Norwegian Air, which recently had a troubled launch of its new long-distance routes to Bangkok and New York, is changing the course its boss Bjørn Kjos laid out earlier this year. Now, instead of counting on growth from Asia, Norwegian aims to open more new routes to cities in the US and set up a new base in either New York or Florida.
“For the next few years, we’ll first and foremost grow with routes to the US,” Kjos told newspaper Dagens Næringsliv (DN) over the weekend. “That’s logical, because the greatest traffic flow is there today.”
That’s in contrast to what Kjos told members of Norway’s Foreign Press Association in January, when he claimed that the biggest airline industry growth would come from Asia, not least as more Chinese join the international travel market.
Since then, however, China’s economy has showed signs of a slowdown while the US’ has picked up. Norwegian, a low-fare carrier, faces tough competition from Asian airlines that offer much more passenger service on board that’s included in ticket fares than in rival Norwegian’s, and Oslo-based Norwegian attracted complaints when passengers failed to get food, drink or even a blanket when they couldn’t pay cash. Several low-fare Asian airline bosses also told DN last month that they don’t dare offer low-fare service to Europe because fuel costs leave them without the same advantages on flights longer than eight hours.
Norwegian also suffered delays getting delivery of the new Boeing 787 Dreamliners it intended to put into service on its new long-haul routes when they were to begin at the end of May. Nagging technical problems with the Dreamliners meant that didn’t happen, and Norwegian had to lease other aircraft until the Dreamliners can finally start flying in mid-August. That exacerbated start-up problems and last week, arch rival Scandinavian Airlines (SAS) announced a major order for new aircraft itself that SAS will use on long-distance routes, also to the US. That’s likely to make competition even tougher for Norwegian.
With Norwegian’s stock sagging lately, Kjos says he still has faith in the prospects of long-distance travel at low fares “but we will first and foremost follow the traffic.” That’s in the US, he’s decided, as the airline opens new non-stop routes to New York and Fort Lauderdale, Florida. More new routes are likely to follow, from New York, Washington, Los Angeles or San Francisco. DN reported that not only Oslo may get new long-haul service, but Bergen or other medium-sized Norwegian cities as well.
Norwegian also plans to open a new base in the US similar to those it’s operating at London’s Gatwick Airport and in Spain. US personnel costs are much lower than those in Norway, and Norwegian, which is registering its new Dreamliners in Ireland to avoid the costs of Norwegian labour laws, may hire several hundred non-Norwegians. DN reported that each Dreamliner needs arounds 25 pilots and 70-80 flight attendants to keep it in the air up to Kjos’ goal of 18 hours a day. That means around 800 persons will be needed to staff Norwegian’s new long-distance routes.
Kjos noted that it’s also much easier to secure air traffic rights in the US “because the market is completely open.” Routes to and from Asia are more difficult to secure, also because of rights to air space over Russia.
“We’ll establish a base with employees in the US when we get the third Dreamliner at the end of October,” Kjos told DN.
Views and News from Norway/Nina Berglund
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