U.S. airlines, unions say Norwegian Air plans to 'Walmart' the skies

Low-cost airline's globalization moves raise issues about transparency, labor — even safety

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New low-cost airlines frequently start with a headlong race to bottom-line prices and no-frills service, but U.S. carriers and others are worried newcomer Norwegian Air has figured out a way to bypass regulations that rule the market, prompting fears about labor, plane maintenance and even passenger safety.

Today, Norwegian flies from New York City and Fort Lauderdale to Europe; it wants to add Los Angeles, Oakland and Orlando to its route map in 2014. “We're constantly considering new routes for our network, also in and out of the U.S.," a spokesman for the airline said. Three weeks ago, Norwegian announced the opening of crew bases in New York and Fort Lauderdale, with plans to hire 300 U.S. flight attendants in 2014 “and many more in the years ahead.”

As its rapid expansion plans unfold, Norwegian Air has managed to do the impossible, uniting the U.S. airline industry — though in opposition to Norwegian's existence. And not just over competitive issues, but also over Norwegian's intent to, in effect, choose the regulations it wants to obey and to ignore, raising questions about how transparent Norwegian's operations would be.

This week the AFL-CIO accused Norwegian of "Walmarting the airline industry" and campaigned against what it called "flag of convenience airlines that seek to scour the globe for low labor standards and lax rules and regulations."

But wait. So what if an airline founded in Fornebu, Norway, in 1993 flies under an operating certificate issued in Ireland, uses Thailand-based pilots supplied by a Singaporean company and goes on a hiring spree for U.S. flight attendants? Isn't that what globalism is all about?

The Irish connection doesn’t surprise industry analysts, because Ireland-based Ryanair is the recognized worldwide leader among low-cost airlines. Ryanair, after all, has considered pioneering “standing-room only” fares and onboard pay toilets.

But in December, Norwegian Air International ― representing several Norwegian brands ― filed an application with the U.S. Department of Transportation to expand U.S. service. The move opened the floodgates to criticism of “social dumping” on American soil, with U.S. airlines, unions and trade organizations attempting to block the application almost in lockstep. Norwegian had been under fire from employees, unions and tax officials for years, particularly after hiring pilots on short-term contracts in Estonia.

“Norwegian has a unique scheme, and their plans for ‘success’ call for undermining the European Union-U.S. Air Transport Agreement," said Michael Robbins, lobbyist for the Air Line Pilots Association, representing 32 North American carriers. "If they are allowed to go forward, other airlines ... will need to respond.”

The Big Four of American, Delta, United and US Airways ― soon to be three, now that American and US Airways have the government’s blessing to merge ― crafted a joint statement bluntly asking the DOT to deny Norwegian's application in part because it is “not in the public interest.” They accused Norwegian of creating a “shell company” in Ireland and “using imported labor.” As proof, they attached to their filing an internal Norwegian “Dear Colleagues” holiday letter that said: “The operations for NLH [Norwegian Long Haul] will end in Norway and we will establish Norwegian Air International Ltd. (NAI) in Ireland. With this, all business under NLH will be transferred to NAI.”

Even the Southwest Airlines Pilots' Association weighed in, though Southwest doesn't fly over the Atlantic: “SWAPA opposes what appears to be an attempt of Norwegian Air International to seek authority to operate in the United States utilizing a ‘venue shopping’ strategy, whereby a carrier chooses ‘which’ set of regulations from ‘what’ country it chooses to follow.”

When asked about these objections, Norwegian spokesman Lasse Sandaker-Nielsen said: “It’s obvious that they’re afraid of competition. Their strategy is to make false allegations in an attempt to prevent American travellers from getting inexpensive airfare to Europe.”

Of course, there’s more than a little irony in airlines crying foul over hiring practices. The average passenger might not realize the U.S. airline industry has been transformed by its labor actions over the past two decades, as tens of thousands of jobs have been eliminated. Carriers have sidestepped union battles by hiring low-wage part-timers or engaging in wholesale outsourcing. Even “uniformed” airport ticket agents are not always employees of the airlines they represent. Just last month, Yahoo reported United is furloughing 688 flight attendants.

That said, the comparison to Walmart is interesting. Regardless of what might be said about the world's largest retailer's labor practices, Walmart has succeeded in lowering the prices of average goods for millions of consumers. As a consumer, it's hard to question Norwegian's low prices. Recently it advertised one-way fares of $315 from New York to Bergen, Norway, and $296 from Fort Lauderdale to London.

But retail stores are not airlines, and if Walmart started an airline, would you want to fly it? In my 2012 book, "Attention All Passengers," I address how airline labor relations have affected costs, service and even safety. Over the past decade, virtually every airline in the United States has opted to outsource aircraft maintenance, in many cases overseas to El Salvador, Mexico, China and Singapore. What’s more, dozens of current and former Federal Aviation Administration employees have told me the FAA is not providing the same level of oversight of these shops.

In a situation full of ironies, the U.S. airline industry, which has long intoned the mantra of laissez-faire capitalism and letting the marketplace decide, now wants government intervention. But if the DOT does approve Norwegian’s application, there’s no telling when cost-cutting will hit bottom.

Both Norwegian and its foes say they haven’t received timetables on the application process. A DOT spokesperson says, “We are in the midst of a contested proceeding and we are not in a position to address timing issues at this time.”

As for those 300 flight attendant openings in New York and Florida, there was plenty of response from a depressed workforce, and airport officials in Florida and California weighed in to support Norwegian. But it’s fair to remain skeptical after Norwegian claimed ― and reiterated ― it will create one million “travel and tourism jobs” in the United States.

William J. McGee is a longtime airline safety advocate and author of "Attention All Passengers." He teaches at Vaughn College of Aeronautics and Technology in Queens, N.Y., and served as the lone consumer advocate on the DOT’s Future of Aviation Advisory Committee.

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