Before 1994 the Norwegian domestic market was regulated, and the routes had been split between Braathens S.A.F.E and Scandinavian Airline Systems (SAS), with SAS flying from Oslo to Bergen and Braathens S.A.F.E flying from Oslo to Stavanger, Ålesund, and Trondheim, an agreement settled in 1952. But in 1994 the marked was opened for competition, and both SAS and Braathens S.A.F.E started competing on the routes from Oslo to Stavanger, Bergen, and Trondheim, but Braathens S.A.F.E kept its monopoly on the route to Ålesund.
On 8th October 1998 the new Oslo Airport, Gardermoen opened, replacing Fornebu. This eliminated the bottleneck in Norwegian aviation, and Color Air used this new capacity to also start domestic flights to Bergen Airport, Flesland, Stavanger Airport, Sola and Trondheim Airport, Værnes with five Boeing 737-300s. SAS met this competition by also introducing flights to Ålesund, while both SAS and Braathens increased the number of departures to all involved cities, exceeding 50 daily flights each way to each city. All three main city routes were among the ten domestic routes in Europe with the most seats.
The considerably lower prices that Color Air offered resulted in a price war between the three airlines. Though the other two airlines also offered low-fare tickets, these were often issued with restrictions concerning travel dates and refunds. But Color Air failed to win the business market, partially because of the lack of a loyalty program to attract business customers. Also, both SAS and Braathens had liquidity to lose vast amounts of money on the war; SAS could subsidize its routes from profits made domestically in Sweden and Denmark and from its international routes while Braathens had lots of cash and KLM as a major owner at the time.
NORWAY: AIR SHUTTLE HAS HIGH CHANCES FOR SUCCESS - COLOR AIR FOUNDER.(Norwegian Air Shuttle, forecast)(Brief Article)
Sep 03, 2002; Olav Nils Sunde, founder of the now defunct Color Air, believes that Norwegian Air Shuttle has a far better chance of survival...