New measures necessary for aviation sector in crisis

The government is to expand and strengthen the measures available to the Norwegian aviation sector, and will shortly propose changes to the loan guarantee scheme and increase the funding available for underwriting of airline routes.

Aviation is in the midst of a deep crisis on both a national level and globally. In September, the number of air passengers was 70 per cent lower than at the same time last year, and it appears that it will take time before air traffic sees a resurgence.

‘The government is taking the crisis in aviation very seriously. Together with the Storting, we stepped in at an early stage to implement a range of measures to alleviate the situation,’ says Iselin Nybø (Liberal Party), Minister of Trade and Industry.

‘Overall, the state’s extraordinary measures to the aviation sector in Norway amount to NOK 14 billion so far in 2020 and consist of: Exemptions from a range of taxes, the state underwriting of airlines routes to ensure a minimum level of service, additional compensation to existing public obligation routes (FOT), support for airports not under state ownership and a loan guarantee scheme for aviation of up to NOK 6 billion,’ says Knut Arild Hareide (Christian Democratic Party), Minister of Transport and Communications.

However, it has transpired that the crisis in aviation is more long-term and serious than anticipated, and there is a need to further support the industry.

Underwriting of airline routes

The government is proposing the allocation of a significant sum to underwrite minimum levels of service on domestic airline routes.

‘We want to extend the possibility for the state to support a range of routes through state purchases, and thereby ensure that there are sufficient air travel options available to passengers until the markets normalise.

This is the government’s main goal in the short-term. Air travel is a key part of the transportation offering in a country with spread population such as Norway, which is why we wish to ensure that there is a competitive Norwegian aviation sector in place following the Covid-19 pandemic,’ says Knut Arild Hareide, Minister of Transport and Communications.

Expansion of loan guarantee scheme for aviation

Additionally, the government is proposing to extend the term and the availability period for loans issued under the guarantee scheme for aviation. The extension of the availability period will allow for potential unused funds to be available throughout the spring.

‘Now that we know the crisis is of a more long-term nature than we assumed when establishing the scheme, we feel it is reasonable to grant the airlines more time to get back on their feet before their loans are due for repayment. Extending loan terms will help to relieve the financial pressure on companies,’ says Iselin Nybø, Minister of Trade and Industry.

Further details about the loan guarantee scheme for aviation

On 19 March, the government launched a loan guarantee scheme for aviation worth up to NOK 6 billion for airlines with a Norwegian operating licence (AOC). NOK 3 billion was directed to Norwegian, NOK 1.5 billion to SAS and the remaining NOK 1.5 billion was directed to Widerøe and other airlines. To date, Norwegian and Airwing have made use of the scheme. The scheme is managed by the Norwegian Guarantee Institute for Export Credits (GIEK).