terça-feira, 25 de outubro de 2016

Norwegian Air bets on Boeing in low-cost air travel overhaul



Asgeir Nyseth is striding down the aisle of a Boeing 787 Dreamliner. Matter of fact, he points to seats 5C and 5E. These are the best seats on the airplane, he says.


This is the latest addition to a fleet of aircraft that has transformed the once regional airline, Norwegian Air. The plane stands on Boeing’s Paine Field runway, ready to embark on its delivery flight from the west coast of the US to Oslo. In a few days this plane will begin its first commercial flight.

Nyseth, the airline’s chief operating officer, was brought on board the rapidly growing airline in 2006 by group chief executive Bjorn Kjos at a critical step-change for the airline.

At the time the aviation market was dominated by low-cost carriers such as easyJet and Ryanair, offering cheap short-haul flights cross-crossing much of Europe. By contrast Norwegian was largely confined to the Nordic market with a modest 19 plane fleet.

Since then the pair have snapped up over 100 airplanes while their order book heaves with more than 200 to follow in the next five years.

“In 10 years I’ve seen the company change a lot. I thought when I left my previous role that I’d be moving to a much quieter job without too much to do,” laughs Nyseth, who was previously boss of Lufttransport, which operates air ambulances in Norway and Sweden.

“But the first discussion that I had with Bjorn was about buying aircraft.”

The airline’s appetite for new planes borders on the insatiable. In 2012 Norwegian placed the largest single European aircraft order in history for 222 new planes including 122 Boeing 737s, and 100 A320s from rival aircraft manufacturer Airbus.

Last year Norwegian ordered 19 additional 787-9 Dreamliners, of which this is one.

For Norwegian the haul is about seizing the advances made in aircraft technology. The bet has allowed the airline to flip the idea that low-cost travel is synonymous with short-haul routes by undercutting long-haul airlines with discounted rates and the promise of a comfortable journey.

“You need to be first in line for the change in aircraft technology. The new generation of aircraft can travel further, use 20pc less fuel, and requires less maintenance,” he says.

Norwegian’s explosive growth has positioned the airline as Europe’s third largest low-cost carrier, flying 400 routes to more than 130 destinations in Europe, North Africa, the Middle East, Thailand, the Caribbean and the US. Last year 26m passengers opted for Norwegian’s low-cost offers and the airline expects the 11pc growth seen last year to continue as it opens more routes in the coming years, with Canada, South America and South Africa all on the cards.

It’s a rosy position to be when rivals Monarch Air, AirBerlin and easyJet are treading water in choppy market conditions. Customer jitters over Brexit, the weakening pound and the threat of terror attacks have dampened the travel markets. In the background oil prices are slowly beginning to climb to add further pressure to struggling airlines.

If Nyseth is worried about these factors, he doesn’t show it.

As the operator of one the most fuel efficient aircraft fleets in the world, the rising fuel price will not be as uncomfortable for Norwegian as it will be for its competitors, he says.

“We didn’t expect that fuel prices would crash the way that they did, and perhaps older legacy carriers have survived because of this, but as prices move higher this will give us a competitive advantage compared to the others,” he adds.

Brexit is also an opportunity if the weaker sterling sees more visitors to Britain, he says. And if other UK-dependent airlines shift routes away from the UK into Norwegian’s markets, the disruptive newcomer is ready for that too.

“We always like competitors so they’re welcome to come,” Nyseth laughs.

“In this industry you need to see the possibility, and there is a lot of possibility. Firstly, direct routes have been a huge success for Norwegian. Passengers don’t always need to go to a big hub if they can go direct, and understanding this has opened a lot of new routes.”

Norwegian’s corporate structure mirrors its pursuit of the Dreamliner fleet in the way that it is lean and strategically nimble. The airline is, in fact, four different carriers with separate airline operating certificates for its Norwegian Air Norway business which operates from Scandinavian bases, Norwegian Air Shuttle, which operates routes outside of Scandinavia, and then its UK and Irish businesses, the latter being the focus for its long-haul business.

The four-way network is held together by a central division focusing on finance and recruitment and other shared services which allows Norwegian the benefits of different country licences while avoiding the costs of doubling up on support staff.

The airline is not without its jurisdictional issues however. Norwegian has been locked in battle with the US aviation authorities over approval to operate flights from the US. Norwegian has been waiting for more than a year for approval from the UK subsidiary, and from its Irish one an unprecedented three years.

The typically routine request is usually concluded within two months. But Norwegian has failed to win approval from the US over concern that competition from the new entrant would hit local airlines.

Nyseth is adamant that the approval will come through after the US general election next month.

“There is no way that they can deny Norwegian the approval. If they could, they would have done it by now,” he says.

Propping up his unshakable confidence is the aircraft which has made the Norwegian business model possible: Boeing’s Dreamliner 787.

From Boeing’s 98 acre Everett aircraft factory on the outskirts of Seattle, the Dreamliner is built using unprecedented techniques. Boeing says it is 20pc more fuel efficient than previous models which, in an industry where fuel makes up a third of total costs, is a huge cost-saving measure for any airline over the plane’s lifetime.

Norwegian has taken delivery of four of the new aircraft this year and expects nine in 2017. By the end of the decade it will take on 11 more.

It’s been a very busy last decade for Nyseth, but what of the next 10 years?

“Well, we’ll have at least 250 new aircraft because that’s already in order, with another 150 in option deals.



“We are a global player, but we will be a much bigger global player. Much bigger,” he smiles, and prepares for take-off.

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