Lawmakers seek to ground Norwegian Air’s flight bid

Top transportation lawmakers in the House are fighting to stop Norwegian Air’s bid to gain access to more airports in the U.S. and European Union.

The low-cost air carrier has for years been seeking approval to use airports covered under the U.S. and EU’s Open Skies
agreement by establishing a subsidiary — Norwegian Air International — that would be based in Ireland, a member of the EU. 

{mosads}Norwegian Air currently flies to some airports in the U.S. under the banner of its parent company, Norwegian Air Shuttle. But the company says the model for its low-cost subsidiary that would offer the cheaper transatlantic flights requires access to more Open Skies airports in Europe, which would provide more route flexibility.

The Scandinavian company has said it will be able to offer transatlantic flights for as low as $150 each way if its effort is approved.

The Department of Transportation (DOT) tentatively approved the carrier’s permit last month after consulting with both the Justice and State departments and finding no basis to reject the application.

The agency’s move roiled the aviation industry, union groups and lawmakers from both sides of the aisle. Critics argue that Norwegian Air is attempting to skirt more stringent Norwegian labor and tax laws by establishing itself in Ireland and say it is undermining competition by hiring pilots contracted through Asia, where labor costs are lower.

Now lawmakers on the House Transportation and Infrastructure Committee are pushing legislation that they say would effectively block the DOT’s stamp of approval.

The bill, H.R. 5090, would bar the DOT from allowing a foreign air carrier to operate between European countries and the United States unless the carrier complies with basic U.S. or EU labor standards.

It would do so by requiring the Transportation Department to determine whether applications are consistent with a clause in the U.S.-EU air travel agreement that says “opportunities created by the Agreement are not intended to undermine labour standards or the labour-related rights.”

When the DOT tentatively approved Norwegian Air’s application, the department said the provision of the agreement that addresses labor “does not afford a basis for rejecting an applicant that is otherwise qualified to receive a permit.”

The new legislation is backed by Rep. Peter DeFazio (D-Ore.), ranking member of the Transportation Committee; Rep. Frank LoBiondo (R-N.J.), chairman of the aviation subcommittee; Rep. Rick Larsen (D-Wash.), ranking member of the aviation subcommittee; and Rep. Lynn Westmoreland (R-Ga.).

Twenty-six other lawmakers, including four Republicans, are also co-sponsoring the measure so far.

“This airline is ‘Norwegian’ in name only,” DeFazio said after the bill’s introduction last week. “It’s a virtual airline set up to undercut competition by exploiting cheap labor. Our bipartisan legislation sends a strong message to DOT — we must stop this race to the bottom and protect the open and fair transatlantic aviation market.”

But Bjørn Kjos, Norwegian Air Group’s founder and chief executive officer, emphasized in a blog post on The Hill that the carrier will not be using any Asian-based cabin crew on transatlantic flights and said Asian long-haul pilots for Norwegian earn about 96 percent of what long-haul pilots in Norway make despite different costs of living.

“Norwegian always follows the rules and regulations in each of the markets in which it operates and offers employees competitive compensation package on par with other U.S. airlines,” Kjos said.

The company also maintains that it chose to establish itself in Ireland for access to future traffic rights to and from the EU and to secure better aircraft financing rates.

But with a groundswell of opposition to the company’s application in Congress, DeFazio’s measure could gain traction. The House unanimously attached similar language to a Transportation, Housing and Urban Development spending bill in 2014 that aimed to block Norwegian Air’s permit.

“In my view, granting NAI an air carrier permit would violate the agreement we have in place to protect our aviation system stakeholders from unfair labor practices,” Larsen said in a statement to The Hill. “That is why my colleagues and I are taking decisive action to prevent NAI from receiving an air carrier permit.”

The bill could potentially hitch a ride on another spending measure or a long-term reauthorization of the Federal Aviation Administration.

But not everyone is likely to be on board with the plan.

Travel and consumer advocacy groups have applauded the DOT’s tentative decision to allow Norwegian Air to fly to the U.S. because, they say, mergers among U.S. airlines in recent years have greatly reduced competition in the industry. 

“The decision to tentatively allow Norwegian Air International flying rights to the U.S. is a welcome development in an aviation landscape that often appears increasingly anti-competitive and closed-off,’ said Jonathan Grella, executive vice president of public affairs for the U.S. Travel Association. “Finalizing this decision would be a pro-competition, pro-growth and pro-traveler move that will benefit flyers, workers and the U.S. economy.”

Kjos said he believes the threat of competition is exactly why larger airlines are aggressively trying to prevent his company’s entry into the U.S. and EU markets.

“The only threat Norwegian poses is to the near-monopoly that has existed in transatlantic travel for decades, which has been protected by joint ventures and alliances without providing a cost benefit to the flying public,” Kjos said.