Norwegian Air spreading its wings in Asia
SINGAPORE — Low-cost Scandinavian carrier Norwegian is on an aggressive Asia expansion spree. The airline announced in April that it would launch a non-stop service between Singapore and London with fares starting from S$199 later in the year. In an exclusive interview with TODAY, the firm said it plans to introduce direct flights to connect Singapore with Paris, Rome and Scandinavia over the next two years.
SINGAPORE — Low-cost Scandinavian carrier Norwegian is on an aggressive Asia expansion spree. The airline announced in April that it would launch a non-stop service between Singapore and London with fares starting from S$199 later in the year.
In an exclusive interview with TODAY, the firm said it plans to introduce direct flights to connect Singapore with Paris, Rome and Scandinavia over the next two years.
Also on the cards are plans to launch direct flights from Europe to Japan, South Korea, Hong Kong and China over the next two years.
The airline’s entry into these new markets will be through an “affordable fare” strategy, having successfully implemented the low-cost, no-frills model on its transatlantic routes connecting Europe with the United States, the airline told TODAY.
Norwegian entered the Asian market back in 2014 with routes to Bangkok from Europe.
On April 20, Norwegian announced the launch of a four-times weekly service between London’s Gatwick Airport and Singapore which will increase to five times a week during the Northern winter season.
Flights from Changi Airport will commence on September 29 with Norwegian using a 344-seat Boeing 787-9 Dreamliner aircraft in a two-class configuration offering economy and premium cabins.
“We are planning to expand in Asia in a big way over 2018 and 2019,” Mr Thomas Ramdahl, chief commercial officer at Norwegian said in a telephone interview from the airline’s headquarters in Norway.
“We will also launch operations to Tokyo, Beijing, Hong Kong and Seoul. But that requires permits to fly over Russian airspace which we currently don’t have,” he added.
A key challenge for the airline would be to get rights to start operating on Asian routes.
This is where politicians in the European Union and Asia would have to collectively work towards an open skies policy, Mr Ramdahl urged. The other hurdle is the availability of popular scheduled slots at busy airports.
The carrier is scouting for regional airline partners like Jetstar and Scoot, to help feed in traffic from South-east Asian countries through Singapore to Europe and vice versa.
“We are exploring various partnership models other than code-share as that is pretty much outdated and eventually turns out to be expensive,” said Mr Ramdahl.
The airline aims to cash in on Asia’s burgeoning middle class, with a keen focus on regional markets like Indonesia and China.
“There is huge growth potential for a budget carrier like us serving long-haul key routes between Europe and Asia. Europe is emerging as a travel hotspot for Asian travellers fuelled by affordable airfares... Our focus is on keeping costs low and we are able to that with fuel-efficient aircraft. Legacy carriers in Europe are increasingly adopting our strategy and floating budget operations. This is testimony to the fact that there is growing demand for our services,” Mr Ramdahl added.
Meanwhile, the airline’s newly-launched Singapore-London flights have been well received since bookings were open.
Singaporeans make up over two-thirds of the total volume of seats booked, contrary to the airline’s expectations of 70 per cent bookings from Europe.
According to Mr Ramdahl, Norwegian’s direct flights are more attractive compared with the stopover flights by Middle Eastern carriers given the shorter travel time.
Analysts say that the popular Singapore to London route is relatively under-served in terms of non-stop capacity, with only two competitors in the market, Singapore Airlines and British Airways, since Qantas pulled out in March 2013. Emirates, Qatar Airways and Malaysia Airlines are the other carriers which serve this route.
“Non-stop seat capacity from London to Singapore is currently 30 per cent below early 2013 levels, prior to Qantas’ withdrawal. With lower non-stop fares than Singapore Airlines and British Airways, Norwegian should be able to attract price-sensitive passengers who are now taking the cheaper one-stop options,” said Mr Brendan Sobie, an analyst at the Centre for Aviation.
Norwegian’s entry into the Singapore market may spur Singapore Airlines’ budget arm Scoot to respond by accelerating its own European expansion plans.
Scoot will be launching its Singapore to Athens route in June, while AirAsia will be introducing flights between Kuala Lumpur and Honolulu also in June.
“It is interesting to see how low-cost carriers are taking up long-haul routes with the ability to create new product offerings supported by technology. The model is working despite the high cost structure, putting pressure on legacy carriers,” Mr Greg Waldron, Asia managing editor at FlightGlobal said.
While newcomer Norwegian may be an “irritant” to more established carriers in the region like Singapore Airlines and British Airways, however, it is not expected to have a major impact on the larger players, as they still have their business class cabins to fall back on, said Mr Waldron.
Despite ferrying more passengers and introducing major route expansions, Norwegian recorded a loss of 1.5 billion Norwegian krone (S$245 million) in the first quarter of this year over the 800 million krone loss in the last quarter of 2016.
“The first quarter comprising winter months is typically the worst quarter for all European airlines. It is not really reflective of the entire year. We hope to bounce back in the second and third quarters, as we have full faith in our business model,” Mr Ramdahl told TODAY.
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