May 24 - Foreign Carrier New Entry Critical In Transatlantic Market

 

It’s Time To Provide Final Approval To Norwegian Air International’s Application

The U.S. Department of Transportation (DOT) closed its public docket yesterday as the agency prepares for a final decision on Norwegian Air International’s (NAI) application to operate transatlantic air service from cities in the European Union (EU) to cities in the United States (U.S.). There are several important reasons DOT needs to stay the course and promptly issue a final order confirming the grant of a foreign air carrier permit to NAI.

First, from a legal perspective, the U.S.-EU Open Skies Agreement imposes on the U.S. an obligation under international law to grant the permit and to do so, as Article 4 of the Agreement stipulates, “with minimum procedural delay.” This is the clear and unqualified conclusion reached by the DOT General Counsel, the U.S. Department of State and the Office of Legal Counsel at the U.S. Department of Justice. It is also the clear and strongly stated view of the European Commission. The desperate fulminations, factual distortions and bizarre legal assertions of the opponents of NAI need to be dismissed as utter rubbish.

Second, complying with our international law obligations is not only the legal and “right” thing to do but it is the smart thing to do.  If the U.S. violates the Open Skies Agreement, it throws open the door to reciprocal restrictions and countermeasures by the EU. For example, if JetBlue wants to fly to the EU next year the EU would be on absolutely firm legal footing in saying no. 

Indeed, the EU could look at revoking the existing and exceptionally valuable rights that U.S. carriers received as a result of the Open Skies Agreement.  The UK, for example, could consider banishing U.S. carriers from London Heathrow and sending them back to Gatwick where they were required to operate under the old bilateral Bermuda 2 accord.  Or Ireland could re-impose the old Shannon stop requirement for U.S. carriers wishing to fly to Dublin.  No one should want that.

Third, and very importantly, granting a permit to NAI supports America’s pro-consumer, pro-growth, and pro-competition Open Skies policy. Granting NAI the right to operate to America supports U.S. consumers, our airports and communities, our tourism sector, the U.S. aerospace industry, cargo carriers and the creation of American jobs. 

That is really what Open Skies was and is all about: not limiting the rights of foreign airlines for the purpose of protecting a handful of U.S. carriers and their politically connected unions, but spurring vigorous airline competition and offering consumers a choice. In the case of NAI, that choice means new routes, affordable fares and excellent service on board Boeing 787 Dreamliners.

The opponents of NAI have offered no new arguments following the DOT Order to Show Cause.  They have simply     asserted in their earlier pleadings and propaganda.

For example, they contend that NAI is a so-called “flag of convenience” carrier that lacks “significant operations in Ireland.”  Or, as one pilot union put it in a press release on its website:  NAI is “an Irish subsidiary that won’t serve Ireland.”[1]

The truth, however, is that NAI is headquartered in Dublin with 80 employees there; has 37 aircraft registered in Ireland; currently operates between Dublin and three cities in Europe; and will, once granted a DOT permit, commence service between Cork and Boston later this year, with service to New York to follow in 2017. 

In the U.S., Norwegian has established cabin crew bases in Florida and New York to support its existing operations to the U.S. The number of cabin crew based in the U.S. - currently about 400 - will grow once NAI receives a permit to operate.  

As a final point of desperation, opponents of NAI have played the slanderous “safety card,” contending that NAI poses a risk to passengers. In reality, all NAI pilots have European licenses, and all of NAI’s operations are overseen by the Irish Aviation Authority (IAA), ranked fourth in the world in 2015 by the International Civil Aviation Organization for compliance with international safety oversight standards. The IAA actually ranked slightly higher than our own Federal Aviation Administration.

If one reads the frantic press statements from unions opposing NAI, one would draw the conclusion that if NAI is granted a DOT permit the U.S. carriers will simply have to close shop and yield the field to the new competition from Scandinavia. The truth is that NAI, while it will offer consumers a number of new routes, such as Cork-Boston and truly affordable fares across the Atlantic, hardly poses an existential threat to the massive oligopoly of network carriers in the three antitrust-immunized alliances. 

These pro-consumer, pro-growth, pro-competition Open Skies agreements have opened markets for U.S. airlines in 120 countries, enabling the largest profits ever witnessed in the history of global aviation. Literally millions of American jobs - in the tourism industry, in our world-leading aerospace sector, as well as at U.S. airlines and airports - owe their existence to America’s quarter century of gold-standard leadership in Open Skies. The fact is that U.S. airlines employed 3.8 percent more workers in February 2016 representing the 27th consecutive month that airline full-time employment exceeded the same month of the previous year.

OpenSkies.travel members have a huge stake in the growth of travel and tourism, and in an aviation market focused on consumers and vigorous airline competition. We stand in resolute support of DOT in proposing to grant NAI’s foreign air carrier permit.

The need for independent, innovative airlines such as NAI has never been more compelling, especially in the transatlantic market where three antitrust-immunized alliances control of the market has increased from 55% to roughly 80% in the last six years.  NAI will inject competition and lower fares into existing and new markets, and drive efficiency, consumer choice, and increased service to underserved communities.

Every day that the NAI application is delayed, consumers subsidize the major U.S. network carriers through fares that are artificially inflated due to a lack of competitive alternatives offered by NAI. BTC and OpenSkies.travel urge DOT to finalize the grant of a foreign air carrier permit to NAI, and affirm that consumers represent the North Star in U.S. aviation policy.

[1] Allied Pilots Association, Allied Pilots Association on U.S. service by Norwegian Air International: “This cannot stand,” Apr. 15, 2016, https://www.alliedpilots.org/News/ID/4227/Allied-Pilots-Association-on-US-service-by-Norwegian-Air-International-This-cannot-stand.

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