As New Norwegian gears up for launch, which will focus on what was its profitable short-haul foundation, we look at what caused its many troubles. Come August, Oslo and Norway will be more important than ever – but competition is increasing.
It is fair to say that Norwegian has suffered enormously in the past few years, culminating in bankruptcy protection in late 2020. Its precarious position came about mainly because of its swift growth that saw over 10 million seats added in two years and an increasingly unclear focus. This was from various ‘distractions’ from its core short-haul operation, especially expansion into long-haul markets – which grew very rapidly – and Norwegian Air Argentina’s launch.
The rise of the non-core
Norwegian had 22.3 million seats in 2011, analysis of OAG data indicates, which had more than doubled to 45 million by 2019. In this period, domestic Nordics (within Denmark, Norway, Sweden, Finland) grew very slowly, meaning this market fell from nearly half of the total to just 26%, as shown below.
International capacity to/from the Nordics, meanwhile, more than doubled, although its share was flat. This is from the rise of the non-Nordics. This increased from fewer than one million seats in 2011 (4% of its total) to 10.1 million by 2019 (22%). Crucial to this was long-haul.
70 long-haul routes
At its peak in 2019, Norwegian had 6.6 million long-haul seats across 70 routes. It was the fifth-largest airline between Europe and the United States. The US was all-important, with all but 700,000 of its long-haul capacity. Gatwick to New York JFK was number-one, followed by Los Angeles – Paris CDG, Gatwick – Los Angeles, JFK – CDG, and Amsterdam – JFK. Norse Atlantic hopes to replace it on routes that showed good promise, but the problems of long-haul low-cost loom large.
From all of this expansion, Norwegian’s losses went up, debt increased, and the day-to-day cash level became a major problem. This week (April 14th), Norwegian said that it aims to raise €594 million in new capital before emerging from bankruptcy protection in May. This, it says, will help get back-to-basics ‘New Norwegian’ going.
The idea of New Norwegian is a sound one. It is about retreating to its core short-haul operation within and to/from Nordic countries. It is inevitable and sensible, although it comes as the competitive scene changes significantly. Norwegian startup Flyr is preparing for its first flight on June 30th and will use B737-800s, while Wizz Air gets set to operate 15 domestic Norway routes this summer involving 10 airports, mainly from its fairly new Oslo base.
As Norwegian’s CEO said last year:
“Our short-haul network has always been the backbone of Norwegian and will form the basis of a future resilient business model.”
Short-haul was profitable before coronavirus
The comment from Norwegian’s CEO chimes with analysis by RDC Aviation. The data company showed that the airline achieved short-haul profits of approximately €234 million in 2019, but this was dragged down significantly by its loss-making long-haul operation. Why the airline decided to move away from its solid foundation is a subject for another day.
Norwegian’s plan for this August is likely to change, but a summary of its ‘top-10’ is shown below.
|Ranking in August 2021||Top routes||Top airports||Top countries||Top country-pairs|
|1||Oslo - Bergen||Oslo||Norway||Domestic Norway|
|2||Oslo - Trondheim||Copenhagen||Denmark||Domestic Sweden|
|3||Oslo - Stavanger||Stockholm||Sweden||Norway - Spain|
|4||Oslo - Tromso||Bergen||Spain||Domestic Denmark|
|5||Copenhagen - Aalborg||Stavanger||Finland||Norway - Denmark|
|6||Oslo - Stockholm||Trondheim||UK||Norway - UK|
|7||Oslo - Copenhagen||Helsiniki||Italy||Denmark - Spain|
|8||Oslo - Harstad-Narvik||London Gatwick||Poland||Norway - Poland|
|9||Oslo - Bodø||Malaga||France||Norway - Sweden|
|10||Oslo - Alesund||Alicante||Germany||Domestic Finland|
Norway is now expected to have over seven in ten seats, a good distance ahead of the volume in August 2019. And Oslo’s lead over the second-ranked airport has grown. The elimination of long-haul and the closure of its Gatwick base and other coronavirus-related border problems have pushed Gatwick from fourth-largest to eighth. Norwegian will now have seven routes from Gatwick this August, purely across the Nordics, down from 36 in August 2019. New Norwegian in action.
Do you think it will be successful? If so, why? If not, why not? Comment below!