The Department of Transportation (DOT) has issued final approval for Norwegian Air’s bid to fly to the United States, delivering a major blow to the airline industry on Friday evening.
Norwegian Air has for years been seeking access to more airports in the U.S. and European Union, by establishing a subsidiary — Norwegian Air International — in Ireland, a member of the EU. The company says it could offer transatlantic flights for as low as $150 each way under that model.
The DOT tentatively approved the application in April, roiling the aviation industry, union groups and lawmakers from both sides of the aisle.
Critics say the company is attempting to skirt more stringent Norwegian labor and tax laws by establishing itself in Ireland. Opponents also slammed the airline for undermining competition by hiring pilots contracted through Asia, where labor costs are lower.
“DOT’s decision has guaranteed a race to the bottom in our transatlantic aviation market. ‘Norwegian’ is a virtual airline, set up under a flag of convenience to exploit weak labor laws in other countries like Singapore, save money, and undercut competition,” Rep. Peter DeFazio (D-Ore.), ranking member on the Transportation and Infrastructure Committee, said in a statement. “I am extremely disappointed by DOT’s short-sighted decision to ignore the serious harm to thousands of American jobs, and our national security.”
Norwegian Air currently flies to some airports in the U.S. under the banner of its parent company, Norwegian Air Shuttle. But the company says the model for its low-cost subsidiary requires access to more Open Skies airports in order to have more route flexibility.
Norwegian Air maintains that it established its subsidiary in Ireland for access to future traffic rights to and from the EU and to secure better aircraft financing rates, and has agreed not to use any Asian-based cabin crew on transatlantic flights.
"While the delays Norwegian have faced have been unfortunate and unnecessary, ultimately the decision now made by the US DOT finally paves the way for greater competition, more flights and more jobs on both sides of the Atlantic," said Anders Lindström, a spokesman for the airline. "Above all, it is a victory for millions of passengers who will benefit from more choice and lower fares. We now look forward to working on our plans for Norwegian's continued expansion in the US, delivering the flights, jobs and economic boost we always promised we would.”
The DOT said that in approving applications, it does not have to consider a clause in the U.S. and EU’s Open Skies agreement that says “opportunities created by the Agreement are not intended to undermine labour standards or the labour-related rights.”
The department argued that the provision of the agreement that addresses labor “does not afford a basis for rejecting an applicant that is otherwise qualified to receive a permit.”
Top lawmakers on the Transportation and Infrastructure Committee have been pushing bipartisan legislation that they say would effectively block the DOT’s stamp of approval.
The bill would bar the DOT from allowing a foreign air carrier to operate between European countries and the United States unless the carrier complies with basic U.S. or EU labor standards.
“Bipartisan legislation to stop the NAI permit garnered 175 co-sponsors this Congress,” DeFazio said. “I intend to work with my colleagues to fight this attack on Open Skies.”
This story was updated at 6:52 p.m.