AIRLINES BRACE FOR BREXIT HEADACHE
Negotiators need to untwine the UK from decades of EU rules
AT an aviation summit here in the past week, Europe’s main airlines put on a display of unity over the challenges ahead. But the industry’s chief executive officers (CEOs) were divided when it came to the biggest issue of all: Brexit.
The United Kingdom’s scheduled departure from the European Union (EU) in March next year has provoked widely varying reactions from carriers in the 28nation bloc.
At one extreme are dire flight-cancellation warnings by Ryanair Holdings Plc CEO Michael O’Leary and at the other is nonchalance by his counterpart at British Airways owner IAG SA, fellow Irishman Willie Walsh.
The airline industry differs from others such as energy and chemicals where, from London to Lisbon, companies uniformly say that the UK’s departure is a major headache.
The dissonance suggests some carriers sense the possibility of a Brexit accord that would prevent hassles for tens of millions air travellers while ushering Britain, home of Europe’s busiest airport, out of the European single aviation market.
“It’s about jockeying for position in the market and potentially gaining an advantage over competitors as the future relationship between the UK and the EU is worked out,” said Michael Tscherny at GPlus Europe.
“On the basic question of whether flights will stop the day after Brexit, nobody has an interest in planes not flying between the UK and the rest of Europe.”
No industry in the Brexit process has a more direct link to citizens than aviation, which carries one billion travellers a year within the EU. The UK plays an outsized role, accounting for a quarter of the total, making it the thirdbiggest aviation market behind the United States and China.
This economic reality confronts the Brexit negotiators, who must untwine the UK from decades of European aviation rules that have expanded traffic and ownership rights and streamlined certification and safety procedures. Letting this regulatory framework lapse in the UK without a substitute arrangement would end EU flight rights for Britain and vice versa the day after Brexit.
“I am determined to avoid that particularly absurd consequence of Brexit,” EU president Donald Tusk said in Luxembourg last week, when the UK’s partners in the bloc produced a blueprint for future economic ties with Britain.
“To do so, we must start discussions on this issue as soon as possible.”
O’Leary of Ryanair had said a stalemate in the Brexit negotiations points to serious disruptions for airlines.
He cited two particular challenges: keeping planes flying between the UK and the EU and preventing the bloc’s 49 per cent limit on foreign ownership of carriers from affecting operators in Europe including IAG, which also owns Aer Lingus in Ireland and Spain-based Iberia and Vueling.
“We see no progress towards a solution that will address either the flight rights or the ownership rules,” said O’Leary, a staunch opponent of Brexit, during a CEO conference organised by Airlines for Europe, the main EU industry lobby group, which campaigns on issues like aviation taxes and air traffic control but has no position on Brexit.
The opening lineup of CEOsat the event — also on stage were Carsten Spohr of Deutsche Lufthansa AG, Jean-Marc Janaillac of Air France-KLM Group and Johan Lundgren of EasyJet Plc — presented a common front on such matters as airport fees (too high) and security checks on travellers (too burdensome) while steering clear of the elephant in the room that is Brexit.