Norwegian 56% lower fare to US than airlines from Heathrow

Norwegian commenced services from London Gatwick to Boston on 27 March using its 787-8 fleet

In 2019, London Gatwick had 2.2 million of Norwegian’s almost six million seats from Europe to the US. It began long-haul operations from Gatwick in 2014.  By 2019, it served 14 US airports from the London airport.  Some, such as Fort Lauderdale, Las Vegas, and Oakland, have gone, while others, like Miami and San Francisco, have come. Boston, which began from Gatwick in May 2016, is operated daily, year-round.

Long-haul for Norwegian is big and controversial business, although at Group level it only represented 15% of its total seats in 2019.  Despite its ongoing, Group-wide rationalisation to improve overall performance,  which saw the end of its Argentinan unit and a host of routes cut, it flew nearly six million seats between Europe and the USA last year.  This involved 55 airport-pairs, 15 US airports, and nine in Europe, which routes that have since ended and those that are to end. The coming partnership with JetBlue will further help to transform its transatlantic performance.

Minimal YOY capacity growth

Norwegian’s Europe – US seats increased by just 181,000 in 2019 over 2018 against 2.6 million between 2017 and 2018.  This shows one impact of its self-described “new strategy”: its approach to “continuing the process of moving from growth to profitability”.  In other words, the rocket science idea of focusing on where it is making money and increasing capacity sensibly, increasing loads per flight, increasing ancillary revenues per flight from greater volume, and increasing total revenue per ASM.  In November 2019, it reported that its US revenue grew by 21% in Q3 2019. 

With 2.2 million of its almost six million US seats, London Gatwick is key to its long-haul operation. 

Norwegian’s Gatwick – US fare 56% lower than competitors at Heathrow

In keeping with its long-haul, low-cost strategy, Norwegian has a 56% lower average one-way base fare from Gatwick to the US (USD$405) in comparison to airlines serving the same airports from Heathrow ($921).  Of course,  given different strategies and costs, this is not an apples-to-apples comparison, but it is insightful.  This is based on local passengers only and, for Heathrow, it reflects the average fare across all cabins.  These figures exclude ancillaries which, for Norwegian, is crucial. Of course, the fare premium from Heathrow is from full-service airlines, the proportion of premium passengers, and market domination.  At $633, Boston had the greatest ‘fare gap’.  While the shortest route by distance,  it has the third-highest fare from Heathrow.  At $238, Miami had by far the smallest fare gap.  Norwegian moved from nearby Fort Lauderdale in March 2019, a move which, as we will see, saw a significantly higher average fare achieved.

Norwegian 56% lower fare to US versus airlines from Heathrow

Source: OAG Traffic Analyser.  This is based on local passengers only in the year to September 2019.  For London Heathrow, it is the average of all cabins. It excludes taxes, fuel surcharges, and ancillaries. Orlando and Tampa haven’t been included due to not being served non-stop from London Heathrow. * Las Vegas: because this route ended in March 2019, data is based on the year to March 2019 instead. ** Miami and San Francisco began in March 2019.  As such, the data for them, and from Heathrow, is based on March-September 2019 only.  It will be interesting to look at their year-round fares when available.

Las Vegas cut; no surprise given fare per mile

Because of Las Vegas’ passenger mix and strong competition from London, the airport achieved the lowest average from both Gatwick and Heathrow. Its long-distance and summertime payload restrictions due to the high density of its B787s (obviously crucial to reduce seat costs) and hot weather, coupled with low performance, made its end inevitable. This came in March 2019.  Denver and Chicago ORD, both underperforming, were not spared.  Both have been made summer-seasonal.  Unlike Denver, Chicago, which began less than two years ago, will not see S20 capacity increases, suggesting the need for further work. Not surprisingly, Tampa and Austin, along with Denver and San Francisco, will see frequency increases in S20.

Norwegian 56% lower fare to US than airlines from Heathrow

Source: OAG Traffic Analyser.  This excludes taxes, fuel surcharges, and ancillaries. Orlando and Tampa have been included here due to no comparisons between airlines or airports. Miami and San Francisco haven’t been included because data is presently not available for the full year to take account of wintertime, which is important in this comparison. Las Vegas: because this route ended in March 2019, data is based on the year to March 2019.

Move to Miami and San Francisco paid off by fares

Norwegian’s move from Fort Lauderdale to Miami and Oakland to San Francisco was, of course, for higher fares. This was, in part, from competition from London but also because the new airports are better known internationally. It decided that stronger performance would likely result even with higher charges.  Purely in terms of base fares and based on most of the IATA summer period only, San Francisco attained an estimated $140 price advantage each way against Oakland, and Miami $121 against Fort Lauderdale.  Despite the increases, there is still a significant price gap (albeit before crucial ancillaries are added) versus airlines from Heathrow, at least to San Francisco.

Norwegian 56% lower fare to US versus airlines from Heathrow 2

Source: OAG Traffic Analyser. Data for Oakland and Fort Lauderdale is based on March-September 2018; for Miami and San Francisco: March-September 2019.

 


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Comments

  1. Bruce Chapman says:

    I think another factor limiting the year over year growth for 2018 to 2019 is the lack of confidence that the airline would survive financially after the 12/2018 financial scare. Hopefully in S20 riders will have more confidence.

  2. Peter Salomonsson says:

    Very good article, interesting to read about Norwegians moves

  3. Peter says:

    Im flying to miami on 18th jan with norwegian first time so we’ll see

Comments are closed