The controversy over plans by Norwegian Air Shuttle AS to expand
its trans-Atlantic services intensified Monday as a group of U.S.
lawmakers moved to block the effort on the eve of a meeting with
European Union officials aimed at keeping the issue from becoming a
full-blown trade dispute.
Opponents of Norwegian's move to use an Ireland-based subsidiary
for its venture--including the largest U.S. and European
airlines--secured congressional support for a measure that backers
said would block the U.S. Department of Transportation from
approving the European carrier's application, which has been
sitting before regulators since February.
The latest twist in one of the airline industry's most closely
watched competition cases comes ahead of a Tuesday meeting in
Vienna between European regulators--who back Norwegian's
application--and their U.S. counterparts, at a time when the two
sides are seeking a broader free-trade deal.
Norwegian, Europe's third-largest budget carrier by revenue
after Ryanair Holdings PLC and EasyJet PLC has already delayed to
July from April plans to launch new trans-Atlantic flights using
its Ireland-based NAI unit.
Opponents of Norwegian Air Shuttle's plan say the company aims
to circumvent European labor laws by registering aircraft in
Ireland and hiring cheaper staff at local bases in Europe, Asia and
the U.S. As Norway isn't a member of the EU, the carrier has had to
set up the subsidiary in Ireland to take advantage of agreements
between the EU and U.S. Norwegian's supporters said detractors are
trying to stifle competition.
The U.S. House of Representatives on Monday passed an amendment
to the proposed Department of Transportation budget request
intended to block Norwegian's application.
European officials have been pushing Norwegian's case and said
they expect the DOT's delay to lead to "very spirited discussions,"
during a Tuesday meeting of the special committee set up to oversee
the two sides' open skies aviation treaty.
"The strategy seems to be to allow [Norwegian] to bleed slowly
to death as the administration seemingly cannot move. But if they
don't grant the permit, it is in violation of European rights under
the [open skies] agreement," one European official said.
A DOT spokeswoman said Norwegian's application is pending before
the Department because "it is a contested proceeding," but that the
department "cannot comment on the merits of the case."
Norwegian is the first of a new breed of low-cost airlines to
launch trans-Atlantic flights and has said its expansion would
boost competition.
Addressing criticism that it is simply looking to hire cheap
labor, the carrier has said it is seeking an Irish license to gain
access to airline traffic rights that aren't available in Norway
and to secure more attractive aircraft financing rates.
Norway's budget airline recently began putting together a fleet
of Boeing Co. Dreamliners and has already been operating
trans-Atlantic long-haul flights from Scandinavian hubs such as
Oslo, Stockholm and Copenhagen to New York and Fort Lauderdale. But
to be competitive, it needs to fly from larger hubs, such as
London, and to do so a new U.S. carrier permit is necessary.
Opponents of Norwegian Air Shuttle's plan say the company aims
to circumvent European labor laws by registering aircraft in
Ireland and hiring cheaper staff at local bases in Europe, Asia and
the U.S. As Norway isn't a member of the EU, the carrier has had to
set up a subsidiary in Ireland to take advantage of agreements
between the EU and U.S.
EU officials have supported Norwegian's plan under the existing
aviation treaty and expected the U.S. to do the same, based on the
agreement signed by the two sides in 2007. The U.S. hasn't issued a
formal reply and if the situation isn't resolved soon it risks
"evolving into a big issue," the European official said.
Norwegian's application has been raised in previous meetings.
"It cannot be that the EU-U.S. agreement only operates when one
side says so," the official said.
Write to Christina Zander at christina.zander@wsj.com
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