Transatlantic flight dates back to the invention of the hot air balloon when early innovators tried (and failed) to cross the Atlantic with nothing more than a massive balloon and a bucketload of hope. 

Today, more than a century after the first non-stop Atlantic flight in a plane, the transatlantic aviation market has reasons to be positive. And given the past two years, an optimistic outlook is something to be celebrated. But is it warranted?

As with every other aspect of aviation, North American routes were devastated during the pandemic. In 2020, international travel was brought to a halt for the foreseeable future. No one could have predicted how long this would continue and the subsequent worldwide effect on planes and global travel. 

Now, the aviation intelligence and advisory company IBA expects demand for transatlantic flight to recover to 2019 levels in 2022. It points to a particularly positive future for the likes of IAG, saying that the group’s transatlantic capacity will reach 100% of pre-COVID levels by this summer. 

But there’s something else going on here. In recent years, low-cost carriers have taken on their more-established competitors and entered the transatlantic market, with varying degrees of success. 

Traditionally dominated by airlines such as IAG Group, Lufthansa (LHAB) (LHA) and Air France-KLM, not to mention American, United and Delta, the transatlantic sector now has its fair share of disruptors including JetBlue (JBLU). In August 2021, the low-cost carrier, and the seventh largest airline in North America in terms of passengers, launched its first transatlantic route from New York’s JFK to London Heathrow. At the time, CEO Robin Hayes said that the US-UK sector had “suffered from outrageously high fares for too long”. He pledged to bring prices down and “shake up the transatlantic market”. Later in 2021, JetBlue (JBLU) added another route from JFK to London Gatwick in an effort to wrest share from the legacy carriers. 

Meanwhile, Norwegian’s attempts to disrupt the transatlantic market pre-dated the pandemic, although it withdrew in 2021 and shrunk down to focus on short-haul. In addition to JetBlue (JBLU) and Norse Atlantic, other airlines are hoping to exploit the gap left by Norwegian with new competition on the US-Europe link from Iceland’s PLAY plus the usual flag carriers. 

As AeroTime reported earlier this year, the new Norwegian carrier, Norse Atlantic Airways, is capitalizing on the transatlantic low-cost gap left by Norwegian Air Shuttle. It plans to start operations in spring 2022, connecting Oslo to US cities. The start-up intends to operate a fleet of 12 Boeing 787-9 Dreamliners and three Boeing 787-8 Dreamliners. It received its Air Operator’s Certificate (AOC) on December 29, 2021. 

Independent aviation consultant John Strickland from JLS Consulting says: "It could be a bumper summer for transatlantic, which could bring a boost for the newcomers as they are starting out. But the old issues of trying to make low-cost long-haul work remain - seasonality, whether and how to do feed, how do you survive if you rely on price-sensitive traffic at the low end of the market with few or no premium customers to push up average fares especially when fuel prices are going up.”

He continues: "I’m more optimistic about [Icelandic] PLAY. With the A321neo, they’ve got the right aircraft, which is more efficient on an operating cost basis than some larger and older aircraft. PLAY is also trying not to grow too much, too quickly. [Iceland’s] WOW grew too fast and diversified its fleet to include wide bodied A330s, which ended up being too high costs for too low yield and extremely challenging to fill in seasonally weaker periods. 
"I’m more cautious on Norse Atlantic. With the 787s, they’ve got the same aircraft as Norwegian Air was using, which are going to be hard to fill. They have been able to get very cheap leases, which is one advantage. However, I am concerned that the business model appears exposed to reliance on lower prices and apparently lacking feed to counter seasonality. The home Scandinavian market is also a small one.”

Not surprisingly, traditional airlines are doing all they can to hold on to their lucrative transatlantic market share. For example, in recent months the major carriers have begun to increase the number of their flights between the US and the UK. In February, British Airways announced a new daytime flight from Newark to London Heathrow, its third daily flight on this route, to support the return of business travel in 2022. This flight will launch in early June. The airline has also announced its intention to resume its ‘daylight’ service from JFK in March, and will add flights to Portland, Oregon. Following the latest announcements, British Airways and its business partner American Airlines (A1G) (AAL) say they offer the most extensive network from the New York area to London. 

Other airlines have also upped their number of transatlantic flights, including United and Iberia, while Delta Air Lines plans to offer a peak of more than 500 weekly departures from the UK bound for various destinations across the Atlantic.
Meanwhile, Virgin Atlantic is adding to its roster of destinations, including operating a Dreamliner to Austin, Texas, as is Lufthansa (LHAB) (LHA) with two new routes including Frankfurt to St. Louis in Missouri from June 2022. In addition, Aer Lingus has launched daily weekly flights between Manchester in the UK and JFK, Canada’s WestJet will add a second London airport to its network, and on March 27, 2022, Finnair will start flying from Helsinki to Dallas-Fort Worth.
With profit margins likely to return to pre-pandemic levels in the transatlantic market, Strickland is confident that some of the new entrants can take on their larger competitors.

"With JetBlue (JBLU), they’ve got a chance to do well. They’re an established carrier in their own right and they have a good foothold in the New York market with feed into JFK. The premium product has done very well for them on US trans-continental routes and they have a good economy product too. They have decided not to move beyond London this summer, so they are not moving too quickly. They do need to get themselves more known on this side of the Atlantic though. They also need to build up frequencies at London Gatwick and Heathrow to attract more premium business travelers, but that is tricky given the pandemic and given the challenge of slot availability. It will be challenging to mobilize enough capacity to force any of the traditional carriers in these markets to structurally lower their premium fares.