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Is Norwegian up to the long-haul challenge?

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Can it finally make the low-cost long-haul model work?

 

 

The casualty list of airlines trying to make the low-cost long-haul model work stretches back to the 1980s, writes Gary Noakes for TTG Digital. But Norwegian believes its budget flights between Europe and the US will succeed where the others failed.

The carrier, which currently offers 320 short-haul flights a week from London Gatwick, starts transatlantic flights from there next July, with three services a week to New York JFK, two to Los Angeles and two to Fort Lauderdale.

Laker Airways collapsed in 1982 after trying to make low-cost long-haul work. More recently, Oasis Hong Kong Airlines, Flyglobespan and Zoom Airlines tried and failed. Unlike these, Norwegian already has a network of short-haul routes into Gatwick, and among the 30 that it will operate next year around 24 have potential to provide feeder traffic to its US flights.

“We have a vast route network which is already established to and from Gatwick, so we expect that many of our passengers will travel from destinations in Europe,” a Norwegian spokeswoman said.

All Norwegian’s US routes are afternoon departures, giving plenty of time to assemble passengers from continental Europe to transfer to these flights. Gatwick is Norwegian’s fastest-growing base, set to leap from 1.87 million passengers to 2.42 million there next year, with two aircraft added to the current four, one of them being a new Boeing 787.

The carrier argues that the 787 will help make the routes profitable. It was not around when Zoom Airlines operated a Boeing 767, which has running costs about 20% higher than the new type.

“We have the right aircraft to make this work,” the spokeswoman said.

Gatwick, meanwhile, is keen to have a New York flight, which it last had in 2009. It is aware that its price point must be significantly lower than Heathrow’s.

UK customers are discovering that Norwegian’s headline fares do not include food, baggage or seat reservations, as these are add-ons sold in one package costing £30 (€35) each way. When these are included, they bring the carrier’s cheapest return fare to New York up to £512 for a July 8 departure. This is far higher than the airline’s cheapest advertised return fare of £298, but far below British Airways and Virgin’s identical published fare of £884.

Norwegian’s handicap is that unlike BA and Virgin, it does not have a full business product to attract higher-yielding corporate fliers. Norwegian’s version, Premium Class, is a premium economy product rather than a full flat bed. And a sample New York price for the July departure showed it at £1,212, very close to Virgin’s basic Premium Economy fare at £1,246.

Another potential downside is that Norwegian will not feed its Gatwick flights from its hubs in Scandinavia, as by the time of the launch it will have the US routes covered direct from Copenhagen, Stockholm and Oslo.

TTG Digital

[photo courtesy Norwegian]

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