When you hear an airline say it wants to be global, that generally means it wants to fly to places around the world. But when Norwegian says it, it means something different. And its competitors here in the US think that Norwegian’s efforts should be blocked.
I’ve written about Norwegian before. It’s based in an extremely high-cost country, Norway, and that’s not exactly the best foundation for a low-cost carrier. But Norwegian thrived early because it was lucky enough to compete with bloated, high-cost SAS. That’s not the hardest thing to do. Norwegian’s aspirations, however, went beyond intra-Scandinavia flying and even beyond Europe entirely. That changes the competitive set and makes the airline work harder to succeed.
Norwegian is now dipping its toes into the long haul, low-cost market. That’s a market that nobody has ever successfully conquered for any lengthy period of time, and you would think that an airline coming from a high-cost country wouldn’t be the most likely suspect to end up with a different result.
With that rather large problems staring Norwegian in the face, how would it actually be able to make a run at success here? Norwegian is registering aircraft in Ireland and using lower cost Asian cabin crews.
Norwegian applied for an air operator’s certificate (AOC) in Ireland. The plan is to run the long haul airline from there in an administrative sense. There aren’t any flights currently planned to touch Ireland, but that’s not the point. The point is that Ireland is a tax-friendly place and most importantly, it has much more liberal labor laws.
Norway, like all Scandinavian countries, has strict rules that tend to favor labor. That generally means high wages and taxes. It also means blocking workers from outside Europe from taking a job. And that’s precisely what Norwegian has decided to work around. It has turned its eyes toward Southeast Asia where it can recruit people for a much lower “living wage” than what it would take in Europe, especially in Norway itself.
Here’s how it works. Norwegian contracts with Rishworth Aviation to recruit pilots. It bases them in Bangkok and offers a 3 year contract that is renewable. While they don’t give pay rates in the job posting, there is an article that points to flight attendants making less than $500 a month in base pay. That kind of pay makes first year flight attendants at US carriers seem rich. But in Thailand, that isn’t a bad wage, or so they say.
That may be the recipe for success for Norwegian, but it has other airlines and labor groups fuming. The Air Line Pilots Association (ALPA) was quick to condemn Norwegian for tactics that would give the airline “a serious and unfair economic advantage over U.S. airlines in the competition for the business of international passengers flying to and from the United States.” ALPA is not alone. The legacy carriers in the US are also lobbying for the US to deny the airline access to the US. (Of course, they’re already here, but this would be for ongoing permanent access.)
For its part, Norwegian scoffs at these claims. It has ramped up its PR campaign by talking about the new bases it’s opening in the US in New York and Ft Lauderdale. Wait, what? Yeah, it might make sense to staff some flights to the US with Thai crews, but that presents logistical issues. It can make more sense to open a base in the US as well. After all, US laws look very friendly versus Norway. This way, Norwegian can keep its long haul crews at the spokes in North America and Asia, so-to-speak, because that’s where the friendliest laws are.
Of course, it’s the job of airlines and crews in the US and elsewhere to try to fight new competition. Just as they’ve done with gulf carriers like Emirates, they’re trying to block anything that hurts their competitiveness. It seems like an uphill battle.
So far, Ireland and Norway seem to have failed to prevent this from happening, and that says a lot. If they can’t successfully fight the outsourcing of jobs, then it seems silly for the US to be able to block it. But hey, it’s politics. We might see a lot of rhetoric in the political sphere over this, though in the end, I doubt it will amount to anything of substance, as is often the case.