Atlantic Airways hotel plan “anti-competitive”

Atlantic Airways’ plans to build a new hotel Tórshavn have met with disapproval from politicians and the hotel industry.

Tórshavn’s private hotels have sent a letter to the Prime Minister and the Minister of Trade urging the government to stop the project immediately, arguing that it will be impossible for private hotels to compete with the new one, since Atlantic Airways is a public limited company.

The letter says that Atlantic Airways

* Receives better interest rates

* Has no profit requirements

* Will cause ‘predatory dumping’, i.e. it will price its services below the market value in an attempt to drive out private competitors

* Can run a deficit for an extended period until private competitors have been eliminated

* Has ‘unfair’ advantages, such as ambulance services, helicopters and duty-free sales.

Sceptical political parties

Politicians, including the party leaders of Fólkaflokkurin (the People’s Party) and Sambandsflokkurin (the Union Party), are also critical of the plan, saying that Atlantic Airways is moving beyond its core business of providing aviation services.

However, trade minister Poul Michelsen says he will not interfere in the project.

“Atlantic Airways’ corporate mission statement says that the company operates in the field of ‘aviation and associated services’,” he says.

“I believe that building and running a hotel falls within the ‘associated services’ definition, so I will not interfere in this matter.”

The minister adds that the strategy with Atlantic Airways has always been based on the arm’s length principle, which in this case means that the airline, although a public limited company, is free to make its own strategies and follows its own business model.

Translated by prosa.fo