Giant German carrier Lufthansa has joined the fight against rival airline Norwegian’s new practice of using low-cost Asian crews on board its intercontinental flights. Lufthansa’s CEO is accusing his counterpart at Norwegian, Bjørn Kjos, of bringing the same type of crewing loopholes to the skies that the shipping industry launched at sea years ago, and he wants them closed.
Christoph Franz, chief executive for the huge Frankfurt-based Lufthansa, told newspaper Dagens Næringsliv (DN) on Monday that he thinks Kjos has gone too far in testing international rules for cabin crews on board Norwegian’s new intercontinental service.
“This is an entirely new development in the airline industry,” Franz told DN. “We respect Norwegian highly and gladly compete against them on long-haul routes, but that must take place on the same terms.”
Lufthansa has joined its Star Alliance partner and Norwegian’s arch-rival, SAS (Scandinavian Airlines), and labour organizations in asking airline authorities to reject Norwegian’s application for traffic rights over the Atlantic. A so-called “Open Skies” agreement between the US and the EU in 2006 was aimed at clearing the way for more competition on trans-Atlantic routes. Franz claims, however, that the bilateral agreement was never meant to open up for crewing practices that would undermine European labour standards. Norwegian has itself announced that it intends to build up its new long-haul service based on labour, social standards and pay levels from outside the EU, Franz noted.
“That’s what we’re reacting to,” he told DN: “We have seen this happen within shipping, when shipowners began sailing their vessels under flags of convenience in Liberia and Panama.” As a result, for example, hardly any Norwegian-owned ships have Norwegian crews on board. DN reported over the weekend that large liner firm Wilh Wilhelmsen is phasing out the rest of the Norwegian seafarers on its vessels, to cut costs.
Asked why the same sort of rules that apply to shipping should not apply to airlines, Franz claimed they already do in some cases: “When we fly to Thailand, we export German labour standards to Thailand. When Thai Airways flies to Europe, they import their labour standards to us.
“But if we’re to maintain a minimal level of fair competition, we can’t import workers from a third market.” That’s what Franz thinks Norwegian is effectively doing, by using Asian crews on flights between Europe and the US.
Norwegian, which has vigorously defended its new intercontinental operations, has claimed that new American crews hired in the US to also work on board Norwegian’s new long-distance flights will receive the same pay as their colleagues from Thailand. “We have clarified to the authorities that this isn’t just a search for the cheapest personnel,” Norwegian’s communications directors Anne-Sissel Skånvik told DN. “We need bases that serve flights in towards Europe. We have established crew bases in the US with the same pay levels as in Thailand.”
As Norwegian Broadcasting (NRK) reported over the weekend, Norwegian was deluged with job applications from eager Americans when it advertised for crews to be based in Florida. Norwegian, meanwhile, hopes to get a green light by April 1 from US authorities to keep expanding its trans-Atlantic service that uses new, but often troubled, Boeing 787 Dreamliner aircraft.
Lufthansa and SAS want any decision delayed until US and EU authorities meet in Vienna in June. CEO Franz repeated that he’s respected Kjos and Norwegian’s operations until now, also for finding “new solutions” to industry challenges. “But his ambitions must end where the law sets limits,” Franz said.
‘Mad at us right now’
His opposition to Norwegian’s new operations is significant since Norwegian has been a “good customer” of Lufthansa’s aircraft maintenance services. Franz isn’t happy that Norwegian “is mad at us right now” for opposing its ambitious plans, “but this is all about one single issue.” He rejected Norwegian’s often-repeated claims that its US and European rivals are simply afraid of new competition on long-distance routes.
“This airline has lived with competition for a long time,” Franz told DN. “Over the Atlantic, there are three airline alliances that compete hard against each other every day, and there are other airlines in addition to them.” He noted that no low-fare carriers have succeeded as yet in introducing low-fare intercontinental service: “On those routes, fuel is the biggest cost, and that in principle is the same for everyone.”