BEFORE THE

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Application of )

)

)

) Docket DOT-OST-

) 2013;.0204

)

)

--------------~-------------------)

Norwegian Air International Limited

for an exemption under 49 V.S.C. § 40109

and a foreign air carrier permit pursuant

to 49 V.S.C. § 41301

ANSWER OF FEDERAL EXPRESS CORPORATION

Communications with respect to this document should be sent to:

Nancy S. Sparks

Managing Director

Regulatory Affairs

FEDERAL EXPRESS CORPORATION

1700 Pennsylvania Avenue, N.W.

Suite 950

Washington, D.C. 20006

(202) 393-9286 (phone)

(202) 628-0654 (fax)

Email: nssparks@fedex.com

Dated: February 12,2014

M. Rush O'Keefe, II'.

Senior Vice President & General Counsel

Steven H. Taylor

Vice President

Regulatory Affairs

FEDERAL EXPRESS CORPORATION

3620 Hacks Cross Road

Building B, 3rd Floor

Memphis, Tennessee 38125

(901) 434-8586 (phone)

(901) 434-8283 (fax)

Attorneys for

FEDERAL EXPRESS CORPORATION
BEFORE THE

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Application of )

)

)

)

)

)

)

)

Docket DOT-OST2013-0204

. Norwegian Air International Limited

for an exemption under 49 D.S.C. § 40109

and a foreign air carrier permit pursuant

to 49 D.S.C. § 41301

ANSWER OF FEDERAL EXPRESS CORPORATION

Federal Express Corporation ("FedEx") files this answer to the Notice, served

January 30, 2014, by the Department of Transportation (the "Department") in the docket

relating to the application of Norwegian Air International Limited ("NAI") for a foreign air

carrier permit. The Notice contains information provided by the European delegation in a

private government-to-government session held during the meetings of the Joint Committee,

formed under the U.S.-European Union Air Services Agreement (the "U.S.-EU Open Skies

Agreement").

FedEx has observed the growing level of activity in this docket and appreciates the I

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opportunity to provide comment pursuant to the Notice. FedEx sees nothing in the Notice,

other than the fact that the Air Operator's Certificate ("AOC") has yet to be issued, as a

reason to reject the application of NAI. We conclude that NAI's application should be

granted and allowed to benefit from the terms of the U.S.-EU Open Skies agreement once

that AOC has been issued.
In fact, it was the intent of the U.S.-EU Open Skies Agreement not to probe the

decision of a national regulator in matters of fitness and qualification. See Article 6 bis. In

order to make applications less burdensome, the Department created a special procedure for

European carriers' applications for a foreign carrier permit. I This unique procedure

underscores the importance of the special aviation relationship that the u.s. and the

European Union intended to further by signing the U.S-EU Open Skies Agreement. This

agreement is the keystone of the U.S. government policy in favor of opening aviation

markets.

FedEx is of the view that a rejection of this application would violate the clear terms

of the D.S-EU Open Skies Agreement. Once an AOC is issued, a European Member State is

affirming that a thorough review of the air operator has been undertaken and that compliance

with national law is being confirmed by that Member State. For the U.S. to dismiss the

application after that certification is a rejection of that Member State's aviation regulatory

scheme.

There is no reason for such a rejection grounded in safety. Ireland remains rated

Category 1 by the U.S. Federal Aviation Administration. It is the regulator of an airline that

operates to the U.S, without any question by the Department. It is, in fact, one of the most

respected aviation authorities in the world. In its 2010 audit by the International Civil

Aviation Organization (ICAO), the Irish Aviation authority ranked in the top ten agencies in

I Application Procedures for Foreign Air Carriers ofthe European Union, February 19,2009,

http://www..dot. goy/sites/dot. gov/fi lesldocs/ ADD]ication% ?OProcedures%20for%20 EU%20can'iers-O )-19-

2009.pdf

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the world in recent audits by slightly ahead of the United States? On safety, the most

important rating for any airline, NAI would be held to the highest standards and the issuance

of its AOC would indicate that it had passed a rigorous review of its safety procedures.

There is no reason for rejection in terms of ownership and control. According to the

Notice, NAI is wholly owned by Norwegian Air Shuttle ASA ("NAS"), which is

undisputedly a Norwegian company and the holder of a Norwegian AOC. Under the first

stage of the U.S-EU Open Skies Agreement, it was agreed that citizens of members of the

European Community Aviation Area would be treated as nationals of Member States for

purposes of ownership and control. See Article 4(b) and Annex 4, Article 1 (3). Therefore,

NAS is entitled to own NAI, which is intended to be an Irish carrier.

On employment, there is nothing in the Notice that indicates that applicable labor

laws are not being complied with. Some commentators in this docket seem to think that a

difference in hiring practices, organizational results and employment terms should disqualify

a carrier from serving the U.S. under this agreement. In fact, there are many different ways

that employees of both U.S. and European airlines have chosen to organize (or not to

organize) themselves, and thus far, no government has found those to be an indicia of a lack

of fitness, The Notice sets forth clearly that there is no tradition in the NAS companies of

discouraging unionization, and there is no basis to presume that it will be changed for the

employees of Nal.

There is not a single labor law standard in the U.S.-ED Open Skies Agreement under

which all carriers must operate. The history of the agreement clearly demonstrates that it was

2 "Following an intensive international audit by ICAO in 20 I0, Ireland was ranked among the best in the world in the safety

oversight of civil aviation. Ireland was placed in the top ten countries worldwide ahead of countries like the United States.

Brazil and Australia and ranked third of the twenty-two European states that had completed their audit at that time." Abollt

the Irish Aviation Authority, bttps://www.iaa.ie/about-iaa.

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intended to permit application of the individual national laws governing employee/employer

relationships, rather than to set up a single trans-Atlantic labor standard. While some

participants in the talks did seek for the U.S. to submit itself to a single labor standard along

with Europe, that view did not prevail. Article 17(2) bis instead references "labor standards

or the labor-related rights and principles contained in the Parties' respective laws,"

recognizing the continuing governance of each side's carriers by their own national labor

laws. For the U.S. to hold otherwise would be the worst kind of revisionist history. It also

would open a door that U.S. employees might later regret. If the U.S. can question European

labor practices, what would stop the EU or other aviation partners from questioning U.S.

airlines' labor practices?

FedEx believes that a rejection of this application is being sought by some that would

seek to turn back the movement of aviation liberalization in the U.S. generally. One filing

specifically asks that this application be rejected because "U.S. carriers' competitive

positions would be unfairly and unlawfully compromised by approval of the NAI scheme." 3

We are not clear as to how the "unlawful" issue is propounded, because this is the final

argument put forward by the repliers and there is no further explanation. But the "unfair"

complaint is familiar ·from recent public dialogue on airline competition. It appears to be

grounded in a special definition of "unfair" - as being anything that U.S. carriers choose not

to do - rather than rooted in the traditional aviation law definition of "unfair" competition

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3 Joint Reply of Delta Air Lines. Inc .. United Airlines. Inc .. American Airlines. Inc. and US Airways, Inc .. Docket DOTOST-2013-0204, December 20,2013.
being "discriminatory.t'" Having benefited from opening up non-U.S. markets to U.S. carrier

competition, some commentators in the docket would now seek to stop reciprocal market

liberalization for carriers seeking to serve the U.S., under the guise of "fair competition."

FedEx believes that open markets will inevitably produce a variety of business models, of

employment models and of corporate models. Those are not grounds for rejection under this

liberalized agreement and to hold otherwise would be to turn back the clock on U.S. market

openings. At a time when the U.S. is seeking to open access to European markets through

trade agreements such as the Trans-Atlantic Trade and Investment Partnership and the Trade

and Investment in Services Agreement, the U.S. Government would be foolish to seek to

close the door already opened in aviation by the U.S.-EU Open Skies Agreement.

Moreover, not only would it send a message of protectionism to our most favored

trading partners in Europe, it would also inform other aviation partners, both those already

patty to other Open Skies agreements and those still considering them, that the U.S. is

advocating market openings only when it is the foreign markets that are opening to U.S.

carriers, That seems to be the message from some filings in this docket - perhaps an example

of "buyer's regret" when foreign carriers turn out to be able and even innovative competitors.

U.S. carriers must be prepared to compete with all types of carriers. Over the past twenty

years, U.S. carriers have competed with operators with differing pricing and cost structures,

including those that are the beneficiaries of special monopolies and privileges and those that

are the "national champions." The consumer has consistently benefited, and U.S carriers

remain the best in the world. FedEx continues to believe that Open Skies - and beyond Open

4 A "fair and equal opportunity to compete" is a concept recognized in the U.S-EU Open Skies Agreement, see

e.g. Article 14. However, that concept it is clearly applicable only in a situation where a country grants to its

own carriers greater rights than it grants to foreign carriers. That is not the situation here.

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Skies - is the best policy to benefit US. passengers and shippers, who are and should remain

the primary beneficiaries of U.S. international aviation policy.

FedEx (and its customers) benefit greatly from the US-EU Open Skies agreement

and other Open Skies agreements, as do all U.S. carriers that operate internationally. We

utilize the open Fifth Freedom rights, liberal change-of-gauge capabilities, intermodal rights

and operational flexibility provisions contained in those agreements. OUThub-and-spoke

system could not function outside the U.S. without the grant of those rights. Using those

rights, FedEx has created a global network of US-operated flights, using U.S. crews and

covered under U.S. safety and security regulations. In Europe, we have multiple locations in

Member States where those rights allow us to connect points within Europe and beyond it to

OUTU.S. and Asia hubs. We would strongly oppose any action by the Department that could

cause other nations to "limit the benefits of the US-EU Open Skies Agreement or which

might invite a restrictive reading of its terms by others.

FedEx contends that NAI should be permitted into the US. marketplace, as an airline

supervised by a highly competent safety regulator, and as an airline which seeks to create

U.S. jobs, purchase US. products and offer US. consumers an innovative service. We also

believe that a failure to approve the NAI application will result in a crisis of confidence in the

US. push for air services liberalization. As an airline that has always backed deregulation

and its international equivalent, liberalization, FedEx urges the Department not to convert the

US.-EU liberalizing agreement into a weapon to stop certain airlines from serving the U.S.

market. Instead, the US. should support the agreement by refusing to penalize a carrier that

operates in a different manner from models presently in the trans-Atlantic arena. After that,

only time - and the marketplace - will decide ifNAI can succeed.

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Respectfully submitted,

FEDERAL EXPRESS CORPORATION

Isl Nancy S. Sparks

Nancy S. Sparks

Managing Director

Regulatory Affairs

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CERTIFICATE OF SERVICE

A copy of the foregoing Answer has been served this 12thday of February, 2014, upon the

following persons via email:

romanow@pillsburylaw.com

peter.nelson@pillsburylaw.com

russell. bailey@alpa.org

steve.mon·issey@united.com

dan. weiss@united.com

sascha. vanderbellen@delta.com

howard.kass@usairways.com

robert.wirick@aa.com

francis.heil@aa.com

robert.land@jetblue.com

Ipommer@atlasait·.com

anita.mosner@hklaw.com

jennifer.nowak@hklaw.com

mlbenge@zsrlaw.com

dberg@airlines.org

j casey@airlines.org

kglatz@airlines.org

cbethke@airlines.org

edw@ttd.org

ejames@jamhoff.com

clytle@portoakland.com

kgeorge@broward.org

mrichardson@swapa.org

sshur@traveltech.org

jesse.elliot@faa.gov

douglas.schwab@faa.gov

nicholas.tsokris@faa.gov

john.allen@faa.gov

paul.gretch@dot.gov

brian.hedberg@dot.gov

reese.davidson@dot.gov

esta.rosenberg@dot.gov

brett.Ia.-uger@dot.gov

ursIa.-@state.gov

CristinaSA@state.gov

Eugene.alford@trade.gov

info@ait-lineinfo.com

Courtney E. Felts

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/s/ Courtney E. Felts

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