U.S. DEPARTMENT OF TRANSPORTATION
Docket No. OST-2013-0204
NORWEGIAN AIR INTERNATIONAL
for an exemption under 49 U.S.C. § 40109
and a foreign air carrier permit pursuant to
49 U.S.C. § 41301 (US-EU Open Skies
JOINT COMMENTS OF AIR LINE PILOTS ASSOCIATION,
TRANSPORTATION TRADES DEPARTMENT, AFL-CIO AND THE EUROPEAN COCKPIT ASSOCIATION ON DOT’S AUGUST 4 NOTICE
The Air Line Pilots Association, the Transportation Trades Department, AFL-CIO, and the European Cockpit Association hereby submit the following comments in response to DOT’s August 4 Notice regarding the views voiced by the Director of Aviation of the European Commission’s Directorate of General Mobility and Transport (“DG MOVE”) on the applicability of Article 17 bis of the U.S.-EU Air Transport Agreement (“ATA” or “Agreement”) to NAI’s application. For the reasons set out below, the Labor Parties believe that DOT should reject DG MOVE’s interpretation of Article 17 bis and promptly deny NAI’s application for an exemption on the grounds that approval would be inconsistent with the public interest and with Article 17 bis. With respect to NAI’s application for a foreign air carrier permit, DOT should also issue a show cause order stating that it intends to deny NAI’s application for a permit on the grounds that approval would be inconsistent with Article 17 bis. If the Department believes that it would benefit by having more information before it issues such an order, it should issue document production requests, including those attached to the February 21, 2014 Joint Reply of the Labor Parties to Comments on DOT’s January 30 Notice, and/or should hold a hearing at which representatives of NAI may be examined about the founding and structure of the company, including the compensation and laws that apply to Norwegian Long Haul’s (“NLH”) air crew and that will apply to NAI’s air crew.
A. Preliminary Matter: The Director Was Not Speaking on Behalf of Any Party to the ATA.
The DG MOVE Director’s views were expressed in a meeting between a delegation of European Commission officials and a U.S. delegation composed of representatives from DOT and the Department of State and were given in response to a request from the U.S. Government for views on the legal reasoning and applicability of Article 17 bis. Although DOT had announced that it was seeking the views of the European Union (see Thursday, July 10, 2014 e-mail from Susan Kurland, DOT ID: 2014-0204-0120), the views expressed by the Director are described, variously, as those of “EC officials,” the “EC delegation,” “the EC,” “DG MOVE,” or just the Director himself. The Notice indicates that the Director also stated that DG MOVE was “in the process of discussing the issues with representatives of the European Union Member States, Iceland, and Norway, which are all parties to the Agreement.” (Notice at 2). Thus, it appears that the Director was not speaking on behalf of any party to the ATA.
Finally, we are aware that numerous EU Member States do not share the legal analysis of DG MOVE and several of them have informed DG MOVE that they do not support DG MOVE’s backing of NAI.
B. The Views on Article 17 bis Advanced by the Director
According to the Notice, DG MOVE’s “key message” to the U.S. delegation was that, “from [its] perspective,” Article 17 bis “cannot be referred to unilaterally by a Party to refuse an authorization under Article 4 of the Agreement to an airline of the other Party.” (Notice at 3). The Director also stated the “EC’s view” is that Article 17 bis does not afford a legal basis for unilaterally denying an application under Article 4. (Id. at 2). The Director asserted “DG MOVE” believes that if a party has a concern about Article 17 bis “as a general matter” the only mechanism available is to raise the issue for consideration by the Joint Committee under Article 18(4). (Id.) He also noted that if a party wants to discuss Article 17 bis in the context of a particular foreign air carrier application, it can avail itself of Article 6 bis (1)(a), which leads to consultations and, if necessary, consideration by the Joint Committee. (Id. at 2). The Director also stated that “DG MOVE believes” that, under certain circumstances, perhaps two parties could decide together to deny an application using Article 17 bis on the grounds that an application undermines labor-related rights and laws. (Id. at 3).
C. DOT Should Deny NAI’s Applications.
The Labor Parties believe that the views expressed by the Director miss the mark in several key respects and that DOT has the right to unilaterally deny applications for operating authorizations from EU airlines and to take Article 17 bis into account when doing so.
1. DOT Should Deny NAI’s Exemption Application as Inconsistent with the Public Interest and with the Principles Set Out in Article 17 bis.
It is clear that DOT may deny unilaterally NAI’s application for an exemption.
Under Article 4(c) of the ATA an airline must “be qualified to meet the conditions prescribed under the laws and regulations normally applied to the operation of international air transportation by the Party considering the application or applications.” The principal law applied to applications for exemptions is 49 U.S.C. § 40109 (“Authority to exempt”) which, tellingly, the Director appears not to have
addressed at all. The statute provides, in pertinent part, that “the Secretary may exempt to the extent that the Secretary considers necessary” a foreign air carrier from the requirement to hold a foreign air carrier permit “when the Secretary decides that the exemption is consistent with the public interest.” 49 U.S.C. § 40109(c).
The “necessary” and “public interest” tests remain untouched by the ATA. The tests are statutory tests, and statutory requirements were not eliminated by the Agreement. Moreover, the U.S. Government expressly confirmed during the negotiations, both in writing and orally, that the mutual recognition procedures for fitness and citizenship determinations in Article 6 bis did not modify the conditions prescribed under the laws and regulations normally applied by the Parties to the operation of international air transportation referred to in Article 4 of the Agreement. See Memorandum of Consultations accompanying the Protocol to Amend the ATA ¶ 5. Neither the “necessary” test nor the “public interest” test is met here.
Grant of an exemption to NAI certainly is not necessary. NAI’s parent company Norwegian Air Shuttle (“NAS”) owns another airline subsidiary – Norwegian Long Haul – that is a Norwegian air carrier holding permit and exemption authority from the Department and that is conducting – on behalf of NAS – all the flight operations that NAI proposes to conduct.
A grant of an exemption to NAI would also not be consistent with the public interest.
The record in the case shows that:
● Norwegian Air Shuttle formed NLH with the intent to use flight crew working under contract to a Singapore hiring firm who would not be subject to Norway’s immigration and employment laws, but Norway sought to have its employment laws apply to those crew members. NAS worked to avoid this from happening first by registering its aircraft in Ireland and then by establishing a subsidiary air carrier – NAI – outside of Norway to do the flying being conducted by NLH.
● The pilots who operate NLH’s aircraft are employed not by NAS or NLH, but by crew supply companies under individual employment contracts governed by Singapore law. They are fictitiously claimed to be based in Thailand. This is the same for pilots who would be operating NAI’s aircraft.
● The NLH pilots’ terms and conditions of employment are substantially inferior to those that apply to the pilots employed by NAS. This is the same for pilots who would be operating NAI’s aircraft.
● The employment contracts that apply to the NLH pilots contain a term that effectively prohibits those pilots from providing information about their employment contract or NLH’s business to anyone.
● NAI plans to take over the long-haul 787 flying being done by NLH and perform it permanently in the same manner as NLH is doing temporarily.
Among the policy objectives that DOT is to seek to achieve when determining
whether proposed foreign air transportation is in the public interest is the encouragement of “fair wages and working conditions.” 49 U.S.C. § 40101(a)(5). Another objective is “strengthening the competitive position of [U.S.] air carriers to at least ensure equality with foreign air carriers.” 49 U.S.C. §§ 40101(a)(15) and (e)(1). For the reasons set out in ALPA’s December 17, 2013 Answer (at 4-7), approval of NAI’s application would be inconsistent with those public interest objectives.
Whether a DOT licensing action is consistent with the provisions of an air services agreement – in this case Article 17 bis – should also be part of the public interest analysis. In addition, as explained below, Article 17 bis is also a separate basis for deciding to grant or deny operating authorizations to NAI.
Article 17 bis reads:
1. The Parties recognize the importance of the social dimension of the Agreement and the benefits that arise when open markets are accompanied by high labor standards. The opportunities created by the Agreement are not intended to undermine labour standards or the labour-related rights and principles contained in the Parties’ respective laws.
2. The principles in paragraph 1 shall guide the Parties as they implement the Agreement, including regular consideration by the Joint Committee, pursuant to Article 18, of the social effects of the Agreement and the development of appropriate responses to concerns found to be legitimate.
Significantly, DG MOVE recognizes that Article 17 bis can serve as the basis for
denial of operating authority. DG MOVE does contend that a denial based on Article 17 bis cannot be done unilaterally, but DG MOVE’s contention is based on an incomplete reading of the article. Read as a whole, Article 17 bis provides each Party to the Agreement the ability to ensure, as it implements the Agreement, that opportunities created by the Agreement are not used to undermine labor standards or labor-related rights and principles that contribute to the “high labor standards” that the Parties have deemed to be beneficial to a liberalized trans-Atlantic air services market.
The first phrase in paragraph 2 states that the principles established in paragraph 1 “shall guide the Parties” as they implement the Agreement. The Director posits that this means implementation matters are to be dealt with “by ‘the parties’ and not any one single party.” (Notice at 2). But here the word “Parties” clearly means “each of the Parties” and the plural is used simply because there are multiple parties to the Agreement. Each of these “Parties” has an obligation to ensure that it implements the Agreement in a way that is consistent with the principles in paragraph 1. It is each of these “Parties” that will be in the best position to identify its own “respective” labor standards or labor-related rights and principles that could be undermined by the use of opportunities created by the Agreement. And it is each of these “Parties” that “implements the Agreement” when it decides whether it is appropriate to grant operating authorizations.
The Director further contended if a Party has a concern about Article 17 bis as “a general matter the only mechanism available under the Agreement is to raise the issue for consideration by the Joint Committee. . . .” (Notice at 2). But the Director, again tellingly, overlooks crucial words. The principles in paragraph 1 are to guide the Parties “as they implement the Agreement including regular consideration by the Joint Committee, pursuant to Article 18.” (Emphasis added.) In other words, resort to the Joint Committee is one path for ensuring that the principles set out in paragraph 1 are effectuated. And this makes sense. The Joint Committee meets periodically and is not in a position to take timely action when, as is the case here, a decision as to how the Agreement is to be implemented must be taken under a statutory deadline. (See pp. 10-11 below.) In such a case, an individual Party must have the latitude to act on its own to ensure that implementation of the Agreement is consistent with the principles in paragraph 1. The first phrase of paragraph 2 appropriately gives each Party that latitude.
The words “shall guide” are not merely hortatory; they are directive. “Shall” is “used in laws, regulations or directives to express what is mandatory.” Merriam-Webster Dictionary, available at www.merriam-webster/dictionary/shall; see Gonzalez v. Thaler, 132 S. Ct. 641, 644 (2012) (“[t]he word ‘shall’ . . . underscores the rule’s mandatory nature”). “Guide” means “to direct . . . to a particular end.” Merriam-Webster Dictionary, available at www.merriam-webster/dictionary/guide. Therefore, “shall guide” provides marching orders for the Parties as they implement the Agreement, whether they are acting individually or collectively.
Again, DOT is implementing the Agreement when it decides whether or not NAI, under Article 4(c), is “qualified to meet the conditions prescribed under the laws and regulations normally applied” to an exemption application. While Article 4(c) does not reference Article 17 bis, there is nothing in the Agreement that prohibits the articles from being read together and it is natural that they should be, not the least because the application of Article 4 forms an integral part of the “implementation” of the Agreement, which is to be “guided” by the principles in Article 17 bis, paragraph 1. See Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52 (1995) (“cardinal principle of contract construction [is] that a document should be read to give effect to all its provisions and to render them consistent with each other).
Finally, DG MOVE’s position that DOT may not take unilateral action on NAI’s exemption request, if adopted, would have unacceptable results. As noted above at 4, DG MOVE did not address the fact that 49 U.S.C. § 40109 provides a firm basis for DOT to deny NAI’s exemption application. To the extent DG MOVE is suggesting (see Notice at 3) that DOT cannot deny an exemption without first consulting with the aeronautical authorities of Ireland, it is advocating a view that would have the irrational and plainly impermissible consequence of giving a foreign country – in this case Ireland – not the DOT, the power to determine whether an exemption should be granted or not. While there is no statutory deadline for DOT to make a final decision on an application for a foreign air carrier permit, there is a deadline to make a final decision on NAI’s exemption request. See 49 U.S.C. § 41710. If, as DG MOVE seems to argue, all DOT can do is notify – either under Article 17 bis or Article 6 bis – the aeronautical authorities of Ireland that the conditions prescribed in Article 4 of the Agreement for the grant of appropriate authorization have not been met, then Ireland could draw out consultations and Joint Committee consideration until the deadline. Then, because, according to DG MOVE, DOT could not unilaterally deny the application, the Department’s only available course of action would be to grant the exemption. Under the statute a decision yea or nay is for the Department. Allowing a foreign country a veto power most certainly is not a result that could have been intended by Congress nor one that it would be likely to countenance.
2. NAI’s Foreign Air Carrier Permit Application Should Also Be Denied.
For the reasons set forth with regard to the exemption application, DOT should deny NAI’s application for a permit as well. DG MOVE says that Article 6 bis is an available process in connection with foreign air carrier applications, but Article 6 bis pertains to regulatory determinations with regard to airline fitness and citizenship, and not to an assessment of whether approval of an applicant’s business model is consistent with Article 17 bis.
The Agreement and the March 2, 2007 Memorandum of Consultations (“2007 MOC”) that accompanied the “First Stage” Agreement recognize that there can be differences between the Parties over the interpretation of provisions of the ATA that apply to applications for operating authorizations. They also establish that the appropriate recourse for a Party that wishes to challenge another Party’s interpretation of Article 4, Article 6 bis or Article 17 bis is to take its concerns to the Joint Committee. Thus, Article 18, paragraph 2, of the ATA says that a Party “may . . . request a meeting of the Joint Committee to seek to resolve questions relating to the interpretation or application of the Agreement,” and paragraph 33 of the 2007 MOC says that if a “Party believes that its airlines are not receiving the economic authority to which they are entitled under the Agreement, it can refer the matter to the Joint Committee.”
Because of the nature of NAI’s application, the Department may decide that it would benefit by having additional information to consider before it issues a show cause order on the permit application. If it so decides, DOT should issue document production requests designed to obtain additional pertinent information, including the production requests attached to the February 21, 2014 Joint Reply of the Labor Parties to Comments on DOT’s January 30 Notice, and/or should hold an evidentiary hearing at which representatives of NAS/NAI may be examined about the founding and structure of the company, including the compensation and laws that apply to NLH’s air crew and that will apply to NAI’s air crew.
For the foregoing reasons, DOT should promptly deny NAI’s application for an exemption. The Department should also issue an order to show cause stating its intent to deny NAI’s application for a permit as well. If the Department believes that it would benefit by having more information before it issues such a show cause order, it should issue document production requests designed to obtain additional pertinent information, including those attached to the February 21 Joint Rely of the Labor Parties to Comments on DOT’s January 30 Notice, or hold an evidentiary hearing at which
representatives of NAI may be examined about the founding and structure of the company, including the compensation and laws that apply to NLH’s air crew and that will apply to NAI’s air crew.
/s/ Edward Wytkind
Edward Wytkind, President
Transportation Trades Department,
815 – 16th Street NW
Washington, DC 20006
/s/ Philip von Schöppenthau
Philip von Schöppenthau,
European Cockpit Association
Rue du Commerce 20-22
Jonathan A. Cohen
David M. Semanchik
Air Line Pilots Association
1625 Massachusetts Avenue NW
Washington, DC 20036
Attorneys for Air Line Pilots Association
August 18, 2014
CERTIFICATE OF SERVICE
I certify that on this 18th day of August, 2014, the foregoing Joint Comments of Air Line Pilots Association, Transportation Trades Department, AFL-CIO, and the European Cockpit Association and to Comments on DOT’s August 4 Notice were served by causing a copy to be sent by electronic mail to the addresses identified below: