Aviation: A 'no deal' Brexit

December 19, 2018

The European Union has thrown the aviation industry a lifeline that will be extremely useful if the United Kingdom crashes out of the EU without a 'deal'.  It has proposed measures that will partly mitigate the adverse impact of both parties failing to reach more extensive agreements on the terms of the split, some of which could have an impact on when, where and how we fly after March next year.

 

In a statement issued on December 19, the EU said:

 

Transport

The Commission has today adopted two measures that will avoid full interruption of air traffic between the EU and the UK in the event of no deal.  These measures will only ensure basic connectivity and in no means replicate the significant advantages of membership of the Single European Sky.  This is subject to the UK conferring equivalent rights to EU air carriers, as well as the UK ensuring conditions of fair competition.

 

  • A proposal for a Regulation to ensure temporarily (for 12 months) the provision of certain air services between the UK and the EU.

  • A proposal for a Regulation to extend temporarily (for 9 months) the validity of certain aviation safety licences.

 

The Commission has also adopted a proposal for a Regulation to allow UK operators to temporarily (nine months) carry goods into the EU, provided the UK confers equivalent rights to EU road haulage operators and subject to fair competition conditions.

 

More details

There's a few details hidden behind the press release that indicate the market won't operate quite as it does right now.  In particular, the full text says: "the total seasonal capacity to be provided by UK air carriers for routes between the United Kingdom and each Member State shall not exceed the total number of frequencies operated by those carriers on those routes during respectively the IATA winter and summer seasons of the year of 2018."  Its also worth noting that the EU's offer makes no provision for fifth freedom flights (services from the UK that stop in the EU en route to destinations outside the continent) after March next year.

 

So under the proposals put forward by the EU it appears that there will be no growth in air service frequency from and to the UK next year.  The conditions also seem to prohibit the opening of new routes between the UK and European countries.

 

Small steps but far from ideal

These fallback proposals protect the aviation industry, but there are further ramifications for aviation in a 'No Deal' Brexit.  Make no mistake: there is the genuine possibility that the UK's exit from the EU could result in the temporary cessation of air services between the two if this stopgap is not agreed.

 

Rolls-Royce has already announced that it is moving its aero-engine design approval processes to Germany to ensure they can be completed under EASA (European Aviation Safety Agency) regulations and oversight - a step that is essential to ensure its products can be used by the world's airlines.  The pound is also doing badly against the dollar, which will lead to higher fuel costs for UK airlines.  The offer does nothing to address ownership issues for UK and European airlines and the problems are far from settled permanently - the temporary measures proposed by the EU expire in early 2020, leaving a great deal more negotiation to do.

 

Image: ChiralJon

With so much uncertainly surrounding the outcome of the exit negotiations the UK's aviation industry is not in a good place right now.  The EU's proposals are limited and not ideal but will, if they are reciprocated by the UK, enable flights across the continent to continue if the split happens without a more detailed agreement.  They will nevertheless leave the UK somewhat isolated, especially in terms of regulation, and growth could be stifled. 

 

The irrationality of the UK deciding to leave the EU without fully understanding the ramifications and having robust mitigation in place - not only for aviation, but for a whole host of industries - continues to cause problems for businesses across the whole region.  Anyone who was encouraged to believe the UK's transition to isolation would be simple and stable was somewhat misled.

 

Text © The Aviation Oracle

 

 

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