Market Wins: CEO Says Air Travel Prices Going Down

Air travel prices to Europe from the U.S. will soon be $69 according to Norwegian Air CEO.

It wasn’t too long ago that the media was warning us about how bad it is that cheap oil might cause airlines to start a price war with one another to win over customers.

But that’s how the market works. Providers compete with one another for customers and outbid one another by lower prices and increasing quality. Sometimes, an industry stagnates because not much can change in terms of price or quality, and then some other disruptive market innovation occurs and suddenly the bidding war is reignited. Suddenly consumers find that their income does more for them than it used to.

NBC reports, “Norwegian Air CEO Says $69 Flights From U.S. to Europe Coming Soon.”

Norwegian Air Shuttle ASA hopes to sell one-way tickets to Europe for $69 as early as 2017 by flying from U.S. airports that have low fees, Chief Executive Officer Bjørn Kjos said in an interview Tuesday.

Europe’s third-largest budget airline is considering flights to Edinburgh and Bergen, Norway from U.S. airports that have little to no international service today, such as New York’s Westchester County Airport and Connecticut’s Bradley International Airport, just north of Hartford, Kjos said.

Average prices on such routes are likely to be closer to $300 round trip, Kjos said, compared with many of Norwegian’s fares that run more than $500 today because of higher fees levied by busier airports.

The potential plans are part of Norwegian’s broader move to cut prices and take share from traditional flag carriers that dominate trans-Atlantic flying.

While airlines such as Deutsche Lufthansa AG offer travelers hundreds of destinations via connections in airport hubs, Norwegian is aiming to make nonstop service to small cities that straddle the Atlantic more common, which keeps costs low.

The story doesn’t say anything about jet fuel costs instigating this new strategy. Even if it is not a factor (which I doubt), contemplating cheap travel to Europe should demonstrate that we are better off with airlines that undercut one another and offer us reduced prices.

Why would anyone think otherwise?