Best results ever
Following a turnover of NOK 944 million and a pretax profit of NOK 253 million in 2014, Flytoget has delivered its best result ever. Since its launch in 1998, the company has paid out an accumulated dividend, including provision for 2014, of NOK 1,056 million to its owners.
Business activities, objectives and strategy
Flytoget operates public transport services on the route from Drammen to Oslo Airport, and has its head office in Oslo city centre. The company transports approximately seven million passengers each year. This represents about ten per cent of all train passengers in Norway, and about 20 per cent of all those in the Oslo region.
Flytoget was previously owned, since 2004, by the former Norwegian Ministry of Trade and Industry, and subsequently, since 2013, by the current Ministry of Trade, Industry and Fisheries. The objective of the state ownership of Flytoget is to achieve profitable train operations that contribute towards maximising public transport's share of journeys made to and from Oslo Airport. This is economically beneficial for society, and also provides climate change-related and other environmental benefits. The company is administered on a commercial basis, without public sector procurement.
Status of the market and competition
In 2014 Flytoget recorded passenger growth of 4.2 per cent. The total number of airline passengers passing through Oslo Airport, not including transit and transfer, increased by 1.8 per cent. Flytoget's market share of transport service provision to Oslo Airport thus increased to 33.2 per cent in 2014, which represents an increase of 0.8 per cent compared to 2013.
Customer satisfaction ratings achieved a record high of 97 per cent on average in 2014. The most important reasons for excellent levels of customer satisfaction are that Flytoget continues to deliver high levels of departure frequency, punctuality and regularity, as well as excellent customer service.
The regulatory framework
The Norwegian National Rail Administration (Jernbaneverket) has provided Flytoget with the opportunity to expand its train operations from Oslo Airport to Lysaker by one train departure per hour. Our plan is to phase in this expansion when the train turning facility at Høvik is completed, some time in 2015. This expansion will enable us to provide our customers with more departures from high-pressure areas in and around the stations at Lysaker, Sandvika, Skøyen and Nationaltheatret.
The Norwegian government's ownership arrangements report published in 2014 contained provisions linked to the future ownership of the company. The government believes that there are no special reasons why the Norwegian state should remain the long-term owner of the company, and has signalled that it is willing to consider arrangements that entail a reduction in the state's current ownership share. This has generated a public debate concerning the ownership of the company. Many employees at Flytoget have experienced this news as stressful, and the situation has contributed to a higher turnover among train drivers than would otherwise be expected.
In 2014, the Norwegian Ministry of Transport and Communications invited a variety of interested parties to present proposals for the future organisation of the rail network in Norway. As part of this process, Flytoget has prepared a proposal for a model which will provide a modern, innovative and effective organisation of the railway sector. Elements of the model address ownership, input factors, the size of tender packages, and measures to stimulate competition which will result in a Norwegian rail network providing better quality services in return for public transport sector funding.
In 2000, when the Norwegian Parliament reviewed Flytoget's opening balance sheet, the company was granted a 30-year entitlement in the form of a track priority arrangement along the route between Etterstad and Gardermoen. On the initiative of the Ministry of Transport and Communications, Flytoget has negotiated a new traffic agreement replacing the outdated track priority arrangement with a preferential entitlement to operate transport services on the route between Asker and Gardermoen. The agreement is in force for 15 years from 1 February 2013 until 31 January 2028.
Strategy and objectives
The company's safety-related objectives provide clear guidelines in terms of prioritisation. In 2014, three strategic areas of focus were identified above and beyond the prioritisation of safety, punctuality and service:
- to optimise Flytoget's business operations concept
- to increase customer experience
- to increase the public transport market share to and from Oslo Airport
Specific targets and action plans were defined for each of these customer and market-oriented areas. For the most part, optimisation of the business operations concept has consisted of a review of current service delivery with the aim of identifying potential for improvements which can lead to a further consolidation of customer experience and the Flytoget brand. A key component of this process has been a major investment in digitization of the company's interface with the general public. This process will continue during 2015. Key subsidiary targets in 2014 were a punctuality rating of 97 per cent and a regularity rating of 99.5 per cent. The figures achieved were 97.3 and 99.4 per cent, respectively.
Passenger numbers continue to increase such that in the long-term these may generate challenges in relation to capacity. In 2014, with this and passenger growth projections made for Oslo Airport in mind, the Board decided to initiate the procurement of eight new trains.
Flytoget's contribution towards increasing the proportion of journeys made to Oslo Airport by public transport can be seen in the overall increase in this factor by 0.8 per cent. There is no reason to believe that this increase has been achieved at the expense of other rail operators.
Read more in the full report of the board of directors.