Speaking at this year’s Beaumont International Aerospace Conference – the day before the UK government published its Brexit White Paper on 12 July – Clyde & Co chairman Michael Payton warned of the possible fallout for aviation if negotiations between the UK and EU were to fail.
“Peering through a glass darkly”, he said there were six possible models for a post-Brexit aviation market, including “maintenance of the status quo”, which he deemed unlikely; a UK-EU bilateral aviation agreement; UK membership of the European Economic Area or the European Common Aviation Area; or a no-deal Brexit.
“Absent any agreement, Brexit means no traffic rights [and] the end of market access of the UK to the open skies European common aviation area,” he said, adding that the UK will face “third country” restrictions on ownership and control of aircraft, the loss of mutual recognition, and the end of its membership of the European Air Safety Agency (EASA).
These risks were stark enough to prompt international trade body the General Aviation Manufacturers Association and its UK counterpart ADS to write to the EU chief Brexit negotiator Michel Barnier in June to request special “technical and contingency planning discussions” between EASA and the Civil Aviation Authority (CAA) outside of the political fray – a request which the EU rejected. Later that month, French aircraft manufacturer Airbus announced in the weeks before the conference that a no-deal Brexit would cause it to abandon its operations in the UK, which employ around 14,000 workers.
As if to assuage these concerns, the White Paper proposes that the UK could remain part of EASA as a third country, acknowledging that this would likely involve a “number of commitments”, such as a “financial contribution”.
Speaking to ALN, Clyde & Co partner John Balfour said it would make “best sense” for the UK to remain part of EASA as the agency has increasingly “taken over” technical rule-making and certification that was previously carried out by the CAA.
The CAA no longer has the expertise or experts that it would need to resume those activities, he added, noting that, on the other side of the coin, the CAA is also a “source of great expertise for EASA”.
However, the EU Commission’s “no cherry-picking policy” – which would bar the UK from opting into certain EU programmes while forgoing others – is unlikely to allow the UK to remain a member of EASA, Balfour suggested, adding that he thought the bloc’s stance was “inherently ridiculous” as “any arrangement falling short of full membership is bound to involve some selection, and hence if there is to be none there is no point in even having discussions”.
Equal flexibility could be required on the part of the UK, however. Partners Sue Barham and Giles Kavanagh at Holman Fenwick Willan (HFW) in London said it is “unlikely” that the UK will not maintain some kind of relationship with EASA and cautioned that if the two organisations were to completely cut ties, it would have a “severe” effect on the aerospace industry. Yet they noted that continued membership of EASA would likely require the UK to accept some jurisdiction of the European Court of Justice (ECJ), which “had hitherto been one of the UK government’s [so-called] red lines”.
There is precedence for such arrangements, Balfour noted, with Switzerland, Norway and Iceland all sitting on the EASA management board, albeit without a vote. It is “very unlikely that it would be agreed to give the UK a place on the management board with a vote”, he added.
Barham and Kavanagh noted that “whilst the UK might well retain influence within EASA given the aviation safety regulatory expertise in the UK, in form at least the UK could well be in the position of rule-taker, not rule-maker”.
The White Paper also proposes a post-Brexit air transport agreement between the UK and the EU in an effort to maintain “reciprocal liberalised access” between the two jurisdictions.
Barham and Kavanagh noted that if the UK leaves the EU without a deal on aviation, “no UK airline will have any rights to fly to any destination in the EU” or vice versa, and speculated that the most likely solution would be an “agreement which allows reasonably unfettered traffic rights” for airlines operating on routes between the EU and the UK.
However, if the UK did not sign up to “wider acceptable EU treaty principles” such an agreement would be unlikely to “provide the same level of access for UK airlines to operate across the EU as enjoyed by the remaining EU member states”.
“While no one genuinely expects that US-UK air traffic will come to a halt on Brexit,” they added, it “should also be remembered that the UK currently derives air traffic rights to operate to a number of countries”, including the US and Canada, by virtue of EU treaties that would cease to apply in the event of a so-called no-deal Brexit.
In such a scenario, Balfour said it is “certainly not the case that all air services would have to stop”. He noted that the 1994 Chicago Two Freedoms Agreement would allow UK-based airlines to provide services to the EU while pre-existing bilateral agreements regarding traffic rights between the UK and other EU member states that are “probably still in force”. These will have “been overtaken and dormant during the period of the single aviation market, and hence would come back to life,” he added.
However, both seventh freedom services – involving points in two other member states but operated by UK airlines – and ninth freedom services – involving domestic services in another member state but operated by a UK airline – would be excluded from those agreements.
“Even in the absence of authority deriving from [such] agreements, continuation of current air service[s] could be permitted on an informal basis by agreement with the other state[s] on the basis of the international legal and diplomatic concept of comity and reciprocity,” Balfour said.
Payton took pains in his address to praise aviation liberalisation as one of the EU’s “finest achievements”, and emphasise how much he hoped that “common sense prevails” and negotiations “finish up with a position which differs from where we are only in form and as much as possible not in substance”.
The Beaumont International Aerospace Conference, hosted by Clyde & Co, ran over 11 and 12 July at the Grange Hotel near St Paul’s Cathedral in London, and included further sessions on aviation insurance, drones and Brexit.