Here’s What Could Happen to Air Transport if There’s a No-Deal Brexit
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Airline passengers could face higher fares, longer wait times at immigration and problems connecting to Europe through British airports if the UK leaves the European Union without a deal, aviation experts warn.
The March 29 deadline for the UK to leave the EU is drawing closer, with no sign yet that the British Parliament will support the exit agreement negotiated with the Union by Prime Minister Theresa May. Members of Parliament voted overwhelmingly to reject the deal earlier this month. That is making the prospect of a so-called “hard Brexit” more likely.
The International Air Transport Association (IATA) — the trade body which represents most of the world’s airlines — warned that a no-deal Brexit “could lead to a cap on flights that will stunt important economic opportunities and may lead to higher prices for consumers.” European Union authorities are preparing for just such a scenario.
The European Commission — the EU’s equivalent of an executive power — issued in December a no-deal Contingency Action Plan. In order to “avoid full interruption of air traffic between the EU and the UK in the event of no deal,” the plan would ensure “basic connectivity” for a period of 12 months. “Basic connectivity refers to the level and volume of air transport services that will suffice to cover the basic needs of the Member States’ economies…without, however, guaranteeing the continuation of all existing air transport services under the same terms as they are supplied today.” So the legal rights enabling UK airlines to carry passengers, for instance, from the US to the UK and then on to countries in the EU could become a thing of the past.
“A no-deal scenario will cause significant disruption,” said the European Commission. “Contingency measures cannot replicate the benefits of membership of the [European] Union.”
“The Commission said it will have a standstill agreement that will freeze at the current level the amount of flights between the UK and EU countries. Generally speaking, if there’s a cap on how many flights UK carriers can fly, fares will go up,” said Andrew Charlton, managing director of Aviation Advocacy, a Switzerland-based consulting firm specializing in aviation politics.
But the potential economic fallout of a no-deal Brexit could be so catastrophic that “air fares are going to be the least of anybody’s worries,” Charlton said.
IATA estimates that up to 5 million extra airline seats will be required on flights between the UK and the EU in 2019 compared to 2018, many of which “will be in the peak summer season when families will be booking holidays.” These additional seats “are at risk if a no-deal Brexit occurs,” IATA said.
According to ACI Europe, the trade body representing European airports, the restriction of air connectivity in the event of a no-deal Brexit could result in “the loss of 93,000 new flights and nearly 20 million airport passengers” in the UK-EU air transport market.
“By contrast, the Brexit deal on the table would guarantee a business-as-usual scenario,” said Olivier Jankovec, director general of ACI Europe. “All this shows that there is no such thing as a silver lining for aviation with the no-deal scenario – and that it must be avoided at all cost.”
A number of European airlines have already put in place Brexit contingency plans of their own, to ensure that they can continue to enjoy free access to the UK-EU market after the UK’s departure.
UK-based low-cost carrier easyJet, for example, has established separate operating units in Austria and Switzerland, and has re-registered 130 of its aircraft in Austria. Its Ireland-based rival, Ryanair — the biggest airline by passengers carried in Europe, which has a significant UK-EU operation — has applied for and secured a UK air operator’s certificate in addition to its Irish one, to ensure that it can continue to operate after Brexit as it does today.
In the short term, however, passengers could pick up some good deals on European air fares as carriers compete with one another in a market that is currently oversupplied. Ryanair, for example, recently lowered its full-year profit guidance for 2019 because of “lower-than-expected air fares” in the second half of the year. Its chief executive Michael O’Leary said that “we cannot rule out further cuts to air fares and/or slightly lower full-year guidance.”
Airline passengers traveling to the UK and EU from countries outside Europe could find their journey choices more restricted post-Brexit. For instance, USA-Europe flights operated by UK carriers, or by US airlines which codeshare with UK carriers, currently enable passengers to travel via the UK without restrictions. That’s because the UK is legally in the European Union, which has a so-called Open Skies agreement with the US: Any US or EU carrier can carry people between any airport in either party. The UK and US have had to negotiate an agreement to regulate air traffic between the two in the event of Brexit. But if the new UK-USA bilateral air services agreement that was announced in November does not replicate the rights afforded by the EU-USA Open Skies agreement, the picture could change.
“If the replacement UK-US agreement goes forward, in the short term things should be ok. But if something goes wrong between now and Brexit, there will be a really huge problem, and British and American carriers will be subject to serious restrictions,” said Charlton.
Given the global nature of the airline industry, it is not simply a case of choosing to fly on an EU-based carrier to avoid restrictions. Over the years airlines have entered countless code-sharing, revenue-sharing and cross-investment deals with other carriers from outside their home countries. For instance, Air France-KLM announced last May that it would acquire a 31% stake in Virgin Atlantic, which is already 49% owned by Delta Air Lines, as part of a transatlantic joint venture agreement between the carriers.
There is also the “time bomb” of EU ownership and control regulations to consider, according to Charlton. In order to retain flying rights within the Union, and to the countries with which the EU has negotiated traffic agreements, like the US, airlines must be 51% owned and controlled by EU nationals. In the case of International Airlines Group (IAG), the parent company of British Airways and Iberia — which have a transatlantic joint venture agreement with American Airlines — this could prove complicated.
“[IAG] is going to have to convince the authorities that British Airways is British and Iberia is Spanish which, given that they’re both owned by the same company, is going to require some fancy footwork,” said Charlton. IAG has consistently said it is confident that it “will comply with the EU and UK ownership and control rules post-Brexit,” and does not foresee a problem.
Another potential consequence of a no-deal Brexit that would be sharply felt by airline passengers is increased immigration waiting times at airports.
“If there’s a no-deal Brexit and every European is treated as an alien, the queues are going to expand massively,” said Charlton. “If there’s a standstill and [the UK] treats European passengers as they do today, there won’t be much change.”
The European Commission has already said that UK citizens will have to pay 7 euros ($8) to apply for a new travel permit, known as ETIAS (European Travel Information and Authorization), before traveling to the EU after Brexit. The UK Government has also informed citizens that they should ensure they have six months’ validity left on their passports from the date of arrival in an EU member state.
What happens next in the Brexit process, though, is still unclear. On Tuesday, Parliament voted to send May back to Brussels to negotiate an alternative to the part of the deal that seeks to avoid the return of a hard border between Ireland and Northern Ireland. However, the European Commission has repeatedly said it is not willing to reopen the two and a half years of negotiations that led to the Withdrawal Agreement. If the two sides are unable to ratify the deal before March 29, the UK could end up crashing out of the EU with no protective measures in place.
Regardless of whether the Withdrawal Agreement can be ratified or the UK ends up leaving the EU without a deal, one thing is certain: it will not be business as usual for airlines and travelers after March 29.
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