June 9 - BTC Letter To DOT Secretary Foxx Re NAI Application


The Honorable Anthony Foxx

Secretary

U.S. Department of Transportation

1200 New Jersey Ave, SE

Washington, DC 20590

Norwegian Air International Application; DOT Docket 2013-0204

Dear Secretary Foxx,

On behalf of OpenSkies.travel members from the U.S. and countries around the world, I write to support Norwegian Air International’s (NAI) motion for expedited treatment and urge the U.S. Department of Transportation (DOT) to approve NAI’s application to provide air service to the U.S. That application was completed in February 2014, well over a year ago. Indeed, so much time has elapsed that Norwegian, according to its June 1, 2015 filing with DOT, has been able to advance its existing business plans through the growth of bases in the EU and the U.S. to volunteer to use only U.S. and European crews on NAI’s transatlantic flights.  This very significant voluntary step should enable immediate approval of the NAI application.

Hopefully, Norwegian’s recent commitment will end this unprecedented and embarrassing delay in contravention of the U.S. - EU Open Skies agreement that has led the EC to declare the U.S. in breach of its international legal obligations. It is one thing to thoroughly review an application but quite another to effectively deny it through unjustified inaction. It is imperative that DOT now act immediately to fulfill the U.S. obligation under the agreement to grant authorization to a fully licensed EU airline “with minimum procedural delay,” an obligation that is also statutorily mandated by 49 U.S.C. 40105(b)(1) (“The Secretary of Transportation… shall act consistently with the obligations of the United States Government under an international agreement.”)

As the domestic U.S. airline industry has consolidated from 11 carriers controlling 80 percent of the U.S. domestic market in 2005 to just four today, domestic and foreign new entry and expansion by airlines is vital to resurrecting price competition, guaranteeing consumers better choices and encouraging the return of adequate levels of air service for U.S. communities, especially to U.S. cities that are not, or are no longer, U.S. carrier hubs. Hardly a week goes by without the national media reporting on the profound and widespread frustration and anger of air travelers with high airfares and the inferior levels and quality of air services in the U.S.

Moreover, now that the U.S. major network airlines have secured antitrust immunity with the largest European carriers, they appear to want to close down the U.S. market to competition and divvy up the spoils of their alliances. European carriers like Norwegian that belong to none of the mega alliances provide access for U.S. businesses under Open Skies agreements to markets that the alliance airlines simply refuse to serve.

It must not be forgotten that the promise of new and expanded air services by non-aligned U.S. and foreign airlines such as NAI in an Open Skies environment was the very premise upon which antitrust immunity was accorded to each of the three alliances. In short, new entry by airlines such as NAI was to be the antidote for the competition lost when major U.S. airlines were allowed to team up with major foreign carriers with which they had previously competed. And it should not go unnoticed that the arguments against Open Skies are shifting, self-serving and ad hoc. In the case of the gulf carriers, they seize on alleged government subsidies as the basis to argue some foreign carriers should be blocked from exercising rights under Open Skies agreements and in other cases, such as that of NAI, broadly assail the carrier’s low-fair business model as somehow unfair to them.

Importantly, to achieve President Obama’s stated goal of 100 million annual tourists by 2021, and the jobs they would generate, the Administration cannot count on U.S airlines and their chosen alliance partners that are sheltered from competition by their “Fortress Hubs” and are overtly pursuing anti-consumer “capacity discipline.” New foreign carrier entry and expansion is the necessary, indeed only, path to the President’s goal. The U.S. airlines are financially the strongest they have ever been and should not be so paranoid about healthy competition and consumer choice, which is the central principle of the U.S. free market system.

Unfortunately, some U.S. carriers are following a well-worn anticompetitive route in which powerful incumbents seek to lock out independent airlines that offer lower fares, newer airplanes, faster connections, more destinations and superior customer service. When Southwest, for example, began to grow from a small airline in Texas to the national powerhouse it is today, the established U.S. network airlines sought to beat it through regulatory restrictions. Fortunately for U.S. consumers and businesses, they failed.

Today, the NAI business model is perceived by some in the same threatening way. The Play Book page is as identical as it is predictable. They seek to prevent NAI from proving that its low-fare business plan will stimulate bi-directional international demand and be embraced by U.S. consumers. They desperately want to prevent NAI from establishing a U.S. foothold with the fear that other carriers such as JetBlue, Ryanair or Tiger Airways will seek to emulate the success of NAI’s low-fare international, long haul model.

Although U.S. airlines preach that their interests are paramount, and trumpet demands for a “National AIRLINE Policy,” they are just one among many stakeholders whose interests are reflected in the Federal Deregulation Act of 1978 and U.S. Open Skies policy. These other stakeholders include consumers, airports, mid-size communities, tourism destinations, travel distributors, travel agents, global Open Skies partners, cargo airlines and their customers, other commercial airlines, plane manufacturers and their suppliers, managed-travel operations and American job seekers. Contrary to the self-absorbed perspective of U.S. major network carriers - it is the legitimate interests of these many other stakeholders collectively in the introduction of new air services that should be dispositive in the NAI proceeding.

Secretary Foxx, with the pilot and cabin crew issues settled with Norwegian’s voluntary commitment, we are hopeful and confident that you will uphold the U.S. commitment to Open Skies by approving the NAI application promptly.

Sincerely,

Kevin Mitchell

Chairman, Business Travel Coalition

Founder, OpenSkies.travel

 

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