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 — meaning that the ultra-low-cost carrier received tentative approval to add more flights to the United States.
This is also your opportunity for your voice to be heard and your opinions to be considered, as the announcement from the Department of Transportation on Friday April 15, 2016 is now open for public comment by interested parties through Friday, May 6, 2016. Submissions by you and other interested parties will be read and considered before a final order is issued in this matter.
Should Norwegian Air Be Approved to Add More Flights to the United States?
The application of Norwegian Air International “led to an extensive number of filings that were submitted throughout the course of the case, both in support of and opposition to the application. The substantive legal and regulatory points raised by the parties reflected the novel and complex nature of the case, which required careful and comprehensive DOT review.”
That is an understatement, as the possibility of Norwegian Air Shuttle operating flights to the United States has been fiercely opposed by airlines and their unions based in the United States for years, as it has been considered a threat to commercial aviation in the United States — and the Department of Transportation is “proceeding with caution and careful consideration” and “went to great lengths to give full consideration to such issues.”
After taking the unprecedented step of formally consulting with two agencies with special expertise on international law — specifically, the Office of Legal Counsel of the Department of Justice and the Department of State — Norwegian Air International appears to meet the normal standards for award of a permit by the Department of Transportation: “There appears to be no legal basis to deny NAI’s application” — meaning that the application cannot simply be rejected without merit. In fact, Norwegian Air International is fit to fly both operationally and financially; and that Irish safety oversight satisfies the requirements of the Federal Aviation Administration of the United States, according to the ruling from the Department of Transportation.
Opposition to Norwegian Air 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?” this article posted at the Pilot Partisan — an official weblog of the Air Lines Pilots Association, International — asked back on Thursday, October 17, 2013. “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.”
Taking into consideration two dates at random for comparison purposes and including all taxes and fees in airfare costs: a round-trip itinerary using Boeing 787 “Dreamliner” airplanes operated by Norwegian Air Shuttle departing New York on Thursday, November 10, 2016 and returning from Oslo on Sunday, November 20, 2016 costs a total of $323.00 — and the flights are non-stop each way. Compare that to a total airfare of $666.00 for an itinerary consisting of flights operated by both United Airlines and SAS on the same dates — with a stop on Dublin for two hours and 25 minutes on the outbound flights and an overnight stop in Amsterdam for 14 hours and 50 minutes on the return flights — and the opposition by airlines based in the United States and their unions becomes more obvious.
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 back in 2013 is what concerned — and still does concern — members of the Air Line Pilots Association, International. The union — which represents greater than 52,000 pilots — is calling on its members to take action now against Norwegian Air International.
“We are extremely disappointed by the DOT’s intention to permit Norwegian Air International to fly to and from the United States because it is an affront to fair competition,” Tim Canoll — who is the president of the Air Line Pilots Association, International and a captain himself — said in this official statement. “DOT is proposing to allow a foreign airline to compete directly with U.S. airlines on long-haul international routes with unfair economic advantages.
According to the aforementioned article from Pilot Partisan, 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.
“Norwegian Air International has picked its place of incorporation based on whether that nation’s tax and regulatory laws are favorable,” continued Canoll. “As a result, NAI gains an enormous competitive advantage over U.S. airlines, which are required to do business under one set of U.S. laws and regulations. This is not a fair market.”
The headquarters of Norwegian Air Shuttle — the third-largest low-cost carrier in Europe and the tenth largest airline in Europe in terms of total scheduled and chartered passengers — is based in Fornebu, Norway.
The article argued 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.”
In Support of Norwegian Air International
“NAI’s proposed service will improve competition along transatlantic routes and lead to lower airfares for American and international travelers, encourage greater travel to the U.S. from key European markets, help the U.S. achieve its goal of attracting 100 million international visitors by 2021 and create more American jobs”, according to Roger J. Dow, who is the president and chief executive officer of the U.S. Travel Association. “These factors are critical to expanding the economic development and job creation opportunities provided by inbound travel to the U.S.”
Charlie Leocha — who is the chairman and founder of Travelers United, which is an advocacy membership organization that represents all travelers — chastised the Department of Transportation in its delay of its formal approval. “Already, the delay of this permit for Norwegian Air International (NAI) by the DOT is nothing short of shameful. The arguments presented by airlines and their unions seeking protectionism are without merit. Since when has the DOT determined what labor laws should control which airlines.”
Pertaining to flags and incorporations of convenience, Leocha counters the charge of the Air Line Pilots Association, International that “In 2012, United and American Airlines were caught ‘…operating a ‘sham’ office in the DeKalb County community of Sycamore since 2001 after reaching an agreement to pay the town more than $300,000 a year a fraction of what it would have owed in sales taxes in Chicago and Cook County.’ And, this was after the City of Chicago provided United Airlines millions in tax breaks to keep their headquarters in their city.”
Leocha is correct; and a lawsuit was initiated by the Regional Transportation Authority in Illinois against American Airlines Group Incorporated as a result of that “sham” office.
The lawsuit still has not apparently been resolved, as evidenced by this article written for the Daily Chronicle — which served DeKalb County in Illinois — from March 10, 2016 pertaining to deciding on a tax referendum without United Airlines and American Airlines dictating policy planning and a potential loss in tax revenue: “Those companies’ interest in our area appears to extend no further than the tens of millions dollars in tax rebates they receive from their agreements with the city of Sycamore.”
Leocha is also correct about the state in which Delta Air Lines and other airlines are incorporated: “Major carriers are headquartered and formed in Delaware because they find that state to offer more favorable corporate governance rules. No major airline flies in or out of Delaware, of which I am aware.”
In fact, Delaware ironically is currently the only state without passenger service provided to its airports from any major airline.
Speaking of airports, those individuals and groups who support airports in the United States — such as those which serve the greater metropolitan areas of Fort Lauderdale, Oakland and the District of Columbia and could potentially gain flights — support Norwegian Air International and urged approval of the proposal.
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 seems to be nothing to stop 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. It is certainly not unprecedented in the domestic market in the United States, with examples too numerous to mention here.
However, that seems to no longer be the practice of airlines since the consolidation of the commercial aviation industry in the United States as the result of the mergers and acquisitions which occurred over the past ten years. The legacy airlines seem to co-exist with the low-cost carriers and ultra-low-cost carriers on competing routes, confident that the differentiation of services and amenities justifies the higher airfares — and that seems to be working for all airlines, as they are experiencing quarter after financial quarter of record profits or revenues which were reported to be better than expected. Can a similar situation exist for international and transoceanic flights?
Given the reductions in services and benefits — as well as the perceived collusion in the commercial aviation industry in the United States — frequent fliers are more likely to be significantly less sympathetic with those domestic airlines today than they would have been ten years ago.
In the meantime, please take a few moments to not only post your thoughts in the Comments section below; but also submit them to the Department of Transportation of the United States by Friday, May 16, 2016.
Source: Norwegian Air Shuttle.