Skift Take

Politics is a funny game. There was little doubt the government would approve Norwegian's application — it had no legitimate basis to deny it — but the DOT still waited years before finally getting around to it. That was probably not fair to Norwegian, but the airline will survive.

Norwegian Air‘s Irish-based subsidiary may fly to and from the United States, the U.S. Department of Transportation said in a final order released Friday, dealing a blow to some U.S. interests who had hoped the government would deny the carrier’s application.

The decision was not unexpected, as regulators had decided in April to tentatively award the company’s Irish airline the right to launch U.S. fights. But the issue has been contentious, with several U.S. airlines and their employee unions opposing Norwegian’s plan, while some companies, including Federal Express, supporting it. In recent weeks, European regulators, who supported Norwegian, have become increasingly irritated that it had been taking the United States so long to issue a decision. 

The Air Line Pilots Association, which represents pilots at United Airlines and Delta Air Lines, has been especially vocal, accusing Norwegian of creating its Irish subsidiary in part to “avoid Norwegian labor, tax and regulatory laws.” Without the opposition, the DOT likely would have ruled sooner, as Norwegian first filed its application about three years ago. The government usually approves these applications without delay.

The anti-Norwegian interests often criticize the company’s unusual strategy. Unlike most airlines, which typically have one operating certificate, Norwegian has four — two in Norway, one in the UK and one in Ireland. All entities are called Norwegian — to the traveler, it seems like one airline— but they operate as independent business segments.

The company’s Norway-based airline began flying to the United States in 2014, and has been rapidly adding routes between the United States and Europe using new Boeing 787 aircraft. The Norway-based already has the right to launch any flights it wants from anywhere in Europe (not just Norway) to anywhere in the United States.

But Norwegian has wanted two of its other airlines — one based in Ireland and the other in the United Kingdom — to fly to the United States. Norwegian set up the non-Norway subsidiaries in part to take advantage of more favorable aviation policies in the UK and Ireland. For example, the company has noted that UK-based airlines have more traffic rights to South Africa and India than Norway-based ones while Irish airlines tend to have more traffic rights to Asia than Norwegian ones.

If Norwegian shifts some of its U.S. flying to its Irish operation, it should have more control over the routing of its aircraft. A plane operated by the Irish airline might, for example, fly from New York to Barcelona and onward to somewhere in Asia.

The DOT still has not cleared Norwegian’s UK-based subsidiary to fly to the United States. Eventually, it should do so — it’s not clear the government has any legal basis to deny it —but the timeframe is not clear. In June, the DOT said it needed more time to review Norwegian UK’s application. 

Over time, Norwegian’s Irish application likely became a hotter political issue than it should have been, considering the relatively straight-forward legal issues involved. Both the UK and Irish entities were approved long ago by local European regulators, and when that happens, the United States almost always follows.

European regulators had also lobbied the U.S. government to approve the application, saying it was required to do so by treaty. The European Union went so far as to request formal arbitration with the United States, and eventually that process likely would have led to the same result as what happened on Friday.

But the DOT made that moot with its decision, saying it had little choice but to approve Norwegian’s application.

“Regardless of our appreciation of the public policy arguments raised by opponents, we have been advised that the law and our bilateral obligations leave us no avenue to reject,” arguments from the anti-Norwegian groups, government lawyers said in their final order.

In an email, Norwegian spokesman Anders Lindström said the company welcomed the “long overdue” news. As an immediate consequence, he said, the company expects to add more flying between Ireland and the United States.

“While the delays Norwegian have faced have been unfortunate and unnecessary, ultimately the decision now made by the U.S. DOT finally paves the way for greater competition, more flights and more jobs on both sides of the Atlantic,” he said.

Lindström added that the carrier is now looking ahead to the DOT’s approval of its UK-based company.


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Tags: low-cost carriers, norwegian air, politics

Photo credit: Norwegian Air's Irish subsidiary will be able to fly to the United States after a DOT order release Friday. 158849

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