Norwegian Air CEO Touts Low Fares, Labor Calls It 'a Shell Game'

NEW YORK (TheStreet) -- Norwegian Air Shuttle CEO Bjorn Kjos is visiting the U.S. seeking public support in a battle to convince federal regulators to approve the carrier's bid for a permit to serve the country.

Kjos will speak Thursday to the International Aviation Club in Washington. Afterward, airline labor leaders including Lee Moak, president of the Air Line Pilots Association, plan a news conference to spell out their objections to the Norwegian model.

In September, the U.S. Department of Transportation rejected Norwegian's request for an exemption that would permit Ireland-based subsidiary Norwegian Air International to serve the U.S. The rejection was unsurprising, given that Norwegian's efforts are opposed not only by unions but also by American (AAL) , Delta (DAL) and United (UAL) , which have all filed objections with the DOT. 

In the speech, "I am going to talk about how Norwegian contributes to making sure Americans can afford to fly intercontinentally," Kjos said in an interview. "It's not for us. It's for the jobs you can create in the U.S. 

"The main thing is to give more affordable fares to everybody," he said, because low fares increase the volume of tourism and that tourism creates job. Norwegian's trans-Atlantic round-trip fares start at around $300. It is obvious, Kjos added, why the big three U.S. airlines oppose Norwegian: All three are partners in global alliances that control nearly 90% of trans-Atlantic traffic.

Oslo-based Norwegian Air Shuttle already holds a permit to fly to the U.S., so the permit denial had no immediate impact. But Kjos would prefer to use the Irish subsidiary for U.S. flying. Because Norway is not part of the European Union, the Oslo-based company cannot serve Asia from most of its key cities.

"We need a license to fly east," Kjos said. "We can already fly as much as we like to the west. But we cannot, for instance, fly Stockholm-Delhi or Copenhagen-Delhi or London-Delhi: we can only fly from Norway. And you don't want to operate two airlines."

Moak said Norwegian is playing a "shell game," and using Ireland as "a flag of convenience" as it seeks to avoid labor protections.

The U.S./EU Open Skies agreement specifies that labor standards must be maintained by trans-Atlantic carriers . However, Norwegian has had multiple conflicts with Scandinavian pilot and flight attendant contracts, and Moak has met with Norwegian union and government officials.

"Norwegian violated Norwegian labor law," he said in an interview. ""They are saying Norwegian men and women are not good enough to fly on their airplanes" and hiring workers in Thailand.

"Then they did regulatory and oversight shopping in Ireland and now (Kjos) is paying Irish (regulators) to oversee his operation even though he doesn't fly to Ireland. You can't make this up -- it is a very convoluted scheme.

"One thing he says that really gets under my skin is that we are afraid of competition," Moak said. "That's not true. This is not about competition. It is about trying to skirt oversight."

-- Written by Ted Reed in Charlotte, N.C.

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At the time of publication, the author held no positions in any of the stocks mentioned. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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