Norwegian Gobbles up Flynordic - LCC vs HVC

For some this might seem to be a consolidation amongst LCCs. For others its a rationalization of the LCC model that shows its maturity.

Norwegian is not a traditional Low Fare LCC - rather it sits in a relatively protected market of Scandinavia where anything less than SAS's high prices is seen as a boon. Already it operates with a competitive schedule on some of the most highly profitable routes in the world which exist within Scandinavia. From its home base in Oslo it can charge relatively reasonable prices and make money. All the great attributes of a LCC.

Taking over FlyNordic is a win win for Finnair and for Norwegian. The former has stumbled a few times of late and who operate at the behest of SK. So this is good for them to go back to their core business. The latter confirms its move UP the airline food chain. Operating at a low end of the GDS chain you can book its products there but you have to pay a premium fee to the airline in the form of an additional fee (this was actually the prototype for the full service Amadeus fee that is now enacted for such airlines as BA).

Conclusion is that LCCs who see a future as a conventional carrier can do that if they operate in a high priced market such as Scandinavia. This version of the HVS - Hybrid Value Carrier - sees the likes of GOL, EasyJet joined now by Norwegian.

Note Norwegian now has Finnair as a part owner (5% with an option up to 10%). That's just enough to keep SK off kilter and give them access to great feed for Finnair's alternative route structure - particularly to Asia. However they need more feed to other places.

Are we seeing a new trend of Symbiotic LCCs combining with FNCs? GOL+Varig is another example

Time will tell