Daniel Skjeldam (Director Network and Revenue of Norwegian)

Could you please present Norwegian to our readers? What are your specificities compared to other European LCCs? What do you do better than your competitors?
Norwegian is Scandinavia’s largest LCC with 5,2 million customers in 2006 and 22 aircrafts. It is the largest carrier on international flights from Norway. We fly a many high frequency routes on the domestic network with up to 14 daily roundtrips. To achieve this, we have built a product with emphasis on an effective airport product. For instance, you can go directly to the gate with your creditcard or barcoded traveldocument on any domestic airport if you only have a hand-luggage. On the international network, we mainly focus on primary airports, but we fly to secondary airports where it’s suitable for our customers. We have a very effective flight-program, with 20 minutes turnaround and up to 12 daily sectors per aircraft.

You already cover many routes between Norway and European main cities. Do you plan to develop new routes within the Scandinavian market; are there sufficient population catchment areas to open new routes in Scandinavia? If not, towards which market do you tend to?
Most of our network originates out of Norway, but we’ve also built a base with two aircrafts in Warsaw, and we also fly 4 routes out of Stockholm. The catchment area in Scandinavia is smaller than in other European regions, but population flies more due to both topography of the area and distance from the rest of Europe. Though, by having a smaller catchment area you have to adapt the product to it. For instance, we codeshare with other Scandinavian LCC’s on the intra-Scandinavian routes.

Which are the low cost carriers serving the Scandinavian market? Who are your most dangerous competitors: local LCCs or “Islanders” (Ryanair and easyJet)?
The largest LCCs in Scandinavia apart from ourselves are Sterling and FlyNordic who are Scandinvian-based, and Ryanair with a base in Stockholm and a number of routes from Norway and Denmark. Air Berlin, easyJet, WizzAir, Sky Europe and Germanwings also operate to Scandinavia – but on a smaller scale. On the domestic and intra-scandinavian network, we compete a lot with the SAS, whereas on the leisure-routes we compete with a number of carriers. Though, having a very strong brand in Norway, and operating almost 90 routes from this market, puts us in a very comfortable position as opposed to airlines having a smaller position in the market.

The European Low cost carriers market has reached a certain maturity which leads to its consolidation. During this transition, what are, for you, the greatest threats to European Low cost carriers? Fuel rising? Overcapacity? Evolution of airports? Regulation?...
In my opinion the greatest threat towards LCCs in Europe are stupid ideas and regulations from EU that could limit further traffic growth. Of course the Environmental side is an issue we need to follow closely, but LCC’s in general should have a huge advantage over traditional airlines, with LCC’s having newer fleets, higher seating-density, avoiding traffic-jams at hubs like LHR and FRA and not the least flying with much higher load factors. Traditional airlines with business cabins and low density seating focus on business-yield Vs filling and standing in line at LHR for hours are the worst threat to the Environment.

Many LCCs look after extra-revenues to offset the low price of their tickets. What are the projects of Norwegian in terms of Extra-revenues?
As most LCC’s we sell hotels, rental cars, insurances and other things on our website. In addition we have implemented assigned seating for a fee of EUR 3,5 as well as a luggage fee. On domestic flights we also take cargo on the last flight of the day, where we have a little more generosity in the schedule.

Do you believe that consolidation of the market will lead to 2-3 main LCCs in Europe, or do you think there will always be many LCCs on niche markets?
I believe it’s quite difficult to achieve a low cost level with a small number of aircrafts. For ourselves, we didn’t make profits until we reached 15 aircraft. I believe there is room for more than 2-3 LCCs in Europe, but not for the around 50 LCCs flying in Europe today.

During last World Low Cost Airlines Congress, you expressed your worries about the shortage of pilots and crew hitting LCC market? Could you explain us your point of view on this situation and what Norwegian does to face such problem?
I believe the airline industry will face the challenge of very low rates of new pilots trained in the period after 2001, but that supply and demand will take care of this in the longer run. I don’t think the industry faces a problem regarding cabin crews. For ourselves, we have a lot ex-pat pilots wanting to return to the region, and we don’t face any significant challenges at the moment.

What are the options for Norwegian to transform its business model in order to make more costs savings?
We have a continuous focus on cost savings in all areas. Recently we have implemented a new reservation-system that gives us a very competitive distribution-cost. We have also just implemented a new DCS-system on our main-airports, with huge cost-savings over the old one we used. Operationally we have hedged part of the fuel-purchases for the upcoming period and are striving towards the 900 limit for our pilots and cabin-crews. Aircraft utilization is now 12 hours plus in the Summer Program by implementing more red-eye flights to offset the challenge that many short sectors flights poses to the utilization.