Will flights still takeoff after Brexit?

In recent weeks there has been a lot of discussion about what will be the impact on flights in and out of the UK if there is no deal between the UK & EU after March 2019. EasyJet have set up a European subsidiary in Austria and Michael O'Leary, no stranger to political controversy, has even been quoted as saying Ryanair will have to start cancelling flights from as early as next year. So what is really going on?

There are two elements to the current uncertainty, first is the legal ability to fly international flights and second is the long running battle between low cost and legacy airlines in Europe.

Let's start with the first of these. No international flights can take place without an agreement between the governments involved. Without that agreement there is no legal base for a flight. So for example if a British airline wants to fly between London and Toronto, the British and Canadian governments have to agree that flights can take place, the number of flights, the airlines that can operate them and which airports and routes they can use. Flights cannot legally take off without these air transport agreements as there is no WTO style body to fall back on.

The problem for the UK is that the European Union has full competence to negotiate these agreements, so current air transport agreements that govern international routes from the UK are under the auspices of the EU. The full state of affairs can be found here:https://ec.europa.eu/transport/modes/air/international_aviation/country_index_en

The EU has an open skies agreement with the US for example which allows any EU airline to fly to any point in the US. When the UK leaves the EU, it also automatically exits all of these agreements.

With third countries this is problematic, but not catastrophic, as the UK has old bilateral agreements with many countries which would then come back into force. However, these are old agreements which allow only a limited number of flights. So in the absence of agreements being reached with other countries there could be a significant reduction of long haul flights from the UK until agreements can be reached. Although it is highly likely these would be agreed relatively quickly in most cases.

The main problem after March 2019 comes with flights to the EU as the EU operates under the principle of a single European sky. In this regard the EU is a truly exceptional single aviation market as all 9 so-called freedoms of the air are included (see https://www.icao.int/Pages/freedomsAir.aspx for a full description of these). Essentially this means any European airline can fly between any two cities in Europe with no restrictions on the number of flights.

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Brexit therefore provides two problems for airlines. Firstly, if the UK leaves the European aviation area without a follow up agreement there is no legal basis for any flights between the UK and Europe. The only legal basis could again be the old bilateral agreements with individual countries, however as aviation is fully an EU competence, it is not clear if old national bilateral agreements would in fact be legal. In any case, such agreements belong to a pre low cost era and are not well suited to the modern age. Significantly the UK doesn't have bilateral agreements with many EU countries, including Spain, which means that if there is no agreement, in the summer of 2019, there will be no flights between the UK and Spain. Not an attractive possibility for holidaymakers, or for the European tourist industry.

When Michael O'Leary warns of cancelling flights he is not making entirely empty threats. Ryanair and any other airline would legally not be able to operate any of those flights.

The second problem is that even if there is an agreement, if the UK is outside of the EU single aviation market, then a British airline can no longer fly a route between two European cities, as is the case for many airlines today.

This is a real problem for British airlines but not such a problem for EU airlines. Ryanair for example will be able to fly from the UK to 27 EU countries, not just from Ireland, but EasyJet would be able to fly from France only to the UK. This is why EasyJet is setting up a European subsidiary.

Therefore it is a priority for the UK to firstly negotiate an agreement with the EU which supersedes the existing agreement, and allows UK airlines to fly from the UK to anywhere in the EU. This should not be difficult; the EU has such an agreement with many countries, including the UAE. Secondly the UK should aspire to keep the 9th freedom rights that come with being part of the European Common Aviation area (ECAA). Many non-EU countries are in the ECAA in some capacity, including Norway, Switzerland, and some North African countries (which is why Ryanair can maintain hubs in North Africa and Norwegian can fly flights from the UK to the US). However not all have the right for their airlines to fly intra EU flights.

Such an agreement has significant downsides for the UK, principally that we would be bound by the EU rules but have no say in making them and that we would have to accept ECJ jurisdiction. In addition, if there is no general exit agreement with the EU, it is likely that there won't be a specific aviation agreement at all.

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This leads on to the second more political element of the EU and UK aviation market. Brexit is the latest battleground in the long running battle between the low cost airlines including Ryanair, EasyJet and Norwegian and the old legacy carriers such as Air France, Lufthansa and British Airways.

These old flag carriers have been hit substantially in recent decades. In the old days they relied on their governments (who often owned them) to keep out the competition, e.g. British Airways against Laker Airways, and the old bilateral agreements were negotiated on their behalf, with governments often deciding the routes for the airlines. As a result there were far fewer flights and they were much more expensive.

The liberalised era has badly exposed these airlines as the low cost carriers shook up the aviation market, taking a huge market share and massively expanding the whole market. Now we have many more flights and routes and flights are a lot cheaper. The dominant airlines in intra European flights are no longer the legacy flag carriers, many of whom are struggling, but the lean low cost airlines, which brought flights to regions which rarely saw them before and opened up whole new areas of Europe to tourism and regeneration in a way that EU structural funds failed to do. The legacy carriers successfully restructured to focus on the long haul market instead, but that is also now in the sights of the low cost carriers.

A more restricted market would suit legacy carriers, especially if EasyJet could no longer compete with Air France on French domestic routes and Ryanair could no longer fly British domestic routes. There will be a market opportunity there for Air France and British Airways in their domestic markets, but this will not necessarily be good for consumers, who can probably expect less competition and higher prices.

This is a complex area, and reducing opportunities for some carriers will probably mean openings for others, but aviation, more than any other industry, has traditionally been dominated by government to government negotiations, the EU single aviation area changed all that and brought a huge increase in flights, safety improvements and a massive reduction in cost.

Therefore the focus for the future should be to keep the market as liberalised as possible, probably through a specific bilateral agreement which preserves the right for any UK airline to fly from the UK to anywhere in the EU. However it will probably be tough to keep the rights for UK airlines to fly intra EU flights, or French domestic flights for example.

The repercussions of no deal at all are severe. So severe in fact that if a deal was not struck before the UK left, one would doubtless be agreed very soon afterwards when the repercussions started to become clear. Neither side could cope with the effective closing down of the other’s market for any prolonged period of time. The real difficulty though is that airlines plan their schedules at least six months in advance, so if a deal isn't forthcoming by next autumn, the summer of 2019 could be a very turbulent one for airlines and flyers, dwarfing in magnitude the recent security queues experienced due to enhanced Schengen entry checks. Travelling in Europe, for so long a simple and relatively inexpensive luxury enjoyed by a majority of Brits, could become a much more expensive and exclusive experience. So it is in all our interests to strike a broad agreement on aviation quickly.