AIRLINES Primera Air

DEALING WITH
CHANGING
TIMES

34 ISSUE 1 ROUTES NEWS 2018 routesonline.com

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Primera Air has caused a stir by adding transatlantic
routes to its previously mainly short-haul repertoire
WORDS: MARTIN RIVERS
mid a recent flurry of activity
A in the low-cost, long-haul
sector, one new operator stands
out as relatively unknown on both sides
of the Atlantic.
Primera Air stormed on to the scene
last year by announcing plans to fly from
London Stansted, Birmingham and Paris
Charles de Gaulle airports to New York,
Boston and Toronto – a radical departure
from its short-haul, charter specialism.
The company has an eclectic history
that defies easy classification.
Having started life as an
Icelandic airline, JetX,
it was acquired
by and renamed
after Primera
Travel Group, a
conglomerate
of Scandinavian
travel agencies
and tour operators.
Newly formed
Hrafn Primera Air then
Thorgeirsson ditched its Icelandic
identity, first by
acquiring a Danish operating licence
and then another in Latvia.
Having moved its headquarters from
Reykjavík to Riga in 2014, Primera Air
was best described as an Icelandic-owned
airline based in Latvia that specialises in
flights from Denmark and Sweden. Sun
destinations in the Mediterranean and the
Atlantic make up the bulk of its network
– a consequence of the group’s structure
and its historic reliance on leisure-focused
charter markets.
But even that description is now
incomplete, thanks to the addition
of British and French bases. With a
smattering of flights also operated from
other countries – and with markets in
the Middle East, Africa and Asia on the
horizon – Primera Air is nothing if not a
truly dynamic airline.
CEO Hrafn Thorgeirsson admits that
some people “might find it odd” that
the company has its fingers in so many
pies. When it comes to explaining the
structure, however, his answers are
surprisingly logical.
Riga may be separated from Primera
Air’s Scandinavian bases, but, he notes,
it “is still closer to Denmark and Sweden
than Iceland”. Having two Air Operator’s
Certificates (AOCs), meanwhile, may add
complexity, but it also adds flexibility.
The Latvian licence, registered under the
p34-36 AIRLINES Primera.indd 35
Primera Air AIRLINES
name Primera Air Nordic, benefits
from more favourable employment
laws, for example. And the Danish
licence, operated as Primera Air
Scandinavia, already had a permit to
serve the US, which has sped up the
transatlantic launch.
“We have the two AOCs for the same
reasons that SAS [Scandinavian Airlines]
now has two AOCs, and Norwegian has
multiple AOCs,” Thorgeirsson says. “It
does give us certain leverage… and
it’s not really a big deal economically,
because the back offices are the same for
both. Everything is basically run like one
airline in this building where I’m sitting.”
Of more significance is Primera Air’s
gradual diversification into scheduled
flying. At the turn of the decade, less
than 3% of its revenue came from direct
sales to passengers. That figure reached
“around 23-25%” last year, and by 2019
it should be an even 50/50 split with
charter revenues.
Thorgeirsson attributes this to an
industry-wide shift away from package
holidays. “We saw around 2012 that
the so-called charter markets, especially
in the Nordic area, seemed very
stagnant… whereas the rest of air travel
was growing 4-7% a year,” he recalls. “
It’s just like in the Bob Dylan song:
we felt the times they are a-changin’.
We could see that the other traditional
charter airlines in Europe had either
disappeared, or shrunk, or been
incorporated into larger airline alliances.”
Parent company Primera Travel
Group was particularly exposed to a
downturn, given that it runs a host of
travel agencies and tour companies across
Sweden, Denmark, Norway, Finland,
Iceland and Estonia.
Yet, with charter flights retaining their
popularity among certain demographics,
the group used its charter base as a
“foundation” on which to build an entirely
new scheduled empire. For flagship
routes such as Copenhagen to Malaga
or Majorca, about 70% of seats on its
Boeing 737-800s are still pre-filled with
charter customers. That leaves fewer than
60 tickets for Primera Air to sell direct,
meaning the company can “experiment a
little bit” with the new model.
“It has been a strength,” Thorgeirsson
emphasises. “We have been able to
use the charter business… and at the
same time we have been able to grow our
direct sales.” w
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 AIRLINES Primera Air

The strategy is being optimised for Boeing 757 ceased production

each market. In some of the “more exotic” in 2004. “We’ve done cost
destinations like Fuerteventura and analysis where we looked
Madeira for example, direct sales have at, for instance, the [next-
not proved popular. But the reverse is generation] A321LR versus
expected to hold true for the upcoming the 757,” he notes. “It’s
transatlantic routes. Only a “very small around 40-45% cheaper
percentage” of sales in these markets will to operate across the
come from tour operators, heralding a step Atlantic with the newer
into the unknown for the group. aircraft… There just
haven’t been aircraft like
Competitive headwinds this available until now.”
When its new transatlantic flights from Primera Air’s fleet plans
Birmingham begin this summer, Primera leave little doubt about
Air will not face direct competition on any the scale of its ambitions:
of the routes. But four other airlines will Primera Air has eight Airbus A321neos will
fly to Boston and Toronto from London, ambitious plans for arrive this year, followed by 10
expanding its fleet
while three will do so from Paris. The 737 MAX 9s in 2019, and then
competition is fiercer in New York: eight MAX 9s plus two A321LRs
seven rivals will serve the city from in 2020. The airline currently deploys
London, and eight from Paris. Low-cost, nine 737NGs and is due to induct a 10th
long-haul players such as Norwegian, unit imminently.
LEVEL and WestJet are among the airlines With one-way transatlantic fares
vying for market share. starting as low as $99, Thorgeirsson
Thorgeirsson is not overly concerned says sales have been “fantastic... way
about the competitive landscape, insisting beyond what we expected”. He hints
that Primera Air only wants to capture that Washington DC and Montreal could
0.1% of a “pretty big pie”. become the next additions.
The bigger issue for him is timing: Closer to home, intra-European route
“Looking at the market – seeing how development is also on the agenda.
much it’s changing and the new players The failure of Monarch Airlines last
coming in – if we didn’t get into the game year created an opening for Primera Air
now, in 2018, then we might miss the to launch Spanish holiday flights from
train. So we decided to take a chance.” its new UK bases. Daily services from
He describes the latest generation London Stansted Airport to Alicante
of long-range narrowbodies as “game- and Malaga – and from Birmingham to
changers” for the industry, filling a Malaga and Majorca – will begin this
middle-of-the-market gap left when the summer. A once-weekly flight from Riga
to Malaga will also be launched.
The rest of the summer network
remains focused on flights from
Scandinavia to the Mediterranean.
Scheduled services are operating from
three points in Denmark (Copenhagen,
Geopolitical Billund and Aalborg); three in Sweden
hurdles Like all European leisure carriers, Primera Air was hard hit by
(Stockholm, Gothenburg and Malmö);
and Oslo in Norway. Destinations as far
the destabilisation of the Middle East, North Africa and Turkey
west as the Azores and as far east as
following the 2011 Arab Spring.
the Black Sea are being served, taking
Having originally accounted for 50% of its flights, Egypt and
in Portuguese, Spanish, French, Italian,
Turkey both fell off the route map due to violence and upheaval.
Greek and even Bulgarian sunspots.
The Egyptian market was shaken by two political revolutions in Cairo and a
Although North American flights are
security crisis in the Sinai Peninsula, home to the country’s Red Sea resorts. In Turkey, it
the exception for now, Thorgeirsson fully
was a failed coup attempt and spill-over violence from Syria that scared off the tourists.
expects to add more long-haul routes in
“Right now the Nordic customers are very worried about any terrorism or any
the future.
conflict down south,” Thorgeirsson admits. “So now [the demand is] mainly down to
“The new Boeings and Airbuses [can
Spain and the Canary Islands and Greece.”
fly up to] 4,000 nautical miles, so we
Although Primera Air managed to shift capacity to perceived safe havens in Europe,
can reach a lot of places that were not
Egypt in particular is a difficult market to replace. “For the leisure market I don’t think
thinkable before,” he says, identifying
anything really comes in place of it,” he says. “Egypt is just a very economical place
Kenya, Gambia, Cape Verde and Goa as
for most airlines and for the customers to go in the winter.”
potential markets of interest.
Management is therefore keen to restore Hurghada and Sharm el Sheikh flights as
“These things might take one or two
soon as possible, as well as returning to Antalya and Bodrum in Turkey.
years of preparation and planning. We’re
The Persian Gulf is also back on their radar. Primera Air used to operate charter
going to start on the transatlantic – get
flights to Oman and Dubai, but technical stops made the routes logistically
ourselves some good experience on long-
challenging. That will be less of a concern once longer-range Airbus A321neos and
range flights – and then definitely, if the
Boeing 737 MAX 9s enter the fleet, Thorgeirsson says, adding: “With the new aircraft,
traffic rights are in our favour, we will be
the Near East is definitely something we will look at.”
moving east like we are moving west.” £
36 ISSUE 1 ROUTES NEWS 2018 routesonline.com

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