Originally Posted by
RexBanner
There’s undoubtedly less profit to be made in LCLH though VinRouge. You simply cannot get the unit cost down to the same extent that you can in Short Haul. It’s been tried over and over and over again. Norwegian haven’t somehow magically made it profitable, it’s the most advantageous environment there has ever been for LCCLH (Cheap Fuel, record low interest rates) and they are barely keeping their heads above water. Surely that tells its own story?
I am absolutely convinced that BA/IAG are talking up Norwegian as a stick to beat the workforce with. We should 100% call them on it.
They also are having to contend with the overheads of establishing an operation at present. That can't be cheap, the profit will come imho once they bed in and learn where increased load factor or prices are tolerable.
Price hikes in fuel will impact the whole industry and result in price hikes, the low cost I expect will be relative to existing traditional long haul carriers. If everyone hikes by 50 quid a fare for increased prices, the traditional airlines will be in just a bad situation. Hedging fuel prices only works in your favour for so long before options expire, so that can only work in the sort to medium term.
The only concern is bankruptcy or someone loss leading, similar to what has happened to NOR SH at BHX I believe. Question is, with 2 billion down, are they now too big to fail?