### BEFORE THE

DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

Application of

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 (U.S.

- EU Open Skies) )

)

)

)

)

)

)

) Docket DOT

- OST

- 2013

- 0204

JOINT REPLY OF DELTA AIR LINES, INC., UNITED AIRLINES, INC., and

AMERICAN AIRLINES, INC.

Communications with respect to this document should be addressed to:

August 25, 2014

### Howard Kass Vice President

-- Regulatory Affairs American Airlines

, Inc. 1401 H Street, NW Washington, DC 20005 202

- 326

- 5153 Howard.Kass@ aa.com

Robert A. Wirick Managing Director, Regulatory and International Affairs American Airlines

, Inc. P.O. Box 619616, MD 5635 DFW Airport, Texas 75161 (817) 963

- 0394 robert.wirick@aa.com

Daniel A. Weiss Managing Director

– International Affairs and Regulatory UNITED AIRLINES, INC. 233 South Wacker Drive 10th Floor

– HDQIZ Chicago, IL 60606 (872) 825

- 6828 dan.weiss@united.com Alexander Van der Bellen Man aging Director

– Regulatory and International Affairs & Associate General Counsel Christopher Walker, Regional Director

– Regulatory and International Affairs DELTA AIR LINES, INC. 1212 New York Avenue, N.W. Washington, D.C. 20005 (202) 842

- 4184 sascha.vanderbellen@delta.com

### BEFORE THE

DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

Application of

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 (U.S.

- EU Open Skies) )

)

)

)

)

)

)

) Docket DOT

- OST

- 2013

- 0204

JOINT ANSWER OF DELTA AIR LINES, INC., UNITED AIRLINES, INC., and AMERICAN AIRLINES
, INC.

American, Delta and United ("the Joint Carriers") believe that the arguments advanced by NAI in its Reply and in the accompanying joint declaration of John Byerly and Daniel Calleja do nothing to counter the clear and express objective of Article 17 bis : to maintain high labor and social standards in the transatlantic market, and to prohibit the establishment of flags of convenience that seek to evade labor protections and create an unfair competitive advantage. First, the Department should accord no weight to John Byerly’s declaration because he is a registered lobbyist acting on behalf of NAI. Second, the declaration of Daniel Calleja is entitled to little weight because it repre sents the views of only one of 34 European parties to the Agreement. Finally, a comparison of Article 17 bis with other provisions of the Agreement clearly demonstrates that the Parties intended it have legal effect, a point reinforced by the Labor partie s in their Reply comments.

### John Byerly had a distinguished career as a State Department civil servant in the aviation sphere

. However, he is now employed as a paid outside lobbyist /advocate for Norwegian Air Shuttle (NAS) (s ee registration at Attachment 1) . As such, the opinion offer ed by Mr. Byerly regarding the “intent” of the U.S.

- EU agreement ex post facto in this case should be weigh ed in the context of his current relationship with NAI

. Indeed , the social dimension and labor provisions of Art 17 bis were carefully crafted an d critical to achieving unanimous U.S. delegation support for the agreement (see Reply Comments of the Labor Parties)

. As such , the Department should disregard a claim that this provision has no legal effect.

T he U.S. Delegation l ed by Mr. Byerly at the time was most certainly concerned about the potential emergence of flags of convenience. During the course of negoti ati ons, USG sought to ensure that a European airline must have its “primary p l ace of business” in the EU member state where it is organized: “ In response to a question from the U.S. delegation, the EU delegation affirmed that, under European Community legislation, a Community airline must receive both its AOC and its operating license from the country in which it has its principal place

of business

. ” ( March 2, 2007 MOC, Para 7 , emphasis added). In our view t he Department

should carefully scrutinize and compel NAI to produce evidence of how their proposed business

model could satisfy this standa rd when it has

- and would have

- no aircraft, no crews, and no

transat lantic operations from Ireland

, and when its so

- called “headquarters” is a building in

Dublin’s docklands where at least 125 other “Irish” companies are also headquarter ed. The

address is not co incidentally the office of Mathe son, an Irish law firm specializing in establishing and registering foreign companies in Ireland. (“Dublin Moves to Block Controversial Tax
Gambit,” Wall Street Journal , October 15, 2013). It is clear that Norway

, n ot Ireland

, is NAI’s principle place of business, which in any event DOT should establish t hrough an appropriate investigation

. As former ICAO Ambassador Duane Woerth noted in his August 22 Aviation Daily op ed piece, this is not just a regulatory subterf uge; it could have serious safety implications. While describing the Irish Aviation Authority as “among the world’s finest stewards of aviation safety,” the Ambassador expressed his concern about the ability of any regulator “to provide safety oversight o f long

- haul, transoceanic operations that are conducted without ever transiting ‘home’ soil.” (Aviation Daily, Aug 22, Page 5). Like the Ambassador, the Joint Carriers hold in high regard the oversight and safety culture of the Irish authorities but do be lieve that the Department needs to fully consider the Ambassador’s concerns in this and any other proceeding where a carrier proposes to operate all of its operations to the U.S. from a country

outside its home base.

### Norwegian Joint Reply Page 3

As for Mr. Calleja’s opinion, he repres ented only the European Commission

– just one of the 34 European parties to the agreement, so his recollection of the reasoning behind Article 17

bis is by no means fully dispositive of EU intent. Secretary Foxx asked for a meeting in

Brussels to better understand the EU position on the impact of Article 17 bis on the NAI application

. T he Commission made clear that there is no EU position

– the Commission could speak only for its own officials, and was still “discussing the issues” with i ts mem ber states,

some of which

– including large and powerful members

– may in fact disagree with Commission

officials. As a result, the Department should elicit the views of the other 33 parties to the Agreement on the application of Article 17 bis as part of a broader inquiry into NAI’s application.

In the affidavit, NAI contends that Article 17 bis does not establish a legally binding rule that can be applied unilaterally. As such, it is instructive to again review the text of the article

here :

Social Dimension

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 labor standards. The opportunities created by the Agreement are not intended to undermine labo ur 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 responses to concerns found to be legitimate.

T he second paragraph uses the word “shall” and makes specific reference to implementation of the agreement. T his not o nly allows, but requires the parties to consider Article 17 bis when they implement the a greement. The fact that the second paragraph uses the clause “including regular consi deration by the Joint Committee” indicates that there will be situations in which the parties will be guided by the principles in paragraph one outside of the Joint Committee process. If the intention were always to require joint action within the Joint Committee , then the provision

would have stipulated that requirement

. NAI also misconstrues the significance of the use of the word “part ies” rather than “party,” claim ing this must mean that both parties must act in concert through the Joint

Committee

. However, NAI fails to point out that A greement uses the both the term “part y” and “parties” in many places where unilateral action is cle arly contemplated. For example :

### Norwegian Joint Reply Page 4

Article 6

- The Parties shall implement the provisions of Annex 4 in their decisions under their respective laws and regulations concerning ownership, investment and control

Article 7

- The responsible authorities of the Parties shall recognize as valid, for the purposes of operating the air transportation provided for in this Agreement, certificates of airworthiness, certificates of competency, and lic enses issued or validated by each other and still in force, provided that the requirements for such certificates or licenses at least equal the minimum standards that may be established pursuant to the Convention.



### Indeed DOT regularly make s unilateral dec isions regarding ownership and control , or regarding

rec ognition of operating authority.

As previously noted, NAI has filed for both Permit and Exemption relief. The Department

should deny NAI an exemption from the permit requirement, which is a discretionary and special process available to expedite consideration under appropriate circumstances when the application is clearly in the public interest

. 49 U.S.C. § 40109. The denial would be without prejudice to later consideration of NAI’s permit a pplication after sufficient fact s are established to complete the record and made available with time allotted for careful consideration from all

Parties of this novel permit application. The need for exemption relief is further mitigated given

that Norwe gian is already operating to the United States via Norwegian Air Shuttle entity using 787s operated by its subsidiary Norwegian Long haul and leased B

- 777s

.

We reiterate that the core objectives of Article 17 bis would be critically undermined if the Department approved the NAI application in its current form

. Doing so would allow NAI to enter

the U.S.

- EU market by establishing a de facto flag of convenience specifically designed to

circumvent otherwise applicable labor protection laws. It would also allow NAI to import lower

cost labor from outside the U.S and EU

, which would be deployed to compete unfairly i n the

transatlantic marketplace with U.S. and EU carriers that are required to follow stringent labor

standards. For the foregoing reasons and for reasons set out in the Joint Carriers’ earlier filing s , the Department should deny the NAI application.

Respectfully submitted,

/s/ Alexander Van der Bellen Managing Director, Regulatory and

### Norwegian Joint Reply Page 5

International Affairs

& Associate General Counsel Delta Air Lines, Inc.

/s/ Howard Kass Vice President

-- Regulatory Affairs American Airlines

, Inc.

/s/ Robert A. Wirick Managing Director, Regulatory and International Affairs American Airlines, Inc.

/s/ Dan Weiss Managing Director

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### C ERTIFICATE OF SERVICE A copy of the foregoing Answer has been ser ved this 25 th 

### day of August

, 2014 , upon the following persons via email:

romanow@pillsburylaw.com peter.nelson@pillsburylaw.com Russell.Bailey@alpa.org steve.morrissey@united.com dan.weiss@united.com sascha.vanderbellen@delta.com howard.kass@usairways.com robert.wirick@aa.com francis.heil@aa.com rpommer@atlasair.com mlbenge@zsrlaw.com jesse.elliot@faa.gov douglas.schwab@faa.gov nic holas.tsokris@faa.gov john.allen@faa.gov anita.mosner@hklaw.com jennifer.nowak@hklaw.com nssparks@fedex.com dberg@airlines.org jcasey@airlines.org paul.gretch@dot.gov brian.hedberg@dot.gov esta.rosenberg@dot.gov brett.kruger@dot.gov urskr@state.gov CristinaSA@state.gov eugene_alford@ita.doc.gov info@airlineinfo.com