Norwegian discount airline in it for the long haul

17 Dec

Norwegian — one of Europe’s fastest-growing airlines — has ordered six Boeing 787 Dreamliners for its planned intercontinental operations. Kjos noted that Malaysian budget carrier Air Asia X already has long-haul flights from Kuala Lumpur to European destinations.

“In 10-15 years, the number of passengers flying from the East to Europe will be significantly larger than that the total number of passengers flying within Europe,” Kjos told AP at Arlanda Airport, one of Norwegian’s four Nordic hubs.

“Our future competition will be the Asian companies,” he said.

Kjos owns 27 percent of Norwegian, founded in 1993 and listed on the Oslo stock exchange 10 years later. After struggling to make a profit in its early years, Norwegian bought competitor FlyNordic from Finnair in 2007 and ordered 42 new Boeing 737 planes, lowering fuel and maintenance costs, which Kos said has been key to keeping prices down.

Norwegian is now the No. 2 airline in Scandinavia, and aggressively challenging tri-nation carrier SAS, the market leader, rather than trying to compete with other low-cost airlines.

“They are an old company that was created in a time when you didn’t have to think about costs, you just raised ticket prices,” said Kjos, who writes spy novels in his spare time. “It’s much easier to compete with SAS than Ryanair.”

SAS chief commercial officer Robin Kamark noted the airline trimmed costs in a savings program that helped it offer better rates while returning to profitability last year.

“We have very good prices and customers are obviously very happy,” Kamark said. “We listen to our customers and not what Bjoern Kjos says about SAS.”

About Norwegian’s planned long-haul flights, Kamark noted it was a “totally different game” than what the budget carrier was used to. “We wish them welcome to the market,” he said. “SAS will be well prepared for the competition.”

Unlike Ryanair, Norwegian has been trying to slash costs without cutting as many services. Norwegian flights have designated seating, and about half the planes in the fleet even offer wireless Internet access for free.

Kjos said Norwegian would be able to offer low fares on long-haul flights because of the lower operational costs of the new Dreamliner aircraft. Unlike a legacy carrier, on a Norwegian flight there will hardly be any difference between flying business class and economy class, he said.

“There will be wider seats for those who want to pay more, but there will be no real difference in flying business; the seat will be the only difference,” he said.

Before becoming a lawyer and businessman, Kjos flew fighter jets in Norway’s Air Force during the Cold War. He said the experience of intercepting Soviet warplanes nearing Norwegian air space helped him develop an ability to “evaluate risk” — a skill he’s found useful in business ventures.

Norwegian’s fleet has grown from 14 aircraft in 2005 to more than 60 this year. Last year, the airline flew about 13 million passengers, while SAS flew nearly twice as many.

The gap is expected to narrow this year, and even more so in 2012. Norwegian last month announced it would launch 34 new European routes starting in March next year.

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http://www.canadianbusiness.com/article/62542–norwegian-discount-airline-in-it-for-the-long-haul

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