Norwegian burning cash!
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With respect, that’s going to make naff all difference. Norwegian’s “premium” product is premium economy at best and won’t generate anywhere near the revenues of the business and first cabins of the big boys. Allied to that Norwegian don’t have the frequency that business travellers crave nor the redundancy or resilience of the operation to keep those business pax feeling secure. They’re a busted flush and people are now starting to find that out.
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With respect, that’s going to make naff all difference. Norwegian’s “premium” product is premium economy at best and won’t generate anywhere near the revenues of the business and first cabins of the big boys. Allied to that Norwegian don’t have the frequency that business travellers crave nor the redundancy or resilience of the operation to keep those business pax feeling secure. They’re a busted flush and people are now starting to find that out.
Which of course is why BA are copying all the routes out of LGW and desperately squeezing more punters in the BACK of their antiques...
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They’re doing it to quicken the process of Norwegian’s demise, nothing more nothing less. If there’s anything that BA management are it’s greedy, even if Norwegian are taking one single penny off their profits they’ll do anything to claw that back, on that you can bet your bottom dollar. It’s telling to remember what has happened to the previous heralded low cost carriers BA used the same tactics against.
Of course afterwards they can continue to get more revenue from the Y Cabin by having more seats. And they may be antiques but at least BA actually own them, which is a position Norwegian are unlikely to ever be in. How’s their balance sheet looking again?
Of course afterwards they can continue to get more revenue from the Y Cabin by having more seats. And they may be antiques but at least BA actually own them, which is a position Norwegian are unlikely to ever be in. How’s their balance sheet looking again?
Last edited by RexBanner; 26th Mar 2018 at 20:22.
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To clarify I’m not wishing to see anyone out of a job, not for one minute. I’ve been through it before myself and it’s not pleasant. History does tell us though that airlines will come and go. It’s the unfortunate nature of our industry and profession. I’m just as interested as anyone to see how it does turn out for Norwegian, it’d be an absolute game changer if they could get it to work. However my gut feeling is the model just can’t fit the environment of long haul.
High aircraft utilisation, high turnover of passengers (potentially up to eight different sets of passengers to sell stuff to per aircraft each day), no need to nightstop crew etc these are all fundamental staples of low cost airlines on short haul that simply cannot be replicated on Long Haul. I think it speaks volumes that Ryanair and easyJet have never attempted it and still have no interest after seeing Norwegian’s initial forays.
The premium cabin heavily subsidises the economy cabin, that’s why it raises eyebrows to attempt to fill a wide body jet with the lowest yielding passengers there are, incidentally the ones who will be the first to stop flying in any downturn. The proof will be in the pudding and who knows, I could be left with egg on my face.
High aircraft utilisation, high turnover of passengers (potentially up to eight different sets of passengers to sell stuff to per aircraft each day), no need to nightstop crew etc these are all fundamental staples of low cost airlines on short haul that simply cannot be replicated on Long Haul. I think it speaks volumes that Ryanair and easyJet have never attempted it and still have no interest after seeing Norwegian’s initial forays.
The premium cabin heavily subsidises the economy cabin, that’s why it raises eyebrows to attempt to fill a wide body jet with the lowest yielding passengers there are, incidentally the ones who will be the first to stop flying in any downturn. The proof will be in the pudding and who knows, I could be left with egg on my face.
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Prem Eco is a good product and popular with the pax, but according to my employer doesn't add much to the bottom line as the price premium is quite low compared to the loss of seats. But, it looks good in the marketing. Don't know about Norwegian, but there is a lot of 'in the checkin queue' sales as upgrades, which is a healthy uplift to an economy ticket. If it was such a good thing, there'd be an airline out there operating a Eco Plus cabins.
Then you might get away with it after a few years of route development.
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But wouldn’t the demise of Norwegian be a good thing for the overall T&C’s in airline industry both in Europe and America?
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Although many on here seem to believe Norwegians T&Cs are the worst in Europe, they are definitely not. It won't make any difference to worldwide T&Cs, or even in Europe, as there many many many more offering worse and will continue to do so...
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Nice idea J2 but T and C's will continue to get worst,you only have to look at diminishing staff numbers at BA, the Mixed Fleet Cabin crew, to see the downward spiral in pay and conditions. BA are even in the process of outsourcing Load control and have issued redundancy notices to 700 check-in staff.
If there is an upside to this I presume the Flight Crews may still have some level of power as witnessed by Ryanair last year!
If there is an upside to this I presume the Flight Crews may still have some level of power as witnessed by Ryanair last year!
The price of pilots is high at the moment because there are not enough of them.
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Actually the money to be made in long haul is travel in the premium cabins, PLUS the contribution of those back in economy, with a significant proportion of them also travelling on business and not having paid bottom bucket fares, PLUS substantial belly freight loads in both directions, PLUS a good frequent traveller base to ensure all year round and continuing revenue, PLUS a balanced mixture of O&D and connecting pax rather than just all one or just all the other, PLUS service into a significant hub for at least one end of the route.
Then you might get away with it after a few years of route development.
Then you might get away with it after a few years of route development.
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Have you not even read any of the links Bondi posted (admittedly in Norwegian but there’s plenty of others elsewhere)? Investors are bailing fast. The easyJet versus BA Short Haul likened to Norwegian versus BA Long Haul is completely apples and oranges. For one thing easyJet had a sound business model. We’ve already spoken about why low cost works on short haul hence the rise of easyJet etc but that same model can’t be applied to long haul. That’s why easy were able to steal a march on BA whereas airlines like Laker weren’t.
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Have you not even read any of the links Bondi posted (admittedly in Norwegian but there’s plenty of others elsewhere)? Investors are bailing fast. The easyJet versus BA Short Haul likened to Norwegian versus BA Long Haul is completely apples and oranges. For one thing easyJet had a sound business model. We’ve already spoken about why low cost works on short haul hence the rise of easyJet etc but that same model can’t be applied to long haul. That’s why easy were able to steal a march on BA whereas airlines like Laker weren’t.
Second, most of their model is set up on lease and on a service agreement basis. This also leaves a lot of OEM and service providers also in the dwang if the market is suddenly flooded by 20+ 787 and 40+ engines. Surely better to cut profit, even turn a slight loss than have 20+ 787-9 parked up somewhere arid in America. Thats not to mention their 737 MAX. Any trouble and the used market is going to depress the price of a brand spankers jet for a while.
Thirdly, Norwegian has the world's largest sovereign wealth fund. Its bigger than any Middle Eastern equivalent. This should be a worry to BA, as they could very suddenly find themselves getting deep into a price war that is mutually destructive, against a company backed by a country with a very, very, very deep pocket.
Finally, although they have lost cash, they are not losing lots of cash... yet. They are still establishing route structure, cargo capability and wider networks. The efficiency will always take time. The Scandinavians are exceptionally good at the digital thing, so expect business analysis to increase profits in the future. Be interested to see how their cargo business develops and if they can develop a decent hedge strategy.
Last edited by VinRouge; 27th Mar 2018 at 19:53.
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https://www.nytimes.com/reuters/2018...ut-equity.html
To save you the time:
"The results of the share issue show investors have enormous confidence in the company. And they should not, because Norwegian Air is losing an enormous amount of money," said Karl-Johan Molnes, chief analyst at brokerage Norne Securities, who has a "sell" rating on the stock, said Norwegian Air should dismantle the long-haul business because it could not replicate the success on shorter routes. “Long-haul customers are mainly high-paying business-class customers, while Norwegian Air is focusing on economy customers, he said. ‘They need to dismantle it very quickly,’ he said.
To save you the time:
"The results of the share issue show investors have enormous confidence in the company. And they should not, because Norwegian Air is losing an enormous amount of money," said Karl-Johan Molnes, chief analyst at brokerage Norne Securities, who has a "sell" rating on the stock, said Norwegian Air should dismantle the long-haul business because it could not replicate the success on shorter routes. “Long-haul customers are mainly high-paying business-class customers, while Norwegian Air is focusing on economy customers, he said. ‘They need to dismantle it very quickly,’ he said.