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American and United happy to compete with 'clever' Norwegian

American Airlines and United Airlines are happy to compete with Norwegian’s expansion to the USA, which their chief executives say is simply using a "clever" business strategy - and not subsidies - to lower costs.

“[Norwegian’s] not being subsidised doing what they do,” says Oscar Munoz, chief executive of United, on the sidelines of the US Chamber of Commerce Aviation Summit in Washington DC today. “That’s something we have to accept and work through… I appreciate that – I don’t like it necessarily as a competitor – but that we can compete with.”

Munoz describes Norwegian’s Irish subsidiary Norwegian Air International (NAI) and its UK subsidiary Norwegian UK as "clever... labour arbitrage" plays that allows them to keep costs low by hiring staff in different countries.

NAI will begin service to the USA in June with new service on Boeing 737 Max 8 aircraft to Edinburgh from Hartford, Newburgh Stewart and Providence. It plans to add service to Belfast, Cork, Dublin and Shannon from the US cities by July.

The airline will base four 737s in Newburgh and Providence supported by at least 200 pilots and flight attendants in each city.

“There’s nothing about Norwegian that is like the Middle Eastern carriers that suggests they’re subsidised,” says Doug Parker, chairman and chief executive of American, later at the summit. “It’s never been an issue competing with someone who has a different model or lower costs – we do that all the time and we’re good at it.”

Parker was referring to the US mainline carriers' on-going complaint against the Gulf carriers who they claim have received more than $40 billion in state subsidies that has allowed them to dump capacity in the US market under open skies.

Emirates Airline, Etihad Airways and Qatar Airways all deny the allegations.

American and United, along with Delta Air Lines, are pushing the Trump administration to limit open skies with Qatar and the United Arab Emirates due to those subsidies. Their main concern focuses on the ability of carriers from those countries to operate fifth freedom flights from Europe to the USA, as Emirates does from Athens and Milan.

Both Munoz and Parker reiterate their complaints against the Gulf carriers today.

The two executives' comments do put them at odds with some of their unions, including the Air Line Pilots Association (ALPA) and Association of Flight Attendants-CWA (AFA), which vocally oppose Norwegian and NAI.

"International airlines flagging for convenience are bad for the airline industry and bad for the US economy," says ALPA president captain Tim Cannoll in response to Munoz and Parker's statements. "ALPA strongly opposes this scheme, as did United Airlines and American Airlines in filings with the US Department of Transportation in 2013 and 2014. These airlines have not modified their positions with DOT, nor has ALPA changed its position in support of defending the US aviation industry and American jobs against unfair foreign competition.”

This is a change from Canoll's view in February, when he was confident that American, United and other carriers supported the union's view. “They have filed in support of our position on the docket with DOT. They haven’t said a lot lately. That will change. I am confident of that," he said at the time.

Updated with comment from ALPA

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