Open the skies to Norwegian Air

Washington does not often get everything right, but every once in a while, policy reform works.  Nowhere is this clearer than in air travel.  Beginning in 1978, deregulation of the domestic aviation market enabled greater competition among airlines and empowered consumers, not government regulators, to decide which routes, fares, and amenities meet their needs.  After accounting for the cost of fuel and inflation, today it costs half of what it cost in 1983 to fly from New York to Los Angeles.  An entire generation of people who could never have afforded air travel before now regularly board a flight for business or pleasure travel.

Recognizing the benefits of deregulation for consumers and the U.S. airline industry, in the early 1990s, the George H.W. Bush Administration announced an initiative to pursue the equivalent of domestic deregulation in the international arena through a policy called Open Skies.  True to its name, this policy opens international aviation markets through air service agreements that remove restrictions on the destinations, the frequency and capacity of flights, and the fares that American and foreign airlines may offer their customers.

{mosads}Today the United States has Open Skies agreements with more than 110 countries around the world, including a landmark 2007 agreement with the European Union.  The Open Skies policy, now widely replicated around the globe, has ushered in unparalleled and fundamentally pro-consumer airline competition on a global scale, generating hundreds of thousands of jobs, bolstering U.S. airports, cities, and communities, and providing America’s travelers new, more frequent, and better air service at affordable prices.

Open Skies agreements contribute significantly to America’s global competitiveness and are an engine of economic growth and prosperity here at home.  According to recent Congressional testimony, 66 million international visitors traveled to the United States in 2012, generating a record-high $165.6 billion in revenue.  The Commerce Department estimates that the number of foreign travelers will increase to 88 million during the next four years, generating an additional 338,000 jobs from 2010 levels.   Making this increase possible is the rapid growth in flights to and from the United States by both American and foreign airlines, a direct and successful consequence of the Open Skies policy.

Open Skies agreements have fundamentally altered international air service by fostering vigorous airline competition.  It is competition that drives down the price of tickets, encourages airlines to improve service, and makes expansion to new destinations possible.  During our combined tenures as Secretaries of Transportation, the United States entered into new or expanded Open Skies agreements with over 40 international partners.  We are pleased this successful policy is being continued by President Obama’s Administration, which has energetically secured Open Skies agreements with major aviation partners such as Japan, Brazil, Israel and Colombia, and achieved an enhanced Open Skies agreement with the European Union in 2010. 

Now before the Department of Transportation is an application from a new European low-cost airline – Norwegian Air International (NAI) – that plans to launch flights between a number of U.S. and European cities with fares that make transatlantic travel accessible to more travelers than ever before.  NAI meets all the legal and regulatory requirements to inaugurate air service to the United States. 

Unfortunately, a number of major U.S. and European airlines that dominate today’s transatlantic aviation market, together with labor  interests, have petitioned DOT to deny NAI the necessary approvals to serve the U.S. — approvals  to which it is entitled under the U.S.-European Union Open Skies agreement.  If these parties were to prevail, it would set a dangerous precedent — calling into question America’s commitment to the Open Skies agreements secured over the past two decades and to the pro-consumer, pro-growth, pro-competition goals that have been the hallmark of our country’s aviation policy since 1978.  Moreover, failure by the United States to live up to its international legal obligations could quickly elicit retaliatory restrictions on U.S. airlines by foreign governments, triggering a downward cycle of protectionism and negating the many benefits of the U.S.-European Union Open Skies agreement.

As secretaries who have dealt with difficult international aviation issues, we can say that unambiguous policy wins are rare.  By promptly approving Norwegian Air International’s application to serve the United States, the Department of Transportation has the opportunity to uphold the cornerstone of one of America’s most successful policy reforms – and grow the economy and benefit consumers in the process.

We do not know whether Norwegian Air International will succeed with its plan for low-cost, low-fare transatlantic air service.  We can say with certainty, however, that Americans will be better off if the Department of Transportation gives NAI the opportunity to compete and the Administration continues America’s longstanding commitment to promoting open skies.

Mineta served in the United States Congress, as Secretary of Commerce during the Clinton Administration, and Secretary of Transportation from 2001-2006, the only Democrat to serve in President George W. Bush’s Cabinet. Peters served as the 15th Secretary of Transportation from 2006-2009 after serving as the administrator of the Federal Highway Administration and direcgtor of the Arizona Department of Transportation.