Norwegian roams into Italy’s long-haul market to add to Alitalia’s woes

31 May, 2017

Low-cost carrier Norwegian is to expand its transatlantic network with the addition of long-haul flights from Rome’s Leonardo da Vinci International Airport. The airline will base a single Boeing 787-9 at Fiumicino from November 2017 to introduce flights to Newark and Los Angeles, adding a second aircraft from February 2018 to grow frequencies and add a link to Oakland, serving the San Francisco Bay market.

The airline’s long-haul launch in Italy has been on the cards for some time and is not an immediate reaction to Alitalia’s administration filing earlier this month, although it will add to the troubled flag carrier’s woes by bringing competition to its flights into the USA. Norwegian will compete directly with Alitalia between Rome and Los Angeles and with United Airlines between Rome and Newark, while indirectly competing with Alitalia, American Airlines and Delta’s flights into New York via John F Kennedy International Airport.

“Rome is one of the top tourist destinations in the world, and a favourite among Americans, so it was an obvious choice for us as we continue to expand our transatlantic presence,” says Thomas Ramdahl, chief commercial officer, Norwegian.

The budget carrier will initially link the Italian capital with Newark four times a week from November 9, 2017 and Los Angeles twice weekly from November 11, 2017. These routes will grow to six and three times weekly, respectively from the start of February 2018 when a twice weekly Oakland International service will also be added from February 6, 2018.

Norwegian has been serving the Italian market for over ten years, but first introduced flights into the capital city’s Fiumicino Airport in March 2007 when it inaugurated flights to Rome from Oslo, shortly after adding onward links to Warsaw in Poland - it had previously served Rome’s Ciampino Airport. This summer it serves eight destinations from Fiumicino, comprising Bergen, Copenhagen, Gothenburg, Helsinki, Malaga, Oslo, Stockholm and Tenerife.

Rome is the airline’s largest destination in an Italian network that also includes Catania, Milan, Olbia, Palermo, Pisa and Venice and Verona. A two aircraft (737-800s) base was opened at the main gateway to the capital city from March 27, 2016. During the summer 2017 schedule it will account for 58.4% of the airline’s total departure capacity in Italy, according to OAG data, offering around 580,000 seats in and out of Rome.

The growth of Norwegian's activities in Italy has been significant - capacity is up an average of 16.5% per year since the start of the decade – but, it still remains only a small fish in a big pond. The airline is currently only the 18th largest operator in the country's international market based on this summer’s schedules with just a 1.1% share of total international capacity.

CHART - Largest airlines in Italy (weekly departure seats)

Rome will be the airline’s seventh long-haul European destination linked to the US via its Dreamliner fleet following Barcelona, which will launch this June; Paris; London; and the three Scandinavian capitals of Copenhagen, Oslo and Stockholm.

The fastest-growing airline will launch at least 25 new routes into the US this year, including 12 transatlantic routes to be operated by its new single-aisle Boeing 737MAX-8 airliners out Ireland, Northern Ireland, Scotland and Norway, although entry into service delays mean that some of these routes will initially be served using 737-800s with a likely capacity restriction due to its reduced range.

Alongside 52 transatlantic routes serving 13 points across the US, Norwegian also serves the French Caribbean markets of Guadeloupe and Martinique from points across the US replacing Baltimore/Washington International and Boston links with Providence, Rhode Island, Fort Lauderdale and New York JFK flights for the forthcoming winter 2017/2018 schedule.

Norwegian will expect its low-fare model to stimulate the long-haul market in and out of Rome, while its own local flights and an expected tie-up with Ryanair could generate some feed to the transatlantic network. Blue Swan Daily analysis shows that while Alitalia and the big three US majors will obviously see some yield impact from Norwegian’s arrival in the market, British Airways (BA) could also be impacted with around 45,000 passengers a year connecting via its London Heathrow hub between Rome and Los Angeles, New York and San Francisco in 2016.

Last year an estimated 117,000 two-way O&D passengers flew between Rome and Los Angeles but just a quarter (26.5%) made use of the non-stop Alitalia offering with significant connecting flows via London (16,000 annual passengers), Istanbul (6,800 passengers), New York (6,800 passengers) and Dusseldorf (5,600 passengers), according to data from OAG Traffic Analyser.

In the more competitive Rome – New York city pair, an O&D market of around 330,000 two-way passengers in 2016, non-stop flights accounted for a much larger 69.6% of the total demand with the Rome – Newark route currently served by United Airlines accounting for an estimated 86,000 annual passengers. Again, London was main indirect connecting point (18,500 annual passengers) ahead of Dublin (9,500 passengers) and Lisbon (6,000 passengers).

The unserved Rome – San Francisco market generated around 77,500 two-way O&D passengers in 2016. The largest demand was in and out of San Francisco International Airport (73,000 passengers) with nominal existing flows into Oakland International Airport and Norman Y Mineta San José International Airport. The majority of these passengers were connecting once again via London Heathrow (10,500 passengers), as well as Frankfurt (7,000 passengers) and Istanbul (6,500 passengers).