Norwegian Air Shuttle Announcement of New Flights: A Threat to Commercial Aviation in the United States?
An announcement from Norwegian Air Shuttle that the airline will launch service between Gatwick Airport south of London and three destinations located in the United States as of July of 2014 using Boeing 787 “Dreamliner” aircraft has members of the Air Line Pilots Association, International concerned that the flights present a threat to the aviation industry in the United States.
According to FlyerTalk member Swiss Tony, a seat in the economy class cabin on a round-trip flight to be operated by Norwegian Air Shuttle to New York will cost as little as £300.00 — equivalent to approximately $492.00 — including all taxes and fees; whereas a seat in the premium class cabin starts at £1,200.00 or approximately $1,966.00…
…and this alleged undercutting of carriers based in the United States by as much as 50 percent on comparable routes between London and New York, Los Angeles and Fort Lauderdale is what concerns the Air Line Pilots Association, International.
“What is it going to take to wake U.S. policymakers up to the fact that our nation’s aviation industry is competing on a very un-level playing field with state-owned and some other airlines?” an article posted at the Pilot Partisan weblog asks. “Today’s announcement by Norwegian Air Shuttle (NAS) underscores the need to recognize the unfair advantages used by some foreign airlines to take markets from U.S. airlines. It’s time for the U.S. government to step in and level the playing field.”
Could carriers based in the United Kingdom be similarly threatened — especially when FlyerTalk member Raffles claims that the taxes for a similar flight on British Airways to New York when redeeming Avios frequent flier loyalty program points is £360.00?
According to the aforementioned article, 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.
The headquarters of Norwegian Air Shuttle — the third-largest low-cost carrier in Europe — is based in Fornebu, Norway.
The article argues that “While passengers riding NAS might enjoy cheaper fares in the short-term, the unfair competition will drive down revenue at American carriers. This potential race to the bottom could ultimately harm our airline industry and put quality U.S. jobs at risk. U.S. airlines contribute more than $1 trillion to the U.S. economy and nearly 10 million jobs. Their health and success is a major driver for economic growth.”
Perhaps — but FlyerTalk member HIDDYcounters that “Ryanair would already be doing it if it was viable. It won’t last.” FlyerTalk member callum9999argues that the business models of Norwegian Air Shuttle and Ryanair may be similar but are not the same.
I believe that while the concern of a threat to the commercial aviation industry in the United States by the Air Line Pilots Association, International may be justified and credible, could this possibly be a comparison similar to the ones between apples and oranges? Other than cost, there are many other factors which can affect the preference of one flight over another by a customer: seats, amenities, schedules and service, to name a few…
…and there is nothing stopping a carrier based in the United States from launching a competing flight which may lose money temporarily in an attempt to “kill” off the threat — at least as far as I can tell. It is certainly not unprecedented in the domestic market in the United States, with examples too numerous to mention here.
Is there room for transatlantic service operated by low-cost carriers without posing a significant threat to the established legacy carriers currently operating transatlantic routes — or do the legacy airlines have a legitimate concern? Is it possible that there is a market of passengers who currently do not patronize the airlines currently operating transatlantic flights but would take advantage of the service to be offered by Norwegian Air Shuttle? Should there be a policy by the government of the United States to prevent “a race to the bottom in the international air travel market” and create a level playing field for commercial airlines based in the United States, as called upon by the Air Line Pilots Association, International?
What are your thoughts?