Flags of Convenience: Norwegian Air
Norwegian Air International (NAI) and Norwegian Air United Kingdom (NAUK), two subsidiaries of Norwegian Air Shuttle (NAS), have applied for foreign air carrier permits from the Department of Transportation (DOT). NAI’s application was granted in the last days of the Obama administration. While NAS is headquartered in Norway, it has established NAI and NAUK in Ireland and the UK, respectively, in order to take advantage of these countries’ less-restrictive labor and regulatory laws. By flagging aircraft in Ireland, for instance, NAI expects to be able to use flight crews employed under contracts governed by the laws of various Asian countries, including Singapore and Thailand. This scheme runs counter to the letter and spirit of the U.S.-EU Open Skies Agreement and should be rejected.
NAI is an example of a flag-of-convenience airline. This business model has been responsible for the destruction of the American maritime shipping industry. In 1955, U.S.-flagged vessels carried 25 percent of the world’s tonnage with 1,072 ships. Today, U.S. carriers account for just 2 percent of world tonnage with 167 ships. That falloff is a direct result of forum shopping, a process where ship owners opt to register and “flag” their vessels in a country that offers the most business-favorable laws governing their crews, taxes, and other aspects of their business. The U.S. airline industry employs more than 151,000 workers who support its international operations. Collectively, these workers earned $11.3 billion in wages in 2015. Together, U.S. airlines’ international operations contribute about $95 billion per year to the U.S. economy. Foreign flag-of-convenience carriers put those jobs and their economic benefits at risk.
The record shows that NAS’s clear goal in setting up these subsidiaries is to avoid Norway’s labor laws. Article 17 bis of the U.S.-EU Air Transport Agreement was designed to prevent exactly this kind of degradation of labor standards. The preceding two Republican-led Congresses have opposed NAI’s scheme, seeing the threat it poses to U.S. airlines and their employees. More than 220 members of the House and Senate weighed in with the Obama administration in opposition to these applications. The DOT chose to ignore NAI’s flag-of-convenience structure when it approved the carrier’s application in December 2016.
Help stop this job-killing approval by participating in ALPA’s Call to Action and tweeting the Administration today!
- The new administration should immediately move to reverse the DOT’s decision regarding Norwegian Air International and revoke or suspend the foreign air carrier permit.
- Congress should clarify that it is not in the public interest to award foreign air carrier permits to flag-of-convenience carriers.