21 OCTOBER 2013

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Article from BTNews 21 OCTOBER 2013

COMMENT: Gatwick and Norwegian

Under its new owners Global Infrastructure Partners, Gatwick Airport has been aggressive in its pursuit of a better identity, both in terms of airport fabric and routes, throwing off the years of neglect by the BAA.

In many ways it has been successful, and some ways less so.

There is no doubt that Gatwick is now a top quality gateway to the UK with the completion of the rebuilt railway station early next year, the North Terminal update, and the ongoing works in the South Terminal.  Airside to Central London is far quicker (and cheaper) than its competitor, the world’s largest and most important international airport, but it has lacked for some years flights to New York, the most important gateway to North America.

All this will change next summer when Norwegian launches flights to JFK (and also Ft Lauderdale and Los Angeles – see below Low cost North Atlantic). 

This is something the new(ish) management at Gatwick has been striving for.  Did Norwegian order the 787 with Gatwick in mind.  This does seem likely.

The big question is will the new route succeed?

If you consider Gatwick as another regional UK airport the answer must be yes.  United (and others) have developed low frequency routes to the US (and Canada) from Birmingham, Manchester, Edinburgh and Glasgow, plus semi-charters from other points.  The market is available.  Gatwick does however compete with Heathrow, which has around 30 daily services to the two New York airports.  The fares at the South London airport will for the most part be much cheaper, but Norwegian will offer a fully flat Business Class and no doubt an executive lounge at each end.  It is tackling the business market and high earning private traveller too.

But Gatwick has not worked in the past.  The Laker Skytrain is for the most part forgotten as well as British Caledonian and Canadian operator Wardair.   However Air Transat to this day operates a restricted service to Canada (and from other UK airports too) with a small ‘Club Class’.

The problem with long haul low-cost is that for the most part the public want a better quality cabin operation when sitting cooped up for eight hours or more.  Norwegian will have in-flight video to a high standard and wi-fi connectivity.

Back-up aircraft when there are technical problems are simple in Europe.  You just fly another aircraft in if needs be.  It is not so easy if you are grounded at JFK.  Your spare crew may be 3,000 miles away and whilst competing carriers will be quick to offer (paid for) help they will also be trying to convert your clients.  It is bad news all round.

Budget carriers have tried for decades to fly long haul routes but even AirAsia X, successful out of Kuala Lumpur to a limited range of destinations, could not make a go of Stansted, nor Gatwick when they moved.  The Business Class only airlines out of Luton and Stansted were a failure.

On short haul routes budget carriers can save half the cost compared to a traditional airline but in long haul routes, where fuel is a disproportionately large expense, the savings are not the same.  Passengers also tend to fly with checked baggage on longer routes and demand greater in-flight services, further diminishing the potential savings.  Norwegian to date has had little experience in this area of cut price air travel.

BTN believes that New York will work for Norwegian and will fairly quickly go daily.  It needs to if it wants to attract regular/business traffic.  Whilst United and others have prospered with their move to Heathrow the market appears to be there.  Whether the majority of originating traffic comes from the US or from this end remains to be seen.  easyJet believed that most passengers for their highly successful Gatwick - Moscow route would come from the UK and have been proven wrong, 60% of  passengers originating from the Russian capital.

Ft Lauderdale has been pushing for a long time regarding a proper scheduled route from the UK and will aggressively support the route.  It should work to a city that is nearer to the Florida attraction than Miami.

That leaves Los Angeles.  It is a long flight.  Eleven hours

British Caledonian found it popular.  But there are four fine airline competitors from Heathrow.  Not far away Las Vegas works for Virgin Atlantic from Gatwick in spite of British Airways at Heathrow.

And where does BA stand regarding a future return to Gatwick for New York?

Business Travel News has faith in Norwegian. It is not going to be straight forward for the airline, at some point they will fall out with their ‘friends’ at Virgin Atlantic.  If the 787 introduction had been smooth there would have been no problem in forecasting quick success.  With that aircraft’s halo now removed it is going to take just that bit longer.  Let us hope Norwegian has deep pockets.

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