Norse Atlantic Updates Business Model, Reduces Fleet

More morons that think if we can only increase our load factor for every fare we lose money on some how we will make money. The ULCC business model only works it seems within inter Europe flying (short hops often out of under used airports).

Norse will fail. Only a matter of time.

Longhaul low cost flying doesn't work esp. since they don't compete for high fare business traffic which is what keeps legacy/global carriers going during the off-peak periods of low tourism-related demand.

It is also becoming increasingly apparent that UA's strategy of holding onto aircraft during the pandemic probably was not the right choice as yields soften even with a much smaller transatlantic low cost sector. UA did not get the operating cost improvements that most other legacy carriers got by retiring aircraft and those cost improvements are necessary as yields will continue to weaken on international routes.

And it is also notable that the 787-8 is increasingly being pushed out of service; the baseline or non-stretch versions of aircraft never provide economies as good as stretch versions and that is all the more true with widebodies in longhaul international service.

Oh good. More UA comments in a thread that has nothing do with them at all. Loon.

Long-haul low cost carrier doesn't work in TATL as you said, but it does work in TPAC. ZIPAIR Tokyo, subsidiary of JAL, is profitable, and so is Air Premia of South Korea.

TATL market is just too competitive. Icelandair is doing quite well thanks to its geographical advantage, and both TAP Portugal and SAS are dumping the airfare by flying narrowbodies.

TPAC is quite different because there's nothing like Icelandair in this market and because it's too far to fly narrowbodies. Chinese carriers used to dump the price but they're now almost non-existent in TPAC due to political reasons.

it has EVERYTHING to do with UA.

Whether you know it or not, Scott Kirby SPECIFICALLY said early on during covid and covid recovery that its strategy NOT to remove aircraft types as AA and DL did was based on a belief that pricing would fundamentally be stronger because so much low cost TATL capacity was pulled from the market including because of the failure of Norwegian.

It was a given that there would be a rebalance of capacity to demand and that TATL demand would fall as the amount of revenge travel falls - which is what we are seeing.

AA and DL reset their cost structures and DL led the industry with pay raises which were possible because of its higher revenue generating ability. It took a chunk of its aircraft-related efficiency gains and rolled it into higher employee compensation.
AA lags on revenue generation which is why its profit margins on its international network continue to fall while UA has one of the least fuel efficient international fleets of any global airline which shows up by the fact that DL's international system profit for 2023 was almost 50% higher than UA's even though UA operates a much larger international network. It also isn't a surprise that AA and UA are dragging their feet in getting new contracts for their FAs.

TPAC fares are very high because of the significant reductions in Chinese carrier capacity so the S. Korean and Japanese carriers don't have to lower fares near as much in order to gain passengers.

Yes, and that's why long-haul low cost works in TPAC now. Chinese carriers are not likely to regain the TPAC capacity in a decade, and FSCs are charging really high prices thanks to it.
Most Asians earn less than Americans or West Europeans, so even a slightly lower fare than FSCs is very attractive to them. They're a lot more cost-sensitive than Westerners, and long-haul LCCs fulfill their needs.

Carriers like NORSE are a problem with their lower fares and generally inferior product which the larger legacy carriers are forced to match with a diminished product. The market is often driven by the low cost Operator even though those Carriers barely manage to stay afloat. Carriers like NORSE are a parasite and need to go away. No way in hell will the legacy carriers offer a Better experience while matching the fare of a bottom feeder like NORSE and people need to understand that. Why would they?

It will be hard for them to sign those wet lease contracts in a short period. And agreed with Ben that multi-year wet leases would be unusual in the biz, as they are usually seasonal, sometimes shorter.

The network needs to be considered. Ex-LGW they are operating in very competitive markets, which on one hand I understand due to volume, but on the other hand the competition is too challenging. Why not secondary-ish markets with fewer frequencies? They also seem to have limited flights into other markets - BKK and CPT seems to be the extent, if looking at their website correctly. Maybe it's traffic rights, but couldn't they be looking at other volume leisure and VFR markets? LGW-HKT, LGW-CUN (had a group of pals traveling from LON to CUN this month, and there were no direct flights they could find), LGW-JRO-ZNZ triangulate, etc etc etc...?

LCCs in Europe fly out of normal airports too, its not 2005 anymore.

Ryanair makes money, despite low fares, by offering a superior product at a lower price to the likes of LH/BA/etc. on top of making loads of ancillaries.
There is more legroom on Ryanair than in BA J within Europe.

I thought Norse had a power-by-the-hour deal with Boeing, which was suppose to help with the seasonality. In any case, Norse hasn't done enough to resolve winter traffic. Kudos for trying something but I'd say it needs to get more aggressive -- something like Sun Country and Transavia used to do. Obviously, opportunities are limited for wide-bodies, but maybe something like an agreement with a pre-Westjet Sunwing.

That said, as a customer, I love Norse and it's downward pressure on transatlantic fares.

TUI already operate many of these routes you are suggesting Norse try.

LGW-DXB would be my suggestion over the winter months for them to try.

"had a group of pals traveling from LON to CUN this month, and there were no direct flights they could find"

They suck at searching then, or they lied to you about trying.

BA2203 is 6xWk LGW-CUN
BY048 is 3xWk LGW-CUN

Both have been operating all month. Took 5seconds to find them.

Problem for Norse is they are just not competitive once you add extras that you basically need for long-haul flying. Legacy carriers frequently have great deals and include everything. Also Norse is notorious for awful customer service that is much worse than those legacy carriers no matter your general feelings about them and when things go wrong they do little to help - this obviously doesn't help with brand loyalty, as people try them, have an extremely bad experience and never fly with them again. I just can't see any way they can work.

I am amazed Norse Atlantic was even given a licence to operate. The original business model had failure written all over it. The definition of madness is trying the same thing repeatedly but expecting a different outcome.

The author in this article, although I agree with everything he wrote but when it comes to Norwegian and his conclusion about long haul low cost model. I must say I don't fully agree, one fundamental or rather 2 fundamental issues Norwegian in particular was facing was the infamous rolls royce engine problems that created huge disruptions. Not to mention all the battery issues at release that were causing fire that Boeing had to fix. Norwegian was flying 43 dreamliners at its height, and despite all the challenges, the airline was almost getting ready to be profitable on the long haul market. Buy then the devastating effects of the pandemic came and put a deathblow into everything and killed off the entire project. You could argue and say that Norwegian was the unlucky airline. The formula that they were trying to achieve was working if it wasn't for all the external factors beyond the company's control. Another big difference between Norwegian and Norse is that Norwegian has better branding and recognition than Norse. Norse is not even known in their own hometown which is Norway. I think Norwegian would be in a good position to start flying long haul again in the near future, but not before 2028. First, all the NG fleet needs to be replaced to MAX aircraft, and Boeing being delayed with aircraft deliveries might delay things even further.

Hey, all start ups need time and money, and generally are going to lose money the first 3 to 5 years. It,s naive to think otherwise. And face it, their competitors do not want to have to compete with a low cost business model. Especially on these long distance routes. My only suggestion would be to improve the inflight product experience. But competition is good for the consumer, so really hope they find the keys they are going to need to be a success. And contrary to the comments I see, they have increased their turnover and pax carried by a lot this year..and reduced their loses...

Not hard to see why Norse is not doing well. We flew last year and were stunned by their seeming incompetence and disorganization. It was mayhem at checkin and boarding. There’s no online checkin, so it’s a free for all at the ticketing desk & with their strict baggage policies, people were losing their cool and yelling. It was the worst. Then, we were delayed for 8 hours with zero updates. The boarding time never even changed even though we boarded 8 hours late. Everyone seemed confused or clueless. When we did board, everyone just mobbed the gate. There was no priority given to different boarding groups. We felt fortunate to have arrived safely and vowed never to fly this airline again. Many people were saying the same.