U.S. Carriers Wary of Norwegian Airline’s Cut-Rate Wages
U.S.-based airlines and their pilots are waging a new battle against a foreign carrier they contend is taking advantage of provisions in international law to unfairly compete on American routes.
The latest lobbying fight centers on an expansion of Norwegian Air Shuttle ASA, an Oslo-based company that started out as a regional carrier but has spent much of the past decade rebuilding itself as an aggressive low-cost airline with wide reach across Europe. More recently it has begun pushing into Asia and the United States, staffing those international flights with Thai flight attendants who are paid about $500 a month, far less than the wages earned by its Norway-based attendants.
The airline, which operates under the trade name Norwegian, locked down a fleet of ultramodern Boeing 787 Dreamliners to expand its international offerings to Thailand and the United States but is registering the aircraft in Ireland, where looser labor regulations allow foreign flight attendants to work for less.
The airline’s aggressive cost-cutting has made routes between the United States and Norway’s capital, Oslo, among the most competitive international airfare offerings in North America. Through the winter, the airline is offering fares as low as $391 round-trip from New York including all taxes, undercutting United, its only U.S. competitor on the direct route, by nearly $300.
Norwegian labor unions launched a boycott campaign last fall, arguing that underpaying the foreign flight attendants threatens to undermine the workplace and wage protections that native workers enjoy. The airline responded that its Thai workers are paid salaries that are well above average for their homeland, and receive bonus payments for long shifts and layovers in expensive foreign destinations.
Since that dust-up in Norway, American carriers started taking notice and are asking the Transportation Department to take a closer look at Norwegian’s pending paperwork for further expansion into the United States. On Dec. 3, the airline’s holding company submitted an application for a new subsidiary, Norwegian Air International Ltd., to operate to more American destinations.
In its response to the proposal, the industry trade group Airlines for America said it believes the Transportation Department “absent the necessary regulatory approval being issued by the appropriate European authorities, should continue to pursue questions that were raised regarding such proposed operations to the United States at the last European Commission-United States Joint Committee meeting.”
At that committee meeting in Iceland last June, U.S. representatives peppered Norwegian and European Commission counterparts with questions about the airline’s operations and its staffing. The panel’s next meeting is slated for Wednesday.
Meanwhile, the Air Line Pilots Association, called last month for the Transportation Department to “immediately reject” the application of Norwegian Air International.
“Norwegian Air International was clearly designed to attempt to dodge laws and regulations, starting a race to the bottom on labor and working conditions,” the pilot union’s president, Capt. Lee Moak, said in a statement. “If successful, the company would gain a serious and unfair economic advantage over U.S. airlines in the competition for the business of international passengers flying to and from the United States. This exploitation of the laws intended to prevent labor law shopping cannot be allowed to stand.”
While foreign flag carriers have long served American destinations, U.S.-based carriers contend today’s competitors are more cutthroat than ever, taking advantage of legal technicalities and sometimes the deep-pocketed assistance of foreign governments to subsidize their long-term growth plans.
Two carriers in the United Arab Emirates, Etihad and Emirates, have been at the center of recent protest by groups including Airlines for America and the pilots association. They are worried a proposal to open a Customs and Border Patrol preclearance facility in Abu Dhabi would unfairly advantage Etihad, since it’s the only carrier that serves the United States directly from the city.
While Norwegian doesn’t enjoy the government subsidies that help some Middle Eastern carriers, the pilot union worries that its move to circumvent Norway’s labor regulations by registering aircraft in Ireland will have an effect on aviation similar to the impact that “flags of convenience” have had on maritime shipping. By registering ships in countries such as Panama where labor costs and taxes are significantly lower, cruise operators and cargo haulers alike have been able to cut their costs, leaving the United States with one of the smallest flag fleets among developed seafaring nations.
Norwegian has retorted that it pays its Asia-based crews wages similar to those offered by other airlines — including Northern Europe competitor Finnair — and is planning to hire “hundreds” of American workers as it expands in the United States.