Deny NAI Again
11-19-2014, 03:58 PM
#41
Gets Weekends Off
Joined APC: Jun 2012
Posts: 289
I tried the link and didn't get very far since I'm not represented by a union...guess I'll do some searching.
I'm surprised such low numbers are actually taking the time... What's wrong with us?
Sent from my iPhone using Tapatalk
I'm surprised such low numbers are actually taking the time... What's wrong with us?
Sent from my iPhone using Tapatalk
11-19-2014, 05:13 PM
#42
Gets Weekends Off
Joined APC: May 2009
Position: The GF of FUPM
Posts: 3,073
Apathy. Pilots are a myopic group. It seems the higher they climb, the mo' worser it gets. And scabs are the worst of the bunch. Its easy to rationalize bending over as long as the hot poker hits someone else.
"Hey, want to see a pic of my new boat (Baron, house, Vette, etc)?"
"Hey, want to see a pic of my new boat (Baron, house, Vette, etc)?"
Last edited by oldmako; 11-19-2014 at 05:37 PM.
11-19-2014, 06:17 PM
#43
Moderate Moderator
Joined APC: Mar 2008
Position: Curator at Static Display
Posts: 5,681
erman:
Use this:
Find Your Representative · House.gov
And for the Senate:
contact_list
And compose your own letter. Still pretty easy.
Use this:
Find Your Representative · House.gov
And for the Senate:
contact_list
And compose your own letter. Still pretty easy.
12-03-2014, 08:09 PM
#44
Gets Weekends Off
Joined APC: Aug 2005
Position: tri current
Posts: 1,485
Norwegian Has Big Transatlantic Ambitions
Norwegian is not only a pioneer in long-haul, low-cost flying, it also aims to strengthen long-haul narrowbody operations
Nov 25, 2014 Jens Flottau | Aviation Week & Space Technology
Redefining the Model
Neither the yield situation, losses nor the dispute around its transatlantic flights will slow the growth of the Oslo-based low-cost carrier, however. By year-end, the airline plans to have expanded capacity by 35%, mainly driven by the launch of its long-haul network. And it will scale that back to just 5% next year. Norwegian’s expansion will be slowed somewhat by the dearth of aircraft it will receive in 2015—giving competitors some room to breathe. “We are not aware of any [Boeing 787] Dreamliners available on the market,” Kjos says. He is prepared to bite the bullet and accept weaker business performance in the short term. To him, it is an investment along the lines of gaining critical mass as quickly as possible before reaping the benefits, first on short-haul and then on long-haul routes. And a little more than a year from now, Norwegian plans to resume steeper growth where it left off. Kjos sees the airline growing 10-15% in 2016 and beyond, a rate he describes as “normal.”
For now, Norwegian’s balance sheet shows clear marks of Kjos’s course, and they are not pretty. Average yields have shrunk by 16% in the first three quarters. The equity ratio is still at a comfortable level of 15% (the same as Lufthansa’s), but it was 20% a year ago. The net cash flow from operating activities is down by almost 50%. And while the airline managed to post a 515 million Norwegian krone ($76 million) profit in the first nine months of 2013, that result reverted to a 91.4 million krone loss this year.
Kjos openly counts Norwegian as part of the group of airlines in his region that are in the “make-or-break” phase. If those carriers do not bring unit costs down further and if their maturing routes do not deliver positive results, they will be in trouble. But then again, Norwegian’s bracket of “make-or-break” airlines also includes EasyJet, arguably one of the most promising airlines in Europe. And Kjos does not believe his own carrier will “break,” of course.
In fact, Norwegian has become the latest among the small group of airlines transforming European air transport. While Ryanair and EasyJet have prepared the ground for low-cost short-haul travel and are now the two dominating airlines in that segment, Norwegian is third and takes the business model far beyond where the two pioneers stopped. Norwegian has created a significant footprint in the European short-haul market with a large fleet—it expects to have 88 aircraft by year-end—but its rapid growth serves one main purpose: reaching critical mass in the long-haul market as soon as possible to establish the low-cost model there, where others have failed.
The rise of Norwegian also is indicative of the fundamental change in the Scandinavian air transport market. Long dominated by a few legacy carriers such as Scandinavian Airlines (SAS), which is partly owned by the governments of Sweden, Denmark and Norway, as well as Finnair, which is majority-owned by the government of Finland, the region was not particularly well-suited for the low-cost concept. Scandinavia’s high labor costs have to be taken into account in any business plan. SAS is only a shadow of its former self and is still declining, while Finnair is trying to rebuild its business in a small niche of the market. Norwegian is the biggest threat to both of them, with unit costs 77% lower than SAS’s and 40% below Finnair’s.
On the other side of the Atlantic, Norwegian appears to be threatening carriers, too. A large group of airlines along with the Air Line Pilots Association (ALPA) are vigorously opposing approval of Norwegian Air International (NAI), the Irish subsidiary that is to take on the airline’s long-haul operations. ALPA argues that Norwegian wants to avoid Norway’s stricter labor laws and set up a “flag of convenience” model similar to those in the shipping industry.
Kjos dismisses this. All pilots, whether they are based in Europe, the U.S. or Bangkok, must have European licenses because they fly for a European airline. And the Thailand-based pilots in fact receive slightly higher salaries than their company peers in Spain, Norway and the U.S.
Norwegian outsources many back-office functions to lower-cost countries in Eastern Europe, and relies to some degree on temporary employment through agencies. But it is moving the base of its long-haul unit to Ireland because it needs a European Union (EU) air operator certificate (AOC) to gain access to traffic rights to destinations in Asia from its growing number of EU bases. Its U.S. flights are unaffected by the delayed Transportation Department approval, as the airline can use its Norwegian AOC. Even though the country is not an EU member-state, Norway is a party to the EU/U.S. open skies agreement
Norwegian picked Ireland for tax reasons and because the country has signed the Cape Town, South Africa, convention, which will lead to lower airline interest payments for the airline. Norwegian’s new aircraft-leasing affiliate also is based in Dublin.
One of the ironies of the dispute with its opponents in the U.S. is that the longer the approval is withheld, the greater the chance that Norwegian will put more (or all) of its long-haul capacity into the U.S. market, for lack of alternatives. The airline has committed to a fleet of 17 Boeing 787s, only some of which it intends to fly on U.S. routes. But if it is not successful on routes in Asia, “then it would be no problem to fly all of them to the U.S.,” Kjos says.
Meanwhile, the delayed U.S. approval of NAI is adding to the airline’s costs and making life more difficult. The single 787 already on the NAI registry can fly only to Bangkok, not to the U.S., which is leading to “scheduling inefficiencies,” the airline says.
Norwegian’s 787 operation has attracted attention because it is the first low-cost carrier to operate the aircraft—with which it has had high-profile teething problems, including a low reliability rate—and due to discussions around the Transportation Department process. But what many have missed in their analysis of Norwegian’s plans is that the company’s assault on the current system of long-haul flying is based not only on the 787, but also on the 737 MAX. Kjos says it is “highly likely” that Norwegian will use some of its incoming MAXs on long-haul services across the Atlantic and into western Asia.
Boeing has argued for years that the future of long-haul travel will be in fragmentation rather than bigger aircraft size. Airbus holds the opposite view, and both have consistently developed aircraft that fit their respective market assessments. But the transformation caused by new business models for short-haul flying has not yet happened in intercontinental operations. There has been some aggregation of capacity in big hubs where Airbus A380s are used more, and some indications of the opposite trend can be observed in other markets as well as the big hubs.
Norwegian could become a major driver in establishing the low-cost concept on long-haul routes and flying narrowbody aircraft farther than has been envisioned in a long time.
Kjos will not yet reveal which routes the airline is eyeing. Its first of 100 Airbus A320neos will arrive in 2016 and the first of 100 737 MAX 8s are expected about a year later. But he sees the MAX flying from the U.K., Ireland and Scandinavia to New York, in addition to smaller markets on the U.S. East Coast. The aircraft could also be used on services to Asia. Kjos says routes from Stockholm to eastern China or New Delhi are possible. Norwegian flies its current 737-800s on routes as long as Oslo-Dubai, which is takes nearly 8 hr. on the return leg. Some of the transatlantic services envisaged could be shorter.
The MAX gives Norwegian an opportunity to fly to smaller markets economically, Kjos argues. He believes the aircraft will be able to match 787 unit costs when used close to its maximum range. The range designed into the 787 is hardly needed to fly to the U.S. East Coast from Europe.
Overall, Norwegian seeks the right balance between intra-European flying and long-haul services. The traditional shorter-haul, low-cost segment (although enhanced by ancillary features such as inflight Wi-Fi or added meals) will in the long run still comprise two-thirds or three-quarters of Norwegian’s capacity, even if the airline resumes talks with Boeing about a follow-up 787 order, which has been officially on hold because of the stalled approvals.
Norwegian has recently added an element of flexibility to its business model by setting up a leasing business in Ireland that will own all of the new aircraft coming in and lease them back to Norwegian. If the carrier’s capacity plans change, the lessor will market the aircraft outside of the group. Kjos believes it will conclude the first deals with other airlines next year. Over time, the affiliate will manage a large portfolio of aircraft. “The 100 [737-800] NGs will sooner or later be in the leasing market,” Kjos says, hinting at Norwegian’s current fleet and 46 more 737-800s coming in. The airline plans to fly aircraft for 7-8 years and no more than 10 before replacing them.
In an extreme case, the leasing unit theoretically would allow Norwegian to more or less stop growing. The 737 MAXs would replace the NGs on a one-for-one basis, and the A320-neos would go straight into the leasing arm and not fly for Norwegian. Kjos believes the company will be competitive: “We are a large player with our large orders. With the prices we have achieved, we are fully able to compete.” But the airline remains at the core of the business, while leasing is a tool for risk-mitigation: “Flexibility is what we are after,” Kjos says.
Pay attention to the bolded parts. It would seem that once again ALPA has misunderstood the situation to the detriment of it's members.
Typhoonpilot
Norwegian is not only a pioneer in long-haul, low-cost flying, it also aims to strengthen long-haul narrowbody operations
Nov 25, 2014 Jens Flottau | Aviation Week & Space Technology
Redefining the Model
Neither the yield situation, losses nor the dispute around its transatlantic flights will slow the growth of the Oslo-based low-cost carrier, however. By year-end, the airline plans to have expanded capacity by 35%, mainly driven by the launch of its long-haul network. And it will scale that back to just 5% next year. Norwegian’s expansion will be slowed somewhat by the dearth of aircraft it will receive in 2015—giving competitors some room to breathe. “We are not aware of any [Boeing 787] Dreamliners available on the market,” Kjos says. He is prepared to bite the bullet and accept weaker business performance in the short term. To him, it is an investment along the lines of gaining critical mass as quickly as possible before reaping the benefits, first on short-haul and then on long-haul routes. And a little more than a year from now, Norwegian plans to resume steeper growth where it left off. Kjos sees the airline growing 10-15% in 2016 and beyond, a rate he describes as “normal.”
For now, Norwegian’s balance sheet shows clear marks of Kjos’s course, and they are not pretty. Average yields have shrunk by 16% in the first three quarters. The equity ratio is still at a comfortable level of 15% (the same as Lufthansa’s), but it was 20% a year ago. The net cash flow from operating activities is down by almost 50%. And while the airline managed to post a 515 million Norwegian krone ($76 million) profit in the first nine months of 2013, that result reverted to a 91.4 million krone loss this year.
Kjos openly counts Norwegian as part of the group of airlines in his region that are in the “make-or-break” phase. If those carriers do not bring unit costs down further and if their maturing routes do not deliver positive results, they will be in trouble. But then again, Norwegian’s bracket of “make-or-break” airlines also includes EasyJet, arguably one of the most promising airlines in Europe. And Kjos does not believe his own carrier will “break,” of course.
In fact, Norwegian has become the latest among the small group of airlines transforming European air transport. While Ryanair and EasyJet have prepared the ground for low-cost short-haul travel and are now the two dominating airlines in that segment, Norwegian is third and takes the business model far beyond where the two pioneers stopped. Norwegian has created a significant footprint in the European short-haul market with a large fleet—it expects to have 88 aircraft by year-end—but its rapid growth serves one main purpose: reaching critical mass in the long-haul market as soon as possible to establish the low-cost model there, where others have failed.
The rise of Norwegian also is indicative of the fundamental change in the Scandinavian air transport market. Long dominated by a few legacy carriers such as Scandinavian Airlines (SAS), which is partly owned by the governments of Sweden, Denmark and Norway, as well as Finnair, which is majority-owned by the government of Finland, the region was not particularly well-suited for the low-cost concept. Scandinavia’s high labor costs have to be taken into account in any business plan. SAS is only a shadow of its former self and is still declining, while Finnair is trying to rebuild its business in a small niche of the market. Norwegian is the biggest threat to both of them, with unit costs 77% lower than SAS’s and 40% below Finnair’s.
On the other side of the Atlantic, Norwegian appears to be threatening carriers, too. A large group of airlines along with the Air Line Pilots Association (ALPA) are vigorously opposing approval of Norwegian Air International (NAI), the Irish subsidiary that is to take on the airline’s long-haul operations. ALPA argues that Norwegian wants to avoid Norway’s stricter labor laws and set up a “flag of convenience” model similar to those in the shipping industry.
Kjos dismisses this. All pilots, whether they are based in Europe, the U.S. or Bangkok, must have European licenses because they fly for a European airline. And the Thailand-based pilots in fact receive slightly higher salaries than their company peers in Spain, Norway and the U.S.
Norwegian outsources many back-office functions to lower-cost countries in Eastern Europe, and relies to some degree on temporary employment through agencies. But it is moving the base of its long-haul unit to Ireland because it needs a European Union (EU) air operator certificate (AOC) to gain access to traffic rights to destinations in Asia from its growing number of EU bases. Its U.S. flights are unaffected by the delayed Transportation Department approval, as the airline can use its Norwegian AOC. Even though the country is not an EU member-state, Norway is a party to the EU/U.S. open skies agreement
Norwegian picked Ireland for tax reasons and because the country has signed the Cape Town, South Africa, convention, which will lead to lower airline interest payments for the airline. Norwegian’s new aircraft-leasing affiliate also is based in Dublin.
One of the ironies of the dispute with its opponents in the U.S. is that the longer the approval is withheld, the greater the chance that Norwegian will put more (or all) of its long-haul capacity into the U.S. market, for lack of alternatives. The airline has committed to a fleet of 17 Boeing 787s, only some of which it intends to fly on U.S. routes. But if it is not successful on routes in Asia, “then it would be no problem to fly all of them to the U.S.,” Kjos says.
Meanwhile, the delayed U.S. approval of NAI is adding to the airline’s costs and making life more difficult. The single 787 already on the NAI registry can fly only to Bangkok, not to the U.S., which is leading to “scheduling inefficiencies,” the airline says.
Norwegian’s 787 operation has attracted attention because it is the first low-cost carrier to operate the aircraft—with which it has had high-profile teething problems, including a low reliability rate—and due to discussions around the Transportation Department process. But what many have missed in their analysis of Norwegian’s plans is that the company’s assault on the current system of long-haul flying is based not only on the 787, but also on the 737 MAX. Kjos says it is “highly likely” that Norwegian will use some of its incoming MAXs on long-haul services across the Atlantic and into western Asia.
Boeing has argued for years that the future of long-haul travel will be in fragmentation rather than bigger aircraft size. Airbus holds the opposite view, and both have consistently developed aircraft that fit their respective market assessments. But the transformation caused by new business models for short-haul flying has not yet happened in intercontinental operations. There has been some aggregation of capacity in big hubs where Airbus A380s are used more, and some indications of the opposite trend can be observed in other markets as well as the big hubs.
Norwegian could become a major driver in establishing the low-cost concept on long-haul routes and flying narrowbody aircraft farther than has been envisioned in a long time.
Kjos will not yet reveal which routes the airline is eyeing. Its first of 100 Airbus A320neos will arrive in 2016 and the first of 100 737 MAX 8s are expected about a year later. But he sees the MAX flying from the U.K., Ireland and Scandinavia to New York, in addition to smaller markets on the U.S. East Coast. The aircraft could also be used on services to Asia. Kjos says routes from Stockholm to eastern China or New Delhi are possible. Norwegian flies its current 737-800s on routes as long as Oslo-Dubai, which is takes nearly 8 hr. on the return leg. Some of the transatlantic services envisaged could be shorter.
The MAX gives Norwegian an opportunity to fly to smaller markets economically, Kjos argues. He believes the aircraft will be able to match 787 unit costs when used close to its maximum range. The range designed into the 787 is hardly needed to fly to the U.S. East Coast from Europe.
Overall, Norwegian seeks the right balance between intra-European flying and long-haul services. The traditional shorter-haul, low-cost segment (although enhanced by ancillary features such as inflight Wi-Fi or added meals) will in the long run still comprise two-thirds or three-quarters of Norwegian’s capacity, even if the airline resumes talks with Boeing about a follow-up 787 order, which has been officially on hold because of the stalled approvals.
Norwegian has recently added an element of flexibility to its business model by setting up a leasing business in Ireland that will own all of the new aircraft coming in and lease them back to Norwegian. If the carrier’s capacity plans change, the lessor will market the aircraft outside of the group. Kjos believes it will conclude the first deals with other airlines next year. Over time, the affiliate will manage a large portfolio of aircraft. “The 100 [737-800] NGs will sooner or later be in the leasing market,” Kjos says, hinting at Norwegian’s current fleet and 46 more 737-800s coming in. The airline plans to fly aircraft for 7-8 years and no more than 10 before replacing them.
In an extreme case, the leasing unit theoretically would allow Norwegian to more or less stop growing. The 737 MAXs would replace the NGs on a one-for-one basis, and the A320-neos would go straight into the leasing arm and not fly for Norwegian. Kjos believes the company will be competitive: “We are a large player with our large orders. With the prices we have achieved, we are fully able to compete.” But the airline remains at the core of the business, while leasing is a tool for risk-mitigation: “Flexibility is what we are after,” Kjos says.
Pay attention to the bolded parts. It would seem that once again ALPA has misunderstood the situation to the detriment of it's members.
Typhoonpilot
12-03-2014, 08:15 PM
#45
Gets Weekends Off
Joined APC: Aug 2005
Position: tri current
Posts: 1,485
Then add this to the mix:
Lufthansa to launch budget long-haul next year.
Associated Press
12 hours ago
BERLIN (AP) — German airline Lufthansa on Wednesday announced plans to launch budget long-haul services at the end of next year in collaboration with SunExpress, a joint venture with Turkish Airlines.
Lufthansa's supervisory board gave the go-ahead to expand the company's low-cost operations amid a battle with a union representing pilots at the airline.
The union, Vereinigung Cockpit, said it would hit Lufthansa's long-haul flights on Thursday with its second strike this week in a dispute over the airline's plans to cut transition payments for pilots wanting to retire early, which the union wants to see maintained. Lufthansa offered to take the issue to arbitration.
Lufthansa is citing increasingly tough competition as it sets out its future plans. Traditional national carriers such as Germany's biggest airline are being squeezed both by European budget carriers and major Gulf airlines, and Lufthansa already has lower-cost offshoots in Germanwings and Eurowings.
The company said its budget operation's first long-haul destinations will include locations in Florida, southern Africa and the Indian Ocean. The flights — to be flown by SunExpress crews — will initially be operated by three Airbus A330-200 aircraft, and the budget long-haul fleet will be expanded to as many as seven leased A330-200s "over the next few years."
Its home base will initially be the Cologne-Bonn airport, Lufthansa said. The airline's two traditional hubs are Frankfurt and Munich.
"For several years now we've been facing fierce competition from the rapidly-growing low-cost carriers in the point-to-point travel segment, not only in Germany but throughout Europe, too," CEO Carsten Spohr said. "And we are sure to see this competition extend more and more to the long-haul travel segment in the years ahead."
So international LCCs are coming no matter what. Better to prepare than bury one's head in the sand with protectionist measures that will not work over the long run.
Typhoonpilot
Lufthansa to launch budget long-haul next year.
Associated Press
12 hours ago
BERLIN (AP) — German airline Lufthansa on Wednesday announced plans to launch budget long-haul services at the end of next year in collaboration with SunExpress, a joint venture with Turkish Airlines.
Lufthansa's supervisory board gave the go-ahead to expand the company's low-cost operations amid a battle with a union representing pilots at the airline.
The union, Vereinigung Cockpit, said it would hit Lufthansa's long-haul flights on Thursday with its second strike this week in a dispute over the airline's plans to cut transition payments for pilots wanting to retire early, which the union wants to see maintained. Lufthansa offered to take the issue to arbitration.
Lufthansa is citing increasingly tough competition as it sets out its future plans. Traditional national carriers such as Germany's biggest airline are being squeezed both by European budget carriers and major Gulf airlines, and Lufthansa already has lower-cost offshoots in Germanwings and Eurowings.
The company said its budget operation's first long-haul destinations will include locations in Florida, southern Africa and the Indian Ocean. The flights — to be flown by SunExpress crews — will initially be operated by three Airbus A330-200 aircraft, and the budget long-haul fleet will be expanded to as many as seven leased A330-200s "over the next few years."
Its home base will initially be the Cologne-Bonn airport, Lufthansa said. The airline's two traditional hubs are Frankfurt and Munich.
"For several years now we've been facing fierce competition from the rapidly-growing low-cost carriers in the point-to-point travel segment, not only in Germany but throughout Europe, too," CEO Carsten Spohr said. "And we are sure to see this competition extend more and more to the long-haul travel segment in the years ahead."
So international LCCs are coming no matter what. Better to prepare than bury one's head in the sand with protectionist measures that will not work over the long run.
Typhoonpilot
12-04-2014, 05:24 AM
#46
Gets Weekends Off
Joined APC: Mar 2006
Position: 737 fo
Posts: 908
Originally Posted by Typhoonpilot
Then add this to the mix:
Lufthansa to launch budget long-haul next year.
Associated Press
12 hours ago
BERLIN (AP) —
So international LCCs are coming no matter what. Better to prepare than bury one's head in the sand with protectionist measures that will not work over the long run.
Typhoonpilot
Lufthansa to launch budget long-haul next year.
Associated Press
12 hours ago
BERLIN (AP) —
So international LCCs are coming no matter what. Better to prepare than bury one's head in the sand with protectionist measures that will not work over the long run.
Typhoonpilot
12-04-2014, 07:45 AM
#47
Gets Weekends Off
Joined APC: Nov 2012
Posts: 1,083
I remember when Southwest started getting the 737NG. It gave them an airplane that they could load up and fly nonstop from the short runways at MDW to anyplace on the west coast. It was a huge blow to UAL and AMR operating out of high cost ORD to all the west coast destinations. The transcontinental markets were hit next.
As the airplane capabilities change, so does the market. The assault on the US domestic markets by the LCCs is bound to be repeated on the international front. However, I still support ALPA trying to keep the worst of the schemes off the table. The period of relative industry calm we are enjoying is bound to give way to another industry crisis. It is only a matter of time, as this industry has proven over and over again.
As the airplane capabilities change, so does the market. The assault on the US domestic markets by the LCCs is bound to be repeated on the international front. However, I still support ALPA trying to keep the worst of the schemes off the table. The period of relative industry calm we are enjoying is bound to give way to another industry crisis. It is only a matter of time, as this industry has proven over and over again.
12-04-2014, 03:30 PM
#48
Gets Weekends Off
Joined APC: Apr 2006
Position: 737 CA
Posts: 2,750
Originally Posted by Typhoonpilot
Norwegian Has Big Transatlantic Ambitions
Norwegian is not only a pioneer in long-haul, low-cost flying, it also aims to strengthen long-haul narrowbody operations
Nov 25, 2014 Jens Flottau | Aviation Week & Space Technology
Redefining the Model
Neither the yield situation, losses nor the dispute around its transatlantic flights will slow the growth of the Oslo-based low-cost carrier, however. By year-end, the airline plans to have expanded capacity by 35%, mainly driven by the launch of its long-haul network. And it will scale that back to just 5% next year. Norwegian’s expansion will be slowed somewhat by the dearth of aircraft it will receive in 2015—giving competitors some room to breathe. “We are not aware of any [Boeing 787] Dreamliners available on the market,” Kjos says. He is prepared to bite the bullet and accept weaker business performance in the short term. To him, it is an investment along the lines of gaining critical mass as quickly as possible before reaping the benefits, first on short-haul and then on long-haul routes. And a little more than a year from now, Norwegian plans to resume steeper growth where it left off. Kjos sees the airline growing 10-15% in 2016 and beyond, a rate he describes as “normal.”
For now, Norwegian’s balance sheet shows clear marks of Kjos’s course, and they are not pretty. Average yields have shrunk by 16% in the first three quarters. The equity ratio is still at a comfortable level of 15% (the same as Lufthansa’s), but it was 20% a year ago. The net cash flow from operating activities is down by almost 50%. And while the airline managed to post a 515 million Norwegian krone ($76 million) profit in the first nine months of 2013, that result reverted to a 91.4 million krone loss this year.
Kjos openly counts Norwegian as part of the group of airlines in his region that are in the “make-or-break” phase. If those carriers do not bring unit costs down further and if their maturing routes do not deliver positive results, they will be in trouble. But then again, Norwegian’s bracket of “make-or-break” airlines also includes EasyJet, arguably one of the most promising airlines in Europe. And Kjos does not believe his own carrier will “break,” of course.
In fact, Norwegian has become the latest among the small group of airlines transforming European air transport. While Ryanair and EasyJet have prepared the ground for low-cost short-haul travel and are now the two dominating airlines in that segment, Norwegian is third and takes the business model far beyond where the two pioneers stopped. Norwegian has created a significant footprint in the European short-haul market with a large fleet—it expects to have 88 aircraft by year-end—but its rapid growth serves one main purpose: reaching critical mass in the long-haul market as soon as possible to establish the low-cost model there, where others have failed.
The rise of Norwegian also is indicative of the fundamental change in the Scandinavian air transport market. Long dominated by a few legacy carriers such as Scandinavian Airlines (SAS), which is partly owned by the governments of Sweden, Denmark and Norway, as well as Finnair, which is majority-owned by the government of Finland, the region was not particularly well-suited for the low-cost concept. Scandinavia’s high labor costs have to be taken into account in any business plan. SAS is only a shadow of its former self and is still declining, while Finnair is trying to rebuild its business in a small niche of the market. Norwegian is the biggest threat to both of them, with unit costs 77% lower than SAS’s and 40% below Finnair’s.
On the other side of the Atlantic, Norwegian appears to be threatening carriers, too. A large group of airlines along with the Air Line Pilots Association (ALPA) are vigorously opposing approval of Norwegian Air International (NAI), the Irish subsidiary that is to take on the airline’s long-haul operations. ALPA argues that Norwegian wants to avoid Norway’s stricter labor laws and set up a “flag of convenience” model similar to those in the shipping industry.
Kjos dismisses this. All pilots, whether they are based in Europe, the U.S. or Bangkok, must have European licenses because they fly for a European airline. And the Thailand-based pilots in fact receive slightly higher salaries than their company peers in Spain, Norway and the U.S.
Norwegian outsources many back-office functions to lower-cost countries in Eastern Europe, and relies to some degree on temporary employment through agencies. But it is moving the base of its long-haul unit to Ireland because it needs a European Union (EU) air operator certificate (AOC) to gain access to traffic rights to destinations in Asia from its growing number of EU bases. Its U.S. flights are unaffected by the delayed Transportation Department approval, as the airline can use its Norwegian AOC. Even though the country is not an EU member-state, Norway is a party to the EU/U.S. open skies agreement
Norwegian picked Ireland for tax reasons and because the country has signed the Cape Town, South Africa, convention, which will lead to lower airline interest payments for the airline. Norwegian’s new aircraft-leasing affiliate also is based in Dublin.
One of the ironies of the dispute with its opponents in the U.S. is that the longer the approval is withheld, the greater the chance that Norwegian will put more (or all) of its long-haul capacity into the U.S. market, for lack of alternatives. The airline has committed to a fleet of 17 Boeing 787s, only some of which it intends to fly on U.S. routes. But if it is not successful on routes in Asia, “then it would be no problem to fly all of them to the U.S.,” Kjos says.
Meanwhile, the delayed U.S. approval of NAI is adding to the airline’s costs and making life more difficult. The single 787 already on the NAI registry can fly only to Bangkok, not to the U.S., which is leading to “scheduling inefficiencies,” the airline says.
Norwegian’s 787 operation has attracted attention because it is the first low-cost carrier to operate the aircraft—with which it has had high-profile teething problems, including a low reliability rate—and due to discussions around the Transportation Department process. But what many have missed in their analysis of Norwegian’s plans is that the company’s assault on the current system of long-haul flying is based not only on the 787, but also on the 737 MAX. Kjos says it is “highly likely” that Norwegian will use some of its incoming MAXs on long-haul services across the Atlantic and into western Asia.
Boeing has argued for years that the future of long-haul travel will be in fragmentation rather than bigger aircraft size. Airbus holds the opposite view, and both have consistently developed aircraft that fit their respective market assessments. But the transformation caused by new business models for short-haul flying has not yet happened in intercontinental operations. There has been some aggregation of capacity in big hubs where Airbus A380s are used more, and some indications of the opposite trend can be observed in other markets as well as the big hubs.
Norwegian could become a major driver in establishing the low-cost concept on long-haul routes and flying narrowbody aircraft farther than has been envisioned in a long time.
Kjos will not yet reveal which routes the airline is eyeing. Its first of 100 Airbus A320neos will arrive in 2016 and the first of 100 737 MAX 8s are expected about a year later. But he sees the MAX flying from the U.K., Ireland and Scandinavia to New York, in addition to smaller markets on the U.S. East Coast. The aircraft could also be used on services to Asia. Kjos says routes from Stockholm to eastern China or New Delhi are possible. Norwegian flies its current 737-800s on routes as long as Oslo-Dubai, which is takes nearly 8 hr. on the return leg. Some of the transatlantic services envisaged could be shorter.
The MAX gives Norwegian an opportunity to fly to smaller markets economically, Kjos argues. He believes the aircraft will be able to match 787 unit costs when used close to its maximum range. The range designed into the 787 is hardly needed to fly to the U.S. East Coast from Europe.
Overall, Norwegian seeks the right balance between intra-European flying and long-haul services. The traditional shorter-haul, low-cost segment (although enhanced by ancillary features such as inflight Wi-Fi or added meals) will in the long run still comprise two-thirds or three-quarters of Norwegian’s capacity, even if the airline resumes talks with Boeing about a follow-up 787 order, which has been officially on hold because of the stalled approvals.
Norwegian has recently added an element of flexibility to its business model by setting up a leasing business in Ireland that will own all of the new aircraft coming in and lease them back to Norwegian. If the carrier’s capacity plans change, the lessor will market the aircraft outside of the group. Kjos believes it will conclude the first deals with other airlines next year. Over time, the affiliate will manage a large portfolio of aircraft. “The 100 [737-800] NGs will sooner or later be in the leasing market,” Kjos says, hinting at Norwegian’s current fleet and 46 more 737-800s coming in. The airline plans to fly aircraft for 7-8 years and no more than 10 before replacing them.
In an extreme case, the leasing unit theoretically would allow Norwegian to more or less stop growing. The 737 MAXs would replace the NGs on a one-for-one basis, and the A320-neos would go straight into the leasing arm and not fly for Norwegian. Kjos believes the company will be competitive: “We are a large player with our large orders. With the prices we have achieved, we are fully able to compete.” But the airline remains at the core of the business, while leasing is a tool for risk-mitigation: “Flexibility is what we are after,” Kjos says.
Pay attention to the bolded parts. It would seem that once again ALPA has misunderstood the situation to the detriment of it's members.
Typhoonpilot
Norwegian is not only a pioneer in long-haul, low-cost flying, it also aims to strengthen long-haul narrowbody operations
Nov 25, 2014 Jens Flottau | Aviation Week & Space Technology
Redefining the Model
Neither the yield situation, losses nor the dispute around its transatlantic flights will slow the growth of the Oslo-based low-cost carrier, however. By year-end, the airline plans to have expanded capacity by 35%, mainly driven by the launch of its long-haul network. And it will scale that back to just 5% next year. Norwegian’s expansion will be slowed somewhat by the dearth of aircraft it will receive in 2015—giving competitors some room to breathe. “We are not aware of any [Boeing 787] Dreamliners available on the market,” Kjos says. He is prepared to bite the bullet and accept weaker business performance in the short term. To him, it is an investment along the lines of gaining critical mass as quickly as possible before reaping the benefits, first on short-haul and then on long-haul routes. And a little more than a year from now, Norwegian plans to resume steeper growth where it left off. Kjos sees the airline growing 10-15% in 2016 and beyond, a rate he describes as “normal.”
For now, Norwegian’s balance sheet shows clear marks of Kjos’s course, and they are not pretty. Average yields have shrunk by 16% in the first three quarters. The equity ratio is still at a comfortable level of 15% (the same as Lufthansa’s), but it was 20% a year ago. The net cash flow from operating activities is down by almost 50%. And while the airline managed to post a 515 million Norwegian krone ($76 million) profit in the first nine months of 2013, that result reverted to a 91.4 million krone loss this year.
Kjos openly counts Norwegian as part of the group of airlines in his region that are in the “make-or-break” phase. If those carriers do not bring unit costs down further and if their maturing routes do not deliver positive results, they will be in trouble. But then again, Norwegian’s bracket of “make-or-break” airlines also includes EasyJet, arguably one of the most promising airlines in Europe. And Kjos does not believe his own carrier will “break,” of course.
In fact, Norwegian has become the latest among the small group of airlines transforming European air transport. While Ryanair and EasyJet have prepared the ground for low-cost short-haul travel and are now the two dominating airlines in that segment, Norwegian is third and takes the business model far beyond where the two pioneers stopped. Norwegian has created a significant footprint in the European short-haul market with a large fleet—it expects to have 88 aircraft by year-end—but its rapid growth serves one main purpose: reaching critical mass in the long-haul market as soon as possible to establish the low-cost model there, where others have failed.
The rise of Norwegian also is indicative of the fundamental change in the Scandinavian air transport market. Long dominated by a few legacy carriers such as Scandinavian Airlines (SAS), which is partly owned by the governments of Sweden, Denmark and Norway, as well as Finnair, which is majority-owned by the government of Finland, the region was not particularly well-suited for the low-cost concept. Scandinavia’s high labor costs have to be taken into account in any business plan. SAS is only a shadow of its former self and is still declining, while Finnair is trying to rebuild its business in a small niche of the market. Norwegian is the biggest threat to both of them, with unit costs 77% lower than SAS’s and 40% below Finnair’s.
On the other side of the Atlantic, Norwegian appears to be threatening carriers, too. A large group of airlines along with the Air Line Pilots Association (ALPA) are vigorously opposing approval of Norwegian Air International (NAI), the Irish subsidiary that is to take on the airline’s long-haul operations. ALPA argues that Norwegian wants to avoid Norway’s stricter labor laws and set up a “flag of convenience” model similar to those in the shipping industry.
Kjos dismisses this. All pilots, whether they are based in Europe, the U.S. or Bangkok, must have European licenses because they fly for a European airline. And the Thailand-based pilots in fact receive slightly higher salaries than their company peers in Spain, Norway and the U.S.
Norwegian outsources many back-office functions to lower-cost countries in Eastern Europe, and relies to some degree on temporary employment through agencies. But it is moving the base of its long-haul unit to Ireland because it needs a European Union (EU) air operator certificate (AOC) to gain access to traffic rights to destinations in Asia from its growing number of EU bases. Its U.S. flights are unaffected by the delayed Transportation Department approval, as the airline can use its Norwegian AOC. Even though the country is not an EU member-state, Norway is a party to the EU/U.S. open skies agreement
Norwegian picked Ireland for tax reasons and because the country has signed the Cape Town, South Africa, convention, which will lead to lower airline interest payments for the airline. Norwegian’s new aircraft-leasing affiliate also is based in Dublin.
One of the ironies of the dispute with its opponents in the U.S. is that the longer the approval is withheld, the greater the chance that Norwegian will put more (or all) of its long-haul capacity into the U.S. market, for lack of alternatives. The airline has committed to a fleet of 17 Boeing 787s, only some of which it intends to fly on U.S. routes. But if it is not successful on routes in Asia, “then it would be no problem to fly all of them to the U.S.,” Kjos says.
Meanwhile, the delayed U.S. approval of NAI is adding to the airline’s costs and making life more difficult. The single 787 already on the NAI registry can fly only to Bangkok, not to the U.S., which is leading to “scheduling inefficiencies,” the airline says.
Norwegian’s 787 operation has attracted attention because it is the first low-cost carrier to operate the aircraft—with which it has had high-profile teething problems, including a low reliability rate—and due to discussions around the Transportation Department process. But what many have missed in their analysis of Norwegian’s plans is that the company’s assault on the current system of long-haul flying is based not only on the 787, but also on the 737 MAX. Kjos says it is “highly likely” that Norwegian will use some of its incoming MAXs on long-haul services across the Atlantic and into western Asia.
Boeing has argued for years that the future of long-haul travel will be in fragmentation rather than bigger aircraft size. Airbus holds the opposite view, and both have consistently developed aircraft that fit their respective market assessments. But the transformation caused by new business models for short-haul flying has not yet happened in intercontinental operations. There has been some aggregation of capacity in big hubs where Airbus A380s are used more, and some indications of the opposite trend can be observed in other markets as well as the big hubs.
Norwegian could become a major driver in establishing the low-cost concept on long-haul routes and flying narrowbody aircraft farther than has been envisioned in a long time.
Kjos will not yet reveal which routes the airline is eyeing. Its first of 100 Airbus A320neos will arrive in 2016 and the first of 100 737 MAX 8s are expected about a year later. But he sees the MAX flying from the U.K., Ireland and Scandinavia to New York, in addition to smaller markets on the U.S. East Coast. The aircraft could also be used on services to Asia. Kjos says routes from Stockholm to eastern China or New Delhi are possible. Norwegian flies its current 737-800s on routes as long as Oslo-Dubai, which is takes nearly 8 hr. on the return leg. Some of the transatlantic services envisaged could be shorter.
The MAX gives Norwegian an opportunity to fly to smaller markets economically, Kjos argues. He believes the aircraft will be able to match 787 unit costs when used close to its maximum range. The range designed into the 787 is hardly needed to fly to the U.S. East Coast from Europe.
Overall, Norwegian seeks the right balance between intra-European flying and long-haul services. The traditional shorter-haul, low-cost segment (although enhanced by ancillary features such as inflight Wi-Fi or added meals) will in the long run still comprise two-thirds or three-quarters of Norwegian’s capacity, even if the airline resumes talks with Boeing about a follow-up 787 order, which has been officially on hold because of the stalled approvals.
Norwegian has recently added an element of flexibility to its business model by setting up a leasing business in Ireland that will own all of the new aircraft coming in and lease them back to Norwegian. If the carrier’s capacity plans change, the lessor will market the aircraft outside of the group. Kjos believes it will conclude the first deals with other airlines next year. Over time, the affiliate will manage a large portfolio of aircraft. “The 100 [737-800] NGs will sooner or later be in the leasing market,” Kjos says, hinting at Norwegian’s current fleet and 46 more 737-800s coming in. The airline plans to fly aircraft for 7-8 years and no more than 10 before replacing them.
In an extreme case, the leasing unit theoretically would allow Norwegian to more or less stop growing. The 737 MAXs would replace the NGs on a one-for-one basis, and the A320-neos would go straight into the leasing arm and not fly for Norwegian. Kjos believes the company will be competitive: “We are a large player with our large orders. With the prices we have achieved, we are fully able to compete.” But the airline remains at the core of the business, while leasing is a tool for risk-mitigation: “Flexibility is what we are after,” Kjos says.
Pay attention to the bolded parts. It would seem that once again ALPA has misunderstood the situation to the detriment of it's members.
Typhoonpilot
Its U.S. flights are unaffected by the delayed Transportation Department approval, as the airline can use its Norwegian AOC.
12-05-2014, 03:13 AM
#49
Gets Weekends Off
Joined APC: Aug 2005
Position: tri current
Posts: 1,485
EU: U.S.’s Delay In Granting Norwegian Application Breaches Open Skies Deal
Dec 4, 2014 Cathy Buyck | Aviation Daily
The European Commission (EC) will start discussing with its members states the actions it could take to press the U.S. authorities to approve low-cost carrier (LCC) Norwegian’s application for a foreign air carrier license for its Irish subsidiary, Norwegian Air International (NAI).
According to the EC, the U.S. has violated the principles of the open skies agreement between the U.S and the EU by stretching its review of NAI’s application over an indefinite period.
“According to the agreement, the parties shall grant authorizations to carriers of the other party swiftly, which was the case in previous applications,” the EC notes.
It adds that the EC “considers that there is a breach of the EU-U.S. air transport agreement by the U.S. authorities, regarding the application from Norwegian Air International to fly to the United States.
The U.S. authorities are taking too long to process the application and this delay is not compatible with the EU-U.S. agreement.”
The EU’s executive body called a meeting of the EU-U.S. Joint Committee under the EU-U.S. air transport agreement, signed in 2007, to discuss the matter and its concern “that the U.S. is not honoring the agreement.”
The meeting was held in Washington, D.C., on Nov. 25, and the next gathering of EU-U.S. Joint Committee is scheduled for January, an EC spokesman says.
“The EC will now discuss the possible next steps with the EU member states,” he confirms.
It is not clear whether the EC can take action, nor which actions it can legally take.
Moreover, getting consensus of all 28 member states, plus other European signatories of the EU-U.S. open skies agreement, including Iceland and Norway, is likely to be very difficult. Air France-KLM and Lufthansa are against the NAI plan and Norwegian long-haul model, with crew partially sourced in non-EU countries with third party contracts.
Irish authorities have granted NAI all necessary licenses, including its air operator certificate (AOC), and the country has repeatedly criticized the U.S.’s stance on delaying the LCC’s application for a foreign air carrier permit.
“Ireland’s civil aviation authorities, for instance, could block traffic rights of some U.S. carriers flying to the country as a sign of opposition,” a source notes. Ireland is considering opening up its fifth-freedom rights, and the Gulf carriers would likely to be very quick to capitalize and launch flights between the U.S. and Dublin.
Unintended consequences?
ALPA really needs to stick to air safety and aeromedical. Items they can actually help pilots with. Their forays into trying to drive the marketplace have pretty much all been abject failures and bad for the pilot profession in North America.
TP
Dec 4, 2014 Cathy Buyck | Aviation Daily
The European Commission (EC) will start discussing with its members states the actions it could take to press the U.S. authorities to approve low-cost carrier (LCC) Norwegian’s application for a foreign air carrier license for its Irish subsidiary, Norwegian Air International (NAI).
According to the EC, the U.S. has violated the principles of the open skies agreement between the U.S and the EU by stretching its review of NAI’s application over an indefinite period.
“According to the agreement, the parties shall grant authorizations to carriers of the other party swiftly, which was the case in previous applications,” the EC notes.
It adds that the EC “considers that there is a breach of the EU-U.S. air transport agreement by the U.S. authorities, regarding the application from Norwegian Air International to fly to the United States.
The U.S. authorities are taking too long to process the application and this delay is not compatible with the EU-U.S. agreement.”
The EU’s executive body called a meeting of the EU-U.S. Joint Committee under the EU-U.S. air transport agreement, signed in 2007, to discuss the matter and its concern “that the U.S. is not honoring the agreement.”
The meeting was held in Washington, D.C., on Nov. 25, and the next gathering of EU-U.S. Joint Committee is scheduled for January, an EC spokesman says.
“The EC will now discuss the possible next steps with the EU member states,” he confirms.
It is not clear whether the EC can take action, nor which actions it can legally take.
Moreover, getting consensus of all 28 member states, plus other European signatories of the EU-U.S. open skies agreement, including Iceland and Norway, is likely to be very difficult. Air France-KLM and Lufthansa are against the NAI plan and Norwegian long-haul model, with crew partially sourced in non-EU countries with third party contracts.
Irish authorities have granted NAI all necessary licenses, including its air operator certificate (AOC), and the country has repeatedly criticized the U.S.’s stance on delaying the LCC’s application for a foreign air carrier permit.
“Ireland’s civil aviation authorities, for instance, could block traffic rights of some U.S. carriers flying to the country as a sign of opposition,” a source notes. Ireland is considering opening up its fifth-freedom rights, and the Gulf carriers would likely to be very quick to capitalize and launch flights between the U.S. and Dublin.
Unintended consequences?
ALPA really needs to stick to air safety and aeromedical. Items they can actually help pilots with. Their forays into trying to drive the marketplace have pretty much all been abject failures and bad for the pilot profession in North America.
TP
12-05-2014, 04:34 AM
#50
Gets Weekends Off
Joined APC: Mar 2006
Position: 737 fo
Posts: 908
Originally Posted by Typhoonpilot
EU: U.S.’s Delay In Granting Norwegian Application Breaches Open Skies Deal
Dec 4, 2014 Cathy Buyck | Aviation Daily
The European Commission (EC) will start discussing with its members states the actions it could take to press the U.S. authorities to approve low-cost carrier (LCC) Norwegian’s application for a foreign air carrier license for its Irish subsidiary, Norwegian Air International (NAI).
According to the EC, the U.S. has violated the principles of the open skies agreement between the U.S and the EU by stretching its review of NAI’s application over an indefinite period.
“According to the agreement, the parties shall grant authorizations to carriers of the other party swiftly, which was the case in previous applications,” the EC notes.
It adds that the EC “considers that there is a breach of the EU-U.S. air transport agreement by the U.S. authorities, regarding the application from Norwegian Air International to fly to the United States.
The U.S. authorities are taking too long to process the application and this delay is not compatible with the EU-U.S. agreement.”
The EU’s executive body called a meeting of the EU-U.S. Joint Committee under the EU-U.S. air transport agreement, signed in 2007, to discuss the matter and its concern “that the U.S. is not honoring the agreement.”
The meeting was held in Washington, D.C., on Nov. 25, and the next gathering of EU-U.S. Joint Committee is scheduled for January, an EC spokesman says.
“The EC will now discuss the possible next steps with the EU member states,” he confirms.
It is not clear whether the EC can take action, nor which actions it can legally take.
Moreover, getting consensus of all 28 member states, plus other European signatories of the EU-U.S. open skies agreement, including Iceland and Norway, is likely to be very difficult. Air France-KLM and Lufthansa are against the NAI plan and Norwegian long-haul model, with crew partially sourced in non-EU countries with third party contracts.
Irish authorities have granted NAI all necessary licenses, including its air operator certificate (AOC), and the country has repeatedly criticized the U.S.’s stance on delaying the LCC’s application for a foreign air carrier permit.
“Ireland’s civil aviation authorities, for instance, could block traffic rights of some U.S. carriers flying to the country as a sign of opposition,” a source notes. Ireland is considering opening up its fifth-freedom rights, and the Gulf carriers would likely to be very quick to capitalize and launch flights between the U.S. and Dublin.
Unintended consequences?
ALPA really needs to stick to air safety and aeromedical. Items they can actually help pilots with. Their forays into trying to drive the marketplace have pretty much all been abject failures and bad for the pilot profession in North America.
TP
Dec 4, 2014 Cathy Buyck | Aviation Daily
The European Commission (EC) will start discussing with its members states the actions it could take to press the U.S. authorities to approve low-cost carrier (LCC) Norwegian’s application for a foreign air carrier license for its Irish subsidiary, Norwegian Air International (NAI).
According to the EC, the U.S. has violated the principles of the open skies agreement between the U.S and the EU by stretching its review of NAI’s application over an indefinite period.
“According to the agreement, the parties shall grant authorizations to carriers of the other party swiftly, which was the case in previous applications,” the EC notes.
It adds that the EC “considers that there is a breach of the EU-U.S. air transport agreement by the U.S. authorities, regarding the application from Norwegian Air International to fly to the United States.
The U.S. authorities are taking too long to process the application and this delay is not compatible with the EU-U.S. agreement.”
The EU’s executive body called a meeting of the EU-U.S. Joint Committee under the EU-U.S. air transport agreement, signed in 2007, to discuss the matter and its concern “that the U.S. is not honoring the agreement.”
The meeting was held in Washington, D.C., on Nov. 25, and the next gathering of EU-U.S. Joint Committee is scheduled for January, an EC spokesman says.
“The EC will now discuss the possible next steps with the EU member states,” he confirms.
It is not clear whether the EC can take action, nor which actions it can legally take.
Moreover, getting consensus of all 28 member states, plus other European signatories of the EU-U.S. open skies agreement, including Iceland and Norway, is likely to be very difficult. Air France-KLM and Lufthansa are against the NAI plan and Norwegian long-haul model, with crew partially sourced in non-EU countries with third party contracts.
Irish authorities have granted NAI all necessary licenses, including its air operator certificate (AOC), and the country has repeatedly criticized the U.S.’s stance on delaying the LCC’s application for a foreign air carrier permit.
“Ireland’s civil aviation authorities, for instance, could block traffic rights of some U.S. carriers flying to the country as a sign of opposition,” a source notes. Ireland is considering opening up its fifth-freedom rights, and the Gulf carriers would likely to be very quick to capitalize and launch flights between the U.S. and Dublin.
Unintended consequences?
ALPA really needs to stick to air safety and aeromedical. Items they can actually help pilots with. Their forays into trying to drive the marketplace have pretty much all been abject failures and bad for the pilot profession in North America.
TP
"The opportunities created by the Agreement are not intended to undermine labor standards or the labor-related rights and principles contained in the Parties' respective laws.”
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