Nordic low-cost carrier Norwegian this morning announced its intention to acquire the country’s regional giant, Widerøe. A bold move from an airline that was on the verge of collapse between 2019 and 2021. While consolidation in the airline market is usually a bad thing on its own, it may get even worse for customers of Scandinavian Airlines (SAS), as Widerøe is a popular part of their frequent flyer program, Eurobonus.
Background
As the announcement mentions, Widerøe has a long (almost 90 years old) history. Early this century, SAS bought the airline but sold it to WF Group by 2016. The two airlines kept some of their partnership alive, with the regional carrier using Eurobonus as its frequent flyer programme.
Meanwhile, Norwegian in the last decade focused on low-cost Transatlantic flying which went well terribly. After Boeing 787 engine issues, MAX issues and a questionable business plan, the airline’s future was uncertain in late-2019. The events of 2020 didn’t help much and with little hope, Norwegian entered into bankruptcy protection.
Surprisingly, Norwegian emerged as a very strong Nordic carrier, dropping its hand-luggage allowance and long-haul flights. Thanks to SAS’s low-cost transformation and then own bankruptcy protection, the airline was able to keep its market position. Interestingly, a domestic airline was launched in 2020 counting on Norwegian’s collapse, called Flyr. However, their expectation didn’t come to fruition as they went bankrupt with Norwegian taking their MAXes.
While the Norwegian market is strong, thanks to the spread-out population centres, it has been a graveyard or at least a rocky garden. Even low-cost giant Wizz Air had to backtrack on its Norwegian domestic entry (due to union concerns). Meanwhile, Widerøe ran fairly smoothly, mostly due to its public service obligation (PSO) flights.
The Purchase (What it Means to Passengers?)
Today, the red-nose airline announced that it would pay NOK 1,125,000,000 (~€95,679,541) to purchase Widerøe. According to the announcement, the airline holds 20% of the Norwegian market share.
The announcement also mentions that Widerøe will remain an own entity with its own brand and headquarters. Apparently, the two airlines will complement each other and offer connections to the other one’s network.
While the announcement doesn’t mention it, Geir Karlsen’s (CEO of Norwegian) comments seem to indicate that Wideroe’s Eurobonus membership won’t be continued.
The agreement will secure an even better customer offering for passengers in Norway. It will facilitate more efficient operations that lay the foundation for a strong Norwegian aviation industry with local employment and sound working conditions. This will open new opportunities for collaboration with the travel industry in Norway to promote tourism across the country. We will make sure that all passengers benefit from our extensive offering, including our attractive Norwegian Reward loyalty programme.
Norwegian’s CEO, Gerl Karlsen’s remarks
It’s unsure, whether Norwegian will match SAS statuses by giving one or two reward tiers (explained below).
Norwegian’s “Loyalty Programme”
Norwegian recently relaunched its rewards programme. After every 8 flights, you can choose a new benefit that you can use for the next 12 months as much as you want. The first reward is a ridiculous +2% extra CashPoints reward, meaning you’ll earn very few extra points. However, things get interesting afterwards. After 16 and 24 flights (within 12 months), you can choose between benefits like a free checked bag, a free large cabin bag, free standard seat selection or even free fast track security.
Once you reach 32 flights, you get Norwegian’s “premium tier”, Norwegian Reward Priority, unlocking all benefits. Then, you can even choose emergency exit seats, free tea or coffee (included in SAS for free) and priority customer service.
Source: Norwegian
Cover Picture: © Widerøe