Norwegian Air takes on transatlantic market with budget flights

LONDON Thu Oct 17, 2013 12:16pm BST

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LONDON (Reuters) - Norwegian Air Shuttle (NWC.OL) will take on one of the most competitive markets in the world from next summer, launching low-cost flights between Britain and the United States.

Norwegian, which this year became the only European budget airline to fly transatlantic routes, will fly to New York, Los Angeles and Fort Lauderdale from London's Gatwick airport, using its new Boeing (BA.N) Dreamliners, it said on Thursday.

One-way tickets will start at 149 pounds ($240) to New York and 199 pounds ($320) to Los Angeles, offering an up to 50 percent discount compared to the best fares from London's rival Heathrow airport, Gatwick said in a statement.

"Gatwick is ideal because we have a lot of feeder flights in and out of there," Norwegian CEO Bjoern Kjos told a news conference. "Gatwick also has one of the biggest networks in Europe when you take all the EasyJet (EZJ.L) and Ryanair (RYA.I) traffic there. It will give us a lot of transfer traffic opportunities."

Norwegian started flying to New York and Bangkok from its Scandinavian bases this year, saying its new Boeing Dreamliners will save more than 20 percent on fuel, making budget long-haul flights viable.

Its long-haul efforts were hampered first by the late delivery of its Dreamliners, then by the repeated breakdown of the brand new jets, which forced the airline to ground one of the planes and ask Boeing for repairs just one month after its delivery.

Budget carriers have tried for decades to fly long-haul routes but with the exception of a few Asian carriers like Qantas (QAN.AX) unit Jetstar and AirAsia X (AIRX.KL), most have given up because the cost savings were not there.

On short-haul routes budget carriers can save as much as half the cost compared to a traditional airline but in long-haul routes, where fuel is disproportionately large expense, the savings could be cut in half.

Passengers also tend to fly with checked baggage on longer routes and demand greater inflight services, further diminishing the potential savings.

(Reporting by Rhys Jones, Writing by Balazs Koranyi, Editing by Angus MacSwan)

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