EU to arbitrate over Norwegian’s access to US market

Despite the US Department of Trade (DOT) granting tentative permission for Norwegian Air International to operate between the European Union (EU) and the US, the EU has given notice that it intends to arbitrate over whether NAI should have access to the US market. EU Transport Commissioner Violeta Bulc sent a letter to the U.S. Secretary of Transportation, Anthony Foxx, on July 26, informing him that the Commission had consulted EU member states and would invoke arbitration. This notice will likely mean further delays in the decision-making process.
In what has been seen by many as an attempt to bypass stringent Norwegian labor laws, as well as a means of utilising EU-US Open Skies agreements, Norwegian Air International (NAI) was set up in Ireland under a what has been suggested as a “flag of convenience” and had applied for a foreign air carrier permit from the DOT in December 2013. Despite the DOT’s tentative approval, formal confirmation has not been forthcoming.
Noting that the DOT had not confirmed the application’s approval, a spokesperson for the European Commission Transport Directorate indicated on July 27 that: “We notified the US authorities yesterday that we will be launching arbitration.”
The spokesperson also advised the arbitration process would begin in September and would likely take eight or nine months. In the meantime, the EU has continued to urge the US to comply with the Open Skies agreement even prior to this impending arbitration, adding that the EU also inviting the DOT to approve a foreign air carrier permit for an additional UK-based Norwegian subsidiary that wishes to start transatlantic flights.
A company spokesman for Norwegian Air confirmed: “We are very pleased that the EU Commission is seeking arbitration with U.S. authorities to solve this long overdue issue. Norwegian Air International is an approved and fully operational EU carrier that meets all requirements under the Open Skies Agreement between the EU and the U.S. A final approval will lead to more new jobs on both sides of the Atlantic, more new transatlantic routes and more affordable fares.”
A win for Norwegian could challenge U.S. carriers such as Delta Air Lines (DAL.N) on the highly profitable transatlantic route, where partnerships with European rivals and immunity from U.S. antitrust law have allowed them to make continually healthy profits.