Stockholm Arlanda reduces airline charges to remain competitive

To meet its goal of becoming Scandinavia’s leading airport and enhance its competiveness against other major international airports in the region and across the wider European market, airport operator Swedavia has revealed that it will again reduce charges at Stockholm’s Arlanda Airport.

After a record performance handling 24.7 million passengers in 2016, Swedavia has confirmed it will reduce airport charges at Sweden’s largest international air gateway by an average of one per cent as of April 1, 2017. As a result, the airlines’ charges at the Arlanda hub will have been decreased by a total of 6.5 per cent over the past three years. Since 2005, Swedavia’s airport charges have been cut by more than 20 per cent.

“We are now reducing charges to airlines for the third straight year and will thus be even more competitive. The fact that we have succeeded in attracting 15 new intercontinental direct routes to the airport in three years is clear evidence of this,” said Elizabeth Axtelius, director of aviation business at Swedavia.

“The competition is becoming increasingly intense between international airports to encourage new airlines to launch operations or develop existing operations and invest in exciting new routes. So it feels really good that we can continue to lower our charges. When we look at comparable airports in Europe, our prices are about 20 per cent lower,” added Axtelius.

The growth in traffic is also expected to continue in 2017, when Swedavia expects its overall airport system will pass the 40 million passenger mark for the first time, and Stockholm Arlanda Airport will increase volume for the seventh straight year. Stockholm Arlanda is making substantial investments to expand capacity. During the year, 2.9 billion Swedish kronor will be invested in Swedavia’s airport operations.

In April, Swedavia will launch a number of initiatives to increase efficiency and the long-term development of its airports. This will be achieved in part by reducing passenger charges to encourage a higher load factor on flights.

“We are using incentives with airlines by introducing a new graduated discount on volume. The more passengers, the larger the discount. Along with our competitive prices, we offer discounts to airlines that choose to increase their traffic and invest in new destinations,” said Axtelius.

The state-owned group owns, operates and develops ten airports across Sweden. It also owns Göteborg City Airport and is a minority owner in the company that operates the airport. Sweden is the most populous country in Scandinavia, with 9,500,000 inhabitants, and has strong economic growth. Sweden is also the main Scandinavian market for multinational companies: H&M, Ericsson, Volvo and SKF have developed their operations there, while foreign companies like Bosch, Mercedes Benz and IBM also have major operations in Sweden.

Over the past ten years, the number of tourists has increased by over 100 per cent, and today the country has close to 15 million foreign overnight stays a year. Travel to and from Swedavia’s airports increased 5 per cent in 2016. International travel was up 6 per cent to 25,787,000 passengers, compared to 24,311,000 in 2015. Domestic travel was up 3 per cent, from 13,262,000 passengers in 2015 to 13,724,000 for the full-year 2016. In relative terms, intercontinental air travel increased the most, 10 per cent to 2,253,000 passengers.

Seven of Swedavia’s ten airports set a new passenger record for the full-year 2016. Alongside the growth at Stockholm Arlanda, Göteborg Landvetter Airport set a new record of three per cent growth, with volume rising from 6,162,000 passengers in 2015 to 6,375,000 passengers in 2016. Stockholm downtown Bromma Airport passed the 2.5 million passengers, with volume increasing one per cent to 2,505,000 passengers.

Other airports setting records were Malmö Airport, up two per cent to 2,219,000 passengers; Luleå Airport, up two per cent to 1,197,000 passengers, Umeå Airport, up one per cent to 1,059,000 passengers and Åre Östersund Airport, up seven per cent to 495,700 passengers. Visby Airport also set a new “modern day” passenger record, up 7 per cent to 463,500, which is the highest figure since 1990. Ronneby Airport likewise saw growth of seven per cent to 231,600, the highest figure since 2000.

Swedavia’s successful air service development arsenal includes a New Destination Discount that entitles an airline to discount on the passenger and/or take-off charges during a limited period of time when operating scheduled traffic to a new destination from a Swedavia airport. It also offers a Passenger Increase Bonus of up to 100 per cent if the number of annual departing passengers exceeds the previous year and a marketing support function for all airlines that start a new route, or expand on an existing route.

Data from the AirVision Market Intelligence tool from Sabre Airline Solutions shows that the domestic market accounted for 36.0 per cent of O&D departure demand from Sweden in 2016, down from 42.0 per cent ten years ago in 2006. The largest international O&D markets out of Sweden are Spain (7.0 per cent share), United Kingdom (6.4 per cent), Germany (5.3 per cent), Norway (3.9 per cent) and USA (3.7 per cent). Together these accounted for just over five million departing passengers.

Our analysis shows that O&D demand from Sweden has grown 36.7 per cent since 2006, a compound average growth rate of 3.7 per cent, with traffic more than doubling into the Gulf and Middle East markets, as well as the Central Africa and Central Asia markets. Enhanced connectivity into Eastern Europe has boosted demand from Sweden by 118 per cent between 2006 and 2016, delivering a 955,000 more passengers from the country, while its largest departure region, Western Europe with a 79.0 per cent share of departure traffic, grew 27.0 per cent over the ten years, adding over 3.2 million one-way passengers.

Spain, Poland, Greece, Turkey, Austria, Croatia are all top twenty O&D markets out of Sweden with triple-digit passenger growth over the past ten years, facilitated by improved non-stop connectivity into all these countries.

Richard Maslen

Richard Maslen has travelled across the globe to report on developments in the aviation sector as airlines and airports have continued to evolve and…