On Wednesday, the government brought good news to air passengers in the districts: Ticket prices will now be cut. As deputy leader Bjørnar Skjæran in Ap writes on Facebook: “After years of increased flight prices and poorer offers on the short-haul network, the Labor Party and the Center Party are halving the prices on FOT routes”. But do they actually do that? – I think we can say that is actually wrong. They halve the maximum price, says Leo Grünfeld in Menon Economics. Photo: Screenshot from Facebook This is how the maximum price works The maximum price is in the tender contract on the FOT route network and says something about how expensive the tickets on a given route can be. This means that the airline that operates the FOT routes, which today is Widerøe, cannot have more expensive tickets than the maximum price on a route. Leo Grünfeld is a social economist and works for Menon Economics. At the same time, only a given number of seats on a flight are FOT scheduled seats, and are thus governed by the maximum price. When this has been met, other seats can be priced as the airline itself wishes. Grünfeldt believes that a halving of the maximum price means that cheap tickets can become a thing of the past. – If you halve the maximum price, you can have the effect that the airline will use the lure prices to a much lesser extent. – This again means that the average price does not fall by 50 per cent. Johan Vasara (Ap), who until February this year was state secretary in the Ministry of Transport, writes on Twitter that there will be a 50 percent reduction on all tickets. The correct thing is that the maximum ticket price is halved. Photo: Screenshot from Twitter But it’s not necessarily easy to cut the average price either, Grünfeld believes in Menon. – If the state is to use the average price as a target, then this must be monitored at all times. It requires extra resources from both the airline and the authorities. Then the maximum price is easier to follow, because the airline is not allowed to have more expensive tickets. The FOT routes in Norway Route areas in Northern Norway with contracts valid until 31 March 2024: Routes between Kirkenes, Vadsø, Vardø, Båtsfjord, Berlevåg, Mehamn, Honningsvåg, Hammerfest and Alta. Hasvik–Tromsø vv, Hasvik–Hammerfest vv and Sørkjosen–Tromsø vv Lakselv–Tromsø vv Andøya–Bodø vv and Andøya–Tromsø vv Harstad/Narvik–Bodø and Harstad/Narvik–Tromsø vv Stokmarknes–Bodø and Stokmarknes–Tromsø vv Svolvær–Bodø vv Leknes–Bodø vv Røst–Bodø vv Brønnøysund–Bodø vv and Brønnøysund–Trondheim vv Sandnessjøen–Bodø vv and Sandnessjøen–Trondheim vv Mo i Rana–Bodø vv and Mo i Rana–Trondheim vv Mosjøen–Bodø vv and Mosjøen–Trondheim vv Namsos –Trondheim vv and Rørvik–Trondheim vv Route areas in southern Norway with contracts valid until 31 March 2024: Røros–Oslo vv Florø–Oslo vv Førde–Oslo vv Sogndal–Oslo vv Sandane–Oslo vv Ørsta-Volda–Oslo vv Ørsta -Volda–Bergen vv Sogndal–Bergen vv Sandane–Bergen vv (Source: regjeringen.no) NOK 138 difference between expensive and cheap ticket The maximum price on FOT routes says something about how expensive a ticket on the route can be. This price must include all taxes, fees and charges to the public, as well as all other price surcharges. The ticket cannot therefore be more expensive than the maximum price. Grünfeld gives an example of the FOT route between Namsos and Trondheim. Here, the maximum price today is NOK 1,375 for a full flex ticket. This is how the Labor Party advertised the price cut on FOT routes. But what does halving the price actually mean? Photo: Screenshot from Facebook The cheapest tickets at Widerøe are NOK 549. But when the maximum price is cut to NOK 687, Grünfeld believes that the airline has no good reason to continue with cheap tickets. They can even think of setting all the tickets at NOK 687, i.e. the new maximum price. – Then you get an average cut that is smaller than the maximum price cut. But how much less is difficult to say, according to Grünfeldt. There can be anywhere from 20 to 40 percent reduction in the average price. Another example is the stretch Mehamn – Kirkenes. Here, the maximum price is NOK 1,244. But if you book a few weeks in advance, it is possible to get tickets for 699. The real cut in price will not be 50 per cent for many. But if you fly one of the more popular routes, the picture will be different again. The morning flight between Svolvær and Bodø, for example, is sold almost exclusively at maximum price – unless you are very early. In other words, passengers here will experience a real cut of 50 per cent. – Depends on the market State Secretary Bent-Joacim Bentzen (Sp) in the Ministry of Transport cannot give a clear answer as to how much the average price will decrease. – The Ministry of Transport currently regulates the ticket prices on the FOT routes by setting a level of maximum permitted ticket prices, fully flexible one way. Within this level, which is now halved, the operators can freely offer various discounted tickets, he tells news. – This means that the average price deviates from the maximum price. The reduction will help reduce average prices, but exactly how much depends on market conditions. Best for those who fly the most Gisle Solvoll is professor of transport economics at Nord University. He says the price cut will mainly benefit those who fly the most. He also believes that there may be fewer low-price tickets when the halving comes into effect on 1 April 2024. – There will not be more low-price tickets, perhaps rather fewer when the full-price tickets become more affordable. – Are afraid people will be disappointed Christian Kamhaug is behind Flypodden, a podcast about the aviation industry in Norwegian. He emphasizes that the Norwegian short-haul network is completely unique in a world context. – No one else has such good flight coverage to such small places as Norway. We must never forget that, he says to news. But he is afraid people will be disappointed by the government’s cuts. – When ministers promise to halve flight prices, it is an extreme simplification, which unfortunately is unlikely to be what air passengers encounter when booking tickets. He emphasizes that the cut applies to the maximum price for point-to-point flights on FOT routes. But a great many passengers travel on tickets that are the combination of FOT routes and commercial routes and combinations of the FOT network and the main route network. – I think that what people can really expect is perhaps more in the order of 20-25 per cent cheaper tickets – not half price. What will it cost? news has asked the Ministry of Transport and Communications how big the bill to the state will be for halving the maximum price. But the ministry will not answer that. However, Finance Minister Trygve Slagsvold Vedum (Sp) stated during the election campaign in 2019 that the cost of such a term would cost between NOK 400-450 million. So about the same as it costs to split up Kristiansand municipality. They state that NOK 942.1 million was set aside in the state budget for 2023 for FOT route purchases. Professor Solvoll believes that the costs will be higher than what Vedum signaled in 2019. – You must also expand the route offer that you have today. So then it costs perhaps NOK 700–800 million a year. Taxpayers must help finance this from the national budget.
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The government halves the price of FOT routes – fears the cheap tickets may fail – news Nordland
