BEFORE THE DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C.

BEFORE THE DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C. Application of NORWEGIAN AIR INTERNATIONAL LIMITED Docket No. OST-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 hereby 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 Transportation 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 for an exemption and a foreign air carrier permit, filed with the Department on December 2, 2013. For the reasons elaborated below, ASTA believes that prompt approval of Norwegian International 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, thereby helping the Administration to meet its ambitious goal of attracting 100 million international visitors annually to the U.S. by 2021. 2

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 world s leading professional travel trade organization. ASTA s voting membership is comprised of retail travel agents, including traditional brick-and-mortar leisure agencies, Travel 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 representative of the interests of travel agents and consumers and has participated in a multitude of proceedings before federal and state agencies. Travel agents, both online and traditional 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, including 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 decision-making as to how best to spend their travel dollars. Travel agencies also help government and corporate organizations manage employee travel spending, reduce costs and negotiate 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 travel. 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 percent lower since 1980 The decline in fares coincided with a growth in passenger traffic and increased competition over the period. 2 1 https://www.arccorp.com/news/stat/2013-12.jsp. 2 http://gao.gov/assets/260/250422.pdf. 3

With the growth of antitrust-immunized international airline alliances, however, this promise is under attack. For example, a 2011 U.S. Department of Justice ( DOJ study of trans- Atlantic air services found that grants of antitrust immunity to carriers, which reduce competition in routes where these carriers offer competing flights, have resulted in a situation where the three largest groups of antitrust immunized carriers combine to carry over 82% of the U.S.-E.U. passenger traffic. 3 With regard to the fares paid by trans-atlantic passengers, DOJ found that fares in non-stop trans-atlantic flights are significantly higher in routes with fewer independent non-stop competitors. The data show that, all else equal, average one-way fares in routes served by one non-stop carrier are $31 higher 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 carriers This evidence supports the normal antitrust presumption that eliminating or substantially reducing competition through merger or collaboration enhances the market power of the remaining suppliers and leads to higher prices, harming consumers. 4 So, instead of a large number of independent carriers competing vigorously for consumer patronage, the industry has been reduced to a severe oligopoly model, especially as it relates to trans-atlantic service. Economic theory teaches, and 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. 4

II. THE NORWEGIAN APPLICATION SQUARELY ADDRESSES BENEFITS THE UNITED STATES BARGAINED FOR IN THE U.S.-EUROPEAN UNION OPEN SKIES AGREEMENT. The previous section describes the competitive landscape that Norwegian International is now asking the Department to enter. Earlier this year, Norwegian Air Shuttle, an affiliate of Norwegian International, inaugurated new nonstop flights 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 $201 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 International s application without delay. Approval of Norwegian International s application will also help the Administration meet its ambitious policy goal, set in 2012, of attracting 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 Association, the Corporation for Travel Promotion and others to further this goal to increase international 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 inability 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 travelers. 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. 5

outlined by President Obama in Cooperstown, New York. 6 For example, the U.S. Department of Commerce projects international travel to the United States from Eastern Europe will grow by 56 percent between 2013 and 2018. Approval of Norwegian 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 strong consumer benefits of Norwegian International s entry into the U.S. market as outlined 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 one 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 would find it acceptable under the agreement for a EU Member State to reject an application 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 International offers Americans seeking employment, including first-time employment, an enormously appealing and valuable 6 See FACT SHEET & REPORT: President Obama Visits Cooperstown to Highlight Travel and Tourism that is Growing our Economy and Creating Jobs, Mar. 22, 2014 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 investing in America and today he is taking action to welcome more international visitors to our country because making it easier for more foreign visitors to travel to and spend money at America s attractions and national parks helps local businesses and grows the economy for everyone. 7 Notice at 3. 6

opportunity. 8 Further, Norwegian International recently (January 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 indirect 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 created. 9 If the situation were reversed, would the United States accept a rejection of a carrier entry application offering such benefits? We would hope the answer is no, and if it is no, then it would seem obvious that Norwegian International s application should be granted. Indeed, the Commission and the two directly relevant governments of Ireland and Norway, favor approval of the application. ASTA strongly believes that approval of Norwegian International s application will increase competition in trans-atlantic air service, create American 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 millions of travelers they serve every day, we urge the Department to approve Norwegian International 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. 7

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 Travel Agents In Support of Application of Norwegian Air International Limited was served by electronic 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 8