Norse Atlantic Airways is a long haul low cost carrier that launched in 2022. The airline exclusively flies Boeing 787s, and primarily operates transatlantic flights. Being a profitable low cost long haul carrier can be challenging, especially in highly seasonal markets, like across the Atlantic.
Continue reading: Norse Atlantic Reports Huge Loss: Can The Airline Be Profitable?
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It seems to me the typical ULCC flyer isn't one vacationing in Europe. And an airline like this isn't going to attract many business flyers. I therefore question the ULCC or even LCC (and yes the legacies are ULCC/LCC to a certain extent) business model on long haul International. I don't want the cabin specifics are but stuck in a 29 inch pitch seat without any IFE for 8 hours seems like a very unpleasant experience.
I don't think why they don't shift their aircraft to popular winter sun destinations like Dubai, Bangkok, Bali and Cape Town between November and March.
Why not use these aircraft for winter sun to Canaries, Turkey or Dubai. Lots of demand and you can probably charge more per mile ticket price than across the Atlantic...
Because the European LCCs already service Canaries and Turkey and Norse isn't going to be cheaper than Ryanair or Wizz.
Dubai could work because the LCCs don't fly there.
They're also recruiting for more FAs in the USA, so I suspect that they think they'll be around for a while.
thank you for continuing to highlight stories regarding finances in the airline industry. As much as some resist hearing these details, a well-rounded discussion has to include finances.
UA's CEO accurately noted several years ago that the global carriers and esp. US global carriers are in the best position they have been in for decades. The US did not lock down as aggressively, has a large domestic market which largely remained open after the first few months, and the US, like many large economies, generously supported their airlines (huge amounts of money was pumped into economies so it wasn't just airlines).
Labor costs have soared, low cost carriers didn't have the capital to get through the pandemic, and the legacies throughout the world are not willing to let low cost carriers or the Middle East airlines to take the share that they took in the last decade before covid. The developed market legacy carriers have the resources to add
efficient capacity and can price to reduce leakage to non-legacy carriers. Add in, legacy carriers worldwide are largely profitable.
So, the outlook for Norse Atlantic and others is grim. They will fight to survive as they should. Their chances of being sustainably profitable is unlikely.
The main problem is unbundled fares long-haul don't work, as invariably people can't really do without meals for that length of flight or luggage as people generally go for longer when going that far. Transatlantic flights are hyper competitive already bundled - the problem for Norse is frequently you can that for less after you add those things with them. There is no viable future for this model - hell I don't think unbundled service has much of a future in short haul even as even the cost of flying with low-cost carriers is risinng massively, when people pay much more, they expect a lot more.
If only they hired TD as CEO and tried to model their business around the world's best airline, Delta.
The strong dollar will be hitting demand westwards across the Atlantic. So many who used to go to America are now going to the Middle East and Asia as it is so much cheaper than America. Especially for ordinary families Orlando and Florida are now well above most British holiday budgets.
The dollar has lost 0,66% of its value vs. the Euro in the past 6 months and 2,53% in the last 12.
Next summer ‘25 will be record demand as the World economies come out of recession.
and esp. for transatlantic airlines, it is the strength of the dollar and the longer travel season that is making TATL networks work.
All of the large European global airlines are in JVs with US airlines, are lining up to become affiliated w/ one of those carriers, or have figured out how to become viable on their own w/ a niche strategy.
The same is increasingly true w/ Asian and Latin airlines that recognize the power of connections to the big 3 global carriers - even though Asia and Latin America is much more Asian point of sale than to Europe.
So, currency benefits swing both ways. Right now, Americans are traveling and the US economy is still stronger than most world economies.
Norse Atlantic has to figure out how to participate in the market as it exists. Given that other airlines are making money, Norse Atlantic perhaps simply does not have any more viable of a strategy than Norwegian did.
It seems like you just made a case for why this would work better for long haul. You gotta check a bag, you gotta eat, you gotta drink so you will pay extra for those things and add revenue. What am I missing?
Full of fluff.
But no bingo this round.
Everyone's middle box "Delta" wasn't called.
Better luck next time.
The big issue are labor costs because the ULCC are competing for the same labor pool, specifically pilots, with a limited number of individuals with the certifications/qualifications to do the job. ULCCs cannot support a pilot training program to bring in individuals with the potential to become a commercial pilot. ULCCs don't have the diversification of partner income and lucrative International premium fares. So they are stuck with higher costs but limited means to generate revenue outside raising fares and fees are coming up with new fees.
very well said and accurate. (in contrast to the meaningless drivel that was posted above your comment)
If I'm flying across the Atlantic, it going to be an established airline (Euro or the Big Three). Those flying on the established airlines are more well grounded, have some type of allegiance (FF miles, credit card, business capacity agreement) which nurtures a repeat PAX.
Norses is the airline I throw my son or daughter on as a cheap ass way to cross the Big Ditch. Here's your passport, backpack, phone with a Euro SIM card, and strong boots. Back in the days of Freddy Laker, it was called the "Flip Flop and Backpack Crowd". What Norse lacks a is dedicated clientele. Instead, it's one-off PAX leveraging the price of a ticket. It takes consistency and repeat customers to make money in the long run, especially transatlantic.
Some European LCCs do fly to Dubai, but from secondary Eastern European cities. Norse could fly to DXB from London, Paris, Oslo, CPH, ARN, BER, etc.
Doesn't AerCap (the lessor to the initial 787s for Norse) have a ton of equity in the business hence the cheap lease rates?
A definition of madness is to keep doing the same thing but expect a different outcome. I don't understand how this airline ever got an operating license. It seems to use the same flawed business model as its bankrupt predecessor Norwegian. Even some of the senior managers are the same.
The only successful new entrant over the last 50 years or so, was Virgin Atlantic (VS). However, with a full service model and - importantly - a seasonally balanced network. From the beginning, they had a strong footprint in the Carribean, shifting some of the capacity seasonally.
The point is those things are bundled with fares on legacy carriers and work out cheaper - unbundling doesn't work out cheaper and why most people still fly with those airlines and why low-cost long-haul hasn't worked be it with Norwegian's previous operations, Norse's currrent, or AirAsia X's.
Virgin Atlantic also fought and won to have a position at Heathrow airport not unlike what Southwest managed to do at Southwest. Airlines provide a service in a competitive market and both figured out how to get into the markets where "the big boys" played. Then each of them came w/ business plans that allowed themselves to expand in a highly competitive market
Norse Atlantic and Norwegian before didn't get the first part right. They are still competing with much larger airlines that have the "location" piece much better figured out.
Perhaps if they flew from other airports like Birmingham, instead of where every other airline flights from London they may do better
The problem is they have no short haul connecting flights so they have to fill their planes from the local catchment area. By the time you buy connecting flight with easy jet you have to add a bag and seats etc it is way more expensive than using BA if you are flying from GLA, and flying from GLA TO THE USA through LHR is usually cheaper than flying direct from LHR to the US. Norse should try linking up with easy to connect with GLA, EDI, MAN, NCL. Flew with Norwegian LGW-JFk. Nothing against them but I would rather fly a legacy carrier across the pond.
Yeah, totally agree. GLA and EDI. I would prefer direct with Norse than travelling via LHR with BA.
I flew them last summer one way LGW-MCO and they were perfectly fine. Left on time, arrived on time, friendly FA's, really no different than flying VS or BA as my price included 1x Bag and 1X Meal. But a lot less money.
The main thing though was all the big boys would not sell me a 1 way ticket without gouging me. The one way prices were more than buying a return ticket which left me with the choice of buying a return ticket and throwing the return part away. I know, against their rules.
So I went with Norse. I hope they survive!
I am hoping to go to the US in the next few months. I want to go Premium Economy and Norse makes sense.
Sadly the Trans atlantic is a graveyard for low cost airlines, Laker,People's Express and Norwegian to name a few.
I wish them well but the odds are not great
Laker had vision but also an ego. He bought loads of planes with not enough routes.
Also the legacy carriers were out to get him
I do the exact opposite of Paper Boarding. I always fly Iceland Air, Azores Airlines, Westjet or some other low ball transatlantic airline. I don't need points from anyone except Southwest and Hawaiian, and it makes no sense to pay a lot of money for a flight that lasts less than six hours. Premium Economy is fine with me.