1 BEFORE THE

U.S. DEPARTMENT OF TRANSPORTATION

WASHINGTON, DC

) Application of ) ) Docket No. OST

- 2013

- 0204

NORWEGIAN AIR INTERNATIONAL )

LIMITED ) ) for an exemption under 49 U.S.C. § 40109 ) and a foreign air carrier permit pursuant to ) 49 U.S.C. § 41301 (US

- EU Open Skies) ) )

COMMENTS OF THE SIGNATORIES TO THE JOINT DECLARATION

AGAINST EU

- BASED FLAGS OF CONVENIENCE IN AVIATION AS

ENDORSED ON 5 JUNE 2014 BY THE AIR CREW WORKING GROUP OF THE

SECTORAL DIALOGU E COMMITTEE

TO

COMMENTS ON DOT’S August 4 NOTICE

Emmanuel Jahan Chairperson of the European Sectoral Social Dialogue Committee in Civil

Aviation

Avenue Louise 149 Tour Generali, B31

B

- 1040 Brussels

Tel: +32

- 473.93.84.33

Email: chair.ssd.committee@gmail Jonathan H orne Vice

- Chairperson of the European Sectoral Social Dialogue Committee in

Civil Aviation c/o European Cockpit Association

Rue du Commerce 20

- 22

B

- 1000 Brussels

Tel : +32

- 2

- 705.32.93

Email: jh@eurocockpit.be

Dated: 18 Aug. 2014

The signatories are the official joint representative s of international scheduled airlines, pilots and cabin crew ( the Air Crew Working Group) in the Civil Aviation Sectoral Social Dialogue Committee of the European Union

.

We would like to comment on the summary of the v iew proposed by officials from DG MOVE during its meeting with the Department of Transport and the Department of State on July 14, 2014 on the legal meaning and applicability of article 17bis of the EU

- US agreement while considering the exemption and a for eign air carrier permit for Norwegian Air International.2

These comments are without prejudi ce to the filings already made b y the organisations of the two signatories.

1. Process:

We understand that the U.S. Government has requested the Directorate Ge neral for Mobility and Transport of the European Commission (DG MOVE) to present its own view on the meaning and the applicability of article 17bis ‘Social Dimension’. The Director of Aviation at DG MOVE spoke on behalf of his colleagues from DG MOVE only, referred to as the EC (European Commission) delegation or EC officials or EC. We would like to stress that although DG MOVE has a delegated power from the European Commission to negotiate a draft aviation agreement, to oversee its implementation, and is

e ntitled to co

- chair the discussions within the Joint Committee framework, it does not

– in this context of the NAI application

– represent the view of the European Commission as a whole nor of the Member States who are signatory parties of the agreement.

We are aware that DG MOVE met with Member States to seek their opinion on the meaning and the applicability of article 17bis in the context of the request from NAI to request an exemption and a foreign air carrier permit. All Member States present agreed that the business model proposed by Norwegian Air International is questionable and some Member states contested DG MOVE’s legal interpretation as reflected in the August 4 DOT notice. Some of them have addressed their concerns and comments by

letter to DG MOVE , and DOT might want to consult with EU Member States and directly seek their views. Hence it is noteworthy that the opinion expresses the sole view of DG MOVE. Furthermore, apart from the fact that several EU aviation stakeholders (airlines and staff organisations) do not share DG MOVE’s point of view, a number of Members of the European Parliament have addressed questions 1 to the Commission on

NAI’s business model

– questions that have been answered only partly and superficially.

2. Comments on th e interpretation of Article 17bis:

Article 17 bis reads:

“ 1. The parties recognize the importance of the social dimension of the agreement and the benefits that arise when open markets are accompanied by high labour standards. The opportunities created b y the agreement are not intended to undermine

labour standards or the labour

- related rights and principles contained in the Parties’ respective laws.

2. The principles in paragraph 1 shall guide the Parties as they implement the Agreement, including regula r consideration by the Joint Committee, pursuant to Article 18, of the social effects of the Agreement and the development of appro priate response to concerns found to be legitimate ”

DG MOVE’s interpretation of Article 17bis is partial only. For example it disregards that §1 contains a strong wording i

. e. “ are not intended to undermine labour standards or

1 See Annex 13

labour

- related rights and principles contained in the Parties’ respective laws’, rather than stating e.g. ‘ should be intended to not undermine’ or ‘ shou ld not undermine’.

In §2 , t he verb ‘guide’ is defined as “Lead or direct in a course of action, the formation of opinions, etc.; influence; advise; be the principle, motive, or ground of (an action, judgement, etc.). e.g

. ‘Policy is guided by...” 2 . So the p rinciples in paragraph 1 SHALL lead or direct the parties during the implementation of the agreement. It includes

– but is

not limited to

- regular considerations by the Joint Committee. The Joint Committee is a tool which analyses problems already created by the implementation of the agreement whereas Art. 17bis guides/directs the parties not only in ongoing functioning of the agreement, but also in deciding how to implement in the first place to prevent subsequent problems arising.

Contrary to the view a dvanced by the individual Commission officials at the meeting, the use of the plural “parties” does not, in plain or legal English meaning, restrict the action of implementation to be only possible jointly, it simply means there is more than one

party to t he agreement.

The use of the wording “ including regular...” clearly indicates that the Joint Committee is not the only body entitled to decide upon implementation of the agreement. In fact Article 17 §2 is expressly worded to state that it is the parties wh o are guided in how they [meaning the parties] “implement the Agreement”. It is clear that they are entitled to take individual positions on implementation.

As to the term ‘implementation, it is noteworthy in this respect that, by nature, the implementati on of an agreement can only occur through the application of the agreement’s provisions. These provisions include Art. 4 and Art. 6bis. Hence, the application of these articles by the parties is subject to and governed by Art. 17bis

– contrary to what DG M OVE states.

DG MOVE is of the view that article 17 bis refers to matters to be dealt with by ‘the parties’ jointly rather than by any one single party. Whereas we agree that ‘the parties’ agree and want to follow the principles laid down in article 17bis §1 (first sentence) and article 17bis §2, DG MOVE’s interpretation can simply not stand for article 17bis §1

- second sentence. This latter refers to the “labour standards or the labour related rights and principles contained in the parties’ respective law s ”, i.e. the individual laws of each of the countries that are Parties to the agreement. In other words the U.S. and each of the European Countries are therefore held to ensure that their own respective (labour related) laws and principles are not undermin ed by the opportunities created by the agreement.

As to the ‘opportunities created by the agreement’, these opportunities can only be created through the application of the agreement’s provisions, incl. Art. 4 and to the extent that it might be relevant, Art. 6bis. Hence, the application of these articles by the parties is subject to and governed by Art. 17 bis

– contrary to what DG MOVE states. Furthermore Art. 4(c) states that a party shall grant appropriate authorizations and

2 Oxford Dictionary4

permissions provided that ‘the airline is qualified to meet the conditions prescribed under the laws and regulations normally applied to the operation of international air transportation by the Party considering the application or applications’. Art 17bis is such a “normally applie d regulation” to which the U.S. is obliged to abide to and is entitled to refer to unilaterally.

For the above reasons, it is the view of the signatories to the Joint Declaration that article 17bis should be fully taken into consideration

, by either par ty

, at any stage of the implementation of the agreement including when applying article 4 and if applicable 6bis to a specific case, such as the application of NAI.

With respect to the provisions laid down under 4(c) we recommend the U.S. DOT to deny

the NAI application for an exemption. We do not think that Art. 6bis applies in the present case as it only refers to airline f itness and citizenship. Indeed the Memorandum of Consultation between the EU and the US on the second stage of negotiation (23

- 25

Ma rch 2010) in its point 5 clearly states that A rt . 6bis should not modify art. 4 3

. Nevertheless if Art. 6 bis applies , the DOT should notify Ireland that it has issued a denial of NAI’s exemption application that finds that conditions prescribed under Art. 4(c) and

17bis have not been met. Considering the number of concerns from EU Members States, Members of the European Parliament, Social Partners and Aviation stakeholders from both sides of the Atlantic, we recommend the DOT to subsequently also deny the f oreign air carrier permit to NAI.

3. DG MOVE disregards European legislation

The arguments brought forward by DG MOVE, and the substantial support DG MOVE lends to the application of NAI, disregard several aspects of European legislation and principles relevant to the social repercussions of NAI’s business model and relevant to the application of Art. 4.

a. Labour standards and labour related rights

Art. 17bis §1 clearly refers to the fact that the opportunities created by the agreement

– such as NAI’s application

- « are not intended to undermine labour standards or the

labour

- related rights and principles contained in the Parties' respective laws ». Nevertheless NAI’s model

– through its other long haul company ‘Norwegian Long Haul’

– already today under mines European labour related laws.

3 EU

- US MoC point 5: ‘The Delegations affirmed that the procedures for reciprocal recognition of regulatory determinations with regard to airline fitness and citizenship in the new article 6bis a re not intended to modify the conditions prescribed under the laws and regulations normally applied by the parties to the operations of international air transportation referred to in art. 4 of the Agreement.’ http://ec.europa.eu/transport/modes/air/international_aviation/country_index/doc/2010_03_25_us_moc. pdf5

In Europe, the labour law and labour

- related law applicable to the pilots and cabin crew

are the one of the Member state in which or from which the worker habitually carries out

his/her duties 4 . Some operators in Europe have tried to set up a ‘PO box’ company in a

Member State w h ere social charges are among the lowest and post their employees in a different country. In order to fight these abuses the European Union has revised its “Posted workers’ directive”. Yet Norwegi an operates all its flights out of Europe and pretends that all the crews are based in Bangkok where EU and national (labour and

labour

- related) legislation cannot be implemented and enforced.

Furthermore the use of European pilots, employed on a fixe d

- term contract by a subsidiary in Singapore, supposedly based in Bangkok and the recruitment of Thai cabin crew, to operate intra

- European flights and flights from and to the EU is in clear breach of Art. 17bis §1. Indeed, such a business model will under mine labour standards and the

labour

- related rights in the USA and in European countries.

Finally, by supporting NAI, the DG Move disregards an important recital of the EC regulation on common rules for the operations of air services in the Community 5 : “W ith respect to employees of a Community air carrier operating air services from an operational base outside the territory of the Member State where that Community air carrier has its principal place of business, Member States should ensure the proper appli cation of Community and national social legislation.”

b. Principal Place of Business

With reference to Art.4 of the EU

- US agreement, in Europe the «principal place of

business 6 » is defined as follow: “ the head office or registered office of a Community a ir carrier in the Member State within which the principal financial functions and operational control, including continued airworthiness management, of the Community

air carrier are exercised.”

This definition is in line with the US Supreme Court's unani mous opinion 7 that concluded

« that "principal place of business" is best read as referring to the place where a corporation's officers direct, control, and coordinate the corporation's activities. It is the place that Courts of Appeals have called the corp oration's "nerve center." And in practice it should normally be the place where the corporation maintains its headquarters

provided that the headquarters is the actual center of direction, control, and coordination, i.e., the "nerve center," and not simply an office where the corporation holds its board meetings ».

The EU Court of Justice, laid down a judgment 8 in which the «establishment» (similar to

4 Reg 593/2008/EC and 465/2008/EC

5 Reg 1008/2008/EC

6 Reg 1008/2008/EC

7 He rtz Corp. v. Friend, 559 U.S 23 February 2010

8 Judgment Bruno Schnitzer C215

- 01

– 20016

the principal place of business) is defined as « having an infrastructure there enabling it

to pursue a pr

ofessional activity there on a stable and continuous basis». This judgement is applicable to all sectors of activity including aviation.

The «nerve center» and the «stable and continuous basis» describe very well the «principal place of business». Norwegi an Air International is not operating in accordance with this as it has no flight from Ireland, no r any aircrafts there and a very limited number of staff. Rather than moving its ‘nerve center’ to Ireland, NAI has a set

- up comparable to

the so

- called ‘mail box’ or ‘PO box’ companies, which allow them to avoid paying social contributions and taxes both in the US and in Europe, and allowing it to escape from the stricter labour standards and labour related laws and principles applying in Norwegian’s

home coun try

, Norway.

c. Public interest

In the US the notion of «public interest» is well know n and has its equivalent in the EU legislation 9 : «Overriding mandatory provisions are provisions the respect for which is regarded as crucial by a country for safeguardi ng its public interests, such as its political, social or economic organisation, to such an extent that they are applicable to any situation falling within their scope, irrespective of the law otherwise applicable to the contract under this Regulation.».

The request for an exemption and a permit asked by Norwegian Air International, must

be considered in the light of the public interest. Social dumping practices are not beneficial to the American and the European public interests as the job creation, the social contributions and tax payments of the crews, etc. will be outside of the parties’

areas.

Finally we stress the parallel to the development of “flags of convenience” in the maritime sector. This is because Norwegian Air International is a mail box enterprise, established in a country where corporate taxes and labour cost are low, where labour regulations are more lenient than in Norwegian’s home country, and where it has no flight operations. The only purpose for such a set

- up is to avoid having to paying social taxes

in the USA, Norway and in the EU, and in general to benefit from more lenient labour regulations. It was the use of such flags of convenience that led to the loss of the commercial maritime activities and related employment both in the US and in Europe, which has clearly been against the public interest of the US and Europe’s countries. In the same vein, condoning and promoting NAI’s flag of convenience

- based business set

- up would be against the public interest on both sides of the Atla ntic.

d. Safety Issues

A growing number of aviation authorities and stakeholders have identified that the use of contract workers and precarious employment for air crew may have an impact on flight

9 Reg. 593/2008/EC Art. 97

safety. However, European regulation 216/2008/EC on commo n rules in the field of civil aviation and establishing a European Aviation Safety Agency, does not provide a mandate for the European Commission to regulate on the use of such ‘atypical employment’ forms in civil aviation. In NAI’s case pilots are recruit ed on a fixed term contract through a temporary work agency in Singapore with low job security and no social protection.

Before supporting and promoting the development of airlines using ‘atypical’ employment contracts (in or outside of Europe), Europe’s n ational Civil Aviation Authorities should be able to guarantee the safety of the flights operated. This is even more important when pilots or cabin crew are deemed to be based outside of the EU or the US (i.e. outside of the framework of the parties of the EU

- US ATA).

Hence, by supporting NAI’s application and by condoning NAI’ s business model and related employment practices, DG MOVE is exceeding its own mandate, as it de facto condones employment practices of air crew whose safety implications have not be en properly assessed.

Furthermore, given that the potential safety implications of NAI’s employment practices have not been assessed, nor the ability of a Civil Aviation Authority (Ireland or others) to oversee air crew employed outside Europe, the conditi ons of Art. 4(d) are not met.

4. The Joint Declaration against flags of convenience

As expressed in this Declaration, the signatory Social Partners have serious concerns about the new business model of Norwegian’s Irish subsidiary NAI and the negative social repercussions it would have if it went ahead. As explained in more detail in the Joint Declaration, NAI’s business model is based on the use of a ‘flag of convenience’

– i.e. Ireland (where it has not any substantial business)

– resulting in social dumping and a distortion of competition. If authorization is granted to NAI, these effects will spread to

the EU

- US market, risk setting a precedent for other market players to follow, and would set off a spiral towards ever lower social standards and cond itions both in the US and in the EU. This is exactly what Art 17 bis of the agreement is meant to prevent.8 ANNEX 1

Questions tabled by Members of the European Parliament & Answers given by the European Commission

Question Commission Response

Jutta Steinruck (S&D), Knut Fleckenstein (S&D), Jörg Leichtfried (S&D) and Ole Christensen (S&D)

Subject: Social dumping: business model of Norwegian Air Shuttle (NAS)

The US Department of Transportation is currently examining the application by Norwe gian Air International (NAI), a subsidiary of the company Norwegian Air Shuttle (NAS), to obtain a foreign air carrier permit under the EU

- US Open Skies Agreement. At the January 2014 EU

- US Joint Committee meeting, DG MOVE adopted a favourable position on this application and welcomed NAI’s business model as being good for consumers, competition and companies.

1. Can the Commission explain its grounds for supporting a business model that builds on social dumping by moving NAI to Ireland, which will enable the company to bypass Norwegian social and labour legislation and costs by basing cabin crew and pilots in Asia, with temporary work contracts governed by Asian countries’ law?

2. Can the Commission confirm that it considers it legitimate behaviour for N AI deliberately to set up a company structure that will force its pilots to be falsely based in Thailand, thereby allowing the airline to avoid paying tax and social security contributions in Europe, where the majority of the pilots actually live?

3. Can the Commission confirm that its support for

NAI

– as expressed by DG MOVE on behalf of the European delegation

– is backed by Member States and that DG MOVE had a mandate to give such support? Did DG MOVE establish its position beforehand with DG EMPL, and did the latter support it?

4. Can the Commission detail the steps it is taking to counter the emergence of harmful business and contractual practices in the aviation sector, such as bogus self

- employment, the bogus basing of crew outside Europe, and foru m shopping? Answer given by Mr Kallas on behalf of the
Commission

1. At the January 2014 EU

- US Joint Committee meeting, at the request of the US authorities, the Commission transmitted to the latter factual information given by NAI to explain the busines s model of the company.

2. The Commission has not received any evidence of any such practice. The Commission would not hesitate to intervene should any EU rule be infringed.

3. The Commission contributed to the EU

- US joint committee by giving factual ele ments received from NAI which were not available in the public domain at the time. These elements set out the company's rationale for their operations. In addition the Commission stressed the principles of the EU

- US Agreement, namely that competition on th e market is in general good for the sector and the consumer, whilst acknowledging the importance of the social dimension of the Agreement.

4. The Commission's services regularly report on trends in the sector, such as the Fitness check on the aviation

inte rnal market (1) and Study on the effects of the implementation of the EU aviation common market on employment and working conditions in the Air Transport Sector over the period 1997/2010 (2)

.

(1) See on DG MOVE website; http://ec.europa.eu/transport/modes/air/internal_market/doc/fitness_check_internal_aviation_market_en_commission_staff_workin g_document .pdf
(2) See on DG MOVE website; http://ec.europa.eu/t ransport/modes/air/studies/doc/internal_market/employment_project_final_report_for_publication.pdf9

Michael Cramer (Verts/ALE)

Subject: Cork accident report conclusions versus business model of Norwegian Air International

In January 2014, Ireland’s Air Accident Investigation Unit issued its investigation report on the 2011 fatal air accident at Cork airport. Among other things, it

draws attention to the non

‐ transparent business set

up of the operation and to the lack of effective oversight by the ope rator and national authorities.

Norwegian Air Shuttle is currently setting up a new affiliate, Norwegian Air International (NAI), based on an equally complex, transnational and non

transparent business model, with no operations planned in the country issui ng the air operator certificate (AOC). Moreover, air crews are hired in Asia but reside in Europe. In January 2014, DG
MOVE welcomed this business model and asked the USA to grant NAI access to the US market.

Against this background, can the Commission re ply to the following:

1

. Are the AAIU report’s findings relevant to NAI’s business, operational and contractual set

- up, and if so, to what extent?

2

. What does the Commission plan to do to prevent similar safety and oversight loopholes to those

that cont ributed to the Cork accident?

3

. Does the Commission find it acceptable that air crews are given ‘fake’ home bases in Asia?

4

. What is planned in order to enable Member States to collect social security payments and taxes?

5

. Given the experiences of th e maritime sector, to what extent do such business models support an EU aviation market in which operators freely relocate operating licences/AOCs to ‘flags of convenience’ with the aim of avoiding stricter social, labour and tax regulations in their home country? Answer given by Mr Kallas on behalf of the
Commission

1. The Commission has no element in its possession that would allow to conclude that the findings of the Irish

AAIU (1) are relevant to NAI (2 ) business, operational and

contractual set

- up.

2. According to the Irish AAIU's report, the probable cause of the accident was a ‘loss of control during an attempted go

- around below Decision Height in Instrument Meteorological Conditions. ’ There were al so nine contributory causes, one referring to the oversight of the remote operation. The Commission intends to use the lessons learned from this accident to further improve aviation safety, in particular by stimulating and promoting the concept of ‘coopera tive oversight arrangements’.

Based on Article 10 of Regulation (EC) No 216/2008 (3)

, this concept has been further developed in Regulation (EU) No 965/2012 (4) on air operations.

3. The Commission has not re ceived evidence of any such practice (5)

.

4. According to Regulation 465/2012/EU, air crews' social security contributions and entitlements are due in the Member State where their home base is located,

i.e. in the country where thei r activity is pursued (6)

. There is no EU legislation on taxation of income of individual taxpayers (including air crews). Administrative cooperation enables Member States to effectively
assess and collect the taxes due. Council

Dir ective 2011/16/EU (7) provides for mandatory automatic exchange of available information on income from employment between Member States’ competent

authorities from 1 January 2015.

5. On 12 February 2014 NAI was granted a licence an d
AOC in Ireland. The Commission has no element in its possession that would allow to conclude that regulation
1008/2008 (8) was not complied with. Ireland’s safety and fitness oversight meets applicable ICAO and EU

standards.

(1) Air Accident Investigation Unit.
(2) Norwegian Air International.
(3) Regulation (EC) No 216/2008 of the European Parliament and of the Council of 20.2.2008 on common rules in th e field of civil aviation and establishing a European Aviation Safety Agency, and repealing Council Directive 91/670/EEC, Regulation (EC) No 1592/2002 and

Directive 2004/36/EC (Text with EEA relevance) (OJ L 79, 19.3.2008, p. 11).
(4) Commission Regulation (EU) No 965/2012 of 5.10.2012 laying down technical requirements and administrative procedures related to air operations pursuant to Regulation (EC) No 216/2008 of the European Parliament and of the Council (OJ L 296, 25.10.2012, p.16) (ARO.GEN.300 (e)).

(5) See also reply to parliamentary Question E

- 002583/2014 available at http://www.europarl.europa .eu/plenary/en/parliamentary

- questions.html
(6) as defined in Annex III to Council Regulation (EEC) No 3922/91, Official Journal L 373 , 31.12.1991 p.4

- 8.10 (7) Council Directive 2011/16/EU of 15.2.2011 on administrative cooperation in the field of taxation and repealing Directive 77/799/EEC (OJ L 64, 11.3.2011, p. 1).
(8) Regulation (EC) No 1008/2008 of the European Parliament and of the Council of 24.9.2008 on common rules for the operation of air services in the Community (Text with EEA relevance) (OJ L 293, 31.10.2008, p. 3).

Peter van Dalen (ECR)

Subject: Norwegian Air International

It was recently announced that Norwegian Air International intended to offer flights betwe en Western Europe and the United States under an Irish

licence. Pilots and cabin crew would be based in Thailand and hired temporarily via a temporary employment agency in Singapore.

1. Does the Commission consider it desirable and acceptable that a Norwe gian airline should use an Irish subsidiary to offer flights between Western Europe and the United States with crews based in Thailand employed on temporary contracts governed by Singapore law? Does the Commission consider that a genuine link should exist between the main place of employment and establishment of the employees and the country whose law applies to the employment contracts? If not, does the Commission not consider there to be any risks of social dumping, in disregard of high European employmen t standards?

2. Can the Commission give an assurance that the business plan for which NAI has opted will not lead to illegal tax evasion by NAI or its possible subsidiaries and/or employees?

3. Can the Commission guarantee that the safety of
NAI’s aircraft will be sufficiently monitored? In this specific case, which authority is responsible for the safety of these aircraft and will be jointly responsible in the event of an accident due to a technical cause entailing culpability? Answer given by Mr Kallas on behalf of the
Commission

1. On the basis of Union law, Norwegian Air International (NAI) is an Irish

- registered company with Norwegian capital that has received an Air Operating Certificate and operating licence from the Irish authorities on

12 Februar y 2014. According to the information provided to the Commission by the company, NAI will be operating flights from Asia to Europe, its main base in Asia being Bangkok. NAI has also filed an application
within the framework of EU

- US agreements to operate

fl ights between the EU and the US. Pilots must hold an appropriate and properly maintained EU pilot licence when flying for an EU operator.

2. Individual cases of alleged tax avoidance and abuse are dealt with by national tax authorities, and the
Commission has no powers in this area. Therefore, it is not possible for the Commission to assess the business plan for which NAI has opted from a tax law perspective. However, EU legislation (1) and bilateral tax treaties provide for coopera tion between national tax authorities

to combat tax evasion.

3. Aircraft registered in a Member State fall within the responsibility of that Member State. In this particular case the Irish Aviation Authority (IAA), governed by

the EU aviation safety rules and controlled by EASA, is to ensure through appropriate oversight that the aircraft is safely operated and maintained by NAI. The Commission has no indication that the oversight exercised by IAA is in any way defective.

(1) Coun cil Directive 2011/16/EU of 15 February 2011 on administrative cooperation in the field of taxation and repealing Directive 77/799/EEC and Council Directive 2010/24/EU of 16 March 2010 concerning mutual assistance for the recovery of claims relating to tax es, duties and other measures.

Ole Christensen (S&D)

Subject: ‘Home base’ rule, social security and employees from third countries

In April 2012, the EU adopted updates to Regulations (EC) Nos 883/2004 and 987/2009 on the
coordination of Member St ates' social security Answer given by Mr Andor on behalf of the
Commission

1. Under the EU legislation on social security coordination as regards EU citizens residing in the EU, the competent national authority is to determine whether

the EU legislation appli es as regards flights starting and/or ending in the EU. The EU has no competence as regards pay.11

systems.

The updates related inter alia to social security arrangements for flight crews. The rules introduced the concept of ‘home base’, which means that employees are covered by the social security arrangements applicable in the c ountry in which they begin and end their work.

The airline Norwegian flies to destinations outside

the EU and EEA countries, including Thailand.

The aircraft carrying, for instance, passengers from Scandinavian countries to Bangkok are registered in

Irelan d. Cabin crew personnel now come from Thailand; they are hired via Adecco in Thailand and work on Norwegian's long

- haul flights between Europe and Asia. The pilots are Europeans who are engaged as self

- employed contractors in Singapore

and are based in Ban gkok. All employment

- related matters are governed by Singaporean legislation and regulations.

In the light of the above, does the Commission

consider that this contrivance

— cabin crews and pilots working on aircraft registered in the EU, but
on the basis of pay and social security arrangements governed by Asian rules

— breaches
EC law?

Furthermore, does the Commission consider that both cabin crew personnel and pilots should have a work and residence permit in the EU if they are working on aircraft registe red in the EU? Parties to a cross

- border employment contract are in principle free to choose the law governing their employment relationship. Regulation 593/2008/EC (1) will apply where, in the event of a dispute between the parties, the case is referred to a court in a Member State. However, irrespective of the law chosen, an employee may in certain circumstances be protected by more favourable employ ment conditions applicable in the country where or from which he or she habitually carries out his or her work, or, failing that, the country where the place of business through which the employee was engaged is located, or failing that, the law of the

cou ntry with which the contract is most closely

connected.

2. A residence permit in the EU is necessary only if one

resides in the EU. Moreover, it is for the Member State to

decide whether or not a third

- country national needs a work permit.

--------------- ------ (1) Regulation (EC) No 593/2008 of the European
Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I),
OJ L 177, 4.7.2008, p. 6.12 ANNEX 2

Joint Declaration against EU

- based Flags of Convenience in Aviation

as endorsed by the Air Crew Working Group of the Sectoral Social Dialogue Committee,

5 June 2014

During the Plenary meeting of the Sectoral Social Dialogue Committee for Civil Aviation held on 5 June 2014, the European social partners of the Air Crew Working Group present at meeting expressed their concerned with recent developments in the aviation industry that seriously threaten the European social model, employment, and fair competition

in the aviation market.

At issue is a new ‘business model’ that makes use of a “flag of convenience” in Europe, resulting in a distortion of social conditions and competition. A precedent for this business model is currently being set by a non

- EU airline that has obtained an operating license in an EU Member State despite having no substantial aviation activities in that county and without planning to have any base within the EU.

European airlines provide extensive and comparatively decent employment in Europe in contrast to the history of decl ine in the European maritime sector

– here the past permissive attitude towards the use of flags of convenience has been devastating to industry and employment alike, and must be taken into account to avoid significant aviation job losses in Europe.

This d eliberate choice of establishment in a Member State in order to avoid the social laws of another country is what defines a “flag of convenience”

– a phenomenon unanimously condemned by the international community. Furthermore replacing local crews with non

- European Economic Area (EEA) workers, subject to lower terms and employment conditions, amounts to social dumping at the expense of the European social security systems and the employees. This

cannot be tolerated within the EU.

The European social partner s of the Air Crew Working Group urged the European Commission to decisively stop this kind of development before it spreads.

The European social partners of the Air Crew Working Group called upon the European Parliament, the Council of

Ministers and the C ommission to take urgent action to:

 Prevent the development of EU

- based flags of convenience in aviation, or the importing of non

- EU flags of
convenience in the sector, and

 Revise Regulation 1008/2008 including the definition of « place of business » to e nsure that EU operating licences can only be issued in the country where the operator has substantial aviation activities, including a substantial number of flights, crews and bases in line with existing case law and other EU legislative measures. Followin g that the requirement in recital 9 of this regulation on national and Community social legislation should be render mandatory, and

 Ensure that the aviation authority who delivers the AOC to the airline is required to assess the effective base of the

crew and undertakes regular checks, and

 Co

- ordinate and revise legislation on visas and work permits for non

- EEA based crews to prevent any possible illegal use of foreign workers on board EU registered airplanes operating in or from the EU. This should includ e a revision of Directive 2011/98 EU (single permit directive) to extend its application to mobile workers in civil aviation.

Those urgent changes are a crucial first step to ensure the credibility of the European Union’s determination, both in Europe and internationally, to build fair and open aviation markets and to guarantee the competitiveness of the European industry and the preservation of European jobs.

The Chair The Vice

- Chair

Emmanuel Jahan Jon Horne

Note : AEA’s position with respect to th is declaration is most accurately reflected in its submission filed in the US DOT docket on the case of Norwegian air international.13

CERTIFICATE OF SERVICE

I certify that I have, on this 1 8th day of August, 2014, served the foregoing document on the persons identified below by causing a copy to be sent by electronic mail:

Reese.Davidson@dot.gov ; steve.morrissey@united.com ; Thomas.bolling@united.com ; dan.weiss@united.com ; hershel.kamen@united.com ; sascha.vander

bellen@delta.com ; chris.walker@delta.com ; Andrea.Newman@delta.com ; mlbenge@zsrlaw.com ; rpommer@atlasair.com ; russell.bailey@alpa.org ; david.semanchik@alpa.org ; jonathan.cohen@alpa.org ; robert.wirick@aa.com ; francis.heil@aa.com ; michael.wascom@aa.com ; howard.kass @aa.com ; jesse.elliot@faa.gov ; douglas.schwab@faa.gov ; nicholas.tsokris@faa.gov ; john.y.chen@faa.gov ; anita.mosner@hklaw.com ; jennifer.nowak@hklaw.com ; nssparks@fedex.com ; gbleopard@fedex.com ; pvs@eurocockpit.be cc@eurocockpit.be romanow@pillsburylaw.com ; jennifer.trock@pillsburylaw.com ; peter.nelson@pillsburylaw.com ; Melinda.hernandez@pillsbury.com ; dberg@airlines.org ; jcasey@airlines.org ; kglatz@airlines.org ; CBethke@airlines.org ; edw@ttd.org ; ejames@jamhoff.com ; info@airlineinfo.com ;14

clytle@portoakland.com ; kgeorge@broward.org ; mrichardson@swapa.org ; sshur@traveltech.org ; michael.whita ker@faa.gov ; ottar.ostnes@sd.dep.no ; david.batchelor@sesarju.eu ; felix.leinemann@eeas.europa.eu ; matthew.baldwin@ec.europa.eu ; john.hanlon@elfaa.com ; dhainbach@ggh

- airlaw.com ; Athar.HusainKhan@aea.be ;

Emmanuel Jahan Chairperson of the European Sectoral Social Dialogue Committee in Civil Aviation

Jonathan Horne

Vice

- Chairperson of the European Sectoral Social Dialogue Committe e in Civil Aviation