Norwegian Air's Bid for Wideroe Faces Potential Obstacles

DALLAS — The competition watchdog in Norway has issued a warning stating that it might reject Norwegian Air Shuttle's (DY) attempt to acquire its domestic competitor, Wideroe (WF). The watchdog expressed concerns that such a merger could result in fewer flights and higher prices for customers.

If the fusion is approved, there would only be two carriers, DY and the flag carrier of Denmark, Norway, and Sweden, SAS Scandinavian Airlines (SK), competing for customers in Norway, said the regulator.

According to a Reuters report, the Competition Authority Director, Tina Soereide, stated that there was a significant risk of weakening competition in the market, which could lead to increased ticket prices and a decline in the quality of services available to passengers in Norway. The regulator highlighted that, with only two competitors in the market, it would be more feasible to coordinate domestic prices.

The announced deal, valued at 1.13 billion Norwegian crowns (US$103.32 million) and subject to final adjustments, was made public on July 6. DY has expressed its intention to finalize the transaction by the end of the year.

Comments from Norwegian Air, Wideroe

Both Norwegian Air and Wideroe expressed their disappointment with the regulator's initial decision. However, they maintain their belief that it is still possible to obtain approval for the merger.

Norwegian Air CEO Geir Karlsen expressed optimism regarding the final outcome of the application process, citing the facts of the case in a statement. WF emphasized the significance of the deal in ensuring travel accessibility in rural parts of Norway.

In a joint statement, the airlines acknowledged the significant changes occurring in the European aviation industry. They also noted that even with the merger taking place, they would remain relatively small players in the international context. According to DY, the combined operations of both carriers encompass a total of 107 routes in Norway, with five of them overlapping.

The airlines are required to provide a response to the regulator's statement by December 8. The authority has set a final deadline of January 3 to determine its course of action regarding the merger.

Featured image: Norwegian Air LN-DYO Boeing 737-8JP | Photo: Alberto Cucini/Airways