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News From Air Cargo Industry
Exclusive - Norwegian Taps into Cargo
The thriving Nordic low cost carrier Norwegian Air Shuttle (NAS) commences serving long-haul routes. In addition to carrying passengers the Boeing 787 aircraft will be utilized for transporting cargo shipments as well. Adding air freight to its activities is a decisive strategic novelty in the short history of the 2002 incepted airline.
Exclusive – Norwegian Taps into Cargo
“The Vikings are coming,” this former cry of fear is meanwhile enjoying a rather positive sound. In this case it was evidenced by the international echo the Nordic carrier received when announcing it would commence low-cost flights on intercontinental routes, thus expanding its current intra-European regional network.
 
In the meantime a precise date has been fixed for the start of the new era – May 30. On that Thursday, a Boeing 787 will depart from Oslo to New York (JFK), thus initiating a new phase in the rather young history of the airline. And more routes are to follow such as Oslo-Bangkok or Stockholm-Bangkok next July, followed by flights from Scandinavia to Fort Lauderdale, Florida next November.

If booked early enough, a one-way ticket to New York can be obtained for 30 euros, with Oslo-Bangkok costing 145 euros. In view of these very low fares and the traditional high Scandinavian labor costs the airline can only generate profits on long-haul routes if the overall mixture of expenditures and earnings is coherent.
This risky start-up situation has catapulted the air freight issue right onto Norwegian’s financial agenda. An assumption that is indirectly admitted by CEO Bjoern Kjos, who speaks of “important additional revenues” contributed to the flights by transporting boxes and packages in the lower deck compartments of the intercontinental fleet.

By stating this he puts indirectly the pressure on Peter Kales and his team since his Kales Airline Services won a tender to market the cargo capacity of Norwegian’s long-haul flights, confirms Kjos.  

These will be plenty, since the Viking carrier placed an order for eight 787s at aircraft manufacturer Boeing. But “before adding new destinations to our network we tend to increase the frequencies on our existing routes,” states the founder and majority stakeholder.  

The 1946-born manager further confirms that cargo will remain being a niche product for NAS and he denies any thoughts on air freight transports by the European single-aisle passenger fleet of Norwegian. This might jeopardize the narrow turn-around times of the aircraft between landing and departure. “Intra-Europe we normally accept smaller items or express shipments, but those are the only goods we are willing to carry on board our Boeing 737 fleet.”

Last year NAS ensured that the entire leisure and aviation world to pricked up their ears by placing a huge order for 222 Boeing and Airbus aircraft, thus tripling the current fleet of 74 units. In order to reduce labor costs and circumvent high Scandinavian taxes, the budget airline is increasingly basing part of its fleet outside the Nordic countries and also hiring staff there.
This seems to pay off financially as the 2012 achieved turnover of €1.74 billion euros is reflecting together with the EBIT of €83.95 million. “Our IT department is located in Kiev, Ukraine and we‘ve hired many of our staff in Spain,” explains airline boss Bjoern, while announcing up to fifty new weekly flights to and from Germany as of next winter during a press meeting in Hamburg. On this occasion he issued a warning to Europe’s full-service airlines. “I know some carriers don’t like to hear this, but I’m sure that it’s going to be very, very cheap to fly long-haul in future.” The upcoming flood of Chinese, Latin American and other members of the growing and affluent middle class will show this. Today, leisure passengers account for 85 percent of the globally sold airlines’ seat capacity. It is fast outgrowing the segment of business travelers and will account for 90 percent on average in the near future, predicts the former Starfighter pilot and low cost market conqueror, modern Viking Bjoern Kjos.
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