British Airways and Norwegian are enjoying a merry dance on the trans-Atlantic

22 March, 2019

A recent blog post by aviation intelligence provider OAG provides some interesting insight into the trans-Atlantic market between the United Kingdom and North America and especially how established market leader British Airways is embroiled in a network dance with newer competitors, most notably LCC Norwegian.

Over recent years we have seen Norwegian launch multiple new air trans-Atlantic flights from London Gatwick to both served and unserved airport markets, mainly in the United States of America (USA). On some routes British Airways has responded by launching its own flights, and similarly we have seen Norwegian also add flights into markets where the British flag carrier already has an established presence.

They say all is fair in love and war - or with open skies in this case - and that any market will ultimately decide the right level of capacity and fare to support sustainable demand levels. The OAG analysis, 'The Norwegian Effect', highlights just some of the key moves in this trans-Atlantic network dance and the winners and losers - in terms of airlines and markets - as the newcomer "seeks to establish some sort of presence" and the established market player "defends its turf".

CHART - British Airways is by far the largest operator in the UK- USA market with over a third of the total seat capacitySource: CAPA - Centre for Aviation and OAG

Around 15% of British Airways' worldwide capacity operates over the trans-Atlantic, but it contributes a much bigger share to profits. With a secure 39% share of London - USA traffic, the OAG post says there can't be much that rattles the airline these days "other than the irritation of competitors nipping at its heels on the trans-Atlantic market". As such, OAG highlights some specific US markets from London where the competitive dance between airlines has been most obvious.

One example is Las Vegas, where it says Norwegian "undoubtedly saw Virgin, Atlantic, the only other operator on the route, as its competitor" when it started its winter service from Gatwick in 2016. However, Norwegian's move "was enough to entice British Airways," which already operated Heathrow-Las Vegas, to add a direct year-round service from Gatwick in Apr-2018. For now, OAG says, all three carriers "seem to be making it work in terms of capacity and frequency but a look at yield might tell a different story".

Another market it highlights is Seattle, a market Norwegian tried to serve daily from Gatwick but couldn't compete against British Airways' three times daily Heathrow - Seattle operation and pulled out after a year. In a similar vain, Norwegian tried Austin too up against a British Airways Heathrow service with a similar outcome.

But at Oakland, things worked out very differently. When Norwegian started a direct service to the secondary airport in the San Francisco urban area, it was the only operator on the route. British Airways swiftly followed telling The Blue Swan Daily previously that its LCC rival and proved a market existed for such a route.

As OAG highlights, with British Airways already serving San Francisco from London Heathrow, the opportunity to fly to the second airport in a city to another second airport seemed "to represent a reasonably risk-free option" and would be able to "fall back on the primary airport service if the new route didn't take off". That proved to be the case in this and British Airways has now pulled the service, leaving Norwegian to it.

There's a dance taking place on the East Coast too, where OAG says Norwegian and BA "have been facing off" in Fort Lauderdale, Miami's secondary airport. As was the case with Oakland, despite serving Miami International from London Heathrow, British Airways has launched a London Gatwick - Fort Lauderdale service in summer 2017 in direct competition with Norwegian.

It is a another different style of performance here, though, as Norwegian is about to move its Gatwick - Fort Lauderdale service to Miami International (MIA) this summer, indirectly going head-to-head with British Airways, its trans-Atlantic partner American Airlines and Virgin Atlantic too (the latter all serve Miami from Heathrow).

OAG schedule data shows Norwegian will operate a 17% share of London - Miami capacity. "Whether BA decides to retain its Gatwick- Fort Lauderdale route in the long term or focus its efforts on retaining the greatest market share on London, Miami remains to be seen," it says.

While BA, like all FSCs, has a premium bias (as its new Club Suite business class cabin testifies), OAG says the trans-Atlantic "is a market the airline cannot afford to be complacent about: it is simply too important" and as such "each move Norwegian makes - whether that is to enter markets with limited competition or choose markets where it competes head on with the big boys - demands a competitive response. What that means is this trans-Atlantic network dance is sure to deliver more interesting moves in the future.