Europe seems to offer fertile ground for ‘new business models’ and airline management aspiring to de-facto re-write the rules of competition. A new candidate-pioneer with a ‘new business model’, longing to do things differently has emerged. It seems though that this new business model has a familiar ring to it: social dumping & regulatory shopping for flexible rules and oversight are its key pillars. This is the example of the Icelandic-Danish-Latvian Guernsey-company Primera Air: a charter airline flying mostly Scandinavian holidaymakers.
The basic facts are remarkable: Initially established in Iceland, with an Icelandic Air Operations Certificate (AOC), it obtained an AOC in Denmark in 2009 and in late 2014 decided to move its aircraft to Latvia. There – in Riga – under a new subsidiary “Primera Air Nordic”, it manages remotely its operations, only very few of which will ever touch Latvian territory. While currently many of Primera Air’s aircrew are still on direct open-ended employment contracts, the number of pilots and cabin crew engaged as self-employed contractors through the Guernsey-based agency „Flight Crew Solutions“ is increasing.
This set up sounds astonishingly familiar with the example of AVIES AS – a small/mid-size European airline having most of its operations in Sweden while having an Estonian AOC. The Norwegian Air International (NAI) model, stretching out between 3 continents, is another example. But while Norwegian is more discrete about why it would like to abandon Norway’s strict regulations and social laws, Primera Air Chief Executive Hrafn Thorgeirsson does not shy away from admitting the Latvian AOC will allow Primera Air to do its business “a little differently” to accelerate its growth: “The carrier needs to have an AOC outside the Nordic countries to have “more flexibility” especially in regard to labour regulations and unionization”, he says.
With the move of almost all aircraft to its new Latvian subsidiary, the responsibility for the operator’s safety oversight will be with the Latvian Civil Aviation Authority (CAA). For Primera Air, which is a private charter company with atypical air crew employment practices through an agency in Guernsey, the rather small Latvian CAA will face the challenge of having to oversee Primera’s operations in a far-away country. Similar experiences elsewhere in Europe have demonstrated the inability of small, under-resourced authorities to perform effective safety oversight (e.g. AVIES in Sweden). And if that was not sufficient, there is also the investigation report into the Cork accident warning against the difficulties of performing ‘remote oversight’ by a relatively small authority.
Airlines ‘shopping around’ for lenient legislation, bypassing regulatory, tax and social obligations is a new trend, but not a business model. Primera Air is just another example of how little different this “little differently” philosophy is.