Norwegian Air Shuttle

     Norwegian Air Shuttle owns two subsidiaries. One is Norwegian Long Haul AS and the other is Norwegian Air International. NLH is in fact based and registered in Norway and operates out of Norway. It is Norwegian Air International that has been the topic of much controversy and recently was denied permission to operate flights to and from the U.S. Norwegian applied for a permit to carry passengers to the U.S. while they wait for the final DOT ruling, This is sort of a way for them to operate while their case is being processed, but it was denied. NAI is based in Ireland, uses Singaporean contracts for its flight crews and bases them in Thailand. By basing itself in Ireland, which is an active member of the US-EU Open Skies agreement, it would have the opportunity to fly a large number of flights to many destinations in the U.S. from Ireland. The sole existence of NAI is to provide extremely cheap long-haul airfare. They have bent over backwards in order to have the lowest possible labor costs. By hiring crews through contracts in Singapore, and basing them in Thailand, they are able to get around Norwegian labor laws. They have destinations abroad in New York, California, Florida, Bangkok, Dubai, and Iceland.

     U.S. carriers have a major bone to pick with NAI. For one, they are trying to undercut them in terms of price for transatlantic airfare. The United States airlines main issue is the fact that they are a Norwegian company but hardly any of their operation can be tied to Norway. They are outsourcing everything from certificates to pilots. The U.S. claims that by doing this there are serious safety concerns from hiring the cheapest crews but they are also concerned with losing market share to NAI. Basically, it is not the way to operate in their eyes and gives NAI an unfair labor advantage by hiring their pilots on third party contracts. ALPA has drawn the comparison of NAI also using a "flag of convenience" business model which essentially destroyed the U.S. maritime industry.

     The DOT recently denied a temporary permit of NAI to operate commercial flights to points in the U.S. on the premise that they need to further look into exactly what is going on with NAI in terms of their employment methods and whether or not they are abiding by the open skies agreement between the U.S. and European Union. I definitely agree with the decision to deny NAI any landing rights in the U.S. To enable this business model to succeed will only put downward pressure on our airlines to lower labor costs here. Not to mention, there is a major issue that hasn't been touched on too much. If NAI plans to have its operating certificate in Ireland but currently doesn't have any flights in or out of that country, how exactly will there be any oversight from the Irish aviation authorities? How will inspections on airplanes happen? Who is to blame if there is a dispute about wages not being paid, the agency that employed the pilots, or NAI? There are a lot of issues about being based in a country or three but not having any personnel there at all.

     If NAI is eventually allowed to operate to the U.S. there are a lot of concerns. We don't know exactly how much their pilots will be paid. For now, we can only speculate that by advertising one hundred dollar fares, they won't exactly be making a fortune. This will cause a downward pressure on pilots that have seen bankruptcies, recessions, and extreme turmoil over the past decade. The other issue is safety. Just how well trained will the people be who are willing to roll the dice and join NAI, be based in Bangkok, and fly the 787's that NAI will operate. Since they aren't under European labor laws, will they be working long hours and have little time off all for low pay? There are a lot of unanswered questions and the DOT is doing the right thing.

   


http://centreforaviation.com/analysis/norwegian-air-shuttles-long-haul-business-model-flag-of-convenience-or-fair-competition-146928