Norwegian’s London Gatwick North Atlantic routes <1% of UK-US capacity (but Virgin was once new too)

One of Norwegian's 787 Dreamliners.

Norwegian will launch a total of seven weekly flights spread across three destinations from London Gatwick, starting 2 July 2014, using its 787 Dreamliners. These flights will represent less than 1% of the existing seat capacity between the US and the UK during the peak summer season.

Norwegian’s recent announcement that it will base one of its 787 Dreamliners at London Gatwick next July, and start non-stop service to Fort Lauderdale, Los Angeles and New York JFK is exciting news for London’s second airport. Fort Lauderdale will be served twice-weekly (Mondays and Fridays), Los Angeles also twice-weekly (Wednesdays and Sundays), and New York JFK thrice-weekly (Tuesdays, Thursdays and Saturdays). With a total of seven weekly departures from the UK to the US Norwegian’s new offering will represent just under 1% of all non-stop flights between the two countries, during the peak summer season.

UK-US market grew in 2011 and 2012; still below 1999 level

The UK-US market is arguably one of the most mature air travel markets in the world. Since 2001 demand ‘across the pond’ has varied between a low of 15.8 million in 2010, and 18.6 million in pre-Lehmann Brothers 2007.

UK-US air traffic 1996-2012 Annual passengers (millions)

Source: UK CAA

The good news is that in the last couple of years the market has picked up again, growing 6.8% in 2011 and 2.1% in 2012. In the first six months of this year the demand was up a very modest 0.6% to 8.17 million.

Heathrow accounts for over 80% of UK traffic to US destinations

Since the UK-US bilateral agreement allowed ‘free’ access to Heathrow, several carriers that had previously been denied access to the airport (such as Delta Air Lines and US Airways), were able to move their services across from London’s Gatwick Airport. As a result Heathrow’s share of US-UK traffic has grown from just over 60% in 2007, to 81% in 2012. The almost 14 million passengers travelling between Heathrow and US destinations represents fully 20% of all passengers using Heathrow.

Top airlines between UK and US Weekly scheduled departing seats in August 2013

Source: Innovata Diio Mi for August 2013

Based on schedule data for this August, the two leading UK carriers have 55% of total seat capacity, while the four US carriers share a further 41%. The remaining 4% is split between various UK ‘leisure’ airlines such as Monarch Airlines and Thomson Airways, as well as Air New Zealand, Kuwait Airways and Pakistan International Airlines.

Vegas working well, Austin coming in 2014

In terms of new UK-US services there have not been that many developments in recent years. Since the beginning of 2012 United Airlines has added a non-stop service between Washington Dulles and Manchester (in May 2012), while British Airways added a Gatwick-Las Vegas service to complement its existing Heathrow service in October 2012. More recently, at the start of the summer 2013 season, US Airways moved its Charlotte service from Gatwick to Heathrow. As a result Gatwick’s only US services this summer were:

  • Las Vegas (LAS) served by British Airways and Virgin Atlantic
  • Orlando (MCO) served by British Airways and Virgin Atlantic
  • Orlando Sanford (SFB) served by Thomson Airways and Monarch Airlines
  • Tampa (TPA) served by British Airways

The next major development will occur on 3 March 2014 when British Airways launches flights from Heathrow to Austin in Texas. Later that month, Delta will introduce daily flights from Seattle to Heathrow, followed in late-May by United adding seasonal flights from its Chicago O’Hare hub to Edinburgh, and US Airways adding daily seasonal flights from its Charlotte hub to Manchester. Then, on 2 July, Norwegian will launch its first UK-US flights.

London Gatwick delight at “re-established” routes

Norwegian’s CEO Bjørn Kjos, said: “There’s great demand for high quality flights at a low fare between the UK and the US, particularly to and from London Gatwick, where no other airline currently offers these routes. We are looking forward to welcoming many new customers on board our brand new aircraft. Launching long-haul routes between London Gatwick and the United States is also an important part of our strategy to expand internationally and get a stronger foothold in markets outside Scandinavia.”

Stewart Wingate, CEO of London Gatwick, said: “This is one of the most exciting route developments since Gatwick’s change of ownership four years ago and shows the benefits to passengers of Gatwick competing with Heathrow on routes, price and service. Norwegian’s decision to re-establish London Gatwick’s links to strategic destinations in North America gives passengers, once again, real choice about how to get there and, importantly, provide options for affordable travel to popular business and leisure destinations. Norwegian’s decision to operate high quality services on new long range aircraft offering good-value fares to the US from London Gatwick is a significant industry game-changer.”

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  1. Peter Gordon says:

    I don’t see how JFK & LAX will work. Norwegian will not pick up any premium traffic with such a low frequency and the big airlines will always have spare capacity on certain flights that they can price at marginal cost (as Oasis HKG knows to its cost. FLL could work. Its very close to MIA but I would imagine that BA / VS have higher load factors with lower yield traffic. It might be better to try operating out of regional airports where low operating costs are vital. Maybe match the Air Transat operating model.

    I wonder how the high capital cost of a 787 offsets its low fuel costs. Norwegian certainly has lower staff costs but they are low proportion of all costs for long haul operation.

  2. pedro says:

    Norwegian Air has come to offer something very attractive to the passenger, an air-fares battle, but not to make the market bigger (the frequencies they plan to operate are marginal, much less than capacities they have in other regional markets such as domestic routes in Norway like OSL-BGO), so after all, the only new proposal they came with to the market is the ultra low cost fares for a long haul operation. I forecast a difficult business for them in all of their new announcements for international long haul operations. If you add to the still inmature long haul low cost model, the likely delays/problems, which are in fact massive for these kind of operations, they might be dropping all services in a year and half or so. Their idea is powerfull, the market is there, the aircraft type they’re using (even though its “bumpy” start) is great… but the model is not for a low cost operation, at least, not yet. As Vueling recently said, there is no way to implement yet a low cost operation on any flight longer than 6 hours (even more can be profitable for some airlines within some markets like Asia, but up to a maximum about 8-9h like Air Asia experienced with their own network), due to the fact of the normal issues this industry is affected by, such as technical faults, and so on. They are the ones that really make the business to drop the line between profitable and non-profitable, even more than load factors. In fact, Air Asia even stated even if they loaded a 100% booking level for every flight operating to Europe or Christchurch, the business wouldn’t still raise enough at the fuel price they were paying for back in those days. Say in a different way, to send an empty A320 from BCN to FIU takes 2 hours and 6 members of stand by crew, plus a reasonable amount of extra fuel. Even in these cases, low cost operators try to minimise the cost of the “rescue operation”, many times by annoying passengers. However, to send an empty “something**, cause actually Norwegian has apparently no spare long haul aircrafts, but anyway…” an empty A330/787 to Bangkok or Oakland/LAK/JFK takes 9- 12 hours, 12 member of stand-by crew (where from if they are not based in OSL/ARN/LGW???… and a ridiculous massive amount of fuel. Furthermore, for a likely 70% load factor on the affected flight… who might have paid 200 bucks for their seats. It’s really challenging this industry.

    As a passenger, I feel excited about this new offer in the market, but when it comes to analyse how profitable it might be, I honestly wouldn’t bet a lot for these brave vikings…

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