Norwegian Air International (NAI) recently made headlines with its announcement to launch a low cost airline in the U.S. This may sound great on the surface — who doesn’t want to save money on flights? — until you realize what NAI is intending to do: set up a shell corporation to skirt existing laws and put American carriers at a competitive disadvantage. That’s why I joined 40 of my colleagues in the House and Senate to urge Secretary Anthony Foxx to quickly reject NAI’s application for a foreign air carrier permit.
NAI’s parent company currently flies to the U.S. under the name Norwegian Long Haul. That operation was set up like any other airline and as such, it competes with U.S. carriers under the same rules and regulations. My concern is not with Norwegian Long Haul, but with its new affiliated company, NAI. NAI has created a new business model to skirt existing laws in an attempt to evade market forces.
By registering their planes in Ireland, hiring crew members through Singaporean contracts, and then basing those crews in Thailand, NAI is structuring a flag-of-convenience air carrier that will not be subject to the individual laws of any one country. No U.S. airlines have that option in the marketplace, nor do any other global airlines. In effect, if our government signs off on NAI’s permit, it signs off on this type of business model. That means NAI will have created its own governing structure, one removed from the transparency rules, labor laws, and safety regulations we take for granted today.
This not only presents legal concerns, but also security ones.
NAI appears to be just a shell company, created explicitly to avoid U.S. and Norwegian labor, tax, and regulatory laws. Its aircraft, registered in Ireland, have no plans to fly to or from Ireland. This makes surveillance and oversight of the airline difficult. How is the Irish Aviation Authority, responsible for ensuring the safety of the airline’s operation, supposed to effectively ensure compliance with acceptable international standards? This structure resembles the cruise line industry, where ships registered in Panama and Liberia never touch down in those ports. We need only look to the unfortunate Carnival Triumph disaster in the Gulf last year, where hundreds of people were stranded at sea for days with no food, running water, or power to know how that system of safety “oversight” works for American consumers.
This shell structure also threatens the free market, which requires a level playing field. NAI wants to escape that system for its own gain with an anti-competitive scheme, at our airlines’ and our economy’s expense. For the sake of free and fair competition and to ensure appropriate oversight and security, the Transportation Department should deny NAI’s application for a foreign air carrier permit.