Even though the outlook for traffic growth is improving in Sweden, the country’s airport operator Swedavia is not satisfied and is working hard to improve its connectivity options, both east and west. Mark Pilling reports
It’s a great feeling for an airport marketing team to see years of work come to fruition when a major carrier announces new service. That was the case for Swedavia in July, when Star Alliance carrier All Nippon Airways declared it would open a direct route between its home base at Tokyo Haneda and Stockholm Arlanda Airport.
“There is great confidence in the Swedish air travel market and ANA’s investment in a direct route from Stockholm Arlanda to Tokyo Haneda is a clear sign of this,” said Jonas Abrahamsson, President and CEO of Swedavia.
Formed in 2010, and wholly owned by the Swedish State, Swedavia’s mission is to own, operate and develop the gateways that make up the country’s airport infrastructure. Swedavia owns all 10, and while Ronneby and Luleå Airports are partly owned by the Swedish Air Forces, Swedavia is responsible for commercial air traffic there.
Adding an Asian flag carrier to its overall offer is a show of strength for Swedavia, which has had a somewhat challenging time with its Asia-Pacific network following the ravages of the pandemic, the closure of Russian airspace making routings to the east uneconomic, and the strategic reformation of SAS.
ANA will serve Stockholm three times a week with Boeing 787s from 31 January 2025. “It is a big win for us,” said Elizabeth Axtelius, Director Aviation Business at Swedavia.
The Japanese carrier had been planning to begin service to Stockholm in time for the 2020 Tokyo Olympics, but this was shelved when the pandemic hit.
Now, though: “The timing is absolutely right,” said Axtelius. “We used to have a lot of inbound traffic from Japan, most of the passengers travelling via Helsinki, but now outbound traffic to Japan is increasing and there is a large business market too. Traffic to and from Japan is over pre-pandemic levels today.”
As traffic grows, the business ties between the two countries bolster the case for the route. Japan is Sweden’s second-largest trading partner in Asia, with close to 150 Swedish companies – both major corporations and start-up companies – operating in Japan, the world’s third-largest economy.
Sweden in turn is the largest Nordic export market for Japan, and roughly 180 Japanese companies have operations in Sweden.
The route will not only serve as an important connection to the Japanese capital but also as an important connection via ANA’s network to Asia and the South Pacific. A desire to bring routes that offer strong onward connections is a persistent theme of Swedavia’s story as it seeks to strengthen the Arlanda offering.
Increasingly, Swedavia is having to attract carriers other than its largest customer SAS for such long-haul routes. There is further change in the air that affects airport networks: SAS is leaving the Lufthansa- and United Airlines-dominated Star Alliance and shifting to SkyTeam, which includes Air France-KLM and Delta Air Lines as predominant members.
Encouragingly for Swedavia, ANA, a member of Star, wants to serve Stockholm even without the benefit of having SAS as the Star hub carrier.
Canadian arrival
The departure of SAS from SkyTeam played a role in another Star member, Air Canada, inaugurating new routes to Stockholm. “Air Canada was another big win this summer. They noticed the challenges that we had with SAS leaving Star and less capacity to North America, so they took advantage of the market situation,” said Axtelius.
In mid-June, Air Canada launched a twice-weekly service to Toronto and a three-times-weekly service to Montreal. “Both routes have done really well since launch,” said Axtelius.
The success of the Air Canada routes echoes the rebound Swedavia has seen across its international markets. “When we look at the international traffic from our airports, there is a strong demand,” said Axtelius.
“And the demand is maybe stronger than what the figures show, because there is not enough capacity in the market to cater for the demand that we see,” she added. In July, international traffic at Arlanda returned to pre-pandemic levels for the first time.
The SAS factor
ARGS interviewed Swedavia’s Axtelius on 28 August – the day SAS officially emerged from US Chapter 11 proceedings, just over two years after filing to restructure under bankruptcy protection.
It comes with a variety of strategic implications, such as SAS moving to SkyTeam, and airports understandably worry about network changes. Axtelius summarised how Swedavia sees the situation of its largest customer in the largest market in Scandinavia.
“SAS is an extremely important customer for us. They are important both for European traffic, but also for domestic traffic,” she explained. “They will continue to play an important role in Sweden.
“They might change some of the destinations, such as perhaps not operate as much as they do [now] into Germany [because of less emphasis on feeding Lufthansa/Star hubs there]. But in terms of European and domestic traffic I think in total it will have little impact.
“Having said that, they are focusing more on Copenhagen,” noted Axtelius, with an increased effort to feed the Danish hub. “For us, that is a challenge.” SAS, for example, began operating a new service this June from Copenhagen to Delta’s Atlanta hub as it shifts its priorities to SkyTeam.
Swedavia is concerned about retaining its North American links as SAS reduces its point-to-point services out of Stockholm. “We need better connectivity to a large North American hub and now there is a great opportunity for many carriers to establish themselves in the Swedish market,” she said.
When SAS flew to Chicago from Stockholm, Swedish travellers could reach most destinations in the US with just one stop. That increases to two stops if the SAS Atlanta service is chosen. “For us that is a headache. Limited North American connectivity is something that the business community in Sweden talks a lot about today,” said Axtelius.
This is a challenge, but also a chance to serve new carriers and reach more US hubs. New York JFK is an obvious target for year-round service, but Chicago, Washington DC and Philadelphia are also strong opportunities, she said.
And SAS, too, could reinstate some Stockholm links. “From an SAS point of view, they need to look after the Swedish market. They also need to rethink how they will be serving the Swedish market in the future, not only focusing on Copenhagen,” she explained.
Looking east
In terms of services to the Gulf, Emirates and Qatar Airways serve Stockholm, albeit not back at pre-pandemic capacity levels due to their capacity constraints. One target destination is Abu Dhabi, with Swedavia keen to attract Etihad Airways to inaugurate a direct service to Stockholm. A direct route to Stockholm would meet some of the strong demand for additional connections to the Middle East.
With Stockholm’s Asian connectivity somewhat lacking after the pandemic, the ability to offer services via the Middle East hubs is a good option. Another one could be Riyadh or Jeddah in the future.
“In a couple of years’ time traffic into Saudi Arabia would make sense. Sweden is a large market, and we have a large Muslim community and a lot of VFR traffic. Considering what’s happening in Saudi I think it would make sense,” said Axtelius.
Further east, Air China served Stockholm daily from Beijing this summer and Thai Airways operates daily to Bangkok. However, Stockholm has no direct service to Shanghai, Hong Kong or Singapore at present and all are on Swedavia’s radar.
“Our connectivity to a hub in Southeast Asia is not as good as it was before the pandemic,” said Axtelius. “We need a big hub in Southeast Asia, or somewhere in Asia, while India and a long-haul leisure route are definitely something we’re looking at.”
Europe and domestic markets
Closer to home, Swedavia’s European network has grown again this summer with 25 new routes launched – 17 from Arlanda and 8 from Göteborg Landvetter Airport.
LCCs Ryanair and Norwegian have grown strongly in Sweden in recent years. “We would like to see Ryanair grow more in both Stockholm and Göteborg; there is room for additional growth from these carriers,” said Axtelius. Meanwhile: “Eurowings is doing well serving the German market. It has been good for us and for the business community,” she added.
While the European and international traffic picture is strengthening, Swedavia’s mood is tempered somewhat by a tough domestic market, the SAS situation and airline capacity constraints caused by late aircraft deliveries.
“What we are struggling with, and I think there are several markets in Europe that see the same trend, is that domestic traffic is still lagging behind, and especially domestic traffic to the southern parts of Sweden,” said Axtelius.
Services to northern Sweden where there is no alternative to air travel are less affected, but good road links to the south provide a competitive option. Customer behaviour has changed too, with the shift away from business travel to remote digital meetings becoming a trend that Swedavia does not see reversing.
Market outlook
However, Axtelius is hopeful that Sweden’s economy, which is showing signs of stronger growth, will drive an expansion of the domestic network from both Norwegian and SAS.
A lack of capacity has driven fares up and depressed demand. But Swedavia is expecting traffic growth this year and next on the back of the economic upswing. The airport operator also welcomes the government’s proposal to abolish Sweden’s air travel tax, which has been in place since 2018. “This travel tax is something we think has a negative impact on our traffic, and it doesn’t have a positive impact on the economy or the environment,” she said.
In 2023, 32.1 million passengers flew to and from Swedavia’s airports, compared to 27.6 million in 2022. This is up to 80% of pre-pandemic levels.
Sustainability
A field in which Swedavia is an undoubted pioneer is sustainability. Since 2020 the operator has been “fossil-free” at all its 10 airports.
“The next step is to work together with the ground handlers to become fossil-free with all the ground operations,” said Axtelius. Swedavia is also working with a variety of partners on biofuel, electrification and hydrogen technologies.
An interesting scheme now in its fifth year at Swedavia is the Sustainable Aviation Fuel (SAF) Incentive Programme. This initiative, which has a pot of SEK 40 million (US$3.9 million) in 2024, sees Swedavia offering airlines and other industry players a discount of up to 50% of the premium cost when they refuel with SAF.
Airlines such as SAS and Aegean, plus DHL, have taken advantage of the programme.
Airport developments
Swedavia took the opportunity of the pandemic, when traffic was at a standstill, to undertake some important developments at Stockholm Arlanda, explained Axtelius.
In September 2023 the airport opened its new Marketplace in Terminal 5. This 11,000 sq m space provides the heart for Arlanda’s commercial offering with a variety of new food and beverage and shopping options. A significantly expanded security checkpoint zone has also been inaugurated.
