The news broke earlier this week and spread like wildfire. The US has refused to grant Norwegian Air International approval for its foreign air carrier permit. That sounded like something big, but it wasn’t even what actually happened. All the US did was delay on actually taking any action, and Norwegian can continue to fly its existing schedule the way it’s set up today. The saga continues…
Norwegian Air Shuttle flies to the US today, but it’s as a Norwegian carrier (which makes all too much sense). Despite its name, Norwegian has decided that it can’t get its costs low enough this way, so it wants to start up an Irish subsidiary that’s called Norwegian Air International (NAI) for long haul flights. If it does that, it can not only escape restrictive and pricey Norwegian labor law, but it can also get a more favorable tax situation being in Ireland. There’s also supposed to be a traffic benefit being located in the EU, but since Norway is a party to the US-EU open skies agreement, I don’t quite understand that logic.
Norwegian Air International has been in a lengthy process to convince the Department of Transportation (DOT) regulators here in the US that it should be given the ability to fly here. It’s been quite the campaign for the company. How comprehensive is it? It’s even buying ads in the Navy Yard Metro station in Washington to state its case. Yep, that’s where DOT headquarters is. A reader sent me this photo:
The pitch is simple. Allow Norwegian to fly here and you’ll get low fares on new routes with new airplanes. We already have that now, of course, but Norwegian thinks it needs to get costs lower to make these flights work. Travel agents and airports that are getting Norwegian service agree, as you’d expect. But there are some powerful enemies.
Pretty much every US and European airline hates this plan, as does any labor group worth its salt. The airlines obviously don’t like the idea of competition with a cost advantage, and the labor groups don’t like the idea of cheap labor undermining their efforts. The argument being put forth is that Norwegian is trying to create a “flag of convenience” operation – a company that bases itself wherever it wants to circumvent less favorable laws. Is that what Norwegian is trying to do here? That’s the question at hand.
With such a weighty question out there, DOT issued a ruling yesterday but not on the airline’s fitness to serve the US. See, any airline, Norwegian included, asks for a temporary exemption to allow flights while the final permit is being considered. DOT, seeing such widespread conflict here, denied that request. In its own words.
The Department typically reserves its exemption powers in awarding foreign air carrier authority to situations where the circumstances of a case are sufficiently clear-cut…. Because of the extensive record, which reflects the novel and complex nature of this case, however, the Department does not find that a temporary exemption is appropriate or in the public interest.
And that’s smart. There’s no reason to rush this decision with so much anger in the process. DOT is just going to take its time to fully review the application before coming to a decision. When that’ll happen is anyone’s guess, but I imagine it’ll be awhile.
For what it’s worth, Ireland says that this is perfectly fine and the European Commission agrees. So why is the US having such issues? It’s primarily the opposition from airlines and labor that’s making the US look very closely here.
I’ve written about this before, and I’ll admit that I remain torn on this. It doesn’t seem like there’s anything illegal here, and I’m inclined to think NAI should be allowed to fly, but the flag of convenience issue is one that hasn’t really been an aviation issue. Other industries (like cruises) have dealt with this on a large scale, but it’s not something I know all that well.
Let’s hear your thoughts. Should NAI be allowed to fly?
