ANALYSIS: Pilots fight new Norwegian employment model

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European and US pilot associations have met with Norwegian and US authorities in Oslo to discuss issues arising from the continuing efforts by Norwegian Air Shuttle to set up an innovative corporate model for a new subsidiary airline.

Pilot associations both sides of the Atlantic have voiced concern about the subsidiary’s proposed employment model and its carefully chosen countries of registration, employee sources and employment practices, all of which would be different, says the European Cockpit Association.

Norwegian has applied for a EU air operator’s certificate to be issued by the Irish Aviation Authority to the new airline, Norwegian Air International (NAI). This carrier – with a corporate headquarters in Ireland but no operating base there, flying twin-aisle aircraft aircraft registered in Ireland – is applying to operate transatlantic services between the EU and the USA while retaining its Norwegian brand identity. The Irish AOC and the US foreign air carrier permit are still under consideration by the Irish Aviation Authority (IAA) and the US Department of Transportation (DOT).

“Pilots with Singaporean contracts, based in Bangkok [Thailand] flying for an Irish company with long-haul routes across the Atlantic, branding itself as being Norwegian – is that the new European model that NAI is trying to establish?” asks ECA president Nico Voorbach.

Norway has high labour costs and social taxes, and is a member of the European Economic Area, but not of the EU. By basing NAI in Ireland, it gains EU status and exposure to Ireland’s lower social and corporate taxes and an aviation authority that applies European oversight legislation. Pilot and cabin crew will be sourced via NIA-owned contracting agencies by which the crew would be employed.

“Forum-shopping and social dumping practices are not acceptable,” argues the ECA. “Competition on the Atlantic is a good thing but it must be based on fair conditions. Pilots in Europe and across the globe should have decent working conditions, including access to pension and social security. The liberalisation of the air transport market must not be an excuse to scorn labour rights, be it in Europe, Asia or America.”

But the ECA and American Air Line Pilots’ Association will not find much comfort in the European Commission’s attitude. This is how the EC proposition was summed up by the US DOT: “The European delegation objected to any characterisation of Ireland as a ‘flag of convenience,’ and stated that Ireland’s safety and fitness oversight meets all applicable ICAO and EU standards. They stated that [under] the US-EU Air Transport Agreement, the US should recognise Ireland’s determinations regarding NAI. The European delegation further stated that the European Commission welcomed the competition that NAS/NLH [Norwegian Air Shuttle/Norwegian Long Haul] has provided in the EU market and noted that its business model, if successful, will benefit competition, US consumers and US manufacturers.”

In a statement distributed by Norwegian today, the IAA reacts to Scandinavian media reports on Norwegian’s application for an Irish AOC. “Although this is an unusual step, the IAA is happy to take the opportunity now to clarify its excellent performance record in relation to safety oversight of international airlines in order to alleviate all unnecessary concerns and to counter the false information which is currently in the public domain,” says the authority.

It adds: “In 2011, Ireland was ranked amongst the best in the world for civil aviation safety oversight, following an intensive international audit by the International Civil Aviation Organisation conducted during 2010. In July 2013, the Eurcontrol Performance Review Body published its annual monitoring report on safety which ranked Ireland first out of 29 European states for the measure of effectiveness of safety management... The IAA already provides safety regulation of one of the largest international airlines in the world, Ryanair, to the highest international standards [and] has provided safety regulatory oversight to long-haul airline operators with services on the North Atlantic for many years – Aer Lingus, as an example – as well as the safety regulation of aircraft on the Irish register from other regions worldwide such as Russia, Italy, Colombia, Mexico and Spain.”

In December 2013, Norwegian mounted a defence of its operating model after criticism from pilot union ALPA. “Those familiar with the airline industry also know that competitive wages and conditions are not country-specific – but rather follow an international standard,” said the airline.

It argued that its long-haul pilots were attracted by “highly competitive conditions on a par with both US and other European carriers”, plus “the opportunity to fly the Boeing 787 Dreamliner, a brand-new aircraft type that offers improved in-flight working conditions”. The airline added that it “always follows the rules and regulations in all markets we operate”.

Additional reporting by Niall O’Keeffe