Cheap seats the hard way

If you thought the airline business was complicated by laws, regulations, treaties, bureaucrats, lobbyists and legislators, keep reading, because it could get interesting.

We are referring to the story of Norwegian Air International, or "Norwegian," a new transatlantic carrier known to agency reservations systems as DY and to the Air Line Pilots Association (ALPA) as the devil.

Norwegian is an arm of Norwegian Air Shuttle, a carrier that began operations in Norway in 1993 and that operates 80 or so aircraft within Europe and to destinations in the Middle East, Asia and (since last year) the U.S. It trades on the Oslo stock exchange and it's growing. It has 275 aircraft on order.

Operating new Boeing Dreamliners, the carrier offers low-fare services from New York and Fort Lauderdale to Oslo, Copenhagen and Stockholm, to be supplemented this year by routes to Los Angeles, Oakland and Orlando.

But the carrier's boldest plan is to launch low-fare service this July from New York, Los Angeles and Fort Lauderdale to London Gatwick.

The route expansion is accompanied by an even bolder corporate plan to register the carrier's long-haul aircraft in Ireland and establish the company as an airline of Ireland, using contract crews hired through a staffing agency.

Ordinarily this sort of thing doesn't happen in the bilateral world of international aviation. Historically, country A and country B exchange bilateral traffic rights, reserving direct service for airlines based in and regulated by those countries. This is why, even with Nafta, Aeromexico doesn't operate between Miami and Toronto.

But the old bilateral system is breaking down, and one of the big battering rams was the multilateral open-skies accord between the U.S. and the European Union. It permits any airline of the E.U. to operate between the U.S. and any E.U. country, which is why British Airways operates its Open Skies brand between New York and Paris.

The pact extends to the European Common Aviation Area, which includes non-E.U. countries such as Norway. Thus it is theoretically possible for a Norwegian firm to establish an affiliate in an E.U. country with a favorable business climate (say, Ireland) and operate between the U.S. and any point in the E.U. (such as, say, London).

In attempting to move that concept from theory to reality, Norwegian has attracted the attention of ALPA and the AFL-CIO, which have called on the Transportation Department (DOT) to put the kibosh on the whole plan. According to the labor groups, Norwegian is trying to set itself up in Ireland with the "express intent of evading" Norway's labor laws.

They claim that the DOT should not allow an airline to "shop around for the labor laws and regulations that best suit its bottom line," but isn't that what most companies do when they incorporate in Delaware and shop around for office space and factory sites?

Notably, the unions don't allege that Norwegian is breaking any U.S. or E.U. laws.

Given that Ireland is an E.U. member in good standing, and that Aer Lingus has been serving the U.S. since 1958, we think it's quite a slap for ALPA to suggest that an air carrier regulated by Ireland would somehow be unworthy of serving the U.S. market.

We think Norwegian deserves credit for seizing this opportunity, and we think that if Ireland issues a license to Norwegian, the DOT should accept it and let the traveling public have some cheap seats to London -- because the market may not get them any other way.
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