My post on Hubert Horan’s anti-merger stance generated a ton of discussion here, and 
that was great. While some agreed, others didn’t. Norwegian apparently falls into the latter category, because it wants to jump into the Transatlantic market in a big way starting next year.
One of the important tenets of Hubert’s argument was that these mergers and joint ventures have created an oligopoly over the Atlantic that can’t be broken. This assumes that low cost carriers won’t be able to break into the market successfully in any meaningful way. Norwegian apparently thinks he’s wrong.
In an interview with E24, Norwegian CEO Bjørn Kjos outlined his plans for Transatlantic domination. I should warn you that it’s entirely in Norwegian. Were it not for Google Translate, I would never have known anything about this. (Even with Google Translate, some of this is unintelligible.)
The airline plans to start intercontinental flights to the US and Asia just in time for summer season, 2011. The plan is to have 15 airplanes, no small amount. It’s unclear how many will be flying at the start, but this isn’t just going to be a case of the airline dipping its toes in the water.
Bjørn says he wants the newest and most efficient planes, but I have to assume that will mean something like second-hand A330s or something like that. I can’t imagine we’ll see Norwegian colors on a 787 anytime soon, but then again, stranger things have happened.
If you think this is going to be a true low cost carrier, point to point operation, you’re wrong. Bjørn says that won’t work, and he’s building a hub operation instead. At least he knows that feed is important. And Norwegian does have a fair amount of feed. Take a look at this current route map from Oslo:
Stockholm and Copenhagen are smaller, but still have similarly strong reach. Of course, these don’t all operate every day and aren’t organized in a way where they could perfectly feed into the long haul option at the same time, but if it’s cheap enough, the leisure folks will endure long layovers.
It’s not, however, the leisure folks that really matter the most here. I find myself wondering if these guys are even going to have a shot at the business travel market. If they build a true hub with efficient connections, I suppose it’s possible, but I’m not sure that’ll happen. True, they can get the local traffic in Scandinavia, but, uh, that’s not the world’s biggest market.
I’m sure SAS is just thrilled with this move. Yeah, right. The always-failing airline is now going to face much more competition, if this takes flight. Heck, SAS doesn’t even have 10 widebodies, so Norwegian is looking to just leap right over it. I would just hate to be SAS right now. Actually, I wouldn’t want to be SAS at any time in the last couple decades.
So this Norwegian experiment may very well be the first test for substantial low cost long haul over the Atlantic. I’m skeptical that it’ll work, but hey, stranger things have happened.
[Original Photo via Flickr user kjetil_r]
19 comments on “Norwegian Wants to Go Intercontinental, Prove Hubert Horan Wrong”
I would figure that LH would be taking care of SAS now. Is there some reason you don’t think they are capable of competing with the backing of LH?
SAS is in Star Alliance so it shouldn’t worry to much, and like Mac said, having LH as your buddy isn’t bad.
LH already has cash and effort expended elsewhere. they can’t clean up every mess.
Cranky, are you sure they are going to fly wide-bodies? They do dry lease most of their aircraft, but they also have 42 737-800s on order. Could they perhaps be thinking of flying some -800s? If they made a service stop in Iceland or Ireland (a la BA and Sun Country) they could serve the east coast. Of course they could dry lease the wide-bodies, but just thinking the service might be using their existing order.
Well, translations are fickle, but I believe they are looking for widebodies. They want to do Asia and the US and not with a Sun Country-esque stop. They’ll need a widebody to do all that, especially if they’re planning on having 15 airplanes. I have no clue what they’d do with a narrowbody fleet of 15 for long haul.
Bangkok, Miami and New York are dense enough from the region to work at start. Start with those three and gradually add. I think it has some potential for a network similar to Air Berlin.
I wonder how much O/D traffic they’ll be able to peel off with this?
In what way is SAS ‘always failing’?
Sadly, they’ve been failing financially for years. Like many US airlines, they have constant labor strife but it’s magnified with SAS trying to contend with the laws in 3, labor-friendly countries. They’ve also over-extended themselves with ill-advised investments that have not paid off (bmi, Spanair, airBaltic, etc). They had a bad attempt at a low cost carrier, Snowflake, which wasn’t low cost. Their long haul operation has struggled for awhile and they’ve lost a ton of money on it as it continues to shrink. (No more west coast US flights, for example.)
Didn’t Cranky mention something about a “Feel Air” based out of Stockholm? Not sure, but Norwegian’s attempt seems to be the most serious and reasonable so far.
I actually think that Star Alliance is hurting SAS cause the Lufthansa machine is just replacing SAS with one-stop connections over Germany. (Some might argue that Star is the saving grace for SAS). I think it would be ideal if SAS and the airberlin-niki-S7 group all joined oneworld.
To Jason H: Yeah they could use 737-800 with one stop but it would make for an even longer flight time and very marginal revenue prospects (cause they would have to pay twice for airport fees). Also there might be crew time issues. Sun Country can do this cause they are leaving their aircraft at STN for 2 days.
Feel Air? I don’t remember that one. Maybe it was discussed elsewhere. (Or I’m losing my mind, which is also possible.)
This is a good example of why I don’t worry about FR venturing into longhaul. For longhaul to work you need a hub, connections, a competitive premium cabin, high yield passengers, basically everything FR doesn’t have and a model that is diametrically opposite FR’s current operation. DY on the other hand sells connections and its leadership knows what it takes to make longhaul work. That said, demand to Norway is relatively small, and if SK doesn’t even bother with longhaul to OSL with a much larger network, what the heck is DY going to do with 15 widebodies? I assume they, and Air Asia for that matter, will both run into reality very quickly here.
Not sure if Norwegian can pull this off. Not to put them down, but OSL is a great destination I personally don’t believe the have enough demand for this type of service.
OSL doesn’t have to have the demand for service if the fare is cheap enough. If we go back in time about 40 years there was low cost summer flights for the back packer type crowd which used Brussels or Luxembourg. That got people to Europe and they branched out from there on trains, buses, and ferries. So this service could do the same thing in the 21st century.
Where does Icelandair fit in? They have been running low fares trans-Atlantic with connections to several European cities.
Icelandair is awesomely goofy. I flew them about 10 years ago – great time stopping in Iceland. They’ve been able to create a fantastic niche for themselves. They bring people into Iceland from the west coast and then send them to Europe. As an added bonus, you get a nice stopover in Iceland if you want. It’s a great niche, but it hasn’t grown in years and it probably won’t grow much beyond where it is. One of the great things about Iceland is its location. A lot more of the US can be reached with a 757, so it gives them a nice edge in serving routes with less demand.
I’ve only actually flown Norwegian on one round trip so far – OSL – TOS, and they’re ok, better than Ryanair or EasyJet. But I’ve found that they’re often not cheaper than SAS. –In late May I flew from Oslo to Malaga. Both SAS and Norwegian have direct flights, but SAS had better times and they were cheaper once you figured in the cost of checking a bag on Norwegian. Just barely cheaper, but still cheaper.
That said, if Norwegian starts offering flights to the US, I’ll definitely consider them if the price is right, but they wouldn’t be my first choice.
Some random thoughts.
Scandinavians have some of the most vacation time and leave time in Europe. If you have a baby–whether you are male or female–you get something ridiculous (to an American) like a year off and you get to keep most of your salary. Wikipedia has a nice chart: http://en.wikipedia.org/wiki/Parental_leave
So my point is that while I’d never say that Scandinavia is a huge market, it’s a traveling market. People just have a lot of time.
I’d also add that I flew norwegian last year and thought it was incredibly awesome that I could buy wireless access ahead of time when I booked my ticket. Then, once I got to the airport in Oslo, I just had to open my laptop, and type in my code. That was cool.
I just flew with Norwegian from London to Oslo. Price was cheaper than Ryan Air if you consider the train ticket. And I could bring luggage. No hidden £10 creditcard fee and the fact that the plane was a brand new 737-800 with sky interior didn’t drag it down one bit. Oh and they had free WiFi connection during the whole flight… I was checking mail and newspaper at 38000 feet. Will go again for sure.