Get ready for more fun in the Transatlantic market next year. That’s the general message coming from Scandinavian airline group Norwegian on the heels of approval from the US Government for Norwegian Air International, its Irish subsidiary, to operate flights to the USA. Despite what the Agency ultimately said was a clear requirement of the law to approve the application it took years to issue the final authorization. Lobbyist from airlines and labor groups on both sides of the Atlantic worked were relentless in their opposition, causing delays but unable to prevail in the end. From the DoT’s final order:
This case is among the most novel and complex ever undertaken by the Department. We have taken the necessary amount of time to review and consider the comments from a wide range of stakeholders. Regardless of our appreciation of the public policy arguments raised by opponents, we have been advised that the law and our bilateral obligations leave us no avenue to reject this application.
Initial approval was issued in April 2016. Opposition groups filed objections which essentially restated all the same reasonings that the DoT had previously rejected. Nonetheless it took nearly eight months for the review of said objections and the final ruling to be issued. Perhaps most interesting is the phrasing of the approval which suggests that the Agency wanted to reject the application but was given no reasonable means to do so without violating applicable treaties and laws. That could be seen as a small win for the legacy US carriers and their unions, the main parties opposing the approval, though in the end that level of victory matters not; the Irish operation is set to fly to the USA next year.
As for market growth, Norwegian plans to pursue that with its 737MAX fleet on order. The carrier is the European launch customer for the type with deliveries expected to begin in mid-2017 and six in the fleet by the end of the year. While specific routes have not yet been named a statement from Norwegian confirms its intent to base four of those new MAX planes in the US and to serve transatlantic routes with the aircraft:
The new aircraft type will operate transatlantic flights from the Northeastern United States to parts of Europe and open up a plethora of routes and destinations currently not served from the U.S. over the next few years. At least four of the Boeing 737s will be based in the Greater New York City area and the Greater Boston area next year.
In late 2015 Norwegian announced plans to fly between Boston and Cork, Ireland during 2016. Norwegian’s Cork service would expand to include Barcelona and New York City in 2017, setting up the beginnings of an Irish scissor hub for the company. Delays from the DoT led to the postponement of those flights several times and now the airports to be used may be changing. The Wall Street Journal is quoting Norwegian’s CCO Thomas Ramdahl as picking Stewart Airport (some 70 miles north of New York City) as the New York-area hub for its operations. The Boston-area hub will be either at Portsmouth International Airport in New Hampshire or T.F. Green Airport near Providence, Rhode Island. T.F. Green saw seasonal service to Germany on Condor this past summer. Portsmouth has limited domestic service from Allegiant but also features an 11,500 foot runway and the necessary customs and immigration facilities. It also appears to have no landing fees and very inexpensive parking rates.
It is unclear if Cork will remain the core of the Norwegian operation. Building a successful connecting hub operation will require more destinations on both sides of the Atlantic and efficient passenger flow through the Cork airport. Dublin (via Aer Lingus) and Keflavik (via Icelandair and WOW) are running similar operations very successfully; just how well Cork (or another hub airport) can build up to such remains to be seen. Also, the company has established a 787 base in Barcelona in the intervening time, with service to New York, Los Angeles, Oakland and Fort Lauderdale set to commence through the summer of 2017. That may require rethinking some of the destination planning for the theoretical Cork hub.
It also is unclear that Norwegian wants to operate a hub model on the European side. Point-to-point flying on the 737MAX planes could allow it to cherry-pick underserved markets where it can provide its promised cheap fares, though just how many are willing to use the tertiary airports as a base for those trips is unclear. Choosing the smaller bases could benefit the carrier if the airport authorities offer financial guarantees or marketing dollars to help boost the service start-up. Such deals are common, especially for international flights or at smaller facilities looking to attract new commercial service.
Also consistent with its promises in seeking the DoT approval Norwegian reiterated that it will open US crew bases to help staff these flights. The company’s Fort Lauderdale pilot base is set to hire 25 pilots for March 2017 training. This crew will cover the first 787 based in Florida with a second round of hiring to follow in 2017 in advance of a second Dreamliner being based at the airport later in the year. The 737 MAX plans will see “almost 100 new pilots and cabin crew in the Northeast to staff these aircraft,” according to the company.
While the legacy US carriers voiced strong objections to the license application one of Norwegian’s supporters could see some challenges from the new operations. JetBlue has been teasing plans to convert some of its A321neo orders to the A321LR type, allowing for transatlantic services from its Boston and New York City hubs. Those deliveries are a few years hence, giving Norwegian a head start in setting up operations to compete on potential JetBlue routes. JetBlue does have the advantage of offering a premium cabin – the Mint product will be part of the company’s long-haul plans – and strong existing feed at both the US hubs. It also has a history of configuring planes with more legroom and amenities in-flight than Norwegian offers. But missing out on first mover advantage will challenge the carrier. And the apparent choice of alternate airports rather than Boston and JFK for the new Norwegian service likely significantly mitigates JetBlue’s risk.
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