Following the almost inevitable feeling collapse of WOW air this week, Norwegian now stands as the last remaining independent low cost trans-Atlantic carrier. This market remains a tough one to crack, with Norwegian struggling financially on their long haul routes, and the collapse of WOW air and Primera last year. However this market is also one that seems to have been recognised by the major carriers as one with great potential, with both IAG and Lufthansa starting airlines to serve this market (Level and Eurowings). However there still remains the possibility that Norwegian are not going to make it as well, which is what I am going to focus on in this blog. However in this blog I will only be focusing on the long haul aspects on Norwegian, as there still remains a possibility that Norwegian will just withdraw from the long haul market, keeping their short haul operations.
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| Norwegian 787 landing at London Gatwick |
British Airways expands
Currently one of the main focuses of Norwegians long haul operations are to and from London Gatwick, with it being the airport where they offer the most capacity on long haul flights as well as the airport those chose to send their leased A380 last summer whilst they were suffering from their 787 engine issues. Therefore if Norwegian long haul flights were to stop, I would imagine that British Airways would use this as a chance to expand their long haul footprint at this airport. Routes to Buenos Aires and Los Angeles I could see British Airways trialling new flights on with Norwegian having shown that they are possible to fly from Gatwick successfully and with a lack of competition form Norwegian now these might be an attractive option for British Airways from this airport.
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| British Airways 777 |
More Expensive Transatlantic Fares
With Norwegian now remaining as the last pure transatlantic low cost carrier, if they were to withdraw the lowest transatlantic prices would become a reasonable amount higher. This lack of competition might permit some of the airlines attempting to compete with Norwegian (looking at British Airways primarily) to raise their fares a bit, as customers wouldn't have as much choice to look at. This would probably be most evident on direct flights, as customers would loose a larger percentage of their choice, and if they value convenience, would have to go to these other airlines.
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| Scoot is an airline who also flies low cost long haul in Asia |
End of Low Cost Long Haul
Ever since Laker Airways, various carriers have attempted to scale up the low cost model up to long haul flights. No-one yet has managed to make that model work successfully, as for long haul flights you need bigger planes, which require more demand. Furthermore with long-haul flights, you have to give the planes a longer turn around, which removes one of the ways which budget airlines operate. Norwegian's low cost long haul model is the most successful model currently, however it still is not helping its parent airlines make money, with them most recently recording losses, mainly down to the large orders of new aircraft they have had to make to aid their expansion. If Norwegian were to withdraw from the long haul market in the next year and a half, it would mean three airlines would have failed in this market in as many years. This would suggest that it is not a viable market to move into, and would struggle to find any further investment in the future. The only way in which I could see this market struggling on after Norwegian would leave it would be through IAG subsidiary Level, who with the large financial backing of their parent, would be able to survive for long enough to be able to gain a good reputation which would inevitably lead to demand.
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