The Scandinavian Airlines executive who oversees its business in the US explains how it attracts high-yield customers to stave off budget airline competition

• Many of the low-cost airlines that flew between the US and Europe have collapsed, but Norwegian Air remains in service, despite some financial headwinds.
• The Norway-based airline flies on a number of short-haul and long-haul routes that are also flown by Scandinavian Airlines, or SAS, the 73-year-old flag carrier for Denmark, Norway, and Sweden.
• Despite Norwegian often undercutting SAS prices on trans-Atlantic flights, the SAS executives overseeing the airline's business in the Americas told Business Insider that there are a few reasons he doesn't see Norwegian as a threat.
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Over the past few years, a number of startup and low-cost trans-Atlantic airlines have come and gone.

Primera Air collapsed after offering fares as low as $99 between the US and Europe, Wow Airlines fell despite offering a compelling product between the US and Europe using Iceland to power a hub-and-spoke model, and even the storied travel company Thomas Cook disintegrated, failing to find a sustainable airline-and-holiday-package approach while primarily targeting leisure travelers.

The airlines gambled and lost on the premise that ultra-low, "unbundled" fares would attract customers who would then pay more for things like seat assignments, drinks, checked bags, and food - things that are typically included on traditional carriers.

Among the discarded remains, reclaimed leased planes, and intellectual properties of those shuttered carriers, however, one survivor stands out.

Norwegian Air Shuttle shares a geographic market with Scandinavian Airlines

Norwegian Air Shuttle has taken a few different forms since it was founded in 1993, but started long-haul flights in 2013 (the long-haul flights are technically operated by two wholly-owned subsidiaries based in Norway and the UK).

It's by all definitions a low-cost carrier, based in Norway, and flies short-haul throughout Europe, and long-haul between Europe and cities in the Americas.

That puts it as a direct competitor to Scandinavian Airlines, or SAS, the flag carrier for Denmark, Norway, and Sweden. The 73-year-old airline is a more traditional legacy carrier, operating full-service flights with a diverse fleet, flying both domestic, short-haul European, and longer intercontinental flights.

Despite plenty of economy-cabin fare sales on SAS, Norwegian usually undercuts the airline on price when they both fly from the same regions. For the price-conscious passenger, that makes Norwegian the default choice.

There have been questions about Norwegian's economic sustainability since it began flying long-haul, and continuing through today, the airline has so far managed to stay afloat. The airline has reported record profits this year, a repayment deferral agreement with bondholders, and only just this November announced a fresh capital infusion.

But a Scandinavian Airlines' executive says his airline has little to worry about - even if Norwegian thrives

That should make the airline a continued threat to SAS, especially for long-haul operations, but according to Max Knagge, SAS' general manager in the Americas, the airlines occupy such different markets with so little overlap, that even if Norwegian continued to expand, there's little for his carrier to worry about.

SAS operates like most mainline airlines, making a significant portion of its revenue from business travelers purchasing business-class and last-minute flights, opting for the most convenient flight and desirable product, with little consideration for price.

Customers in business class and premium economy, and those who book last minute, yield dramatically higher margins and contribute a significant portion of the airline's revenue. That includes wealthier leisure travelers who pay more for the comfortable seats up front.

Coach tickets also contribute profitable revenue, of course, but the margins are much tighter. Those seats are more appealing to most vacationers, and business travelers whose companies are more price-conscious.

Norwegian "attracted a somewhat different clientele, with very low prices, who maybe wouldn't fly at all otherwise, or would fly with another low cost carrier," Knagge told Business Insider.

While he described Norwegian as "the fiercest competitor we have" for short-haul flights between Scandinavian cities and other places in Europe, "long-haul is a bit of a different ballgame."

Why SAS doesn't worry about Norwegian

The importance of premium cabin revenue on trans-Atlantic profitability is stark.

On longer flights, fuel, equipment wear-and-tear, crew salaries all add up much faster than on shorter flights. That makes the low-cost business model - which can work well on short-haul flights - difficult to apply to the long-haul market.

"Just looking at ourselves, even, long-haul and short-haul are two different businesses, with a lot of different dependencies and factors playing in for how profitable you're able to be," Knagge said."

The low fares offered by Norwegian have exuded pressure on SAS and other legacy airlines flying trans-Atlantic, but not where it hurts them the most.

"Yes, we do compete with them on the lower fare passengers, because obviously we need to compete and fill planes," he said. "But I think on a bigger picture since also we have more high yield, like in premium economy and business class, Norwegian is not our main competitor."

While Norwegian offers a "premium" product that's similar to the premium economy offered on other airlines - both in terms of product and price - the fares are significantly less than airlines like SAS charge for business class.

In some ways, the low-cost carriers have actually helped other airlines fill planes by driving up awareness and demand for travel between the US and Europe.

"They also helped raise the awareness about accessibility and actually got eyes up for more travel than the traditional carriers perhaps attracted before," Knagge said. "It helps attract a larger customer base who says 'actually, it's not far to travel there, it doesn't need to be expensive."

"The fact that going from New York or Boston to Copenhagen is in the same ballpark as going to the West Coast" in terms of price and flight time, also helps, he added.