How Norwegian Air Upended Travel With Its Cheap Flights
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Underneath it all is the same operating model that allowed low cost carriers to flourish in the short-haul market: streamlined, standardized, modern, fuel efficient fleet; non-unionised crews; using cheaper secondary airports; flying direct; cramming in as many rotations in 24 hours as possible and flying outside of peak hours to get cheaper landing slots.
The new Boeing and Airbus models make the LCC approach increasingly viable for longer haul routes thanks to big fuel efficiency improvements and smarter cabin interiors/materials that boost pax load without sacrificing comfort. Oil prices are also helping since the price has remained low for so long now that even if an airline hedged the wrong way a few years ago they're now all enjoying better rates.
IAG (British Airways, Iberia) and Lufthansa are trying to get in on the action too with Level and Eurowings respectively.
To be honest, Ryanair's new web app is actually not that bad compared to the hostile site they had a few years back.
Ryanair's new web app is actually not that bad compared
to the hostile site they had a few years back
Short-haul LCC traffic in Europe is becoming a mature market and so budget airlines are on a drive to find ways to grow beyond simply offering "insanely cheap prices". However, it's important to remember that a bad/hostile customer experience didn't stop Ryanair getting to ~100 million passengers a year (note: not that I'm defending that!).
I really can't see myself getting a Ryanair flight to anywhere where I could get Norwegian, airBerlin, or other LCC that aren't as cheap as "Fly for €6.99" but at least treat you well.
You pay extra for: checking luggage, carrying on luggage, selecting your seat in advance, selecting any seat that's not a middle seat.
And then -- for most LCC's, you MUST print your boarding pass at home, or pay a 50 Eur service fee. And many of them make you check in your own luggage, all the way to the belt.
Is this uncommon in the US?
I'd much rather enter the airport, casually walk up to a touchscreen, print my boarding pass and label and drop off my baggage than queuing up in a long line when the check-in counter opens.
However - a lot of Americans still aren't comfortable with this level of self-service, and want to go to a full-service counter.
What I was referring to specifically with LCC's is that they have zero personnel at the check-in counter -- self-checking your luggage isn't a nice option, it's mandatory. And there's not even a kiosk for printing your boarding pass (that would cost money to maintain, best to have you use your own paper and toner at home).
Or... you can board with your phone :)
Well, you do. But you're subsidising regular LCC users like myself :) I never bring check-in luggage, don't care where I sit and as regards printing out passes, most (including Ryanair) have decent apps that negate the need for that.
N.B. This applies to shortish trips, to places in Europe. If it's a long haul trip or long duration, I'll consider other airlines.
I call this a plus. Waiting to have somebody check your baggage when you could just do it yourself is a vast improvement.
This doesn't sound quite right. Starting an airline is not a trivial undertaking, certainly not something you could hope to complete during a temporary downturn or use "market timing" like you would with equities.
Norwegian along with most other budget carriers leases their planes. This gives them certain advantages. This model allows them to always be taking advantage of most fuel efficient planes and phase out less efficient parts of their fleet much quicker[1]. Also the lessor absorbs much of the maintenance costs on the leased planes where's bigger companies that buy fleet outright have to assume that costs themselves often with union labor.
In fact Norwegian is also now in the business of leasing planes to other budgets carriers[2].
[1] http://www.reuters.com/article/us-airlines-leasing-orders-id...
[2] http://www.routesonline.com/news/38/airlineroute/271604/norw...
Re: leasing. This is true of virtually all airlines these days outside of some flag carriers - I was being sloppy with my wording :) However, you get much better lease rates if you're willing to commit to a very large order and are negotiating it during a downturn. Which is what both Ryanair and Norwegian did.
Airline manufacturers and leasing companies traditionally experience a large drop off in their deal pipeline at the beginning of an economic shock/downturn because most airlines are badly run, cash strapped, slow moving and have no appetite from their creditors to commit to multi-billion, multi-year leases just when the wider economy is going to shit (and hurting their passenger loads). Non-legacy airlines (mainly budgets) have more tools available: they quickly drop routes, slash staff count etc. to ride the downturn while at the same time investing for the inevitable swing back. Helps too that they are the last to be hit by falling pax numbers since their ticket prices are so cheap.
There's lots of other factors at play too that I haven't really touched on. How an airline hedges its fuel and forex, what deals they have with airports, which manufacturer they standardise on (Boeing or Airbus), where they get their crews from, how they retail their tickets, which markets they're strong in, what AOC(s) they have, who their investors/creditors are (state, bank, sovereign wealth fund, pe, private) and on and on and on.
Sure, I didn't say that they started in 2007. I'm unsure why you are refuting that particular point. Norwegian did begin with leased planes however:
"Norwegian Air Shuttle (NAS) was founded on 22 January 1993 to take over the regional airline services produced by Busy Bee for Braathens in Western Norway. Busy Bee, founded in 1966, was a subsidiary of Braathens that operated a fleet of Fokker 50 aircraft on charter services. This included the network of regional services between cities on the west coast of Norway operated on wet lease for the mother company. Following Busy Bee's bankruptcy in December 1992, NAS took over three leased Fokker 50 aircraft, and started operating from Bergen Airport, Flesland to Haugesund Airport, Karmøy, as well as from Bergen to Molde Airport, Årø or Kristiansund Airport, Kvernberget, and onwards to Trondheim Airport, Værnes."[1]
While leasing is very common, bigger carriers are a mix of both purchase and leases, leasing is still only 40% of total of plane makers sales[2]. Leasing cuts both ways as plane is much cheaper for a carrier if it is used for its entire 30 year lifespan.
[1] https://en.wikipedia.org/wiki/Norwegian_Air_Shuttle
[2] http://www.economist.com/news/business-and-finance/21699893-...
Outside of some state backed airlines, I would have thought any airline founded in the last 35 years will have started with 100% leased aircraft. For airlines that own their own equipment, in the first world at least, most of them tend to offload aircraft at the 17 to ~20 year stage (at which point they're usually sold on to leasing companies who then lease them out to charter/acmi operators or they find their way down to Africa or LATAM).
The problem with buying your own equipment (from a budget airline PoV) is that you can't benefit from newer model fuel efficiencies or improved pax capacity. They also put much higher pressure cycle loads on the hulls due to the increased rotation frequency of the short-haul point-to-point model (which reduces the serviceable life of the airframe and hence the re-sale value). Running a mixed leased/purchased fleet starts making more sense when your route network isn't dominated by short-haul.
As an example, Ryanair's average fleet age is < 6 years (across 300 aircraft).
I worked with a guy in CompUSA in college who was literally a retail salesdude, who was on the phone all day trying to get some deal together to lease planes. He ended up hustling a deal with a travel agency his girlfriend worked for (this was the mid 90s) and getting his dad and a few investors to buy into the plane charter.
I thought he was just crazy, but he ended up running charters for at least a half dozen trips to the Carribean, and made a good buck on it.
Granted that he was doing charters, not starting an airline. But it was much easier than I had imagined.
At least here in Europe I fly Norwegian almost anywhere they go exactly because they are a low-cost flying through main airports.
I'm going to Amsterdam Schiphol this week flying from Stockholm-Arlanda, for an example.
What Norwegian really seems to do well is cramming rotations, I've seen a plane turn over from landing to take-off in about 30~40 minutes.
Also: Norwegian is by far one of the best companies I've flown, free Wi-Fi onboard, no one pesters me about backpack sizes, no dark patterns when selling me tickets to upsell something, most of my flights with them were on schedule or delayed by about 10 minutes or less.
All in all I wouldn't ever compare Ryanair to Norwegian, the only thing in common they have is being low-cost and probably the strategy for ordering tons of planes in a down market.
Norwegian are where they are today thanks to: execution, vision, luck and balls. Just like all the other hyper successful businesses of the world (Amazon, Ryanair, Southwest, Netflix etc. etc.).
One of the biggest advantages are the short breaks. Sometimes they even don't turn off the turbines before they fly back. I am skeptical if Norwegian can copy all this to long distance.
I regularly fly Norwegian but wouldn't fly Ryan again if my life depended on it.
I was on their first flight from NYC to Paris and they even had a mini celebration free "buffet" with snacks and gave out business class seats to the first ~ten people to have booked their seat on that flight!
source: https://thepointsguy.com/2017/06/norwegian-737-800-flight-re...
For someone like you who is commuting home, it makes a ton of sense. For typical business/leisure travel it rarely is convenient, and like many folks I'm astounded at the level of inconvenience people will go through to save $50 on a flight.
The price difference for my extra hour on a train is about $120-$150. I'd say earning $150 an hour for sitting in a quiet smooth train with free Wifi is almost certainly worth it, unless you're the kind of person who hates trains.
If your destination is truly downtown Boston.
However, a lot of people are coming from the suburbs or going to somewhere on Route 128. In those instances, Providence (or Nashua) is WAY faster--especially even remotely close to rush hours. Digging your way into Logan is always a nightmare. And Providence is a vastly nicer airport experience.
The Boston airports really do qualify as close to each other if you're renting a car (less than an hour to Boston under most circumstances and probably less than 45 minutes if you're going to Route 128/I-495).
(Long Beach to Ontario in Los Angeles is nominally 45 minutes but WAY longer due to traffic).
As a Norewgian I got mixed feelings about them. It is cool with a Norwegian company doing so well and I like flying with them more than other low cost carriers. Ryan air is just too nasty for me to ever want to fly with. I got a minimum of principles and they border on being crooks.
Still I am not happy about many things Norwegian airshuttle does. I wish they played more fair with the unions and took safety more serious. They are pushing boundaries with safety with overworked pilots. Not sure how they are by international standards. Noregian labour regulations tend to be a lot stricter than most other places.
https://www.norwegian.com/uk/booking/booking-information/con...
If you have a connection, you need flight 1 to arrive x minutes before flight 2 departs. If that doesn't happen you start asking things of the airline (at cost to them). If you purchased the tickets separately, it was your fault that you missed the connecting flight.
I saw a thread were pilots were freaked out by this: http://avherald.com/h?article=4a1ae8c4
https://www.quora.com/How-is-Norwegian-Air-so-cheap
https://skift.com/2016/10/10/norwegian-air-accused-by-critic...
"Norwegian’s modus operandi does raise interesting questions. Should a carrier established in one country be allowed to offer wages typical of another? And should airline employees be given the same labor protections regardless of where they are located?"
https://www.forbes.com/sites/realspin/2017/01/26/pot-kettle-...
All under the pretext that this was not circumventing the strike, because the pilots were not working for them but for the newly created subsidiary.
The right political response should be to strengthen workers bargaining position---run the economy hot enough to turn the labour market into a sellers market, and keep enough social safety net that even just saying No without another job lined up would be feasible.
"Since this move accomplishes exactly the curcumvention of the strike, we consider the new company bound by the old company's agreements. Oblige by Monday or stop flying in Norway".
Second - a company that would cross the unions by hiring new workers would be blockaded. First by the union itself, but very soon by other unions. For example a restaurant that doesn't pay the correct wages might not be able to get deliveries of certain products, garbage won't be picked up etc. Outside the entrance customers are handed flyers that the restaurant is mistreating staff. All of this is regardless of whether the restaurant staff wants to be union members and regardless of whether they are happy with their contracts.
And this is working very well actually - there is for example no need for minimum wages set by law. Strikes are rare, and "illegal/wild" strikes outside of contract periods are almost unheard of. Perhaps surprisingly, businesses are quite happy with this setup. Weaker unions would likely mean more unnecessary strikes, and definitely more regulation of things that are now covered by agreements.
(Police and school teachers have similar requirements in their contracts and will use "sick-outs" to apply pressure without a full strike)
But as alkonaut was pointing out, the actual rules themselves don't matter as much to business as predictable and swift enforcement.
The chief concern is safety.
America's airline industry especially with the consolidations of United buying Continental and American buying US Airways is dysfunctional. We have no equivalent of Ryan Air or EasyJet in the US and we should.
US domestic carriers should strive to compete with Norwegian offering their prices and stop complaining.
I know somebody who was in a long-distance Washington DC - Florida relationship and was able to get $20-$40 round-trip flights for weekend trips pretty regularly.
NYC SFO July 11 to 20 RT is about $330 to $350 on Spirit, Frontier, and Kayak (with better carriers).
They are not comparable to EasyJet and Ryan Air which does offer substantially lower fares.
All of the US domestic carriers went bankrupt and renegotiated their union agreements, so this doesn't hold.
I'm happy to take Norwegian when I'm travelling by myself, as I'm content to take the risk. But if I'm travelling with family I'll usually avoid them.
If they get off schedule, they will have to drop flights or rent an aircraft and skip a flight to catch up.
Colleagues have experienced cancelled flights and delays of over 12 hours a few times.
Despite that, there aren't many better alternatives. Ryanair are similarly unreliable and others are expensive.
- They fly out of Oakland airport, OAK, not San Francisco Airport.
- They don't fly non-stop to Oslo, apparently. Itineraries to Oslo from OAK connect in London, Gatwick.
- OAK<->LGW September 18th - 24th indeed $499
- OAK<->LGW July 3rd - 10th $1,189. So you'll still want to buy tickets well in advance.
There is a non-stop flight, Norwegian Air Shuttle 7064. You can look at its flight path here: https://flightaware.com/live/flight/NAX7064
The flight leaving tomorrow was $340 one way when I checked now. Round-trip, I was able to find a non-stop OAK--OSL ticket for $510 (similar September dates to yours).
There used to be OAK <-> OSL non-stop until last October but I guess there is not enough people to keep it sustainable.
Some of the fare prices to Europe are very cheap, but not always.
If you want to get on a plane, go to sleep, and wake up at your destination, a extra few hundred dollars is worth it to some people.
Bounviaggio!
Order what? Inflight videos?
IIRC, inflight entertainment is free. Scheduled meal costs extra at time of ticket purchase. Much better to bring your own food, or buy their decent snacks as you get hungry.
Some is.
Will be interesting to see how Delta, American, et al react to Norwegian's Uber-esque pricing.
p.s. discovered Norwegian via Google Flights, which has supplanted pretty much every other airfare search option I used to use.
I found a round-trip from Ft Lauderdale - Sweden for just $380 bucks in may but you have to be flexible around the dates.
You just can't find prices like that with other carriers.
Now that all airlines are getting into the cheap category, I fear eventually I can't fly at all.
It is very frustrating just how much airlines fail to cater for tall passengers. They all have different rules for emergency exit seats, and the cost of upgrading can be quite high.
As an English person living in England I have no idea whether getting someone's country 'almost right' is a hurtful thing. Is the Norwegian vs Swedish thing real? If so, is it for the reason I give - not paying attention - or is there more to it than that?
Pakistan/India
Iran/its neighbors
South Korea/North Korea (you'd be surprised how often people think South Koreans might be from North Korea)
Mexico/its neighbors
By "sensitive" I don't mean that people will get very offended, just that they might be mildly annoyed. Norway/Sweden as well as Netherlands/Belgium is mostly a playful rivalry.
This partially because it was a long time the subservient partner of Denmark-Norway, and then later passed to Sweden as war-reparations after Denmark backed Napoleon (never mind the earlier event where Trøndelag was given to Sweden after the 30 years war, only to be handed back a decade later because Sweden found them to be unruly).
That said, mostly it is playful banter. For example, all nations have similar jokes where representatives of the nations try to one up each other, and the nation of the story teller always come out on top to a massive degree.
This is the same government under Obama and Democrats that allowed for consolidation of United buying Continental and American buying US Air which resulted in less competition.
The Democrats used to represent regular people instead of favoring special interests that result in higher prices.
Instead of allowing the legacy carriers to slow down Norwegian and other innovators, the legacies should copy them. They have much more capital and they can make it happen if they want to.
A huge cost advantage that NAI enjoys on many of their international flights is through a flag-of-convenience scheme. NAI is a Norwegian majority owned company but has established their base of operations for international flying in Ireland. Through this arrangement they are able to hire pilots and cabin crews under contracts and work rules of southeast Asia where wages are low and work rules are less restrictive. You might imagine how cutting costs in that regard might have an impact on quality of service and more importantly SAFETY.
If this precedent is allowed there is no doubt the major American airlines will do the same in the interest of remaining competitive but shockingly airlines in the US have actually resisted this in the interest of the jobs of American people. I can't speak to each airline individually but for example Delta Air Lines directly employs 80,000 people in addition to 10s of thousands of contractors. Multiply that by 3 or 4 and you're looking at a ton of well paying American jobs. Not to mention when is the last time you remember a fatality on a major US airline?
I think the flag-of-convenience scheme leads us down a slippery slope where getting the lowest bidding pilot cadets trumps safety.
When I fly to Israel with a layover in Istanbul to visit friends in Istanbul, I am using Turkish pilots, thus depriving Americans of jobs. They are lower cost than many European pilots. Are you saying I shouldn't be flying Turkish Air? I don't understand? Incidentally, the flights from NYC to Istanbul use very modern planes and are staffed with very friendly staff.
Direct flights to Israel on El Al use Israeli pilots whom I guessing don't get paid as much as their American counterparts and yet, highly trained as probably almost all of them were in the Israeli Air Force.
So, please explain your position.
I am concerned with safety and in fact part my work deals with safety in healthcare. Airlines landing in US airports should be following FAA regulations. It is important that the FAA regulate this.
I encourage US domestic carriers to change the way they operate so that they can match the Norwegian fares while retaining American jobs.
But to complain that Norwegian is offering fares that make Europe more accessible for people with fixed or limited income is just wrong.
They don't fly out of regional airports at least in NYC I think that is rare.
I"ll bet there are a lot of operational issues.
Delta, United and others own low-cost carriers (the famous United case where the senior was dragged off the plane screaming and kicking was not on United but a low cost fully owned subsidiary carrier of United) as it is, so they could have a low-cost carrier that travels to Europe. These low-cost wholly owned carriers are domestic only.
But none of them have them because they want to cannibalize the higher fares charged. They enjoy their margins.
Norwegian (like Amazon, like Uber) is in a contest to capture market share and thus may be willing to operate on thin margins or even take a short term loss to capture share. The major American carriers may not want to invest the money to retain share and prefer to use politics instead.
United does not own Republic Airways and they are not a subsidiary of United Continental Holdings (United's parent). Republic is its own airline operating flights under contract for United, Delta and American.
The legacies by and large do not own the regional carriers, nor are those airlines intended to be low-cost carriers. The differences primarily lie in the aircraft operated and result from union contracts that inhibit the legacies from profitably operating smaller (non-mainline) aircraft.
> "and result from union contracts that inhibit the legacies from profitably operating smaller (non-mainline) aircraft."
And it is these union contracts then that keep the US carriers from earning such low profits.
United Express is nothing more than a brand serving as an umbrella for a group of subcontractors.
These subcontractors seems to run with lower operational expenses and yet use Americans as pilots following FAA guidelines. United could have a similar arrangement with lower operational costs for overseas flights.
Are they high-paying because of the time and effort it takes to procure necessary skills (anesthesiologists) or are they high-paying through artificial throttling of the supply and monopolistic anti-competitive practices (taxi medallions)?
One is the boon to the economy, another one is rent-seeking and employs a broken window fallacy to justify itself.
> I think the flag-of-convenience scheme leads us down a slippery slope where getting the lowest bidding pilot cadets trumps safety.
So far pilot safety has been associated with the number of hours flown, not the specific rates one was paid for those hours. If somebody proves that, given the same number of hours flown, a higher-paid pilot produces more safety per capita, FAA regulations for acquiring the commercial/ATP licenses can be modified accordingly.
Moreover, things are not all rainbows and unicorns in the airline world, especially once you start drilling into those "contractors" you mentioned http://californiawatch.org/dailyreport/pilots-can-earn-less-...
The major airlines are paying high wages to attract the best, most experienced pilots in the world. There is definitely no rent-seeking in this employment market.
An ATP license for a major airline is no different than an ATP license for Bob's Discount Airlines, so the costs of obtaining either one are the same. Airlines (or in the US, their unions, who usually govern this) generally promote on seniority, which does relate to the number of hours flown, but considering it's the hours that are flown on the job, it's airline's investment at that point.
In reality, though, jobs at major airlines pay well for senior pilots because the unions for major airlines are run by senior pilots, who see no problem in negotiating a payscale with significant income inequality between junior and senior levels. I'd urge you to read Philip Greenspun's "Unions and Airlines" to understand the way the industry is structured in the US http://philip.greenspun.com/flying/unions-and-airlines
> The major airlines are paying high wages to attract the best, most experienced pilots in the world.
If they were, senior pilots from United would be jumping ship for better compensation packages with Delta, and then American would have to raise the stakes to attract the best and the brightest. But a senior pilot at United will have to restart as a junior pilot with Delta, all that "high cost of time, effort, and dollars necessary to procure the skills" be damned.
That doesn't make any sense at all. That sounds like some sort of anti-trust issue that keeps airline costs low by making it impossible to "poach" highly qualified pilots from other carriers and raise wages.
To quote a letter to the editor in 2003 WSJ https://www.wsj.com/articles/SB105149633146672400
"A 45-year-old captain who has been with an airline for 15 years cannot quit and go elsewhere, because doing so would mean starting all over at the bottom, earning $25,000 a year at a new airline and working every holiday. Imagine if a surgeon had to go back to being an intern every time he changed hospitals."
It's exploitable somewhat by airline management (definitely takes the metaphor of golden handcuffs to the next level), but then the number of airlines is not fixed, with new start-ups coming on board every few years or so, so you'd think that at least someone would exploit these inefficiencies, if it made economic sense for them.
I think you've forgotten that.
Consumers paid for these consolidations with higher fares and worse service.