Stewart Airport (courtesy of Port Authority)
Could it be my imagination? Could the great pond that separates North America and Europe be shrinking for reasons other than climate change? Is it even remotely possible that flocks of Dubliners could soon be crossing the pond, arriving at Stewart Airport in mid-morning, be driven by bus to shop at Woodbury Common Outlet Center’s 240 high-end stores, and then, exhausted but bags filled, return late that afternoon in time to fly happily back to The Emerald Isle that very evening, alighting back in the auld sod during the pre-dawn hour.
Surely ’twould be an exhausting day-into-night if they were to do so. An option might be to pay $100 or so for a nearby hotel/motel room in order to squeeze in a second immersive day of shop-until-you-drop at Woodbury Common.
After almost nine months of operations at Stewart and in the wake of winter service cutbacks there, Norwegian Air seems now preparing to up the ante for 2018, doubling its flight frequency to Dublin beginning on April 26 to two a day in each direction. Americans traveling to Irish airports could hop from the Irish airport to low-cost flights elsewhere if they wished.
The Coach USA bus company and Woodbury Common management seem game to play their part, offering bus trips designed to accommodate Norwegian Air travelers and travel packages that include coupon books. Bus rides are already being offered from Port Authority’s bus terminal in Manhattan to stop at Woodbury Common before connecting to Norwegian flights from Stewart.
What you don’t find in Norwegian’s ebullient marketing is the cost squeeze of the airline’s expansionary strategy, of which what’s happening at Stewart Airport is but a part. As of the beginning of this year, Norwegian’s capital expenditures for 2018 were about $1.9 billion. Norwegian passenger capacity grew by 25 percent in 2017 and will grow an expected 32 percent this year. Will the increase in capacity be accompanied by cost benefits that result in higher profitability?
Norwegian has bought more than 200 fuel-efficient new jets, which it has mostly put into service. It expects to sell its older aircraft. “Norwegian’s fate rests on the still unproven strategy of adapting the success of low-cost short-haul travel to long-haul routes,” recently wrote Irish Times,“ as well as making a parallel bet on leasing out jets to rival carriers.”
“We are not at all satisfied with the 2017 results,” Norwegian CEO Bjorn Kjos told analysts in February, according to Irish Times. “2017 was not a very good year.” The costs of expansion significantly reduced the airline’s cash reserves.
Kjos took a defensive rhetorical tack. “What could we do?” he asked. “We had already started to sell a lot of tickets. We couldn’t say to the passengers, ‘Sorry, we can’t fly you.’ The best thing about 2017 is that it’s now 2018.”
Questions persist as to the long-term demand for the Norwegian routes to and from Stewart. A comparison of Norwegian’s month-to-month passenger figures for Stewart with those at the Port Authority airports as a whole show a similar seasonal pattern — strongest in the summer and considerably weaker in the winter. If anything, autumn and winter demand to the northern climes Norwegian serves lagged a bit behind the average seasonal international demand. It’s hard to know how the end of winter will affect Norwegian’s financial perspective at Stewart.
Don’t draw premature conclusions about Norwegian Air’s cheap-tickets adventure at Stewart Airport. Though the discount carrier’s strategy is not without serious risks, the business model carries the potential for enormous rewards. The airline’s brash pricing stance has already irreversibly pushed a very profitable industry toward new pricing strategies and structures. Cheap fares seem on more consumer minds. Deals are everywhere, more options than ever are available. Even everyday fares seem to have sunk to new lows.
The new frame of mind seems to have changed the calculation of the convenience-versus-price ratio for the air consumer. “With prices this cheap,” Money magazine recently advised, “you can handle the extra costs and hassles of using B-list airports, and still have money left over to hopscotch around Europe by booking a few low-fare flights within the continent.” Precisely.
As it increases the frequency of its transatlantic flights this spring, Norwegian Air will face new competition. Last Thursday, American Airlines announced it would introduce a new discount fare in April to compete with discount transatlantic carriers such as Norwegian. British Airways, Air France and Deutsche Lufthansa are also preparing lower-cost offerings. Delta already offers basic economy fares on such routes.
Can these new offerings reverse the trend? Or is the low-cost jinni out of the box forever?
