Flying Rights Granted to Subsidiary of Norwegian Air Shuttle — But What Exactly Does That Mean?

A n order was released from the Department of Transportation of the United States at the end of the day on Friday, December 2, 2016 in which the Irish subsidiary of Norwegian Air Shuttle was granted flying rights with a foreign air carrier permit — which further exacerbated the controversy between factions of an ongoing debate pertaining to the validity of permitting the airline to serve the United States with low airfares.

Flying Rights Granted to Subsidiary of Norwegian Air Shuttle

“Following Norwegian’s Irish subsidiary Norwegian Air International (NAI) finally awarded a foreign carrier permit by the US authorities last Friday, Norwegian plans to operate daily transatlantic flights between the Greater New York and Greater Boston areas to Ireland, as well other European destinations”, according to this press release which was posted at the official weblog of Norwegian Air. “The routes will be operated by crew from two new bases in the United States, as well as NAI’s European crew from European bases.”

Those daily transatlantic flights are expected to be launched sometime in the summer of 2017.

“In October this year, Norwegian announced it would open its first U.S. pilot base at Fort Lauderdale-Hollywood International Airport. Now that we finally have our DOT approval for Norwegian Air International, I’m pleased to announce that we will also be opening a second and third pilot base in the U.S., and Norwegian will create at least another 150 new American pilot and cabin crew jobs in 2017,” Bjørn Kjos — who is the chief executive office and founder of the Norwegian Group — was quoted as saying in this article. “Norwegian is fully committed to growing its presence in the U.S. market, and that includes creating more American jobs. Not only do we have more U.S.-based cabin crew than any other foreign airline, we will soon also have more U.S.-based pilots than any other foreign airline. Norwegian is simply creating more American jobs than any other non-American airline, and we will continue to do so, just as we promised we would.”

Long History Towards Approval

The road to having flying rights granted for Norwegian Air Shuttle was a long one, as expressed in this article which was also posted at the official weblog of Norwegian Air: “While the delays Norwegian have faced have been unfortunate and unnecessary, ultimately the decision now made by the US DOT finally paves the way for greater competition, more flights and more jobs on both sides of the Atlantic. Above all, it is a victory for millions of passengers who will benefit from more choice and lower fares. We now look forward to working on our plans for Norwegian’s continued expansion in the US, delivering the flights, jobs and economic boost we always promised we would.”

Back in October of 2013, an announcement from Norwegian Air Shuttle which declared that the airline would launch service between Gatwick Airport south of London and three destinations located in the United States — New York, Los Angeles and Fort Lauderdale — as of July of 2014 using Boeing 787 “Dreamliner” aircraft for as little as $150.00 each way had members of the Air Line Pilots Association, International concerned that the flights presented a threat to the aviation industry in the United States.

Anthony Foxx — who is the Secretary of Transportation of the United States — issued a temporary setback to Norwegian Air Shuttle in September of 2014 by rejecting the request for the carrier to immediately operate flights to the United States as Norwegian Air International while the airline awaited a permanent decision by the federal government on its application.

The Department of Transportation of the United States issued a show cause order concerning Norwegian Air International — which is the subsidiary of Norwegian Air Shuttle based in Ireland — in April of 2016, meaning that the ultra-low-cost carrier received tentative approval to add more flights to the United States; and the federal agency had asked for your input during a period of public comment which has since expired.

In response to the aforementioned show cause order, four members of the House of Representatives of the United States introduced a strongly-worded bipartisan bill to block that decision in May of 2016 known as H.R. 5090.

The application by Norwegian Air Shuttle for exemption authority to establish a new long-haul operation based in the United Kingdom was dismissed by the Department of Transportation in June of 2016 on procedural grounds, citing that the parties opposed to the application “have raised a number of significant issues, in many instances directly overlapping the types of issues before us in the still pending proceeding involving the permit application of Norwegian Air International Limited.”

Opposition to the Decision

Tim Canoll — who is the president of the Air Line Pilots Association, International and a captain himself — was quoted in an official statement in this article that “We are extremely disappointed by the Department of Transportation’s decision to run roughshod over the U.S. Open Skies agreement and allow Norwegian Air International to fly to and from the United States. This flawed action is a lasting legacy of the Obama administration and demonstrates an egregious lack of support for working men and women in this country. ALPA would never have supported this Air Transport Agreement if we had known how our government would apply it. Given this decision, why should anyone trust the U.S. government to enforce its own trade agreements? This decision is an affront to fair competition and will ultimately result in the loss of U.S. jobs and, potentially, significant losses for the U.S. international aviation industry. ALPA is considering all options to reverse this action.”

One of those options includes “appropriate action to overturn this decision and block the NAI business model from spreading” in the belief that Norwegian Air now has an “unfair competitive advantage.”

Sara Nelson — who is the president of the Association of Flight Attendants-CWA (AFA) — was quoted in this press release which also condemns the decision. “This decision must be reversed immediately by the Obama administration. It is a betrayal to hundreds of thousands of aviation workers. The DOT decision overrides carefully negotiated worker rights and designs a new playbook that rolls out the red carpet for foreign corporations by trampling workers’ rights. This decision puts a rubber stamp of approval on the ‘flag of convenience model’ that destroyed over a hundred thousand U.S. shipping jobs.”

What Nelson means by the ‘flag of convenience model’ is that Norwegian Air Shuttle is able to take advantage of loopholes which are currently unavailable to airlines based in the United States — including registering their fleet of long-haul aircraft in Ireland while hiring flight crew personnel based in Thailand who will reportedly work under Singaporean contracts — and Canoll alleges that one reason is to “avoid Norway’s employment laws” and “that it plans to use flight crews hired on Singapore and Thai employment contracts with compensation substantially below that of Norwegian’s Norway-based employees.”

Support of the Decision

“There is zero downside to allowing more low-cost carriers into U.S. airports: it’s a policy that’s good for consumers, stupendous for U.S. economic and job growth, and even good for U.S. airlines because it broadens the market for domestic connector flights”, Roger J. Dow — who is the president and chief executive officer of the U.S. Travel Association — was quoted as saying in this press release. “More choices for American travelers and more capacity to bring foreign visitors and their dollars to U.S. shores is the unimpeachably correct decision, period.”

Calling the granting of flying rights with a foreign air carrier permit as an “welcome repudiation of protectionist, anti-competitive policymaking”, Dow asserted that Norwegian Air International “will buy more America-made planes, their passengers will spend money in American businesses, and American travelers will have more and cheaper options when they fly.”

With regard to airplane orders, Dow may be correct: in terms of a total of 148 airplanes on back order prior to the announcement of the decision, Norwegian Air Shuttle is one of the top ten customers of The Boeing Corporation — including 108 Boeing 737 MAX airplanes on order for delivery beginning next year. This year alone, Norwegian Air Shuttle has already taken delivery of 16 Boeing 737-800s and four Boeing 787-9 airplanes — as well as one Boeing 737-800 aircraft last month. Additionally, Norwegian Air Shuttle will be the European launch customer for The Boeing Corporation with the new Boeing 737MAX aircraft, which is planned to be in service on the new route between New York and Cork in 2017…

…but Norwegian Air Shuttle is also expected to purchase airplanes from Airbus as well.

Travelers United — which is an advocacy membership organization that represents all travelers — also applauds the approval of the foreign carrier permit for Norwegian Air International.

“Finally, after more than two years, the Department of Transportation (DOT) has done what it should have done in the first place — allow Norwegian Air International (NAI) to freely operate transatlantic flights”, according to this article written by Charlie Leocha, who is the chairman and founder of Travelers United. “The holdup of this approval at DOT was been caused by questionable tactics employed by airline unions claiming that Norwegian is offering substandard working conditions and lower pay. Plus, airlines claim that NAI will be flying under a ‘flag of convenience,’ headquartering themselves where taxes and regulatory law are favorable.”

Leocha claims that the real reason for the long delay was avoidance of new transatlantic competition, as airlines based in the United States are “scrambling” to figure out a way to respond to the long haul, low cost model of Norwegian Air International. “Preventing this transatlantic competition has cost the American public millions of dollars every day that service was delayed.”

He also believes that approval of this application will not only increase aviation jobs in the United States, but it will also add dramatically to travel and tourism jobs in the United States as well. “Expanding international travel will provide thousands of jobs to airport workers, flight attendants (who will be hired and based here in the US), hotel and restaurant workers, Boeing, and many others associated with travel and tourism. Some of the pilots now flying at poverty wages for regional carriers” — an issue pertaining to pilots receiving a salary close to minimum wage, which Leocha alleges that the airline unions never decried — “may even have an opportunity to work for NAI.”

Another benefit to the United States in general, according to Leocha, is that the increase in economic activity will improve the balance of trade. “Basically, every sector of the travel stakeholder community that deals with travel and tourism supported the NAI application — local Chambers of Commerce, airports, travel agencies, tour operators, airport support workers, hotels, and rental car operators.”

About Norwegian Air Shuttle

Founded in 1993, Norwegian Air Shuttle is the sixth largest low-cost carrier in the world with approximately 6,000 employees. Nearly 450 routes to greater than 150 destinations in Europe, North Africa, the Middle East, Thailand, the Caribbean and the United States are operated with approximately 120 airplanes — with the fleet continuing to increase — every day from its hub in Oslo.

Summary

The following statement by Charlie Leocha might resonate strongly with some frequent fliers who have been worn down by higher airfares and the increases in restrictions in frequent flier loyalty programs: “Finally, the US network airlines can get a strong dose of what they claim makes the airline market work — competition.”

By the way, if you agree with the position of Travelers United and want your voice to be heard as well as learn how to travel smarter, you may want to consider becoming a member of the advocacy membership organization

…but regardless of whether or not you agree with that statement by Charlie Leocha, the commercial aviation industry in the United States has been fighting both Norwegian Air Shuttle and the three major carriers based in the Middle East: Emirates Airline, Etihad Airway and Qatar Airways — the former due chiefly to the ‘flag of convenience model’ and low airfares which they cannot seem to match at this time; and the latter due to artificial overcapacity as the result of billions of dollars in alleged government subsidies.

Does the ‘flag of convenience model’ and low prices by Norwegian Air Shuttle and its subsidiaries pose a legitimate threat to both the commercial aviation industry and the economy in general in the United States; or are the carriers based in the United States and unions simply attempting to implement unnecessary protectionism which is not driven by forces of the free market?

Source: Norwegian Air Shuttle.

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