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Home  >  News • Norwegian Air  >  Dubious: Why Does Congress Want You to Pay More for Airfare?
NewsNorwegian Air

Dubious: Why Does Congress Want You to Pay More for Airfare?

Matthew Klint Posted onJune 28, 2017June 28, 2017 5 Comments

The U.S. House of Representatives Transportation and Infrastructure Committee just voted to raise your airfare by making foreign competition more difficult.

The provision allows the secretary of transportation to block foreign airlines from serving the U.S. after finding a carrier would erode labor standards because it was established in a country other than its majority owners to avoid regulations of the home country.

What does that mean exactly? The USA will block a “race to the bottom” using cheap foreign labor to drive down prices.

On one side: bipartisan concern over the practices of Norwegian Air, a Norwegian company doing business in Ireland and using crews from Singapore.

On the other side: acknowledgement that low-cost carriers like Norwegian have spent billions of dollars on Boeing jets, hired hundreds of American workers, and made airfare affordable for thousands of Americans.

Why I am Skeptical of the “Race to the Bottom” Argument

I think Norwegian spokesman Anders Lindstrom captures nicely why I am skeptical of protectionist moves like the House bill in question.

At a time when U.S. airline job growth continues to rise and U.S. carriers are generating record profits, the language appears to be yet another attempt by special interests to evade healthy competition and raise costly procedural hurdles to new entrants in international markets — all to the detriment of consumers, communities, aerospace manufacturers, and the travel and tourism sector

Shouldn’t it count for something that despite a huge crop of low-cost-cariers blossoming around the globe, U.S. airlines are reporting record profits? U.S. carriers are expanding as well…

Isn’t that the real reason why U.S. carriers also oppose Gulf Carriers? Not so much because they are hindering profit, but because they seek an even higher profit by forcing competition out? Let’s not kid ourselves: that higher profit comes with less consumer choice and higher consumer prices.

CONCLUSION

Norwegian Air is providing high-paying manufacturing jobs in the USA, making airfare cheaper for you and me, and providing SE Asian workers a path to middle class life.

Closing off this sort of competition due to dubious labor concerns expressed by well-funded and vested interests strikes me as something all Americans who do not work for American, Delta, or United should oppose.

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About Author

Matthew Klint

Matthew is an avid traveler who calls Los Angeles home. Each year he travels more than 200,000 miles by air and has visited more than 135 countries. Working both in the aviation industry and as a travel consultant, Matthew has been featured in major media outlets around the world and uses his Live and Let's Fly blog to share the latest news in the airline industry, commentary on frequent flyer programs, and detailed reports of his worldwide travel.

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5 Comments

  1. SAN Greg Reply
    June 28, 2017 at 12:22 pm

    Well stated and all valid points. The merits only end up serving those who want to monopolize the market. Never mind that fact that all those Dreamliners are built here in America.

  2. Cipta Reply
    June 28, 2017 at 12:29 pm

    Well, it is to be expected. After successfully driving out ME3 by security reasons (laptop ban) LCC (such as Norwegian) is next in line. US3 are currently making big profits, no doubt. But who on earth didn’t want another big chunk of money? They are, afterall needs to make ROI (investment=lobbyist).

    Competition, fairness, labour protection, etc. are nothing more than gimmicks, to be used appropriately depending on situation and circumstances.

  3. John Reply
    June 28, 2017 at 5:36 pm

    Would you support US legacy carriers firing all of their flight attendants and hiring new FA’s from Eastern Europe and SE Asia at a fraction of the cost and essentially force them all to live in corporate compounds with no labor unions…you know, just like ME3 do? I mean, sure, those 200k Flight Attendants would all be out of jobs but if AA, UA, and DL all by Boeing jets that should make up for it right?

    • Matthew Reply
      June 28, 2017 at 7:50 pm

      Would need more details.

  4. Howard Miller Reply
    June 29, 2017 at 4:06 pm

    There are ways to protect American jobs, without throwing the baby out with the bathwater, as this blatant attempt to further restrain new entrants from emerging to challenge the near monopoly that the US3 has created for itself domestically, and is now seeking for themselves and to restrict competition against the partners in the big 3 immunized alliances (oneworld, skyteam and star).

    Is it any surprise now that the US3 all but monopolize the domestic market and are rapidly stripping down one product while adding a plethora of fees to others, and who have succeeded at “back-dooring” restrictions via an extra-legal process to restrain the ME3 carriers through the laptop and large PED bans and other policies targeting a subset of Middle East countries, that they now have become emboldened to block Norwegian from challenging the otherwise cartel-like (and very lucrative if it remains shielded from meaningful competition) trans-Atlantic market.

    As the first commenter noted, this is a very astute observation by the author. In fact, it’s spot on!!!

    Norwegian offers the first meaningful competition on the trans-Atlantic market since the advent of the big 3 anti-trust immunized alliances carved up the market for themselves at their respective fortress hubs on both sides of the pond.

    The argument that Norwegian poses a threat to American jobs is a “red herring”, and should be seen for what it is: a shameless attempt to keep competitors out, and artificially inflated high-fares in.

    Anyone who truly believes in the virtues of a “free market” should recoil in horror if this legislation passes and becomes enacted.

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