Nor­we­gian: Fly­ing soon to a des­ti­na­tion near you

Norway-Asia Business Review - - Contents - text by Eric Baker photo by Nor­we­gian Air Shut­tle (ASA)

Don’t be sur­prised if Nor­we­gian is a house­hold name in Asia in a decade. Al­ready the com­pany, of­fi­cially Nor­we­gian Air Shut­tle ASA, has grown ex­po­nen­tially in a hand­ful of years, now the sec­ond big­gest car­rier in Scan­di­navia and the ninth­largest in Europe by pas­sen­ger num­bers. Yet chief ex­ec­u­tive Bjorn Kjos has much big­ger goals in mind, and as the low-cost car­rier com­menced long-haul ser­vices be­tween Bangkok and Oslo this sum­mer, the Busi­ness Re­view caught up with the busy boss on the air­line’s plans for the fu­ture. “Nor­we­gian is en­ter­ing Asia now be­cause the com­pany be­lieves it has huge growth po­ten­tial. China as a mar­ket is only go­ing to keep grow­ing, as more work­ers earn higher wages. And we ex­pect in the fu­ture a lot of the traf­fic flow will be from Asians com­ing to Europe,” said Mr Kjos. “Of course as a budget car­rier, we’ve al­ready seen some trav­el­ers from Europe on our ser­vices that want a com­pet­i­tively priced flight for a hol­i­day to Asia.” Nor­we­gian takes the same ap­proach to brand­ing in ev­ery coun­try, as Mr Kjos be­lieve people every­where want low-priced, safe air travel. The strat­egy ap­pears to be pay­ing off in Europe, but Asia is a big gam­ble. Even riskier is the or­der for 222 air­craft Nor­we­gian placed last year: the or­der is for 122 air­craft from Boe­ing in­clud­ing 100 Boe­ing 737 MAX8 as well 100 Air­bus A320­neo. The air­craft will be phased in from 2016. Is it wise to ex­pand so quickly? “It can seem risky, be­cause it is a huge pur­chase and no one can pre­dict the fu­ture,” he said. “But in the avi­a­tion busi­ness you have to plan in ad­vance like this. We don’t see it as risky be­cause all our busi­ness is grow­ing, and we be­lieve you have to have a crit­i­cal mass of jets like we plan if you want to sur­vive the com­pe­ti­tion in the fu­ture.” Nor­we­gian has 79 air­craft with red noses, just like Ru­dolph, in its sta­ble, mostly Boe­ing 737s, and it or­dered some of Boe­ing’s 787 Dream­lin­ers as well to ser­vice its long-haul routes to Bangkok and New York City. It ex­pects to have the lat­ter fly­ing on its routes shortly, while an or­der of 100 Max 737 jets is slated for the third quar­ter of 2017. Mr Kjos, a for­mer fighter pi­lot, lawyer and spy nov­el­ist, knew he would ruf­fle some feath­ers with his plan to reg­is­ter his long-haul jets in Ire­land in­stead of Nor­way, but he said it was be­cause of un­nec­es­sary reg­u­la­tions in his home coun­try that pre­vent for­eign air crew from fly­ing into Nor­way, rest­ing, and then fly­ing out again with a work per­mit or be­ing paid wages on the scale of lo­cals. Of course cost is one of the rea­sons Nor­we­gian hired a for­eign air crew in the first place, and Mr Kjos said he saw no pur­pose for the reg­u­la­tion. Nor­we­gian had a load fac­tor of 96% on its new long-haul flights in the sec­ond quar­ter of this year, though short-haul routes through Europe are where Nor­we­gian has built the bulk of its suc­cess. Some in­dus­try an­a­lysts are still scep­ti­cal about whether a low- cost car­rier can com­pete in the long-haul mar­ket. For Mr Kjos, the doubt is mis­placed. “If you have solid bases set up, then it’s just a mat­ter of hav­ing the right planes and train­ing the crew to switch from short-haul to long-haul routes,” he said. “If you can do short-haul suc­cess­fully, you should be able to do long-haul. We have very mod­ern air­planes and a strong in­fra­struc­ture.” Mr Kjos added that Boe­ing’s GoldCare ser­vice is also likely to pare costs, be­cause it means Boe­ing en­gi­neers are the ones pro­vid­ing the main­te­nance and ser­vice re­spon­si­bil­i­ties. Boe­ing knows its planes bet­ter than any­one, and the com­plex­ity and cost ser­vic­ing the jets our­selves would be too high, he said. Nor­we­gian in­cludes on-board WiFi in its base ticket price, and you can pur­chase food, drink or in-flight en­ter­tain­ment with your own credit- card kiosk. Sev­eral of Nor­we­gian’s cus­tomers are cost- con­scious, so they bring their own food and en­ter­tain­ment, just as many plan their own trips with­out us­ing a travel agent these days. He pointed to Nor­we­gian’s fully func­tional web­site as an­other play to fully in­de­pen­dent trav­el­ers.

The air­line also of­fers a pre­mium econ­omy cabin on long-haul flights that Mr Kjos be­lieves will be ap­peal­ing to busi­ness trav­el­ers be­cause it is still priced lower than the busi­ness class sec­tion of its com­peti­tors. The con­sumer re­sponse to its long-haul routes has al­ready been en­thu­si­as­tic, and Nor­we­gian ex­pects to be cash­pos­i­tive from its first year of oper­a­tion on the routes. The com­pany saw an in­crease of over 1 mil­lion pas­sen­gers in the sec­ond quar­ter of 2013 year-on-year, while its unit cost re­duced 9%, mak­ing it third in all of Europe.

Nor­we­gian saw an in­crease of over 1 mil­lion pas­sen­gers in the sec­ond quar­ter of 2013 year-onyear, while its unit cost re­duced 9%, mak­ing it third in all of Europe.

The air­line’s quar­terly re­port also noted that its traf­fic growth of 35% for the pe­riod sur­passed its ca­pac­ity in­crease. These cer­tainly are heady times for the Nor­we­gian boss, es­pe­cially con­sid­er­ing the ex­pan­sion the air­line has planned over the next five years. But Mr Kjos seems clear­headed about the ef­fort, con­fi­dent in the no­tion that if the num­bers play out the way his team cal­cu­lated, Nor­we­gian will soon be well-known in this part of the world.

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