Airline reserves right to limit redemption
Norwegian Airlines, in bankruptcy protection after a last minute change of heart by the Norwegian government has “paused” its CashPoints loyalty programme and limited redemption in order to protect its cashflow.
Norwegian has been struggling for months as it fights for survival after the pandemic caused the removal of 90.4% of its passengers.
But a pause is better for passengers than a complete cancellation. A note on the airline’s website states that Norwegian Reward members can no longer earn or redeem CashPoints on “Norwegian’s products or services” like flights or baggage fees. Members can, however, earn CashPoints with the airline’s partners.
Norwegian claims that this pause is in effect while the airline restructures. Later in the statement, the airline also reserved the right to limit CashPoint redemption after restructuring until “the ongoing pandemic is under control and Norwegian’s commercial activities can return to a new normal.” Hopfully this is more than just wishful thinking.
The positive news is that Norwegian promised not to devalue the CashPoints program as a whole. One CashPoint will continue to equal 1 Norwegian Krone towards flights and other services once redemptions restart.
That said, one might say that suspending the Norwegian Reward program for the foreseeable future is a huge devaluation in its own right.
The airline also said it would give Norwegian Rewards members with expiring points the opportunity to extend them in the near future although for those customers with large points balances, there is little information as to what they have to do to keep them active. There has been little effort made so far to reassure passengers that choosing to travelling with Norwegian in future, and electing to save CashPoints, will be a sensible move.
The pausing of Norwegian’s CashPoints loyalty programme is in stark contrast to what US airlines have done with their loyalty programs during the pandemic. As well as selling inventory to credit card companies to produce much needed cash, they have also been offering more ways to earn miles both on and off the plane, with enhanced mileage-earning opportunities and better-than-ever cobrand credit card offers. US airlines have even used loyalty programs as collateral for federal loans.
UK administrators appointed
It’s sad to see the bad news surrounding Norwegian Airlines continue to roll in.
In the meantime, accountants KPMG has been appointed as administrators to deal with the closure of Norwegian’s UK business.
After it filed for bankruptcy last November. The airline then permanently cut all long-haul flights in mid-January.
This came after years of massive growth for the airline. Before the pandemic, the airline beefed up its US presence by offering low-cost transatlantic flights from major U.S. cities to its numerous European gateways. Its route network once included main routes like Los Angeles (LAX) and New York-JFK to London-Gatwick (LGW). The airline even launched a US cobranded credit card in early 2020.
There is other negative news circulating for the airline, that will do nothing for customer confidence.
Pilots have hit back at Norwegian Air after it emerged the airline will not pay outstanding salaries to laid-off staff following the collapse of its UK operations.
Norwegian Air last month announced it would shut down Norwegian Air Resources (NAR), its UK crewing business that employed 1,100 people at Gatwick Airport.
In November the Irish Court place the struggling carrier under bankruptcy protection and has now extended Norwegian Air’s creditor protection until 25 February.
The court granted the extension after the examiner said that the airline had a reasonable prospect of survival.
Norwegian is planning to cut its hefty debt pile to 20bn krone (£1.7bn), and raise 4-5bn krone in new cash.
Industry Minister Iselin Nyboe said that the government’s participation would hinge on whether private investors also put money in.
Under the new restructuring plan, it will cut its long-haul network altogether, and reduce its fleet to just 50 planes.
This will lead to 2,000 staff being laid off in total, including 1,100 in the UK.
Norwegian has been a trailblazer in creating low-cost routes over the Atlantic, and its rapid expansion left it with ballooning debt bills. By mid-2020 these totted up to close to $8bn.
The airline’s July passenger volume fell by 90.4% on the year, after the coronavirus crisis