Can Norse survive?

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  • cwoodward
    Participant

    Any long-haul low cost operator needs high load factors of around 90% to survive.
    Norse load factors hover in the 50%s and they cannot survive for long without significantly more bums on seats.
    Even with the summer upturn I doubt that they can fill aircraft profitably or survive for more than a couple of years ?

    The model (with a couple of small exceptions) has been shown not to be workable several times and I cannot see any reason why Norse will not suffer the same fate.

    1 user thanked author for this post.

    TominScotland
    Participant

    Wholly agree with you, cwoodward

    Even when low cost, long-haul carriers have a deep pocketed benefactor (SCOOT) we have seen the consequences of cost-cutting/ lack of refurbishment here on this Forum (OK, just one aircraft but still). That neglect is not sustainable, even as a low-cost business model.


    hi_flier
    Participant

    I’ve often found that with these so-called low-cost long-haul operators, it’s not always that much cheaper than legacy carriers when you start adding baggage, food, drinks etc… to the fare. These days there are so many additional surcharges anyway that the base fare in and of itself is hard to be competitive on.

    The advertised low price is also often just one-way for headline grabbing (e.g. “USA from £199”) so you immediately have to double it, add any extras and before you know it, a practical and meaningful return fare with any extras is in the region of £600!

    These considerations plus the fact that historically these airlines have less schedule choice and can be notoriously poor in IRROPS has meant I’ve stayed clear. Low cost within Europe? Sure! Low cost across the Atlantic? No thanks!

    2 users thanked author for this post.

    AMcWhirter
    Participant

    hi_flier makes a good point.

    Having been involved in this business for decades I have seen numerous transatlantic LCCs fail right back to the days of Laker’s Skytrain launched in 1977.

    But I stress there is one way where LCCs score and that is they sell o/w fares.

    This meets the need of those younger customers who would be working in the US or Europe and who are unsure of their plans.

    Conventional airlines do not do this. Hence it’s cheaper with them to book a return and not use the second coupon (now you can see why airlines overbook as they will have no shows).

    So I checked the o/w fare with BA flying LHR-JFK on Monday March 27. It was £1,927 !

    I then checked a return BA fare on the same route travelling March 27 returning one month later (including checked luggage) and the price was £1,000 + including luggage and I avoided dates which clashed with public holidays.

    I then checked the Norse fare LGW-JFK o/w for March 27. The price was USD460 including checked luggage, hand luggage and a main meal.

    (Norse prices in US$).

    Now Dan @Djsaviation took Norse last week BER-JFK. I put these points to him

    His reply via Twitter was: “I agree totally ! It was interesting to see the demographic on board the Norse flight. Very much younger solo travellers.”

    4 users thanked author for this post.

    Senator
    Participant

    I don’t know how far they have gotten with their cargo business, but if they can get regular clients for the cargo space load factors could be lower in order to make this work.

    https://www.flynorsecargo.com/

    I don’t have all the details, but when Finnair stationed a few A350s at ARN at the end of 2021, and opened routes to JFK/LAX/MIA (and BKK/HKT), the passenger loads were light but the belly of the planes filled to rafters with cargo. According to sources, they were able to steal a significant market from SAS on the North American market making this venture good business.

    It’s a fairly well-known story that SAS CPH-NRT was one of the most profitable routes pre-Covid. The cargo space was filled each day with fish from Norway, destined to Tokyo’s fish market.

    If, and I mean if, Norse can get a blended revenue model like the legacy carriers of people and cargo, they might make it this time around. I think it is futile without the cargo.

    1 user thanked author for this post.

    AMcWhirter
    Participant

    You make a good point Senator.

    It’s all too easy to forget the amount of cargo being shifted.

    Virgin Atlantic publishes its cargo schedules. See PDF below.

    https://www.virginatlanticcargo.com/content/dam/cargo/pdf/FLIGHTSCHEDULE.pdf


    cwoodward
    Participant

    The cargo market has weakened at the moment thus I cant understand why any of the incumbents would let a freight contract slip away particularly to an airline that has zero experience or infrastructure in freight.
    Freight is not a ‘spot’ business and I don’t see it any sort of short term prop for this Norse low cost model.
    Perhaps V Atlantic as a tiny player in freight with no freight fleet is not a good example Alex particularly as the B787 does not have a the large belly capacity of most the Airbus models.
    The belly capacity of passenger Airbuses is why CX (normally one of the worlds largest non totally dedicated freight carrier) runs such a large airbus fleet.


    onajetplane
    Participant

    I wonder how many people just won’t book with them expecting an imminent collapse? Not an airline I would ever personally consider… but I definitely give advice to friends and family re. their respective bookings… I would 100% not recommend them booking a UK-US flight this summer if they were considering it, solely from the perspective that I don’t have confidence their schedules will run as currently planned – I wonder how many others are in the same position with thinking re. booking for a trip a few months out…? Exactly same logic I applied to recommendations re. potential Flybe.2 booking queries…


    AndrewinHK
    Participant

    Still early days, but JetBlue seems to be making a success of transatlantic operations, they class themselves as a low cost operator. I fear Norse operating 787’s is the issue, JetBlue 321’s are obviously much smaller, and they have a domestic operation and codeshares to feed the routes, but the concept seems proven, expanding now into CDG, and are trying to get access to AMS. Air Transat, yes a hybrid leisure/low cost carrier also has successfully operated a wide spread transatlantic schedule for decades, maybe Norse should take note.


    AMcWhirter
    Participant

    AndrewinHK – Just wanted to clarify that Jet Blue isn’t low cost on its transatlantic routes. Many media keep on regurgitation this fact (not Business Traveller I might add !) but it’s a full service airlines between US East Coast and Europe.

    Onboard products in both economy and Mint are as good as if not better than some of the established airlines.

    Just check YouTube.

    Indeed it will be interesting to see how Norse competes with Jet Blue as regards Paris.

    I wouldn’t wish to speculate at this time but the current unrest in France (if it continues for weeks or months) could affect visitor numbers.

    As for Schiphol I reported on the issues facing Jet Blue there some weeks ago. See “Jet Blue thwarted from launching Amsterdam services” February 15.

    1 user thanked author for this post.

    AndrewinHK
    Participant

    Noted on JetBlue. Interestingly they were just granted AMS slots, albeit on a temporary basis, and not at ideal times, “The temporary slots accepted by JetBlue were not at commercially desirable times, as they involved an arrival time of 3 pm at AMS (local time), which would necessitate a JFK departure time of 1:20 am (local time). Nevertheless, JetBlue’s acceptance of these temporary slots underscores its eagerness to enter the U.S.-Amsterdam air services market.”


    cwoodward
    Participant

    They picked up 2 additional and daytime slots at LHR which is something of a coup and not exactly cheap.
    With the expanded transatlantic services it looks to me that they don’t at present have enough aircraft to service the routes.
    Perhaps Gatwick will lose one of the flights ?


    AMcWhirter
    Participant

    [quote quote=1350716]Interestingly they were just granted AMS slots,[/quote]

    Yes we posted the story online earlier today. I believe it was the intervention of US DOT which brought this about. There was a similar situation some years ago when Norwegian wanted AMS-JFK rights and was turned down. It was only when the EC intervened (in the interests of competition) that KLM had to release one of its slots to enable Norwegian to launch the route.

    FYI cwoodward Those extra LHR slots for Jet Blue were leased from Etihad.


    Sarah Stemp
    Participant

    I will be sad to see Norse fail. As a regular London – New York flyer, I really appreciate the Gatwick departure and the ability to mix cabins each leg. I find the premium seats far more comfortable than BA premium economy seats and they are usually a third or half the price.

    1 user thanked author for this post.

    jjlasne
    Participant

    I agree with the one-way fares and, with Norse as others, it is possible to book them either way. On the other hand, Edelweiss based in Zurich allows one-way outbound from ZRH only. If you want a one-way flights inbound to ZRH, Edelweiss refers to Swiss Airlines, its big sister carrier. Neos Air based in Milan will sell you a one-way fare from JFK to Almaty with a transfer at Malpensa. But those flights are purely seasonal so they may not qualify as LCC’s.

    IMHO, one of the biggest advantages with long-haul LCC’s is the fare in business/premium classes which is rather competitive with legacy carriers although not in the same league.

    The first time I flew the premium class on Norwegian from LAX to CDG, I had access to the Qantas lounge at LAX which was quite nice. The second time around, not any longer – too expensive for Norwegian I reckon – but the premium class was full and there were two small dogs as well.

    For the record, I also did fly Lakers Airways from London (Gatwick?) to LAX on their DC10 aircraft.

    Would you consider French Bee an LCC? They do fly year-round from Paris-Orly to San Francisco and on to Papeete on their Airbus A350′ s offering a lot of seats. I would surmise they are not losing money.

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