September 1, 2014
The Norwegian Shell Game
Over the past several months the Association of Flight Attendants-CWA has been working with other aviation unions to block a scheme to outsource our jobs - #DenyNAI. If the Department of Transportation (DOT) approves Norwegian Air International’s application for a Foreign Air Carrier permit, it will set a dangerous precedent. The air carrier plans to fly to the US under an Irish certificate with Pilots hired in Singapore and Flight Attendants in the United States working under a constantly renewed contract that keeps base pay below $18,000 each year.
AFA leaders, activists and members have taken part in our coordinated #DenyNAI campaign. This is a complicated issue because of the shell companies involved and multi-faceted campaign we are waging against them. But the issue is very clear – if we allow this game to go unchecked, our jobs, collective bargaining rights and safety regulations could evaporate with a flags of convenience model for aviation.
What is Social Dumping?
Norwegian Air Shuttle (NAS) is the third largest “ultra” low cost European carrier and operates several companies flying under the ‘Norwegian’ brand: NAS, Norwegian Long Haul (NLH)and Norwegian Air International (NAI).
NAS, headquartered in Oslo, Norway, has a fleet of 737 aircraft which primarily fly throughout Scandinavia and the European Union. NAS has an Air Operating Certificate (AOC) issued by the Norwegian government. NAS workers are represented by the Norwegian labor union, Parat, and thus have a seniority list and other negotiated benefits, in addition to strong job protections under Norwegian law. Their employer pays taxes to the government of Norway which administers extensive social protections including health care, paid parental leave, and other including benefits that make up a strong social safety net.
The company’s long-haul flying is done by NLH and NAI utilizing 787 aircraft from Scandinavia and the EU to Asia and the United States.
NLH has a Norwegian AOC but, having obtained an exemption from the Norwegian government, registers its aircraft in Ireland. This enables the company to hire foreign workers without Norwegian work permits. NLH has route authority to fly to the US under the US/Norwegian Air Transport Agreement (ATA), an open skies agreement.
On the other hand, NAI is an Irish company with an Irish AOC and aircraft registered in Ireland. The Norwegian government has no oversight over NAI, and so the company is not bound by the US/Norwegian ATA. Further, NAI does not employ flight crews: It uses a staffing company to hire and train crewmembers. NAI has hired Asian and US crews to lower their operational cost below what they would have to pay if they were to continue to operate under the Norwegian AOC. NAI currently operates flights from Scandinavia and the EU to Asia, with sights set on providing service to the US under a provision in the broader EU/US Open Skies Agreement.
Norwegian Bait and Switch
The NAI application to fly to the US is under review by the USDOT and NAI has also applied for exemption authority. The exemption would allow NAI to initiate service to the US without receiving a foreign air carrier permit. Instead of flying under the legitimate NLH structure, the parent company would use NAI to operate Irish-certified flights to the US. If the DOT approves the NAI application, the legitimate NLH will likely be merged under the Irish AOC and cease to exist. The provisions of the US-Norwegian ATA already accommodate all of the proposed NAI route structure, which could be operated with aircraft that is registered in Norway, abiding by Norwegian law.
AFA opposed the NAI application to fly the US on the basis that the Norwegian model, creating a new Irish company for the purpose of flying to the US as part the EU/US open skies agreement, violates Article 17 bis EU/US Open Skies Treaty. AFA has been working closely with allies such as ALPA, ITF/ETF, Parat, and TTD to put pressure on the US government urging them to deny the NAI application.
NAI was created to circumvent Norwegian labor laws and therefore amounts to social dumping of corporate responsibility.
If DOT allows NAI to set up a “flags of convenience” business model it will put downward pressure on US carriers to lower labor costs on transatlantic operations in order to compete with this new “ultra” low cost carrier model.
This opens the floodgates to duplicating the model throughout aviation as competition “requires” regulatory change or exemption.
Our Efforts to Fight Back
Since Fall 2013, AFA has also continued to work with the Senate and members of the House of Representatives to send letters to Secretary Foxx and the White House urging them to ensure the terms of the EU/U.S. treaty are upheld. AFA has worked with labor allies to encourage our members to sign a petition to the Obama Administration urging them to protect the US aviation industry and US aviation jobs.
In our continuing campaign, AFA has:
- Met with Norwegian officials and other International aviation unions to join forces to prevent the flags of convenience business model from infiltrating our industry (February 2014.)
- Submitted comment to the DOT rulemaking urging them to reject the NAI applications (February 2014).
- Urged AFA members to sign the White House petition (February 2014).
- Introduced a resolution at ITF meeting calling on European Commission and the US DOT hold NAI to the labor provisions of the EU/US Open Skies Agreement (May 2014)
- Worked quickly through our Government Affairs activists to achieve the U.S. House of Representatives unanimous vote for the DeFazio/Westmoreland Amendment to H.R. 4745, the FY 2015 Transportation Appropriations bill (June 2014). The amendment requires DOT to follow U.S. law and labor protection provisions outlined in the U.S.-EU Open Skies Agreement when considering an application for a foreign air carrier permit.
- Met with DOT Secretary Foxx and called attention to our filed comments (June 2014).
In July 2014, a US delegation from the Department of State and the Department of Transportation met with the European Commission. The EU requested the meeting to attempt to persuade the US DOT to approve the NAI application, or to tend an exemption. Meeting notice was posted to the U.S. federal register.
In August 2014, AFA supported ITF/ETF efforts to get EU member states to weigh in with the European Commission Directorate-General for Mobility and Transportation, and submitted comments.
Read the press release >
The DOT must rule on the exemption application by the end of August 2014. In the event the US government grants an exemption, we will keep up our fight to block the NAI foreign air carrier permit application and work to ensure that our jobs and Flight Attendant profession are not further eroded by any decision. We won’t back down – and until or unless the application is approved or an exemption given, we will work to defeat the outsourcing scheme outright.