The Norwegian government’s move to cut inbound duty free tobacco allowances has hit Avinor revenues by as much as NOK 300 million/$27.8 million, the airport operator has said.
As reported by TRBusiness, Norway’s government halved the tobacco allowance for residents in January 2023, meaning they can now only purchase 100 cigarettes or 125g of other tax tobacco products at the airport on arrival.
There are different rules for tourists that live outside of Norway.
Speaking to TRBusiness shortly after Avinor issued “strained” nine-month 2023 results, Commercial Executive Vice President Joachim Lupnaav Johnsen confirmed the move has had a “significant impact” on Avinor’s finances.
“The effect of this change is a reduction in Avinor’s revenues of between NOK 270-300 million,” Johnsen told this title.
“In 2022, the option to exchange the tobacco quota for two extra bottles of wine was also removed. In total, and in combination with lower traffic numbers, this has made revenue development challenging for Avinor.”
Operating revenues for the first nine months of the year reached NOK 8,717m/$802.m. While this was an increase of 15.2% on 2022, operating expenses increased by almost 10% to NOK 5,798m.
Avinor: Govt. says no airports will close
Over the period, commercial income accounted for 57.3% of airport revenues.
Other factors contributing to the state-owned airport operating company’s “strained” financial position include an increase in aviation taxes, and suppressed traveller numbers.
Avinor operates 43 airports across Norway, including Oslo, Bergen, Trondheim, Stavanger and Tromsø Airports.
Over 37.2 million passengers travelled through Avinor’s airports over the nine-month period. While it represented a 12.2% year-on-year increase, the total remains 10% lower than pre-pandemic levels.
Total air movements remain 7% below 2019 figures. Avinor said recovery had been strongest among holiday and leisure trips, but business travel lagged behind.
The operator said the factors combined resulted in weaker revenue development than had been assumed. It said it had signalled the need for a “real increase” in fees.
“Together with significant backlogs following the pandemic and large investments going forward, a weakened revenue base has contributed to the challenging financial situation that Avinor is facing,” added Johnsen.
In a statement, Avinor CEO Abraham Foss said: “Traffic remains at lower levels than before the pandemic, and forecasts of future traffic growth indicate that recovery will take longer than previously anticipated.
“In addition, there has been a significant real decline in airport taxes, which account for 50% of Avinor’s revenues, since 2019.”
A 16 November letter from the Ministry of Transport stated that the government will ensure that despite the financial situation, passengers and airlines would continue to receive a good service.
The government also pledged that no airports would be closed.
“There is uncertainty associated with future levels of air traffic, especially with regard to how technology, climate, and consumer economics may lead to changes in travel habits,” continued Foss.
“Global geopolitical and economic developments also increase uncertainty.”
Foss said that Avinor was committed to finding sustainable avenues to growth while cutting greenhouse gas emissions.
“Together with the airlines, Avinor will work for innovation and technology improvements to reconcile the goals of emission cuts and expected traffic growth.
“Mobility and efficient air transport are central to societal development and crucial in the development of Norwegian travel and business.
“New technology will change aviation as we know it today. Avinor’s social mission means that the group must facilitate further development and expected changes in air traffic,” he added.
Avinor’s Traffic Development VP Gaute Skallerud Riise expressed concern around passenger numbers in June, noting that there was “some uncertainty” heading into the winter.