Airlines as the New Threat to State Sovereignty
The traditional sovereign state model is under threat. It is not due to terrorism nor the rise of international institutions, but due to expanding airlines. A new breed of airline is emerging that shows no regard for national boundaries and is threatening the ability of states to control the flow of people within their borders.
Within the past month, Norwegian Air Argentina took delivery of its first of between fifty and seventy Boeing 737 aircraft. A division of the already large Norway based airline conglomerate, Norwegian Air Shuttle, Norwegian Air Argentina plans to inaugurate domestic service between Argentina’s largest cities this year. According to Norwegian Air Shuttle CEO Bjørn Kjos, Argentina will serve as a springboard for Norwegian to launch service across South America, putting it in direct competition with entrenched national airlines in South America. Norwegian Air Argentina has already received approval from the Argentinian government to inaugurate service on 152 routes within Argentina and internationally. This is in addition to the extensive network Norwegian Air International has between various points throughout Europe and the United States.
For proponents of state sovereignty, Norwegian’s Argentinian expansion is a worrisome prospect. State sovereignty can broadly be defined as the ability of a state to exercise control within its borders, free from the influence of other states. For a state to be able to exert control within its borders, the state must be able to control the transportation of people within the state, otherwise the government would have no power. While transportation can take a variety of different forms, in the modern world air travel is by far the most important, due to its speed and ability to circumnavigate geographic challenges.
By allowing Norwegian Air Shuttle to operate domestically within its borders, Argentina has undermined its own sovereignty. The country has handed over control of the transport of citizens within the state to an outside multinational corporation, vacating its authority to do so. This is especially significant given that Argentina has its own state-owned airline, Aerolíneas Argentinas. By choosing to allow Norwegian Air to inaugurate service within Argentina, the state is demonstrating its preference for a foreign multinational corporation over supporting the growth of a nationally owned company. Argentina is willingly undermining its own sovereignty through this decision.
However, the state of Argentina has some control over Norwegian Air Argentina. Norwegian Air Argentina has an Argentinian Airline Operators Certificate, meaning it must abide by all Argentinian air transport regulations and that its aircraft must be registered within Argentina. Yet this is only an illusion of control. Norwegian Air Argentina is completely owned by Norwegian Air. Therefore, Norwegian Air Argentina operates to further the economic interests of the Norway based, Norwegian Air, instead of operating to further the interests of Argentina.
This means that if Norwegian Air Argentina underperforms economically or if Norwegian Air’s ambitions change, Norwegian Air could shut down Norwegian Air Argentina. This would cripple Argentina’s ability to transport citizens within its borders and would seriously harm the Argentinian economy, both of which would be an affront to the authority of the Argentinian state.
Historically, in order to prevent a situation like the one described above, states have limited the percentage of an airline that can be foreign owned. The limit is typically set at between 25% to 49.9%. This is done to prevent cabotage by foreign airlines on domestic routes and prevent flag of convenience situations where an airline registers planes where it is cheapest. Both of these are loopholes Norwegian Air exploits to the detriment of state sovereignty.
Norwegian Air’s operations in Argentina are a prime example of state sanctioned cabotage, where the Argentinian state has given the Norwegian airline permission to operate domestically in Argentina. This has negatively impacted the Argentinian Government’s ability to project power within its borders. Furthermore, Norwegian Air makes extensive use of flag of convenience loopholes. The majority of the planes Norwegian Air operates between Europe and the United States are registered in Ireland, since Ireland has cheaper taxes and allows the use of cheaper foreign labor.
Yet, the phenomenon of a multinational airline conglomerate world is not limited to Norwegian Air. In April 1997, the European Union passed legislation allowing any airline based within the European Union to fly between any two European cities, resulting in the rise of low cost airlines in Europe including Ryanair, Easyjet, and Wizzair. These three airlines connect almost every city in Europe, operating without regard for national borders. Similarly, in Asia, both Air Asia and Jetstar have developed extensive networks within East Asia, operating both domestically and internationally from a variety of countries. All of these airlines take advantage of flag of convenience loopholes, registering planes where it is cheapest and then operating them throughout the world.
This has been to the detriment of established national airlines, many of which are now struggling. Notably, Italy’s once proud Alitalia recently declared bankruptcy and faces the possibility of shutting down. A similar situation is playing out with India’s Air India, which has been posting consistent losses for the past couple years. For many countries with encumbered national airlines, losing their national airline due to increased competition with multinational airlines would mean becoming completely reliant on those multinational airlines for both domestic and international air service. This would be a daunting prospect for any state, given that in today’s interconnected world, reliable air links are all but essential for states to survive. It also would be a huge affront for any state’s claim to sovereignty, since the state would be unable to effectively control air travel and the flow of people, within its borders.
The launch of Norwegian Air Argentina is a prime example of why states should be wary of the growth of new multinational airlines that show little regard for national boundaries. These airlines have a serious potential to undermine a state’s claim to sovereignty by possibly crippling a state’s ability to regulate the flow of people within its borders. Therefore, states should look to adopt more protectionist attitudes when dealing with multinational airlines like Norwegian.