A little over year after commencing domestic operations in Argentina, the low-cost airline Norwegian has announced it is abandoning the market with immediate effect. The carrier today announced it had sold 100 per cent of its Argentinian operation to rival discounter JetSmart, who’s parent company also owns US-based Frontier and Eastern Europe’s Wizz Air.
“We’re taking necessary steps to return to profitability,” said acting CEO Geir Karlsen as the news broke on Wednesday afternoon.
The embattled discounter has been taking the axe to unprofitable routes and markets over the last few months as it strives to stem huge losses and get the Oslo-based airline back into the black. Only last week, Norwegian said it would be closing two long-haul bases in Copenhagen and Stockholm, citing a lack of demand for such services in the region.
JetSMART will take over Norwegian’s operations immediately, with cabin crew and pilots transferring over to the Chilean airline. Over the coming months, Norwegian’s branding will be replaced but JetSMART will continue to operate the same schedule as Norwegian and passengers shouldn’t expect any disruption.
Norwegian currently has three Boeing 737’s stationed in Argentina but as JetSMART is an all-Airbus operator, these won’t form part of the deal and will be transferred back to Europe. JetSMART will continue to operate A320neo aircraft on its domestic Argentinian services.
The Argentinian aviation market has only recently opened up to foreign players and discounters following reforms made by the now ex-President Mauricio Macri. It’s first home-grown LCC flybondi has helped open up domestic travel to a whole new audience.
However, some analysts fear Macri’s reforms might be in jeopardy already after populist leader Alberto Fernandez signalled the need to boost state-backed Aerolineas Argentinas.
“Attaining satisfactory profitability for a relatively small domestic operation has proved difficult to achieve, given the overall situation in the country,” explained Karlsen.
“…revenue is obtained in pesos only, and the sharp depreciation of the peso against the dollar has created a significant gap between costs and revenue,” he continued.
Estuardo Ortiz, chief executive of JetSMART said today his airline had a long term commitment to Argentina.
With its Argentinian subsidiary, Norwegian once boasted that passengers could fly from the Artic to Antártica on the same airline… that vision is now a mere memory.
Long-haul flights between Buenos Aires and London will not be affected by today’s announcement. Norwegian has suggested it has any plans to discontinue this route at this time.