10 ms·

Norwegian borrowed the same play book Michael O'Leary (of Ryanair) used ~6 years earlier: putting in a big, bold order for new Boeing aircraft just as the aviat

Norwegian borrowed the same play book Michael O'Leary (of Ryanair) used ~6 years earlier: putting in a big, bold order for new Boeing aircraft just as the aviation market was tanking (due to 9/11 in O'Leary's case and the GFC in Norwegian's). Anti-cycle is the cheapest time to buy lots of new planes (if you have the balls and investor backing to do it). Underneath it all is the same operating model that allowed low cost carriers to flourish in the short-haul market: streamlined, standardized, modern, fuel efficient fleet; non-unionised crews; using cheaper secondary airports; flying direct; cramming in as many rotations in 24 hours as possible and flying outside of peak hours to get cheaper landing slots. The new Boeing and Airbus models make the LCC approach increasingly viable for longer haul routes thanks to big fuel efficiency improvements and smarter cabin interiors/materials that boost pax load without sacrificing comfort. Oil prices are also helping since the price has remained low for so long now that even if an airline hedged the wrong way a few years ago they're now all enjoying better rates. IAG (British Airways, Iberia) and Lufthansa are trying to get in on the action too with Level and Eurowings respectively.

vanderZwan 9y ago
A big difference with Ryanair and other low-cost airlines is that Norwegian stays away from dark UI patterns in their website/app, and also doesn't use the "make it uncomfortable enough that you consider paying more, but not so uncomfortable that it stops you from using it" tactics in general. I think they'll be much better at customer retention.
- corford 9y ago
  Perhaps where Norwegian and Ryanair compete on the same routes (which isn't many). But even then, if there's more than a €10 difference in the headline price, most LCC flyers will pick the cheaper one regardless. I think just like with blindness to banner ads on websites, most consumers quickly learn to avoid the dark patterns during check out. To be honest, Ryanair's new web app is actually not that bad compared to the hostile site they had a few years back.
  - manarth 9y ago
    Ryanair's new web app is actually not that bad compared to the hostile site they had a few years back Which is roughly when they refocused on customer-service, when their previous customer-hostile approach generated enough negative publicity to threaten their business model.
    - corford 9y ago
      Threatening their business model is overstating it a bit I think. More like they had already successfully picked all the low hanging fruit and in order to maintain their stellar (multi) year-on-year passenger growth they needed to start trying other things (customer experience improvement, more focus on business flyers, serving more primary airports, dipping their toes in to offering a few connecting flights). Short-haul LCC traffic in Europe is becoming a mature market and so budget airlines are on a drive to find ways to grow beyond simply offering "insanely cheap prices". However, it's important to remember that a bad/hostile customer experience didn't stop Ryanair getting to ~100 million passengers a year (note: not that I'm defending that!).
  - piva00 9y ago
    As I stated in another comment: I'd never pick Ryanair over Norwegian, even as LCC flyer. I had flights with Norwegian where paying €100 more than with Ryanair was well worth it for the time I'd lose going to/from airports and the hassle it'd be to be sure I'd done everything against the dark patterns of Ryanair. I really can't see myself getting a Ryanair flight to anywhere where I could get Norwegian, airBerlin, or other LCC that aren't as cheap as "Fly for €6.99" but at least treat you well.
- surfmike 9y ago
  Norwegian has better airport locations too.
- URSpider94 9y ago
  You aren't kidding. We did a family vacation in Europe last year, and relied primarily on LCC's to do side trips. Buying tickets was like clicking through a Facebook clickbait story - packed with ads and confusingly named links that would add charges to your flight. You pay extra for: checking luggage, carrying on luggage, selecting your seat in advance, selecting any seat that's not a middle seat. And then -- for most LCC's, you MUST print your boarding pass at home, or pay a 50 Eur service fee. And many of them make you check in your own luggage, all the way to the belt.
  - 1stranger 9y ago
    > And many of them make you check in your own luggage, all the way to the belt. I call this a plus. Waiting to have somebody check your baggage when you could just do it yourself is a vast improvement.
  - kristofferR 9y ago
    > And many of them make you check in your own luggage, all the way to the belt. Is this uncommon in the US? I'd much rather enter the airport, casually walk up to a touchscreen, print my boarding pass and label and drop off my baggage than queuing up in a long line when the check-in counter opens.
    - URSpider94 9y ago
      In the USA, it's not uncommon to check in at home and/or print your own boarding pass. It's far less common to print and attach your own luggage tags - United does it at SFO. However, US airline regs require that an employee checks your ID and compares it to the boarding pass before accepting luggage - so there's always a human in the loop. However - a lot of Americans still aren't comfortable with this level of self-service, and want to go to a full-service counter. What I was referring to specifically with LCC's is that they have zero personnel at the check-in counter -- self-checking your luggage isn't a nice option, it's mandatory. And there's not even a kiosk for printing your boarding pass (that would cost money to maintain, best to have you use your own paper and toner at home).
- random_comment 9y ago
  They actually offer some premium stuff in the price. Nice seats and free inflight wifi inside Norway (has been there for a few years).
mtgx 9y ago
Companies that have low costs and innovate during a downturn are always the ones to come out the strongest out of the downturn. By the time the big players "return to normal" in an upmarket, those innovators are already in a much better long term position to take them on.
- corford 9y ago
  This is definitely true although in Norwegian's case they also benefited from some lucky timing: the GFC happened to occur just as Boeing were developing new aircraft that would finally be capable of offering low enough ops costs for the LCC model to work on longer sector times. I doubt too that Norwegian foresaw how long oil prices would remain low when they made the order. Norwegian are where they are today thanks to: execution, vision, luck and balls. Just like all the other hyper successful businesses of the world (Amazon, Ryanair, Southwest, Netflix etc. etc.).
  - robocat 9y ago
    Norway sells a lot of oil. As a country owning a large airline is good diversification?
    - arve0 9y ago
      Norwegian is not owned by Norway. SAS on the other hand...
    - corford 9y ago
      Norwegian is privately owned.
bogomipz 9y ago
>"Norwegian borrowed the same play book Michael O'Leary (of Ryanair) used ~6 years earlier: putting in a big, bold order for new Boeing aircraft just as the aviation market was tanking (due to 9/11 in O'Leary's case and the GFC in Norwegian's)." This doesn't sound quite right. Starting an airline is not a trivial undertaking, certainly not something you could hope to complete during a temporary downturn or use "market timing" like you would with equities. Norwegian along with most other budget carriers leases their planes. This gives them certain advantages. This model allows them to always be taking advantage of most fuel efficient planes and phase out less efficient parts of their fleet much quicker[1]. Also the lessor absorbs much of the maintenance costs on the leased planes where's bigger companies that buy fleet outright have to assume that costs themselves often with union labor. In fact Norwegian is also now in the business of leasing planes to other budgets carriers[2]. [1] http://www.reuters.com/article/us-airlines-leasing-orders-idUSKCN0IA2LH20141021 http://www.reuters.com/article/us-airlines-leasing-orders-id... [2] http://www.routesonline.com/news/38/airlineroute/271604/norwegian-outlines-leased-aircraft-operations-in-s17/ http://www.routesonline.com/news/38/airlineroute/271604/norw...
- corford 9y ago
  Norwegian didn't start in 2007. They go back to the early 90's. Re: leasing. This is true of virtually all airlines these days outside of some flag carriers - I was being sloppy with my wording :) However, you get much better lease rates if you're willing to commit to a very large order and are negotiating it during a downturn. Which is what both Ryanair and Norwegian did. Airline manufacturers and leasing companies traditionally experience a large drop off in their deal pipeline at the beginning of an economic shock/downturn because most airlines are badly run, cash strapped, slow moving and have no appetite from their creditors to commit to multi-billion, multi-year leases just when the wider economy is going to shit (and hurting their passenger loads). Non-legacy airlines (mainly budgets) have more tools available: they quickly drop routes, slash staff count etc. to ride the downturn while at the same time investing for the inevitable swing back. Helps too that they are the last to be hit by falling pax numbers since their ticket prices are so cheap. There's lots of other factors at play too that I haven't really touched on. How an airline hedges its fuel and forex, what deals they have with airports, which manufacturer they standardise on (Boeing or Airbus), where they get their crews from, how they retail their tickets, which markets they're strong in, what AOC(s) they have, who their investors/creditors are (state, bank, sovereign wealth fund, pe, private) and on and on and on.
jk2323 9y ago
You are right but miss some things: 1. Planes are easier to clean 2. Even the Emergency board card can't get stolen (Printed on the chair) 3. Can't buy tickets on other websites 4. Point to point airline, luggage does not have to get transferred, no missed connection flights. One of the biggest advantages are the short breaks. Sometimes they even don't turn off the turbines before they fly back. I am skeptical if Norwegian can copy all this to long distance.
- corford 9y ago
  I too am sceptical the pure LCC model will work for extended long haul routes but I think it can definitely work for medium-haul (i.e. Western Europe to Eastern/Central US). I think the legacy carriers will also have an easier time catching up to Norwegian's prices in the medium-haul space since the distances involved restrict how creative you can be to get costs down (compared to the short-haul market) i.e. there's a limit to how cheap Norwegian can make it.
- jpatokal 9y ago
  Air Asia X and Scoot have been doing quite well in the medium-haul market (<8 hours) in Asia. However, Air Asia X just announced that they're abandoning a mooted 2nd attempt at long haul (Asia to Europe/US) because the numbers just aren't there; they'll fly Japan-Hawaii but no further.
piva00 9y ago
Cheaper secondary airports? Where? At least here in Europe I fly Norwegian almost anywhere they go exactly because they are a low-cost flying through main airports. I'm going to Amsterdam Schiphol this week flying from Stockholm-Arlanda, for an example. What Norwegian really seems to do well is cramming rotations, I've seen a plane turn over from landing to take-off in about 30~40 minutes. Also: Norwegian is by far one of the best companies I've flown, free Wi-Fi onboard, no one pesters me about backpack sizes, no dark patterns when selling me tickets to upsell something, most of my flights with them were on schedule or delayed by about 10 minutes or less. All in all I wouldn't ever compare Ryanair to Norwegian, the only thing in common they have is being low-cost and probably the strategy for ordering tons of planes in a down market.

vanderZwan 9y ago

A big difference with Ryanair and other low-cost airlines is that Norwegian stays away from dark UI patterns in their website/app, and also doesn't use the "make it uncomfortable enough that you consider paying more, but not so uncomfortable that it stops you from using it" tactics in general. I think they'll be much better at customer retention.

corford 9y ago
Perhaps where Norwegian and Ryanair compete on the same routes (which isn't many). But even then, if there's more than a €10 difference in the headline price, most LCC flyers will pick the cheaper one regardless. I think just like with blindness to banner ads on websites, most consumers quickly learn to avoid the dark patterns during check out. To be honest, Ryanair's new web app is actually not that bad compared to the hostile site they had a few years back.
- manarth 9y ago
  Ryanair's new web app is actually not that bad compared to the hostile site they had a few years back Which is roughly when they refocused on customer-service, when their previous customer-hostile approach generated enough negative publicity to threaten their business model.
  - corford 9y ago
    Threatening their business model is overstating it a bit I think. More like they had already successfully picked all the low hanging fruit and in order to maintain their stellar (multi) year-on-year passenger growth they needed to start trying other things (customer experience improvement, more focus on business flyers, serving more primary airports, dipping their toes in to offering a few connecting flights). Short-haul LCC traffic in Europe is becoming a mature market and so budget airlines are on a drive to find ways to grow beyond simply offering "insanely cheap prices". However, it's important to remember that a bad/hostile customer experience didn't stop Ryanair getting to ~100 million passengers a year (note: not that I'm defending that!).
- piva00 9y ago
  As I stated in another comment: I'd never pick Ryanair over Norwegian, even as LCC flyer. I had flights with Norwegian where paying €100 more than with Ryanair was well worth it for the time I'd lose going to/from airports and the hassle it'd be to be sure I'd done everything against the dark patterns of Ryanair. I really can't see myself getting a Ryanair flight to anywhere where I could get Norwegian, airBerlin, or other LCC that aren't as cheap as "Fly for €6.99" but at least treat you well.
surfmike 9y ago
Norwegian has better airport locations too.
URSpider94 9y ago
You aren't kidding. We did a family vacation in Europe last year, and relied primarily on LCC's to do side trips. Buying tickets was like clicking through a Facebook clickbait story - packed with ads and confusingly named links that would add charges to your flight. You pay extra for: checking luggage, carrying on luggage, selecting your seat in advance, selecting any seat that's not a middle seat. And then -- for most LCC's, you MUST print your boarding pass at home, or pay a 50 Eur service fee. And many of them make you check in your own luggage, all the way to the belt.
- 1stranger 9y ago
  > And many of them make you check in your own luggage, all the way to the belt. I call this a plus. Waiting to have somebody check your baggage when you could just do it yourself is a vast improvement.
- kristofferR 9y ago
  > And many of them make you check in your own luggage, all the way to the belt. Is this uncommon in the US? I'd much rather enter the airport, casually walk up to a touchscreen, print my boarding pass and label and drop off my baggage than queuing up in a long line when the check-in counter opens.
  - URSpider94 9y ago
    In the USA, it's not uncommon to check in at home and/or print your own boarding pass. It's far less common to print and attach your own luggage tags - United does it at SFO. However, US airline regs require that an employee checks your ID and compares it to the boarding pass before accepting luggage - so there's always a human in the loop. However - a lot of Americans still aren't comfortable with this level of self-service, and want to go to a full-service counter. What I was referring to specifically with LCC's is that they have zero personnel at the check-in counter -- self-checking your luggage isn't a nice option, it's mandatory. And there's not even a kiosk for printing your boarding pass (that would cost money to maintain, best to have you use your own paper and toner at home).
random_comment 9y ago
They actually offer some premium stuff in the price. Nice seats and free inflight wifi inside Norway (has been there for a few years).

mtgx 9y ago

Companies that have low costs and innovate during a downturn are always the ones to come out the strongest out of the downturn. By the time the big players "return to normal" in an upmarket, those innovators are already in a much better long term position to take them on.

corford 9y ago
This is definitely true although in Norwegian's case they also benefited from some lucky timing: the GFC happened to occur just as Boeing were developing new aircraft that would finally be capable of offering low enough ops costs for the LCC model to work on longer sector times. I doubt too that Norwegian foresaw how long oil prices would remain low when they made the order. Norwegian are where they are today thanks to: execution, vision, luck and balls. Just like all the other hyper successful businesses of the world (Amazon, Ryanair, Southwest, Netflix etc. etc.).
- robocat 9y ago
  Norway sells a lot of oil. As a country owning a large airline is good diversification?
  - arve0 9y ago
    Norwegian is not owned by Norway. SAS on the other hand...
  - corford 9y ago
    Norwegian is privately owned.

bogomipz 9y ago

>"Norwegian borrowed the same play book Michael O'Leary (of Ryanair) used ~6 years earlier: putting in a big, bold order for new Boeing aircraft just as the aviation market was tanking (due to 9/11 in O'Leary's case and the GFC in Norwegian's)." This doesn't sound quite right. Starting an airline is not a trivial undertaking, certainly not something you could hope to complete during a temporary downturn or use "market timing" like you would with equities. Norwegian along with most other budget carriers leases their planes. This gives them certain advantages. This model allows them to always be taking advantage of most fuel efficient planes and phase out less efficient parts of their fleet much quicker[1]. Also the lessor absorbs much of the maintenance costs on the leased planes where's bigger companies that buy fleet outright have to assume that costs themselves often with union labor. In fact Norwegian is also now in the business of leasing planes to other budgets carriers[2]. [1] http://www.reuters.com/article/us-airlines-leasing-orders-idUSKCN0IA2LH20141021 http://www.reuters.com/article/us-airlines-leasing-orders-id... [2] http://www.routesonline.com/news/38/airlineroute/271604/norwegian-outlines-leased-aircraft-operations-in-s17/ http://www.routesonline.com/news/38/airlineroute/271604/norw...

corford 9y ago
Norwegian didn't start in 2007. They go back to the early 90's. Re: leasing. This is true of virtually all airlines these days outside of some flag carriers - I was being sloppy with my wording :) However, you get much better lease rates if you're willing to commit to a very large order and are negotiating it during a downturn. Which is what both Ryanair and Norwegian did. Airline manufacturers and leasing companies traditionally experience a large drop off in their deal pipeline at the beginning of an economic shock/downturn because most airlines are badly run, cash strapped, slow moving and have no appetite from their creditors to commit to multi-billion, multi-year leases just when the wider economy is going to shit (and hurting their passenger loads). Non-legacy airlines (mainly budgets) have more tools available: they quickly drop routes, slash staff count etc. to ride the downturn while at the same time investing for the inevitable swing back. Helps too that they are the last to be hit by falling pax numbers since their ticket prices are so cheap. There's lots of other factors at play too that I haven't really touched on. How an airline hedges its fuel and forex, what deals they have with airports, which manufacturer they standardise on (Boeing or Airbus), where they get their crews from, how they retail their tickets, which markets they're strong in, what AOC(s) they have, who their investors/creditors are (state, bank, sovereign wealth fund, pe, private) and on and on and on.

jk2323 9y ago

You are right but miss some things: 1. Planes are easier to clean 2. Even the Emergency board card can't get stolen (Printed on the chair) 3. Can't buy tickets on other websites 4. Point to point airline, luggage does not have to get transferred, no missed connection flights. One of the biggest advantages are the short breaks. Sometimes they even don't turn off the turbines before they fly back. I am skeptical if Norwegian can copy all this to long distance.

corford 9y ago
I too am sceptical the pure LCC model will work for extended long haul routes but I think it can definitely work for medium-haul (i.e. Western Europe to Eastern/Central US). I think the legacy carriers will also have an easier time catching up to Norwegian's prices in the medium-haul space since the distances involved restrict how creative you can be to get costs down (compared to the short-haul market) i.e. there's a limit to how cheap Norwegian can make it.
jpatokal 9y ago
Air Asia X and Scoot have been doing quite well in the medium-haul market (<8 hours) in Asia. However, Air Asia X just announced that they're abandoning a mooted 2nd attempt at long haul (Asia to Europe/US) because the numbers just aren't there; they'll fly Japan-Hawaii but no further.

piva00 9y ago

Cheaper secondary airports? Where? At least here in Europe I fly Norwegian almost anywhere they go exactly because they are a low-cost flying through main airports. I'm going to Amsterdam Schiphol this week flying from Stockholm-Arlanda, for an example. What Norwegian really seems to do well is cramming rotations, I've seen a plane turn over from landing to take-off in about 30~40 minutes. Also: Norwegian is by far one of the best companies I've flown, free Wi-Fi onboard, no one pesters me about backpack sizes, no dark patterns when selling me tickets to upsell something, most of my flights with them were on schedule or delayed by about 10 minutes or less. All in all I wouldn't ever compare Ryanair to Norwegian, the only thing in common they have is being low-cost and probably the strategy for ordering tons of planes in a down market.