News and Commentary

Cronyism: Unions & Politicians Fight Norwegian Air’s Access Because They Offer Cheap Flights

Thursday, ultra-low budget Norwegian Air announced $65 flights from three east coast airports to various European cities, and the airline industry broke into a collective rage-panic.

The $65 flights are merely an introductory price, and don’t include a variety of optional fees. After the introductory phase, flights will be set at a still-thrifty $99. Ben Mutzabaugh of USA Today went through the process of booking a flight on Norwegian Air, and sized up the various fees.

The $65 fare “did not permit an advance seat assignment or include meal service for the roughly six-hour flight.” Additionally, one is allowed a “small item that fits under the seat in front…as well as a bag that can go into the overhead bins–provided its dimensions are 22x16x9 inches or smaller.” In total, carry-on can weigh no more than 22 pounds.

Mutzabaugh ultimately decided on a few upgrades, including extended leg room, and a checked bag. In the end, his flight cost $145–still an extraordinarily cheap fare.

Politicians and unions are disturbed by Norwegian Air, arguing that the airline violates the Open Skies agreement between the United States and the European Union (EU), specifically the portion that reads: “opportunities created by the agreement are not intended to undermine labor standards or the labor-related rights.”

However, The Hill reports that while Norwegian Air’s application for flying rights was “was one of the most complex cases [the Justice and Transportation departments] ever evaluated…the Obama administration ultimately determined late last year that it did not have the authority to withhold the permit and issued final approval for the flight bid…”

Norwegian Air created a subsidiary company, called Norwegian Air International (NAI), based out of Ireland. According to The Hill, this is a sticking point with many of Norwegian Air’s detractors:

Critics say the company is attempting to skirt more stringent Norwegian labor and tax laws by establishing itself in Ireland, and claim the airline is undermining competition by hiring pilots contracted through Asia, where labor costs are lower.

Norwegian counters by claiming their subsidiary’s Ireland headquarters is simply a means of gaining “future traffic rights,” as Norway isn’t a member of the EU, and would need a home base in an EU nation to get a better foothold in the market. They also claim to be hiring American crew members.

USA Today reports:

Norwegian spokesman Anders Lindstrom said…the airline flies an all-Boeing fleet of 120 planes and has ordered 120 more, with 500 U.S. based crew members and hundreds more planned.

Additionally, Norwegian’s senior vice president of sales, Lars Sande, said the company will not be using “Asia-based cabin crew,” and that they are complying fully with the Open Skies agreement, hiring American crews and investing in American planes.

Norwegian Air’s presence in the industry is so disruptive that the unions have begun to apply pressure to President Trump to revoke the airline’s permit.​

Master chairman of the United Airlines branch of the Air Line Pilots Association, Todd Insler, told The Hill:

“It’s a scam. They advertise $65 fares, but they’ll nickel and dime you for everything. People will rush to buy these tickets and wind up paying $1,500, because they check bags or want something to eat.

You can’t drive a car from Washington, D.C., to New York City for $65. So how do they think they can fly across the world for less than that? They can’t sustain that, we can’t sustain that–no one can.”

As was demonstrated by USA Today‘s Ben Mutzabaugh, a claim like Insler’s is incredibly deceptive. Even after additional fees, the price for a Norwegian flight is lower than most other airlines. Ultimately, the root of the pushback appears to be a fear of competition.

Barring the discovery of hidden illegalities, or non-compliance with the Open Skies agreement, Norwegian Air has the same right to fly and compete in the marketplace as any other company. If President Trump were to bow to union pressure and revoke Norwegian Air’s permit, it would be the height of cronyism, disfavoring one company because a conglomerate of other companies is afraid of competition.

Such a move would amount to an inversion of the Carrier deal, which was also pure cronyism. Within the structure of the American economy, a president must not favor one company or industry over another with exclusive subsidies, tax breaks, or other incentives; similarly, one must not punish one company or industry at the behest of a monopolistic collection of corporations.

The fight isn’t over. Last year, Rep. Peter DeFazio (D-OR), introduced legislation aimed at stopping Norwegian from being afforded a permit. The legislation had 128 Democratic co-sponsors. 48 Republicans were also on-board with the bill, which never made it to the floor.

These politicians won’t give up until their friends in the airline industry are safe and happy, or until their ideological interests are satisfied. President Trump will need to stand strong against this tidal wave.