Flags of Convenience: US and EU transportation authorities pave the way

The US Department of Transportation and European Commission are paving the way for “Flags of Convenience” in aviation.

With its decision to tentatively approve traffic rights for “Norwegian Air International” (NAI), the US Department of Transportation (DOT), together with the European Commission (EC) have opened the door and de facto laid out the welcome mat for “Flags of Convenience” in aviation. The US regulator’s decision has been pending for two years amid greater scrutiny on Norwegian’s employment practices and business model. The tentative approval now ignores the key provision of Article 17bis in the EU-US Open Skies agreement, and disregards important facts about NAI’s employment practices.

“This decision is an own goal,” says Dirk Polloczek, President of the European Cockpit Association (ECA). “In opening the door to this flag of convenience scheme, the US DOT and the EC have chosen to undermine their own airline industries and destroy decent jobs and the social rights of their own citizens. They appear instead to have looked out for the interests of a few CEOs that want to deny workers their rights and make a ‘quick buck’ at the expense of the rest of the responsible industry and society.”

He continues: “We fundamentally disagree with this decision, and will continue to work together with our colleagues in European and US aviation to challenge it and to argue that this tentative approval should not be made permanent, unless and until Norwegian has made clear and satisfactory commitments as to how and where NAI employs its flight and cabin crew.”

Despite already having trans-Atlantic flight rights from anywhere in Europe to the US, Norwegian chose Ireland to establish a new subsidiary – NAI – to avoid the social standards of Norway and to enable the company to use a very questionable hiring model.

The carrier has designed a scheme to engage pilots and cabin crew via a Singaporean postbox company and claims to base them in Bangkok. In fact, most of the pilots are based in Europe and operate out of European airports across the North Atlantic, but without being subject to relevant EU employee regulation. Cabin crew are from countries with very low labor standards engaged without residency or work permits in Europe.

The airline claims that NAI’s permit will “create thousands of new jobs,” omitting the fact that most are already part of the transatlantic operation running the last two years – based on a temporary Norwegian exemption – and that NAI’s ‘employment’ scheme will destroy many more quality European and US jobs than it creates.

“If you want to see the future of aviation, as the US DOT and the EC plan it, just look at today’s maritime industry. It is a world where operators choose to be regulated by countries with the weakest or even non-existent rules. Where the standards that have been developed over decades are sold out. Where companies feel free to place themselves beyond the taxes and obligations of the markets they benefit from,” says Jon Horne, Vice-President of ECA. “We will not just stand by and watch while our own government officials again fire the starting gun on this race to the bottom.”