Foreign airlines establish flags of convenience business models
to skirt tax, labor, and safety regulations to gain an unfair
advantage over US airlines and workers. These schemes are
threatening our global aviation system, and have the potential to destroy thousands of existing jobs and billions of dollars worth of our nation’s GDP.
In response to this threat, airline workers have joined
together to support Section 530 of the US House Bill H.R. 4—
the current iteration of FAA reauthorization—which would
help ensure that all carriers have a fair and equal opportunity
to compete in the international marketplace.
The threat posed by the flag-of-convenience business
model is not a theory. In the US, we have already seen the
damage this model can wreak. In the maritime shipping
industry, US companies have lost 23% of the global market
share and 87% of jobs since flag-of-convenience shipping
companies became predominant. It is not hard to imagine a
similar fate for US pilots, flight attendants and mechanics if
this business model successfully grafts itself onto our airline
Until recently, the US Department of Transportation
(DOT) had effectively protected against this model by
making a public interest finding in its foreign air carrier
permit proceedings. The current public interest test writ-
ten by Congress balances 16 different criteria, including air
safety, competition among carriers, fair wages and working
conditions and consumer concerns. Since 1946, DOT and
its predecessor have conducted this test in every applica-
tion for a foreign air carrier permit with just two exceptions:
Norwegian Air International and Norwegian Air UK—the only
two flag-of-convenience operators to apply.
The record makes clear that DOT chose not to conduct
Congress’s public interest test in these cases because the
carriers were unlikely to pass it. They both actually failed the
test when they applied for exemption requests early in the
proceedings. Section 530 simply clarifies the law to ensure
that all foreign carriers have the same process for obtaining a
foreign air carrier permit by requiring the public interest test
in all foreign air carrier permit proceedings.
Some have argued that this legislation could bring “
retaliation” from the European Union (EU). This claim is pure chest
thumping. Under our Open Skies agreement, the EU does
not have the ability to unilaterally act against US carriers;
importantly, US law already provides DOT the discretion to
determine if a foreign carrier should be allowed into the US
based on the public interest test. The “worry of retaliation” is
a shadow phantom; there is no substance behind the claim.
ALPA and others are asking for a level playing field for
all global airlines that serve the US. Section 530 would help
restore that playing field and allow all airlines to enjoy the
benefits of our liberalized international air market.
Tim Canoll is president of the Air Line Pilots Association, International
(ALPA). The views expressed here are his own.
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