Brexit’s Open Skies and lack of consistency amongst Airlines

Brexit’s Open Skies and lack of consistency amongst Airlines post thumbnail image

UK Aviation Law and the EU

UK aviation’s reliance on EU law, makes Brexit a very real threat for airlines on both sides of the Channel and beyond. A consequence of a “no deal” Brexit could in theory result in grounded planes and mass airport disruption although this ranks as one of the most apocalyptic outcomes.

EU legislation gives the UK aviation access to European and other markets like the US and Canada. The UK has to strike a deal with its neighbours to retain the current status-quo, Otherwise, it would have to create a new regulatory framework and strike vast amounts of deals with the hundreds of nations around the world to ensure that flights in and out of the UK continue after Brexit.

The facts and statistics 

‘Aviation is a UK success story boasting the biggest aviation network in Europe, while London has the busiest airport system of any city in the world. We fly directly to over 370 destinations in more than 100 countries worldwide’ – UK aviation minister Liz Sugg.

The UK has over 50 commercial flight airports and even more airfields serving freight and other aviation services. Its passenger numbers account for over a quarter of all annual passenger travel within the EU. The UK boasts the third largest aviation sector, behind only the US and China.

54 million annual round trips are made from the UK to the EU. EU nationals make 26 million round trips to the UK. 75% of all UK holidaymakers and 66% of business travellers go to the EU each year, and 63% of all tourists and 73% of all business travellers visiting the UK come from EU states.

Others UK aviation industry facts for 2016 are:

· 268 million terminal passengers

· 2.4 million tonnes of freight

· 2.2 million air transport movements

· Air transport and aerospace worth £22 billion to UK economy

· Employs 240,000 people

· Tourism worth £54bn annually with 80% of all spending by tourists travelling by air

· Travel and tourism accounts for 10% of UK GDP and 12% of employment over last decade

Ownership rules & Approach of Airlines

European carriers must ensure at least 50% of shares are held by EU citizens. This is a standard feature of most international and bilateral aviation deals and will also apply to British airlines running routes to the US when the UK falls out of the EU-US Open Skies agreement.

IAG (British Airways, Iberia and Aer Lingus) could struggle to hit the 50.1 per cent ownership threshold when UK nationals become third-country nationals. IAG boss Willie Walsh said “I am completely relaxed”, insisting the UK government’s determination to strike a deal with the EU and US would mean no flight disruption and no shareholder problems for IAG. “There will be a comprehensive Open Skies agreement. On how IAG was planning to convince regulators British Airways was both UK and EU controlled after Brexit, Mr Walsh retorted: “magic”.

Michael O’Leary, of Ryanair, whose current ownership structure would also see it classified as a non-EU controlled airline, is predicting “a real crisis” in April 2019. “There will be disruption”

Airlines Licensing post Brexit

Ryanair has applied for a UK licence in an attempt to secure UK access after Brexit

IAG already has European licenses for its continental arms like Spain’s Iberia

EasyJet has applied for EU licenses, while committing that its headquarters will remain in the UK.

Flybe has discontinued all intra-European routes as a precautionary measure, and has said the situation remains unclear on its codeshare

Wizz Air has pledged its commitment to Luton and has said it should be able to continue flying between the UK and a number of non-EU countries after applying for a UK licence.

Thomas Cook, airline as well as a holiday business, has warned it may not be able to fly to the EU or the US without a Brexit deal, and has also warned about the effect on employment, as it may no longer be able to place temporary workers in EU states without facing additional barriers.

TUI which also has an airline and holiday business has announced Brexit contingency plans beyond licencing in areas where UK and European passengers may be affected by a no Brexit deal.

IATA, representing some 280 airlines, believes the picture for airlines after Brexit, whatever the outcome, will be similar to the expected impact on the wider UK economy, anticipating lower growth in terms of passenger numbers than if the status quo was maintained.

IATA forecasts UK air passenger market to be over 45% larger in 2035 than now, even under a so-called ‘hard Brexit’. It is worth noting aviation has nothing to fall back on if the UK has to turn to World Trade Organisation (WTO) rules after the divorce, as there is no framework in place.

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