Air Greenland demand up 50% in five years; growing competition on international routes; lessons learned from Baltimore debacle

Image: Greenland - The world’s largest island

Logo: Greenland Airport Authority and air greenlandWith a population of less than 60,000 people in a country bigger than Saudi Arabia Greenland’s population density is the lowest of all countries by a factor of ten*. A self-governing territory of Denmark, the island is home to 13 commercial airports run by the Greenland Airport Authority and a number of heliports. Nuuk (GOH), with a population of 15,000 is the biggest town but airline operations are centred on Kangerlussuaq (SFJ) which has the best year-round weather conditions and from which Air Greenland operates its domestic ‘hub’.

Air Greenland; mix of aircraft and helicopters

Image: air greenland plane on runwayGreenlandair was founded in 1960 by SAS and local investors. It changed its name to Air Greenland in 2002 and is now jointly owned by SAS (37.5%), the Greenland government (37.5%) and the Danish government (25%). Its domestic routes are served mostly by six 50-seat Dash 7s and a variety of helicopter types. The busiest domestic route is between Nuuk and Kangerlussuaq which is served four times daily during the summer season. There are also four daily flights from Kangerlussuaq to Ilulissat. According to OAG data Air Greenland operated a total of 28 domestic routes last August.

In 1998 the airline acquired its first jet aircraft, a 757-200, which has since been augmented by a single A330. These aircraft are used for international scheduled services to Copenhagen and charter flights. Since 2002 the number of passengers carried by Air Greenland has increased by over 50% from 260,000 to 403,000.

Chart: Air Greenland traffic 1998-2007
Source: Air Greenland

Between 1998 and 2001 load factors averaged around 60% but since 2004 average annual scheduled load factor has been over 70% with 77% being achieved in both 2005 and 2006. International service is currently limited to Copenhagen though the airline did launch services to Baltimore/Washington in May 2007. This route was so unprofitable that it was axed in March 2008. According to the airline’s 2007 annual report, “Over 800 passengers chose to use the route in 2007. We have learned a lot from this experience and it illustrates how essential it is for Air Greenland to acquire competence in implementing new route initiatives and the need for more market-oriented planning in this connection.” Indeed.

Image: Senior management of Baltimore Washington
The senior management of Baltimore Washington with their Air Greenland counterparts at the launch of Greenland’s second only international service after Copenhagen. The route handled just 800 passengers before being axed in March 2008.

International routes to Denmark and Iceland

Demand for international service to Greenland is distinctly seasonal. During the summer SAS competes with Air Greenland for traffic between Copenhagen and Kangerlussuaq, though Air Greenland operates with higher frequency. During the summer Air Greenland also operates thrice-weekly from Narsarsuaq to Copenhagen.

Other international services are to (relatively) nearby Iceland. From Keflavik airport (KEF) both Air Iceland and Icelandair operate to Nuuk, while Air Iceland also operates to Neerlerit Inaat, Kulusuk Island and Narsarsuaq from Reykjavik (RKV). Given the increasing potential for tourism in the country how long before some enterprising low-cost carrier launches flights to the region?

Image: Nuuk Airport Nuuk Airport serves the country’s capital but is not as busy as Kangerlussuaq which Air Greenland uses as its domestic operating base. Tourism is increasingly important for the economy with cruise ships visiting several coastal destinations. How long before Ryanair offers weekly flights from London Stansted?

* In case anyone was wondering the next most sparsely populated country according to Wikipedia are the Falkland Islands.


Comments

  1. Rob says:

    Thanks for this excellent overview of Air Greenland.
    I have linked to this piece from the NordicTravel.co.uk site.

    One concern is that Greenland is a very fragile environment.
    Do they really want this threatened by tourists?

  2. saki says:

    Yes, this was indeed an excellent overview.

    Greenland has to develop some kind of business for the people living here. The options that are being discussed (quite loudly recently) are the possibilities of drilling oil offshore and various minerals to be mined. If we are concerned about environment, tourism is a far better option. It does, of course has to be developed in a way that does not overcrowd and pollute, but I would say that it has much less risk than trying to get oil from seas that can be really savage when the weather is foul and full of icebergs at the same time.

    It would also help if European and North American “developed” countries would take a more fair look at the reality of Greenland. Bans on products of seals, walruses, narwhal and other animals that naturally sustain people living in Arctic countries result in the destruction of traditional skills and cultures (important as resources for tourism, as well as for the identity of the people). Not being able to take meat that is available in their front yard means that more frozen meat is imported from Europe by ships that emit a lot of CO2 and dispose other waste in waters that should stay pristine.

    A ideal way for development would be a cooperation between Greenland and tour operators around the world, to make tourism grow in a responsible way, with respect towards both environment and traditional culture.

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