Four members of the House Transportation and Infrastructure Committee have introduced a bill to prevent foreign air carriers who are operating under a flag of convenience from receiving a Foreign Carrier Permit to operate in the United States. The bill has strong backing from the Southwest Airlines Pilots Association (SWAPA): “We look forward to competing in the international marketplace but will not stand by and watch foreign competitors decimate our industry through flags of convenience schemes or unfair government subsidies.” Representatives Frank LoBiondo, R-N.J., Peter DeFazio, D-Ore., Rick Larsen, D-Wash., and Drew Ferguson, R-Ga., are the bill’s initial sponsors.
Flags of convenience are a legal technique that relies on registration of a business or asset in a country with a more favorable tax or regulatory climate than some other more “true” home country of the business. Flags of convenience have become a major issue for U.S. airlines and their pilots’ unions since Norwegian Air International (NAI) established a subsidiary in Ireland to take advantage of that country’s tax and labor laws while flying trans-Atlantic routes to the United States. NAI has received much support from airport authorities and local governments who hope to benefit from increased travel to their airports and communities. Under current law, the Department of Transportation found they had no authority to deny NAI’s request for a Foreign Carrier Permit. The Department of Transportation in its final ruling on NAI’s application said, “Regardless of our appreciation of the public policy arguments raised by opponents, we have been advised that the law and our bilateral obligations leave us no avenue to reject this application.” SWAPA hopes this bill will change that.
Photo: Creative Commons Attribution, Steve Bates
