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 DIALOGUE 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 Horne

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 representatives 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 view 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 foreign air carrier permit for 

Norwegian Air International.
2

These comments are without prejudice to the filings already made by the organisations of 

the two signatories.

1. Process:

We understand that the U.S. Government has requested the Directorate General 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 

entitled 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 questions1to the Commission on 

NAI’s business model – questions that have been answered only partly and superficially. 

2. Comments on the 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 by 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 regular consideration by the Joint Committee, pursuant to 

Article 18, of the social effects of the Agreement and the development of appropriate 

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 1
3

labour-related rights and principles contained in the Parties’ respective laws’, rather than 

stating e.g. ‘should be intended to not undermine’ or ‘should not undermine’.

In §2, the 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 principles 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 advanced 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 the 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 who 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 

implementation 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 MOVE 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 laws”, 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 undermined 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 Dictionary
4

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 applied 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 party, 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 fitness and citizenship. Indeed the Memorandum of 

Consultation between the EU and the US on the second stage of negotiation (23-25 

March 2010) in its point 5 clearly states that Art. 6bis should not modify art. 43. 

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 foreign 

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 undermines 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 are 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.

pdf
5

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 duties4. Some operators in Europe have tried to set up a ‘PO box’ company in a 

Member State where 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 Norwegian 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 fixed-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 undermine 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 Community5: “With 

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 

application 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 

business6» is defined as follow: “the head office or registered office of a Community air 

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 unanimous opinion7that 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 corporation's "nerve center." And in practice 

it should normally be the place where the corporation maintains its headquartersprovided 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 judgment8in 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 Hertz Corp. v. Friend, 559 U.S 23 February 2010

8 Judgment Bruno Schnitzer C215-01 – 2001
6

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

to pursue a professional 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». Norwegian Air International is not operating in accordance 

with this as it has no flight from Ireland, nor 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 country, Norway. 

c. Public interest

In the US the notion of «public interest» is well known and has its equivalent in the EU 

legislation9: «Overriding mandatory provisions are provisions the respect for which is 

regarded as crucial by a country for safeguarding 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 Atlantic. 

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. 9
7

safety. However, European regulation 216/2008/EC on common 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 recruited 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 national 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 been 

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 conditions 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 conditions 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 Norwegian 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 NAI 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 forum 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 business 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 elements 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 the 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 

internal 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/f

.pdf

(2) See on DG MOVE website; 

http://ec.europa.eu/transport/modes/air/studies/doc/internal_m
9

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 setup of the operation and to the lack of effective 

oversight by the operator and national authorities.

Norwegian Air Shuttle is currently setting up a new 

affiliate, Norwegian Air International (NAI), based on 

an equally complex, transnational and nontransparent business model, with no operations 

planned in the country issuing 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 reply 

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 contributed 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 the 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 also 

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 ‘cooperative 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 received 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 their 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 

Directive 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 and 

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 an

establishing a European Aviation Safety Agency, and repealin

Directive 2004/36/EC (Text with EEA relevance) (OJ L 79, 19

(4) Commission Regulation (EU) No 965/2012 of 5.10.2012 layin

operations pursuant to Regulation (EC) No 216/2008 of the E

(ARO.GEN.300 (e)).

(5) See also reply to parliamentary Question E-002583/2014 ava

(6) as defined in Annex III to Council Regulation (EEC) No 3922/
10

(7) Council Directive 2011/16/EU of 15.2.2011 on administrative 

11.3.2011, p. 1).

(8) Regulation (EC) No 1008/2008 of the European Parliament a

in the Community (Text with EEA relevance) (OJ L 293, 31.10

Peter van Dalen (ECR)

Subject: Norwegian Air International

It was recently announced that Norwegian Air 

International intended to offer flights between 

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 Norwegian 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 

employment 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 February 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 

flights 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 cooperation 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) Council Directive 2011/16/EU of 15 February 2011 on admini

repealing Directive 77/799/EEC and Council Directive 2010/2

assistance for the recovery of claims relating to taxes, duties 

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 States' 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 applies 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 country 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 

Ireland. 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 Bangkok. 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 registered 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 employment 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 

country 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 decline 

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 deliberate 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 partners 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 Commission 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 ensure 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. Following 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 include 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 this 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 18th 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.vanderbellen@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.whitaker@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 Committee in Civil Aviation