With just six weeks left before the UK’s scheduled exit from the European Union, Europe has not yet reached an agreement on how to arrange air traffic between its soon-to-be former member state and the remaining 27 in case of a no-deal Brexit scenario, reflecting the disparity in views—and interests—of the various stakeholders. The European Commission in December released its legislative proposal to ensure what it calls basic connectivity between the UK and the EU27 for a transitional period and prevent disruption, or a shutdown of air services, but both the European Parliament (EP) and the European Council, which represents the interests of the member states, put forward amendments to ease several restrictions on UK carriers included in the proposed regulation.
Three-way negotiations to reach compromise on the texts of the commission, the EP, and the council ahead of the UK’s departure—at 11 p.m. UK time on March 29—will start on February 19. Marking the importance of the file for the commission, transport commissioner Violeta Bulc will participate in Tuesday’s trilogue.
The main sticking points concern the transitional period for ownership and control rules, code-sharing, wet leasing, and a freeze of capacity. The proposed regulation allows for UK airlines to operate third- and fourth-freedom flights between any point in the UK and any point in the EU27 for a period of 12 months as long as the UK provides equivalent access to EU operators, though it caps the number of flights that UK carriers may fly at this year’s pre-Brexit levels. Additionally, the regulations would strip UK carriers of the usual operational flexibility devices—such as cooperative marketing arrangements, leasing of aircraft, and change of gauge. The EP and the council oppose the blanket capacity freeze and also want to scrap the provision to outright ban code-sharing. “Limited code-sharing and aircraft leasing arrangements, including wet lease, will be allowed under certain conditions,” the council noted.
Both the International Air Transport Association (IATA) and Airports Council International Europe (ACI Europe) have warned that freezing the capacity currently offered by UK airlines to the EU27 market as of March 29, 2019, in case of a disorderly Brexit would have a major negative effect on growth. “If also applied by the UK vis-à-vis EU27 airlines, it would ultimately result in the loss of 93,000 new flights and nearly 20 million airport passengers on the UK-EU27 market,” ACI Europe director general Olivier Jankovec pointed out. “With all these passengers departing or arriving in the UK but spread out across 27 other EU countries, UK airports and their communities would be disproportionately affected.”
IATA director general and CEO Alexandre de Juniac last month emphasized “legal and commercial uncertainty over how the commission’s plan to cap flight numbers will work.” A no-deal Brexit cap on flights could stunt important economic opportunities and may lead to higher prices for consumers, he cautioned. IATA research estimates that airlines have scheduled up to 5 million extra seats for 2019 compared with 2018 to meet consumer demand.
On ownership and control, the Council has suggested giving airlines holding an operating license issued by an EU member state but not meeting EU ownership and control requirements until October 26 to fully meet all those requirements. EU law requires majority control of its airlines—50 percent plus one share—and effective control by EU interests. To benefit from the exception, air carriers will have two weeks from the entry into force of the regulation to submit a precise and complete plan presenting the measures intended to achieve full compliance with the ownership and control requirements from Oct. 27, 2019, at the latest. MEPs also want the commission to hold the ability to temporarily extend an EU operating license to those airlines not majority owned by UK residents but with less than 50 percent EU registered ownership after Brexit to allow time for restructuring. Their proposal calls for the exemption to last for one year, until March 30, 2020.