Wednesday, December 28, 2016

Low-cost foreign airlines expand in U.S., but DFW left out so far

For residents in Los Angeles, New York, South Florida and other major metropolitan areas, catching a flight to Europe has likely never been cheaper, thanks in part to the rise of a new breed of low-cost international airlines headlined by Norwegian Air Shuttle.

This group, which also includes Icelandair and WOW air, has brought the unbundled model used domestically by airlines like Spirit and Frontier to the trans-Atlantic market, offering one-way fares as low as $180 targeted toward leisure travelers.

The trio of airlines has grown rapidly over the last five years and now combine to connect more than a dozen U.S. cities to London, Scandinavia and beyond. Although they represent a sliver of the total trans-Atlantic traffic, they exert a disproportionate downward pull on fares and have eyes on continued expansion in the coming years.
But so far, North Texas travelers have been left out of the low-fare frenzy, due to a combination of geography, competition and market dynamics. And there’s no sign any of these airlines will be touching down at local airports any time soon.

“We won’t see the benefit of this as much because really Dallas is perfect for business long-haul travel but not great for leisure long-haul. The coasts are better for [that],” said Rick Seaney, CEO and co-founder of Dallas-based booking site FareCompare.

The idea of low-cost trans-Atlantic air service traces back decades to the likes of Laker Airways and People Express Airlines. But those carriers never amounted to more than a few planes serving limited routes before being driven out of the market in the 1980s by larger airlines, said aviation analyst Robert Mann.

There was also Icelandic Airlines, a precursor to today's Icelandair, which became known in the 1960s as the "Hippie Express" for shuttling American college students to Europe on the cheap.

Norwegian Air, which launched U.S. service in 2013, has made use of the new generation of highly-efficient planes and engines, like the Boeing 787, to make long-haul flights more economical.

Icelandair and WOW air, which is also based out of Iceland, have used geography to connect U.S. travelers to Europe with one-stop service through the island’s Keflavik International Airport. Like the rest of the airline industry, all three have benefited from low fuel prices over the last several years.

Initially, the airlines largely focused on coastal U.S. cities, including Los Angeles, San Francisco, Boston, New York, Washington, D.C., and Miami. But they’re slowly adding more inland destinations such as Minneapolis, Denver and Pittsburgh.

Their route maps tend to favor cities with large volumes of originating passengers, including leisure markets like Orlando and Las Vegas, as well as regions with secondary airports like Oakland, Calif., and Fort Lauderdale, Fla., that don’t have a dominant trans-Atlantic carrier.

Norwegian in particular is poised for even more growth after the Department of Transportation this month approved the company’s Irish subsidiary Norwegian Air International to begin operating flights to the U.S.

The decision, which took three years of deliberation, was fiercely contested by major U.S. airlines and their unions, who warned that the arrangement would undermine wages and safety standards -- claims Norwegian Air denied.

The approval opens the door for Norwegian to connect U.S. passengers to even more destinations in Europe. The carrier plans to add 20 more 787s to its long-haul fleet over the next two years and is establishing crew bases in Fort Lauderdale and New York.

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