On June 23rd 2016 the UK voted to leave the European Union (52% Leave – 48% Remain) instructing the UK Government to initiate the withdraw of Britain from the European Union, its rules and agreements. Many of those agreements have an effect on the aerospace and travel industries so what could it all mean?
Travel
Under the current rules, any EU Citizen has the right to travel to and work in (and through) any other EU country. This is particularly prominent in continental europe where the Schengen accord means there are no border checks between the countries. The UK is not part of the Schengen agreement so does have a physical border and carries out border checks.
As a result if you leave the UK and visit a european country then it is highly unlikely anything will change, your passport will checked in both directions. The two major scenarios that are likely to be considered following Brexit though are as follows:
- Travel agreement – the UK negotiates a free travel agreement with the EU where British passport holders have pretty much the same rights to travel to and within europe as they currently do.
- Visa Travel – The EU requires a visa system for British passport holders wanting to visit EU countries and vice versa.
Given the number of people visiting the EU from Britain, and the number of EU visitors to Britain it is in the interest of both parties to reach a travel agreement (we’re not delving into the work/immigration aspect here). So whilst nothing is certain, it is unlikely anything will noticeably change when you pop off to Europe on holiday.
Talking about the result ABTA released a statement: “The Prime Minister has stated that there will be no initial change in the way people travel. Travellers are as free to move between the UK and the EU as they were yesterday, European Health Insurance cards remain valid and regulations such as Air Passenger Rights remain in place. People due to travel this summer will see little changes to their holiday. Once the UK formally notifies the EU of its intention to leave, the remaining Member States will have up to two years to offer the UK a deal for a future trading relationship and during this period holidaymakers will not see any immediate changes. ”
Airlines and Air Travel
Now this is where it gets a little more complex. Currently UK airlines enjoy unrestricted access to European airports and airspace thanks to the European Common Aviation Area (ECAA).
Any airline owned and controlled by nationals of EU member states is free to operate anywhere within the EU without restrictions.
The ECAA was one of the most important factors behind the rapid development of Low Cost Carriers (LCC’s) in Europe. Today, the extensive cross-European networks of Ryanair, easyJet, Vueling and others are built upon this free access agreement.
easyJet has already said that “We have [this] Friday written to the U.K. Government and the European Commission to ask them to prioritize the U.K. remaining part of the single EU aviation market, given its importance to trade and consumers” and that is a key phrase here, its important to the whole of the EU.
If the EU chooses to not create an agreement with the UK in the same way as the ECAA (or refuse continued access to the ECAA) then the UK will need to negotiate separate agreements with either the EU or individual member states. Something that isn’t impossible but could prove costly driving up prices. However, that would also affect EU airlines flying into the UK so it would be in the interests of both the UK and the EU to reach an agreement equivalent to the ECAA as a priority”
In order to be part of the ECAA then the UK must accept EU Aviation Laws and “close economic co-operation”. The former is not so much of an issue as EU Aviation Laws were largely formed from UK Aviation Laws and all UK airlines operate under them already. Many UK airlines also use EU crew and staff so close co-operation should not be an issue either.
Another way for the UK to ensure that its airlines continue to have access to the EU’s single aviation market would be to negotiate a new agreement on a bilateral basis.
This has already been done with Switzerland. This agreement on Air Transport was signed in 1999 and came into force 3 years later. Domestic air transport rights were originally excluded, but negotiations on this topic began in 2011. Switzerland however is tied to EU Aviation laws and the freedom of trade and labour.
Openskies
The UK is also part of the EU-US Openskies agreement. This arrangement allows flights from anywhere in the EU to anywhere in the US and vice versa. Obviously Brexit means the UK would no longer be part of that agreement. The easiest option would be negotiating the same agreement, a UK-US Openskies agreement. This is highly likely as the transatlantic market for both UK and US airlines is massive.
Norway and Iceland (both non-EU countries) are subject to the EU-US Openskies agreement so once again, the precedent is there.
Business as normal
This of course all applies to other bilateral agreements with non-EU countries of which many are currently negotiated within the EU for all member states but all the experts we have spoken to suggest that it would be the case of “business as normal” with no side wanting to be left out in the cold with regards to air travel.
So the net result is that, as with travel, whilst wording may change, the actually agreements will remain the same. The UK’s LCC’s will keep offering flights across europe and pay the same rates they currently pay as will Europe’s LCC’s wishing to fly to the UK. Frankly its to important to all member states for that not be the case.
The issue though is speed. The aviation industry does not like volatility. The airlines need these agreements (or at least guarantees of) in place as soon as possible so they can plan for the future. This in turn helps the aerospace industry such as EU based airframers Airbus as secure, growing airlines means new orders.
On a personal note for Wales, Airbus has already said that it did not have any plans to move its factories from the UK in the event of Brexit.
Brexit is likely to take around 2 years so nothing is changing overnight, airlines aren’t going to disappear and your summer holiday (and next years too) will go ahead as planned. What the UK needs now, as much as the aviation industry, is a period of calm and ordered negotiation to get the best agreements for Britain and British Airlines.
Say hello to the new boss, same as the old boss…
