Contestable Markets: Norwegian Airlines takes on the Transatlantic Carriers
This is a quite superb article for students wanting a great example of an increasingly contestable market - namely transatlantic travel. Can the fast-growing Norwegian Airlines achieve commercial sustainability in a battle against established rivals? They have just announced a hefty loss for 2017.
Having flown from Gatwick to Boston last year I can confirm that Norwegian's use of the Boeing 787 Dreamliner aircraft provides an economy experience that is a cut above what we have come to expect from flying EasyJet or RyanAir to the Med! Norwegian uses the standard tactics of flying into airports where landing and take-off slots are cheaper and obviously seeks to make as much ancillary revenue as they can from fees for checked-in baggage, seat reservations and on-board food and drink. Michael O'Leary, CEO of RyanAir has claimed that Norwegian will go bust - a case of hope over fear?
A new breed of low-cost carriers such as Norwegian, Wow, and Primera are taking on the old guard such as British Airways and Air France-KLM in the skies above the Atlantic https://t.co/BHH6b2Z2Rj
— BBC Business (@BBCBusiness) February 14, 2018
Norwegian Air's results
— Simon Calder (@SimonCalder) February 15, 2018
One analyst says: "A fast expansion costs money. This is fine if done by a company with a solid balance sheet and enough cash reserves. Norwegian has neither"https://t.co/CCcet1WQY0
Thanks to all 8.1 million passengers who travelled with us fourth quarter. We are truly grateful! Where will you travel next? #Flynorwegian pic.twitter.com/hQuZCp3bFG
— Norwegian (@Fly_Norwegian) February 15, 2018
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Student Revision Workshops Contributor
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Geoff Riley
Geoff Riley FRSA has been teaching Economics for thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.
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