Loading...

Norwegian‌ ‌Airline‌ ‌Opposed‌ ‌Over‌ ‌Low-Budget‌ ‌Business‌ ‌Model‌

April 12, 2021 by Tom Ramstack

A startup airline based in Norway is running into opposition from a leading U.S. congressman on transportation policy over its plan to expand into the United States.

The issue is its “flag of convenience” business plan.

The startup, called Norse Atlantic Airways, has links to Norwegian Air International, a low-cost airline that operated flights between Europe and the United States.

Its division that handled long-haul flights went bankrupt last year as the COVID-19 pandemic cut deeply into the travel industry’s finances. It now operates only shorter European routes.

The controversy for members of Congress who oversee transportation policy was its operating plan in the United States.

Norwegian Air International was registered in Ireland, where labor costs and corporate taxes are lower than Norway. In addition, Irish labor laws are less stringent.

It originally used crews from a staffing agency to keep wages lower than U.S. airline industry norms.

Norwegian Air International received a U.S. Transportation Department permit to fly in the United States in 2016 but operated U.S. flights for only four years.

Now Norse Atlantic Airways plans to use the same kind of flag of convenience business plan when it enters the U.S. market. Some of the new airline’s biggest investors are executives for Norwegian Air International.

Norse Atlantic plans to fly between New York, Los Angeles and Miami and to European cities such as London, Paris and Oslo. It plans to begin its first flights this year in December after raising capital from institutional investors and in a public stock offering.

Rep. Peter DeFazio, D-Ore., chairman of the House Transportation and Infrastructure Committee, calls the flag of convenience tactics used by both airlines irresponsible efforts to avoid labor laws. 

Other critics of the flag of convenience carriers question their safety as they cut costs to a minimum.

DeFazio tried but failed to block the Transportation Department from granting Norwegian Air International a permit. Now he is trying again with Norse Atlantic Airways.

He warns that allowing another flag of convenience airline to operate in the United States would open the door for many others.

Airlines defend their sometimes drastic cost-cutting strategies by pointing out the intense international competition they face to win passengers.

DeFazio says compliance with the best labor and other regulatory laws is a higher priority.

He wrote a letter to U.S. Secretary of Transportation Pete Buttigieg last week explaining why he thought Norse Atlantic Airways’ permit for U.S. routes should be denied.

“In short, Norwegian exploited labor while enjoying the liberalized benefits of the U.S.-E.U.-Iceland-Norway open skies agreement and competing unfairly with airlines that do not subvert fair labor standards,” DeFazio said in his letter.

Norwegian Air International is the only airline so far with a flag of convenience operating model to have won a U.S. Transportation Department permit.

“All the elements are in place for a repeat of the Norwegian debacle,” DeFazio said about Norse Atlantic Airways.

By denying the airline a permit, “Norse Atlantic’s application will give you the opportunity to make good on the new administration’s commitment to protecting U.S. jobs and promoting fair competition in international markets,” DeFazio wrote to the Secretary of Transportation.

Norse Atlantic Airways and Norwegian Air International officials deny they are operating as what DeFazio called “alter egos” of each other while trying to evade labor law responsibilities.

Nevertheless, Bjørn  Kjos, former chief executive officer of Norwegian Air International, owns 15% of Norse Atlantic Airways, the new airline disclosed. The majority owner is Bjørn Tore Larsen, who co-founded OSM Aviation, the staffing agency used by Norwegian Air International.

In addition, Norse Atlantic Airways plans to fly former Norwegian Air International 787 Dreamliners across the Atlantic.

“The operation will be in line with the agreements that regulate air traffic between Europe and the U.S,” Norse Atlantic Airways said in a statement.

The U.S. Transportation Department has not yet made a decision on whether to grant flight permits to Norse Atlantic Airways.

Travel

November 26, 2021
by Dan McCue
US Restricts Travel From 8 Countries in Response to Omicron Variant

WASHINGTON - The Biden Administration on Friday imposed air travel restrictions on eight African nations in response to a new... Read More

WASHINGTON - The Biden Administration on Friday imposed air travel restrictions on eight African nations in response to a new COVID strain first detected in South Africa. The new travel restrictions, which go into effect Monday, apply to citizens of South Africa, Botswana, Zimbabwe, Namibia, Lesotho,... Read More

November 24, 2021
by Dan McCue
Justice Department to Prioritize Prosecution of Air Rage Incidents

WASHINGTON — With more people expected to travel by air this week than at any time since the onset of... Read More

WASHINGTON — With more people expected to travel by air this week than at any time since the onset of the coronavirus pandemic, Attorney General Merrick Garland had a message Wednesday for anyone tempted to lose their cool — act up and you will be prosecuted.... Read More

On the Road Again: Travelers Emerge in Time for Thanksgiving

DALLAS (AP) — Determined to reclaim Thanksgiving traditions that were put on pause last year by the pandemic, millions of... Read More

DALLAS (AP) — Determined to reclaim Thanksgiving traditions that were put on pause last year by the pandemic, millions of Americans will be loading up their cars or piling onto planes to gather again with friends and family. The number of air travelers this week is... Read More

November 5, 2021
by Dan McCue
Air Travel Up in August, Though COVID-19 Still Proved a Drag

WASHINGTON – The number of airline flights in the U.S were up 50.4% in August compared to a year earlier,... Read More

WASHINGTON – The number of airline flights in the U.S were up 50.4% in August compared to a year earlier, but the pace of recovery of the industry continued to be impacted by the drag on travel caused by the COVID-19 pandemic, the Transportation Department said... Read More

October 25, 2021
by Dan McCue
White House Issues Detailed Requirements for Foreign Travelers Entering US

WASHINGTON — The Biden administration on Monday released granular new details on the international travel policy set to go into... Read More

WASHINGTON — The Biden administration on Monday released granular new details on the international travel policy set to go into effect on Nov. 8. In a conference call with reporters senior White House officials reiterated the administration’s original announcement: Namely that all non-citizen, non-immigrant air travelers... Read More

October 20, 2021
by Kate Michael
Experts Fear Travel Restrictions Have Unintended Consequences for Diplomacy

WASHINGTON — Early advice from the World Health Organization warned against imposing travel or trade restrictions on countries experiencing COVID-19... Read More

WASHINGTON — Early advice from the World Health Organization warned against imposing travel or trade restrictions on countries experiencing COVID-19 outbreaks. Now experts fear the decision by most countries to ignore this advice may have unintended consequences for the future of global mobilization and diplomacy. “The... Read More

News From The Well
Exit mobile version