Photo from Norwegian Air
These days, much of the attention in the travel world focuses on innovators—“disrupters,” to some, who’ve found a way to change the whole industry picture. Think Airbnb.
Lately, a lot of the attention has focused on a (not-so-new) airline with a new idea. Norwegian Air Shuttle has been flying very low-cost flights from Scandinavian countries to more of Europe ,the U.S. and Thailand. It also wants to break into the big-money market for flights from London and other cities to the U.S. In the long run, they see the growing numbers of middle class passengers from India and China that will be headed to Europe and the US and want to take them.
Photo from Norwegian Air
Its founders, BjØrn Kjos and BjØrn Kise, built it up, starting in the early 90s, from a small regional subcontractor into Europe’s third largest budget carrier. Several times, Norwegian Air believed they had to expand to get their per-passenger cost down or they would go broke. Quick turnarounds, picking the right routes, and especially betting big on the fuel-efficient planes, let them become more efficient. For long haul routes, that was the 787 Dreamliner.
Photo from Norwegian Air
Norwegian Air was limited to flying direct from Scandinavia, but have set up an EU subsidiary in Ireland to get around that, and that allows them to fly from London and other cities. So far, though, not to the U.S. Their subsidiary, is trying to get a foreign carrier permit from the Department of Transportation ,but it’s been delayed. What usually takes 30 days has taken over a year . The permit is being opposed by some US Airlines and unions.
The critics claim it’s poses unfair competition because Norwegian does not plan on flying out of Ireland and uses an Singapore employment agency. They say Norwegian Air is using Ireland as a “Flag of Convenience” to avoid Norway’s high wages and stricter labor and safety laws. Norwegian Air says they need their Irish subsidiary to gain access to many countries in Asia and Africa since Norway’s not part of the EU and Ireland is. And with that subsidiary, they would be able to shift aircraft from one region to another. They also strongly object to claims they are unsafe and state their wages are competitive.
While waiting to see if the Department of Transportation approves the permit for Norwegian Air International, Norwegian has had a tough 2014, losing money for the first time in 7 years. Their expansion, weakening of the Kroner ,and the competitive marketplace were all factors. They also are experiencing a pilot strike as I write this.
Time will tell if Norwegian can successfully break into the trans-Atlantic market in a big way. Sir Freddie Laker, who first tried budget tran-Atlantic flights with Skytrain, failed when the established airlines matched his prices. Will that be their strategy now?
Photo from Norwegian Air
TravelGumbo interviewed Lasse Sandaker-Nielsen, VP of Media Relations for Norwegian Air. We thank him for being so direct in his answers.
Interview:
TravelGumbo: What’s the latest you’ve heard about your application for a foreign air carrier permit from the Department of Transportation? What’s your view on why American, Delta , United and the Airline Pilots Association are opposing your permit so strongly?
Lasse Sandaker-Nielsen: We haven’t heard anything other than the fact that Norwegian Air International’s application is being processed. The legacy carriers are afraid of competition. The big alliances dominate more than 85 percent of the trans-Atlantic market, and they want to keep their high-fares. We are offering the American people the ability to fly affordably to Europe. Our EU company’s application was complete more than a year ago and its approval is way overdue. That’s why last week about 50 of our U.S. cabin crew traveled to DC and the Department of Transportation to tell Secretary Foxx that enough is enough:
http://media.norwegian.com/us/…ansportation-1119363
http://media.norwegian.com/us/…sident-obama-1118820
TravelGumbo: If Norwegian is successful going to North America and Asia, what’s your strategy if the major airlines start price-matching you on those routes?
Lasse Sandaker-Nielsen : Our strategy is offering low fares on all routes utilizing brand new fuel efficient aircraft. We see it on the routes between New York and the Scandinavian capitols: The prices have fallen dramatically ,all thanks to Norwegian’s entry into the market. By ensuring that everybody can afford to travel, we create new jobs, not only in the air but also on the ground – in the travel- and tourism industry.
TravelGumbo: Whats next for Norwegian? What new routes would you like to get and are there any partnerships,for instance,with budget hotels that might make sense for you?
Lasse Sandaker-Nielsen: We will continue to expand globally as we take delivery of new aircraft, particularly from 2016. We are looking at new routes to Hawaii, Buenos Aires , Cape Town, etc.
TravelGumbo: What do you see in the future for the airline industry as a whole? Where do you see fares from the US headed long term?
Lasse Sandaker-Nielsen: Competition in the air will continue to tighten , particularly as more and more Asian carriers take on flights to Europe.The rising middle class in Asia,will want to travel more and we’ll see the rise of more and more low-fare flights from Asia to Europe. We see it already today with the Gulf carriers that fly brand new aircraft and offer high quality service at low fares. Only airlines that are able to adapt to the changes and the increasing completion will survive. Norwegian is intent on being one of these carriers, which is why we are increasing our global presence.
We already see that fares across the Atlantic are decreasing, thanks to Norwegian’s entry into the market. I’m convinced that more low-cost carriers will go long-haul in the coming years, which will mean lower rates for Americans going to Europe-and vice versa.
Travel Gumbo: Your CEO has been quoted as saying that he doesn’t get jet-lag. Any tips for the rest of us on how to avoid it?
Lasse Sandaker-Nielsen: The best way to avoid jet-lag is to fly the Dreamliner. Obviously, you have to follow the “standard rules” of getting enough sleep and drink enough water, but if you fly the 787 Dreamliner, you are more likely to avoid typical jet-lag symptoms as the cabin air is cleaner, fresher and more humid.
interesting blog!
Lasse could well be correct on the Jet Lag.
The air was fresher on the Dreamliner. The Captain decided when night fell by using the window dimmers.
Same with sunrise.
I can get a flight – UK to Australia – 23 hours – for the same price as UK to New York – 7 hours. Trans Atlantic flights have been price-rigged for years.
More news this morning (Monday) regarding difficulties for Norwegian’s domestic subsidiary, Air Norway and a possible bankruptcy filing, with possible ramifications for the entire company. Read the article here.
In one of Norwegians press releases they do raise an interesting question.
“Why should a flight between New York and Europe cost three times as much as a flight between New York and Los Angeles? The flight to Europe is only about an hour longer, sometimes even less.”
I’ve noticed flights to Asia from Europe are sometimes two to three times as cheap versus flights from the US to Asia and they have roughly the same flight time.
I wish them success. And I hope they start flying into Canada. We could a new low cost carrier here.
Nice piece, Rob, thanks. I found it very informative.
I recently saw a cheap fare from Norwegian posted on The Flight Deal website. What struck me is what they said in the post (below) and how it really demonstrates the same Skytrain price matching problem . I do think consumers have to think that if they choose the legacy carriers price match ,instead of Norwegians, there might not be these lower fares in the future that Delta or United will match.
” Norwegian is a low cost carrier so they will charge you for everything – advanced seat assignment, luggage and so on. We don’t normally feature Norwegian deals since United and Delta usually match — but at these prices, it probably won’t happen.”