Brexit Starts To Ring Alarm Bells for UK Aviation Sector

 - May 17, 2018, 7:36 AM

If aspects of the UK leaving the European Union aren’t clarified soon—especially given that the proposed transition period to the end of 2020 is not finalized—there could be significant consequences for the aviation industry, warned aviation legal experts gathered at Aeropodium's “Counting Down to Brexit” conference in London on May 14.

Organized by The Air Law Firm and Aeropodium and held at the Royal Aeronautical Society, the event brought together leading aviation lawyers to discuss Brexit and the risks the industry faces if politicians can’t bring certainty. The clock has already ticked beyond the “year before” the March 2019 date where airlines start to take bookings for after the UK leaves; their biggest concern is the lack of air service agreements to fill the void that would be left when the UK ceases to be party to EU agreements, such as that with the U.S.

Alarm bells are also going off that there is still no certainty that the UK will remain part of EASA. It can’t be a voting member, as it won’t be an EU member state. The favored model seems to be the same as Switzerland has with EASA, but the lack of progress is leaving companies nervous, as they have to prepare their businesses and as it stands will lose all of their EASA approvals. In fact, the agency has already sent out an “all stakeholders” letter to UK companies saying approvals, including those for Part 145/147 maintenance, will have to be reapplied for post-Brexit.

Yet another contingent getting nervous is the aircraft leasing and finance community, which has to consider how to update contracts. According to Aoife O’Sullivan, founder of The Air Law Firm, the industry “never anticipated that anything like this could happen.”

In addition, O’Sullivan warned there was a chilling effect building whereby UK airlines were struggling to close leases and finance deals. “It’s frankly not acceptable,” she said, adding that, for corporate operators, “I can’t see any impact as they have full choice of where to do deals.” However, the UK and the Isle of Man will no longer be places for importing aircraft and making them VAT-paid for circulation within the EU. A further risk is that EU countries might start to recognize that other aircraft have been imported properly.

TAG Aviation president Graham Williamson expressed concern about the effect on corporate aviation. “I can’t run a business without having a plan with less than 12 months to go…TAG has set up a hedge and applied for an AOC in Malta [which is an EU member state].” But he warned there could soon be a rush that would swamp such jurisdictions. He said the UK was “not too big to fail and it could all go horribly wrong.” TAG has 27 commercial aircraft on the UK’s G-register.

Williamson pointed out that the CAA has indicated clearly it could not take back its responsibilities now transferred to EASA, as it would take many years to set up again; at the same time, EU chief negotiator on Brexit Michel Barnier stated that the UK could not remain part of the EASA system. “That’s all I have to go on,” concluded Williamson.

Michael McParland QC, a lawyer with Quadrant Chambers in London, said there are still too many “unknown unknowns” relating to Brexit.