Nor­we­gian makes rapid progress

As Europe’s long-haul flight mar­ket ex­pands, bio­fu­els ben­e­fit

Global Times - - Business -

Nor­we­gian Air Shut­tle has over­taken Bri­tish Air­ways (BA) as the big­gest non-US air­line on transat­lantic routes to and from the New York area, in the lat­est il­lus­tra­tion of the low-cost car­rier’s move into Bri­tish Air­ways ter­ri­tory.

Nor­we­gian car­ried 1.67 mil­lion pas­sen­gers to or from air­ports in the New York area in the 12 months to the end of July, com­pared with the 1.63 mil­lion car­ried by Bri­tish Air­ways, data from the Port Au­thor­ity of New York & New Jer­sey showed.

No-frills car­rier Nor­we­gian has been rapidly ex­pand­ing in the transat­lantic mar­ket over the last five years, prompt­ing In­ter­na­tional Air­lines Group (IAG), the owner of Bri­tish Air­ways, to try to buy it ear­lier this year.

The data showed four US air­lines, led by United Air­lines, are the big­gest car­ri­ers of in­ter­na­tional pas­sen­gers out of the main air­ports in the New York area, which in­clude John F. Kennedy In­ter­na­tional, LaGuardia and Ne­wark Lib­erty In­ter­na­tional.

Air Canada is the big­gest non-US car­rier of in­ter­na­tional pas­sen­gers, but its dom­i­nance is in travel be­tween the US and Canada.

Nor­we­gian, and other rel­a­tively re­cent en­trants to the mar­ket such as Wow Air, have led a charge to shake up Europe’s long-haul flight mar­ket, of­fer­ing ticket prices that can be as lit­tle as half those charged by tra­di­tional car­ri­ers.

Big Ap­ple bud­get

The tra­di­tional air­lines have re­sponded by sell­ing a new bud­get class of ticket, as well as set­ting up, in IAG’s case, new air­line Level to com­pete di­rectly with Nor­we­gian on prices.

“Our com­mit­ment to New York is as strong as ever,” a BA spokes­woman said. “We fly up to 70 times a week from all three of our Lon­don air­ports, and we re­cently an­nounced a $65 mil­lion in­vest­ment on new lounges, im­proved food, seat­ing and shops at JFK Ter­mi­nal 7.”

Lufthansa has also started bud­get long-haul flights us­ing its Eurow­ings brand.

Nor­we­gian said in May it had re­jected two ap­proaches from IAG, which also owns the Ibe­ria, Aer Lin­gus and Vuel­ing brands, be­cause they un­der­val­ued the com­pany. IAG owns a 4.6 per­cent stake in Nor­we­gian.

The pace of Nor­we­gian’s growth – fig­ures from July 2017 show it only car­ried 750,000 pas­sen­gers into and out of the New York re­gion – has weighed on its fi­nances and it faces mount­ing pres­sure to con­trol costs and shore up its bal­ance sheet.

“Fares have been too high for too long as transat­lantic routes have been long dom­i­nated by car­ri­ers with out­dated lega­cies run­ning on fumes,” a Nor­we­gian spokesman said.

“Nor­we­gian will con­tinue to spread its wings to the Big Ap­ple with a third-daily ser­vice be­tween Lon­don and New York JFK from 28 Oc­to­ber,” the spokesman said.

Bio­fuel ben­e­fits

How­ever, it’s still un­clear whether the low-cost ad­van­tage of Nor­we­gian Air Shut­tle could be main­tained. As part of Nor­way’s push to cut green­house gas emis­sions, the coun­try said on Oc­to­ber 4 that the avi­a­tion fuel in­dus­try must mix 0.5 per­cent ad­vanced bio­fuel into jet fuel from 2020 on­ward, a move which will force air­lines to use the more costly fuel.

“The gov­ern­ment’s goal is that by 2030, 30 per­cent of the air­line fuel will be sus­tain­able with a good cli­mate ef­fect,” said Nor­way’s Min­istry of Cli­mate and En­vi­ron­ment.

This cor­re­sponds to around 6 mil­lion liters of what is also known as sec­ond-gen­er­a­tion bio­fu­els, a prod­uct of waste and left­overs, and can­not be based on palm oil, Nor­way’s Cli­mate and En­vi­ron­ment Min­is­ter Ola Elvestuen said.

Bio­fu­els for avi­a­tion cost around two or three times more than reg­u­lar jet fuel, ac­cord­ing to a re­port by Nor­way’s en­vi­ron­men­tal agency, the civil avi­a­tion au­thor­ity and State-owned op­er­a­tor Avi­nor, he added.

How­ever, as there is no func­tion­ing mar­ket for bio­fu­els in avi­a­tion, the real prices are un­cer­tain, said Elvestuen.

“Ac­cord­ing to the re­port, a quota obli­ga­tion of 0.5 per­cent ad­vanced bio­fu­els can cor­re­spond to a price in­crease for the air­lines of around 54 mil­lion Nor­we­gian crowns an­nu­ally,” he said. This cost amounts to roughly $6.6 mil­lion.

Even though there are other ini­tia­tives and tri­als around the world, Elvestuen said Nor­way’s move to leg­is­late bio­fu­els use in avi­a­tion may be the first bill in­tro­duced world­wide on the topic.

“As far as we are aware, no other coun­try has pro­posed leg­is­la­tion sim­i­lar to the Nor­we­gian plans,” said the min­is­ter.

File photo: VCG

Nor­we­gian Air Shut­tle ASA takes off at Lon­don Gatwick Air­port in Craw­ley, UK

Newspapers in English

Newspapers from China

© PressReader. All rights reserved.