The grounded Boeing 787 is an apt metaphor for Norwegian’s low-cost long-haul ambitions, which ended in mid-January when the troubled airline announced it would revert to being a short-haul brand.
Some said Norwegian expanded too fast, and it had major technical issues with the 787s before the pandemic even hit.
In early 2018 it began replacing engines on all its 787s, as fan blades in the Rolls-Royce turbines were prone to cracking. The 787 was Norwegian’s only long-haul choice, so it had to lease expensive replacements.
Unfortunately, Norwegian was tied in to acquiring more new 787s and finished with 35, 18-20 of which were UK-based and grounded by the pandemic.
In its heyday at Gatwick, the carrier offered three flights a day to New York plus Boston, Orlando. Miami, Tampa, Chicago, San Francisco, Los Angeles, Austin, Seattle, Denver, Rio de Janeiro and Buenos Aires.
“It was not an experiment that went wrong,” said Norwegian. “We proved the concept was successful, but the environment was highly competitive and difficult and we had a lot against us because the Dreamliner issue made it difficult.”
The irony is that had Norwegian stuck to long-haul, it would have had an open goal at Gatwick post-pandemic, with British Airways and Virgin Atlantic vacating the airport for the foreseeable future.
British Airways, Virgin and US carriers were also undoubtedly rattled by Norwegian, with all introducing “hand baggage only” fares to compete.
BA’s cheapest economy long-haul fare now offers two pieces of hand luggage, no seat reservation and no checked baggage.
On the other side of the Atlantic, the US carriers have done the same, with Delta’s Basic Economy fare excluding prior seat selection and with no ticket flexibility or refunds. On the bulk of its international services, checked bag fees apply.
Despite Norwegian’s withdrawal from long-haul, there is no going back for legacy airlines since the Scandinavian upstart paved the way. It may have ultimately lost, but it won the argument.
“People did not mind having the choice of paying for food and luggage, hence the likes of BA charging for baggage,” said the Norwegian spokesperson.
Food and drink were added extras on Norwegian, but remain a part of even the cheapest fare on legacy airlines’ long-haul routes – for the moment.
Once airlines upgrade in-flight technology, “buy onboard” will be easier. The days of “free” food on long-haul services are numbered, and customers will essentially be paying more for less.
OPPORTUNITY KNOCKS
Expansion by any airline is not currently a top priority, but there are contenders to take Norwegian’s place in the long-haul market.
Norwegian’s rise seemingly prompted BA’s parent company IAG to react with the formation of Barcelona-based Level, which IAG is resolute will resume flights to all its destinations post-pandemic.
But IAG’s low-cost UK ambitions appear to centre on Aer Lingus, and on Manchester.
IAG has positioned the Irish carrier as a budget transatlantic option with flights from the UK via its Dublin hub, but a new subsidiary, Aer Lingus UK, looks set to fly non-stop from Manchester to the US.
Documents filed in December 2020 with the US Department of Transportation confirm the new company is registered at Belfast City airport, giving it UK status.
They reveal Aer Lingus UK has applied to the CAA for an AOC (Air Operator Certificate) and route licences.
“Aer Lingus (UK) Limited anticipates the CAA will issue its AOC and licences in or around February 2021,” it says, confirming flights will be from Manchester.
“Aer Lingus (UK) Limited intends to operate daily flights to New York (JFK), daily summer flights and four weekly winter flights to Orlando, and summer flights to Boston.”
TRANSATLANTIC TUSSLE
It has a good business case as, following the demise of Thomas Cook Airlines, Virgin would otherwise offer 70% of transatlantic capacity from Manchester this summer.
Aer Lingus UK has applied to re-register two wide-body Airbus A330-300s from its fleet and station them at Manchester, but has another weapon up its sleeve; two new narrow-body A321LRs, due for delivery in February and March under the UK flag.
This new-generation Airbus is 30% cheaper to operate than comparable aircraft. Sixteen of the 184 seats will be lie-flat business class, effectively subsidising bargain economy fares.
Manchester is likely a toe in the water for Aer Lingus, which, minus Norwegian, has suddenly found a much bigger potential market.
Meanwhile, New York’s JetBlue has secured slots at Gatwick and Stansted for JFK and Boston flights, and has confirmed a start this summer.
Norwegian’s 35 Dreamliners have joined the glut of aircraft for sale or lease, and Rob Morris, global head of consultancy at airline data specialist Cirium, said average Dreamliner lease rates had declined “22-26%” last year.
“Now Norwegian have finally decided to exit long-haul operations, there is potential for even further falls in lease rates, although to some extent this exit from the market was not unexpected and thus likely already factored in,” he said.
It is a buyer or leaser’s market at the moment, and while it would be a very, very brave investor to plan a budget long-haul start-up, now may be the time. Stranger things have happened.
