Norwegian start-up Feel Air plans to establish itself as a long-haul, low-cost operation between Scandinavia, the USA and Asia from March-April next year, offering fares up to 50% lower than the competition.

The new airline is arranging dry leases for two new Airbus A330-200s, with a two-class seating configuration: 264 economy seats with 34in pitch and 40 premium-economy seats with a 38in pitch. Service, however, will be uniform, with passengers required to pay extra for meals and entertainment.

Feel Air chief Kai Holmberg, formerly a senior vice-president at VIA Travel Group, says: "We're trying to effect a Ryanair-type cost religion, combined with an AirAsia X business model, wrapped up in Virgin-style branding."

One aircraft will be based at Stockholm Arlanda and one at Oslo, and both will connect to Bangkok and New York JFK. Frequencies will be weighted towards New York in the summer and Thailand in the winter.

To achieve lower costs, the start-up is aiming for heavy aircraft utilisation of 16.7 hours per day. This will mean floating, or inconsistent, scheduling.

Feel Air hopes to be cash-positive by mid-2011 and during its first nine months expects to raise load factors from 49% to 75%, and yield-per-seat to $0.05.

The airline has raised $37 million of starting capital from Norwegian sources, which include state equity investment vehicles. Although forward plans assume an oil price of $70 per barrel, Holmberg asserts that the start-up has raised enough capital to sustain it for 12 months at $110 per barrel.

"The challenge we're looking at is keeping our labour costs down and getting those fuel hedges in place," Holmberg adds.

The new company still awaits its Norwegian air operator's certificate.

Providing the airline nears its targets, it will feed capacity into its existing routes for a period before adding more destinations in the USA and southern Asia. Any new routes will be cherry-picked from thinner markets, says Holmberg.

Its present competitors on the New York and Bangkok routes include Continental Airlines and Thai Airways International.

"The most important reason why Feel Air is going to succeed is that Spain and Scandinavia are the most underserved and unexploited markets in Europe. A part of our expansion and penetration strategy is to not go into the lion's cage," Holmberg says.

For that reason, he adds, FeelAir chose not to launch from Copenhagen, but rather Oslo and Stockholm which offer healthy low-cost feeder traffic. The choice of JFK over cheaper Newark was dictated by better connectivity.

Holmberg remains optimistic despite the poor economic environment. "We have seen casualties," he says. "But looking forward to this year, when we see Jetstar, V Australia and AirAsiaX - this is beginning to show that it might be working if you get all the elements right."

Source: Air Transport Intelligence news