Norwegian long-haul is dead; Long live Norse Atlantic Airways

Faced with mounting debt and an uncertain recovery timeline for long-haul travel Norwegian elected to slash its transatlantic operations. But that did not dull the dreams of its founders to offer service across the Atlantic. With new funding from former Norwegian investors and executives, Norse Atlantic Airways may soon be flying between the US and Europe.

We now have a historic opportunity to build a new airline from the start. When the world opens up again, there will be a need for an innovative low-cost company in the intercontinental market.

– Bjørn Tore Larsen

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Bjørn Tore Larsen leads the new endeavor with a 53% share in the startup airline. Larsen is no stranger to the long-haul airline model. His staffing company OSM Aviation provided flight crews for Norwegian before the company’s bankruptcy filings and restructuring.

Also participating in the Norse Atlantic Aviation effort are Norwegian Air founder Bjorn Kjos and former chairman Bjorn Kise with 15% and 12% of the new company’s shares, respectively.

As part of their mutual investments the airline took a 50% stake in the staffing company in December 2015.

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The new carrier will focus on 787s for its fleet, similar to the Norwegian approach. Indeed, it would not be too surprising if some of the same aircraft ended up on leases at the new carrier.

Destinations potentially include major metro areas on both sides of the Atlantic, such as New York City and Los Angeles to London and Paris. The company claims it will only operate on profitable routes, and unlike the original Norwegian model that could mean skipping most Scandinavian long-haul options.

A reasonable product?

Assuming it does pick up the Norwegian 787s the cabins come fitted with a reasonably mix of premium economy and economy class seats. Nothing truly luxe about the interiors, but that’s not the target market. Those planes also feature in-flight entertainment systems at every seat and satellite wifi connectivity hardware already installed on board. It would be interesting to see if the company invests in activating that system or if some alternate business model comes about with a third party assuming the cost liability but also taking the revenues from those services.

But will it fly??

So, putting aside the laughable assertion that the airline will only operate profitable routes – after all, how many start a business intending to lose money?? – can the operation launch and make money?

The costs of starting up a new airline are not trivial. Doing so with a twin-aisle fleet adds significantly. Staffing levels must be higher owing to crew rest requirements. The lease rates on 787s, while perhaps slightly depressed as long-haul operations suffer amid the pandemic, are still significant. And lessors will have to consider the history of similar operations in deciding just how much credit to extend to the new carrier.

On the flip side, leisure travel will rebound faster than business trips. And once the borders open there will be demand for a cheap trip across the Pond. Delivering that with a cost basis that can afford it rather than as a legacy, network carrier could mean this version stands a tiny chance of success.

Launching transatlantic operations in winter is not typically a strong play, but depending on the border situation that could be a necessary win for the company rather than a liability.

It is also worth noting that this is not the only collection of failed long-haul LCC operators looking for a comeback in 2021. PLAY, based in Iceland and run by some veterans of WOW, hopes to launch service this year as well. The carrier secured slots at Gatwick, Stansted and Dublin for Summer 2021 operations. It initially planned a Summer 2020 launch before COVID derailed those dreams.

The hub operation in Iceland offers a less expensive way to connect more destinations, while the non-stop markets offer convenience to passengers and could be seen as more appealing as the pandemic wanes.