Recent weeks have finally brought confirmation of what has been on the horizon for some time: Low-cost transatlantic services are going to be introduced with narrowbody aircraft. Norwegian announced flights from five European destinations to three airports on the U.S. East Coast to start in May with a fleet of Boeing 737-8s.
Yes, Icelandair has flown Boeing 757s across the Atlantic for many years, and WOW Air also is offering connecting services in Keflavik, Iceland. Westjet flies Boeing 737s across the Atlantic, Aer Lingus has wet-leased 757s in service to some U.S. destinations, and of course, there are the dozens of Delta Air Lines and United Airlines 757s that fly to Europe.
What makes the Norwegian plan  different is its combination of a low-cost model and a really efficient next-generation aircraft, in this case a version of the 737 MAX family, whose improved range capabilities  are enabling the carrier to launch the new routes. The Norwegian flights mark the beginning of major change for transatlantic air travel. Secondary destinations in the U.S. and Europe that have not been served by long-haul flights, or at least not so many connections, now will be linked.


Credit: Norwegian


The services will pull demand from the backyards of major hubs on both sides of the Atlantic as travelers—especially leisure fliers—discover that these flights are not only cheaper but also shave one or two connections from the journey. Granted, 189 seats in a 737-8 do not make for the greatest of all travel experiences, but ultimately price wins.
The Norwegian example shows that new business models open up markets traditional hub-and-spoke carriers have chosen to ignore. It also shows the potential presented by the Airbus A320neo and 737 MAX. There has been considerable debate in the industry about whether the aircraft are as essential as they looked when fuel costs were double the current price. They certainly appear less essential at the moment.
For instance, within weeks of each other, Qantas and Virgin Australia have decided to defer deliveries of the A320neo (Qantas) and 737-8 (Virgin Australia). Qantas says it has other investment priorities, such as new seats and inflight entertainment, and its current A320 fleet is not old enough to warrant replacement right now. Virgin Australia simply wants to cut back on investment spending as it sees its markets weaken.
Qantas’s argument for deferring deliveries until 2019 is interesting—it basically says it does not have much next-generation narrowbody competition in the markets that are affected by the decision. The group planned to allocate the aircraft to Jetstar-branded flying in Asia. If no one else has the unit-cost advantage the new aircraft offer, then there is more time to stretch out the investment.
Meanwhile, what about emissions and the environment?
Once fuel prices go up again, airlines will surely have different views about how urgently they need the MAX and the Neo, even if they are just replacing current-generation aircraft in their networks.
Nonetheless, some airlines see real value in taking delivery of the latest aircraft as soon as possible, despite low fuel costs. Like Norwegian, they prize the aircraft’s additional payload/range capabilities, which enable them to expand into markets they could not cover before.
International Airlines Group (IAG) has been considering Aer Lingus operations of the A321neo across the Atlantic. But Chief Executive Willie Walsh says other divisions also are likely to fly the type. For instance, the Neos could be flown from Spain to the U.S. or deep into Africa to destinations that require the range of a widebody but the capacity of a narrowbody.
JetBlue has talked about using the A321neo to introduce its first flights to Europe. But even if the New York-based airline does not take that big step, using the aircraft’s 4,000-nm-range would still allow the airline to fly much deeper into Latin America with a narrowbody aircraft.
Therefore, the unit-cost advantage of the MAX and the Neo does not really tell the whole story. Their true significance is much greater and will be witnessed as carriers begin to transform their networks. With only 70 A320neos delivered so far—mainly because of the Pratt & Whitney-engine-induced delays—and the first MAX to enter service in the coming months, what promises to be a fascinating process is just about to start. It will also be a process legacy carriers cannot afford to ignore, given its potential to undermine their hubs. To protect those hubs, the legacy airlines  need to get creative, too.