside Norwegian operator Wideroe – that serves Vagar airport.
And while some airline chief executives can take heart from the growth potential in home markets, Atlantic Airways has no such luxury.
“Local people are travelling a lot – they almost can’t travel more,” she states, retiterating that tourism is a more likely source of growth for the carrier.
Still, “first of all we are the national carrier, so we always want to provide our own people with different possiblities to travel abroad”, Bergi states.
The Faroe Islands’ small population of around 50,000 also means recruitment can be tough.
“If you want to work in the industry in the Faroe Islands you don’t have so many options, so that’s good and bad.
“You don’t have freedom to choose but we appreciate the people that are with us.
“To have an AOC organisation is very demanding, there is more and more focus on compliance, safety and security, but I am very happy with the people we have at the moment.”
The airline’s fleet currently features two A320ceos and two A320neos – plus a couple of helicopters. It has two more A320neos on order directly from Airbus, “but that will be in 2027, so it’s a long time away”, Bergi says of deliveries.
She cites the difference in size between Atlantic Airways’ fleet and those of SAS and Icelandair – around 90 and 45 aircraft respectively – stating that her airline can never expect to reach that kind of scale.
Helpfully, however, while smaller carriers have complained of the outsized impact of parts shortages, maintenance issues and reliability problems on aircraft availability in recent months, Bergi notes that Atlantic Airways’ fleet is powered by CFM engines, stating: “It’s as good as it gets in a challenging moment.”
That is beneficial for a small airline that is being hit by some pretty big external headwinds, in common with peers.
“Inflation, war, fuel prices… we have the same challenges,” Bergi states. “And then there is how the customer reacts to… all these things; will they spend money on their house, on their debts?
“We are trying to attract more tourism to really get the scaling,” she says.
“It’s tough to be a small airline but we are still okay.”