Victoria Klesty

OSLO (Reuters) – Friday saw the launch of ticket sales for Norse Atlantic’s budget transatlantic flight. The airline is hoping to replicate Norwegian Air’s spectacular failure by betting on planes leased at low rates in the wake of the pandemic.

Norway-based Norse has assembled a fleet widebody aircrafts to connect the U.S. cities of New York, Fort Lauderdale and Los Angeles with its capital Oslo. London and Paris will follow.

The booking system indicated that the flight’s inaugural departure will be in Oslo, June 14, before heading to New York’s John F. Kennedy International Airport.

Its lease terms are favorable and its aircraft fuel efficiency gives it an advantage on costs. But the real question is how it will fill its planes with enough revenue to make it profitable.

According to Chief Executive Bjoern Torre Larsen, “it is always a little risk when you’re in the airline industry but we believe it’s a pretty great timing.”

Larsen is an avid aviation fan and largest shareholder of the company. He also controls OSM Maritime, a ship management group.

He considers the United States his favorite travel destination and believes that there’s a huge demand for affordable travel between Europe, North America and Asia.

“We are fairly certain that we will fill these airplanes with Americans going to Europe, and Europeans going back to America,” he said.

Airlines industry worries about rising energy costs and uncertainty regarding post-pandemic travel patterns. Travel restrictions are still in place, especially in Asia.

Larsen explained that “what we can see in the reports of companies that are starting to report is strong booking numbers cross-Atlantic flights,” Larsen claimed.

REPLACEMENT NORWEGIAN

Many players in the airline industry suffered losses as a result of the pandemic. They also had to eliminate excess capacity where it was possible.

The collapse of Norwegian Air was one of the most significant cuts. It ceased long-haul operations during bankruptcy proceedings. Last year, it emerged as a smaller regional European carrier.

Enter Norse took delivery its first Boeing (NYSE) 787-9 Dreamliner on December 20, 2021. The company plans to lease 15 more aircraft.

The initial sub-lease for four aircraft to Spain’s Air Europa will be 18 months. Norse stated that this would produce a positive cash flow.

Norse has an arrangement with its lessors that it only needs to pay the amount of time that aircraft are used. This is known as power-by the-hour contracts. It means that some of the financial pressures to maintain the aircraft’s flight can be relieved.

Larsen explained that Larsen would start off carefully to match the demand for aircraft, but not just because there aren’t enough.

Larsen acknowledged that rising fuel costs are likely to increase ticket prices. However, Larsen noted that the inflationary pressure on the market was not sufficient to impact significantly demand.

Bjoern Kos, the founder and former CEO at Norwegian Air, was a pioneer in budget cross-Atlantic flight and made the airline the largest non-North American airline that served New York City.

Kjos, who retired in 2019 from Norwegian Air, was an investor in Norse Atlantic in the beginning and still holds a seat on their board.

Kjos explained that Dreamliner offers a fantastic cost advantage – it is one of the most important aircraft to fly, and you can fly them with modern oil prices.

FEEDERNETWORK

Norse Atlantic, a pure long haul player, lacks regional connectivity. That could mean it is difficult to sell more seats than top routes, such as London-New York. James Halstead (managing partner, consultancy Aviation Strategy) said.

“Very few (long-haul) routes around the world survive on pure “O&D” traffic,” Halstead said, referring to traffic from a single origin to a single destination.

Norwegian Air, Chief Executive Geir Carlsen, said that they are in negotiations with Norse about coordinating their schedules to allow it to operate as a feeder flight service.

“If we can cooperate on any front regarding the destinations, then it is our pleasure to do so,” said he.

Larsen indicated that he anticipated launching flights from Paris to America this summer and London-New York before year’s end.