The battle is on. Norwegian Shuttle – Norway and Scandinavia’s newest and fastest growing airline – is pressing ahead with the its LCC transatlantic service. It offers all economy class (with some “premium economy” seats at the front of the plane) on their 787-8 and 787-9 Dreamliners. CEO of Norwegian Air International (NAI) (the holding company operating the airline), Asgeir Nyseth declared: ““The 787 is the first and only aircraft you can do long-haul, low cost with”.
For US carriers and European giants such as British Airways, Air France and Lufthansa (all FSCs) – management and staff alike, this represents a major threat for two reasons. First, with pricing 30-50% cheaper than standard economy class fares offered by the FSCs, it is threatening to reduce their load factor as price sensitive passengers defect to Norwegian. Second, the terms and conditions under which pilots and flight attendants are hired are considerably less generous with Norwegian compared with the FSCs.
NAI’s plans to operate from Ireland with an Irish air operator certificate – significantly reducing their labour costs. Norwegian Shuttle says this is the kind of business model the U.S.-EU open-skies agreement was designed to create. By contrast, US Pilots associations say NAI is in violation of the “social dimension” clause of the open-skies deal. This dispute has meant that Norwegian is still awaiting US Department of Transportation (DOT) permission to operate services through the issuance of a foreign air carrier permit. Currently, Norwegian operates transatlantic services but under its current existing permit that doesn’t have the cost flexibility offered by the Irish option.
London Gatwick – one of the airports used by Norwegian to operate Transatlantic services – is very positive. Stewart Wingate, CEO of Gatwick stated: “A low-cost carrier flying to the Big Apple for a small price shows how fast aviation is changing and highlights one of a series of future trends.”