Oil prices are obviously having a negative impact on airlines, and are increasing operating costs (and in turn ticket prices, as much as the market will allow). However, in one case higher fuel prices are causing an airline startup to delay its launch altogether.
In this post:
Norse Atlantic now aims for June 2022 launch
Norse Atlantic Airways is an airline startup that plans to offer low cost transatlantic flights. The airline will largely replicate what Norwegian did before discontinuing long haul flights, and is even using former Norwegian Boeing 787s for service.
While low cost long haul airlines are rarely successful, Norse does have some advantages over Norwegian, including a clean balance sheet, better aircraft lease terms, and a bit more conservative of an approach to ramping up operations.
The airline was supposed to launch operations in the next couple of months (this spring), but has now pushed back that timeline somewhat. Norse now plans to launch flights in June, and put tickets on sale in April.
The reason? Because of high fuel prices and uncertainty. As Norse Founder and CEO Bjørn Tore Larsen describes this decision:
“The tragedy unfolding in Ukraine creates uncertainties within international air transport that we take seriously. Norse’s flexible fleet arrangements, low cost base and strong financial foundation allow us to take a careful approach to launch. We are in a unique position as we have not yet started flying, which gives us the advantage to enter the market cautiously in line with demand and quickly adapt to unforeseen events. A gradual approach where ramp-up is exclusively driven by demand, will enable us to preserve our strong, debt-free balance sheet and cost base.”
Most airlines don’t have the flexibility to just park planes for extended periods in a sustainable way, given how high fixed costs are at airlines — if you’re paying for the planes, for employees, etc., then higher operating costs aren’t necessarily a reason not to fly.
This is a major advantage that Norse Atlantic Airways has. Presumably frontline employees aren’t yet being paid, the airline isn’t yet paying for space at major airports, and Norse’s lease costs for parked Boeing 787s are low(er).
Norse’s initial planned transatlantic routes
When Norse Atlantic Airways does launch operations, the plans are to initially fly from Oslo (OSL) to Fort Lauderdale (FLL), New York Stewart (SWF), and Ontario (ONT).
The plan is to add other European destinations, including London and Paris, “as soon as the market situation allows.” Norse has also just secured slots at London Gatwick Airport, allowing the airline to offer flights there.
As Larsen describes the carrier’s plans to ramp up operations:
“The current global situation makes it challenging to predict the demand for transatlantic travel. However, we strongly believe that the demand will bounce-back with full force because people will want to explore new destinations, visit friends and family and travel for business. Norse will be there to offer attractive and affordable flights on our more environmentally friendly and fuel-efficient Boeing 787 Dreamliners to both leisure and cost-conscious business travelers.”
Bottom line
Norse Atlantic Airways is delaying its launch due to high fuel prices. The airline now plans to put tickets on sale in April for flights as of June. Norse plans to first fly from Oslo to transatlantic destinations, with transatlantic flights from London and Paris expected after that.
What do you make of Norse Atlantic Airways delaying its launch?
Fingers crossed here. The former Norwegian Air was by far the best deal in comfortable and affordable transatlantic flights. I was never on one of their flights which was not filled -- or almost filled -- to capacity. Unfortunately the virus dealt the airline a blow from which they could not recover. All the best for Norse Atlantic.
I was departing Oslo yesterday and 5 787 in full Norse livery are parked there. So they are ready I would say. Can't wait to see there prices to Florida.
Why not put June flights on sale at "higher price" to reflect increased costs and then reduce if market permits. Don't delay on sales as now is the time to sell coming out of covid.
Market for SWF (Newburgh-NY) is pent up and waiting to explode.
A number of US airlines provided investor updates today and the theme across the board is that demand is strong including across the Atlantic for the summer. Delta said it had its highest revenue booking day in history last week; there is a huge amount of demand that has been suppressed for 2 years and now is flying.
A summer launch of a new airline is riskier operationally but less riskier internationally. It is...
A number of US airlines provided investor updates today and the theme across the board is that demand is strong including across the Atlantic for the summer. Delta said it had its highest revenue booking day in history last week; there is a huge amount of demand that has been suppressed for 2 years and now is flying.
A summer launch of a new airline is riskier operationally but less riskier internationally. It is more notable that Norse Atlantic is a fraction of the size of its predecessor.
Do I now need to jump into *every* post’s comments with: “In before Tim Dunn makes this about Delta?”.
That seems tiring.
Look, if you want to set money on fire, just get some lighter fluid and do it the easy way.
This CEO does have the same vision as one other CEO.
"We are in a unique position as we have not yet started flying, which gives us the advantage to enter the market cautiously in line with demand and quickly adapt to unforeseen events."
Reminds me of BALTIA.
Stewart and Ontario? ...good freakin' luck.
Stewart is awesome! Many of us would pay extra not to fly from NYC. Once in Olso, I am able to fly to Gdansk, Poland for $50 (two way ticket using Ryanair and Wizzair). Albany, NY has horrible connection and it is so expensive.
Shocking!!! This airline will never get off the ground, and if it does, it will once again flush investor money down the drain, just like its predecessor. This model does not work.
Wow! Do you work for DL or UA?
As opposed to BA, AA, LH, AF, KL? What's your point?