Transatlantic return for £200!!!

Good point, I hadn’t thought of that.

Remember, it’ll be like Ryanair, not all the seats will be £200, some will likely be very expensive!

As Giblets points out, it boils down to tax. Norway, unlike its surrounding European neighbours, is not a member state of the EU. So passengers travelling long haul from the country are not subject to the controversial EU carbon tax. http://uk.reuters.com/article/2012/02/13/uk-airshow-idUKTRE81C0H320120213

On top of this, Norway’s political and economic model is based on a low tax society – so you only need pay Norway’s transportation VAT (8%), aviation fuel tax and a $17 airport departure levy.
All in all the tax of a return ticket to the US from Norway comes in at £50.70… Certainly puts UK tax into perspective :p

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The only reason they can offer fares as low as they are is because of the cattle class (291 seat) 787s they’ll be flying. As we know, aircraft have maximum CASM when operating in high density configurations.

However, after doing some number crunching, they are going to struggle to make a profit after the £30k (OSL-JFK) fuel bill and £10k (OSL-JFK) lease price on the 787… add onto that crew and airport expenditures and you’re cutting your margins awfully fine.

This will make or break the company – if they succeed Norwegian Air Shuttle could easily (I feel) become Europe’s #1 LCC (they’re 6-7 years ahead of the competition, easyJet, Ryanair and Southwest given the order backlog for the 787) – however, if they’ve gotten their margins wrong this will (without a doubt) be the beginning of the end of the airline (#LakerAirways).

Then how long before we get the headline:

Passengers stranded in the US as budget airline collapses.

Sure they can make a profit! I flew LHR-JFK, for £424, of which £350 was tax! So depending on Norwegian taxes, it is more than possible!

If Norwegian can make a profit on the routes, we could see a seismic shift in transatlantic air travel. This is the kind of threat Ryanair made but never followed through…

Reminiscent of the old Freddie Laker Sky Train.

Indeed, and also reminiscent of of the “start-up” model used by Virgin IIRC ….

It will all boil down to four things: firstly can the airline cover operating costs and secondly can it make a profit at those fares? Thirdly, if they are using the launch fares as “loss leaders” how soon, and to what level, will their regular fares rise?

After those three factors, fourth, any long-term future depend on how other competitors (“national carriers” or LoCo operators) react. Majors may simply drop prices to squeeze the newbie out of business, or larger LoCos may try and go transatlantic too.

And, for any non-Norwegian residents (eg from UK), by the time you have added in costs of connecting flights to and from Oslo (even LoCo), plus the additional time needed for the connecting flights, plus costs of any overnight accomodation if timings don’t work out, then you may well find the saving is not as attractive vs the easier option of direct flights from UK…..

Having taken my family long haul myself, the thought of adding extra flight “legs” at the start and end of the trip may not be all that attractive to families with younger children. It’s fine if you are travelling on your own, and/or can understand and accept the hassle, but it’s no fun at all trying to make tight connections, or spending a few added hours in a transit lounge, with a tired, possibly over-excited, youngster (or two) in tow 😮

I wish them success, but time will tell whether they can really run the route and keep fares at that level long-term?

Wow that is cheap.