Running head: NORWEGIAN AIR SHUTTLE DISPUTE 1 Introduction When an airline of a foreign country wants to conduct commercial operations to and from the United States, they must obtain authorization from the United States Department of Transportation (DOT). This authorization includes: (1) economic authority from the Office of the Secretary of Transportation and (2) safety authority from the Federal Aviation Administration. Under Title 49 U.S.C. 40102(21), a foreign air carrier is “a person, not a citizen of the United States, undertaking by any means, directly or indirectly, to provide foreign air transportation.” Title 49 U.S.C. 40102(23) further defines foreign air transportation as ““the transportation of passengers or property by aircraft as a common carrier for compensation, or the transportation of mail by aircraft, between a place in the United States and a place outside the United States when any part of the transportation is by aircraft” (U.S. Department of Transportation, 2014). According to the U.S. Department of Transportation (2012), by exchange of letters dated January 12, 2009, the U.S.-E.U. (European Union) Joint Committee adopted reciprocal recognition procedures for airline fitness and citizenship. Under the U.S.-E.U. Air Transport Agreement, U.S. and E.U. Member States recognize determinations made by one another regarding its air carriers. Licensed E.U., Iceland, and Norway air carriers can file exemption or abbreviated application for foreign air carrier permits, under 49 U.S.C. 41301/40109 and 14 CFR §211.20/§302.202, while application for fully- qualified, permanent permits are in process . As mentioned, economic authority, granted by the Office of the Secretary of Transportation, is separate from safety authority (FAR Part 129) granted to foreign air carriers by the Federal Aviation Administration (FAA). A foreign air carrier may meet economic authority requirements, but fall short on meeting U.S. safety standards and vice versa. Failure to meet requirements of either is grounds for Running head: NORWEGIAN AIR SHUTTLE DISPUTE 2 denial of permit. In addition, foreign air carriers must meet licensing requirements of any other applicable U.S. Government agencies (U.S. Department of Transportation, 2014). Background In late 2013, Norwegian Air Shuttle, hoping to take full advantage of the reciprocal agreements reached by the U.S.-E.U. Joint Committee, planned to expand operations to the United States from countries other than its original home base of Oslo, Norway. In February 2014, the Irish Aviation Authority granted Norwegian Air International (NAI), a fully owned subsidiary of Norwegian Air Shuttle, an air operator’s certificate (AOC). According to the world’s largest airline pilot union, Air Line Pilots Association, Int’l (ALPA), Norwegian Air’s Irish AOC “creates the same flag of convenience scenario that led to the U.S. maritime industry ...

1. Running head: NORWEGIAN AIR SHUTTLE DISPUTE 1
Introduction
When an airline of a foreign country wants to conduct
commercial operations to and from the
United States, they must obtain authorization from the United
States Department of Transportation
(DOT). This authorization includes: (1) economic authority
from the Office of the Secretary of
Transportation and (2) safety authority from the Federal
Aviation Administration. Under Title 49 U.S.C.
40102(21), a foreign air carrier is “a person, not a citizen of the
United States, undertaking by any
means, directly or indirectly, to provide foreign air
transportation.” Title 49 U.S.C. 40102(23) further
defines foreign air transportation as ““the transportation of
passengers or property by aircraft as a
common carrier for compensation, or the transportation of mail
by aircraft, between a place in the
United States and a place outside the United States when any
part of the transportation is by aircraft”

2. (U.S. Department of Transportation, 2014).
According to the U.S. Department of Transportation (2012), by
exchange of letters dated
January 12, 2009, the U.S.-E.U. (European Union) Joint
Committee adopted reciprocal recognition
procedures for airline fitness and citizenship. Under the U.S.-
E.U. Air Transport Agreement, U.S. and E.U.
Member States recognize determinations made by one another
regarding its air carriers. Licensed E.U.,
Iceland, and Norway air carriers can file exemption or
abbreviated application for foreign air carrier
permits, under 49 U.S.C. 41301/40109 and 14 CFR
§211.20/§302.202, while application for fully-
qualified, permanent permits are in process .
As mentioned, economic authority, granted by the Office of the
Secretary of Transportation, is
separate from safety authority (FAR Part 129) granted to
foreign air carriers by the Federal Aviation
Administration (FAA). A foreign air carrier may meet
economic authority requirements, but fall short on
meeting U.S. safety standards and vice versa. Failure to meet
requirements of either is grounds for

3. Running head: NORWEGIAN AIR SHUTTLE DISPUTE 2
denial of permit. In addition, foreign air carriers must meet
licensing requirements of any other
applicable U.S. Government agencies (U.S. Department of
Transportation, 2014).
Background
In late 2013, Norwegian Air Shuttle, hoping to take full
advantage of the reciprocal agreements
reached by the U.S.-E.U. Joint Committee, planned to expand
operations to the United States from
countries other than its original home base of Oslo, Norway. In
February 2014, the Irish Aviation
Authority granted Norwegian Air International (NAI), a fully
owned subsidiary of Norwegian Air Shuttle,
an air operator’s certificate (AOC).
According to the world’s largest airline pilot union, Air Line
Pilots Association, Int’l (ALPA),
Norwegian Air’s Irish AOC “creates the same flag of
convenience scenario that led to the U.S. maritime
industry’s demise and the loss of tens of thousands of jobs,”
this in part because NAI will not officially
serve Ireland (ALPA, 2014). ALPA’s view is that NAI seeks to

4. circumvent Norway’s labor laws, which does
not align with the U.S.-E.U. Air Transport Agreement. ALPA
further suggests that NAI looks to gain an
unfair advantage over U.S. carriers by skirting its own national
laws and breaching the true intent of the
Air Transport Agreement.
Another concern ALPA raises is safety oversight of NAI’s
flight operations. While Norwegian Air
International will never operate through Ireland, Capt. Lee
Moak, ALPA’s President, raises the issue,
“The Irish Air Accident Investigation Unit itself has cited the
adverse effect of such a business model on a
government’s ability to perform adequate safety oversight”
(ALPA, 2014). One example of this point is a
2011 fatal accident at Cork Airport, which involved a carrier
with a Spanish AOC that did not operate
through Spain. The Irish Air Accident Investigation Unit cited
concern in its Formal Report, ACCIDENT,
Fairchild Aircraft Corporation, SA 227-BC Metro III, EC-ITP
date February 10, 2011. Because of the
investigation, the Irish accident unit made 11 safety
recommendations including “Agencia Estatal de

5. Running head: NORWEGIAN AIR SHUTTLE DISPUTE 3
Seguridad Aérea [the Spanish State Agency for Aviation Safety]
should review its policy with regard to
continuing oversight of carriers, in particular those conducting
remote operations.” Another
recommendation states “The European Aviation Safety Agency
should review the process by which AOC
variations are granted to ensure that the scope of any new
operation is within the competence of the air
carrier.” In addition, the European Commission “should review
the scope of the Air Safety Committee,
and consider including oversight of Operating License issued by
Member States and the processes by
which such oversight is carried out” (Air Accident
Investigation Unit Ireland, 2011). The Irish Air
Accident Investigation Unit’s recommendations of the Cork
accident lay out safety concerns, on the
record, and reinforce ALPA’s stance in their grassroots effort to
stop NAI from obtaining a U.S. air carrier
permit.
Analysis
In late 2013, Norwegian Air applied for both a foreign air
carrier permit and an exemption to

6. conduct operations to and from the U.S. for its NAI subsidiary.
In September 2014, the Department of
Transportation dismissed that exemption request, which would
have allowed NAI to operate while the
department reviewed its application for permit. In the DOT’s
decision, signed by Transportation
Secretary Anthony Foxx, “The Department typically reserves its
exemption powers in awarding foreign
air carrier authority to situations where the circumstances of a
case are sufficiently clear-cut to permit
acting” (Carey, 2014). The decision continues by stating that
due to the complex nature of the case, an
approval would not be appropriate.
In a November 2014 letter to Secretary Foxx, 188 House
members stated that NAI’s AOC
application was not in the best interest of the public and would
place domestic airlines on unfair playing
ground. The members reinforce that Norwegian’s business
model would not be in the true spirit of the
U.S.-E.U. Open Skies Agreement.
Running head: NORWEGIAN AIR SHUTTLE DISPUTE 4

7. ALPA, Int’l, who represents over 50,000 pilots from 31 airlines
in the United States and Canada,
has voiced their disapproval for NAI’s tactics by launching
educational websites, whiteboard videos
detailing NAI’s unfair business model, and online petitions for
airline employees to voice their concern –
this petition has garnered over 35,000 signatures. With their
slogan “Deny NAI”, ALPA has taken their
fight all the way to Congress. In November 2014, Capt. Moak
sent a letter to the Senate Appropriations
Committee asking Senate leaders to support legislation already
passed in the House.
On December 11, 2014, the Senate and House approved a
spending bill addressing the dispute
in two paragraphs on pg. 1580. The first forbids the DOT from
approving any application if it would
violate U.S. law or provisions of the U.S.-E.U. Air Transport
Agreement. The second paragraph states that
as long as an application is consistent with U.S. law and the
agreement, nothing prevents the
department from approving the application (Jansen, 2014).
Both sides view this as a win. As it stands
today, both sides await a final decision from Congress.

8. Conclusion and Recommendations
A flag of convenience model typically refers to merchant ships
registering in a sovereign state
different from that of the ship’s owners. This practice reduces
operating costs and skirts regulations of
the owner’s country. Norwegian Air Shuttle, headquartered in
Norway, created the subsidiary NAI as an
Irish airline –Ireland has less stringent laws— in order to get
around Norway’s strict tax and labor laws.
NAI plans to use a contract firm in Singapore to provide pilots
rather than hire pilots on its own paper.
The airline would base pilots in Thailand as lower paid, non-
airline contractors, and along with the crew,
the pilots would work under individual contracts far below
compensation of actual Norwegian Air
employees.
By substituting the word maritime with aviation, one can see
how airlines could apply the flag of
convenience model to gain unfair advantages in commercial and
charter aviation. Approving this
Running head: NORWEGIAN AIR SHUTTLE DISPUTE 5

9. practice would decimate the airline industry as it operates today
just as it did the U.S. merchant marine
industry between 1919 and the 1960s.
Running head: NORWEGIAN AIR SHUTTLE DISPUTE 6
References

10. U.S. Department of Transportation (2014). Retrieved
12/26/2014 from
http://www.dot.gov/policy/aviation-policy/licensing/foreign-
carriers
U.S. Department of Transportation (2012). Retrieved
12/26/2014 from
http://www.dot.gov/policy/aviation-policy/application-
procedures-foreign-air-carriers-european-union
ALPA News, Release #14.15 (2014). Retrieved 12/30/2014 from
http://www.alpa.org/Portals/Alpa/PressRoom/PressReleases/201
4/2-12-14_14.15.htm
ALPA News, Release #14.91 (2014). Retrieved 01/11/2015 from
http://www.alpa.org/Portals/Alpa/PressRoom/PressReleases/201
4/11-19-14_14.91.htm
Air Accident Investigation Unit, Ireland. (2011). FORMAL
REPORT: ACCIDENT, Fairchild Aircraft
Corporation, SA 227-BC Metro III, EC-ITP, Cork Airport,
Ireland, 10 February 2011. Department of
Transport, Tourism, and Sport.
Jennings, M.M. (2015). Business: It’s Legal, Ethical, and
Global Environment (10th Ed.), Cengage
Learning. Stamford, CT.
Carey, B. (2014). Opponents dispute Norwegian Air’s U.S.
permit application. AINonline.
Retrieved 01/26/2015 from http://www.ainonline.com/aviation-
news/air-transport/2014-11-
26/opponents-dispute-norwegian-airs-us-permit-application
Carey, B. (2014). U.S. denies exemption as it mulls Norwegian

11. air permit. AINonline.
Retrieved 01/26/2015 from http://www.ainonline.com/aviation-
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Jansen, B. (2014). Congress pleases both sides in Norwegian air
dispute. USA Today.
Retrieved 02/02/2015 from
http://www.usatoday.com/story/todayinthesky/2014/12/11/norw
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