Saturday, December 20, 2014

New airline a threat to industry standards

ANDREW HARRER / Bloomberg
ANDREW HARRER / Bloomberg

America's skies are facing an invasion - by forces from Norway, of all places.

The newly organized airline Norwegian Air International is seeking approval from U.S. officials to operate flights between several European and American cities. The carrier promises discount fares - and discount service - across the Atlantic.

But Norwegian will only be able to do so by exploiting loopholes in global airline regulations and staffing its planes with cheap labor from abroad.

The carrier's business model threatens not only the sanctity of the regulations governing international air travel, but also thousands of U.S. jobs. American officials should rebuff Norwegian's entreaty.

For starters, the company's moniker is a misnomer. It isn't even based in Norway. The airliner recently moved its international headquarters to Ireland. It also operates under an Irish flight certificate - even though it doesn't serve any Irish markets.

Some of its pilots and crew are officially employed by a Singaporean company and are based in Thailand. The company's flight attendants come from the United States and Asia.

The airline is engaging in such administrative jujitsu to dodge strict labor laws in its home country and avoid paying its workers market wages. Its strategy is right out of the maritime industry, in which shipping giants register their boats in countries with lax regulatory oversight, like Panama and Liberia, to cut costs. These "flags of convenience" allow shippers to skirt maintenance requirements and pay their workers substandard wages. Norwegian apparently wants to bring this model to air travel.

Norwegian Air is also trying to take advantage of the recent Treaty on Open Skies between the European Union and the United States, which aims to expand access to major airports on both sides of the Atlantic. Norway isn't a member of the EU, however, so it shouldn't enjoy the treaty's benefits. Hence Norwegian Air's efforts to become an "Irish" airline.

Norwegian is playing by a set of rules totally different from those that apply to American carriers. And that gives the upstart airline an unfair competitive advantage that harms the interests of the American economy.

U.S. air carriers have finally achieved a measure of financial stability after nearly four decades of turmoil following the deregulation of the airline industry. They transported more than 740 million passengers last year. Their customers are enjoying more reliable service and added amenities. Their workers feel confident about their career prospects. And Wall Street now regards the major carriers as well-managed and worthy of investment.

Indeed, the U.S. airline industry directly employs more than 500,000 Americans - and indirectly supports the jobs of millions more. Norwegian's entry into the American market could jeopardize these jobs. American workers can't afford such an outcome, what with unemployment still above 6.5 percent and stagnant wages a reality for millions of middle-class families.

In fact, Norwegian could exacerbate the wage pressures and shortage of qualified talent already plaguing the airline industry. Current annual salaries for pilots at regional carriers start at about $20,000. Such low wages, especially given the high cost of training, are the chief reason for the nation's pilot shortage.

Granting Norwegian access to the American market would only make these labor matters worse. Our leaders have a duty to protect the interests of American workers and, at the very least, not to harm them. U.S. officials should rejecting Norwegian Air's flag-of-convenience scheme and the company's request to serve the U.S. market.

 


Keith Wilson is president of the Allied Pilots Association, which represents more than 10,000 American Airlines pilots. kwilson@alliedpilots.org

Keith Wilson
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