Trans-Atlantic for $75, does it work?

By Bjorn Fehrm Subscription Required
Introduction
February 9, 2017, © Leeham Co.: Norwegian will start trans-Atlantic flying between Edinburgh and New England for $75 one-way in late spring when it gets its Boeing 737 MAX 8. The introductory price will be $69. CEO Bjorn Kjos says the operating costs of the 737 MAX 8, “which is very low,” will make this level of ticket pricing possible. We were the first to point out (November 2014 in this article) the re-engined MAX 8 would be a trans-Atlantic enabler at a new cost level. We didn’t put the passenger ticket at $75 at the time. Time to check if it’s possible to make money with such fare prices.
Summary:
  • We use our aircraft performance model to generate the operating costs between Scotland and New England/upstate New York.
  • We then compare the total costs for the trip versus revenue. What is the average ticket price to break even?
  • We use an aggressive cabin, the same as for the European traffic.
  • Is it OK to travel at that comfort level for the seven hours over the Atlantic?
  • For $75, you bet it is.

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