Norwegian Air’s Long-Haul Plan Set Back by U.S. Agency

Sep 03, 2014 3:14 am ET

(Corrects executive’s title in ninth paragraph.)

Sept. 3 (Bloomberg) -- Norwegian Air Shuttle AS lost its bid for temporary permission to fly to the U.S. using an Irish- registered subsidiary, a plan that pilots and competitors said would skirt labor protections.

The carrier’s request for long-term permission to fly under the arrangement is still being reviewed by the U.S. Transportation Department, the agency said in a decision posted on a government website yesterday. The department didn’t give a timeline for making a final decision.

The decision is a setback to Norwegian Air’s plan to become to become Europe’s first successful low-cost, long-haul operator. U.S. unions and airlines say registering as a carrier in a third country is an unfair way to sidestep labor protections and government oversight.

“The U.S. Department of Transportation took an important stand for fair competition today by denying Norwegian Air International’s request for temporary authorization to fly to and from the United States,” Lee Moak, president of the Air Line Pilots Association union, said in an e-mailed statement yesterday.

The airline said the decision “is not a denial,” and that it intends to continue pursuing its request.

By certifying its subsidiary in Ireland, the carrier was seeking to hire pilots through a Singapore employment company and base its cockpit crews in Thailand, according to ALPA, North America’s largest pilot’s union.

JFK Flights

The Fornebu, Norway-based company began flying between London’s Gatwick airport and New York’s John F. Kennedy International on July 3. Those flights were operated under the carrier’s existing Norwegian license and aren’t affected by yesterday’s decision.

The airline applied in December as Norwegian Air International Ltd. for permission to fly the route under a license granted by the Irish government, saying the arrangement would “serve the public interest” by increasing competition.

“While we think it is unfortunate that DOT feels the need to further delay issuance of our permit, which has been pending now for over six months, Norwegian Air International stands behind its business,” Asgeir Nyseth, head of Norwegian Air’s long-haul unit, said in a statement.

Delta Air Lines Inc., American Airlines Group Inc. and United Continental Holdings Inc. filed comments urging the DOT to reject the application. They said the regulatory framework would circumvent labor protection laws and give the carrier an unfair advantage.

Norwegian is operating its routes with Boeing Co.’s 787, the company’s latest and most-efficient model.

The carrier eventually wants to serve U.S. cities such as Oakland, California, and Fort Lauderdale, Florida, it said in its filings with the government.

--With assistance from Kari Lundgren in London.