Business Irish

Saturday 23 September 2017

Norwegian boss says airline has a three-year US headstart

Norwegian chief executive Bjorn Kjos is surprised by the strength of sales out of Ireland to the US, and reckons Ryanair, under Michael O’Leary, won’t be a rival yet
Norwegian chief executive Bjorn Kjos is surprised by the strength of sales out of Ireland to the US, and reckons Ryanair, under Michael O’Leary, won’t be a rival yet
Ryanair CEO Michael O'Leary
John Mulligan

John Mulligan

It would take Ryanair at least three years to enter the low-cost transatlantic market with new Boeing aircraft if it decided to challenge rivals on the sector, according to Norwegian chief executive Bjorn Kjos.

"If they decided today, they wouldn't be able to start until at least 2020," Mr Kjos told the Irish Independent, citing available production slots based on his prediction on a challenger on the low-cost transatlantic market opting to use a Boeing 787 Dreamliner. Its fuel efficiency is one of the major reasons why Norwegian uses the advanced jet for most of its transatlantic services.

Ryanair chief executive Michael O'Leary has occasionally talked about initiating transatlantic services, but insisted that such an operation would be separate from Ryanair and also would have to wait until he could get a cut-price deal on aircraft.

But Norwegian - established just 15 years ago with four jets - has blazed a trail on the low-cost transatlantic market, able to offer one-way fares to US for under €100. It now has 56 transatlantic services.

This weekend, it launches flights between Ireland and the United States, including the first ever scheduled service between Cork and America.

For those routes, Norwegian is using a single-aisle, 737 aircraft. Mr Kjos was speaking on a delivery flight of a new 737 Max 8 jet from Seattle to Oslo yesterday.

That jet, and five others due for delivery by the end of July, will be used primarily on Irish and UK routes.

Norwegian will have 144 aircraft in its fleet by the end of this year, including 21 Dreamliners. It has 110 Max aircraft on order.

Two senior Irish pilots - a former Ryanair and an ex-Aer Lingus pilot - flew the Ireland-registered Norwegian Max jet delivered from Seattle yesterday. Mr Kjos said the Max jet would "pave the way for a totally new concept".

He added that the Max would be able to operate from countries such as far away as Denmark and Norway to the east coast of the United States, and that it could also reach Toronto from cities such as Dublin and Edinburgh.

He said that there remains room for a number of competitors on the transatlantic market, but said securing takeoff and landing slots at busy airports that lack infrastructure for growth might be an issue for would-be rivals.

"They are running out of slots, so I don't believe that there will be many slots available that are flyable," he said. "The slots are the big problem. (Airports) have to build more runways. I doubt that they will build more runways in the United States. You have to do like we are doing and go up to Stewart (the small airport Norwegian serves from Ireland and the UK that's about 80 minutes north of Manhattan)."

Mr Kjos declined to say whether stock market-listed Norwegian will consider launching additional routes from Ireland to the US.

"I think that the first phase is to set these routes that we have launched, but the Max is also ideal for going east," he said. He said that from Ireland, that the jet could reach as far as Kuwait. "Clearly, you could set up flights in and out of areas such as Israel or Jordan."

He said it would also be "much better to co-operate" with Ryanair rather than taking it on, "and use them as feeders".

Aer Lingus and Norwegian remain locked in efforts to establish passenger feeder agreements with Ryanair, which would see their tickets being sold on the Ryanair website, for instance. IT issues have so far delayed implementation.

Mr Kjos also predicted yesterday that Brexit will negatively impact air passenger in and out of the UK.

"It will weaken it," he said. He said that he would take seriously Ryanair's warning that it would pull aircraft out of the UK post-Brexit if a new UK-EU air travel agreement cannot be reached to replace open skies.

"I think Michael O'Leary has studied that more than most people," said Mr Kjos. "I think I would take his statement seriously." He added that some EU member states will probably try to block a new agreement between the UK an the union.

"I bet that the UK will have to retaliate: If the EU says no, why should the UK say yes," he added.

Mr Kjos also confirmed that ticket sales for Norwegian's Cork-Rhode Island service have been very strong. The airline will service Providence, Rhode Island as a gateway to Boston and New England.

"We've never seen such a sale before. It was very strong. We were surprised how strong it was out of Ireland," he said.

Mr O'Leary has previously speculated that one day Ryanair passengers would be able to fly without having to pay for their tickets, with the airline generating all its revenue from ancillary services.

Mr Kjos said it would be very unlikely that Norwegian could ever reach such a point for passengers with its transatlantic services however.

"I'm not not sure about that. In some way, they have to pay," he said.

Irish Independent

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