The Norwegians have invaded the Hudson Valley. They will leave their mark. Nothing will ever be the same.
These contemporary Vikings have swept in not on longships, but in new fuel-efficient narrow-body Boeing 737 Max 8 aircraft with images of Benjamin Franklin on their tailfins (“the first American tailfin hero”). They have promised to establish a base at Stewart Airport this fall. Optimistic economic impact studies figure the project will create 230 jobs and $12 million in annual wages. The Norwegians say their overall goal is to have 1000 American airline industry jobs by the end of this year.
Six of their aircraft have begun to provide regular passenger service to and from European destinations from Stewart Airport in Newburgh, Bradley Field outside of Hartford, and TF Green Airport in Providence. But that is probably just the beginning. The Norwegians are not in the game for the short term, they say. They’re here to expand their business big time. They intend to scale up sufficiently to make money with bargain-priced tickets.
Prior to this present foray, Norwegian Air has been providing service to 89 destinations from a handful of major American urban areas: New York, Boston, Los Angeles and San Francisco-Oakland. With this new move, the Norwegians are following a disruptive point-to-point business model quite different from the hub-and-spoke system that has dominated the American air marketplace for the last three decades. The national strategy they are rolling out will compete with the three dominant consolidated legacy carriers, Delta, American and United, and the one dominant upstart, Southwest. They intend to undercut these leaders, who in 2016 boasted a 68.8 percent total domestic market share, through low prices.
Recently released Port Authority data for Stewart, from which Norwegian Air started flying to Edinburgh on June 15, indicated that the airline’s 30 June flights to and from that location had carried 4490 transatlantic travelers in June. With 5952 Norwegian seats available, Norwegian achieved a passenger load factor of 75 percent, probably a disappointing result out of the gate considering the bargain prices — one-way fares as low as $65. To succeed, Norwegian needs to attract new passenger demand, particularly tourists indulging in discretionary spending.
A 33 percent June passenger traffic surge at Stewart was due, moreover, as much to low-cost carrier Allegiant Airlines’ added service to Myrtle Beach in South Carolina as to Norwegian’s to Edinburgh.
If Norwegian stays the course, Stewart general manager Ed Harrison predicts that next year his airport will double its 2016 passenger volume of 275,000 passengers. And that’s a modest projection.
Norwegian Air chief commercial officer Thomas Ramdahl sees the Stewart invasion as another step to growing the third largest low-cost European carrier’s network in the United States. Norwegian and Port Authority have been talking about Stewart for a long time, “and we finally got to do it.”
By and large, Norwegian and Allegiant deliver customers from one point to another via a direct flight (Southwest has been successful in boosting passenger traffic by adding an intervening stop or two). For a variety of reasons, their base prices to their customers are much lower than those of the hub-and-spoke legacy carriers. Offering fewer flights to selected destinations from obscure airports, Norwegian and Allegiant can fly more cheaply.
“While fuel prices usually make headlines, they are only four percent of your typical airfare,” according to a Fast Company article by Michael Thomas. “About 20 percent of your fare goes toward gate fees, which is why low-cost carriers fly out of smaller airports that have lower fees.” Though I haven’t seen the gate-fee numbers for Norwegian at Stewart, I would be very surprised if the airline didn’t get a real good startup deal.
With lower costs than the legacy carriers, the discount competitors offer dramatically lower price options for no-frills service. These advertised prices generate more buzz than marketing campaigns would.
Norwegian’s fees for “frills” are steep. For instance, there’s a $25 fee for booking a flight on the telephone instead of online. “Since budget airlines aren’t making much money on your ticket,” logically reasoned travel writer Rick Steves, “they look for other ways to pad their profits.” You don’t have to take these frills, of course; it’s up to you.
Coach USA is offering a direct $20 bus trip, advertised to take an hour and 25 minutes, from Stewart to the Port Authority bus terminal on 41st Street in Manhattan. Anyone familiar with the daily delays on the Van Wyck Expressway will realize the Stewart Airport Express is worthy of consideration. Bus times are synchronized with Norwegian arrivals and departures. “Buses will wait for inbound passengers regardless of flight delays,” assures the bus-company website
Like many gig-economy companies do, Norwegian prefers to employ independent contractors or people working for agencies with which the airline has service contracts. European legacy carriers, many state-owned, have objected to competition from the low-cost airlines based on their lower labor costs. Labor laws in the United States may make it harder to apply this hiring strategy.
Looking for a ticket to Europe, Luca Zocche of Layover Hub magazine found Norwegian from Stewart “the one option that wouldn’t break the wallet.” Found this writer, “For the price I paid, the flight met expectations, and was enjoyable at that…There is no doubt in my mind that if Norwegian can keep up the level of service that they’re providing and improve on their few weak points, their service out of Stewart will thrive.”
Ben Mutzabaugh of USA Today found the low fares “jaw-dropping,” but warned about the extra charges. He quoted Norwegian as saying that the carrier’s lowest one-way fares to Europe were likely to be $99, and that the low-cost return fare would be either 99 euros or 99 pounds.
Bret Snyder, a.k.a. The Cranky Flier, thought Norwegian’s move “a risky bet” because the legacy airlines will respond with a New York fare war, keeping prices low enough to prevent anyone from needing to head up to Stewart to get a deal. “In the end,” he queried, “is there enough meat on the bone to get people to schlep out to Stewart?” He’s not sure there’s a niche that will work for Norwegian, but said he was happy to be proven wrong. “Let’s see it, Norwegian.”
Stewart general manager Harrison sounded perhaps the sunniest note as he enthused about the opportunity. “I’m going to take my daughter to Dublin for the weekend,” he was quoted as saying. “It will be more fun and not much more expensive than going to the local mall.”
That’s the kind of thinking that Norwegian will certainly be encouraging. The jury’s still out on this intrepid Scandinavian adventure. With the low-cost carriers now 28 percent of the world market, the other players have been watching closely. The monthly Port Authority data and other sources will keep us updated on how the Norwegians are doing. And if they’re doing well, they’ll provide a long-awaited raison d’etre for underutilized Stewart Airport.
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