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Crony Capitalism Watch
Congress Nixes Cheap Flights to Europe

You could fly round trip from New York to London this summer for under $500—but not if Congress has anything to say about it. The House of Representatives voted on Tuesday to forbid Norwegian Air, a budget airline that has cut the cost of transatlantic travel in half, from expanding in the United States. This measure, buried in an amendment to the Department of Transportation’s budget, was heavily supported by established airlines and the Air Line Pilots Association.

Norwegian Air already runs a few, very inexpensive flights from the U.S. to Europe. Now it plans to use an Irish subsidiary, Norwegian Air International, to expand its transatlantic operations by an order of magnitude. The 2007 U.S.-EU Open Skies Agreement allows EU corporations such as NAI to operate flights to the US with few regulatory hurdles. Under pressure from Delta, US Air, United, and the pilots’ union, however, the House voted to forbid the Federal Aviation Administration from issuing Norwegian the necessary air operator certificate.

The charge these corporate interests level against Norwegian Air is that it hires Thai pilots and American flight attendants to circumvent high union prices—in other words, it cuts costs like any other business. Only in air travel is this unusual, as Norwegian Air itself pointed out recently. Noting that their safety and labor records are on par with industry standards, it cut to the heart of the issue:

Norwegian believes that competition on intercontinental flights is long overdue. Flights between the U.S. and Europe have traditionally been way too expensive. Why should a flight between New York and Europe cost three times as much as a flight between New York and Los Angeles? The flight to Europe is only about an hour longer, sometimes even less.

Air travel remains one of the most cartelized sectors of the economy, and Transatlantic travel remains its most overprotected segment. Competition in this area is long overdue. With a broader free trade agreement with the EU currently under negotiation, Congress’s action also risks fueling the perception that the U.S. is for free trade only when it benefits itself and will not hesitate to undermine agreements post hoc when corporate interests are affected.

The one consolation is that, as this stitch-up was buried in an arcane budget amendment and passed by a voice vote, many of those who voted for it may not have been aware of what they were doing. Naming and shaming may lead to a reversal. To become law, a version bill needs to be passed by the Senate and then reconciled with the House bill, during which time the House could remove the language.

For Congress’s own sake, it would be better to try to do so. Some are saying that House Majority Leader Eric Cantor’s shocking defeat last night to an underfunded, unknown economics professor was driven largely by a feeling that the Congressman had come to represent business interests better than the 7th District of Virginia. As long as Congress continues to find ways to fuel these populist fires, don’t expect them to burn out anytime soon.

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  • Reticulator

    I’m filing this under “regulatory failure.”

  • Boritz

    It’s a lobbying issue. What has Norwegian done to deserve [wink] this opening?

  • S.C. Schwarz

    I thought Republicans believed in the free market?

    • Despiser_of_Libs

      Its “relative” to how far left the Democrats have went. When the Democrats have become full blown Communist then the GOP looks upon Fascism as “not so bad”…


  • Kevin Nas

    I have to travel a lot for my business, mostly in Europe and Asia, but often in the states to cities like Las Vegas. I used to use sites like Travelocity to book my flights and lodging, but I stumbled upon the better way to find deals: go to the second level sites – those like who compare the hundreds of different booking sites in one single search. You’ll not only see Trivago or Expedia deals, but ALL OF THEM in one place.

    I must have saved over 3,000 Euros since I started using them. I sincerely believe that using only one of the top booking sites is not necessarily the best idea.

  • Despiser_of_Libs

    “Ineptocracy: in-ep-toc’-ra-cy”

    “A system of government where the least capable to lead are elected by the least capable of producing, and where the members of society least likely to sustain themselves or succeed, are rewarded with goods and services paid for by the confiscated wealth of a diminishing number of producers.”

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