Affordable travel for all

Photo: Boeing. Norwegian’s fleet of 64 aircraft include notable Norwegians emblazoned on the tail, from Olympic figure skater Sonja Henie to polar explorer and humanitarian Fridtjof Nansen.

 

Proof is in the savings: Norwegian shows how smart new technology can lower travel costs

Christy Olsen Field and Kelsey Larson

Norwegian American Weekly

Norway’s high cost of living can cause a lot of sticker shock for tourists and residents alike, but airline travel shouldn’t be one of them, thanks to forward-thinking airline Norwegian. Celebrating its 10th anniversary this fall, Norwegian specializes in low-cost air travel in Norway and beyond.

Norwegian’s success lies in its founding principle: Affordable air travel for all. With a flat hierarchy and a visionary at the helm, Norwegian has made long strides in what many would consider slow economic times for the air travel business.

We spoke with Atle Straume, Delivery and Configuration Manager for Norwegian. Based in Seattle, Wash., since 2007, Straume has coordinated the delivery of 50 Boeing 737-800 planes from headquarters in Renton, Wash., for Norwegian. Straume began his career in 1988 with regional airline Braathens.

Norwegian Air Shuttle AS was founded in 1993 to take over the regional routes for Busy Bee, a subsidiary of Braathens. When Busy Bee declared bankruptcy, the former employees decided to join forces and save the jobs by establishing Norwegian Air Shuttle.

“The pilots and employees said, ‘We can fly again if we all put money in, and get some investors onboard too,’” said Straume.

Norwegian Air Shuttle acquired three Fokker 50 planes and expanded their service to coastal cities, turning a profit of NOK 13 million (USD 2.3 million) in 1999. In 2001, they had six Fokker 50 in service.

In November 2001, Scandinavian Airlines (SAS) bought Braathens, and they canceled their contract with Norwegian Air Shuttle in the spring of 2002, wanting their subsidiary SAS Commuter to take over the routes on the west coast of Norway.

At that point, the choice was to close down operations or reinvent the company. The company chose the latter with Bjørn Kjos, one of the original investors in Norwegian Air Shuttle who had become the company’s largest shareholder and Chief Executive Officer.

In 2002, the airline rebranded to Norwegian and announced it would offer domestic services as a low-cost carrier with Boeing 737 airplanes, on the most-traveled routes with six routes. Three years later, Norwegian turned a profit. Today, Norwegian operates 64 aircraft on 294 routes to more than 114 destinations and employs approximately 2,500 people.

Photo: Boeing.

“Norwegian has a very flat structure – if someone has a good idea, they can knock on Bjørn’s door and tell him. He encourages people to grow in their positions,” said Straume.

Straume points to Kjos as the visionary for Norwegian’s success.

“If you are sitting on this side of the table with an idea, Bjørn is on the other side, thinking even further. He’s always thinking ahead,” said Straume.

One of Norwegian’s greatest strengths is their out-of-the-box approach.

“We were a pioneer with internet booking, starting in 2002. Before then, people could book tickets through a call center. Our call center phone lines were swamped in the startup in 2002, and without much advertising people found our website and booked from there,” said Straume.

Many airlines have followed suit, and online bookings is now standard practice for air travel.

“Another strategy Norwegian introduced was the low fare calendar,” said Straume. “People can look at a whole month’s prices of airfare prices, and see what days are cheaper to fly, based on demand.”

For people with flexible travel plans, this option can save a considerable amount of money. For example, an adult ticket from Oslo Gardermoen to Berlin Schöenfeld for a weekend trip Oct. 20 – 22 would cost NOK 1,588 (approximately USD 280). If you book for the following weekend instead, the price drops to NOK 1138 (USD 200). Tickets within Norway are very affordable – as low as NOK 149 (USD 26) each way, which is less than the cost of gas to drive.

Norwegian also emphasizes cutting edge technology for their passengers, from electronic boarding passes to free inflight WiFi. Norwegian was one of the first airlines to offer self-check-in and tickets on the cell phone. On Sept. 17, Norwegian has won the prestigious Passenger Choice Awards 2012 for the category “Best Inflight Connectivity and Communications.” The airline competed against major international airlines like Virgin America, Emirates, Oman Air and Gulf Air.

So how does a budget airline in one of the world’s most expensive countries stay profitable? The answer is simple:

“New airplanes. The investment can look expensive at the beginning, but the savings are worth it. New aircraft are more fuel-efficient than old ones, even  airplanes made in 2002. New airplanes use less  fuel, has less  maintenance cost, less fees paid for noise and environmental  taxes,” said Straume. “For example, our route from Oslo to Dubai takes 7.15 hours. With an old plane, it would be necessary to do a refuel stop due to higher fuel consumption, but with our new planes, there is no need to stop. We spend less money overall with new planes.”

Norwegian’s relationship with Boeing is key to acquiring new planes, and their relationship goes back to the company’s founding in 2002. “Over the years we’ve gotten to have a unique relationship with Boeing,” said Straume. “As soon as Boeing started to take us seriously, and realized that we were not just a fluke,” he added.

Norwegian is anything but a fluke in Boeing’s book – in January 2012, Norwegian placed an order with Boeing and Airbus to purchase 222 aircraft, Europe’s largest single aircraft order ever made. As a result, a lot of cooperation between Norwegian Air and Boeing in Seattle, Wash., is necessary. In a great example of Norwegian-American business cooperation, this relationship has been overwhelmingly positive, and has even created new traditions in Boeing’s Seattle offices (see sidebar).

Norwegian has big dreams for the future, with plans to expand its routes to North America and Asia, starting with Oslo – New York, and Oslo – Bangkok with new Boeing 787 Dreamliner airplanes.

“People want to save money, in good times and bad. If money is tight, people will look for the cheapest option. When times are good, people still look for the best possible price,” said Straume.

 

For more information about Norwegian, visit www.norwegian.no.

This article originally appeared in the Sept. 28, 2012 issue of the Norwegian American Weekly. To subscribe, visit SUBSCRIBE or call us at (800) 305-0271.

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