Ulf Svane

There’s a battle afoot between low-cost and legacy carriers, and travelers are the winners.

Grant Martin
April 03, 2015

After years of putting up with fares to Europe upwards of $1,000, Americans are starting to get a break. Thanks to a pair of low-cost carriers with transatlantic ambitions, prices to cross the ocean are plunging—for some routes, at least. Right now, a select group of U.S. cities are benefiting. But if the low-cost trend catches on, it may spread across the country, dragging the major carriers along in its wake.

It started in 2013, when upstart Norwegian Air Shuttle launched service from New York City and Fort Lauderdale to Copenhagen, Oslo, and Stockholm with introductory tickets under $500, round-trip. Since then, the carrier has expanded its network to include flights from Orlando, Oakland, and Los Angeles, and into London. (It has also upped its prices, though they’re still well below competitors’ rates.) The Icelandic carrier Wow Air, meanwhile, recently swooped in with $99 introductory fares from Baltimore and Boston to Reykjavík. Both carriers have connecting flights throughout Europe, putting even more destinations within affordable reach for American travelers.

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Naturally, legacy carriers in the States are resisting any incursion into their territory and are pressuring the Department of Transportation to limit Norwegian’s access to some airports. Citing unfair competition, they contend that Norwegian has skirted labor regulations by using a head- quarters in Ireland (where laws are more relaxed) and lower- paid flight attendants contract- ed in Thailand.

Credit: McKibillo
 

But it’s not just labor costs that are keeping fares low. Both Wow and Norwegian fly newer, more fuel-efficient airplanes, like the Boeing 787 Dreamliner. And they use smaller airports with lower landing fees, favor- ing London Gatwick, say, over Heathrow. (Wow saves even more money by forgoing all in-flight entertainment; it’s a bring-your-own-iPad kind of airline.) They also charge pas- sengers extra for things that domestic carriers have typically bundled into their Europe- bound airfares: seat assign- ments, blankets, meals, and even water. The nickel-and- diming can sometimes bring a low-cost fare nearly up to the level of its higher-priced com- petition. But as Ryanair has demonstrated in Europe, it’s a strategy that works—and one that some legacy carriers are deciding to adopt rather than fight. Air France has been work- ing to expand its budget Transavia brand in Europe, while Lufthansa is fighting its union to let its low-cost Eurowings spin-off fly to the Caribbean, Thailand, and Dubai.

Whether the upstarts take off will depend not just on the DOT and labor unions, but on how well consumers stomach the concept of pay-as-you-go travel on long-haul flights. Ironically, even as U.S. carriers battle their new competitors, they are also paving the way for them. Americans have be- come inured to the ancillary fees and discomforts of flying economy at home, so the same inconveniences may no longer seem daunting when crossing the Atlantic.

Taking Care of Business

It’s not just low-cost carriers that are disrupting air travel. Last year, La Compagnie started all-business-class flights between Newark and Paris’s Charles de Gaulle airport with prices well below what others charge for a premium seat. (The trade- off: La Compagnie does not offer fully lie-flat business seats, while its competitors do.) At the end of April, the company is adding routes between Newark and London’s Luton airport. Below, how the business- class fares now stack up.

Tale of Two Carriers

The difference between Norwegian Air and its more-established competitors is more than just airfare. The low-cost carrier has some admirable modern amenities—as well as plenty of extra fees. Here’s a look at what you get on a Norwegian and a Delta flight from New York City to London.

Credit: McKibillo
 

The Takeaway

Delta: Removing the annoyance of extra fees—along with the ability to earn miles and loyalty status on your flight—may make the extra cost easier to swallow.

Norwegian:It’s a better back-of-the-plane experience than many airlines offer. But you’re not going to earn elite status, and then there are the fees, which can easily add an extra $100 to your fare.

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