Norwegian Air Shuttle's plan to launch the biggest low-cost airline crossing the Atlantic took another hit last week when former Transportation Secretary Ray LaHood said the federal government should withhold a permit for the carrier, pending further studies.
The Norway-based carrier is awaiting approval from the U.S. for permission to fly into the country from a base in Ireland.
Airlines and labor unions charge that Norwegian — Europe’s third-largest low-cost carrier — is opening a base in Ireland to take advantage of more lenient labor laws, with plans to undercut transatlantic fares charged by other carriers.
“We should not rush approval of the new business model until the consequences for international competition and the impact on airlines, their workers, and consumers are fully understood,” LaHood said in an article that appeared on the news site the Hill.
Norwegian’s chief executive, Bjorn Kjos, said his intentions are misunderstood.
In a recent interview, Kjos said his airline already has permission to fly into the U.S. under the “open skies” agreement between the U.S. and Europe. The move to Ireland, he said, will make it easier to fly to destinations in Africa, Asia and South America and give his airline access to better financing to buy planes.
The salaries of crew members flying from Ireland are nearly the same as those for U.S.-based crews, Kjos said.
So why are unions and competing airlines so intent on stopping Norwegian?
“They have a protected environment for high prices,” he said. “They hate that we will have introductory fares for $99.”
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