Editorial – Don’t Undermine EU-US Open Skies

Aug 28, 2014 Karen Walker

Some six months after Norwegian Air Shuttle applied for US permission to launch its long-haul, low-cost operation, Norwegian Air International (NAI), between Europe and the US, the company is still waiting for a yes or no from the Department of Transportation.

Latest filings to DOT for and against the application (see story, page 9) show the two sides digging in. The European Commission and NAI argue there is no basis to deny the application, while unions and some European flag carriers and US carriers have formed an alliance whose objections hinge on where NAI is registered (Ireland rather than Norway) and the oversight questions that potentially raises.

Labor is right to be concerned about not setting a precedent for a “flags of convenience” business model in the airline industry. No one wants to see the sort of negligence happening in aviation that this has encouraged in the maritime industry.
However, that is an important but separate issue and it is being used as a distraction to delay or dismiss what is a valid application by NAI under the EU-US Open Skies agreement. While Norway is not an EU member, the agreement allows carriers to operate from any EU country to the US. And under those rights, Norwegian Air Shuttle already operates flights from London Gatwick to three US cities.

It would serve nobody’s interests, least of all those of the Norwegian brands already flying or being planned, to skirt around safety and security obligations, as is being implied by the opponents.

NAI, if it gets the go-ahead, would not operate without regulatory oversight; rather, it has opted for the oversight of another European country. I challenge the opponents to prove that Ireland is “less safe” than Norway as an air transportation regulator.
For sure, NAI is looking to keep its labor costs at a point where it can provide a low-cost transatlantic service and be profitable. In an already highly competitive market, that will be a tough task. Point-to-point long-haul, low-cost models historically have not seen much success. But that is no reason to stop a company from trying the market, and the EU-US Open Skies agreement was forged with the aim of encouraging new entrants.

DOT seems willing to listen to the EC’s argument that the point of controversy—Article 17 of the EU-US agreement relating to labor—does not permit DOT to reject NAI’s application unilaterally. Some further discussion and clarification of that article may be warranted.

But the overriding issue here is that NAI’s application should not be skewed in a way that could potentially undermine the open skies agreement. That agreement was a major breakthrough for European and US airlines, giving them the freedom to operate in what remains the most important air transportation market. It provided them the opportunity to create a business in what had for too long been an exclusive market for a few lucky legacy holders. That is especially true of Heathrow. NAI should be allowed to access the transatlantic market that EU-US Open Skies clearly permits. And then the market can decide if it is up to the challenge.

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