UK airlines in freefall amid Brexit turbulence
The news that Theresa May will be triggering Article 50 on Wednesday 29th March has been met with mixed reactions, with the aviation industry in particular worried about the potential fallout that Brexit could pose.
Popular airlines like Ryanair, EasyJet and British Airways are among the airlines questioning their future in the coming weeks, especially as news is rife that senior EU chiefs have warned that they will either need to relocate their headquarters from the UK or consider selling off shares to European nationals in order to continue flying to destinations in continental Europe post-Brexit. Britain’s division from the EU could have massive effects on the industry, especially when considering that Britain is currently a member of an aviation agreement regulated by the European Aviation Safety Agency, and operates on 35 shared pieces of EU legislation which may no longer apply to Britain when the details of its exit from the European Union are hashed out in the coming months and years.
According to reports from The Guardian, “executives at major carriers have been reminded during recent private meetings with officials that to continue operating on routes across the continent, they must have a significant base on EU territory, and that a majority of their capital shares must be EU-owned”. As well as the financial repercussions of such colossal internal restructures, this bold move could see hundreds, if not thousands, of UK aviation jobs lost as a result. Aviation expert at Clyde & Co. Thomas van der Wijngaart offers a stark warning of the implications this could have, not just on the aviation industry but on the economy as a whole: “It might be that carriers choose to have domestic flights [on the continent] operated by their new European operating license, which would probably mean a reduction in staff in the UK”.
This naturally wouldn’t be met with a warm reception on a domestic level. Such a hostile move could fuel UK retaliation by instigating nationality rules of their own, which if implemented would leave EU-owned airlines struggling to establish routes to major UK cities like London, Manchester and Birmingham. This could see the likes of popular Ireland-based airline Ryanair banned from flying UK domestic routes in the future, with a spokesman echoing the same doubts: “While it appears that we are heading for a hard Brexit, there is still significant uncertainty in relation to what exactly this will entail. This uncertainty will continue to represent a challenge for our business for the remainder of the financial year 2017 and financial year 18”.
A British Government spokesman commented: “The UK aviation industry is the largest in Europe, handling over 250m passengers and 2.3m tonnes of cargo in 2016, benefitting both customers and business in the EU and the UK. It will clearly be in the best interests of both sides in the negotiation to maintain closely-integrated aviation markets”. That may well be, but whether EU officials and the British Government can put aside their differences and use their early negotiations to alleviate lingering doubt in the aviation industry for a mutually-beneficial deal remains to be seen.
However, when it comes to aviation negotiations for the time being at least, the sky’s the limit…
