Airlines need Brexit answers. Soon.
The UK is scheduled to leave the EU (Brexit) by the end of March 2019, but airlines don’t have two years, they need answers by April next year.
Irish low-cost carrier (LCC) Ryanair has called on the UK government to “get in a room and start thrashing it out” with the EU, or risk all UK-EU flights being grounded as of March 2019.
“The worst outcome could well be no flights. This may seem incomprehensible, but we need people tell us what circumstances flights will operate under,” Ryanair CCO David O'Brien told a recent media briefing.
O'Brien admitted to being “vocal and alarmist,” but warned that this is a distinct possibility and that airlines should be nervous. “We do seem to be sleep walking to that outcome,” he said.
The problem is that schedules are fixed 300 days in advance, halving the available negotiating time. Reworking and replacing hundreds of treaties is not a quick business and it is likely that we will end up with a transitional memorandum of understanding, if nothing more solid is decided.
“The UK will be leaving one of the greatest aviation projects in existence,” DePaul University professor Brian Havel said during a series of Brexit lectures in London. “This is another opportunity to infect the EU single aviation market with the virus of protectionism.”
There’s speculation that European giants Air France-KLM and Lufthansa will seize Brexit as an opportunity to get an edge on their UK competitors.
However, Havel said the UK’s old bilateral route rights have not been cancelled. The old agreements are lying dormant underneath the newer EU framework and could be revived. Likewise, the UK-US Bermuda 2 agreement is not dead either.
He predicted that aviation will be exceptionalized and handled differently to other industries, even though the negotiators have said all industries will be treated equally.
Havel urged the UK to “throw the cards in the air” and blaze a trail by doing away with archaic ownership and control restrictions altogether. “It is an intriguing opportunity,” he said, predicting that the EU also wants to get rid of the ownership limits.
But this isn’t just about route rights and ownership and control; the implications for aviation stretch far and wide. Havel said it also impacts EASA where the UK – together with France – has been responsible for two thirds of the rule-making activities.
Other areas that will be affected include the Single European Sky (SES), transatlantic flights under the EU-US open skies agreement, as well as vast swathes of regulation in areas such as airport charges, consumer protection, the environment, state aid and subsidies. The UK will also no longer be overseen by the EU Court of Justice and both the UK and EU will lose their reciprocal rights of establishment. However, Brexit won’t affect the UK’s participation in Eurocontrol.
But the greatest damage of Brexit for the time being is the broader economic impact, as the market battles with uncertainty and the weakness of the pound takes its toll on airline financials and passenger budgets.
“If Hollywood was regulated like the aviation industry, it would still be making silent movies,” he said, quoting a former KLM CEO. “The passenger has no idea of the Chicago Convention. They just go to the airport, thinking it’s like the internet of the sky, that they can get on an aircraft and go wherever they want.”
Uncertainty is the killer. The UK-EU departure lounge could be closed for business.…and the clock is ticking at double time.
Victoria Moores [email protected]