Faroese national carrier Atlantic Airways anticipates a move into the ACMI market as it attempts to offset the effect of new competition on its primary route.

The Faroe Islands is an archipelago midway between Scotland and Iceland. As a dependency of the Danish crown with extensive self-governing powers, its main route is between the islands and Copenhagen, the Danish capital. One week ago, at the start of IATA’s summer season on March 26, Scandinavian Airlines (SAS) started operating on the route.

Competition is generally healthy, Atlantic Airways’ network and charter manager Pætur Rasmussen said on the sidelines of the European Regions Airline Association (ERA) conference in Copenhagen, but he had concerns as to whether the Faroe-Copenhagen route could support two carriers.

“Until now, there have been around 250,000 seats available annually and we transport 180,000 passengers a year, which gives a load factor of around 70%. The arrival of SAS adds another 120,000 seats annually, which gives a total of 370,000. I don’t know how many new passengers SAS will bring on to the route—perhaps 20,000.” That would bring load factors down to around 50%, which would be unhealthy for both companies, he said.

Atlantic Airways had worked hard to build up the route over several years and had been making efforts to keep fares low, but the arrival of much larger SAS had already seen a further drop in prices, Rasmussen added.

Atlantic Airways had been preparing for competition for four or five years, ever since the island’s airport at Vágar had a runway extension, but it had not expected that it would come from SAS, he said. The airline had hoped that any new services would come from a destination that was not already served, so that a new pool of passengers would be accessed.

Atlantic Airways operates two Airbus A319s and one A320, but its traffic is heavily seasonal, with around 40% of its annual traffic condensed into the period between mid-June and the end of August when tourists arrive to take advantage of the long Nordic days. In winter, the carrier’s surplus capacity is usually deployed on charter services, often for Norwegian tour operators.

Charter currently accounts for around one-third of Atlantic’s production.

The Faroese carrier is working on gaining IATA’s Operational Safety Audit (IOSA) certification, which it expects to achieve in September. This will give it an additional avenue from which it can develop a revenue stream: “Once it’s in place we will go out to the ACMI market. Many airlines in this part of the world demand IOSA certification.”

Alan Dron alandron@adepteditorial.com