Airline Globalization on Steroids

By Ed Wytkind
Source: Aviation Daily
December 17, 2013
Credit: Boeing

By Edward Wytkind

As the world’s air carriers battle over which will dominate the international marketplace, we must reject business models premised on scouring the globe for cheap labor no matter the consequences, and not pretend this is somehow acceptable competitive behavior.

A perfect example is the operating scheme of Norwegian Air Shuttle (NAS), a European Union (EU) carrier. NAS, incorporated in Norway, and holding its air operators certificate (AOC) there, has registered its Boeing 787 aircraft in Ireland and wants to obtain an Ireland-issued AOC. The airline will use Thailand-based pilots on individual employment contracts governed by Singaporean law to staff 787 flights. The cockpit crew will not be employed directly by NAS but by a pilot recruitment company that will “rent” them to NAS. A similar arrangement apparently will apply to NAS's 787 flight attendants. If this isn’t globalization on steroids, what is?

NAS has argued that because its aircraft are registered in Ireland, it does not need Norwegian work permits for its Asia-based crews; thus, providing a cost advantage to NAS. While the union representing the non-787 crews is challenging this, Norway's government has indicated that registration of the aircraft in Ireland will postpone the need for Norwegian work permits for the Asia-based pilots. And since NAS is obtaining an Irish AOC, it is doubtful that the Norwegians will apply their social laws under this scheme.

Meanwhile, we’re not sure if Irish social laws will cover these workers either. I posed this question in an Oct. 18 letter to the Irish Government that has so far gone unanswered. By the way, the outcome of this transaction matters to U.S. airline employees: NAS has designs on a large expansion into U.S. markets but first it will need approval from the U.S. Department of Transportation (DOT).

We agree with Rep. Peter DeFazio (D-Ore.) who told the DOT witness in a hearing on the state of American aviation last week that the NAS “flag of convenience” scheme should not be permitted to serve U.S. markets. The model is designed to accomplish one thing: to artificially gain an advantage over airlines that actually uphold decent standards of living for their employees. Left unchallenged, these schemes promise to lower the bar for airline labor standards worldwide.

The debate over the NAS business model is especially timely as the U.S. and EU negotiate a Transatlantic Trade and Investment Partnership (TTIP) deal. The EU is attempting to jam aviation into those talks with the ultimate goal of gutting current foreign ownership and control laws and weakening U.S. rules that reserve U.S. domestic point-to-point airline service (cabotage) for U.S. airlines.

Under the EU’s vision, we’d cede control of our airlines to foreign investors who will decide who crews flights, who maintains and services aircraft, who works in reservations and who reaps the profits. Meanwhile, we wonder whether a foreign-controlled airline that operates here could be a reliable partner under the Civil Reserve Air Fleet (CRAF) program, which provides military airlift support during wars and international emergencies.

Aviation trade is expanding through the existing framework; we have more than 100 Open Skies agreements. There is no need to throw aviation into a larger, more complex pot of trade issues. Not long ago the U.S. and EU negotiated an Open Skies agreement that specifically rejected efforts to change U.S. ownership and control rules. So now the EU is back, this time pushing its agenda through TTIP talks.


Comments On Articles