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Norwegian Kicks off Low-Cost US-French Caribbean Service: Onboard the JFK-Martinique Inaugural Flight.

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Norwegian Kicks off Low-Cost US-French Caribbean Service: Onboard the JFK-Martinique Inaugural Flight.

Norwegian Kicks off Low-Cost US-French Caribbean Service: Onboard the JFK-Martinique Inaugural Flight.
December 04
06:20 2015

MIAMI— From the East Coast of the US to a French beach in under five hours may seem like a pipe dream but it is possible this winter. Norwegian is offering non-stop flights from Boston, Baltimore-Washington (BWI) and New York City (JFK) to Martinique and Guadeloupe on board its Boeing 737-800 aircraft, with the inaugural flights operating on Thursday from JFK to Martinique and Boston to Guadeloupe.  BWI service commenced on Friday.

The carrier is taking advantage of the Open Skies treaty between the US, European Union, Iceland and Norway which allows unlimited frequencies by carriers from any member state to points between the US and those member states. With Guadeloupe and Martinique both French Overseas Departments they qualify for such service. And with a more limited schedule in Continental Europe during the winter season, Norwegian is seeking out incremental profits on the “other side” of the Atlantic. Fares are low, starting at $79 one way (which is what I paid to be on the inaugural departure from JFK) and the company says bookings are strong enough to support an extension of the JFK operations an additional month.

The inaugural flight had some of the hallmarks of such trips, though it was not a gala event. Passengers were treated to a rum cocktail on board shortly after departure and a gift from the Martinique tourism board. The pilot offered a special greeting to passengers prior to departure but the gate area was a typical pre-flight scene, not an inaugural celebration.

Of course, the limited company-sponsored celebrations did not tone down the mood of the passengers too much. My seatmates were on board “because it was crazy cheap” while a group of 20 members of InsideFlyer.com won free seats thanks to a promotion sponsored by the carrier and the website supporting UNICEF, one of Norwegian’s charity partners. Passengers were in the aisles throughout the flight, mingling and the in-flight bingo giveaways had everyone celebrating shortly before arrival.

Potential Profits

While the inaugural flight from BWI is reportedly oversold the flight from JFK had approximately 65% of the seats occupied. Even with the company’s assertions that future bookings justify extending the season in the JFK market one must consider the potential profitability of these routes, particularly given the low fare model the carrier promotes. With a CASM of approximately 8 cents (per CAPA estimates) Norwegian operates at a significant discount to the US-based carriers which could also theoretically offer service on these routes. Given that cost differential (JetBlue, the next closest, operated with a CASM of 10.3 cents in the same period) it would seem that Norwegian has a clear advantage. But the company also has 20% more seats on board its aircraft than JetBlue, shifting the overall math a bit back towards even on a total revenue per aircraft basis. Other airlines have suggested in private conversations that the markets are not robust enough to support service, even on the 2-3x weekly schedule Norwegian has pursued.

And so the math game becomes an interesting one. There are clear costs in not operating the aircraft versus trying something new. Other carriers certainly had the opportunity to try to build traffic on these routes but chose to ignore them. And Norwegian is talking a big game, with discussion of additional aircraft and routes joining the Winter Caribbean fleet in the 2016-2017 season. If one would judge based solely on the inaugural flight perhaps that would seem misguided. But the season is several months, not a single flight. There is plenty of time for both passengers and the carrier to have fun in this market before judging its success.

 

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Seth Miller

Seth Miller

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