Here comes the latest addition to the range of low-cost options of flying from the U.S. to Europe.
Enjoy the extra competition, because analysts say it may not last long.
The company that owns British Airways and Spanish-based Iberia and Vueling Friday launched LEVEL, a new airline that will ferry Californians from Los Angeles and Oakland to Barcelona in Spain from June this year.
Ticket prices will start at $149 or 99 euros one way (quite a difference, given that a euro only costs $1.07), although you can expect to pay for a whole load of extras, judging by the company’s press release (our emphasis):
“Checked luggage (in addition to a free cabin bag), meals, seat selection and the latest movie releases will be complimentary for customers flying in premium economy. Those travelling in economy can choose what they want to buy based on a menu of choices.”
IAG promised that “all customers will have access to next- generation inflight technology with a wide range of onboard entertainment options,” including high-speed internet connectivity “starting at €8.99,” it said.
Flights to and from Los Angeles and Oakland will start on June 1 and June 2, respectively. There’ll be two flights a week from LA and three a week from Oakland. They will feed into an already developed network of connections that Iberia and Vueling run within Europe.
It’s just the latest move by International Airlines Group to counter a growing threat from discounters like Norwegian Air Shuttle, which has made waves pioneering low-cost air travel across the Atlantic, but which is struggling to turn a profit.
According to Mark Simpson, an aviation analyst at Goodbody in Dublin, IAG is trying to put the squeeze on Norwegian, determined not to lose share in the long-haul market the way it did in short-haul to upstarts like Ryanair and Easyjet.
IAG has already moved some transatlantic traffic from London’s Heathrow to Gatwick airport to compete directly with Norwegian, and LEVEL’s new Oakland-Barcelona route will open five days before Norwegian plans to launch its own flights on the same route, which it pre-announced last September. Spain is Norwegian’s biggest market outside Scandinavia.
Norwegian’s cheap fares may have proved popular with passengers but its investors have become increasingly concerned about how much its debt has risen as it has expanded its network. Its shares have fallen nearly 30% in the last year.
Goodbody’s Simpson points out that Norwegian needs to start making more money or it could be forced into accepting a bid from a competitor like IAG.
“The banks and the leasing companies who are really in charge at Norwegian would really like a renegotiation with a financially stronger partner,” he says. IAG, he argues, is pursuing a strategy of “kill or capture” towards its smaller rival.