Imagine a US domestic airline, we'll call it "New York Air," that decided it wanted to fly to London and Acapulco, both from New York City, their hub. A normal airline would base their crews in New York, maintain an FAA air operator's certificate, and pay them according to US labor laws.

But, what if, to save money, this airline set up a subsidiary, headquarters in the Cayman Islands, called "New York Air International," and had their crews "based" in Acapulco, and flying trips through New York with a five day layover there without a hotel on their way to London, where they would stay 24 hours before returning back to New York for another long layover. Their domestic pilots don't have a scope clause in their contract, so they wouldn't be able to bid the international airline, but the new subsidiary could hire anyone (Mexicans, Russians, Lithuanians, whatever - ) who had the right to live in Mexico and could get a Cayman Islands ATP. In the beginning, of course, they would attract some US pilots who would just live in New York, but eventually they would find that it would be cheaper just to take anyone they could, all the while ignoring the onerous US labor protections that their domestic airline would be subjected to.

How long would the Uniteds and Deltas of this world be able to hold out before trying the same thing?

This is essentially what Norwegian Air International is trying to do.