Norwegian hangs 787 order on US approval

Battle lines are being drawn over the latest attempt to introduce cheap flights across the Atlantic.

Norwegian Air Shuttle already offers services from Scandinavia to several US destinations, but intends to also start flying from London Gatwick under an Irish operating licence.

That would put it in direct competition with the full-service alliances that control the lucrative US-UK market, and several airlines and pilot unions have complained about Norwegian’s plans to use an Irish operating certificate without actually flying from the country, as well as its use of Asian crew.

In a recent blog, the head of the Air Line Pilots Association, Lee Moak, accused Norwegian of “deliberately avoiding its own country’s labour laws and airline workers to hire foreign pilots”.

The volume of such objections means that the US Department of Transportation is still assessing Norwegian’s three-month-old application to fly into the US under an Irish operating certificate, despite pressure from the Irish government and the airline, which has threatened to pull an intended order for 20 787s if it doesn’t receive the green light soon.

To accelerate the process, Norwegian has mounted a robust defence of its strategy. The Irish operating certificate, for instance, is no ‘flag of convenience’, but rather a means to simultaneously secure EU traffic rights (Norway is not an EU member state) and position Norwegian at a leading aircraft financing hub – Dublin – as it engages in aggressive fleet expansion.

To charges of subverting European labour laws via a Singaporean recruitment centre, Norwegian answers that its Asian and Western staff receive comparable wages.

“This set-up has no cost advantage in terms of salaries. Both our Thai and US crews are being compensated similarly, between $34,000 and $40,000 per year depending on seniority,” said CEO Bjoern Kjos, who added that flight crew hired by its Singapore office received around $100,000 per year on average. 

Those arguments plus inevitable pressure from Boeing will probably sway the US DoT to approve Norwegian’s plans, though perhaps not in time for the carrier to launch summer services from Gatwick to New York (JFK), Los Angeles (LAX) and Fort Lauderdale (FLL), as it had originally planned.

Such setbacks, however, are par for the course in the maverick world of long-haul, low-cost flying. Thirty years ago Freddie Laker’s pioneering Skytrain operation went bankrupt after transatlantic incumbents priced below cost in order to drive it out of business.

In that case there were strong suspicions of illegal collusion. Nowadays Kjos notes that airline alliances allow their members to “legally cooperate by sharing costs and agreeing on prices”. 

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