Updated to note that Norwegian has succeeded in receiving Irish AOC

Union leaders fear that Norwegian’s successful attempt to receive an Irish air operator’s certificate (AOC) and offer transatlantic flights through an Irish subsidiary will lead other low-cost operators to follow a similar strategy and the industry could face a “tipping point”.

In an interview with Runway Girl Network, Ed Wytkind, president of the USA’s Transportation Trades Department (TTD), AFL-CIO union, said he expects “other entities to follow suit”, which he believes would “badly undermine labour standards in the US and Europe”. Adds Wytkind: “This could become a tipping point for the future of the global aviation industry.” The union plans to fight just as vigorously against any similar plans that could be put forward by other carriers in the future.

Wytkind sent a letter over the weekend to Irish transport minister Leo Varadkar, urging him to put pressure on the Irish Aviation Authority (IAA) and the country’s Commission for Aviation Regulation (CAR) to deny Norwegian’s application for an Irish AOC. But moments ago, the budget carrier successfully secured the coveted clearance.

Norwegian intends to establish a separate subsidiary, known as Norwegian Air International (NAI), through which it plans to operate its long-haul Boeing 787 services. NAI will be based in Ireland. Norwegian has contracted a Singapore-based company to hire flight and cabin crew for its long-haul base in Bangkok, drawing the ire of unions and US airlines alike, which have accused the carrier of trying to evade Norway’s labour and tax laws.

The Oslo-based carrier’s chief executive, Bjorn Kjos, told Runway Girl Network in January that attempts by US carriers and unions to prevent its long-haul plans from going ahead were borne out of a fear of competition. He denied allegations that NAI was seeking to provide lower wages and less desirable working conditions, claiming that the reason for seeking an Irish AOC was simply to gain access to European Union (EU) traffic rights.

But these denials do not wash with Wytkind, who says his union’s opposition has “nothing to do with being afraid of low fares”, and everything to do with preventing “flag of convenience airlines” from “shopping around the world for the most favourable labour”.

He believes that Norwegian is “illegally taking advantage” of the EU-US ‘open skies’ agreement, pointing out in his letter to Varadkar a section of the accord which states that “opportunities created by the agreement are not intended to undermine labour standards or the labour-related rights and principles contained in the parties’ respective laws”.

Wytkind says that even a “really smart, over-caffeinated lawyer” – Kjos is a former lawyer – would struggle to “make the case for basing crews in Bangkok on Singaporean contracts with an AOC in Ireland” as being anything other than a way of “evading the tax and social laws of Norway”.

And yet, Kjos has succeeded.

Asked whether Norwegian’s strategy is merely an example of globalisation – companies in other industries set up bases in different countries and hire local employees on local contracts – and why the airline industry should be any different, Wytkind says the unions are “not afraid of globalisation”, but what Norwegian is trying to do is an example of “airline globalisation on steroids”.

Opposition to Norwegian’s plan is not limited to the USA – the European Cockpit Association (ECA) also joined the fray and is working together with US unions to oppose the move. ECA president Nico Voorbach describes Norwegian’s plan as “an opaque setup which corrupts the European idea of an open market, embedded in Europe’s social model, and spirit of fair competition”. He goes on to say that the proposed setup of NAI is “designed so as to tilt the playing field in its favour with respect to other transatlantic carriers”.

Delegates from the ECA jointly visited Oslo recently with other stakeholders, including the TTD, to express their concerns to the Norwegian authorities. However, Wytkind says that no attempt was made to speak to Kjos during the visit.

Now that the IAA has ruled in Norwegian’s favour, Wytkind believes the TTD will step up its efforts to convince the US Department of Transportation to deny the carrier’s application to serve points in the USA through the subsidiary. “We believe our Administration in the US is going to reject it,” he says.