Charles Duncan, President of Norse Atlantic Airways
On Monday, May 1st, I had the privilege to interview Charles Duncan, President of Norse Atlantic Airways. He has over 27 years of experience in the aviation industry working for Continental Airlines, United Airlines, Swoop, and WestJet. Previously, Mr. Duncan served as the EVP and Chief Strategy Officer at WestJet from 2018-2020, and President of Swoop from 2020-2022. This interview has been edited for length and clarity.
Joshua Kupietzky: What is your background in the aviation industry?
Charles Duncan: I started in 1996 with Continental Airlines, and my first job was as a revenue management analyst with them in Houston, Texas. I then spent 13 years in Asia, all with Continental where I helped to open up Continental's presence in Asia. We started flying to Tokyo-Narita, Hong Kong, Beijing, Shanghai, Mumbai, New Delhi, all from New York, and I was the person on the ground in Asia helping to establish those routes. I spent a great deal of time in Guam as well. I was in Guam twice with Continental-Micronesia, and when the merger between Continental and United happened, I was in Guam serving as President of Continental-Micronesia, and I was asked to move to Chicago, so I came to Chicago to work for United. My first job was in sales overseeing the Atlantic markets, which is very similar to my job at Norse right now. After about a year and a half of that, I was named the General Manager of O'Hare where I oversaw all of United's operations in Chicago, which was a very crazy job. I did that for about four years. I then spent a year and a half as Senior Vice President of Tech Ops [Technical Operations], where I oversaw all of the aircraft maintenance and related functions for United. I retired from United in 2017 and then spent just over five years with WestJet in Calgary, Alberta where I served in a number of roles. Finally, last summer I ended up moving back to the United States and began working for Norse Atlantic as President in January of 2023.
JK: You recently joined Norse after holding executive positions at United, Swoop, and WestJet. What attracted you to joining Norse and what has been the hardest part of making the transition from a legacy carrier such as United to a low cost carrier such as Norse?
CD: What attracted me to Norse was the chance to to build something. It is pretty rare to get the opportunity to work for a startup airline. They happen but they are not that common, and I like the challenge of building the first successful, low-cost, long-haul airline. It is a big challenge, but it's certainly exciting and has a lot of appeal. If you look at the breadth of my career, I've worked for big legacy network carriers; I've worked for regional airlines, and low cost airlines. I have worked for big airlines, small airlines, international airlines, and domestic airlines. In a lot of cases, the challenges are pretty similar across all of them. A Swoop traveler is pretty similar to a Norse traveler. Both airlines are going after leisure customers who are looking for good value and are not necessarily frequent travelers. We are there to provide clean, safe, reliable transit at a reasonable price.
JK: Norse’s business model replicates Norwegian's long-haul network. What lessons have you learned from Norwegian and how is Norse different from Norwegian? Why will Norse succeed where Norwegian failed?
CD: We are very different from Norwegian. Both companies are Norwegian, of course, but there are lots of differences and lots of lessons we have learned from Norwegian. We are also drawing on other successful examples such as Southwest Airlines and Ryanair.
The first fundamental difference between Norse and Norwegian is the single fleet type. Our fleet will consist only of 787s. Looking at Norwegian and others who had multiple fleet types, in their case short haul and long haul aircraft, we learned we need to keep a single fleet type . A second lesson for us is that we are going to focus on not growing too quickly.
This summer, we're going to have ten airplanes flying and, even with that, we're going to be flying only nine of them. We're holding one aircraft back as a spare to ensure operating reliability. In the summer of 2024, we'll have 15 aircraft, so it is very predictable growth. Another aspect we are addressing is to keep our costs as low as we can, so we're going to be focusing on high aircraft utilization and very efficient crew utilization. One interesting thing for us is that we own a flight school with two campuses in Europe - one in Sweden and one in Norway. What is really exciting for us is we are able to take graduates of that flight school, and before they graduate, they work in our operations center in Norway where they get to learn our business, participate in social media, and then become what we call “second officers”. This means on long haul flights they are the augmented crew. After that, they move into the right seat as first officers and then ultimately as captains. It is not as much about cost, but you hear so much about pilot shortages, especially in the United States, so by owning a flight school we get direct access to students. As they graduate, we give them entry into wide body aircraft, which is really cool and becomes an advantage for us.
There are many other lessons we take. A big one for us, and I honestly do not know so much about Norwegian and their strategy from the past, is that during the summer we are going to be putting much of our efforts into flying transatlantic flights such as London to New York or London to Los Angeles. However, in the winter months, we're gonna do a lot more flying from Europe to warm destinations. Therefore, there will be more flights to Florida and more Caribbean flights. We will start flying to the Caribbean this coming winter. So more from cold to warm because it has been very challenging for us, even this past winter, flying between Oslo and New York in the winter months because people do not want to travel to cold destinations for leisure. We are giving a lot of thought to all of these things, but the most important thing for us to be successful is to have the lowest costs. We do believe we will have the lowest costs of any airline flying across the Atlantic. If this occurs, we can be profitable at fares where others cannot, and that will help make us successful.
JK: While Norse’s fleet consists of Boeing 787 aircraft, would you look at adding narrowbody aircraft such as the Airbus A321LR or Boeing 737 MAX to serve thinner routes between the United States and Europe?
CD: Definitely not. For us it will be a single fleet type. When you look at the successful airlines globally, they stick to one aircraft type, and that is what we will be doing.
JK: Norse currently operates 14 routes between Europe and the United States. Do you plan on expanding your network to Asia, Canada, or the Caribbean? If so, what desations are you looking at serving in those markets?
CD: I would say all of the above are possible. We are going to have some news later this week leading us to announce some new destinations. I mean, along those lines for the coming winter schedule, one of the other things we're focusing on is trying to announce and plan our schedules further in advance. As a startup, everything has been very last minute, but for long haul flights, many people book their trips six or even nine months in advance. For this reason, we are working on getting our schedules announced earlier and earlier. And so we will have more news, not necessarily about Canada, but certainly a little bit for Asia and the Caribbean later this week, which will all line up for us to have a successful winter.
JK: What segment of passengers will you be targeting? Will you be targeting more point-to-point traffic or hub-to-spoke traffic?
CD: Our model is point-to-point to keep it simple. We do work with a software company called Dohop that is based in Iceland and works with Gatwick Airport and airlines, such as Easyjet and other other players, where the software can build connections into our point-to-point model, and it comes at no cost for us. We don't have to codeshare or connect the IT systems, nor do we have to worry about delaying flights or moving bags for late customers. For us it's very much point to point, but people can still make their own connections with tools like Dohop.
JK: Most European legacy carriers have U.S. partners. The partners help feed passengers, so flights between New York and Europe can have many travelers who start or end their journey in secondary markets such as Cleveland, Virginia Beach, and Nashville. But Norse does not have partners. The airline focuses only on the biggest U.S. cities. Does that work?
CD: For right now it is only the big city markets. One lesson I have learned is to “never say never” in this industry but, for us, we think the way to be successful is to fish where the fish are, so we stay in the biggest airports, the biggest markets point to point, and we avoid all of the costs and complexities that come with connections in serving smaller cities.
JK: After first adding flights to Oslo, Paris, and Berlin from the United States, you announced you’ll soon fly to London-Gatwick from Los Angeles, San Francisco, Boston, and Washington DC. Why London-Gatwick? And, do you expect to serve other destinations from Gatwick besides cities in the United States?
CD: Airport slots in a city like London or New York, and just getting access to the airport infrastructure, is really important for our success. We will have five daily flights this summer from Gatwick and, with that, we will be the biggest airline from Gatwick to the United States just in terms of frequencies and seats. Gatwick is slot controlled, so we have to go and apply to get the slots. We would love to grow and get more than those five daily flights in the years to come as we acquire more aircraft. Legally there is a whole traffic rights aspect that becomes a little bit complicated. We have an Air Operating Certificate [AOC] from the United Kingdom that deems us to be a British Airline in that sense. Because of this, there are many places we can fly from the United Kingdom with that certificate. At some point we will be able to fly to Asia, and we see a lot of opportunities. The biggest market in the world is the transatlantic market, particularly in the summer months. So, we're going to focus on that because we have lots of opportunities there. It is just nice to be as big as we are in our first full year of operation from an important airport like Gatwick, which has a lot of people living around it and it is just a great airport to use. We are excited about that.
JK: Europe’s strongest low cost carriers do not fly to the United States. Does it help Norse that Ryanair and Easyjet do not fly transatlantic flights, and would you look at partnering with these carriers in the future?
CD: There are no plans for codeshare agreements because they're expensive and it is what the legacy carriers do. But, if you go onto our website and plug in [New York] JFK to Nice, France or Athens, Greece for example, you will see that we sell connections with EasyJet, Norwegian or other airlines. We are partnering with those ULCC [ultra low-cost carriers], and it is facilitated by the software in which we are just selling the point-to-point ticket. The other airline is selling a point-to-point ticket and Dohop, the software provider, puts the two together. Then, if there's any sort of flight delay or cancellation problem, Dohop as the third party becomes the travel insurance, and they are responsible to get the customer to their end destination. So, we are doing that now, but we are doing it in a way that makes sense for a low cost carrier.
JK: Currently, the carrier’s fleet is made up of ten Boeing 787 aircraft and by next year that number will increase to fifteen 787 aircraft. What is the plan for the fleet after 2024?
CD: One of our important cost advantages is that we negotiated leases for fifteen 787s in 2021 during COVID and got really good rates, which were about half of what the rates were paid globally. These are twelve year leases and give us a strong advantage, relative to competitors, for a long time. We have fifteen 787s right now; however, five of them are on lease to another airline in Europe because we did not want to take all fifteen aircraft in one go. We just thought that would be too much to deploy quickly. We will get the other five back by next summer and we are excited about the fifteen. There are no plans to grow beyond fifteen aircraft, but we will be watching what is happening to global demand for aircraft. We will be opportunistic. Ryanair is really good at this. They only buy aircraft in a downturn when prices are very low, and we have done that too. You can expect us to continue that pattern in which when aircraft are cheap and available, we will be happy to come in and grab them, but we are not going to lease or buy aircraft when they are expensive and in high demand like they are right now.
JK: You have inflight entertainment seat screens in economy. That’s a costly investment, since the embedded systems weigh more, which means planes burn more fuel. Why do you have them?
CD: The aircraft are a couple of years old. Norse was not the delivery customer, so they already had the TV screens in them. In a funny way, it would have been more expensive for us to remove them and buy new seats. I would say, generally speaking, there is a consensus on long haul flights that are six hours or longer. There is an expectation from customers that they do want seatback entertainment, and we get good customer feedback for it. It does add some weight, and it increases fuel burn, but we do not have internet Wi-Fi, which is very expensive and people do not want to pay for it. So seatback entertainment is sort of a compromise offering if you will, that people use. Passengers are happy with it, and we would get a lot of complaints if we did not have some form of entertainment available for passengers. I am happy with what we are offering. We are never going to be market leading in a sense. Maybe if internet rates come way down in five to ten years, we might add it then, but we will be among the last airline to do it because I do not think people are willing to pay a higher ticket price for internet on the airplane.
JK: Norse does not have lie-flat seats in its premium cabin. Would you look for flat seats in your premium cabin to appeal to more business travelers?
CD: We are going to stick to what we have. An important part of strategy is to define what we are not, and we are not going to be successful going after investment bankers or people who are buying expensive flatbed seats. We serve people who aren't on expense accounts but use their own money to buy a ticket, and our product offering is great. Our seats have a really nice pitch of 43 inches and a nice recline. Although it is not flatbed, it is good value and it is comfortable. We are happy with that and we've been getting good results in our sales for that front cabin as well. We call it Norse Premium Class.
JK: Do you expect you’ll have more low cost competitors flying trans-Atlantic soon? And which global airline from a competitive standpoint has or still does concern you most?
CD: There are always carriers entering this market as it is the biggest international market in the world. There are a number of players starting up. The two upstarts we watch most closely are a little bit different from each other. One is French Bee that flies out of Paris. The other one is Play and it has an Icelandic hub. All of us are relatively new airlines that are flying transatlantic and have very different strategies and philosophies. We certainly watch those carriers and, of course, compete with the network airlines. I expect there will be more players coming. There are always players coming and going, and it's a very competitive marketplace.
JK: Do you expect legacy airlines will eventually implement strategies to try to compete with you and, if so, how will you respond?
CD: The biggest way they do compete is with a Basic Economy fare, which is where they unbundle and give travers a really cheap fare and then add charges for seat assignments, bags and so forth. They will also restrict, or even eliminate, the frequent flier points they award for travel, which can be expensive. It is a competitive market we're dealing with in those big legacy carriers today. The most important thing we can do to ensure our success is to keep our costs low because, if we can be profitable at a low fare where the other guys have higher costs and are not profitable, it will ultimately benefit us. The most important thing is just being focused on cost and being as efficient as we can be.
JK: What are your goals for Norse, short- and long-term?
CD: In the short term, our goal is to be profitable this year. Our goal, which we have shared with the whole Norse team is for the second half of the year, from July to December, to make one dollar, effectively, to break even. We will make money in the third quarter, which is from July until September. That's our peak for summer and that always does well. The winters are also a real challenge. All airlines lose money in the winter flying North Atlantic routes, so that's why we want to shift our strategy and fly to more warm weather destinations. We want to minimize our losses for the winter so that, in totality, the profits for summer outweigh the losses in winter. In the long term, the goal is to be the first successful low-cost, long-haul airline, which means financial success and consistent profitability. This will be a challenge because there have been many airlines that have tried before us, such as Sir Freddie Laker and Laker Airways in the 1970s. This has been tried many times, and no one has really been able to make it work. We kind of think we're just crazy enough to give it a shot ourselves.
JK: What do you anticipate happening to the airline industry in the next decade? What would you like to see happen?
CD: The industry is constantly evolving and ever changing. During my 27 years working in the industry, I have had many highs and lows. The one really great thing coming out of COVID is the reminder of how much people love to travel, how strong demand is, and the importance of connecting with families and exploring the world. That has been a real positive for me because we had some dark days during COVID during which planes were empty, and we were losing a lot of money. Today we are focused on environmental matters and issues as to how we reduce our carbon footprint. Sustainability is going to be a very big factor for Norse and the whole industry in the years ahead. Balancing growth, and doing it in a sustainable way, will be crucial.
JK: We started this interview talking about your background in the aviation industry. What advice do you have for young people trying to start a career in the aviation industry?
CD: I have no regrets. It has been a ton of fun. Every day I wake up, and I can't wait to get to work.I feel just lucky to be a part of the airline business. I have two teenagers, and they have traveled around the world with me, but if either one of them wanted to work in aviation, I would certainly encourage them to do so. The best advice I can give is that it is not for everyone. Not everyone likes airplanes; not everyone likes travel or international cultural issues, but if someone has an interest in airlines, networks, flying, and all the different things we do, it can be a really rewarding career. I would certainly encourage young people to pursue it, and whether it's line jobs like flying or being a flight attendant or an aircraft mechanic or a management job in a back office, there are many opportunities in an airline career. If I could go back in time, I would do it all over again.
