The July numbers augur well for the success of a new international budget air carrier at Stewart Airport outside Newburgh and therefore for the languishing airport, which employed 1176 people last year and ranked 200th in the FAA list of national airport activity. In its first full month of operation, Norwegian Air, which began service to Edinburgh, Scotland in mid-June, and to Dublin, Belfast and Shannon in Ireland, and Bergen, Norway at the beginning of July, carried 26,703 passengers to and from these five European destinations in July, according to data from airport owner and operator Port Authority of New York and New Jersey (PA).
So far, so good. The Norwegian total was almost half the total number of passenger enplaned at Stewart in July. The airline filled 82.1 percent of its seats available, a promising start for a low-price airline following a business model quite different from the hub-and-spoke system most American air travelers are used to. Stewart makes a clumsy spoke.
Some 77 percent of the rapidly growing low-cost European carrier’s customers book their flights through the Internet. Though its slogan is “Affordable fares for all,” Norwegian has built a reputation for operational efficiency and schedule reliability (99.1 percent flight regularity). It’s not afraid to operate out of secondary airports like Stewart and fly long distances to and from relatively obscure destinations.
Low-cost carriers now account for 28 percent of the world market. Their market share is growing.
Exuding optimism, Norwegian chief executive Bjorn Kjos flew into Stewart last week. He had never been at the airport before.
Kjos said he was happy with the reception to his airline’s presence. He praised the quick customs processing at Stewart. Though Norwegian had “absolutely full planes,” he said, the daily Dublin route was proving the most popular. Rather than cutting back on some routes in winter as it had originally intended, he said, the carrier was considering more frequent flights to some destinations and adding others. But of course he didn’t want to tip his hand to competitors by giving specifics.
Norwegian’s arrival has made an impact. The airport’s usage numbers have been unimpressive. Last year, only 275,000 passengers flew out of the facility; Norwegian’s arrival will double that number.
In 2007, just before the Great Recession, Stewart’s annual passenger traffic, all domestic, had climbed above 900,000. There was loose talk about the Hudson Valley airport becoming New York City’s fourth airport.
That bubble burst. Starting in 2008, traffic on the feeder flights from the metropolitan hubs to the small and medium airports of the nation dried up. The runways became less crowded, and business in the overpriced smaller markets withered. There was a consolidation among the largest domestic carriers, and in the resulting oligopolistic marketplace the survivors jacked up prices. These remaining airlines reported record profits. But in a deregulated business environment they also became more vulnerable to competitive innovation.
Twenty-one Norwegian flights depart Stewart weekly and 21 return. Three flights a day in and three out. At present, the long-haul European-based airline makes daily flights out of Stewart to Dublin and Edinburgh. It also makes three flights a week to Belfast, two to Shannon and two to Bergen.
Norwegian Air has also started flying to Edinburgh three times a week from Bradley International Airport near Hartford. About a year ago, that airport also introduced its first international flight in years, a daily Aer Lingus trip to Dublin. Connecticut offered the Irish low-cost carrier a package of incentives and fee waivers. At Stewart, according to business development manager Ed Torelli, Norwegian received only “the standard inducements” at Stewart. I don’t know otherwise.
At the same time, Norwegian also began regular European service at T.F. Green Airport about ten miles south of Providence, Rhode Island. The departure schedule at T.F. Green includes five flights to Dublin per a week, four to Edinburgh, three to Cork, and two each to Shannon and Bergen.
From this service at the three Northeast airports, Norwegian makes 24 weekly flights to four airports in Ireland, a larger-than-wee isle of seven million people. With Norwegian and Scottish routes included, the airline schedules 42 flights a week, sufficient to keep three Boeing 737 MAX planes busy making daily trips back and forth across the pond.
The airline recently announced it will begin service in October from T.F. Green to two French-Caribbean destinations. Guadeloupe and Martinique, here they come!
Experts in the travel industry were divided when I sampled their comments about a month ago. A guy named Bret Snyder, self-titled The Cranky Flier, put it most succinctly. Would Norwegian continue to succeed if the legacy airlines decided to respond with a price war?
There are two major considerations here. One is whether the legacy carriers would cut prices to defend market share. The other is whether lower New York prices on the part of the legacy airlines would dislodge lower-cost Norwegian from Stewart. In Cranky’s terminology, some airline customers will schlep out to JFK and pay higher prices, while others will prefer to schlep out to Stewart and pay lower prices.
Norwegian seems willing to test the “schlep” proposition. The marketplace will decide what’ll happen.
Norwegian Air’s strategy at Stewart would make a great case study. In business as in life, there’s usually no a priori correct answer. Testing is necessary. Deductive reasoning doesn’t always work.
We’ll continue to follow the unfolding of the situation at Stewart closely.