U.S. paves way for more Norwegian Air flights, competition

Reuters News
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Posted: Apr 15, 2016 3:28 PM

By Jeffrey Dastin

(Reuters) - The U.S. Transportation Department said on Friday it intended to grant flying rights to Norwegian Air Shuttle ASA's Irish unit, setting the stage for a new battle among airlines for leisure travelers.

It said it would give opponents three weeks to file objections. U.S. airlines and unions have said the subsidiary, Norwegian Air International, would undermine U.S. wages and working standards, claims Norwegian has dismissed.

The decision paves the way for increased competition across the Atlantic and for more travelers to buy the cheap tickets that Norwegian can afford to offer, as its operating costs are low.

It comes about a month after the European Union pressured U.S. regulators to approve the typically routine request, which has languished for more than two years. The Transportation Department said it found no legal basis for denying the Irish unit's request to fly to the United States.

While Norwegian is already flying to New York and other U.S. cities, its ability to expand globally has been limited to the air rights that Norway has negotiated.

Not so for its Irish unit. Ireland is a member of the European Union - unlike Norway - which means an Irish airline can tap into aviation rights that the European Union has secured. Friday's news could ultimately let the Irish unit fly from the United States to Europe and onward to other destinations.

"Our continued presence in the U.S. will create thousands of jobs and generate tens of millions of dollars of economic activity for the Group’s U.S. destinations,” Norwegian's chief executive, Bjørn Kjos, said in a statement.

Unions such as the Air Line Pilots Association International (ALPA) were quick to fire back.

Irish taxes and laws give "an enormous competitive advantage over U.S. airlines," ALPA President Tim Canoll said in a statement, adding that the news "demonstrates the failure of our trade agreements to protect American workers."

Delta Air Lines Inc said on an analyst call on Thursday that trans-Atlantic flights added by the likes of Norwegian exceeded customer demand and threatened to lower fares to Europe.

Norwegian has said its fares persuade new people to travel, instead of stealing rivals' customers. Spokesman Anders Lindstrom said the company looks forward to announcing flights from Boston to Cork - which it previously postponed - and potentially other U.S.-Ireland routes once approval is final.

(Reporting By Jeffrey Dastin in New York and Stine Jacobsen in Oslo; Editing by Chris Reese and Steve Orlofsky)