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Norwegian has been making headlines for all the wrong reasons recently as it managed to lose $210m in fuel hedges in 4Q 2018, it had to cancel all of its Caribbean routes in an attempt to cut costs, it had to cut its service between Paris Orly and New York and it had to announce a $353m rights issue to raise much needed funds….but it has not all been bad news.
As recently as November Norwegian took the bold decision to restructure its transatlantic operations to allow it to focus more on major US hubs (and compete more directly with the legacy carriers) and it also announced a new route between London Gatwick and Rio de Janeiro as it looks to compete with British Airways on a route on which the British flag carrier has held as a monopoly for years.
Even last week there were signs that Norwegian is prepared for a fight as it announced two new seasonal transatlantic routes to New York and Chicago.
Now we may be seeing evidence of why the legacy carriers have been so concerned about Norwegian’s effect on the transatlantic market.
Norwegian has announced that, per the latest PANYNJ data, it was the largest non-North American airline to serve the New York and New Jersey area in 2018.
Norwegian carried 2,004,896 passengers to/from the New York/New Jersey area in 2018 as the area broke through the 50m passenger mark for the first time.
I haven’t been able to find this report online (I doubt Norwegian would make something like this up!) but this does mean that Norwegian carried more passengers than the likes of British Airways, Lufthansa, Air France and KLM to the New York/New Jersey area in 2018 and the airline was only around 50,000 passengers short of matching Air Canada’s passenger numbers.
It should be noted that the data collected doesn’t just relate to the two major international airports in the region (JFK and Newark), it also includes passenger traffic to/from Stewart International airport where Norwegian is the only carrier to offer a transatlantic service.
All in all these numbers go to show that Norwegian has quite a bit of clout when it comes to setting market rates for transatlantic air fares and this means that, as long as Norwegian stays healthy, it’s going to be very hard for the legacy carriers to edge prices higher (as they would undoubtably like to do).
This is almost certainly why, until recently, IAG (the parent company of BA, Iberia, Aer Lingus etc…) was very keen to initiate a take over of Norwegian.
IAG has now backed away from that idea (presumably because it feels Norwegian will get weaker and become an easier target in the future) but it will be interesting to see what happens if Norwegian starts to show signs that it’s getting its financials in order.
It has been embarrassing enough for the legacy carriers that an upstart like Norwegian managed to wade into the transatlantic market and cause chaos with airfare prices but at least they’ve always been able to point to Norwegian’s model and say “it cannot last”.
But what if it does last? What happens if Norwegian manages to ride out this storm and get on the path to financial stability?
We’ll then have a situation where we have a healthy low-cost airline positioned as one of the biggest players in the transatlantic market and there will be little or nothing that the legacy carriers can do about it – that has to be a nightmare scenario for the legacies.
Yes, we’re a long long way away from Norwegian getting its act together financially and, ultimately, that may never happen….but wouldn’t it fun to be a fly on the wall in the boardrooms of American, BA, United and Delta the on day Norwegian completed its turnaround?
Featured image courtesy of Norwegian
Maybe Qatar should consider investing in Norwegian.
The US airlines would be apoplectic if this happened 🙂
You have to consider the fact that airlines within the EU can initiate a transatlantic flight from any place in the EU. The legacy airlines mostly fly to or from their Country but Norwegian has made it their model to pick any market that might yield a profit. My personal feeling is that this business plan will yield an unwieldy, constantly changing mix of flights that can only work for price conscious consumers and will not bring spenders or dedicated customers.
I alos wonder how the numbers would compare if one considered combined totals for LH, LX, OS and SN.
Inerrsting points but I’d counter with this:
1) other than political considerations there’s not much difference between Norwegian starting up routes from anywhere in the EU and a US carrier starting up routes from anywhere in the US that offers a population capable of sustaining the flights.
2)Price conscious customers can be dedicated customers – just look at the customer bases that easyJet has.