“We are the only truly global airline, and there is no limit to which markets we would look to grow,” states Norwegian Air’s senior vice-president of sales and distribution matter-of-factly.
He has good reason to be confident.
I’m sitting down with Lars Sande at Norwegian’s glassy offices in Oslo just weeks after IAG surprised the low-cost-carrier with the acquisition of a 4.6% stake in the company, and stating its intention to launch a full takeover offer. At least two bids from the British Airways parent have followed, but both were rejected, deemed “not good enough” by Norwegian. Sande describes the interest in the airline as a “bonus”, however.
He insists it’s “business as usual” at the airline, and there’s certainly plenty for him to be getting on with.
After launching with a regional focus in 1993, Norwegian has undeniably disrupted the European aviation market in recent years, bringing down the cost of long-haul flying with the launch of transatlantic operations in 2013.
While Norwegian made a bigger than expected net loss at the end of 2017, the airline’s chief executive put this down to “global expansion driven by new routes, high load factors and continued fleet renewal”. And he added the airline was far better positioned for 2018. I
I launch straight in with a question about which UK airports Norwegian might look to next, highlighting that Stansted is keen for more long-haul routes.
“Right now Gatwick is a very good place for us to be,” replies Sande after a moment’s thought. “But the challenge is it’s so constrained it’s hard to get enough slots.
“You can see what we’ve done in New York, where we started with JFK and added on Newark as well.
“So that might be a solution in the future if we’re not getting enough availability at Gatwick – flying from other airports in the UK.”
“It’s all on a business case,” he adds. “Of course increasing frequencies is the the easiest way to grow, and we will add frequencies [at Gatwick] to facilitate the growth.
“Then there might be other airports in the London area that we might look at in the future.”
Further destinations
Asked which new routes Norwegian is considering from the UK, Sande remains tight-lipped, but seems genuine when he responds that nothing is off the table: “There’s still capacity we haven’t decided on [for winter] – we’re getting 11 more Dreamliners this year and we’ll have 42 by 2020.”
Norwegian will announce a new long-haul route from Gatwick and increased frequencies in the coming weeks.
Sande explains it’s the fact Norwegian owns its own aircraft and operates outside of any alliance which means “there really is no limit” to which destinations it can consider.
I ask about the hotly anticipated launch of Argentina, for which the airline recently obtained an AOC (Air Operator Certificate).
“We have between 15 and 20 people sitting in Buenos Aires working on setting that up,” Sande tells me.
“One of the things that differentiates us from other airlines is we have multiple AOCs.
“We’re doing it more on our own [than the legacy carriers] and that’s great because if you’re in an alliance you probably need to ask your partners if it’s OK to enter their market… we are the only true global airline I would say.”
Asked about speculation in the media Norwegian is considering launching Guyana, Sande replies carefully: “We’re considering everything.”
APD action
But Sande warns Norwegian could be forced to shift its focus away from the UK if Air Passenger Duty (APD) is not addressed – the airline cancelled an Edinburgh-Connecticut service in January citing APD as a factor.
He explains: “Right now APD is £78 and when we launched the 737 Max from Edinburgh to Stewart and Providence [airports] we had a starting price of £65.
“We are using low fares as a marketing tool to grow and build new routes. When you have a starting point of £78, that is a problem.
“We are increasing volumes, creating more jobs and tourism is growing, but things like APD are not going to help. And then we and others might want to put that capacity elsewhere.”
Sande reveals Norwegian is working together with easyJet to make the case to the government that passengers connecting in the UK should not have to pay APD, adding that the legacy carriers are not affected in the same way because they are selling through fares.
Facing the competition
With so many other low-cost carriers entering the market and legacy carriers launching more affordable tickets, I ask Sande whether Norwegian feels under threat.
“We don’t often look at what the others are doing – we want to focus on us,” Sande responds.
And asked about BA’s apparent mirroring of some of its recent route launches, Sande is unconcerned.
“Just recently they [BA] closed down Gatwick-Oakland. “It’s just a credit to us that they see it [that type of route to lesser-known airports] works for us.
“If BA taps into a market that we’re operating it will actually help us because [BA is] probably spending much more in marketing funds than we are. So those airports will then get more focus from the audience and that will help us grow even more.
“We don’t expect to have a monopoly on any route actually,” concludes Sande.
He adds that while the legacy carriers “of course have a future” their business models need consideration.
“If you have an older aircraft that’s burning a lot of fuel, it’s going to cost you more. Then are you able to have those low-cost fares without losing a load of money? Maybe not.
“We just took what we’re doing on short-haul in Europe and said ‘OK, are we going to do the same on long-haul?’.
On the Dreamliner we added a cabin so we have Premium as well, but apart from that, we still do the one-way fares, we don’t care how long you’re staying in the US or whether you’re travelling on a Sunday, which offers a cheaper fare to the legacy carriers.”
Agent focus
While Norwegian is still intent upon growing its online package offering Norwegian Holidays as fast as the airline, agents remain an important partner, Sande insists.
The airline has two on the road sales reps in the UK – Dominic Tucker, head of sales UK and Ireland and Mitchell Hawes, sales manager UK and Ireland, who both have a strong background working with the trade – at BA and Aviareps respectively.
“We were in the GDS from day one, and it’s always been important for us to be available for the travel trade,” says Sande.
“We don’t have big numbers of staff anywhere, not even here at headquarters. We have the number of staff that we need to operate and at the moment two is enough in the UK.”
But Sande adds that if Norwegian were to grow “massively in the UK”, it would “need more people”.
And he encourages agents with questions or interested in special relationships to get in touch.
“We don’t necessarily operate [with the trade] in the way the legacy carriers do,” he explains. “We’re somewhere in between.
“We can’t say to the trade we’re going to pay them more than anyone else [in terms of incentives], so we need to find other ways to cooperate in a good way – such as blocked seats and fam trips.
“In some markets there will be agents that don’t want to talk to you unless you pay them… I’ve been in meetings outside of the UK that lasted maybe five minutes,” Sande laughs.
“But we’re building new markets and the agents that sell our product will see that this is incremental volume. If they want to mark up our fares they’re welcome to do that.”
“There are approximately 30 people in the business around Europe and the US with their only focus indirect. They are there to help the agents and tell them what our product is all about.”
And educating agents and consumers on Norwegian’s offering is one of the main challenges, Sande reveals.
“Even in the UK a year ago our team had a session with travel agencies and one asked whether all our flights all go through Oslo,” Sande tells me, amused.
“People might think we’re a Ryanair kind of product, but then they get onboard they see the interior is very nice and that we have free Wi-Fi.
“As long as we get people to try the product we get really good feedback and that’s one of the reasons we’re growing so much from Gatwick – because the feedback from the UK market is really good.”