It may well be that Norwegian has already sold most of its capacity at a loss. Or they're simply not selling at the higher fares. We don't know for sure. But while BA powers along with nearly a £2bn operating profit and 14% margins Norwegian stilk can't turn a profit.
They're financing 787s at high costs, they have no utilisation advantage, only a tiny fuel saving (although BA has a good hedged position for the next 12 quarters) and very little in the way of cheaper crew costs. BA is turning the screw with its ability to match or better Norwegian's fares in its core markets from LGW.
I get people willing on the underdog and wanting Norwegian to succeed but it's a failing business model that hasn't delivered and in reality is unlikely to.
Forget the tiny unit cost details etc...
BA is a network carrier with one of the largest hubs at one of the most desirable airports in the world. They have a big nest at one of the most desirable spots and that alone is what is saving the day and bringing in the profits; nothing more.
DY is a carrier that flies point to point routes from everywhere to everywhere else and is getting no-where.
If BA is doing anything, they are trying very hard to become a DY.
Declining product, pay for everything, poor connecting timings and facilities, smaller aircraft to replace larger aircraft to improve unit margin rather than increase market share, meaninglessly opening routes from LGW.
DY doesn't need any help, they are destroying themselves,so rather than going after them, BA could better invest into growing their main markets such as MIA or MCO.
Wrong, wrong, wrong, that’s so 1990s.
BA worked hard to make LGW profitable not just once but consistently year in year out. LGW long haul does rather well, so your description of “Meaninglessly opening routes from LGW” is better described as part of the larger strategy to keep BA relevant in markets DY are getting into. But at the end of the day BA LGW makes money in it’s own right, BA is not all about hubbing LHR but also serves a large UK bases POS on p2p leisure out of Crawley Intl.
As for charging for everything, well that’s what makes money, sad but true. If you want more, pony up for cabins nearer the pointy end.
I think that you are wrong. There is no evidence to suggest that LGW is profitable or that it isn't.
Looking at their route network though, it's certain that they will be profitable in the summer but rather doubtful that they are profitable all-year round.
In the aftermath of Monarch's insolvency, obviously BA is going to see a spike, but it has nothing to do with what they're doing right.
Adding fees right and left works for a summer or two, but after that you enter a steady decline.
JAL is half the airline BA is in terms of fleet, has hubs divided over two airports, the highest maintenance cost base in the world, low aircraft utilisation, doesn't charge extra for anything, gives away great toothbrushes, has a generous loyalty program and a very good product throughout all classes, and yet their earnings are at the same level as BA.
BA is making good money, but perhaps they should be making double of what they are if they were properly managed?
I have made similar warnings about Ryanair.
Ryanair has built a new corporate office, started operating routes out of primary airports, started offering itself as a feeder for legacy airlines, charging even for the carry-on, and most importantly, increasing their fares very drastically. In the meanwhile, passengers are adapting and Ryanair is now having to actively compete against legacies that will sell better schedules and better access for just a fraction more.
Ryanair have been destroying the business model that made them so great, for short-term profits.
I have been answered with disbelief and disrespect on airliners.net when I said that they are at the top of their climb and about to start declining, but what do we see now? Ryanair is now issuing profit warning quarter after quarter, the first time in two decades, with a yield crisis brewing. I'm seeing them panic over the summer yields as I saw many high season fares being slashed by more than half in the past few weeks while they should be increasing.
The passengers aren't buying it anymore and MOL who is seeing the upcoming disaster, has promoted himself away while the stock price is melting down.https://www.ft.com/__origami/service/im ... &width=700