UPDATED: After years of delays and opposition, US authorities finally granted permanent and full permission during the weekend for Oslo-based Norwegian Air to operate as a foreign flag carrier in the US. The US Department of Transportation granted the permission to the airline’s British subsidiary, called Norwegian UK, and by midday on Monday, Norwegian’s stock was flying high.
“This is great news for Norwegian and passengers on both sides of the Atlantic,” declared Norwegian’s founder and chief executive Bjørn Kjos. He said the long-sought permission “makes it possible for us to offer even more routes, more choices and lower fares.”
Investors clearly agreed with Kjos that the new operating rights were “great news.” Shares in parent company Norwegian Air Shuttle soared on the Oslo Stock Exchange Monday morning, jumping 5.6 percent by mid-afternoon to NOK 237.60 per share, up from NOK 225 on Friday. It was a welcome rebound after a long decline.
Norwegian has been operating its flights to the US under temporary permission from the US, but had received permission for its Irish unit last December. Denial for the UK unit could have been disastrous for the airline’s ambitious global expansion plans. Kjos, who’s been impatient to secure the necessary approvals, said his airline’s UK subsidiary had already “opened the door” to a string of new markets.
“By securing full, permanent access to the US, the last piece of the puzzle has fallen into place,” Kjos stated. “We will have the opportunity to operate seamlessly with reasonable fares to more global destinations.”
It’s been a turbulent flight path for Norwegian, which met strong opposition from US-based carriers and not least labour unions that have accused Norwegian of hiring cabin crews, for example, from low-cost countries. Critics have also claimed that granting Norwegian permission to run low-fare trans-Atlantic service between Europe and the US, for example, will lead to job losses in both the US and Europe.
Norwegian has countered the claims, noting how it has set up a base in Florida and hired US citizens to work on board flights. Kjos also claimed that Norwegian will now create “thousands” of new jobs both in the US and the UK. Norwegian already has more than 1,000 pilots and cabin personnel based at its Gatwick hub outside London, while the airline has around 600 employees in the US, mostly in New York and Florida.
The new permanent US operating rights will also help Norwegian launch new routes to Singapore and Argentina from February 2018. Those and other new routes will fuel the job growth, according to Norwegian. The airline needs the new routes and more passengers to justify all its orders for new aircraft, while also trying to avoid all the troubles it’s had on routes currently served by a single aircraft or with inadequate crews available. Things have gone very wrong in cases of technical problems, causing serious delays and sometimes stranding passengers for days.
The news from the US comes shortly after Norwegian also entered into an agreement with another UK-based, low-fare airline, easyJet. The new pact will make Norwegian’s long-haul routes available for sale via easyJet’s new reservation service called “Worldwide by easyJet.” Passengers on easyJet’s European flights will thus more easily be able to connect to Norwegian’s intercontinental flights.