EU/US : NORWEGIAN'S TRANSATLANTIC AMBITIONS A TEST CASE FOR OPEN SKY.

Battle lines are being drawn for what is shaping up to be an important test case for whether the 2007 EU-US Open Sky agreement can be used to prevent airlines engaging in so-called social dumping to lower their labour costs. On 8 January, EU and US officials discussed the issue in Washington as part of their twice-yearly meetings to review the implementation of the 2007 agreement. Their talks centred on Norwegian, a low-cost carrier that has ambitions to crack the transatlantic air passenger market. In a sign of the issue's sensitivity, airline industry and labour union representatives, who are usually allowed to sit in for the entire duration of these meetings, were required to leave the room for this particular agenda item. Regulators are assessing whether Norwegian's proposed new business model adheres to the Open Sky agreement. Norwegian plans to base its new long-haul operations out of Ireland, to recruit the pilots for these flights from a contractor in Singapore, and to domicile them in Thailand. It is awaiting regulatory clearance from aviation authorities in Ireland and the US. The clock is ticking: the low-budget airline aims to start flying from London Gatwick to New York, Fort Lauderdale and Los Angeles from June.

Several sources familiar with the case are predicting that the US Department of Transportation (DOT) will wait and see what the Irish authorities do before acting. There is no statutory deadline for either regulator to take a decision but given Norwegian's imminent plans, the Irish Aviation Authority will be under pressure to move quickly. On the procedural side, the DOT allows stakeholders to submit arguments via a publicly accessible online docket and some have already done so, whereas the Irish do not have such a process. If, as expected, Ireland decides first, the European Commission, which is authorised to negotiate for the EU28, will likely urge the US authorities to endorse Ireland's decision. Should the US not follow suit, it could cause some transatlantic tension given that under Article 6 of the Open Sky accord, they are supposed to recognise one another's regulatory decisions.

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