OSLO, April 18 (Reuters) – Norwegian Air Shuttle will need to order more long-haul planes, with Boeing’s Dreamliners the likeliest option, once its Irish subsidiary wins U.S. approval to fly transatlantic routes, its CEO told Reuters on Monday.
The U.S. Department of Transportation said on Friday it intended to grant flying rights to Norwegian Air’s Irish subsidiary, potentially paving the way for cheaper fares on transatlantic flights.
Norwegian Air, Europe’s third-largest budget airline by passenger numbers after Ryanair and EasyJet, can afford to offer cheaper airfares than traditional carriers because its operating costs are low.
“With this permission from the U.S. Department of Transportation, we can start flying people from Africa and Asia via Europe to the U.S. We are going to need more long-haul planes than we have ordered today,” Norwegian Air’s CEO Bjoern Kjos said in an interview.
The airline has ordered $18.5 billion worth of planes from Boeing so far, including 29 Dreamliners in October, the largest single order ever for Boeing from a European airline.
“Dreamliners are the most likely option,” said Kjos, without specifying how many more planes would be needed. “We are going to create jobs in the U.S. This permit allows us to look at more planes from Boeing.”
Friday’s decision was controversial, with some unions arguing that it failed to protect American workers. One U.S. union argued that Irish taxes and laws gave Norwegian Air an “enormous competitive advantage over U.S. airlines.”
Kjos, however, said the decision would lead to Norwegian Air creating jobs in the United States and that it would use American and European crew on transatlantic flights, not lower-paid Asian crews.
The former fighter pilot said Norwegian Air would employ close to 500 workers in the United States this year and currently employs 100,000 people there indirectly, citing figures from U.S. authorities.
“We have crew bases in Fort Lauderdale and New York now but we fly more to Los Angeles, so it would be natural to have one there too,” he said. “Oakland are Boston are also an option.”
Norwegian is already flying to New York and other U.S. cities but its ability to expand globally has been limited to the air rights that Norway has negotiated. Its Irish subsidiary has greater scope because Ireland is a member of the EU.
U.S. rival Delta Air Lines was critical last week of plans to allow the likes of Norwegian to offer more transatlantic flights, saying services would exceed customer demand and threatened to reduce fares to Europe.
Kjos denied the claim, arguing that Norwegian’s business model encouraged new customers to fly transatlantic, who until now would not fly because of perceived high prices.
“It is too expensive to go to the U.S. so they go to Spain instead,” said Kjos. “More competition means more volumes (of passengers) … Tourism is where we see the highest growth.”
The airline is eyeing direct transatlantic routes from U.S. cities that do not currently have them, such as Memphis and New Orleans, Kjos said.
“And there are several cities around Chicago that are possibilities too,” he said, without naming any.
Norwegian Air is looking for U.S. partners to fly routes within the United States. “We have nothing concrete now but there are good companies like Jet Blue that could be an option.”
It has also applied to U.S. authorities for its British subsidiary to offer transatlantic flights. Kjos said that application still stood as it would benefit from old bilateral agreements between Britain and the United States that do not apply to the rest of the European Union.
“This would give us access to more markets,” said Kjos, without specifying which.
He also said that while consolidation in the European airline industry was likely as some airlines “would likely not survive,” Norwegian Air would probably not participate.
“Never say never, but we are not looking at other airlines right now,” he said.
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