by Infare

21 November, 2017

 

Infare Analytics Team released a Case Study to find out if Norwegian Bet on low-cost, long‐haul flights has the potential to live up to the title of “Airline of the Year” granted by CAPA-Centre for Aviation.

 
The United States and Latin American expansions are big priorities for Norwegian, as it aims to reach its long-term goal of creating a new 'air highway' from the U.S. to Asia via Scandinavia.

 

Yet, Norwegian lacks permission to fly over Russia, which has a policy of only allowing one airline per country to fly over the “Siberian Corridor”. This was granted to SAS ever since a Soviet-era based deal in 1956. For the time being, Norwegian will then focus on bridging Europe and the U.S. with low-cost, long‐haul flights.
 
 

Forbes called Norwegian a Little-Known Oslo-Based Discounter. The type of discounter which indeed is Disrupting Big Airlines’ Profit Model.

 
 

While being unquestionably daring, Norwegian's strategy has to pay off from a revenue perspective to be a sustainable business model and not merely noise in the market.
Our Analytics Team has looked at Norwegian's performance for the route London Gatwick (LGW) – New York J.F.K. (JFK) to establish whether the new strategy has been financially successful and to assess how it has affected the market.
 
 

Figure 1: Average fares on the routes LHR‐JFK (orange) and LGW­‐JFK (blue) for 2014, 2015, 2016 and 2017.

Source: Infare Altus
 
 

Below you can find “The Norwegian Bet” Case Study.

Our Altus BI solution, which is based on a 1 trillion airfares database supported the analysis. Evaluations also factor in CASK value, seat capacity and load factors. What's more, Norwegian's low ‐ cost, the long-haul strategy appears to be impacting passenger demand on the route London Heathrow ‐ New York J.F.K.

 

To conclude, the 'little-known' Norwegian airline might not be so little anymore thanks to the new “Airline of the Year' title. With its strategic focus on long-term goal and, here and now, multi-million dollar earnings, this discount carrier undeniably is setting its footprint in the market.

 

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