Color Air pioneered the low-cost business model in Norway, with a denser seating, no frills and lack of a frequent flyer program.

Tickets were sold only via the Internet, by telephone or in supermarkets; when bought from travel agents, there was a 200 kr surcharge.

Color Air commenced operations on 1 August 1998, with the two other airlines moving from Oslo Airport, Fornebu on 8 October.

After thirteen months and NOK 400 million in losses, Color Air gave up and filed for bankruptcy.

From each domestic destination, flights were made to correspond with the Color Line cruiseferries departing from Oslo to Kiel, Germany, and Hirtshals, Denmark.

[2] Color Air had only one seating class, offered no on-board beverages and had no frequent flyer program or lounges.

This was because Color Air was not linked to the Amadeus booking system, owing to the costs associated with membership.

[7] With Norway joining the European Economic Area, the Norwegian airline market was deregulated from 1 April 1994.

With increased traffic, there soon became a capacity problem at Oslo Airport, Fornebu, the main hub for both SAS and Braathens.

[12] In January 1998, Olav Nils Sunde announced that he would establish a low-cost airline following the opening of the new airport.

Braathens and SAS decided to divide the cross-subsidize the taxes between their routes, something Color Air was not able to do.

Maintenance was outsourced to a British company, after Braathens, which also operated 737 Classic aircraft, had denied Color Air the use of its simulators and technical workshops.

For the start-up, Color Air hired 18 pilots, 40 flight attendants and 40 ground employees, in addition to the administration.

Due to EEA rules, the judicial age limit was 65 years, so Color Air was able to hire retired SAS and Braathens pilots.

The Norwegian Airline Pilots Association stated that this was morally reprehensible, but Color Air was supported by the Norwegian Civil Aviation Authority, medical experts, and SAS, who all claimed that there were no medical reasons to not let people in their 60s operate aircraft.

Ålesund had the largest increase, from seven daily round trips only with Braathens, to seventeen offered by all three companies.

[21] On the route to Trondheim, the number of departures had increased from 27 to 39, with Braathens operating 19, SAS 16 and Color Air 5.

[24][25] By the end of October, the airline had between 40 and 50% cabin load, and the company stated that it needed "slightly more than 50%" to make a profit.

The airline stated that it did not have sufficient aircraft do make more than two round trips to Stavanger, and that this would be too little to be a credible operator on the route.

[33] In the general meeting held in December, two of the largest owners of Color Line, Vital Forsikring and the Government Pension Fund of Norway, both were opposed to the merger, as they felt the purchased companies were overvalued.

[34] After a long process between the minority shareholders and Color Group, the valuation was adjusted to NOK 108 million.

[35] In May, Olav Nils Sunde bought the entire Color Group, and delisted it from the stock exchange following the conflict with the other shareholders.

[39] In February 1999, Braathens announced that they would re-register all their planes in Sweden to avoid having to pay value added tax on catering and fuel.

Following this announcement, the Ministry of Finance changed the rules so also foreign-owned planes had to pay the tax.

The change in rules cost Color Air NOK 10 million per plane per year.

[46] On 10 April, Color Air started a weekly round trip each Saturday to Alicante Airport in Spain.

[39] However, in July, Color Air had a cabin load exceeding 50%, the level Sunde had stated was necessary to make a profit.

[51] On 15 September, Color Air announced that they would start flying five round trips from Oslo to Stavanger Airport, Sola on 1 October, following the delivery of their fourth aircraft.

In particular, the frequent flyer programs that SAS and Braathens had made it difficult to convince corporate travelers to switch to Color Air.

[58] The company was not declared bankrupt, as Sunde wanted to insure his good reputation by paying everyone he owed money.