by Josh Lew
Last updated: 3:00 PM ET, Thu April 21, 2016
After a lengthy wait, Norwegian Air's Irish subsidiary has finally received approval to fly from Ireland to the United States. Flights will take off from Cork and land in Boston, with several news reports pegging the price at $150 one-way. Additional service from Shannon Airport could also eventually be added.
The delay in the approval process was caused, mainly, by protests from various airlines and labor groups in the United States. U.S. carriers are understandably worried about the growing number of low cost airlines competing on transatlantic routes, but their opposition to Norwegian's Ireland plans were particularly strong.
Having lower operating costs is important for Norwegian's long term strategy. In the short term, competitors, including U.S. legacy carriers and major European airlines, could be willing to match Norwegian's fares because fuel prices remain low. If this happens, Norwegian may be able to create the same kind of "JetBlue effect" that saw low cost carriers in the U.S. force full-service airlines to lower their prices in order to keep their share of the market.
Lower prices for the long term
Even more exciting from a flier's perspective is the potential upside for Norwegian's long-term transatlantic ambitions. Now that the DOT has sided with consumers, it opens the door for Norwegian (and perhaps other low cost long haul carriers) to expand further into the United States. The kind of $300-$500 round trip fares to Europe that you now see on Norwegian could become the norm for flights from major airports across the country.
This will not happen overnight, and it is dependent on Norwegian's ability to keep its operating costs low by expanding in Ireland and finding other similarly business-friendly hubs for itself and its subsidiaries.
That said, fliers should be on the lookout for new route announcements from Norwegian. Some analysts have been saying that by 2025 Norwegian could have 150 or more transatlantic city pairs. Even adding 10-15 new routes in the next year or two could have a profound impact on the transatlantic marketplace because it would force other airlines to lower costs in order to compete.
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