Brexit will be disaster for UK airlines? Will pilot unions threaten Open Skies?

As uncertainty swirls around the impact of any post-Brexit arrangements for the future of British airlines in the EU, there is similar ambiguity over the effects of Britain’s de facto withdrawal (or not) from the groundbreaking North Atlantic multilateral agreement that allows enormous flexibility to European and North American airlines.

There are even some concerns that the pre-Brexit conditions are already harming British – and some other – airlines.  On the other hand, perhaps conditions after Britain’s exit from the EU will be benign and the respective governments can find win-win situations that may actually improve operating provisions.

These issues will be the subject of CAPA’s Great Debate to open the CAPA Summit in London on 12-Oct-2017.

The need for Brexit action, with some concern that aviation will merely be lost in a fog of other issues…

As things stand, the UK will have to negotiate and agree separate agreements with the EU states and with the US, to retain the advantages of membership of the EU and as a joint party to the North Atlantic Open Skies agreement. One thing is clear: the current environment creates great uncertainty, something that is not good for industry confidence, nor for consumers. While UK Prime Minister Theresa May’s proposal for a two year transition period may ease the risk of breakage of the system, it also may extend the period of uncertainty.

… and, if North Atlantic Open Skies needs revisiting, will pilots’ unions challenge key provisions?

As the (much delayed) entry of Norwegian on the North Atlantic has clearly illustrated, pilot unions find several of the provisions of the carefully negotiated North Atlantic Open Skies agreement offensive to the status quo. Renegotiating the terms under the duress of a tight timeframe is not going to be a simple task. There is much at stake if this hard fought multilateral compromise is reopened. It would potentially place at stake significant competition in the tightly held North Atlantic market, where over 70% of all services are operated under immunised joint ventures.

The second panel of this Brexit examination will look at the possible scenarios as the UK’s withdrawal from the EU evolves.

For more details on the full event agenda, please see CAPA World Aviation Summit.

SESSION I: THE INS AND OUTS OF BREXIT – 12-Oct-2017
(1) THE EU SINGLE AVIATION MARKET
(2) THE NORTH ATLANTIC OPEN SKIES AGREEMENT

10:40:  Brexit will be a disaster for UK airlines?: the Great Debate 

After years of operating – highly successfully – within the single skies of Europe, UK-registered airlines are imminently threatened by the prospect of withdrawal of their freedom to operate without restriction throughout the EU. Moreover there are several European airlines that would relish the thought of these aggressive competitors being excluded from their home markets. Reversion to the need to negotiate individual bilateral agreements with each EU country would almost certainly be highly disruptive and potentially lead to much more restrictive operating conditions.

Despite there being so much at stake for UK-registered airlines (and, by extension possibly Irish registered airlines), there is little to suggest the UK government is treating the airline industry with any level of priority. It has bigger issues to address.

On the other hand, these issues may be resolved with a pragmatic approach on all sides. This Great Debate will look at all sides of the UK-Europe issue.

The following panel will discuss the implications for Britain under the North Atlantic multilateral agreement, where the UK may need to renegotiate its status on a bilateral basis.

11:15     Renegotiating the North Atlantic multilateral post-Brexit. Will unions try to wind back the liberal terms?

Will unions intervene to wind back key provisions of the North Atlantic ?

It is not only UK-Europe that is deeply affected by Brexit, but also the position of the UK in a multilateral agreement that binds the UK-EU in the context of the North American open skies.

This implies the need to rework the terms of the multilateral agreement – either to include or to exclude the UK, with accompanying need for replacement bilateral agreements between the relevant parties.

This alone is complex. But the history of the original negotiations also revolved greatly around the more liberal approach adopted by the UK as compared with some of the more powerful EU member states.

Can this maze of agreements be negotiated, while keeping the liberalised multilateral terms in place? For example will the various airline unions, vigilant to maintain their respective philosophical positions, seek to claw back some of the more liberal provisions?

With such a challenging process in prospect, what is being done now and what is likely to be the outcome once the UK leaves the EU? This panel looks in depth at these aspects of the Brexit conundrum.