June 18, 2014 | Kendall Creighton US Airlines Shut Out Cheaper European Competitor Norwegian Air Shuttle Blocked Tuesday, June 17, 2014 Monopolies hate fresh competition. An airline that offers some of the lowest fares in the world was stopped by the big three U.S. carriers: United, Delta and American. Norwegian Air International (NAI), an affiliate of the Norwegian Group, had applied to the DOT to offer low-cost international flights to Europe from the U.S. NAI meets all legal, safety and regulatory requirements to inaugurate air service to the U.S. Under the U.S.-EU Open Skies Agreement it could operate among all cities in Europe and the U.S. The U.S. has Open Skies agreements with more than 110 countries around the world, including a landmark 2007 agreement with the European Union. The Open Skies policy has brought in pro-consumer airline competition on a global scale, boosting U.S. airports, cities, and providing travelers more frequent, and better air service at affordable prices. The response of the U.S. legacy carriers was horror. A number of major U.S. and European airlines have an iron grip on the transatlantic market using their alliances; Star Alliance, Oneworld and SkyTeam. They petitioned the DOT to deny NAI approval to serve the U.S. Game-Changing Event Leads To A Cry For Protection The big three U.S. carriers scrambled and sent a letter to the DOT asking for help to keep the Vikings away. “Even if NAI’s plans did not specifically violate the U.S.-EU Air Transport Agreement,” the letter said, “the application should be dismissed because it fails to meet the Department’s public interest standard.” A DOT spokeswoman refused to comment on the “merits” of Norwegian’s case, citing the application’s status as a “contested proceeding”. The European Union’s top transport official expressed deep disappointment with the attempt by American lawmakers to block plans by Norwegian Air to offer new cut-rate flights across the Atlantic, and hinted at possible legal action if Washington failed to grant an operating license to the budget carrier’s long-distance subsidiary. Norwegian Air planned to begin flights in July from Gatwick to JFK. It would have been the only scheduled service from Gatwick to New York and, more importantly, the fares were several hundred dollars below what the legacy carriers were charging. A spokesman for Norwegian said, “It’s ironic that elected officials in a country where capitalism and the free market are celebrated are not making a decision based on the facts that show how we are bringing in competition, lowering prices and creating jobs. Consumers love us, I guess that is what they are afraid of.” An Appeal To Uncle Sam Norwegian Air, which previously specialized in low-cost flights within Europe, entered on the global scene last year with cheap flights from hubs in Scandinavia to holiday destinations in Thailand and the United States. But its business model – which involves basing some crew members in Thailand and hiring American flight attendants – has angered labor groups and airlines in the United States. Millions were spent by the Air Line Pilots Association (ALPA), backed by Norwegian Air’s rival SAS, on xenophobic ad campaigns to stoke divisions and appeals to patriotism. A sample line: “NAI calls itself Norwegian, but it registers its airplanes in Ireland, hires its pilots in Singapore, and bases its flight crews in Thailand.” Bjørn Kjos, CEO of Norwegian Air said, “Obviously they want to keep competition out. Especially low-cost carriers.” The irony here is not lost on us. These are the same American carriers that are hostile to government interference when it comes to rules for tranparent fares or humane seat space regulations. Americans will be better off if the DOT gives NAI the opportunity to compete. To clarify, FlyersRights is opposed to the blocking of competition. We are not endorsing Norwegian Air’s 787 Dreamliner fleet, only opposing protectionism by the Big Three. FlyersRights has urged that 787s be restricted to flying within two hours of landing zones until the aircraft shows at least two years of trouble free operations – and the North Atlantic routes are within that. 33 Republicans Restrict Competition Here are the 33 House members who signed on to the DOT letter to block Norwegian Air. We want to know what kind of ‘donations’ they got for signing that letter: Chris Collins (R-N.Y.); Fred Upton (R-Mich.); Ted Poe (R-Texas); Mike Coffman (R-Colo.); David McKinley (R-W.Va.); Paul Cook (R-Calif.); Walter Jones (R-N.C.); Patrick Meehan (R-Pa.); David Joyce (R-Ohio); Chris Gibson (R-N.Y.); Richard Hanna (R-N.Y.); Mike Fitzpatrick (R-Pa.); Aaron Schock (R-Ill.); Patrick Tiberi (R-Ohio); Rodney Davis (R-Ill.); Jim Renacci (R-Ohio); Ileana Ros-Lehtinen (R-Fla.); Charlie Dent (R-Pa.); Mario Diaz-Balart (R-Fla.); Bill Johnson (R-Ohio); Don Young (R-Alaska); Tim Griffin (R-Ark.); Todd Rokita (R-Ind.); Michael Grimm (R-N.Y.); Jeff Denham (R-Calif.); Steve Stivers (R-Ohio); Duncan Hunter (R-Calif.); Lee Terry (R-Neb.); Tom Reed (R-N.Y.); David Valada (R-Calif.); Lou Barletta (R-Pa.); Adam Kinzinger (R-Ill.); and Steve Southerland (R-Fla.). Read More: NYTimes Read More: the Hill The Fight Continues For Low-Cost Transatlantic Flights WestJet Triggers Price War With Low-Cost Fares To Dublin No-frills Canadian airline, WestJet, succeeded in launching a new route between North America and Europe, where Norwegian Air did not. The airline will make its first transatlantic flight this summer, offering daily non-stop flights to Dublin from St. John’s, Newfoundland. Fares are approximately $390 for a round-trip flight, while tickets from Toronto to Dublin would cost around $610. Chris Avery, WestJet Vice-President, said they wanted to bring discounted prices to their customers so that they can explore Europe. ‘WestJet’s innovative foray into the European market represents a willingness to do what it takes to connect Canadians to the world while bringing the world to Canada. From Dublin, guests can access low-cost flights to more than 100 cities in Europe.’ This comes on the heels of Norwegian Air being denied plans to offer cheap tickets on overseas flights from the U.S. Shrink To NOT Fit (Photo: M. Spencer Green, AP) Alas, another money-making opportunity! Airlines are quietly shrinking the allowed carry-on sizes. Since the airlines upended decades of tradition by making ordinary checked luggage an added profit center, and economically rational fliers responded by trying to pack in accordance with the carry-on rules, the airlines changed the rules in the middle of the game. The USAToday reports that airline “gatekeepers” are being stationed at TSA checkpoints to insist you put your carry-on in bag sizers, for rejection. Quote: Recently I had a very unpleasant surprise in the TSA line at New York’s JFK airport. No, they did not do a touchy-feely pat down or confiscate something. Just before actually getting to the TSA agent’s podium, a red-jacketed person (who I believe was hired by American Airlines as a subcontractor but not an actual employee) insisted that I put my suitcase in a bag sizer. Keep in mind that I was flying in business class, and that I’ve taken this same 21-inch four-wheeled suitcase all around the world on almost every major airline and quite a few not-so-major ones. To make a long story short, it was rejected as “too big.” What I didn’t realize, because it’s never been an issue before, is that American (as well as Delta and United) has updated their carry-on bag policies, including a 14-inch maximum width, and my Rimowa is 15 inches wide, as are many carry-ons. Even though it’s an inch shorter than the 22-inch length limit, and an inch below the official 9-inch depth limit, back to check-in, I went. And the line was so long, I almost missed my flight. I was then told that this is a new “FAA regulation,” a questionable claim given that not all airlines have the same allowances. These new size limits are recent. In fact, United made the change on March 2, 2014. Its previous policy was that no dimension could be over 22 inches and the total overall dimensions no more than 45 inches. So these very specific measurements really change the game, and will be causing a lot of headaches — and heartaches when people learn they will have to leave their favorite, and in some cases, very expensive, bags in the closet. Or change airlines. It’s interesting that not all airlines have the same size limits. Southwest and JetBlue have a more generous 24 by 16 by 10-inch carry-on limit, which makes that “FAA” claim suspect. Your Letters! From last week’s newsletter: Dear FlyersRights: Some thoughts on “People Express” et al. The original People Express was a low cost carrier of the ’80’s. It was absorbed into Continental Airlines in 1987. I never flew it. Donald Burr, formerly of Texas International Airlines, the creation of one Frank Lorenzo and a former business partner, was the founder of People Express. It ultimately was financially drowned in debt, which accounted for the Continental acquisition. And who, pray tell, controlled and was running Continental? The despised Frank Lorenzo, who took the “new Continental” into bankruptcy twice, after acquiring Continental for Texas Air Corporation (Texas International Airlines) in the early ’80’s and moving its corporate headquarters and primary base of operations from Los Angeles, where it had had a storied history, and was primarily a carrier in the western United States and the Pacific, to Houston. Lorenzo also gobbled up Eastern Airlines after disastrous negotiations between Eastern’s CEO, former Apollo Astronaut Frank Borman, and the International Association of Machinists union. Continental was owned by Texas Air Corporation, controlled by Fort Worth financier David Bonderman, then President of the Robert Bass Group. Bass is a Texas oil gazillionaire. I personally experienced Continental first-hand in the 1990’s from 1991 through 1998, both during and post Lorenzo. I was on their planes at least two days a week heading from or back to Houston on business. It had to be one of the shoddiest, saddest excuses for American businesses from my observations, flying the airline 1991-1994. Flights were cancelled when seats weren’t full. Planes were dirty. Personnel were extremely frustrated and unhappy. Fear was everywhere. Management was despised. Reservations were constantly screwed up. The airline held records for lost baggage. They had one of the worst on-time records in modern aviation history. Planes were constantly delayed due to maintenance issues. Lorenzo owned the caterer, Chelsea Food Services, and the food was beyond awful. Bonuses were promised but never paid. Guess who was responsible for revenue planning? Ben Baldanza, now CEO of Spirit. Hm. Ben got excellent training from the master of how to squeeze blood from a turnip, Frank Lorenzo, and one can see a reprise of the Continental of Lorenzo days in Baldanza’s cavalier attitude toward customer needs and shoddy, underhanded pricing practices. He learned from the master. Finally Continental’s board had had enough of poor financial performance and Lorenzo’s ineffective and hated management style. Lorenzo was a less than honest, cut-throat bean counter at heart. The only thing during Lorenzo’s era that didn’t visibly suffer was safety, and I suspect that was the case solely because the FAA and the insurors wouldn’t let him skimp on safety more than the law allowed. Lorenzo hadn’t a clue when it came to actually RUNNING an airline effectively from an operational standpoint, and in 1994, under pressure from investors, he stepped down as CEO. During 1994 the Board hired Gordon Bethune, a Boeing executive in charge of the 737 program, as a senior executive. Bethune’s background was operational–he had been head of operations at Piedmont Airlines prior to its acquisition by Allegheny, which later was renamed USAir. He also held a jet transport pilot’s license. At the end of 1994 Bethune was appointed CEO and Greg Brenneman, formerly of Bain and Co., was appointed President and COO. According to Bethune’s book published in 1997, “From Worst to First”, he and Brenneman discovered at the beginning of 1995, that Continental had cash in the bank to meet payroll for only 30 more days. Its systems didn’t talk to each other, its books were a mess, its personnel in turmoil, its staff turnover rate the highest in the industry, its fleet one of the oldest in the air, its paint scheme only half changed and its brand despised by business travelers and leisure travelers alike. Reservation centers had too few agents and people waited forever to book flights. At the end of 1995 Continental Airlines had $1 billion cash on hand and was ranked in the top four in on-time performance. Employees became believers. The armed guards guarding Lorenzo’s CEO office doors were relieved of their post. Fascinating story. Primarily a result of Bethune and Brenneman’s “Go Forward” plan devised on Bethune’s dining room table in Houston. In less than one year Bethune and Brenneman accomplished what Frank Lorenzo couldn’t or wouldn’t in 13 years. All Lorenzo knew how to do was cut costs, and make employees and passengers hate his guts. The unions particularly despised him. He took the company into bankruptcy to break the unions in 1983. Bethune was fond of saying, “Anybody can make a pizza without cheese. The question is, who’s gonna eat it?” Lorenzo made cheese-less pizza, and only those who had no other choice bought it. It might relieve hunger, but nobody wanted to eat it, given a choice, even at rock bottom prices. Ben, are you listening? Continental wound up with huge hubs in Houston and Newark and instead of dominating the western skies, became the most dominant player in the New York market because of the Newark hub. The turn-around story is fascinating. I owe Kate Hanni a debt of gratitude. Three or four years ago Delta Airlines went out of its way to abuse me in ways that astounded even her when I made a Houston-Chattanooga trip for an uncle’s funeral. The story was so horrible that she actually called me on a Saturday after I posted the story via Flyers Rights. In the end Delta finally, FINALLY made amends and has behaved itself with me since. Her interest caught the interest of an ESPN color commentator based in Atlanta and a Platinum Medallion Delta flyer who got involved. My frequent flying days on Southwest and Continental are over–I should write a book some day of the good, the bad, and the ugly. Believe me. There has been plenty of ugly. Even during the Bethune days, although his office always was horrified and made amends each and every time an incident occurred. One incident was so bad that his executive assistant for passenger relations gave me 24 positive space first class upgrades after a captain threw me off a plane at the gate in Detroit when the crew wouldn’t make room in the cabin for my bag with a computer and sensitive Dun and Bradstreet data in it. Checking it was a fireable offense. And I had a Gold Elite card in my pocket that I flashed him. It was the last plane out on a Friday night on Christmas weekend. I forgave but never forgot. Best, R.C. Well, this is one way to kill time at the airport: All by myself —————————————————————– FlyersRights founder, Kate Hanni with president, Paul Hudson FlyersRights depends on tax-deductible contributions from those who share our commitment to airline passenger rights. Thank you. or FlyersRights 4411 Bee Ridge Road Sarasota, FL 34233 We value your thoughts and opinions! Please email newsletter writer, Kendallc@FlyersRights.org.