The airline was established in response to the opening of Gardermoen, which would allow any airline sufficient landing slots to compete with the incumbents Braathens and Scandinavian Airlines (SAS). Color Air commenced operations on 1 August 1998, with the two other airlines moving from Oslo Airport, Fornebu on 8 October. Following the airline's establishment, a price war broke out between it and the two incumbents. All three increased capacity and dropped prices, giving a 40% increase in seats on the dominant domestic routes and seat loads of between 30 and 50 percent. After thirteen months and NOK 400 million in losses, Color Air gave up and filed for bankruptcy. The price war cost the three airlines more than NOK 3 billion, and ultimately forced the other two to merge.