What if McDonalds stopped serving burgers, Or KFC, chicken?
Make no mistake: no one flies Norwegian because they love the seats. People love Norwegian because they’ve taken the excitement and aspiration of airline travel and made it affordable for more people around the world than ever. People love Norwegian for low fares, the same way they love Apple for overpriced electronics – it’s what they do. The Blue Swan Daily, an aviation trade paper has quoted Norwegian CEO Bjørn Kjos as saying something which seems entirely contrary to their core value proposition…
“There is no chance airlines can continue on without raising air fares” – Bjørn Kjos, CEO Norwegian Airlines, October 25th, 2018.
It’s never been cheaper to fly. Factoring in inflation, average wage and many of today’s headline worthy fares, this is the best time to travel. But the man who lead the quest for low fares appears ready to reverse course. In Norwegian’s Q3 earnings call, the enigmatic CEO stated very simply that low fares cannot continue at current levels. Hey, you started it! The idea of Norwegian being the airline pushing for higher fares is like the idea of McDonald’s leading a campaign for vegans, it just doesn’t fit. But in a time when it’s do or die for many airlines, with rising oil prices and a low season ahead there may be little choice.
Norwegian is one of many airlines people have their eyes on, after the recent folding of Primera Air and Cobalt. Norwegian has been the most prolific and successful of the new generation low cost carriers, expanding rapidly into new markets while piling on heavy debt from wild spending on new aircraft. The airline however, is showing promise and early investment is beginning to pay off. In the Norwegian Q3 earnings call for 2018, CEO Bjørn Kjos proclaimed a $160 million dollar net profit, citing 33% growth in capacity with reduced unit cost per passenger. Things are looking up for the airline, but Kjos warns of future trouble, not just for Norwegian but all airlines if the pricing status quo remains. It seems the war he’s started is one he’d like out of.
What do you think of Bjørn Kjos comments?