Monday, May 09, 2016

FLIGHTS TO PARADISE - Norwegian Airlines

"How a low-cost airline cashed in on cheap flights to paradise" PBS NewsHour 5/5/2016


SUMMARY:  Sometimes called "the Southwest Airlines of Europe," Norwegian Airlines makes a profit even though it undercuts prices of U.S. and foreign competitors.  Economics correspondent Paul Solman reports from the islands of Guadeloupe on how the low-cost airline took a risk that the bigger carriers wouldn't touch.

PAUL SOLMAN (NewsHour):  France in the Caribbean, the islands of Guadeloupe.  Pretty much as paradisal as their P.R. footage portrays them:  French, exotic, with more than a hint of spice.  All just four hours from New York and, if you book early, for $69 or less, November through April.

WOMAN:   Flying to Guadeloupe?

PAUL SOLMAN:  Because upstart Norwegian Airlines, some call it the Southwest Airlines of Europe, is now undercutting the few big post-merger carriers and their few foreign partners, which among them control U.S. skies for travel abroad.

Anders Lindstrom of Norwegian.

ANDERS LINDSTROM, Norwegian Air:  So the fare is not unique for a European airline, it just that really highlights how overpriced the American aviation market really is.

PAUL SOLMAN:  Founded in 1993, the low-cost airline is profitable, due to several advantages: high load factors; our plane was 90 percent full; brand-new Boeings, the most fuel-efficient planes on earth.  But mainly, says Lindstrom —

ANDERS LINDSTROM:  We don't have all the decades of maintenance costs and labor costs that the airlines traditionally do.  So, we're starting with new aircraft, new crew, which really keeps fares low.

PAUL SOLMAN:  And, of course, low fares tend to mean full planes.  But in the end, says aviation industry watcher Michael E. Levine —

MICHAEL E. LEVINE, New York University:  The main difference is labor arrangements.  They're a new airline, their pilots have low seniority, they have more productive labor arrangements.

PAUL SOLMAN:  Arrangements like not using hubs and instead flying non-stop point to point so pilots and crew can live near the airports they fly from.  And that's the Southwest model, right?

One type of aircraft, all the pilots qualified to fly it.

ANDERS LINDSTROM:  Yes, it's a simplified version, and that's something goes across all low cost airlines around the world.

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