Why Norwegian’s Cheap Seats and High-Tech Planes Are Frightening Airlines and Politicians

Wings over London.

Wings over London.

By Jonathan Spira on 23 June 2016
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The dustbin of aviation history is littered with the carcasses of failed low-cost carriers, People Express, Skybus, and Laker Airways to name just a few. Yet every now and then, a company breaks through and manages to not only challenge the airline industry status quo and inexorably changes its norms.

Given this history, it’s no wonder so many are afraid of Norwegian, already one of the big names in low-cost airfare within Europe. Having branched out to the long-haul business, it currently flies brand new Boeing 787 Dreamliners across the Atlantic with extremely low-cost fares on prime international routes such as New York-London, and plans to expand its international operations further.

The Oslo-based carrier wants to fly more 787s, as well as 737 Maxs in the future, to the United States and plans to do so via its Irish-registered subsidiary, Norwegian Air International, or NAI. Since Norway isn’t a member of the European Union and Ireland is, the subsidiary can take advantage of the greater freedoms afforded to EU airlines via the 2007 Open Skies agreement. The 2007 agreement replaced and superseded individual open skies agreements between the United States and individual European countries and now allows any U.S. or EU airline to fly between any point in the European Union and any point in the United States.

Today, the airline industry landscape greatly differs from that which existed when the JetBlues, Southwests, and Lakers entered the market. The four largest U.S. airlines – American, Delta, United, and Southwest – control more than 80% of the U.S. market and the first three, along with their alliance and joint venture partners, control the same percentage of passenger traffic on North Atlantic routes.

The U.S. Department of Transportation gave Norwegian the green light to offer these flights in early May. The action immediately sparked protest.

The reason? Pilots, flight attendants, mechanics, and their unions contend that Norwegian based its company in Ireland specifically to evade otherwise generous Norwegian labor laws and wages.

The issue boiled over in May as hundreds of employees of U.S.-based airlines, many chanting “Deny NAI,” held a protest in front of the White House.

An ad hoc coalition of the biggest U.S. airlines, labor unions, and politicians – most notably Hillary Clinton – has mounted a protracted and vociferous campaign to have the U.S. Department of Transportation block Norwegian Air International’s expansion. The unions say they are motivated by the need to protect jobs as, ostensibly, U.S. airlines might cancel some flying to avoid competing with Norwegian and that could result in layoffs.

Norwegian, which employs more U.S.-based flight attendants than any other foreign airline, some 300 at its two U.S. bases on the East Coast, says the opposite is true, that the company is creating more jobs in the country, and that its employees are employed under and protected by U.S. law. “Many of our cabin crew have worked for other U.S. airlines in the past and report they are not only happier working for Norwegian, but that they are better paid,” Anders Lindström, Norwegian’s U.S-based director of communications, told FBT in an interview.

The airline plans to increase by 300-400% the number of U.S.-based flight attendants even as it stands accused of stealing jobs from American workers.

Click here to continue to Page 2What Boeing, Other Airlines, and Airports Think

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