Two of the world’s most successful low cost carriers could soon be joining forces.
Norwegian newspaper Dagens Naeringsliv has reported that AirAsia boss Tony Fernandes met with Norwegian Air CEO Bjorn Kjos at the Farnborough International Airshow. The two reportedly want to set up meetings to discuss the possibility of a joint venture.
Friendly competitors or allies?
Kjos praised AirAsia as he stood next to Fernandes at the World Airline Awards. Speaking of both airlines’ awards for best long haul low cost carrier and best low cost carrier, Kjos said, “These are the world’s two best airlines. [The awards] show that the customers like our product. They’re the ones who voted for us.”
Fernandes, for his part, donned a Norwegian Air pin and told Kjos “If I get the opportunity to come to Oslo, we should sit down and talk. Why not?”
A worldwide low cost carrier alliance
Should such a joint venture come to pass, the two airlines would be able to cover most of the world. AirAsia has more than 200 routes in Asia and the Pacific regions. Norwegian flies extensively in Europe and has been dramatically expanding its international route offerings. The US market has been a major target for Norwegian, though it has met with resistance from American labor unions and regulators.
AirAsia’s low cost long haul wing, AirAsia X, does fly to Europe, but most of its routes are in Asia and Oceania. Sharing passengers with Norwegian would allow it to reach further into Europe and even into North America. Norwegian, likewise, has a limited number of routes to Asia (to Thailand, Hong Kong and India). So, on paper at least, this seems like a perfect match.
Or could they become rivals
AirAsia is looking to expand its route options in Europe through AirAsia X. Fernandes has already teased more flights to the UK. Potentially, he could also opt to open routes into Scandinavia and use Norwegian’s European services as feeders. Norwegian could want to expand in the other direction, using AirAsia as a feeder airline. If the two carriers cannot come to an agreement about which airline flies which route, they could just as easily become competitors instead of partners.
Following the trend
Such joint venture partnerships have become more common as airlines look to minimize the risks and costs of expansion. United Airlines recently partnered with Air New Zealand, for example, and American Airlines has joined forces with South American super-carrier LATAM on intercontinental routes.
In the current climate, a joint venture between Norwegian and AirAsia does not seem at all far fetched.
Making low cost carriers global
An alliance between Norwegian and AirAsia could signal a new era in the evolution of the low cost carrier phenomenon, which is still mainly focused on regional flights. Carriers like Norwegian and WOW have brought the same low fare model to transcontinental flying, but the trend is still in the very early stages of development. It will be some time before travelers will be able fly anywhere overseas on low cost carriers like they now can on full service airlines.
It is an attractive idea, however. With worldwide networks, low cost carriers could make international travel possible for many people who could not previously afford it (the same way that they have made flying more affordable on the domestic level).
For American fliers, a joint venture between AirAsia and Norwegian could eventually mean low cost flights to both Asia and Europe. As fuel costs start to rise again and airlines start murmuring about raising fares, that would be a very welcome development.
The only reason this is a story is because of the people involved. Both Kjos and Fernandes are shrewd businessmen who have showed a knack for developing the next trend before everyone else. If a long haul low cost revolution is to take place, both their airlines will certainly be a part of it.
AIRASIA (5099) - AirAsia and Norwegian Air Could Create A Worldwide Low Cost Alliance
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