Fuel costs squeeze Lapland tourism firms locked into fixed prices

Rising fuel costs are squeezing Lapland tourism businesses and pushing winter travel into the busiest months, as airlines cut flights during quieter periods. Yle reports that companies with prices agreed in advance cannot readily pass higher costs on to customers.

Visit Rovaniemi chief executive Sanna Kärkkäinen said airlines were focusing on more profitable travel dates. Although air travel is forecast to grow by 8 percent next winter, she said most of that growth is expected in December and February, traditionally the busiest months.

A shorter season could concentrate demand and put more pressure on tourism service providers. Safari and transport companies are also facing higher costs as diesel and petrol prices rise.

Executives at Lapland Safari and Safarctica said increased fuel bills are directly reducing their margins. Lapland Safari chief executive Rami Korhonen said prices are agreed and announced about a year in advance, leaving the company unable to pass on the extra costs.

Safarctica operations manager Tommo Nevala said competition limits how much prices can be raised. The company is seeking savings by combining transport journeys and putting its rental-car suppliers out to tender.

Rovaniemi Taxi Service chief executive Tuomas Palmgren said the company’s fuel costs had risen by more than 30 percent. It transports tourists in minibuses, including on excursions and airport transfers, but prices for the current season were agreed one to two years ago and remain in force until at least the season’s end.

The company is trying to cut costs by encouraging economical driving and combining trips. Palmgren said avoiding hard acceleration and braking can reduce fuel consumption by about 10 percent. The company has switched some smaller vehicles to electric power, but he said electric options are not yet practical for its vans and minibuses.

Lapland Safari has also sought to limit fuel use by minimising snowmobile driving and using more fuel-efficient four-stroke models and some electric snowmobiles. Korhonen said he was particularly concerned about bus companies that provide transport for tourism businesses, as rising diesel prices are eating into their profitability.

Tags: Lapland tourism, fuel prices, transport