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Low fares Across the Atlantic: JetBlue and Norse Atlantic

August 11, 2021


A low-cost airline service with a brand new business class cabin, flying London to New York? As Frank Sinatra might have said: if you can make it there, in the teeth of a global pandemic when the US bars British citizens and advises its own to stay put … well, you can make it anywhere.

Image - JetBlue

On 11 August, nonetheless, JetBlue will launch transatlantic flights that could rattle one of aviation’s normally most lucrative markets. The airline, one of the biggest in America but without the global presence of the “big four” US carriers, will launch its first services to the UK with the promise of driving down fares, particularly for the business traveller.

It sounds a gamble but the chief executive, Robin Hayes, a Briton himself, stressed his airline was nothing like rival carriers, which promised to bring low fares to the transatlantic; Norwegian, for example, which went from minnow to global pioneer to bankruptcy on a similar offer. “It’s very different to Norwegian,” said Hayes. “We’re flying a plane we’ve always flown, and a third of our capacity is already international, to 25 countries. This is really just a very small step for us.”

Image - JetBlue

Where Norwegian pinned its hopes to a swiftly grown fleet of Boeing 787 Dreamliners, JetBlue will cross the Atlantic in a single-aisle, narrow-body plane, the Airbus A321LR. That means fewer seats, but even lower costs. While other airlines generally use the model to maximise the number of economy seats in a single cabin, JetBlue will have an innovative layout including 24 seats in its version of business class, known as Mint.

The small cabin arguably lends an even greater cachet for these seats: with just two per row, all have aisle access and their own sliding door for privacy. And Hayes claimed that the prices would be far below what rivals charge for business class, starting at less than $2,000 (£1,438) for a round trip from the US. “Fares will come down across the board,” said Hayes.

When the east coast-based JetBlue started flying the US’s major long-haul internal corridor from New York to LA, fares on average came down about 50%, he says, while the airline upped the ante on comfort. “We offer low fares but with a very good product. Across the Atlantic even in economy you’re going to have the most legroom, the widest seat, free wifi, live TV and a hot meal included.”

So how does the company do that? Hayes’ reply could be considered an airline chief executive’s standard: “We’re a low-cost airline, so we’re very efficient in what we do, we have much lower costs than our legacy competitors. We’re very focused on keeping our costs low.”

Doubtless, an all-new fleet is more fuel-efficient – although comparisons with “legacy competitors” is often code for paying employees less, even if the likes of BA have jettisoned staff and cut terms and conditions during the pandemic. One cost-saving measure at the very start of JetBlue was customer service agents working from home long before Covid made it fashionable. For all that, Hayes quoted approvingly the mantra of the founder, David Neeleman: “We want to bring humanity back to air travel.” Neeleman, alas, was sacked as chief executive after a debacle in 2007 when thousands of JetBlue passengers were stranded in a snowstorm, a year before Hayes joined the airline.

Robin Hayes

Image - Kathy Willens/AP via The Guardian

Hayes, who swerved early ambitions to be a train driver to take a graduate training role at the national carrier, had moved to run BA’s North American operations before the offer of working at JetBlue came. It happened when he least expected and was anticipating returning to London. Instead, he stayed and rose to the top job in 2015. There was no hint of sentiment in the prospect of UK flights from Hayes. With a smaller plane, he said, the risks were lower in a depressed market, and, he hinted, the planes could easily be pointed elsewhere. The bulk of JetBlue’s business remains within the US, which is returning to pre-Covid levels of flying at a speed European carriers can only dream of.

Industry observers expect the initial impact of the London venture will be small, with a maximum of just one daily return from Heathrow, adding Gatwick flights at the end of September – a schedule that may be diluted further should Covid restrictions on the UK-US route remain in place. The aviation analyst John Strickland, of JLS Consulting, said JetBlue had got a good chance of making a success of the route, even if it could be a difficult beginning.

“Business travellers might think, I can afford two grand, but not the four or five thousand typically charged by carriers until now. The more private seats in Mint also might appeal these days when travellers may be less interested in luxury than space,” he said. “But one flight a day into Heathrow and Gatwick wouldn’t normally be enough to attract those business travellers, as JetBlue is well aware, so they will want to build up the schedule.”

The pandemic has at least facilitated its entry into Heathrow. The airport’s coveted landing slots trade between airlines for tens of millions for pounds, but the system has effectively been suspended while many flights are grounded – giving the likes of JetBlue, at least temporarily, a pass to operate. For Heathrow chief executive, John Holland-Kaye, the arrival of JetBlue and the promise of lower fares was “fantastic … it bears out everything we have said about the benefits of expansion, of competition and choice between airlines”. Ironically, it has come when the airport has been operating on one runway rather than its desired three – but long-term, he said, only more capacity would enable more entrants.

If Heathrow remains tight, JetBlue is looking to spread further. It will take another 26 A321 long-range models in the next four years, which Hayes says will let it start a London-Boston route next summer and then “expand our European footprint” to non-UK destinations.

If the fares promise is more than marketing, passengers will hope they stay London-bound a little longer.

© Gwyn Topham - The Guardian 2021

Norse Atlantic Airways

The new low-cost long-haul Norwegian airline Norse Atlantic Airways has announced plans to fly between Europe and the US from early 2022, as it aims to fill the gap in budget transatlantic air travel left by Norwegian’s departure from long-haul routes.

Norse, which was formed in March by Norwegian airline industry veterans, will initially fly from Oslo, London and Paris to New York, Los Angeles and Fort Lauderdale.

Image - Norse

The carrier’s chief executive, Bjørn Tore Larsen, said the airline intended to be flying its entire fleet of 15 Boeing 787 Dreamliners – featuring Viking-inspired branding – by summer 2022. The airline plans to start recruiting pilots and aircrew at the end of 2021, and expects to have about 1,600 staff by next summer, all of whom will be directly employed.

Norse initially hoped to be airborne at end of 2021, but Larsen said the slower-than-anticipated lifting of coronavirus travel restrictions for long-haul routes meant the airline was aiming to be operational in the second quarter of 2022 at the latest.

“We don’t want to start too early, there is no point flying around with empty aircraft. Having said that, we have a very solid cash position so we can afford to wait it out for a long period of time if that is required,” Larsen told journalists, as he unveiled the airline’s logo, inspired by Viking longships.

Image - Norse

The airline expects passenger demand to return by spring 2022, and said it hoped to be selling 10,000 tickets a day once all of its fleet was operational. Tickets will go on sale three months before its first flight.

Norse’s leased aircraft were previously operated by Norwegian, until its announcement in January that it was shrinking to offer only short-haul European flights and domestic Norwegian routes, after its near-collapse during the pandemic.

The crossover between compatriots does not end there. Larsen, Norse’s chief executive and majority shareholder, was co-founder of the staffing company OSM Aviation, which directly employed Norwegian crew members and was half-owned by the airline. Meanwhile, the founder and former chief executive of Norwegian, Bjørn Kjos, is also a shareholder in the carrier, which debuted on the Oslo stock market in April.

Bjørn Tore Larsen

Image - Norse

Norse insists it can succeed where others, including Norwegian, have failed. “We will be the only low-cost long-haul airline across the Atlantic and that will be our position, we will do nothing but that,” Larsen said. “Our typical traveller won’t necessarily be the typical businessman going from A to B. It will be to a greater extent the family of four going for a long vacation to Florida, or a week to New York, or visiting friends and family, students. So we will ensure that travel is affordable for more people than it is today.”

Aviation companies have been among the hardest hit by the downturn in international travel during the pandemic, and unlike other sectors of the UK economy, air travel is still subject to coronavirus restrictions.

Despite this, Norse is optimistic that demand for travel is bouncing back as restrictions ease, and said it was contacted regularly by prospective passengers asking when the airline would start flying.

© Joanna Partridge / The Guardian 2021

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