“Avinor’s main challenge is reduced revenues due to changes in travel patterns after the pandemic. There are far fewer business travelers than before, and Norwegians’ domestic travel activity has levelled off. Lower traffic volume, lack of adjustment of airport taxes, as well as reduced revenue per passenger, largely due to reduced duty-free quota, challenge the Avinor model”, says Abraham Foss, CEO of Avinor.
In 2023, the Group reported operating revenues of NOK 11,514 million, marking a rise of NOK 1,096 million from the previous year. Operating profits also saw an uplift, growing by NOK 493 million over the same period. Despite traffic not rebounding to the anticipated levels post-pandemic, a passenger growth of 9.6% was recorded in 2023. Additionally, there was a notable increase in non-duty-free commercial revenues at airports, with the average spend per shopper exceeding the broader societal trend.
Net earnings stood at NOK 304 million, a decline from the NOK 427 million reported in 2022, largely attributed to heightened financial costs related to adverse impacts on power price hedging. Excluding this factor, profits actually improved by NOK 166.2 million year-over-year.
Avinor’s projections indicate that traffic volumes may not recover to pre-pandemic figures until 2027/2028, amid escalating costs, higher interest rates, conflict, and widespread uncertainty, all contributing to reduced travel activity.
Throughout 2023, Avinor’s airports facilitated travel for 49 million passengers, up by 9.6% from 2022. This increase was primarily fueled by more international travelers, though aircraft movements only saw a marginal rise of 0.8%, indicating a much higher occupancy rate on flights. A growing interest in Norway, especially Northern Norway, from international tourists was observed, supported by the introduction of several new routes. However, the expansion of intercontinental routes experienced slower progress.
Framework conditions not adapted to the social mission.
“Avinor and aviation live off and for the passengers. It is dramatic when passengers and traffic are reduced over a long period of time. Avinor’s revenues change in relation to the number of passengers, and it is the revenue part of our operation that is most challenging,” says Abraham Foss.
A significant portion of Avinor’s costs are fixed, crucial for maintaining safe and consistent operations across Norway. From 2022 to 2023, the total revenue per passenger saw a slight increase of 0.8%, while operating costs per passenger experienced a decrease of 1.2%.
Avinor’s financial difficulties largely stem from revenue issues, despite years of increasing operational efficiency. The fees charged by Avinor to airlines remain highly competitive when compared to those at major airports in neighboring countries. Additionally, Avinor has reduced costs by nearly NOK 1 billion during and following the pandemic. The perceived increase in overall taxation for airlines in Norway can be attributed to significant hikes in government-imposed air passenger and CO2 taxes. With reduced traffic, shifts in customer demographics, changes to duty-free allowances, and the lack of adjustments in Avinor’s airport fees meant to cover the usage of its nationwide airport network, financial imbalances have arisen.
In 2023, the Group’s operating margin improved, yet the financial conditions set for Avinor do not fully align with its societal and policy mandates. On November 16, 2023, the government confirmed its support for continuing and enhancing the Avinor model, maintaining the current airport structure, and providing Avinor with a sustainable financial framework. During an Extraordinary General Meeting on December 18, 2023, the statutory equity requirement for the Group was adjusted to 35.0% until December 31, 2024, down from the usual 40.0%.
Significant milestones were reached in 2023 concerning infrastructure development both on the ground and in the air. In December, the EFTA Surveillance Authority (ESA) greenlit the funding for a new airport in Bodø, enabling Avinor to start the construction as planned. Following the approval, Avinor acquired land from the Norwegian Defence Estates Agency as per the agreements from March 2023. The development of the new Mo i Rana airport is progressing well, with its opening scheduled for 2027. Tromsø Airport, in need of expansion, welcomed a new domestic terminal this spring, enhancing the potential for increased international travel to Tromsø and the broader Northern Norway region.
Additionally, in 2023, three more air traffic control towers were transitioned to remote operations at the Remote Tower Centre in Bodø, bringing the total to eleven towers managed remotely.
Avinor, a state-owned entity operating under the Norwegian Ministry of Transport and Communications, oversees 44 state-owned airports. The company is at the forefront of environmental sustainability efforts within the aviation sector, pioneering in the development of electric aircraft and the provision of sustainable biojet fuel. Annually, Avinor facilitates safe and efficient journeys for approximately 50 million passengers, with half of these passengers traveling through Oslo Airport. The company employs over 3,000 staff dedicated to the planning, development, and operation of a proficient airport and air navigation service network. Avinor’s financial structure is supported by airport fees and commercial revenues, with its air navigation services functioning as a wholly-owned subsidiary. The headquarters of Avinor are located in Oslo.
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