Norwegian Air Shuttle announced (25-Oct-2012) plans to establish a new base of operations at London Gatwick Airport in spring 2013. It will also establish a new base of operations at Alicante. Norwegian will offer flights to several Mediterranean destinations and the Nordic region from London. The new base in England will also enable Norwegian to better meet the head-on competition from Asian and European carriers in the long-haul market. Norwegian already has more than 100 weekly departures between the Nordic region and London, and London is Norwegian’s most popular destination outside its home market. The Alicante base will – in addition to already established bases at Malaga and Las Palmas – serve an important part of Norwegian’s Spanish traffic. Norwegian is planning to start its operations at London Gatwick with three Boeing 737-800s and increase to four aircraft by the end of the year. The first flights will commence in spring 2013. Pilots and cabin crew will be recruited locally. Norwegian currently has bases of operations in Norway, Sweden, Denmark, Finland and Spain. A new base for the company’s subsidiary for long-haul flights is being established in Bangkok. [more - original PR] [more - original PR Norwegian]
Norwegian opens new bases of operations at London Gatwick and Alicante
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Norwegian Air part 2: long haul growth shows its strategic innovation, but increases debt burden
Norwegian plans to add US routes to its Edinburgh base, a development considered in part 1 of this report, adding to its growing list of European long haul bases. However, its Edinburgh-US routes will use new Boeing 737MAX-8 aircraft – its first deployment of narrowbodies for long haul. It has also ordered 30 Airbus A321neoLRs for long haul use. Narrowbodies open up new possibilities for routes between the UK (or other European markets) and the US east coast.
Norwegian also plans to add non-US destinations to its UK long haul network, with details expected during the course of 2017. Norwegian's flexibility to develop its long haul operations from the UK would be improved by the grant of a US foreign carrier permit to its UK-registered subsidiary, Norwegian Air UK.
Norwegian has had to surmount many obstacles to build and grow its global network – which may also include Latin America in 2017, when it will accelerate long haul ASK growth to 60%. However its rapid expansion, currently driven mainly by long haul growth, has led to a rapid increase in debt, and is likely to weigh on unit revenue. Norwegian's undoubted strategic innovation can only be sustained if it is financially successful.
Norwegian Air part 1: a second UK long haul base at Edinburgh. Matches Virgin on Gatwick-US seats.
Norwegian's plans to add Edinburgh to its long haul bases are a further indication of its constantly evolving strategic development. Driven mainly by long haul, Norwegian returned to strong growth in 2016 after a respite in 2015. Norwegian's 2017 expansion plans will make the LCC Scandinavia's largest airline by passenger numbers, ahead of the legacy airline rival SAS.
The UK is Norwegian's biggest European long haul market outside Scandinavia. This has so far been based entirely on its network at London Gatwick, where its weekly seat capacity to the US now equals that of the market leader Virgin Atlantic. However, Norwegian is looking beyond Gatwick and will add trans-Atlantic routes from Edinburgh in 2017, for the first time deploying a narrowbody (Boeing 737MAX-8) on its long haul network. It has yet to announce the US destinations from the Scottish capital, and also plans to fly to the US from other UK cities.
This report considers Norwegian's Edinburgh long haul plans in the context of its existing UK operations. Part 2 looks at Norwegian's use of narrowbodies for long haul and the application by its UK subsidiary for a US permit. Part 2 also touches on the financial impact of Norwegian's rapid growth.