Grams luftfartsblogg: ALPA Intl. om Norwegian

søndag 13. september 2015

ALPA Intl. om Norwegian

Flags of Convenience: Undercutting Labor Standards, Undermining International Aviation

In the United States and much of the rest of the world, international aviation regulations require aircraft to be registered (“flagged”) in the home country of its owners and regulators. This system encourages best practices in safety and prohibits forum shopping—providing more stability and predictability to the consumer as well as ensuring a more level playing field for air carriers.
Several new airlines are currently attempting to evade this national flag–based system and switch to a flag-of-convenience business model. Using the international maritime system as a template, companies such as Norwegian Air Shuttle have set up subsidiaries based outside of their home countries in an attempt to circumvent local laws, taxes, and regulations to undercut labor practices and increase their “bottom line” financial results.
The Norwegian case is illustrative of this concept. While headquartered in Norway (as the name suggests), the company has applied to the U.S. Department of Transportation for a foreign air carrier permit for a subsidiary Norwegian Air International (NAI), which is to be based in Ireland, despite the fact that the company has no flights to or from Ireland, and despite the fact that Norwegian Air Shuttle already flies to the United States today under its own DOT authority. Flagging its planes outside of Norway allows the company to evade Norwegian tax and labor laws.

NAI: The Big Picture [infographic]

Day of Action: Fly In [slideshow]

The pilots who operate the NAI aircraft are employed by a Singapore hiring company on fixed-term individual employment contracts with total compensation and labor protections substantially inferior to pilots employed by Norwegian. The flight attendants have been employed in a similar manner, though the laws, terms, and conditions of employment that apply to them are unclear.
The expressed purpose of this forum shopping, according to NAI itself, is to avoid Norwegian labor standards and reduce its costs compared to its other competitors who are playing by the rules.
The possibility of such flag-of-convenience airlines was foreseen during the negotiations that led to the U.S.-EU-Norway-Iceland Air Transport Agreement. To prevent forum shopping, Article 17 bis was added during the second phase of the agreement. This article reads in part:
The Parties recognize the importance of the social dimension of the Agreement and the benefits that arise when open markets are accompanied by high labour standards. The opportunities created by the Agreement are not intended to undermine labour standards or the labour-related rights and principles contained in the Parties’ respective laws. . . [and these] principles. . . shall guide the Parties as they implement the Agreement. . .
This provision is designed to prevent forum shopping with the intent of undermining labor-related standards—exactly what NAI is attempting to do. Despite this, NAI’s application for a foreign air carrier permit remains pending at the U.S. Department of Transportation.

Atypical Employment

Many flag-of-convenience industries are developing atypical employment models. The liberalization of Europe’s aviation market and the emergence of these new business models have given rise to a variety of new employment arrangements for pilots. A recent study sponsored by the European Commission evaluated this threat. The study identified several particularly pernicious variations on these models, including (1) “bogus” or “false” self-employment (where the pilot who is an employee is classified other than as an employee in order to mask his or her true status in order to avoid costs associated with taxes or social contributions, or has a contract with an intermediary such as a hiring agency rather than directly with an airline); (2) “zero-hour” flying (where the pilot is remunerated only for the hours of the flight with no paid leave of any sort); and (3) pay-to-fly schemes (in which the pilot contributes to the airline in order to gain flight hours).

Flight Plan

The U.S. Department of Transportation must formally deny Norwegian Air International’s pending application for a foreign air carrier permit. In doing so, DOT should make clear that this is a rejection of the concept of flags of convenience in the aviation sector.
Furthermore, Open Skies agreements should—where appropriate—contain enforceable labor provisions that support the value of high labor standards and protect U.S. aviation jobs. Where labor provisions are present, such as Article 17 bis of the EU-U.S. Open Skies Agreement, they must be enforced, and the prohibition of flag-of-convenience models like Norwegian Air International must be upheld and strengthened.