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Mischief Making

Flying Anywhere and Brexit

The boss of RyanAir, Michael O'Leary has made significant headlines about what could happen to flying anywhere (or not flying anywhere) from the UK to Europe after Brexit and when Michael O'Leary shouts, the travel industry - or more specifically, the airline bit of the travel industry, tends to listen.

What is all the fuss about?

Air travel in Europe, as far as the EU is concerned, is covered by regulation 1008 (its a longer title, but for our purpose, 1008 is enough) and the EU is easily the single biggest destination market from the UK, the EU making up more or less half of all passengers and just over half of all scheduled commercial flights.

Under Regulation 1008, a "Community Carrier" (that is, anyone wanting to operate scheduled services in and around the EU) must be more than 50% owned and effectively controlled by Member States and/or nationals of Member States. Out of the EU, of course, the UK would be free to change to a more restrictive or more liberal ownership and control rule (as the Leave camp would say) BUT those carriers would no longer be able to enjoy the right to fly between any two points in the EU (or EEA). In the absence of anything, the old arrangements between the UK and the other EU Member States, although overtaken by EU liberalisation, would need dusting off and should (hopefully) become effective again. It's the "should (hopefully)" bit that worries Mr. O'Leary.

Such dusting off would, at least, provide a sufficient basis for most 3rd and 4th freedom services (say, London to Frankfurt). The services most affected will be 7th and 9th freedom services in other words, between two non-UK points in the EU (for example, Paris to Barcelona) and between two points in the same EU Member State (say, Rome to Milan).

Any airline wanting to carry on with such inter-Europe services could get an operating licence from a EU Member State, so staying a "Community Carrier". In that case, however, that airline would need to obtain its Operating Certificates from the Member State of choice and, more importantly, have its principal place of business there as well; to put it officially: "..... the head office or registered office ... within which the principal financial functions and operational control, including continued airworthiness management....are exercised". This may not be that easy and could need some complex tinkering; not to mention that (whatever) airline has to be more than 50 per cent owned and effectively controlled by EU nationals, which could also mean tinkering with the shareholding.

RyanAir, of course, have already done most of this. RyanAir holds its operating licence from the Irish CAA, so would remain a "Community Carrier". The rub is that RyanAir's right to operate 7th freedom services between the UK and other points in the EU as a result of Regulation 1008 would no longer be automatically assured, unless rapid agreements are reached - hence the fuss. RyanAir's right to operate 7th and 9th freedom services in and around other EU Member States would not be affected.

One of the main planks of EU external aviation policy (to which the UK could, I suppose, become part) has been the extension of EU aviation liberalisation to nearby countries. This has been sorted with many, such as Switzerland, Norway, Morocco, Israel and Western Balkan States; the so-called European Common Aviation Area ("ECAA") which covers, at present, 36 countries. This has been done in the case of Norway, through membership of the European Economic Area (EEA) and in the case of Switzerland, a package of cooperation agreements in seven specific areas, one of which covers air transport.

The UK could remain part of the ECAA but here, there are great opportunities for other airlines to do some serious mischief making. Now, the UK and more importantly, places such as Heathrow, could become their own worst enemies. To remain part of the ECAA requires all (remaining) 27 countries to agree. It is one thing when "new" ECAA members offer opportunities for more destinations for (current) EU carriers; and places such as Switzerland and Norway are not exactly major global players - but what happens when the opportunity comes about for one major European airline (or a few major European airlines in collusion) to knock out a major competitor not to mention a major non EU airport (or airports)? We can be assured, as the old maxim goes: "Money talks, merit walks".

If the UK wished to continue "as is", it could seek to achieve such by talking to individual Member States (or possibly a group of them) who were interested in carrying on as before. Could the UK even talk to Member States on a one-by-one basis? That is a big question and could well prevent any wide-ranging agreements.

There is a great deal of other EU legislation for aviation such as VAT rules, competition law, state aid, airline insolvency, passenger rights, employment rights, data protection, consumer rights, recognition of EU court judgments (!), the environment, safety, security, airports and ATC ..... although the UK could in theory ditch or limit such regulation (for example, cutting or limiting delay compensation) in practice the UK's freedom to do so may be limited, if it wishes access to the internal air transport market. The invariable model in all cases of having, as it were, co-opted ECAA members to date, is that this is only granted as part of a package which includes accepting the whole EU airline regulation "deal" - all or nothing.

... and all the above, before we start talking about the US and other global routes.

Certainly, before any decisions are made concerning the future of Heathrow, these matters must be sorted and so, the future for UK aviation clarified.

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