Go Back  PPRuNe Forums > Flight Deck Forums > Rumours & News
Reload this Page >

Hard times for Norwegian

Rumours & News Reporting Points that may affect our jobs or lives as professional pilots. Also, items that may be of interest to professional pilots.

Hard times for Norwegian

Old 1st Jan 2021, 09:02
  #1061 (permalink)  
Pegase Driver
 
Join Date: May 1997
Location: Europe
Age: 73
Posts: 3,656
Likes: 0
Received 0 Likes on 0 Posts
An extremely interesting and educative conversation from the beans arithmetic's world that many of us are not familiar with. Thanks you for that.
A question on belly cargo on board pax a/c if I may, :, Andrasz, you mentioned 2 $ / Kg on some LH routes, but at this rate what kind of profit margin the airline gets considering the fuel cost penalties to to carry that extra load on a 10+ hours leg ?

Back to Norwegian LH future. A friend of mine is Capt 787 with them was just sent back last week for retraining on the Sim with a lot of other colleagues after months of inactivity together. So looks like money is still there to do this and the plans seems to be to restart soon.
ATC Watcher is offline  
Old 1st Jan 2021, 13:11
  #1062 (permalink)  
 
Join Date: Sep 2008
Location: Where it is comfortable...
Age: 60
Posts: 909
Received 13 Likes on 2 Posts
Originally Posted by ATC Watcher
you mentioned 2 $ / Kg on some LH routes, but at this rate what kind of profit margin the airline gets considering the fuel cost penalties...
The ~$2/kg is specificly Singapore (or Bangkok) to Europe for generic cargo (or rather it was some years ago, I'm not privy to current rates, but as passenger fares stayed relatively stable on that route for the past 10 years or so, I assume so did freight). The fuel penalty would be minuscule, in the few cents range per kg, not material. This translates into a revenue of $200 for 100kg of freight, which is roughly the weight of a passenger with baggage. Passenger yields on that route would be in excess of $400 for economy passengers. It is a pretty good rule of thumb that on high density longhaul routes with over 20 daily frequencies generic cargo yields are roughly half of passenger yields per unit weight. Once passengers have paid for the flight, any cargo to fill available underload goes directly to the bottom line, which of course drives the yield down, especially at times when there is less cargo than available belly space. There is of course better yielding cargo, though seldom paying more than passengers. However that comes with the caveat of guaranteed space, which is very difficult to manage on primarily passenger services with the unpredictable passenger and baggage loads that change up to the very last minute. KLM solved this problem by operating combi aircraft with a dedicated cargo capacity, supported by long-term contracts primarily with the dutch flower industry and a number of large manufacturers. However they too found that having dedicated freighters for the cargo business works far better than mixing passengers and cargo.
andrasz is offline  
Old 1st Jan 2021, 16:37
  #1063 (permalink)  
 
Join Date: Nov 2017
Location: Copenhagen, Denmark
Posts: 5
Likes: 0
Received 0 Likes on 0 Posts
Hi ATC Watcher.

Are you 100% sure this friend of yours is a pilot with Norwegian LH?

No crew has been asked to return to work, no crew is yet being retrained and no internal information regarding any such events has been issued.

So maybe this friend of yours works with a different company?


Out of curiosity where is your friend based?
Birgitte Andersen is offline  
Old 2nd Jan 2021, 13:37
  #1064 (permalink)  
Pegase Driver
 
Join Date: May 1997
Location: Europe
Age: 73
Posts: 3,656
Likes: 0
Received 0 Likes on 0 Posts
He is based in Paris CDG
ATC Watcher is offline  
Old 2nd Jan 2021, 18:51
  #1065 (permalink)  
 
Join Date: Jan 2012
Location: Dublin
Age: 31
Posts: 52
Likes: 0
Received 0 Likes on 0 Posts
Lots of LGW crew are under the impression they’re going back to work this side of summer, couple 787s positioned to LGW today apparently
Locker10a is offline  
Old 2nd Jan 2021, 20:07
  #1066 (permalink)  
 
Join Date: Apr 2003
Location: Northumberland
Posts: 8,445
Received 68 Likes on 46 Posts
If they did, none of the spotters noticed...
SWBKCB is offline  
Old 2nd Jan 2021, 20:37
  #1067 (permalink)  
 
Join Date: Jan 2021
Location: West Country
Posts: 1
Likes: 0
Received 0 Likes on 0 Posts
Meanwhile up the road at Heathrow a barely whispered New Year’s Eve announcement as BA gets a UK taxpayer backed £2 Billion loan. Guess Willie Walsh must be fuming that the government has dared to step in and support a UK airline. Yeah right!
Heads Out is offline  
Old 2nd Jan 2021, 23:13
  #1068 (permalink)  
 
Join Date: May 2016
Location: The EU
Posts: 636
Likes: 0
Received 0 Likes on 0 Posts
andrasz

Your theory would hold some merit if the figures weren't so out. Looking at BA's fares (to avoid any ignorant comments from others like "well Norwegian should just charge more then") from LON-NYC, the bread and butter of Norwegian's long haul operation, the revenue per passenger once government taxes and airport fees have been taken out is more like $68 per passenger per sector. A far cry from $400, and using your own cargo price estimation, about a third of the $200 per 100kg, assuming the costs associated with handling cargo and passengers are similar. Of course the average revenue per passenger would increase once you include higher fare brackets and cabin classes, but these aren't the passengers that are going to be sacrificed for the carriage of cargo.

The myth of cargo being a prime revenue source may be a myth on some routes, with some airlines. But for airlines like Qatar, for example, cargo is the reason they're able to operate such a high number of frequencies to offer optimal connecting opportunities for passengers. Qatar don't (pre-Covid) fill six widebodies per day into and out of Heathrow for around 45 of 52 weeks of the year, but they do regularly shift over 100 tonnes of cargo per day in each direction. It's not a case of waiting for the last bag to be checked in and then working out how many kg of cargo they can load, the airlines will be able to model an estimated passenger load a couple of weeks in advance and artificially adjust capacity above and below the floor as required. A vast amount of long haul routes all over the world rely on cargo to be viable, it's not just a few extra dollars to the bottom line.

Going back to Norwegian and Singapore, offloading bags and/or passengers would've been far more beneficial than offloading cargo, and this has been covered a number of times. As you well know, being offloaded as a passenger is rarely a traumatic experience that results in "100 lost customers per mistreated passenger". There's usually plenty of volunteers to be offloaded with the incentive of 600 Euros in DBC, a free hotel room and a seat on the next flight. Nor is a missing bag going to cause the airline to lose 100s of passengers. All airlines have bags that don't end up on their intended flight, intentionally or otherwise. I've had Iberia misplace my bag three times on the exact same widebody flight from Madrid to LHR, including once when no bags at all made the flight - bumped off in favour of the vast quantities of fresh fruit from South/Central America.

With that being said, if your argument was that low cost Ultra long haul doesn't work, I'd tend to agree. Singapore, which is essentially ultra long haul, was always going to be a marginal route with performance issues. Another factor at play in Norwegian's case was that most of the flights departed from Singapore in the late morning, when temperatures are typically 3-4 degrees warmer than the "traditional" European departure bank around Midnight. Not only did the few extra degrees add to performance issues, but the daytime airway closures in India add significant track mileage to flights operating Westbound at this time of day. They simply didn't have the aircraft availability to operate evening departures in both directions, not helped by the well publicised RR issues. And that's before you consider the volatile airspace the route uses, whether it's Pakistani airspace closing, Iran's airspace restrictions, Russian overflight or, if all that fails, the near impossible task of getting a Saudi overflight permit at short notice. Low cost to Singapore was probably always doomed. Low cost to New York, Los Angeles and Orlando on the other hand...
Vokes55 is offline  
Old 3rd Jan 2021, 09:17
  #1069 (permalink)  
 
Join Date: Nov 2017
Location: Copenhagen, Denmark
Posts: 5
Likes: 0
Received 0 Likes on 0 Posts
No, just no.

Originally Posted by ATC Watcher
He is based in Paris CDG
Oh, okay. So you persist.

This leaves basically three different scenarios.

1. You are making stuff up.
2. Your friend is making stuff up.
3. Your friend paid for his own LPC and you thought that meant he had been recalled.

I suppose you have no interest in number 1., I suppose your friend has no interest in number 2., so lets conclude your above post was all a big misunderstanding. But just to make it crystal clear - NO LONG HAUL CREW HAS YET BEEN RECALLED.
Birgitte Andersen is offline  
Old 3rd Jan 2021, 10:00
  #1070 (permalink)  
 
Join Date: May 1999
Location: Runcorn,Cheshire,England
Posts: 190
Likes: 0
Received 0 Likes on 0 Posts
well, they”re flogging tickets CDG-JFK in March so I guess it’s not out of the question to start the long process of getting crew retrained! After so long it will entail a lot more than just a two day LPC so this kind of lead in is probably about right..
3Greens is offline  
Old 3rd Jan 2021, 10:40
  #1071 (permalink)  
Pegase Driver
 
Join Date: May 1997
Location: Europe
Age: 73
Posts: 3,656
Likes: 0
Received 0 Likes on 0 Posts
Dear Brigitte. I do not know who you are , it is one of your first posts so I'll be gentle.
Replying to your questions:
I do not makes things up to post here . A lot of people here by now know who I am and what I do.
My friend is not making this up either we fly together in the same flying club since decades .
All I said was that he and other B787 crews went to the sim to revalidate . That is a fact . When and how and where to they will fly again I do not know and this is what I wrote :
So looks like money is still there to do this and the plans seems to be to restart soon.
but as 3 greens mentioned they are currently selling tickets on the web for March to JFK. ( from 28 March for 470 Euro return, I just checked ) . You can draw your own conclusions. .

Last point, I have no horse in this race as the British say. I do not own shares or whatever and even never flew with them , I so just have a friend flying for them . I am here because I find this thread very interesting as I learn a bit how an airline internally functions, and post from people like Andrasz regarding finance are very educative for me. Nothing more .. I can see that the subject is more sensitive and personal for you and I sympathize. Lots of people are going to be severely affected this year by the crisis . I am one of the lucky ones, having retired before the crisis.
so I wish you good luck and really hope to see Norwegian pulling out of this mess. .
ATC Watcher is offline  
Old 3rd Jan 2021, 10:50
  #1072 (permalink)  
 
Join Date: Nov 2017
Location: Copenhagen, Denmark
Posts: 5
Likes: 0
Received 0 Likes on 0 Posts
Dear ATC Watcher.

If what you meant was simply that your friend went back and did re-training (Number 3 above), I apologize. Your quote "So looks like money is still there to do this and the plans seems to be to restart soon.", made me (and others) believe you implied the company (Norwegian) paid for your friends training. However, if we can agree to the fact that your friend paid for his own training, and that Norwegian has not recalled CDG pilots and paid for their training - let's call it a misunderstanding - and I apologize for my part.

Respectfully.
Birgitte Andersen is offline  
Old 3rd Jan 2021, 11:05
  #1073 (permalink)  
 
Join Date: Jun 2018
Location: In the sunshine
Posts: 28
Likes: 0
Received 0 Likes on 0 Posts
It is well known that Norwegian earned their money on Norwegian domestic flights and on flights from Scandinavia to southern Europe.
Overall the longhaul branch was operating with massive losses, for the following reasons The management had no idea how intercontinental flights operate, it is a completely different ballgame than short- medium haul operations.
The mistakes they made regarding longhaul ops, were to utilize a new completely unproven and very expensive. aircraft
with no business class.
Their cargo. operation was a complete disaster.
As all the money they were earning on the good short- medium haul routes were used cover the losses from longhaul , forcing the company to continue a completely unsustainable expansion, just to generate some cashflow, among other things leading to the catastrophic Argentinian adventure.
Some will say that a few of the longhaul routes from LGW were making money, and that may be true, but not nearly enough to cover the massive losses from the rest of the longhaul ops.

The only one who has ever had any success with low cost longhaul was Sir Freddy Laker with his Skytrain, until the operation was killed by BA and other airlines.

There are a few other lowcost longhaul airlines that were operating pre corona, They were also not doing that great, but most of them has business class, and they are either owned by legacy carriers, or other large companies that have other revenue streams.

Norwegians way of low cost longhaul was always doomed.
Diavel is offline  
Old 3rd Jan 2021, 11:10
  #1074 (permalink)  
 
Join Date: Sep 2008
Location: Where it is comfortable...
Age: 60
Posts: 909
Received 13 Likes on 2 Posts
Vokes55 I don't know about BA average yields on the NYC route, but $68 Euros sounds a tad low even with fees and taxes deducted. Then again, the last time I have seen real numbers from them was 10+ years ago, and the world did change, but fundamental airline economics haven't. One can argue that LHR-JFK is really on the borderline of being a longhaul route (the fastest eastbound I ever did with a good kick in the rear by the jetstream was something like just over 4 hours), and with some cunning and finesse the low-fare model may actually work. The figures I used were all for the Singapore to Europe routes (not really material which, though the UK is on the long end). Having a lengthy exposure to both the ful service and the low cost side of the industry, I do stand by my original statement that by and large the low fare model is not viable on routes over six hours. However I'm always open to being proven wrong, would love to see those figures and calculations.
andrasz is offline  
Old 3rd Jan 2021, 13:00
  #1075 (permalink)  
 
Join Date: Nov 2000
Location: South East
Posts: 154
Likes: 0
Received 0 Likes on 0 Posts
Vokes55

Sorry but that argument still doesn’t stack up.

Air Cargo News puts the current average air cargo rates at $3.30/kg (in a world where cargo yields are higher than normal) While a quick online search has Singapore-UK being offered at between $2-$4/kg. So let’s take the top end at $4/kg for cargo.

You need to offload a passenger to uplift an extra 100kg of “very profitable” freight.

Cost of passenger offload = EU261 compensation (€600)+ Hotel+Subsistence+Potential loss of not being able to sell the seat the next day
At current rate €600 is a little over $700, plus let’s say $150 for hotel and subsistence claims. Can’t quantify the loss of revenue for a possible last minute seat sale on the next flight. But absolute minimum cost of passenger offload $850.

Revenue from freight = $400

Doesn’t make much sense from a revenue perspective to cost yourself $850 to “earn” $400

And in my experience airlines don’t offload passenger baggage for cargo either, as that quickly gets expensive. Luggage has to be forwarded on to final destination, possibly involving connecting flights and then couriered to home address or hotel. Plus passengers are normally offered expenses to buy some replacement items.

When my job has involved dealing with cargo in an operational capacity, on high demand cargo routes, there was an agreed minimum cargo uplift offered by the airline in the freight contract. When there was additional demand we would get a phone call/email/SITA on the day of departure from cargo, once the passenger figures were known and we could calculate a real world flight plan, to ask for how much additional cargo we could accept. And the answer was almost always yes with an increased figure for them to work to.

I don’t recall us often not being able to accept the agreed minimum cargo uplift, except in extreme weather contains. Was rare.

This again looks like another case of Norwegian getting it wrong. They offered more cargo capacity than the aircraft would routinely carry based on performance and en-route restrictions, and lost the contract as a result of regularly not being able to accept the agreed freight uplifts. The idea of offloading passengers and baggage to try and save a flawed freight contract would have been a commercial non-starter.

Last edited by Downwind_Left; 3rd Jan 2021 at 13:04. Reason: [SP]
Downwind_Left is offline  
Old 3rd Jan 2021, 16:09
  #1076 (permalink)  

Only half a speed-brake
 
Join Date: Apr 2003
Location: Commuting not home
Age: 46
Posts: 4,302
Received 3 Likes on 3 Posts
Downwind_Left Finally some sense. The original outlined idea above, off-loading bags or pax to keep the lucrative cargo customer served, did not make any sense cashflow-wise. Not to mention additional overheads, PR and loss of customer confidence.

I'm not really disputing anything voiced previously, just wanted to thank you for re-aligning the puzzle pieces. Restrict pax load before selling the tickets, in order to preserve freight capability? Well, perhaps. IDK, not a yield manager. But to offload at the last minute sounds like a trick from the techcrew such as myself.

Last edited by FlightDetent; 3rd Jan 2021 at 23:12.
FlightDetent is offline  
Old 3rd Jan 2021, 16:17
  #1077 (permalink)  
 
Join Date: Mar 2000
Location: UK
Posts: 173
Likes: 0
Received 0 Likes on 0 Posts
But wouldn't this all depend on the contracted cargo allowances, or more importantly, any penalties payable for being unable to carry the contracted load? From past experience, the penalties for default are significantly more than the original contract sum.
Stick Flying is offline  
Old 3rd Jan 2021, 17:13
  #1078 (permalink)  
 
Join Date: Nov 2000
Location: I wish I knew
Posts: 624
Likes: 0
Received 0 Likes on 0 Posts
Racking my brains here, normally the dispatcher advises the crew about the cargo before the final fuel figure is calculated for the estimated ZFW in order to avoid any last minute issues. I can't think of any occasions of denying pax, left baggage behind in the past, but not PAX, except when overbooked or families can't be seated according to the requirements e.g UMs or special assistance.
By the way, most LGW LH destinations are being advertised from 2nd Qtr, doesn't mean we will fly again.
Avenger is offline  
Old 3rd Jan 2021, 18:54
  #1079 (permalink)  
 
Join Date: Jan 2012
Location: Dublin
Age: 31
Posts: 52
Likes: 0
Received 0 Likes on 0 Posts
Originally Posted by SWBKCB
If they did, none of the spotters noticed...

Literally going off posts I’ve seen on Facebook from some of the staff, I’ve not actually seen them myself
Locker10a is offline  
Old 4th Jan 2021, 00:42
  #1080 (permalink)  
 
Join Date: May 2016
Location: The EU
Posts: 636
Likes: 0
Received 0 Likes on 0 Posts
Downwind_Left,

I never said that it’s a common practice for on the day offloads of passengers and/or bags, for the reasons you described. The majority of routes (worldwide, not Norwegian specific here) that have a large regular cargo uplift will have onboard capacity restricted in advance, either for every flight with a contracted minimum cargo capacity, or based on estimated loads a couple of weeks or so in advance.

One thing that nobody is disputing is that Norwegian handled the Singapore route badly. If the cargo was keeping the route profitable, passenger capacity should’ve been restricted in advance - I believe they did learn their lesson on this one and started restricting passenger capacity on the EZE route, I’m sure one of the NUK drivers on here can confirm or deny that - however, much like how airlines overbook flights on the premise that 19 times out 20 there are sufficient no shows, sometimes it doesn’t work out on the day and something has to be left behind, particularly on a performance limited route like SIN-LON, where something as small as 10-15 knot wind speed increase in the strong jet stream over the Sub-continent could require an extra 2 tonnes of fuel.

Norwegian should’ve taken the hit that you outlined with a few passengers, which would’ve cost them a few quid on the day but might’ve ultimately saved the cargo contract. Also worth remembering that if the performance is tight, offloading bags and/or passengers is a far more refined way of getting the numbers below the limiting factor than offloading an entire pallet of cargo. There’s plenty of fat in the performance figures, there’s nothing wrong with departing on MTOW to the kg.

Also worth noting that airlines expect a certain number of EU261 claims per year and will adjust ticket prices to cover this inevitability. It’s only when the number of claims becomes excessive that it becomes a problem for the airline, and offloading a few passengers voluntarily with this incentive would barely scratch the surface of this contingency “fund”.
Vokes55 is offline  

Thread Tools
Search this Thread

Contact Us - Archive - Advertising - Cookie Policy - Privacy Statement - Terms of Service

Copyright © 2024 MH Sub I, LLC dba Internet Brands. All rights reserved. Use of this site indicates your consent to the Terms of Use.