Can Norway's attractive new hub at Gardermoen carve out an international role in the Scandinavian market?

Oslo's futuristic new airport at Gardermoen can probably lay claim to being Europe's last major new opening this side of the millennium. It is undoubtedly a gleaming example of Norwegian architecture, coming complete with a smart express rail link into the city centre.

Yet as the new NKr9 billion ($1.2 billion)airport opened its doors in October, there were still some lingering signs of a rather older tradition: the adversarial relationship between airport planners and airline management. Braathens, effectively Norway's national carrier with half the domestic market, wanted a different location south of Oslo, close to the city's major catchment area. This earlier choice was abandoned by the Norwegian Parliament in favour of Gardermoen, an existing charter airport 47km north of the City.

A southern site would have placed the airport in the right direction, according to Braathens vice-president strategy and business development, Anders Fougli. The final choice was political, he feels, driven by the need to boost economic development in the north of Norway.

Nevertheless, there is little doubt that a new hub was needed. Oslo's old city airport at Fornebu had reached capacity. A new project outside the city centre was not just inevitable, but vital for both the leading carriers Braathens and SAS, as well as the airport authority itself.

The new airport certainly offers more gates and capacity than Fornebu ever had. And both carriers have shown their commitment, with major investments at the new hub. Braathens has invested NKr200 million in the new airport, while Scandinavian flag carrier and Oslo's largest airline, SAS, has spent an impressive NKr1.35 billion.

Both airlines plan to increase their service out of Norway, with plans set against the background of their new global alliance partnerships and a flurry of consolidation within the Scandinavian airline market. SAS was a founder member of the Star Alliance and has been busy buying up smaller carriers in Sweden and beyond. Braathens followed suit last year, joining the KLM/Alitalia/Northwest grouping, sealed by the sale of a 30% equity stake to its Dutch partner, and earlier this year itself buying into Malmo Aviation.

SAS is raising its domestic service from Oslo by some 20 return flights per day, with Alesund and Kristiansand as new domestic destinations. Its flights to Stockholm, Copenhagen and London have also been increased. Braathens is also adding 18 new services, including two new daily services to the newly opened Milan Malpensa through its alliance with Alitalia. Two daily services to London and Stockholm and one new domestic service to Haugsund are also planned.

SAS already operates Norway's only intercontinental daily service direct to new York, while the Braathens link to KLM gives the local Norwegian carrier new leverage in its home market. In essence the alliances now control the airports future at an international and intercontinental level.

A new larger airport may ease congestion and allow for greater frequencies but will it necessarily change the role of Scandinavia's secondary airport, which with 11.8 million passengers trails behind the premier Scandinavian hubs. Copenhagen Kastrup takes the lead with over 17 million passengers last year and Stockholm Arlanda comes next with 15.1 million.

SAS spokesman Simon Revold has not doubts that Copenhagen will remain his airline's premier Scandinavian hub. The airport owners have been saying that they would like to expand international and intercontinental flights. But the market does not grow because of a new airport. It will at all times be the market needs that will decide.

Braathens is pledged to feed more traffic into the KLM Amsterdam hub. Fougli however is cautiously optimistic about a rival to the SAS transatlantic service. "Being a partner we are looking for most of the traffic from Norway and indeed Sweden going to North America," he says. "We would like to transfer that through Amsterdam where both KLM and Northwest the alliance partners which do Atlantic operations, are flying. So we are competing in the home market trying to get those passengers onto our planes to feed them into Amsterdam."

There are indications that a second daily transatlantic route is under examination by both carriers. "We are looking at transatlantic possibilities constantly. If there is a market for intercontinental flights non-stop from Oslo well be there," says Revold.

Fougli adds that the question of who does indeed launch the next move across the Atlantic is still a matter of "wait and see" until the the 1999 summer schedules are published. "It could be anyone. Some intercontinental airlines have been a little bit reluctant and want to see how the new airport will function. But on the other hand, although we have a new airport its still the same population and the same number of people in the catchment area," he says.

Besides nursing ambitions for a second daily to the USA, Oslo Airport company has two other objectives. The first is to establish Oslo as the gateway to Scandinavia for leisure traffic, and more ambitiously, as a niche hub for traffic between northern Europe and north-east Asian destinations such as China, South Korea, Japan. However, with the alliances now exerting influence into the Norwegian market, feeding traffic into Copenhagen and Amsterdam looks set to dominate the immediate future.

According to Oslo Airports manager traffic development Knut Stabaek, the winter programme is already up 24% in movements and 21% in seat numbers. The effect on tourist traffic is yet to be seen. "We expect to see results from the summer season 1999," he says.

In addition, two new carriers have entered. Domestic carrier ColorAir has started three new destinations, while Estonian is flying four round trips a week to Tallinn. However, SweaFlyg has discontinued its operations to Sweden.

Despite its international ambitions, Stabaek denies the airport authority is looking to compete with the bigger Scandinavian capitals. But while the hard numbers still count against Norway, Arlanda airport's head of marketing, Gyda Refsland admits that service levels could yet be used to attract airline customers and passengers to Oslo.

"When you look at the market in Scandinavia, Sweden has the largest amount of trade. Its much more natural that Sweden will attract more traffic. But better customer satisfaction is different. Once airlines are satisfied, then Oslo will build up the traffic," he says. Currently in the middle of its own expansion programme, Stockholm too is looking to increase capacity, including a third runway and new terminals. International traffic is increasing by 10% a month, according to Refsland.

Gardermoen growth

Gardermoen certainly has plenty of room to grow. Built on an enviably expansive tract of land, with 2.7km2 for business development, the 137,000m2 of terminal building is expected to handle 13 million passengers next year and 17 million by 2008. Some NKr600 million has been set aside for the construction of a new pier, to accommodate future traffic growth. The two runways (2,950m and 3,600m) provide for up to 80 movements an hour - double the number at Fornebu.

If there is a major disadvantage, then it centres on the airport's distance from Oslo itself. For a reminder of how controversial such issues can be, Norway need look no

further than Milan and the storms of protest over Malpensa. That opened almost at the same time as Gardermoen, but amid howls of complaint over the initial lack of convenient links into the the city.

Gardermoen has been more careful, with a sleek new high-speed rail service promising a journey time of only 19min into Oslo city.Almost inevitably, there have been teething problems. The link is suffering from water leakage inside its tunnels, leaving connection times at 33min, but that should be remedied next year.

But Fougli believes Gardermoen has largely succeeded in making the most of its link to the city. "The airport company has been quite effective in promoting the high-speed rail link and providing a lot of airport bus service from the catchment area," he says, adding that Braathens too is helping spread the message.

Other gripes exist about the airport. One is over the number of passenger walkways. Although the airport is equipped with eight travelators, Fougli is concerned that passengers face long walking distances inside the piers to the 34 gates. Another worry centres on the potential for bottlenecks at the central security scanning area.

Gardermoen's ultimate test of success, however, is likely to rest on whether it can expand beyond the status of national feeder airport. That will largely depend on the roles of its alliance-oriented airline tenants. For now, intercontinental traffic will be fed through the main SAS hub at Copenhagen and KLM's Amsterdam base.

"The airport will work as a transfer airport for Norwegian traffic. From an international perspective, we have to accept that Norway is on the outskirts. It is difficult to see how we will ever compete with the Scandinavian hubs," says Fougli.

Source: Airline Business