Wednesday 15 August 2018

Why is British Airways so keen to buy up its low-cost Norwegian rival?


Hugh Morris

It’s no surprise that in the same week BA launched its no-frills fares on long-haul flights, the UK flag carrier considers a move for Norwegian.

After all, the Scandinavian airline is all-but the reason British Airways felt the need to introduce hand luggage-only fares on its longer routes to compete with more fervour at the budget end of the market.

IAG, which owns Aer Lingus, BA and other airlines, already entered the increasingly vicious low-cost, long-haul fray last year when it launched Level, a Barcelona-based carrier for the price-conscious millennial traveller.

But bringing Norwegian under its wing by way of takeover would negate the need for a gruelling battle with a carrier that has gone from strength to strength in the last few years, expanding its cheap, transatlantic flights operation across the US, to South America, and even Singapore.

Last year, the airline launched transatlantic services to/from Belfast, Cork, Dublin and Shannon airports. It has added further capacity for 2018.

In February, Norwegian celebrated its first flight to Buenos Aires (sold, like the others, from eye-catching base rates, such as £259/€298 one-way), by announcing it was eyeing up new routes to Tokyo, Shanghai, Beijing, Detroit, more of South America and the Middle East. Broadly speaking, it was confident its new model of low fares offering basically just a seat - on new, comfortable aircraft - was here to stay.

Norwegian's 787-MAX featuring explorer Tom Crean as a 'tail fin hero'
Norwegian's 787-MAX featuring explorer Tom Crean as a 'tail fin hero'

“The airline is exploring potential new routes to more South American countries due to strong ticket sales on the Buenos Aires route," the carrier, which was founded in Norway but has a UK subsidiary, said in a statement.

“Further Asian expansion will build upon the successful launch of the world’s longest low-cost route to Singapore, with destinations such as Tokyo, Shanghai and Beijing planned.”

While BA carries some 12 million more people a year than Norwegian, the latter, at current trajectory, is catching up.

Norwegian, which entered the budget market in Ireland in 2017 with transatlantic services selling from €69, also said it was planning an assault on the business class market from the UK, adding more premium seats to its new 787 Dreamliner aircraft and increasing the number of flights a week to destinations such as Los Angeles and Miami.

It has ambitions for a thrice daily service to New York.

“The UK will be at the heart of our continued global expansion and we remain fully committed to the market,” said CEO Bjorn Kjos. “We are launching long-haul routes exclusively from London Gatwick, introducing our newest Dreamliners to Gatwick and increasing frequency on popular routes which reflects the growing importance of the UK to the future of our business.”

Kjos said Norwegian has “huge global ambitions” and that he is confident “the UK can offer Norwegian a springboard to further expansion as we aim to become the long-haul airline of choice for passengers seeking a high-quality service at great value”.

In December last year Telegraph Travel crunched some numbers, courtesy of the air travel analysts OAG, to see how Norwegian was competing in the transatlantic market.

The data showed that while BA had increased the number of seats available this winter by 1.1 per cent on the previous year, Norwegian enjoyed a 111 per cent increase, the largest growth for any carrier. It then occupied seventh place in the rankings of most transatlantic seats flown but that position is likely to improve.

The airline’s low base fares, on which it prides itself, come under scrutiny when the cost of checked luggage, meals and seat selection are added, but there’s no doubt about the impressive modern fleet that Norwegian boasts, allowing efficient, comfortable long-haul travel.

The carrier, which started life in 1993, is today the third largest low-cost carrier behind Ryanair and Easyjet.

Read more:

New York as a day trip? Low-cost airline makes it possible this spring

Editors Choice

Travel Insider Newsletter

Get the best travel tips, deals and insights straight to your inbox.

Also in Life