Dear America: Sorry, but you can’t have more affordable flights to Europe. Love, Congress.
posted at 7:01 pm on June 12, 2014 by Erika Johnsen
Looking for a relatively inexpensive flight from the East coast over to Europe this summer, perhaps for a budgeted vacation or to visit family abroad? Well, that’s really too bad, because certain rent-seeking actors within the highly regulated and unionized American airline industry would rather you didn’t have that option in order to keep the air-travel marketplace “fair” — which is to say, to keep the marketplace unfair, but in their favor.
Norwegian Air recently opened an affiliate, Norwegian Air International, based in Ireland with the intention of offering transatlantic flights between the United States and Europe — but with a business model that employs Thailand-based flight crews through a Singaporean pilot supply company, unions are calling it the “Walmart-ing” of the international airline industry and entrenched corporations are not at all pleased with the competitive prices NAI is offering. Last December, Delta, United, and American airlines all signed a joint letter to the U.S. Department of Transportation pleading the administration to reject NAI’s pending application for the required operator certificate because the new airline is clearly seeking “to establish a new flag of convenience in Ireland to avoid Norway’s labor laws and lower labor costs.” As Fortune reported last month:
“We’re fine with competition as long as it’s on a level playing field,” Michael Robbins, the Pilots Association’s director of government affairs, told Fortune.
The discount airline currently operates a long-haul business and even flies between Oslo and New York’s Kennedy Airport under a temporary permit issued by the government in Norway. To offer additional flights between Europe and the U.S., Norwegian filed a still-pending application for a permanent permit with the U.S. Department of Transportation in December.
Robbins says the Pilots Association rarely opposes permit applications, but it took issue with Norwegian’s filing because the airline decided to move its long-haul business from Oslo to Dublin, Ireland earlier this year. It filed its permit application with the Department of Transportation as a “foreign air carrier of Ireland” even though it offers no flights to or from the country.
The Pilots Association has painted the move as part of a scheme by Norwegian Air to evade Norway’s strict labor laws and its collective bargaining requirements. Ireland has weaker labor laws that will allow the airline to keep labor costs low by outsourcing its crew to Asia — a strategy that ran aground of Norway’s stricter regulations.
Oh, the move is “part of a scheme by Norwegian Air” to evade more expensive taxes, labor laws, and regulations? A.k.a., part of a smart business plan to cut down on costs and provide a product at a better price than their competitors, as all good companies should be doing?!
Instead of lobbying against Norwegian Air, perhaps these well-established major airlines and employees should be lobbying against the taxes, labor laws, and regulations that inhibit their ability to compete against innovative services in this growing and interconnected global market of ours — but that’s really not the way our bureaucratized government (nor the rent-seeking cronyists who nurture it) works, is it? Via USA Today:
The House approved legislation Tuesday to prevent a Norwegian airline from flying to the USA because of concerns the low-cost carrier will dodge international labor rules. …
But an amendment added late Monday by voice vote from Reps. Lynn Westmoreland, R-Ga., and Peter DeFazio, D-Ore., seeks to prevent the Transportation Department from granting approval of Norwegian Air International to serve the USA. …
“Congress has a responsibility to make sure that U.S. airlines do business in a fair marketplace and that the U.S. government’s transportation funds don’t hand an advantage to foreign airlines that try to cheat the system,” said Capt. Lee Moak, president of the pilots union.
Translation: Congress has a responsibility to bypass executive jurisdiction on the particular behalf of U.S. airlines so that they can continue to offer unnecessarily overpriced flights to American consumers by preventing an innovative company from bringing about change that can improve the system. Access, denied.
John Byerly, a former State Department official who now serves as a consultant to the Norwegian airline, was chief negotiator for the 2007 agreement for unfettered airline service between the USA and Europe. He said rejecting the airline proposal could lead to a trade dispute.
“It is simply absurd and ridiculous to assert that the U.S. aviation industry — making record profits, paying high dividends and buying back stock — is in a crisis,” Byerly said. “This is just over the bend.”
Here, by the way, is the list of the 33 House Republicans that sent a letter to Transportation Secretary Foxx the other day opposing Norwegian Air’s application. Unbelievable.
The Senate still has to have its say on the transportation bill (and the White House opposes the legislation as-is for other reasons), but don’t let the airline-specific bells and whistles of this debate drown out what’s really going on here. This is at its core yet another instance of free-trade-hating Labor Interests and incumbent Big Businesses doing everything they can to prevent the free market from working like it can and should, to their niche benefit but net economic detriment. If the United States wants to be able to sell its goods and services abroad, i.e. maintain a strong and profitable export market, then it has to be willing to accept the imports of its international competitors, too. At the end of the day, this is just the sort of junky protectionism that helps exactly nobody.