Walsh spoke a day after Norwegian Air presented details of flights from five locations in Britain and Ireland to three low- fee airfields in New York state, Rhode Island and Connecticut, to be served by Boeing Co.’s 737 Max 8 model from June with one- way fares starting at 69 pounds or 69 euros ($86/$73).
While the Boeing jets will be operating close to the limits of their range, Norwegian Air has also ordered 30 A321neoLRs with which it could connect dozens of smaller cities either side of the Atlantic in the medium term.
Aer Lingus already operates long-haul flights with a fleet of Boeing 757s, the only narrow-body model to see regular use on non-stop Europe-U.S. services, but which ceased production in 2004. The seven A321s on order will serve as replacements while also adding new routes. The Irish unit began serving Hartford from Dublin last year and IAG has said that several other smaller U.S. airports are keen to attract flights with competitive fees.
Walsh said on a conference call with analysts that the introductory fares offered this week by Norwegian Air aren’t sustainable. “Norwegian has a very small margin of profitability and the fares that they’ve launched are clearly just designed to get some headline media coverage,” he said.
Michael O’Leary at Ryanair has been talking about initiating Trans-Atlantic flights for years but to no avail so far. That is a testament to how difficult it is to achieve sustainable economics for what is a long flight for a narrow body aircraft. Nevertheless, technology has improved, aircraft are more fuel efficient and Europe has a much lower fares than the USA which raises the prospect of disruption when it could well cost less to fly to the UK than Florida over the summer.
Norwegian is testing its early 2016 lows and needs to sustain a move above the trend mean to signal a return to demand dominance beyond scope for short-term steadying…
IAG has held a progression of higher reaction lows since the post Brexit collapse and a sustained move below the trend mean would be required to question medium-term scope for additional upside.
Ryanair rallied from October to test its early 2016 peak and has pulled back to test the region of the trend mean. It will need to find support in this area if medium-term scope for additional upside is to be given the benefit of the doubt.
AirFrance rallied over the last couple of weeks to break a medium-term downtrend.
Looking at the global sector the majority of US airlines are still trending consistently higher and there has been little evidence of competitive pricing. Chinese airlines stand out for special mention. Cathay Pacific and China Airlines rallied this week to break medium-term downtrends.
China East Air is testing the upper side of an 18-month base.
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