This will be a critical year for Norwegian, CAPA says
In an analytical article about Norwegian, the CAPA Centre for Aviation says that the airline’s 2012 results confirm its reputation as the Nordic region’s most consistently profitable airline. But 2013 is a critical turning point for it as it establishes its first base in a major capital city outside Scandinavia, at London Gatwick, and a base in the highly competitive market of mainland Spain. It will also start long-haul routes to New York and Bangkok. Only time will tell if these gambles pay off.
“On long-haul, [Norwegian] will encounter efficient competitors from much lower wage economies and well established strongly branded operators from Europe, while on short-haul it will meet embedded lower cost competitors that will not have the distraction of start-up long-haul operations,” CAPA writes.
“Looking further ahead, it will need more bases around Europe in order to achieve the double-digit growth rates demanded by its ambitious fleet expansion over the next decade or so. It may also need to consider recapitalising its somewhat slight balance sheet.”
CAPA describes Norwegian’s fleet expansion plans as ambitious. It will have to increase its share of European short-haul markets. But due to the tough and well established low-cost competition in the UK and Spain, CAPA assumes that Norwegian is taking the view that SAS will disappear.
[photo courtesy Norwegian]