NAI gets a union; will US3 and labor continue to fight it?

Will the labor union objections to Norwegian Air International (NAI), the Ireland-based arm of the Norwegian family, stop now? The budget airline secured a deal with the International Association of Machinists (IAM) to represent the 40 North America-based flight attendants hired thus far. The crew members are technically employed by OSM Short Haul, a contracting company half-owned by the airline group. That arrangement – crew not directly hired by the airline – was one of the objections US labor groups raised during the three-year battle by NAI to receive its approval to operate in the United States.

NAI is the Norwegian Air Shuttle (NAS) subsidiary that will operate Boeing 737 MAX service between Europe and the United States. Initial flights will launch this summer from Providence, RI and Stewart, NY. As part of its efforts to receive the necessary certifications, the company committed to hire US-based crews.

The move to unionize was fairly easy as the size of the team is relatively small. More than half the 40 employees signed union cards, obviating the need for an election process. For parent NAS, however, that process is more involved. NAS operates Boeing 787 service between the US and Europe with approximately 450 US-based flight attendants working for the carrier via contracts with OSM. Those employees are in the process of voting to decide if they will be represented by the Association of Flight Attendants-CWA. The AFA is the largest flight attendant union, representing the 25,000 cabin crew at United Airlines, among others.

Even after its operations were approved by the US Department of Transportation, the labor unions protested, citing concerns about worker protections and the impact of the low-cost carrier (LCC) on US-based airline jobs. Less than a year ago IAM released a statement from Sito Pantoja, IAM general vice president, suggesting that aircraft registration and employee domicile (two things that have not changed in the past year) put NAI in a position that should see it denied entry into the US market. “Any airline that registers its aircraft in foreign countries with lax safety and security standards and ‘rents’ its cabin crews from countries with no labor laws to lower costs shouldn’t be welcome in the United States…

“Make no mistake: NAI’s scheme to gain entry into the US aviation market will unleash downward pressure on the wages, benefits and working conditions of airline workers here in the United States and cause airline workers to lose their jobs. That is unacceptable.”

But the unions are now represented within NAI and possibly soon at NAS, too. At that point, do the objections cease? Arguably the worker protections claims are null once the union is representing the crews; among other benefits NAI crew get immediate pay raises, increased per-diem payments, and the protection of a grievance procedure according an IAM statement. Union representation is what changed in the intervening months.

But the other half of the argument from the three major US carriers – Delta, United and American (US3) remains: Does the continued rapid growth of LCC competition in the transatlantic market remain sufficiently threatening to the long-term stability of those legacy carriers and their work forces?

To date, the unions and airline management have been in agreement in opposing the upstart LCCs. With the flight attendant union now seemingly set to splinter from that objection – protests that delayed but ultimately failed to prevent NAI’s operations in the US – it seems even less likely that efforts to undo the NAI operations certification will succeed.

For passengers it is hard to see much negative about the news, at least in the near-term. Fares are likely to remain depressed as capacity and competition continue to grow. New routes are coming on line and even if they are not always especially convenient for everyone, more options is generally good.

In the longer-term view, the legacy airlines may argue that they cannot support full route networks in the face of such challenges (recall how United cut transatlantic flights from Houston as Southwest added international service across town). And with more than a dozen new LCC transatlantic routes launching in 2017 alone, the battles on that front are as strong as ever, even if this one angle is relaxed for now.

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