Isn’t it about time that some low cost airlines start flying between the US and Europe with a significant network of flights?
Consumers are faced with higher and higher prices for airfares combined with a group of three alliances that control more than 85 percent of the market and keep competition out and prices in lockstep.
Norwegian Air International has applied for just such permission, but the Department of Transportation (DOT), that is supposed to be looking out for consumers, open skies and competition, seems to be more interested in kowtowing to airline and union interests.
In an article last week, I posited that the airlines and unions complain about any entry that might offer meaningful competition. I listed the dramatic airfares that Norwegian is advertising.
This week, Travelers United sent a letter to Secretary of Transportation Foxx urging the Department of Transportation to move forward with approval of Norwegian Air International’s application to start low cost service between the US and Europe.
June 25, 2014
The Honorable Anthony R. Foxx
Department of Transportation
1200 New Jersey Avenue SE
Washington, DC 20590
RE: NORWEGIAN AIR INTERNATIONAL LIMITED, DOCKET NO. OST-2013-0204
Dear Secretary Foxx:
Travelers United is dismayed about the delayed approval of Norwegian Air International Limited’s (NAI) application for authority to provide low-cost international air service to the United States from Europe.
Travelers United (formerly Consumer Travel Alliance) has long been an advocate for passenger rights in the United States. Its chairman testified before both houses of Congress about issues ranging from airline mergers to airfare disclosures. Travelers United also has a seat on DOT’s Advisory Committee for Aviation Consumer Protections.
The American consumer is losing competition as the Department of Transportation (DOT) delays approval of NAI’s application. Major airlines on both sides of the Atlantic continue to build their fortress transatlantic routes created through the gift of liberal and extraordinary antitrust immunity by DOT and by the willingness of the Department of Justice to allow the mergers of US air carriers.
The job of the DOT is to serve as the champion and servant of the American public, not to be the competition gatekeeper for a cabal of three airline alliances that control more than 85 percent of the transatlantic market.
It is incumbent on DOT to reinject into this market competition that has been substantially diminished by the allowance of antitrust immunity and the creation of joint ventures. Immune airlines in these alliances openly agree not to compete with one another on price, schedules or routes and agree to share profits.
From the point of view of the American consumer, the application of NAI for service to the United States should be approved immediately.
Travelers United has watched the above docket with interest and assumed that the approval of the NAI application for transatlantic service would be forthcoming from DOT. The complaints and comments from US airlines and unions associated with the airlines regarding competition and fitness were to be expected. However, years ago, a streamlined process was agreed upon during EU-US negotiations that would permit the prompt approval of NAI’s application.
Travelers United is an enthusiastic supporter of Open Skies agreements that encourage competition to benefit consumers. Open Skies agreements, however, do not deliver the benefits of competition when routes are closed to innovative airlines such as NAI.
Federal Express Corporation in their comments provided an excellent overview of those Open Skies agreements and the legalities of ownership and control.
The other aspects of the economic benefits of competition for consumers, of job creation here in the United States plus sharing in the worldwide growth in travel and tourism, are clearly stated by The Travel Technology Association in their thoughtful, succinct and clear comments.
Just a month ago, President Obama, speaking in Cooperstown, N.Y., said, “Tourism translates into jobs and translates into economic growth.” Plus, when the president is focused on doubling exports, every tourism dollar counts towards that goal.
The benefits of approval of new NAI service not only will help create a freer and more competitive market for both European and American travelers, but it will create a boom in jobs — both directly and indirectly — in communities served by NAI on both sides of the Atlantic.
Travelers United sees no basis for further delay.
Chairman, Travelers United