Norwegian to establish hub in Buenos Aires as $150 transatlantic tickets loom

Bloomberg

Norwegian Air Shuttle ASA plans to establish Buenos Aires as a hub in South America as expansion across the Americas may see round-trip ticket prices across the North Atlantic fall to $150.
The discount carrier may start connecting Buenos Aires with Oslo, London and Paris in as early as 12 months once government permissions have been granted, Chief Executive Officer Bjorn Kjos said in an interview in Cordoba, Argentina. Services to Madrid and Barcelona are also possible. He added that domestic flights from Cordoba are also possible and he was speaking with authorities in the Chilean capital of Santiago about possible routes.
Connecting cities on Europe’s Atlantic coast, including Edinburgh, with smaller U.S. airports on that country’s east coast, such as New York’s White Plains airfield or Stewart airport, will mean customers will be able to fly across the Atlantic paying less than $150 round trip starting next year, Kjos said. Prices for international service to and from Argentina may fall to one-quarter of what airlines now charge, he said. The Fornebu, Norway-based carrier plans to establish a base of American pilots in Fort Lauderdale, Florida, initially hiring as many as 100 if it can expand U.S. operations as planned.
Norwegian has some of the industry’s most ambitious growth plans for applying the low-cost business model to long-haul routes, including boosting its fleet of Boeing Co. 787 Dreamliners to 42 by 2020, and adding 30 Airbus Group SE A321neo aircraft in long-range versions to fly “shorter long-haul routes” by 2022. The airline has also said it will use smaller 737MAX aircraft to fly transatlantic routes, 100 of which it has on order.
U.S. Clearance
The carrier is still awaiting permission from the U.S. Department of Transportation for permission to use its Irish subsidiary, Norwegian Air International, for transatlantic flights and has also applied for such rights for its Norwegian U.K. unit. It does not depend on these permissions to begin serving South America, Kjos said.
South America operations may begin with two 787 aircraft and would create at least 200 jobs, Kjos said. That would be a welcome move in an economy that has seen little foreign direct investments in past years. Argentina’s badly battered and protectionist economy saw its recession deepening in the second quarter as President Mauricio Macri’s efforts to implement free-market reform exacerbated an already flagging economy.

Foreign Investments
Airlines across Latin American have recently attracted attention of foreign operators as the region’s economic downturn and weakening local currencies and increased dollar-linked costs put them in dire straights and made them attractive targets. In July, Qatar Airways announced it would pay $613 million for as much as 10 percent of Latam Airlines Group SA, South America’s biggest carrier.
Late last year, China’s HNA Group Co. acquired a 24 percent stake in Azul Linhas Aereas Brasileiras SA for $450 million. Colombia’s Avianca Holdings SA and Avianca Brasil, the two airlines controlled by the Efromovich bothers, are seeking separate international partners while maintaining a long-term goal of merging.
Argentina is “a hidden jewel” for international tourists, Kjos said, with “the largest potential I have ever seen” for increasing tourist visits. “But to attract tourists you need to have cheaper flights.”
Making long-haul low-cost flying work will require keeping jets in the air for as many as 18 to 19 hours a day, Kjos said, and the carrier earlier said it plans to operate routes connecting countries such as India and South Africa with the Americas via Europe.