Atlantic Airways has spread its wings just a bit further. After three years of COVID-induced delays, the national airline of the Faroe Islands inaugurated service to the United States this week, with hopes of boosting both inbound and outbound travel for the islands.
We acquired the A320neo and knew it had more potential. We started looking at what the best way was to take advantage of the new airplane. And the United States became possible.– Atlantic Airways CEO Jóhanna á Bergi
The new route comes with plenty of challenges. How, for example, will the airline educate Americans on where the Faroe Islands are (north of Scotland, between Iceland and Norway) and why they should visit (incredible natural beauty, mostly)? Also, how will the airline overcome technical and operational challenges to make the service a profitable one? CEO Jóhanna á Bergi recognizes these challenges and more, but continues her push to see just how far the small airline can extend its range in support of the Faroese people.
Keeping it seasonal
Perhaps most notable about the route launch is that it comes towards the end of the peak tourism season in the Faroe Islands. That’s rarely a good time to launch new service. Bergi recognizes this challenge and knows better than to try to force the situation. With just one flight per week it is relatively easy for the carrier to drop the service and shift the aircraft back to markets in greater demand. Las Palmas, for example, sees very strong numbers in the winter with the Faroese looking to warm up and dry out for a few days. The Stewart service will be suspended from the end of October 2023, but Bergi is adamant it is coming back in 2024, likely for a longer season. And, more importantly, the company will have more time to build its sales channels for the market.
Picking a smaller, alternate airport 90 minutes away from the desired destination adds to the challenges for the route. And Stewart International Airport (SWF) was not the first choice for Atlantic Airways as a gateway. “We were looking at JFK and at Newark; we know they are much closer to New York City,” Bergi shared. But, ultimately, the carrier picked Stewart.
“We are only flying once a week and those airports are very crowded and expensive to operate from,” she noted. Beyond just landing slots and gate access, counter space and ground handling were significantly more expensive, especially for the limited number of flights. Housing the crew who overnight with the aircraft was also a challenge. Eventually Atlantic Airways and the Port Authority struck a deal with service to Stewart, and Bergi appears confident in that selection, including the expectation that it will return to Stewart when the route resumes in 2024.
A very different sort of North Atlantic market
Service once a week to New York does not a transit hub make. Despite its location just a couple hundred miles east of Iceland, relatively well positioned to handle flows of traffic between Europe and North America, Atlantic Airways will never become a major connecting hub like Reykjavik. It simply cannot, and neither the airline nor the Faroese people appear keen to try.
Most notably, physical constraints at Atlantic’s home base at Vagar Airport inhibits growth potential. Limited ramp capacity at Vagar means the fleet will necessarily remain relatively small. Operating to multiple US destinations daily is simply not possible. And it would deviate from the airline’s core mission of serving as “a lifeline for the Faroese people,” Bergi explained.
The flight timing reflects this as well, Westbound the service departs relatively late in the afternoon, too late for passengers to have dinner in New York City on arrival. On the return the carrier operates a daytime flight eastbound that arrives just after 10p local time in the islands.
The sole runway extended to 5,900′ a decade ago and almost certainly cannot grow further. Add uncooperative weather to the mix, and options for larger planes or longer routes begin to quickly dwindle. The carrier also has not pursued ETOPS certification for its operations. Combined, these factors limit which routes are possible and how many passengers can be carried.
While excited to stretch the service range of the A320neo as much as possible, Bergi shared that the New York flight is typically limited to 140-150 passengers on the 180 seat A320neo because of the limited runway length. That’s good news for passenger comfort on board with many middle seats likely to be open. But the company must also account for the limited revenue potential it faces without the ability to fill the cabin.
Fares on the route – starting around $450-500 each way – reflect that. Bergi knows the carrier must also compete with one-stop options; it cannot price the market in a vacuum. But she also believes passengers will accept a premium priced in to the nonstop service, especially without the overnight flight eastbound.
What types of passengers?
Bergi also knows that the Faroe Islands are not Iceland, and she does not want them to be. The island nation is too small to support a massive inbound tourism boost that would come with being a major transit hub. “We have a focus on sustainability and our nature is very precious to us,” she explained, “so we are not going for the mass tourism experience.” Given the limited infrastructure on the islands this should not be too much of a surprise. Even if the passengers showed up they likely would not have hotels, restaurants, tours, and other services available. At least not initially.
Atlantic Airways does work with the tourism board on strategic market development, though the United States is not yet one of those key markets. And its goal with the US route is a roughly 50/50 split of inbound and outbound travelers. That’s somewhat lower than the inbound numbers from other Scandinavian markets, but the tourism draw is harder, mostly owing to Americans not knowing the Faroe Islands exist. Bergi did share that the country sees an interesting overflow from Americans who visit Iceland. Many of those who eventually make it to the Faroes note that they first learned about the islands on a prior Iceland trip.
More visitor options
Perhaps the company will eventually pick up some visitors planning to stop over in the Faroes for a few days before continuing to one of the other destinations in the Atlantic Airways route network. Codeshare and interline agreements with other airlines help support that plan. But vacation packages and stopover fares are not in the cards.
Bergi would rather lean on partners for creating trip bundles, for example, than trying to get into that business directly. The airline is a small operation with a small staff and Bergi is laser-focused on executing on the company’s core competency of point-to-point air service while letting others handle those broader offerings.
Finally, Bergi did note the work Atlantic Airways is doing with Visit Faroe Islands to extend the duration of the peak tourism season – currently just 10-12 weeks/year – and also to increase the types of travel the Islands support. Efforts to increase conference and event travel are underway, fully supported by both parties.
Ultimately, the market for travel between the US and the Faroe Islands is a small one. Atlantic Airways aims to reshape it, however, capturing significantly more market share now that it has the planes to make the nonstop trip happen. And with the heavy lifting of gaining US approvals and meeting the various security and regulatory requirements complete, now the company can focus on delivering that service.
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