Cut-price airline boss making big profits
( and I’m not worried Trump will stop me ... but you will have to use an airport 70 miles upstate )
BJORN Kjos, boss of Norwegian Air Shuttle, appears to have nerves of steel. A former fighter pilot who once flew one of the most notoriously dangerous planes of all time, he is now taking on some of the world’s biggest airlines with a plan to launch budget transatlantic flights – with one-way fares as low as £56.
It’s a ferocious market and one where even the combative Ryanair boss Michael O’Leary has not ventured. It has also been the undoing of once famous names.
Back in the 1970s, Sir Freddie Laker pioneered budget transatlantic flights. But his once successful group Laker Airways went spectacularly bust in 1982. Unlike Laker Airways, Kjos’s company Norwegian Air Shuttle is making a very healthy profit – £95million in just the latest three-month period.
The 70-year-old former fighter pilot, whose stake in the airline has been estimated at about £200 million, made headlines last month when he announced plans for the cheap flights from Britain to America. Can that really still be profitable?
‘You cannot offer every ticket for £56, that’s for sure,’ he says, but he argues with the right aircraft and the right destinations it can be done. ‘You have to have the full low-cost set-up to make this work,’ says Kjos. ‘The right aircraft, the right bases – if you’re flying to New York you have to have your crew based in New York, the same if you’re flying to Fort Lauderdale and so on.’
What has also stunned some observers is that the Norwegian outfit is taking on the transatlantic market where far bigger budget airlines such as Ryanair have steered clear.
Kjos thinks Ryanair could have made a go of transatlantic flights.
‘I think Ryanair could have done it if they had really gone for it, but they have a very successful business in Europe and I think they have decided it makes sense for them to stick with that,’ he says.
Norwegian Air Shuttle has been operating a low-cost service since 2002. It flew 30million passengers last year including 4.5million from the UK to 150 destinations on 120 of the newest, most economical aircraft of virtually any airline.
That includes the Boeing 787 Dreamliner, the twin-engined, carbon-built, jet known for its remarkable fuel-efficiency.
Norwegian Air, with its distinctive red-nosed, white bodied aircraft, each with a portrait of a Scandinavian ‘hero’ on the tailfin – from artist Edvard Munch to actress Greta Garbo – has 120 aircraft. A further 260 are on order and it will be using another Boeing, the new 737 Max, on its next round of flights from the UK to the US.
This year Kjos plans to offer 34 direct flights a week from Gatwick and launch further low-cost services from smaller European airports to US East Coast hubs.
But like Ryanair, Kjos’s lowest prices come by flying between smaller airports. The £56 single transatlantic fare will fly between Edinburgh and a secondary airport in New York – Stewart International Airport, which is 70 miles upstate from New York City; or Providence, Rhode Island.
‘You cannot fly into the main airports because the taxes are just too expensive so you choose the smaller ones – we don’t like to call them secondary airports – they are cheaper but also much more efficient. We can turn an aircraft round in an hour or even 45 minutes so we don’t have much downtime at all.’
But the big city flights remain the most popular.
‘Our most popular routes are London to New York and London to Los Angeles where the aircraft have been flying 95 per cent full,’ says Kjos. ‘We’ve also started flying transatlantic from other European cities and our Paris service has proved very, very popular – the aircraft have been 100 per cent full. We compete against well-established airlines on shorthaul routes in Scandinavia and against very good operators, like British Airways and Aer Lingus, on long-haul but we manage.’
Flying is in Kjos’s blood – his father owned a Piper Cub when he was growing up and also started a small airline in Norway. One of his daughters is a pilot for Norwegian Air and his son works for the airline. After service as a paratrooper in the Norwegian forces, Kjos switched to the Royal Norwegian Air Force where he flew the infamous Lockheed F-104 during the Cold War.
The Starfighter, as it was known, suffered from a notoriously poor accident record and was nicknamed ‘The Widowmaker’. Kjos however was a fan. ‘That was the best job I ever had! The Starfighter was a beautiful aircraft,’ he says. He then took up a career in law, working as a lawyer and then a judge for nearly 20 years. He started Norwegian Air Shuttle in 1993, transforming it into a low-cost airline in 2002.
Many of the new transatlantic
flights Kjos can offer have been made possible because last month Norwegian Air finally got its foreign air permit from the US Department of Transportation. To secure its licence the company had to convince US authorities that it was, despite its name, based in Ireland and so part of the EU which has an ‘Open Skies’ agreement with America. It took the airline three years to get the permit, far longer than usual, because of the opposition of US airlines and trade unions who claimed that Norwegian Air used cheap labour, often from Thailand, to crew its aircraft.
President-elect Donald Trump won election partly by expressing considerable scepticism for such freetrade treaties like the ‘Open Skies’ agreement. So is Kjos worried that it might be torn up?
‘We are not worried, he is smart enough to see that we support jobs in the US, where we employ hundreds of staff and the more destinations in the US we fly to, the more jobs in hotels and restaurants we are supporting,’ he says.
And there are other headwinds too such as the rising oil price and the falling value of the Norwegian krone. ‘You have to have scale to counter oil price changes and we are growing fast,’ he argues. Then adds: ‘And the krone is not the only currency to have fallen. So has the pound, but that’s helped, because it means the UK is a very cheap destination for Americans.’
That’s good news for Kjos, but also bodes well for the UK.
You cannot fly into the main airports because the taxes are just too expensive
The President elect is smart enough to see that we support jobs in America