Norwegian ceased its transatlantic business and is trying to stay afloat as an intra-European carrier. But the founder of Norwegian thinks his ultra low cost long haul business model – that has never worked before – is suddenly ripe for success. And he’s trying again with Norse Atlantic Airways.
OSM Aviation, which provided staff outsourcing to Norwegian, is 53% owner of the new venture. Expect low cost labor flying 9 to 12 ex-Norwegian Boeing 787s. You can apply for a cabin crew job here. (HT: Paddle Your Own Kanoo)
The plan is to launch by the end of 2021 flying between Miami, Los Angeles, New York in the U.S. and London, Paris and Oslo in Europe – and eventually Europe – Asia as well.
So far ‘getting the band back together’ has raised $24 million. They plan float a public offering to raise additional capital. Apparently private investors are too skeptical of launching a transatlantic widebody airline in the dead of winter, when – no matter how cheap the 787s – they’d probably be better off with narrowbody planes that require fewer passengers to cover their operating costs. (I hear 737 MAXs are cheap these days.) Perhaps they’ll have luck naming themselves “GameStop Transatlantic.”
Copyright william87 / 123RF Stock Photo
In an interesting twist on the low cost carrier playbook of keeping everything simple and not offering connections – let alone connections on another airline – they plan to work with Norwegian for connecting traffic. Call them “Norwegian Long Haul.”
Operating long flights is hard for a low cost carrier, because their cost advantage tends to erode. British Airways and Delta do have higher costs, but those amortize over a lot of miles – and a lot of seats when you’re talking about a widebody aircraft.
Meanwhile transatlantic travel is highly seasonal. It’s not hard to fill a Boeing 787 across the Atlantic in the summertime. In winter it’s tough to do at any price, and the airline has to pay for its aircraft – and to a certain extent its crew – throughout the whole year.
Assuming they really do launch, that’s great news – whether you fly Norwegian Norse Atlantic or not – because they’ll help keep prices of coach and premium economy travel super low for as long as they’re around. It’s worth remember, though, that the CEO of transatlantic low cost carrier Wow Air actually pledged his own home as collateral to finance the airline, and lost it. And if this were a good idea, the new Wow Air started by an arms dealer might have worked.
@Gary: “But the founder of Norwegian thinks his ultra low cost long haul business model – that has never worked before – i”
That is incorrect. Freddie Laker made money on operations. It was adverse exchange rates and BA dirty tricks that put Laker Airways out of business. Of course, in the process he immutably changed the travel world as we know it.
@L3 – I’m absolutely aware of Sir Freddie Laker, Laker Airways and the Skytrain! I had the great pleasure of meeting Sir Freddie and Lady Jacqueline three years before he died. I’m not sure it’s fair to call Laker Airways successful, though it was cash positive for a time. It expanded quickly, was undercapitalized, and like Norwegian had long haul aircraft grounded (Norwegian 787s due to engine issues, DC-10 as a result of the wide grounding of that plane after the AAA incident). It wasn’t just ‘dirty tricks’ – though he managed a settlement for predatory pricing, legacy carriers could match his fares with their empty seats.
@Gary: I lined up overnight for the fares. he was full! Without the dirty tricks (illegal) and adverse currency movements (unpredictable) he would not be out of business.
It cn’t be ‘undercapitalization’, can it? Did you ever hear of an ‘overcapitalized’ firm going bankrupt? The term is a label for bankruptcy, not an explanation of it.
Chow.
I never received my money from norwegian from last year. I will not fky with this company
Before landing in the UK, he should be debt free from his old airline before any agreement is reached. (Do directors of failed business not have to be investigated?).
It’s worth mentioning that “regular” airlines without the long-haul-LCC model, *also* don’t work sometimes. We have numerous examples the world over, each for their own reasons.
I’m not saying that long-haul-LCC is therefore a good model, but it’s worth putting it in the context of the overall airline industry.
The one thing that might keep this version afloat is that I’m pretty sure you can lease a 787 with Rolls Royce engines for the money you find in your couch currently. However, you still need to be able to pay for fuel, staff and maintenance, which I think will wind up more than $24 million before you get the first flight off the ground.