Norwegian annual report 2013

Operations and Market Development

In 2012 Norwegian expanded its network extensively with 81 new routes: 23 in Norway, 11 in Sweden, nine in Denmark, 11 in Finland, 15 in the UK and 12 in Spain. By year-end the Group operated 411 scheduled routes to 125 destinations. Norwegian took delivery of a total of 14 environmentally friendly Boeing 737-800 aircraft and three 787-8 during the year. Net fleet growth was 17 aircraft, with the year-end fleet comprising 85 aircraft.

Network

The Group’s route portfolio spans across Europe as well as into North Africa, the Middle East, North America and Southeast Asia, serving both business and leisure markets. The basic principles behind Norwegian’s network development are to grow major point-to-point markets that have been excessively priced or underserved, while simultaneously maximizing aircraft and crew utilization.

Norwegian opened three new European bases outside the Nordic region in 2013; London Gatwick, Alicante and Tenerife. The new Spanish bases enable Norwegian to serve provincial destinations non-stop from the Mediterranean to the Nordic region. The new bases with predominantly long flights will have a high average aircraft utilization at approximately 14 to 18 hours a day. The London Gatwick base serves a combination of Nordic destinations as well as popular Mediterranean destinations, thus reducing the risk of opening the new base 

Norwegian launched its long haul operations at the end of May 2013 with a new crew base in Bangkok, Thailand. In 2013 Norwegian started seven new long haul routes to three destinations (New York, Bangkok and Fort Lauderdale) from Scandinavia. During 2014 non-stop services to Los Angeles, San Francisco and Orlando will start operations. London will be added on the European side. New crew bases in Fort Lauderdale and New York were under establishment by year-end.

Optimization of ROI is to be achieved by:

  • Operating high-RASK business routes during peak hours, and focusing production on low-RASK leisure routes during midday off-peak hours.
  • Focusing on leisure destinations with year-round interest in the Nordic market. The Canary Islands is one example.
  • Replacing Mediterranean routes with routes to the Alps and the Middle East during the winter season.
  • Replacing business routes with leisure routes during the mid-summer period operating flights at nighttime during peak seasons.
    Domestic, intra-Scandinavian and typical European business destinations have the highest frequencies, which attracts business travelers. The Oslo-Bergen and Oslo-Trondheim routes have the highest frequencies with 13 daily rotations on weekdays. Typical leisure destinations in Southern Europe, Northern Africa and the Middle East are typically served once a day or less.

Traffic Development 

Approximately 20.7 million passengers travelled with the Group in 2013, an increase of 17 percent, reflecting the Group’s expansion strategy. Intra-year variations in passenger volumes are significant as a large share of the route portfolio is allocated to international destinations, increasing the Group’s exposure to seasonal fluctuations. Despite seasonality, quarterly year-on-year growth was considerable throughout the year.

In 2013 passenger traffic (RPK) increased by 32 percent, equivalent to the production increase (ASK) The load factor was 78.3 percent during 2013 which is 0.2 p.p. lower than in 2012 (78.5 percent). Norwegian operated 159 285 commercial flights in 2013 with an average flying distance of 1 168 kilometers, up 11 percent from 1048 kilometers last year.

The ticket revenue per available seat kilometer (RASK) decreased 10 percent in 2013. Both RASK and cost per available seat kilometer (CASK) correlate negatively with distance implying lower CASK with longer flight distance and vice versa. Intra-year variations in RASK are significant.

Market Shares

The Group’s position in all key markets improved in 2013. Growth was focused on long-haul to Asia and North America and operations to and from the UK, Spain, Sweden, Denmark and Finland.  

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Ground Operations and In-flight Services

The Group outsources all ground handling services at all destinations. Outsourcing and monitoring are performed by a small team of dedicated staff. The focus on cost effective self-service solutions remains and in 2013; more than 80 % of the baggage in the Nordic countries were handled automatically on self-service bag drops. Norwegian continues to focus on self-service solutions in the coming years to secure cost effective handling of passengers and flights all over Europe.

Gate Gourmet provides catering services to the Group. The airline and the caterer work closely together to provide an attractive “shop on board” experience tailored to Norwegian’s customers in the different markets.

By year-end in-flight Wi-Fi was available on 59 out of 72 Boeing 737-800 in the fleet. All 737-800 aircraft will be Wi-Fi enabled.

Punctuality and Regularity

Departure punctuality, measured as departures within 15 minutes of scheduled departure time, was 86 percent compared with 85 percent in 2012. The arrival punctuality was 85 percent compared with 82 percent in 2012. The Group, with the support of all its employees, aspires to achieve an average of 90 percent punctuality in the total network.

Norwegian reported a regularity of 99.61 percent in 2013 (99.55 percent).

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