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Airlines

Counting the cost

Norwegian is the latest casualty over the MAX fiasco. The low cost carrier announced that it will terminate its transatlantic operations between Ireland and the United States in the wake of the MAX grounding.
 

Norwegian clawed its way into the transatlantic narrowbody market operating from secondary airports and offering markedly lower fares – to create disruption in one of the most mature air travel markets using the MAX 8. Obviously, the longer range and fuel efficiency that these latest generation narrowbodies bring, made the business case to launch operations. 

 

It took the airline about three years to gain approval from the American authorities for its Irish subsidiary Norwegian Air International to launch services from Ireland and Scotland to the US. Usually, according to our friends at CAPA, approval for similar operations takes roughly 60 days, but Norwegian faced fierce opposition, mostly from labour unions Stateside  who accused the company of using a flag of convenience to utilise crews with lower wages. In the face of this barrage, the US Department of Transportation and Justice prevaricated in an unseemly way for several months.

 

Compounded by the global grounding of the 737 MAX and the continued uncertainty of its return to service, Norwegian said this led to the difficult decision to discontinue all six routes from Dublin, Cork and Shannon to the US and Canada from 15 September 2019.  

 

Norwegian was forced to lease in aircraft to maintain the schedule but seemingly this become too costly considering the uncertainty of the 737 MAX return to service.  

 

The termination of these flights or albeit temporarily, comes as a blow to the low cost long haul movement that has gained traction recently. Narrowbody long haul is more popular among LCCs. CAPA data shows there are about 30 LCCs operating routes of more than 4,000km operating 610,000 seats.

 

In this edition we analyse the grounding of the MAX in more detail and specifically the implications to airlines and Boeing. 


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