Tuesday, 28 April 2015

Norwegian Air Says Network Planning Affected by Delayed U.S. Traffic Rights

"Carrier is proving to be a test case for U.S. openness to foreign airline competitors"

LONDON—Norwegian Air Shuttle AS NAS -2.58 % A, which is proving to be a test case for U.S. openness to foreign airline competitors, is growing anxious its growth plans are being crimped by persistent delays in its application for enhanced market access, according to the carrier’s chief executive.

Norwegian Air’s struggle to win U.S. Department of Transport approval for additional traffic rights it says should be automatic come as U.S. airlines and unions step up efforts to keep foreign rivals at bay. Delta Air Lines DAL -1.13 % and other carriers that oppose Norwegian Air’s application also are lobbying the U.S. government to slow the encroachment into their home market from Middle East growth carriers, such as Dubai-based Emirates Airline, the world’s largest by international traffic, neighboring Etihad Airways and Qatar Airways.

Efforts by budget airline Norwegian Air to gain preferred traffic rights in the U.S. have reached an ominous milestone this week: 500 days waiting.

“This is very frustrating because we can’t do any long-term planning,” airline Chief Executive Bjørn Kjos said in an interview. The airline is in the process of building its route plan for next year, which is complicated by the uncertainty over the situation in the U.S., he said.

Norwegian Air has put on hold talks with Boeing Co. BA -0.40 % to buy more 787-9 Dreamliner long-range jets because uncertainty about the airline’s development impacts its fleet requirements, he said.

Norwegian Air, through its Ireland-based Norwegian Air International unit, has sought enhanced traffic rights under a bilateral agreement between the European Union and the U.S. called the Open Skies treaty that was aimed at liberalizing aviation trade. U.S. airline unions have opposed the application, arguing the Norwegian carrier was using Ireland as a “flag of convenience” with less oversight. Ireland has defended its regulatory standards.

The European Union has backed Norwegian Air’s application and has repeatedly called on the U.S. to adhere to principles of the trade accord signed eight years ago.

The European Commission, the bloc’s executive arm, said it “considers that the U.S. authorities are in breach of the EU-U.S. Air transport agreement.” The U.S. should have “swiftly” granted traffic rights, the commission said.

Having raised concerns last year, the commission plans to bring the issue up again when both parties meet in June in Helsinki.

Mr. Kjos said opponents are simply trying to keep out a competitor offering lower fares to passengers.

Norwegian Air began trans-Atlantic services almost two years ago using a fleet of Boeing 787s. It now operates eight such planes. It is seeking to operate the fleet under a European Union license to more easily shuttle planes between Asia, where it has a base in Bangkok, and the U.S., where it serves five cities including New York and Los Angeles.
Mr. Kjos said the airline also is seeking a British air operator’s certificate to tap preferential traffic rights to markets such as India. The airline operates intra-European and trans-Atlantic flights from London Gatwick airport.

The application for the U.K. license has been filed with Britain’s aviation regulator and could be decided this summer, he said. Norwegian Air will also seek U.S. approval under the new license.
Norwegian Air may also seek a Spanish air operator’s certificate to tap special traffic agreements the country has with others, Mr. Kjos said.
—Doug Cameron contributed to this article.
Write to Robert Wall at robert.wall@wsj.com