Ambitious trans-Atlantic expansion plans by upstart budget carrier Norwegian Air Shuttle are unlikely to have a significant impact on British Airways and Iberia, according to the chief executive at the International Airlines Group (IAG).
"For us, Norwegian doesn't really change the dial at all," said Willie Walsh, CEO of IAG, whose holdings include both British Airways, Iberia and Spanish low-cost unitVueling.
"We don't see any impact from Norwegian," Walsh added in a wide-ranging interview with Today in the Sky on Friday (March 3).
Norwegian has grown rapidly in Europe in recent years, and now has its sights set on long-haul routes to the United States and Asia. The carrier has ordered 14 Boeing 787 Dreamliners to further those plans.
Already, Norwegian -- Europe's third-biggest budget carrier -- is flying to from its main bases in Scandinavia as well as from London to overseas routes that include Bangkok, New York and Fort Lauderdale. Going forward, the carrier has said that as much of a third of its upcoming capacity growth would come on new trans-Atlantic routes to the United States, according to The New York Times. Oakland, Los Angeles and Orlando are among Noregian's new U.S. destinations set to come online in the coming months.
Norwegian's ambitious plans come even as Ryanair – Europe's largest discount carrier – has long talked about adding budget-oriented flights across the Atlantic, but has yet to actually do so.
"I think the fact that Ryanair hasn't done it tells you a lot about the challenges that Norwegian will face," Walsh said when asked about Norwegian's boldness to go where Ryanair has not.
"Because without question, (Ryanair CEO) Michael O'Leary is the most formidable character in the industry … and probably one of the smartest. And he recognizes that to make money operating on the trans-Atlantic, it's going to be incredibly difficult," Walsh said.
Norwegian also has drawn attention for its creative attempts to exploit European laws to its advantage.
The New York Times notes "Norwegian Air's European fleet of single-aisle jets is registered in Norway, but the Dreamliners that ply its intercontinental routes are registered in Ireland."
That would permit Norwegian's Irish "Norwegian Air International" subsidiary to fly under the rules of the European Union, which has an Open Skies agreement with the United States. That means Norwegian would be able to fly to the U.S. from any EU city. Norway, the home country of the Norwegian Air Shuttle parent company, is not an EU member.
Norwegian also is under fire from some for basing some pilots in Thailand and hiring American flight attendants. All that has drawn criticism from a number of corners – including the in the U.S. from the Air Lines Pilots Association and major carriers American, Delta and United – who say Norwegian is attempting to skirt EU and Norwegian regulations to grow its footprint and outsource labor to cheaper locales.
U.S. regulators have not yet issued Norwegian's Irish subsidiary a U.S. foreign-carrier permit. Norwegian CEO Bjorn Kos told The Wall Street Journal on Tuesday that "we'll buy an airline with a permit" if efforts to secure one from the U.S. Transportation Department fall through.
When asked what he thought of Norwegian's tactics, IAG's Walsh said it was not for him to decide.
"Some people are arguing that they're in breach of the (U.S.-EU Open Skies) agreement. I think if they are, the regulators on both sides of the Atlantic will decide that," Walsh said. "I've read the agreement carefully time and time again. I don't see that they have breached it. You could argue they might not be in line with the spirit of some of the things in that agreement, but I don't think they've breached any of the rules."
"They've certainly taken a different approach to seeing what's possible," Walsh continued. "But we take the view that regulators decide whether you comply or not. We don't lose any sleep over those issues because it's not a decision that we can take. We just assess them as a competitor and we look at what we need to do, if anything. We've concluded that we don't need to do anything at this stage."
When asked if he thought Norwegian would be successful in with trans-Atlantic plans, Walsh gave a measured answer.
"I always show respect to competitors, but I think he's got a real challenge to make it work," Walsh said of Norwegian CEO Kjos. "A real challenge. It will be interesting to watch."
As for British Airways, Walsh said: "We'll wait and see. We're not doing anything different to respond to what Norwegian have announced."
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