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How Norwegian Air Upended Travel With Its Insanely Cheap Flights

The upstart carrier’s budget fares between the U.S. and Europe are just one more step toward world airline domination.

How Norwegian Air Upended Travel With Its Insanely Cheap Flights
[Illustration: Ben Wiseman]

Ninety-nine dollars isn’t enough to buy a month’s worth of rides on the New York City subway system. But it can get you a plane ticket across the Atlantic on Scandinavian carrier Norwegian Air—and that’s causing more than a little turbulence in the airline industry.

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The low-cost airline, which has long connected Scandinavia with destinations across Europe, has been making inroads into the United States for several years, with direct flights from cities such as London, Paris, Copenhagen, and its home base of Oslo. But this year, after winning approval from the U.S. Department of Transportation to use an Irish subsidiary for transatlantic travel, Norwegian is launching a massive expansion. In the first quarter of 2017 alone, the carrier announced a dozen new routes from U.S. cities including Boston, Seattle, and Denver—at prices that are often less than half those of legacy airlines. By year’s end, Norwegian plans to operate nearly 100 flights weekly out of 13 American hubs. “Three or four airlines have controlled the flights [over the Atlantic],” says CEO Bjørn Kjos. “We have disrupted this monopoly [with] our low fares.”

A decade ago, Norwegian was a virtually unknown regional airline; today, it’s reinventing the industry. Transatlantic fares are just the beginning. In April, the carrier announced nonstop flights between London and Singapore for $199 each way. And one route map the company recently shared with investors shows how Norwegian hopes to one day encircle the globe. “If they execute on their plan,” says Henry Harteveldt, a travel-industry analyst for Atmosphere Research Group, “Norwegian could be the 21st-century-airline equivalent of Pan Am.”

Slideshow: Four more pioneers of low-cost, long-haul air travel.

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Norwegian isn’t the only carrier to offer budget flights across the Atlantic—Iceland’s Wow Air offers $99 fares to Europe, with a stop in Reykjavík, from 10 North American cities; Lufthansa offshoot Eurowings has plans to connect Munich to Orlando, Florida; Las Vegas; and Seattle. But Norwegian aims to beat them all in execution and scale. Like other low-cost carriers, it charges for checked bags, snacks, drinks, and blankets. But its transatlantic experience is nonetheless remarkably comfortable. The service is cheerful, the food decent, and the in-flight entertainment options robust. Each seat has its own power outlet and USB port. The planes are next-generation Boeings with quieter cabins and pressure levels designed to reduce jet lag.

The airline’s young fleet is the foundation of its success—and not just because it attracts passengers. “If you fly an old airplane, it’s like an old car,” Kjos says. “It uses a lot of gas and has high maintenance costs.” In 2007, Norwegian was a regional player knitting together 75 European destinations when Kjos made a bold purchase of 42 Boeing 737-800s for roughly $3 billion. The planes, which have become the airline’s short-haul European workhorses, have flier-friendly features such as high-speed Wi-Fi and lighting that adjusts to match the phase of flight. They also cut Norwegian’s fuel consumption by more than a fifth, while increasing its cabin capacity.

In 2011, Kjos repeated the move, placing an order for the then new Boeing Dreamliner, which has even better fuel efficiency and can seat up to 290 people. He dedicated these planes to long-distance flights between major hubs such as Oslo, New York, and Bangkok.

It’s not just the aircraft that create efficiency, but also how they’re deployed. While most major carriers are bound by existing networks and commitments—obliged to direct planes through their hub cities and those of partner airlines—Norwegian takes a blank-slate approach to its route map, flying where it anticipates it can create demand. This year, Norwegian will be the first airline to fly the speedy, fuel-saving, 189-seat Boeing 737 Max in the U.S. The new aircraft will connect second- and third-tier destinations like Providence, Rhode Island, and Belfast, Ireland. Using smaller, even minuscule, airports means cheaper rent and lower landing fees, savings that Norwegian can use to attract travelers who have, until now, been unable to afford international airfares.

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Norwegian also spurns the traditional long-haul model of scheduling flights to carry waves of passengers in the morning and evening. Instead, it focuses on keeping aircraft in the air as much as possible—even if that means inconvenient departures. Using a plane for a few more hours a day radically improves the financials, Kjos says.

Containing those costs is essential. Kjos founded the airline in 1993 and stepped back in as CEO in 2002, when it was a bit player competing regionally with the dominant Scandinavian operator SAS. He quickly deduced that to survive, Norwegian had to bring down costs by scaling up rapidly. “We were forced to become a much bigger player,” he says. That plan helped Norwegian post a net profit of $136 million in 2016. (In the first quarter of 2017, the carrier boosted its passenger count, but took a bigger-than-expected $174 million loss, burned by higher fuel costs and exchange-rate fluctuations.)

A sure sign that the carrier has become a potent industry force: Legacy airlines have been trying to thwart it. The U.S. Department of Transportation, besieged with opposition from domestic airlines, labor unions, and other interest groups, took three years to approve Norwegian’s transatlantic plan. Its competitors are also creating their own budget mini-mes: International Airlines Group, which owns British Airways, has launched a long-haul, low-cost brand called Level, which operates out of Spain; Delta will soon offer its basic economy fare on long-haul routes.

Kjos, meanwhile, is orchestrating his next move: a partnership deal with at least one other budget airline to create an alliance that would allow passengers to seamlessly book across carriers. Together, Ryanair and easyJet shuttled some 17 million passengers around Europe in April alone. Funneling a portion of those travelers to Norwegian’s transoceanic flights would boost business—and bring Kjos one step closer to realizing his vision of a world connected by affordable flights.