Low-cost transatlantic travel set to expand

5/4/2016
Norwegian Air Shuttle has beaten back strong opposition from U.S. airline labor groups to gain preliminary approval to expand transatlantic flights using a company subsidiary based in Ireland. The approval from the U.S. Department of Transportation (DOT) is pending, after a public review and comment period. Comments from airline unions in the U.S. have been plentiful, as most oppose the granting of a foreign carrier's permit to Norwegian Air International to fly from Ireland to the U.S., despite the parent company being based in Norway. Unions fear that the airline will take advantage of low wage labor to undercut competitors and eventually hurt jobs at their own companies. For its part, Norwegian is complying with current laws and the fact that an open skies agreement between the U.S. and EU includes Norway means that they can operate nonstop flights from any EU country to the U.S. EU law also reciprocally permits companies based in Norway to operate wholly owned subsidiaries in Ireland, so operating out of that nation not only would allow Norwegian to take advantage of lower wages and open skies, but also the U.S. Customs and Border Protection pre-clearance services out of Shannon and Dublin. Even though Norwegian can staff its subsidiary with foreign employees, the airline group's chief executive, Bjorn Kjos told U.S. regulators that it would employee crew members who are citizens the U.S. as well as the EU. While the potential impact to U.S. and European competitors has been voiced by opponents, not lost in the DOT's decision to move forward is the potential impact to consumers. Discounted flights across the Atlantic have been tried in the past and have largely failed. The large hubs operated by the legacy carriers as well as the strong alliances formed over the years make the lucrative routes difficult to operate successfully for low-cost entrants. Norwegian hopes to change that outcome by offering lower fares that can open up the routes to more flyers. Larger volumes of passengers might help Norwegian Air International succeed, but the airline also has to overcome the high volume generated by the voices of its opponents.