Norwegian Air axes two Stockholmâ"US direct routes, blaming Sweden's aviation tax
- Heiko Junge / NTB scanpix
- Norweigan Air has axed two of its direct routes between Sweden and the US.
- The company blames newly implemented aviation taxes.
- The Swedish government, however, claims Norwegianâs problems are due to âpoor profitability.â
- Maria Rankka, the CEO of the Stockholm Chamber of Commerce fears the shut-down will impact future investments in Sweden.
The Nordic regionâs largest airline, Norwegian Air, has announced it is shutting down two direct routes from Stockholm, Sweden to the US, blaming a newly-implemented aviation tax. The destinati ons affected are Las Vegas and Oakland, San Francisco.
- Norwegian Air Shuttle / NTB
âThe long-haul routes are more strained because there is a higher flight tax on them,â Norwegian Communications Manager Charlotte Holmbergh Jacobsson told Dagens Industri.
In April, the Swedish governmentâs aviation tax came into effect. It added emissions fees on airlines flying to and from Sweden, amounting to SEK60 ($7) per domestic and EU flight, and up to SEK400 ($48) on long-haul, non-EU routes.
The tax was set in an attempt to move one step closer to achieving the Sustainable Development Goals by 2030 and the Social Democrat and Green Party-run government predicted a reduction of 450,000â"600,000 airline passengers.
Swedenâs Minister for Financial Markets Per Bolund takes a defensive stance towards Norwegian Air, telling Swedish public-service broadcaster Sveriges Radio that Norwegianâs problems were not directly related to the aviation tax.
âThe aviation industry is already subsidized through lower VAT and exemptions from fuel taxes. In spite of this, Norwegian appears to have such poor profitability on certain routes that it does not manage the recent fuel-price increase. They should probably rather review how they do business than blame a relatively low aviation tax,â Bolund said in a statement to Sveriges Radio on Wednesday.
Read also: British Airways owner IAG is reportedly considering to buy Norwegian â" and Oslo's stock exchange has halted trading
Maria Rankka, CEO of the Stockholm Chamber of Commerce, is not pleased with the results, and worries about the international business travelers who are dependent on good air connections. In the long run, she fears it may affect future investm ents in Sweden.
âNow we see the consequences of aviation tax. The most disturbing part of it is that the design of the tax is terribly executed. It involves high financial costs, but the environmental benefit is very marginal or, in the worst case, even negativeâ, Rankka told Dagens Industri.
However, the airline claims there is more to the shut-down than the tax, and adds that government policy plays a major role.
âWe would like to grow our business in Sweden and use Arlanda as a hub, but there is no political will for us to grow here. The aviation tax is a clear sign from the politicians that they want air traffic to decrease,â said Charlotte Holmbergh Jacobsson who, like Maria Rankka, hopes the tax will be dissolved after the upcoming Swedish election in September this year.
Fresh opinion polls have shown, however, that a large proportion of Swedes favor an aviation tax.
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