Aviation Industry Prepares For Bumpy Brexit Ride

By Benjamin Fox

(EurActiv) — Gearing up for a chaotic Brexit, UK’s aviation, generating an annual turnover of £22 billion (€25 bn) per year, is preparing for the worst.

The sector is the largest in Europe and smaller only to the United States.

It is also one of the sectors most reliant on regulation and, as a consequence, vulnerable to a chaotic Brexit, with the UK potentially excluded from the Single European Sky and SESAR (Single European Sky Air Traffic Management Research) programme. World Trade Organisation rules do not provide a fall-back position for aviation, meaning that without securing a deal with the EU, UK operators would lose ‘Community air carrier’ status and therefore intra-EU traffic rights.

Some have already begun to prepare for the worst. EasyJet has opted to set up a separate EU subsidiary at an estimated cost of £10 million (€11.4 million). Fellow low-cost carrier Ryanair, meanwhile, applied for a British air operating license earlier this month.

A report published by the European Business Aviation Association (EBAA) on Monday (29 January) stated that “maintaining the status quo” is the only Brexit model that would avoid major disruption to the sector.

UK membership of the European Economic Area (EEA) would be “highly desirable for both UK and EU operators”, while a UK-EU aviation agreement modelled on a pact between Brussels and Switzerland would be a “good option”.

But, as the EBAA report concedes, this is an “unlikely scenario”.

The paper, which analysed the possible economic effects of the different Brexit models, is intended to be “almost like a toolbox for the people at the table,” Robert Baltus, Chief Operating Officer of the EBAA told EURACTIV.

“For our members, the most important thing is that we retain a high level of flexibility across Europe,” he adds.

While airlines and the UK’s Civil Aviation Authority want to remain part of the European Aviation Safety Agency, Theresa May’s government insists that it intends to leave the single market, outside of which the UK could not remain a member of any of the EU’s agencies.

Last week, a presentation by the European Commission stated that “UK membership of EASA is not possible,” instead sketching a vision of an EU-UK aviation agreement along the lines of those the bloc has with the United States and Canada.

That could leave the UK to either attempt to persuade other EU governments to allow a non-member to continue agency membership or seek the observer status held by Norway, Iceland and Liechtenstein.

“It makes no sense to recreate a national regulator. At best, you replicate the vast majority of European regulation, and you’d have to do it over an extended period of time. At worst, you create unnecessary barriers,” CAA Chief Executive Andrew Haines said in a speech in September.

“The EASA will remain the main force that Europe has to reckon with,” says Baltus, who points out that the UK was one of the “strong founding members” of the Cologne-based agency.

Gut feeling

Baltus is dismissive of one of the most beloved phrases used by EU and UK negotiators.

“The idea that nothing is agreed until everything is agreed is very dangerous. Uncertainty has an impact on everything we do. “

“Our members need to know where do we stand…a gut feeling is not good enough,” he says.

Changes to the system

The EU’s negotiating guidelines for a two-year transition phase were signed off at the EU Affairs Ministers meeting on Monday (29 January), with UK Brexit Secretary David Davis hoping that the transition, during which the UK will retain full single market access, can be finalised by the end of March.

Balthus says that agreeing on a transition phase “would be step number one”.

But he, and the rest of the industry, are clearly preparing for a bumpy Brexit ride.

“The system as it is works…any changes will make our life more difficult,” says Baltus. “We want both the EU and UK governments to appreciate what will happen”.