Low-fare carrier Norwegian is on the up again, in the wake of a successful restructuring three years ago, and is looking to usher in a record summer season. LARA Editor Lucy Powell reports.
This article was originally published in the February /March 2024 edition of LARA. To receive articles like these directly to your inbox, subscribe to LARA magazine here.
Norwegian’s story could have had a very different ending four years ago.
Thankfully, its journey continues – the transformational story of an airline snatched from collapse that took back control of its own narrative.
Originally founded in 1993, Norwegian began operating as a low-cost carrier in 2002. Yet after the pandemic took the old version of the airline with its long-haul Atlantic routes to the brink of financial crisis, six months later, in May 2021, it emerged from financial restructuring with an altogether different look. Cutting away its long-haul arm and drastically reducing its fleet size, the airline reinvented itself as a smaller, leaner operator.
Since then, the last few years have seen the low-fare airline work hard to rebuild itself, slowly adding more aircraft to its fleet and routes to its roster.
Now, it operates a short-to-mid-haul network, serving destinations across the Nordics and key European destinations. 2023 ushered in a strong year for Norwegian, mirroring, in part, the resurgence of airlines in general as travel returned to a post-pandemic world. Throughout the year, it carried over 20 million passengers, an increase of 16% from 2022.
As a result, its Chief Commercial Officer, Magnus Maursund, is naturally chipper about the airline’s prospects for 2024. “I think we have quite a positive outlook on 2024,” he said. “We see quite a positive development on load factors and yield.”
Recent reports by Norwegian note that load factors for 2023 increased by 2%, while capacity was up by 18%.
Spending habits: Economically conscious travels
Operators face rising interest rates and concerns about inflation as customers decide where to spend their money. Indeed, Maursund remains cautious despite Norwegian’s recent good fortune.
Norwegian Chief Commercial Officer, Magnus Maursund. Photo: Norwegian
He said: “To us, at least, it seems like customers are prioritising travel over other spending. You know as well as I do the industry may be impacted by a number of external circumstances, but we are quite positive for 2024.”
Since making its comeback in 2021, Norwegian has ditched the Boeing 787 Dreamliners and stuck to an all-Boeing narrowbody fleet of 737-800s and MAX 8 jets. It currently has 80 aircraft in its fleet and is set to increase this number to 90 in 2024. The aircraft types fit well with its current long-term strategy to operate cost-effective, fuel-efficient aircraft.
In 2022, the airline ordered 50 MAX 8 jets from Boeing, with 30 options, with deliveries due to commence between 2025 and 2028. The order represents a welcome return to form for the airline and a resolution of its relationship with Boeing since 2020 when it cancelled orders for 97 MAX jets shortly before it restructured.
The deal will allow Norwegian to own a large share of its fleet in the hope that this will help to increase its financial robustness. As for the MAX 10, the latest variant of the MAX series to be developed, there have been reports within the industry that Norwegian would consider adding the type to its fleet.
Maursund confirmed this and said that bringing the MAX 10 into the fleet once it is certified is something the airline is “actively considering”.
“Obviously, we do see the rest of the industry moving up on the average seat count, so it’s a way for us to reduce our cost risk,” he said. “But I think, to us, the key with regards to the MAX 10 is dependent on attractive pricing and a good deal from Boeing.”
Regional takeover: Acquisitions and fleet expansions
One deal that is very much firmed for the carrier is the takeover of regional Norwegian airline, Widerøe.
Just before Christmas, Norway’s competition watchdog cleared Norwegian’s US$110 million takeover of Widerøe. The announcement comes as a welcome reversal of its earlier decision to stop the airline from taking over the smaller regional carrier.
Maursund told LARA that Norwegian’s case for buying the airline was a “very strong” one. “There’s limited overlap,” he said. “We [Norwegian] think that this acquisition will lead to more competition rather than less. This will be good for consumers.”
Widerøe mainly operates De Havilland Dash-8 Q400 and Dash-8 300 turboprops on thinner, regional routes, often in harsh conditions in the north of Norway – many of which are PSO (Public Service Operational) routes. As such, it cuts a wildly different figure from Norwegian’s Nordic and European route map and fleet of narrowbody jets.
Here, Norwegian aims to give its customers greater connectivity options. It is intended that Widerøe will continue as a separate airline with its own identity.
Maursund said: “We think we can unlock quite a lot of synergies by joining forces on the fleet and network side. It [this acquisition] follows the trend that we see throughout Europe with regard to consolidation. They’re a very natural partner for that reason. It’s fair to say that we’re doing this to expand on this regional air connectivity.”
The transaction was due to be completed at the end of January, as LARA was going to press.
Yet while 2024 still sees Norwegian focus on its core Nordic market, it is also ushering in a new addition for the low-fare carrier: the introduction of new non-Nordic point-to-point routes.
Paying it forward: Expanding route developments
In July 2023, Norwegian announced the launch of 40 routes for the summer 2024 season. The addition of these destinations will bring the low-cost carrier’s number to 123, with a total of 332 routes flown over the summer.
Around 40% of the 40 routes announced are brand new, with the remaining 60% split between route reintroductions from its pre-Covid network (40%) and frequency increases on existing routes (20%).
Norwegians US$110 million acquisition of Widerøe has been approved – Photo credits; Norwegian
As with many route announcements, customer demand has driven the selection of a lot of these destinations, particularly the four point-to-point European routes (Malaga-Munich, Alicante-Munich, Riga-Corfu, and Riga-Tiva) included in the summer 2024 roster.
The Munich route is one example of a route that has been reintroduced since the pandemic, Maursund said. “It’s a good mix. We are offering something new to our customers. Most of them [the routes] are in the beach or city break segment, but there are some new domestic routes as well.”
The improvement of its loyalty programmes is also a key focus for Norwegian going into 2024.
In June 2023, the airline partnered with Strawberry, formerly Nordic Choice Hotels, to establish a joint company that will aim to give customers a wider choice in loyalty programmes, creating a digital loyalty currency that can be spent by passengers.
Maursund said the finer details are still being honed, as the two companies are still “working and developing the concept,” but the CCO has high hopes for the partnership.
He added: “I think the core idea is that it will be a very attractive ecosystem for points, for both our customers and partners. This is a way for us to go together with multiple partners and join forces rather than trying to develop our individual customer loyalty scheme.”
Combined, their loyalty programmes total around 7.5 million members in the Nordic countries.
Going fossil free: Sustainable initiatives and expansion plans
In terms of destinations, Denmark is also confirmed to be an area of focus for the airline in 2024.
Currently, Norwegian flies to four destinations in the country: Aalborg, Aarhus, Billund and Copenhagen. “We see Denmark as being very strong, and it’s a super important market for innovation,” Maursund said. “We are adding slightly more capacity than what we’re giving to other markets.”
Denmark is not only an important country to fly to for the airline, with strong passenger demand, but also remains a key hub for sustainable innovation.
In October 2023, the airline announced its intention to purchase fossil-free aviation fuel that would power the equivalent of 100 flights on its busiest domestic route, between Aalborg and Copenhagen.
Norwegian, together with Aalborg Airport, is setting out to prove that operating flights with sustainable aviation fuel (SAF) on a large scale is already possible. Indeed, whilst SAF forms a crucial step in any commercial airline’s sustainability pathway, it often focuses on more than just one part.
For a country that is already incredibly environmentally conscious, Norwegian, as the largest airline in Norway, is almost duty-bound to promote that mindset in its own operations, making sustainability a competitive business advantage.
In 2020, the airline announced a strict goal of reducing its CO2 emissions by 45% from 2010 figures in the run-up to 2030. This ambitious plan and target are far higher than those of many of its low-fare or legacy competitors. To reach this target, the airline is focusing on three main factors: improving operational efficiencies, fleet renewal, and SAF uptake.
“It’s quite significant, the savings we’ve managed to get,” claimed Maursund, in reference to the improvement in flight operations.
In 2023, the airline saved around 70,000 tonnes of fuel by flying smarter, which amounts to roughly 50,000 tonnes of CO2. In terms of SAF uptake, Norwegian has partnered with Norsk e-Fuel to build the world’s first e-fuel plant in Mosjøen, Norway. This partnership aims to secure 20% of Norwegian’s total SAF demand by 2030.
As for challenges, Maursund noted that rising airport costs have been affecting airlines across Europe, and Norwegian is no different. Seasonality, too, has been a challenge, particularly in the northern parts of Europe – a familiar and almost routine issue concentrated on busy summer months and quieter winters.
Norwegian will also focus on reviewing its route schedules and shifting capacity accordingly. Yet, even with news of acquisition and route expansion, the biggest focus for Norwegian going into 2024 is straightforward.
“The core is still focusing on running the business,” said Maursund. “We’ve had very high punctuality and reliability figures throughout. We’ve been doing really well.”
This article was originally published in the February /March 2024 edition of LARA. If you would like to subscribe to receive LARA , you can do so here.
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