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Norwegian airline Flyr files for bankruptcy

After failing to secure financing, Norwegian airline Flyr formally filed for bankruptcy on Wednesday, cancelling all flights and suspending all ticket sales.

Published: 1 February 2023 11:13 CET

Pictured is an airplane landing.

Norwegian airline Flyr has filed for bankruptcy. Pictured is an airplane landing. Photo by John McArthur on Unsplash

Flyr’s bankruptcy filing comes after the airline said it failed to secure financing earlier in the week. The announcement was made via the Norwegian stock market on Tuesday evening.

“The board of directors of the company has today decided to file for bankruptcy at Oslo City Court and will file for bankruptcy tomorrow, February 1st 2023. The board’s decision is unanimous and is due to the fact that there is no longer a realistic opportunity to achieve a solution for the short-term liquidity situation,” the company wrote.

The airline has cancelled all flights and suspended ticket sales. The airline’s website went down after the announcement but is back online with news of the bankruptcy.

“This is a sad day. We have given our all and tried our best to create a good product and a place where the employees are happy. But we have fallen short,” chairman and founder Erik Braathen told public broadcaster NRK.

Meanwhile, managing director Brede Huser has apologised to customers and said they should contact their credit card companies to be refunded for any tickets that they have purchased. Some 400 employees are likely to lose their jobs due to Flyr going bust.

Norway’s consumer rights watchdog, the Norwegian Consumer Council, has said that those who paid by a card should be able to receive a refund via the bank.

“As a consumer, you must make a claim to Flyr, and then the claim to the card issuer. Then you get your money back. With some, it goes quickly, with others, it takes longer,” Thomas Iversen from the Norwegian Consumer Council told public broadcaster NRK.

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Why a Norwegian airline wants to charge tourists more than residents

The airline Widerøe has propsoed a new approach to ticket pricing, over concerns that the recently halved maximum prices on short-haul flights provided by the government may actually make travel less accessible for residents in Norway’s rural districts, regional newspaper Brønnøysunds Avis reports.

The airline has suggested adopting a Spanish model, where different fares apply to permanent residents and tourists, the newspaper reported on Tuesday.

This model, according to the airline, would aim to strike a balance between making air travel in rural areas accessible for local residents while ensuring that routes are not filled up by tourists.

Norway’s FOT route system

In Norway, the vast majority of air traffic operates under commercial arrangements.

However, to maintain a comprehensive network of flight services across the country, the government pays for transportation by procuring flight route services through public competitions among airlines on routes that may not be economically viable for commercial operators.

These routes are primarily located in western Norway and northern Norway (you can find the full list on the Norwegian government’s website), and Widerøe is one of the largest providers of these flights.

These arrangements, known as FOT routes (forpliktelser til offentlig tjenesteytelse på flyruter in Norwegian roughly translates to a ‘public service obligation on flight routes’), impose requirements such as maximum ticket prices, capacity, frequency, and routing.

Typically, the contract is awarded to the airline offering the lowest cost to the state, granting them exclusive rights to scheduled traffic on the designated route for the contract period.

Higher demand prompts reaction from Widerøe

Effective from April 1st, 2024, and August 1st, 2024, new agreements will govern these FOT routes. One of the tweaks will see the maximum prices that airlines can charge on some routes halved.

While these agreements are expected to enhance accessibility and affordability for travellers across Norway, Widerøe has already noted a surge in demand on some of the routes, particularly from holidaymakers and leisure travellers.

Concerns have also been raised regarding potential adverse effects on patients reliant on air transportation for medical purposes.

Lina Lindegaard Carlsen, Widerøe’s communications advisor, acknowledged the issue and suggested exploring alternative pricing models to address them effectively.

“It remains to be seen how it will actually turn out, but if it becomes difficult to get people in need to be served, then we believe that other price models will work better for those completely dependent on aeroplanes as public transport,” Lindegaard Carlsen said.

The communications advisor added that Widerøe had recommended to the Ministry of Transport that a new price model be considered. Under this model, residents along the FTO network would get a solid discount on flights, regardless of whether the journey consists is a FTO or commercial flight.

“This would ensure a low price for the residents of Norway’s districts while at the same time ensuring that the most popular departures are not filled up by holiday and leisure travellers many months in advance,” Carlsen said.

Widerøe was formally acquired by Norwegian Airlines in January 2024.

When the takeover was first announced in July 2023, Norwegian CEO Geir Karlsen said, “With this transaction, we will now create a streamlined and more comprehensive offer for all customers, and we look forward to offering seamless travel across our entire route networks.”

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