BEFORE THE DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

_____________________________________________ ) Application of ) ) NORWEGIAN AIR INTERNATIONAL LIMITED ) Docket No. O ST-2013-0204 ) for an exemption under 49 U.S.C. § 40109 and ) a foreign air carrier permit pursuant to ) 49 U.S.C. § 41301 (U.S.-E.U. Open Skies) ) __________________________________________)

COMMENTS OF THE AMERICAN SOCIETY OF TRAVEL AGENTS

IN SUPPORT OF APPLICATION OF NORWEGIAN AIR INTERNATIONAL LIMITED

Communications with respect to this document should be addressed to: Paul M. Ruden, Esquire Senior Vice President, Legal & Industry Affairs

American Society of Travel Agents 1101 King Street, Suite 200 Alexandria, VA 22314 Tel: (703) 739-6854 E-mail: pruden@asta.org August18, 20142 BEFORE THE DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

__________________________________________ ) Application of ) ) NORWEGIAN AIR INTERNATIONAL LIMITED ) Docket No. O ST-2013-0204 ) for an exemption under 49 U.S.C. § 40109 and ) a foreign air carrier permit pursuant to ) 49 U.S.C. § 41301 (U.S.-E.U. Open Skies) ) __________________________________________)

COMMENTS OF THE AMERICAN SOCIETY OF TRAVEL AGENTS

IN SUPPORT OF APPLICATION OF NORWEGIAN AIR INTERNATIONAL LIMITED

The American Society of Travel Agents (“ASTA”) here by responds to the Department’s August 4, 2014 request for comments (“Notice”) on a July 14, 2014 meeting between representatives of the Departments of State and Tra nsportation and European Commission officials on the legal meaning and applicability of Article 17 bis of the Air Transport Agreement between the U.S. and the EU (the “Agreement”) as it relates to the application of Norwegian Air International Limited (“Norwegian International’) f or an exemption and a foreign air carrier permit, filed with the Department on December 2, 20 13. For the reasons elaborated below, ASTA believes that prompt approval of Norwegian Int ernational’s application will inject sorelyneeded competition into the current trans-Atlantic air service regime, create U.S. jobs, and stimulate new travel between the U.S. and Europe, t hereby helping the Administration to meet its ambitious goal of attracting 100 million internatio nal visitors annually to the U.S. by 2021.3

I. INTRODUCTION – ASTA’S INTEREST IN THE PROCEEDING ASTA, headquartered in Alexandria, VA, with over 8, 000 members in all fifty states and 120 countries, was established in 1931 and is the w orld’s leading professional travel trade organization. ASTA’s voting membership is comprise d of retail travel agents, including traditional brick-and-mortar leisure agencies, Trav el Management Companies (“TMCs”), Online Travel Agents (“OTAs”), as well as individual home- based travel agents and many others engaged in various aspects of retail and wholesale distribution of transportation services. ASTA is widely recognized as a responsible represen tative of the interests of travel agents and consumers and has participated in a mult itude of proceedings before federal and state agencies. Travel agents, both online and tradition al “brick and mortar” agencies, are responsible for the sale of the majority of airline tickets in the U.S. In 2013, online and traditional travel agents processed $86 billion of total air sales, in cluding 142.6 million air transactions. 1 Travel agencies fulfill a range of needs for the traveling public. They save consumers money and time by facilitating effective comparison shopping and d ecision-making as to how best to spend their travel dollars. Travel agencies also help governme nt and corporate organizations manage employee travel spending, reduce costs and negotiat e savings that would otherwise be missed. Travel agents and the travelers they serve have an abiding interest in a healthy airline industry and a competitive marketplace for air trav el. Robust competition between carriers was the central (and largely fulfilled) promise of the Airline Deregulation Act of 1978. As the Government Accountability Office observed in 2006, “Airfares have fallen in real terms over time, with round-trip median fares almost 40 percen t lower since 1980...The decline in fares coincided with a growth in passenger traffic and in creased competition over the period.” 2

1 https://www.arccorp.com/news/stat/2013-12.jsp

. 2 http://gao.gov/assets/260/250422.pdf

.4

With the growth of antitrust-immunized internation al airline alliances, however, this promise is under attack. For example, a 2011 U.S. Department of Justice (“DOJ”) study of transAtlantic air services found that grants of antitrus t immunity to carriers, which “reduce competition in routes where these carriers offer co mpeting flights,” have resulted in a situation where the three largest groups of antitrust immuniz ed carriers “combine to carry over 82% of the U.S.-E.U. passenger traffic.” 3 With regard to the fares paid by trans-Atlantic p assengers, DOJ found that “fares...in non-stop trans-Atlantic flight s are significantly higher in routes with fewer independent non-stop competitors. The data show th at, all else equal, average one-way fares in routes served by one non-stop carrier are $31 highe r than in routes served by 2 competing nonstop carriers, $62 higher than in routes served by 3 competing non-stop carriers, and $88 higher than in routes served by 4 competing non-stop carri ers...This evidence supports the normal antitrust presumption that eliminating or substanti ally reducing competition through merger or collaboration enhances the market power of the rema ining suppliers and leads to higher prices, harming consumers.” 4 So, instead of a large number of independent carrie rs competing vigorously for consumer patronage, the industry has been reduced to a sever e oligopoly model, especially as it relates to trans-Atlantic service. Economic theory teaches, a nd industry practices generally illustrate, that

a market with a small number of dominant firms will exhibit limited entry, less competitive aggression, more parallel behavior, and, ultimately , a diminished response to consumer pressures for better options and prices.

3 http://www.justice.gov/atr/public/eag/267513.htm

. 4 Ibid

.5

II. THE NORWEGIAN APPLICATION SQUARELY ADDRESSES BE NEFITS THE UNITED STATES BARGAINED FOR IN THE U.S.-EUROPEA N UNION OPEN SKIES AGREEMENT. The previous section describes the competitive land scape that Norwegian International is now asking the Department to enter. Earlier this y ear, Norwegian Air Shuttle, an affiliate of Norwegian International, inaugurated new nonstop fl ights between New York and London and expanded its trans-Atlantic service to U.S. markets that currently lack trans-Atlantic connections such as Fort Lauderdale, Fla. and Oakland, Calif. Norwegian Air Shuttle is advertising one-way fares from New York as low as $244 to London and $2 01 to Copenhagen, Denmark – hundreds of dollars less than competitors’ fares. This kind of increased competition in a market that sorely needs it is reason alone to approve Norwegian Inter national’s application without delay. Approval of Norwegian International’s application w ill also help the Administration meet its ambitious policy goal, set in 2012, of attracti ng and welcoming 100 million international visitors, who will spend $250 billion, annually by the end of 2021. For the past few years, ASTA has been working with the U.S. Travel Associat ion, the Corporation for Travel Promotion and others to further this goal to increase interna tional visitation to the U.S. While the number of global long-haul travelers increased by 61 million from 2000 to 2010, the number of overseas visitors to the United States stayed flat. This in ability to keep pace has cost the U.S. economy billions of dollars. This is a priority issue for ASTA because not only do we have almost 800 international members with the potential to drive “ inbound” travel, but, as the May 2012 National Travel and Tourism Strategy notes, “Travel agencies...are important sources of trip planning information for many international travele rs.” 5 Increasing inbound travel from Europe will be a key component of this initiative – a goal shared by the Administration, as recently

5 National Travel and Tourism Strategy, May 2012.6

outlined by President Obama in Cooperstown, New Yor k. 6 For example, the U.S. Department of Commerce projects international travel to the Unite d States from Eastern Europe will grow by 56 percent between 2013 and 2018. Approval of Norwegi an International’s application is fully consistent with the Administration’s goals in this regard, and will do much to help get us there.

III. IMPLICATIONS OF THE INTERGOVERNMENTAL MEETING. ASTA’s evaluation of the intergovernmental meeting discussed in the Notice is driven by the valuable benefits of the Agreement and the stro ng consumer benefits of Norwegian International’s entry into the U.S. market as outli ned above. The question posed by the July 14 meeting, in our view, is directly related to those benefits. The European delegation has taken the position that the Agreement does not provide for on e party to unilaterally reject a carrier entry application under Article 17 bis - and that any such action would “run[] against the letter and spirit of the Agreement.” 7

We believe DOT should consider, then, whether it wo uld find it acceptable under the agreement for a EU Member State to reject an applic ation under Article 17 bis from a U.S.-based airline that, for example, proposed the creation of a new competitor offering robust, low-cost trans-Atlantic service between the U.S. and Europe that will create jobs in the United States. Norwegian International has stated that “some 5,500 Americans applied for the initial 300 U.S.- based flight attendant positions with the Norwegian group, positions offering average gross payments well in excess of $30,000...Norwegian Intern ational offers Americans seeking employment, including first-time employment, an eno rmously appealing and valuable

6 See FACT SHEET & REPORT: President Obama Visits Cooper stown to Highlight Travel and Tourism that is Growing our Economy and Creating Jobs, Mar. 22, 201 4 available at: http://www.whitehouse.gov/the-pressoffice/2014/05/22/fact-sheet-report-president-obama -visits-cooperstown-highlight-travel-an (“This week , the President has highlighted the importance of investi ng in America and today he is taking action to welc ome more international visitors to our country – because mak ing it easier for more foreign visitors to travel t o and spend money at America’s attractions and national parks h elps local businesses and grows the economy for eve ryone.”) 7 Notice at 3.7

opportunity.” 8 Further, Norwegian International recently (Januar y 13, 2014) announced the hiring of 170 US-based crew members in New York and Florida with plans to hire hundreds more. And this is only direct employment – indirec t job creation has the potential to be substantial as well. According to the U.S. Travel Association, for every 33 overseas travelers that visit the U.S., one new American job is create d. 9

If the situation were reversed, would the United St ates accept a rejection of a carrier entry application offering such benefits? We would hope t he answer is ‘no,’ and if it is ‘no,’ then it would seem obvious that Norwegian International’s a pplication should be granted. Indeed, the Commission and the two directly relevant government s of Ireland and Norway, favor approval of the application. ASTA strongly believes that approval of Norwegian I nternational’s application will increase competition in trans-Atlantic air service, create A merican jobs and help the Administration reach its goal of increasing international travel to the U.S. On behalf of the more than 105,000 people who work at travel agencies in the U.S. and the mil lions of travelers they serve every day, we urge the Department to approve Norwegian Internatio nal’s application for an exemption and foreign air carrier permit without delay. Respectfully submitted,

Paul M. Ruden, Esq. Attorney for American Society of Travel Agents, Inc

.

8 Reply of Norwegian Air International, Ltd.. 9 Reply of the U.S. Travel Association.8 CERTIFICATE OF SERVICE The undersigned certifies that on August 18, 2014, a true and correct copy of the foregoing Comments of the American Society of Trave l Agents In Support of Application of Norwegian Air International Limited was served by e lectronic mail on the following persons:

Josh Romanow Peter Nelson Counsel for Norwegian Air International Limited romanow@pillsburylaw.com peter.nelson@pillsburylaw.com Steve Morrissey Thomas N. Bolling United Airlines steve.morrissey@united.com thomas.bolling@united.com

Dan Weiss Continental Airlines dan.weiss@coair.com

Sascha Vanderbellen Delta Airlines sascha.vanderbellen@delta.com

Howard Kass U.S. Airways howard.kass@usairways.com Malcolm L. Benge Counsel for North American/World Airways mlbenge@zsrlaw.com

Russell E. Pommer Atlas Air Inc. rpommer@atlasair.com Russell Bailey Jonathan A. Cohen Air Line Pilots Association, Int’l russell.bailey@alpa.org jonathan.cohen@alpa.org Edward Wytkind Transportation Trades Department, AFL-CIO edw@ttd.org J. Christopher Lytle Port of Oakland clytle@portoakland.com Kent George Broward County Aviation Department kgeorge@broward.org

Mark Richardson Southwest Airlines Pilots’ Association mrichardson@swapa.org

Robert Wirick Francis Heil American Airlines, Inc. robert.wirick@aa.com francis.heil@aa.com

Nick Tsokris Jesse Elliot John Chen FAA New York IFU jesse.elliot@faa.gov nicholas.tsokris@faa.gov john.chen@faa.gov

John M. Allen Director, Flight Standards Federal Aviation Administration john.allen@faa.gov

Anita Mosner Jennifer Nowak Counsel for UPS Holland & Knight anita.mosner@hklaw.com jennifer.nowak@hklaw.com Nancy S. Sparks Bailey Leopard Federal Express Corporation nssparks@fedex.com gbleopard@fedex.com David Berg James L. Casey Keith A. Glatz Airlines for America dberg@airlines.org jcasey@airlines.org kglatz@airlines.org

Celine Canu European Cockpit Association cc@eurocockpit.be Edgar N. James Allied Pilots Association ejames@jamhoff.com Thomas S. Engle Department of State EngleTS@state.gov

Steve Shur Travel Technology Association sshur@traveltech.org Eugene Alford Department of Commerce eugene.alford@trade.gov

Matthew Baldwin Director of Air Transport European Commission Matthew.Baldwin@ec.europa.eu

Emmanuelle Maire DG-MOVE European Commission Emmanuelle.Maire @ec.europa.eu

David Batchelor SJU Liason Officer SESAR Joint Undertaking Delegation of the European Union to the USA David.Batchelor@sesarju.eu

Ottar Ostnes Director General, Norwegian Ministry of Transport and Communications Ottar.Ostnes@sd.dep.no

John Hanlon European Low Fares Airline Association John.Hanlon@ELFAA.com

Paul Gretch Robert Finamore U.S. Department of Transportation paul.gretch@dot.gov Robert.Finamore@dot.gov

Paul M. Ruden