Norwegian’s boss Bjørn Kjos is cutting so much (costs and routes) he could be a barber! Andrew Myers analyses the LCC’s performance.
One of the advantages of Network Grandstand, Europe’s original and most accurate LCC fare and performance monitoring product, is the ability to home in on a carrier’s network and establish very quickly which parts are performing robustly and which are not doing so well.
In our first graphic of 2019, we examine the top-line performance of Norwegian, which like many other carriers during the gloom of the low season, has been in the news recently suffering financial woes.
The chart on the left shows the distribution of routes by performance bucket, based on our profit per set estimates. We have compared Norwegian (outer ring) with the industry star, Ryanair (inner ring) and we can immediately see that while almost two-thirds of Ryanair’s routes are in the top category (routes which we think are making more than €10 per seat), less than half of Norwegian’s routes are similarly successful. At the other end of the scale, almost no Ryanair routes are losing more than €10 per seat. We suspect that those that are, are cut very quickly leaving only a handful that might be in place for more strategic reasons. The figure for Norwegian is almost a quarter.
On the right hand side we look at the six best and six worst country markets on the carrier’s network from a profit per seat point of view. Immediately a few trends begin to appear. It is quickly apparent the carrier is doing best on routes to Southeast Europe, with Montenegro and Turkey being the most profitable of the 41 countries served by Norwegian. At the other end of the scale, routes to the US are doing worst, and in a future blog we plan to examine the economics of operating transatlantic flights and the effects of competition.
Swedish cool for Norwegian profits
To put these results into context, Montenegro is the 40th largest country market for the LCC, just ahead of its smallest, which is Albania. The most significant nations that are performing well for the airline are Croatia (13th largest) and Greece (14th). Of the loss-making country markets, Sweden is the most important for Norwegian (2nd biggest), with Spain (3rd) and the US (6th) not far behind.
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