Norwegian Air Shuttle’s long-haul business model. “Flag of convenience” or fair competition?

On 31-Dec-2013, Norwegian Air Shuttle implemented changes to its corporate structure, involving the establishment of two fully owned subsidiaries - one in Norway and one in Ireland. Each has its own air operator's certificate (AOC), although the Irish company, which is the vehicle for Norwegian's long-haul operation, does not yet have a permanent AOC.

Norwegian's fledgling long-haul network includes services from Scandinavia to Bangkok and two US destinations: New York and Fort Lauderdale. From summer 2014, it will add Los Angeles, Oakland and Orlando to its US destinations and London Gatwick will become its first trans-Atlantic base outside Scandinavia.

Norwegian's new structure aims to minimise the costs of its long-haul operations, in particular labour costs. With widebody aircraft registered (and an AOC application) in Ireland, crew based in Thailand and elsewhere, a Norwegian brand and destinations increasingly focused on the US, Norwegian's long-haul business model is market leading to say the least. US airlines and unions predictably oppose its foreign air carrier permit application, deriding its "flag of convenience" (a misnomer in this case) approach to gaining an "unfair" advantage.