US Department of Transportation (DOT) denies Norwegian Air UK foreign carrier exemption
The US Department of Transportation (DOT) has dismissed an application by the UK subsidiary – Norwegian Air UK (NUK) – of Norwegian Air Shuttle to operate flights to the United States on “procedural grounds.” NUK applied for an exemption and permit to operate flights to the US from Gatwick in December, and the DOT refusal means a set back for Norwegian flying to the US. The DOT cited overlapping issues with Norwegian’s Ireland subsidiary—Norwegian Air International (NAI) —which also sought an exemption to begin operating to the US. The DOT dismissed the NAI exemption in September 2014, but indicated in April that it was inclined to approve it. Opponents of Norwegian being allowed permits to operate flights in the US say the airline seeks to evade both Norwegian and international labour laws and pay pilots less by establishing “flag of convenience” subsidiary airlines. This is seen as a threat to jobs and pay in US airlines. The US Transportation Trades Department, a coalition of unions representing airline staff, say Norwegian’s business model is ‘novel and complex’. They say Norwegian should not be allowed to create shell subsidiaries designed to undermine labour standards etc. Gatwick airport needs Norwegian to be able to fly extensively to the US, to claim it has important long haul (leisure) routes.
U.S. Department of Transportation (DOT) Denies Norwegian Air UK Foreign Carrier Exemption
by Bill Carey (AIN)
July 1, 2016
The U.S. Department of Transportation (DOT) has dismissed an application by the UK subsidiary of Norwegian Air Shuttle to operate flights to the United States on “procedural grounds.” While airline industry unions praised the decision, Norwegian Air said the DOT continues to review the subsidiary’s foreign air-carrier permit.
In an order released on June 30, the DOT cited overlapping issues with Norwegian’s Ireland subsidiary—Norwegian Air International (NAI)—which also sought an exemption to begin operating to the U.S. while the DOTconsiders its permit application. The DOT dismissed that exemption in September 2014, but the department indicated in April that it was inclined to approve the foreign air-carrier permit.
The British subsidiary—Norwegian Air UK (NUK)—applied for an exemption and permit to operate flights to theU.S. from London’s Gatwick Airport in December. The DOT’s latest action was to dismiss the exemption, which would have expedited NUK’s proposed service.
“As we have previously stated, 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 to permit acting, at least for a limited term, without the additional procedural protections of show-cause procedures and (regulatory) review,” the DOT stated in the order. “The parties opposing the Norwegian UK application have raised a number of significant issues, in many instances directly overlapping the types of issues before us in the still pending proceeding involving the permit application of Norwegian Air International Limited. The Department has already characterized those issues as novel and complex in the NAI context, and it reaches the same conclusion as to the present proceeding.”
Opponents allege that Norwegian Air Shuttle seeks to evade both Norwegian and international labor laws and pay pilots less by establishing “flag of convenience” subsidiary airlines. The Air Line Pilots Association described the DOT’s latest finding as “a significant milestone in the drive to ensure fair competition for U.S. airlines in the global marketplace. NUK is a UK airline, and its employment structure for its pilots and flight attendants is unclear, as are as its potential effects on U.S. jobs and the international airline industry.”
The Transportation Trades Department, AFL-CIO (TTD), a coalition of unions representing pilots, air traffic controllers, flight attendants and other transportation workers, also welcomed the “sound decision” by the DOT. “Now that Norwegian Air’s exemption application has been dismissed, the company’s business model—described by DOT as ‘novel and complex’—will face the careful scrutiny it deserves,” said Edward Wytkind, TTDpresident. “Norwegian Air should not be permitted to create shell subsidiaries designed to undermine labor standards and take advantage of lax employment and tax laws.”
In its own statement reacting to the DOT finding, Norwegian Air said the permit application by NUK remains pending, and that it is confident the subsidiary “will receive its permanent authority” to operate to the U.S.
“Norwegian UK should be entitled to a foreign carrier permit under the terms of the Open Skies Agreement,” the group stated. Norwegian’s U.S. flights currently operate under the Norwegian Air Shuttle air operator certificate, which allows the airline to operate between the U.S. and Europe. With U.S. approval for Norwegian UK, the airline will be able to more effectively utilize its long-haul fleet and establish a seamless operation, including the use of the same aircraft on both U.S. and other long-haul routes… which currently all other European airlines can.”
DOT deals setback to Norwegian Air, but broader battle remains
July 1, 2016 (USA Today)
WASHINGTON – A Norwegian airline’s attempts to have subsidiaries fly low-cost routes to the U.S. is in the news again this week.
The Transportation Department on Thursday rejected an application from Norwegian Air United Kingdom to serve the U.S. But the dispute isn’t over yet, as the department noted in saying that the application rejected on procedural grounds had many overlapping issues with a broader, earlier application from Norwegian Air International.
The complicated case involves Norwegian Air Shuttle, the third-biggest discount carrier in Europe, and various subsidiaries that the parent company has organized in countries such as Ireland, the United Kingdom and Singapore. For now, the airline’s long-haul subsidiary serves several U.S. cities.
But the airline applied in December 2013 for permission to serve the U.S. with another subsidiary, Ireland-headquartered Norwegian Air International.
This set off a firestorm of opposition from rival airlines and their unions. The critics argue that the corporate arrangement would allow Norwegian to hire Asian crews at below-market rates, in a “flag-of-convenience” model that allows cruise ships to skirt labor and safety laws.
But the parent airline strongly rejects the criticism. The airline hired hundreds of U.S. workers for its existing routes, and insists Asian crews are used on Asian routes. The Federal Aviation Administration trusts Irish officials to ensure that its airlines fly safely and maintain their planes.
The Transportation Department hasn’t decided what to do on that big fight. But as that dispute has lingered, the subsidiary Norwegian Air United Kingdom asked in December 2015 for permission to fly to the U.S.
Officials from the United Kingdom and London’s Gatwick airport strongly supported the application, saying Norwegian employs 800 workers in that country. U.S. airports such as Orlando and Oakland, which are scheduled to receive new Norwegian routes this year, also supported the application.
“Norwegian UK is a recognized British airline, with a large UK base and the support of the British government,” said Anders Lindström, an airline spokesman. “Given Norwegian UK’s clear and legitimate right to a foreign-carrier permit, we therefore remain confident we will receive final approval.”
But Jenny Rosenberg, acting assistant secretary of transportation for aviation and international affairs, rejected the application on procedural grounds by saying “novel and complex” issues of the case overlapped with the pending application of Norwegian Air International.
“In these circumstances, the department does not find that grant of a temporary exemption to Norwegian UK is appropriate or in the public interest,” she wrote in the three-page decision.
U.S. pilots and flight attendants welcomed the rejection, but agreed that the bigger decision involves Norwegian Air International.
Capt. Tim Canoll, president of the Air Line Pilots Association, a union with 53,000 members, said U.S. airlines “will struggle to compete if the U.S. government does not stop foreign airlines that attempt to use unfair business practices to gain a marketplace advantage.”
“Aviation workers deserve strong job protections in foreign trade agreements,” said Sara Nelson, president of the Association of Flight Attendants-CWA, which has 50,000 members.