Why Obama must reject Norwegian Air
For consumers, the option of choice is one we have come to expect. Factors that sway our decisions could be quality, price, location, convenience — you name it. America has embraced a competitive marketplace that spurs choice and innovation, and the airline industry is no different.
{mosads}However, along with the advantages of healthy competition come the opportunists — those fueled by competition but seeking to cheat the system to gain the upper hand. One of these opportunists that stands to undermine the U.S.’s $1.5-trillion commercial aviation industry is Norwegian Air International (NAI).
It’s a simple story — albeit filled with complex details — about a foreign company that seeks to share in the lucrative U.S. airline marketplace yet with a dishonest advantage. And unless you’re truly paying attention, reading the fine print, and are familiar with the rules of engagement regarding the U.S.–EU Air Transport Agreement, Norwegian Air probably seems like a fine option for consumers. Just another choice.
So, let’s tell it like it is.
NAI, a subsidiary of Norwegian Air Shuttle, is incorporated in Ireland because of the country’s favorable tax and regulatory laws. (NAI is not the only company that has figured this out; you might have heard about Facebook’s recent IRS challenges after moving some of its assets to Ireland due to the lower corporate tax rate.)
However, NAI goes several steps farther with this “opportunity.” The airline intends to use flight crews hired under a Singapore employment contract. NAI still says it plans to use U.S. and EU crews, but if that is indeed true, why bother using a Singapore employment contract? It seems obvious: because it gives the airline a way to get around negotiated labor and compensation standards.
What’s the big deal?
Well, let’s ask the U.S. maritime industry. The what? Right. What U.S. maritime industry?
Once a burgeoning industry for the U.S. and its workers, this country’s maritime industry was destroyed when companies were allowed to shop for countries with weaker laws and regulations and fly their flags. In 1960, the maritime industry employed more than 100,000 people in the U.S., but that number is less than 2,500 today.
This startling statistic alone should make anyone pay attention. And, indeed, there are people paying attention. Petitions to the U.S government have been signed by tens of thousands of U.S. citizens asking the administration to #DenyNAI.
Members of Congress have introduced bipartisan legislation (H.R. 5090) to direct the Department of Transportation (DOT) to require foreign airlines to meet the labor standards agreed to in the U.S. air transport agreements before allowing them to fly to the United States. Presumptive Democratic nominee Hillary Clinton recently released a public statement urging the Obama administration against moving forward with NAI’s application.
The issue has proven to be a galvanizing topic among some who are commonly divided — and this alone speaks volumes.
Perhaps the public campaign to oppose NAI’s scheme is making an impact, albeit one that is moving in slo-mo. If you’ve been following the issue, you know about the promising news last week that the DOT denied Norwegian Air UK’s (NAUK) foreign air carrier permit exemption due to “novel and complex” issues and that granting the exemption would not be in the public’s best interest.
This means NAUK can’t fly to and from the U.S. while waiting for the official ruling on their foreign air carrier permit.
Wait. Weren’t we just taking about NAI? What is NAUK?
Great question. As its full name suggests, NAUK is a U.K. airline, the newest subsidiary created by Norwegian Air Shuttle, and is another attempt by NAS to game the system with its employment scheme. And since the employment structure for NAUK’s pilots and flight attendants remains unclear, so are the potential effects on U.S. jobs and the international airline industry.
Don’t forget, the DOT issued the same ruling for NAI’s exemption status in September 2014. Two years later, however, the DOT still has not issued a final ruling on NAI’s application for a foreign air carrier permit. So now we wait again for the critical decisions on both NAI and NAUK. Yet one would think that with so much evidence pointing to a business scheme that outright ignores the spirit of healthy competition, breaks the rules of the U.S.–EU Air Transport Agreement, and is ultimately bad for U.S. airlines and their employees that there should only be one answer: It’s time for the U.S. government to #DenyNAI.
Garver is general manager of the Air Line Pilots Association, International, and a former deputy administrator of NASA.
The views expressed by contributors are their own and not the views of The Hill.