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U.S. Lawmakers Propose “Flag of Convenience” Airline Law But Critics Say it Addresses a Problem That Doesn’t Exist

U.S. Lawmakers Propose “Flag of Convenience” Airline Law But Critics Say it Addresses a Problem That Doesn’t Exist

U.S. Lawmakers Propose Anti "Flag of Convenience" Airline Law

A bipartisan group of U.S. lawmakers have tabled a new law that they say would protect the American aviation industry and American jobs from “unfair” international competition – on the flip side, however, critics claim the Bill addresses a “problem that does not exist” and would invite “retaliation” from countries with whom the U.S. currently has a good aviation relationship.

The proposed Fair and Open Skies Act would prevent the Department of Transport from issuing new air carrier permits to any European airline that didn’t have fair labor standards or to any airline that was found to be exploiting what’s known as a flag of convenience business model.

Essentially, a flag of convenience is where a company sets up business in another country in order to primarily take advantage of lower labor standards and worker protections and regulations.  There was an attempt to introduce a similar Bill in 2016 although it was never actually made into law.

Photo Credit: SFO
Photo Credit: SFO

The House Transportation Sub Committee specifically calls out low-cost long-haul airline Norwegian, claiming that it’s subsidiary Norwegian Air International is “Norwegian in name only, having established itself in Ireland to avoid Norway’s strong labor protections and employing crews on cheap short-term contracts governed under Singapore law.”

The five lawmakers say the decision by the Department of Transport to issue NAI an air carrier permit will “encourage future opportunistic airlines to continue this race to the bottom in international civil aviation, threatening U.S. carriers’ ability to compete in critical international markets.”

For its part, Norwegian has always strongly refuted the claims made by the likes of Congressman Peter DeFazio.  The airline employs more U.S.-based flight attendants than any other international airline and employs long-haul crew in a number of European countries including the UK, Italy and France – hardly countries where labor rights could be considered an issue.

That’s perhaps one reason why a lobby group that represents a number of U.S airlines including jetBlue and Hawaiian thinks this latest Bill is “unnecessary” at best.

“The Fair and Open Skies Act of 2019 placates a narrow segment of the U.S. aviation industry by claiming to address a problem that does not exist,” a spokesperson for the U.S. Airlines for Open Skies commented.

The group claims safeguards are already in place to prevent the U.S. aviation industry going the same way as the maritime industry so this intervention is of little use and could actually backfire.

Yet DeFazio hopes the Bill will make international airlines that want to serve the United States “play by the rules”.

“Today, foreign airlines can set up under a flag of convenience to exploit weak labor laws in other countries in order to save money and undercut competition,” he explains.

Photo Credit: Qatar Airways
Photo Credit: Qatar Airways

The Bill is supported by a number of prominent groups, including the Allied Pilots Association, the Association of Flight Attendants and Transportation Workers Union, although the chances of this Bill actually ever becoming law are slim at best.

In related news, Qatar Airways yesterday signed an agreement with GE in a deal valued at over $5 billion for new aircraft engines and MRO services.  The signing ceremony, held at the White House, was witnessed by President Donald Trump and perhaps signals an effort by the Qatari’s to avoid U.S. government scrutiny.

The Big Three U.S. airlines have been waging a PR war against the likes of Qatar Airways and other Persian Gulf airlines for several years and have campaigned for tougher rules that would restrict their access to the United States.

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