Willie Walsh, CEO of British Airways parent IAG has branded Norwegian Air Shuttle's new transatlantic service from Gatwick to New York as "not significant" and warned the airline would face "huge challenges" in sustaining meaningfully lower fares.
Norwegian recently announced plans to launch long-haul services from Gatwick to New York, Los Angeles and Fort Lauderdale in July 2014, with one-way prices to New York starting at £149, not including hold baggage or food, which is another £30 per flight.
Speaking at an event to mark Qatar Airways' entry into the Oneworld alliance in Doha, Walsh said: “Norwegian will have very small presence in the UK transatlantic market – three flights a week to New York against the 30 flights a day operated from Heathrow. This scale of things doesn’t represent significant addition of capacity.”
He added: “I think the challenge for Norwegian will be to demonstrate that they can offer truly low fares against fares in the market. I think that's going to be a huge challenge. In particular considering the costs of fuel, aircraft ownership, airport charges, APD – all of these add up to significant costs. It’s very different to what the low-cost carriers have been able to achieve in the intra-European market.”
He expected the fares offered by the Scandinavian airline “will not be significantly different, in fact in many cases I think they'll be higher than fares already available in the market.”
Walsh concluded: “I wish them well.”
Qatar Airways CEO Akbar Al Baker was typically forthright on the topic. He said: “I won't be so kind as Willie is about low-cost long-haul. You can see what happened to Air Asia X. And there were many low-cost premium carriers flying from Europe to the US that also folded. I think the low-cost model on long-haul does not work. In many regions even low-cost on short-haul doesn't work. This is already proven.”
The pair were also asked about the potential of the Chinese market.
“China represents a fantastic opportunity for all Oneworld carriers,” said Walsh, citing the recent launch of BA’s Chengdu service. "We are looking to increase the number of flights on this route, and looking at new destinations in China.”
“More and more you’re going to see a strong Oneworld presence in China, with opportunities for expansion. We are excited about the number of Chinese tourists travelling round the world and expecting to travel in next few years – so for us this is one of the most exciting developments. And with the geographic position of Doha, we are very well positioned to take advantage of this growth market.”
Al Baker added: “China is going to be the biggest aviation market in the world – and the largest economy. All airlines look at China as a very strategic region, as does Oneworld and Qatar Airways. We will continue to request Chinese authorities for additional rights.”