Norwegian Air’s plan to launch long-haul services from Europe to North America via Ireland will depress fares in what is the world’s most lucrative travel market, a leading rival has warned.
Virgin Atlantic's chief executive Craig Kreeger said the airline was expecting to see a fall in pricing on services it operates as Norwegian Air extends its reach.
“They’re someone we compete with aggressively,” Mr Kreeger said, describing the Scandinavian carrier as “relatively small” right now but with “gigantic” growth plans.
“We need to - and we do - take them very seriously,” he added.
The European Commission's transport chief, Henrik Hololei, this week criticised US authorities for its delay in granting Norwegian Air a licence that would allow it to fly to Boston from Cork.
Norwegian is seeking a foreign airline permit from US authorities but claims by unions and rival airlines that it is using the Republic as a flag of convenience to skirt labour protections have stalled its application for two years.
The group plans to launch a low-cost long-haul airline connecting Europe with the Far East and US. As part of this, it had intended launching services from Cork and Shannon to Boston in April, but had to postpone this as it had yet to receive its foreign carrier’s permit.
Virgin is analysing Norwegian’s route choices as a carrier once limited to low-cost European flight, but which is now expanding its fleet of Boeing 787 wide-bodies from 10 now to 42 by 2020.
That growth will put the Nordic company on a par with its British rival, which operates 40 aircraft including 13 787-9s, with four more due
Virgin Atlantic returned to profit in 2014, aided by a trans-Atlantic venture with shareholder Delta Air Lines.
Mr Kreeger said Virgin has become more efficient in the three years since Delta took its 49 per cent stake and is better able to compete on price, though will continue trading on “a service advantage” conferred by the Richard Branson-controlled carrier’s reputation as an industry innovator.
Virgin is facing up to the challenge from Fornebu-based Norwegian after falling behind British Airways in the trans-Atlantic market following its local rival's purchase of BMI to add scarce operating slots at London Heathrow airport.
BA owner IAG has also bought Ireland's Aer Lingus, giving it the option of routing more US services via Dublin.
Mr Kreeger said Virgin is open to accords that would complement its North Atlantic venture with Delta, most likely focused on Asia and other eastbound markets where the carrier reduced its exposure after the US deal.
More immediately, it's in talks on adding to its seven code-share partnerships. A decision on a successor to Virgin's aging Boeing 747 jumbo-jet fleet is "imminent," Mr Kreeger said, with the 777-300ER and the 787-10 under consideration from the US manufacturer, alongside Airbus Group SE's A350.
The European model is most likely to be chosen, people with knowledge of the contest said in January, though Mr Keeger said that a proposed stretch version isn't an option since it wouldn't be available before 2021.
Additional reporting: Bloomberg