A Norwegian airline’s plans to expand low-cost flights between the U.S. and Europe have aroused opposition from American air carriers and unions, who say the company is trying to get around labor rules and pay cut-rate wages.
Both sides in the fight over Norwegian Air International are lobbying U.S. Secretary of Transportation Anthony Foxx, Charlotte’s former mayor. Norwegian’s opponents want the Department of Transportation to deny Norwegian’s permit to begin operating from Ireland, which would give the carrier full access to the Open Skies agreement between the U.S. and the European Union.
Norway is not a member of the EU, which in 2007 approved the Open Skies agreement, intended to reduce regulations on the trans-Atlantic market.
Norwegian CEO Bjorn Kjos said his opponents’ motive is simple.
“Nobody likes competition,” Kjos told the Observer. “The airlines are apparently afraid of low fares over the Atlantic.”
About 87 percent of trans-Atlantic flights are operated by the three large American carriers or airlines that participate in alliances with them. That keeps prices artificially high, Kjos said, and limits the market.
“If you can lower the price over the Atlantic 30 or 40 percent, you stimulate the market,” said Kjos. “You can double the volumes of traffic between the U.S., the Far East and Europe.”
Norwegian Air Shuttle – the parent company of Norwegian Air International – has already started flying to New York and Fort Lauderdale. The company is Europe’s fourth-largest discount air carrier, behind such better-known airlines as Ryanair. Kjos said he hopes to expand U.S. service, using long-range, fuel-efficient Boeing 787 planes.
His business model is similar to what Southwest did in the U.S. after deregulation of the domestic air travel market in 1978. Kjos wants to operate point-to-point service between destinations, instead of large hubs, using an airline with lower costs than the legacy carriers and offering cheaper fares.
Kjos said he eventually wants to fly to markets such as Charlotte, which he said are underserved by European carriers.
“It’s a long-term destination I can look at in the U.S.,” Kjos said of Charlotte.
Getting his Irish subsidiary approved as an EU carrier could also give Kjos more access to new markets such as Israel, with which the EU recently concluded an open skies agreement.
American Airlines spokeswoman Michelle Mohr declined to comment. But US Airways, American, Delta Air Lines and United Airlines made a joint legal filing last month opposing Norwegian’s Irish subsidiary. They called the airline “a shell company in Ireland to operate its aircraft using imported labor.”
Labor groups have been even more forceful in their opposition to Norwegian. They say Norwegian wants to base its operation in Ireland to cut wages because of Ireland’s looser labor laws.
“If this scheme is allowed to proceed, it would undermine the safety and security of passengers in this country by lowering the high labor standards our passengers enjoy and deserve,” wrote the US Airline Pilots Association, a Charlotte-based union representing US Airways pilots, in a recent legal filing.
Capt. Lee Moak, Air Line Pilots Association president, echoed USAPA.
“Norwegian Air International was clearly designed to attempt to dodge laws and regulations, starting a race to the bottom on labor and working conditions,” Moak wrote in a December message. “If successful, the company would gain 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.”
Trans-Atlantic flights are a lucrative business for airlines, since the long-haul, international flights on large planes typically command a premium price compared with shorter domestic routes. American, which is merging with US Airways, reported last week that trans-Atlantic trips accounted for 14 percent of the combined airlines’ flying.
A DOT representative declined to comment on Norwegian’s application or when the department might reach a decision.
Portillo: 704-358-5041; Twitter: @ESPortillo
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