Norwegian CEO to US airlines: You’re afraid of competition

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Scandinavian budget carrier Norwegian Air Shuttle has hit back at US opposition to its plans to operate transatlantic flights through an Irish subsidiary, accusing US airlines of trying to stifle competition and prevent the onset of lower fares across the Atlantic.

Speaking to Runway Girl Network, Norwegian chief executive Bjorn Kjos said that attempts by American Airlines, Delta Air Lines, United Airlines, US Airways and Airlines for America (A4A) to persuade the US Department of Transportation (DOT) to deny his carrier’s application to serve points in the USA through what they describe as “a shell company in Ireland” are borne out of a fear of competition.

“Why do they try to stop us? Because nobody likes competition,” says Kjos. He denies allegations from the US carriers in their DOT filing that Norwegian’s plan to establish an Irish company known as Norwegian Air International (NAI) to take over its long-haul operations is an attempt to “avoid the social laws of Norway – allowing NAI to provide lower wages and less desirable working conditions”.

Says Kjos: “US carriers told the DOT that Norwegian is hiring pilots at 50% of the salaries they have to pay – we’re hiring ex-KLM pilots and they don’t work for peanuts.”

He adds that the reason Norwegian has applied for an Irish air operator’s certificate (AOC) is to make it easier for it to serve markets in the Far East – Ireland is a European Union member state whereas Norway is not. The carrier already serves points in the USA from Oslo, but plans later this year to launch low-cost flights from London Gatwick to New York, Fort Lauderdale and Los Angeles.

Kjos says he hopes to find out whether the Irish AOC application has been successful “very soon”.

So far the low-cost model has not successfully been applied to the long-haul market on a wide scale, something that Kjos believes is about to change as fuel-efficient widebodies such as the Boeing 787 make it a more attractive option.

Irish budget carrier Ryanair has expressed an interest in entering the long-haul market in the past but has yet to go beyond talking about it. Kjos says he expects US carriers to oppose possible future long-haul plans by other European low-cost operators as well. Ryanair itself is no stranger to controversy over its interpretation of labour laws, and has faced fines in the past for employing crew based in France under Irish labour laws.

“[US airlines] are afraid of competition over the Atlantic. They think if they can stop Norwegian they can keep up the high prices,” he says.

United Airlines declines to comment beyond what it states in its DOT filing, while American is referring all queries to A4A. An A4A spokesman would not comment beyond the following statement: “We want the authorities to fulfill their responsibility to ensure that competition is fair and on a level playing field, and that airline services comply with applicable international agreements.”

If Kjos’s theory on how the long-haul low-cost market will develop over the coming years is to be believed, legacy carriers may well have good reason to be concerned. Addressing delegates at the Runways UK conference in London on 16 January, Kjos said that aircraft such as the 787 will do for the long-haul low-cost market what the arrival of Boeing 737s and Airbus A320s did for the short-haul budget market in the 1990s.

“No, we will not be alone…Wait and see how long it takes for Ryanair to come after us – most of them will come and they’ll create volume,” he says. “Open the sky, let everyone compete – those that can compete will compete and those that can’t will die.”

1 Comment

  1. US carriers have forgotten the meaning of competition. They operate in a large domestic market, with a limited number of players and th tightest capacity constraint that industry has experienced. Profits are barely made and only through jacking up ancillary fees.
    None of the cries we hear about unfair competition are real.
    EXIM Bank financing will not make a dent in the financing of international carriers specially those in the GCC.
    The facility in Abu Dhabi regardless of its pros and cons, will not impact congestion at US gateways.
    International carriers actually pay better than US carriers and working conditions and duty time limitations are more liberal. A salary of US$ 21K for a first officer, is unheard of in the Gulf.
    The bottom line is US carriers have forgotten how to compete and are simply scared of competition.