Opinion: Don’t Let The Big Guys Block Norwegian
The Obama administration has been actively promoting international tourism and a major reduction in barriers to trade between the U.S. and EU—goals that can be immediately furthered by approving Norwegian Air International’s application to provide low-fare competitive transatlantic air service.
Representatives from the U.S. and EU met outside Washington late last month for the fifth round of negotiations on the Transatlantic Trade and Investment Partnership. TTIP, the Obama administration’s ambitious initiative to reduce transatlantic barriers to trade in goods and services, aims to promote both competition and competitiveness in the massive U.S.-EU market. The TTIP negotiations are a testament to how the global economy is interconnected and the close links between America and Europe.
As the negotiators progress toward trade liberalization and the president works to promote international tourism as an essential way to boost our economy and create jobs, the administration can underscore its commitment to these principles and the impressive liberalization already achieved in air transportation by immediately approving Norwegian Air’s application before the U.S. Transportation Department (DOT).
Since last December, Norwegian Air, an innovative -European low-fare airline, has awaited approval from DOT to launch affordable new service between Europe and U.S. cities like Oakland, Calif., and Fort Lauderdale, Fla.—both of which now lack transatlantic connections—as well as Orlando, Fla., New York and Los Angeles. Although the open-skies air service agreement between the U.S. and the EU guarantees EU airlines—like Norwegian Air, which is licensed as an air carrier in member-state Ireland—the right to serve the U.S., Norwegian has been opposed at every turn by entrenched U.S. and European airlines and their allies in organized labor. Their all-out assault on the fledgling carrier—including radio ads and posters in the Washington Metro—has delayed a DOT decision far beyond the time that is typically needed to issue a permit. As the busy summer travel season begins, the leisure customers who would benefit from Norwegian’s low fares are left with only the -expensive tickets sold by the incumbent airlines.
The case for DOT to approve Norwegian is clear-cut: The airline satisfies all the legal and regulatory requirements under the open-skies treaty, has an untarnished safety record, and a fleet of one of the most advanced aircraft in the sky—the Boeing 787 Dreamliner. Passengers voted its parent company the best low-cost carrier in Europe at the 2013 World Airline Awards. The members of the three airline mega-alliances—Star, Oneworld and SkyTeam—recognize the attractiveness of Norwegian’s service and are scrambling to block this compelling new competitor.
As transportation secretary under President George H.W. Bush, I was honored to participate in the negotiation of the first open-skies treaty, signed in 1992 with the Netherlands. Since then, my successors at DOT in the Clinton, George W. Bush and Obama administrations have continued to break down barriers in the international aviation marketplace by concluding open-skies agreements with over 100 countries worldwide.
But the sad irony is that even as the number of destinations covered by the agreements has increased, the number of carriers serving those destinations has dropped. Through mergers, joint ventures and bankruptcies, the aviation industry has consolidated to the point where the three major alliances control about 60% of global aviation traffic—and an astounding 87% of traffic across the Atlantic.
You don’t need a degree in economics to know that when the number of competitors in a market goes down, prices in that market have a tendency to go up. That is exactly what analysts at the U.S. Justice Department found when it examined transatlantic price trends in a 2011 study. And it is exactly why Norwegian’s competitors are so eager to block it from taking off. Already, a recent New York Times study found that the cheapest international destinations this summer from New York Kennedy International Airport were Oslo and Bergen, Norway, and Copenhagen. It is no coincidence that each of those markets is served by an affiliate of Norwegian. In Los Angeles, served by the same affiliate, Copenhagen and Stockholm lead the list. Competition matters.
Increased competition lowers fares, allowing more people to travel to more destinations, bringing with them the assets and ideas that power the global economy. The Obama administration has properly made the liberalization of trade with Europe the central goal of the TTIP negotiations and has rightly emphasized the importance of international tourism for the U.S.’s continued economic growth. The administration should honor its open-skies commitments to Europe, foster more vigorous airline competition and boost the prospects for success in TTIP by approving Norwegian’s application without delay. It’s time to let the spirit of competition fly.
Card is a former U.S. transportation secretary and White House chief of staff.View the Article
Irish Department of Transport, Tourism and Sport
Washington Airports Task Force
Greater Orlando Aviation Authority
Federal Express Corporation
Orlando Mayor Buddy Dyer
A Concerned Citizen for a Fair America
European Low Fares Airline Association
Leo Varadkar, Minister for Transport, Tourism and Sport of Ireland
Teresa Jacobs, Mayor of Orange County
A Concerned Citizen for a Fair America
Broward County Aviation Department
Atlas Air, Inc.
Port of Oakland