IATA opposes U.S. airline labor unions in 'flag of convenience' dispute


Arguing that it would erode free-market air service agreements, IATA is lobbying to block a so-called "flag of convenience" clause from making it into the final version of the FAA reauthorization bill.

The provision, which was included in the House version of the FAA reauthorization bill that passed in April, would forbid the Department of Transportation from issuing foreign air carrier permits to airlines undermining U.S. labor standards.

It would also forbid the DOT from awarding a permit to "flag of convenience" carriers, which the bill defines as a foreign airline registered in a country other than the home country of its majority owners in order to avoid the regulations of that home country. 

The measure, which has the support of U.S. airline labor unions, is a response to the DOT's contentious 2016 approval of a foreign air carrier permit for an Ireland-based subsidiary of Norwegian Air. Labor groups -- along with Delta, American and United -- accused Norwegian of locating in Ireland because labor laws there are laxer than laws in Norway. 

In a letter sent to leaders of the House and Senate transportation committees last week, IATA and other organizations in the travel and shipping industries argued that the "flag of convenience" clause would violate the aviation agreement between the U.S. and the European Union, under which airlines are able to fly unfettered across the Atlantic. 

The provisions "would threaten the foundations of open skies agreements that the United States has entered into with 125 countries since 1992 by unilaterally imposing new conditions on entry of foreign carriers to the U.S. It would also invite retaliation by U.S. open skies partners, leading to significant negative impacts on the U.S. aviation industry, manufacturers and the local economies that enjoy the benefits of access to aviation services," the organizations said.

The European Union, the letter states, has already said it would consider retaliating if the provision were to be passed.

Among the signatories of the letter are JetBlue, Atlas Air, UPS and FedEx. But Delta, United and American, which opposed the Norwegian air permit, are among the carriers that didn't sign on. Airline trade group Airlines for America is silent on the proposal.

Congress must either pass an FAA bill by Sept. 30 or pass a short-term bill that would extend funding for the agency. The Senate has yet to pass its version of the FAA bill and has its attention turned at present to the confirmation process of Supreme Court nominee Brett Kavanaugh.

Nevertheless, Politico has reported over the past week that that the House is working on a bill that would be pre-approved by the Senate so that it could pass both chambers quickly.

Spokespeople for the House and Senate transportation committees didn't respond to emails from Travel Weekly.

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