Wednesday, May 27, 2009

Norwegian Air Shuttle squeezed out of the Russian market

(Source: Aftenposten, May 19th 2009) Whereas Norwegian Air Shuttle may offer us cheap air fare to continental Europe, there is no such options to the Russian Federation. Why? Because it was forced to sell tickets at the same price level as the Russian air carrier Aeroflot, even though it could offer travelers much cheaper fare to and from Moscow. This shows the unequal terms international firms are offered in Russia, compared to the rest of Europe.

Air carriers may not seek any permission when opening new services within the EU. This opens up to competition on equal terms, giving us travelers a wide range of possibilities when booking tickets. Norwegian Air Shuttle has opened up flights to many new and exciting destinations these last years.

In 2007 Norwegian started flights from Oslo to Moscow offering competition to the Russian Airline Aeroflot that has had direct flights from Oslo for 40 years. Norwegian soon discovered that there was one set of rules for Europe, and a completely other set of rules in Russia.

When the airline offered low price tickets to Moscow, Russian authorities soon demanded that Norwegian should rise the price of tickets to the same level as Aeroflot. As the airline wanted to be a cheaper alternative to Aeroflot, and was not allowed to offer real competition, Norwegian decided to stop flights to Russia.

There is considerable confusion on terms of flights to and from Russia. Whereas Russian Authorities on one hand claim that there are no unequal terms for air carriers, on the the other they refer to a valid negotiated settlement between Norway and Russia from 1950 that sets a minimum price of air fare between the two countries. And when Norwegian Air Shuttle claims that the demand to sell over priced tickets were the reason why they abandoned the Russian market, Russian officials deny that they have made such a demand altogether.

Whatever facts or fiction in this case. With one airline flying Oslo-Moscow, travelers risk paying up to EUR 500 for a round trip ticket. Seeing the prices Norwegian Air Shuttle offers on similar destination, the only looser is the traveler.

Other Norwegian Air Shuttle stories:
(Photos: Company website and Arpingstone)

No comments: