Brexit and bizav: why a status quo must remain

patrick-margetson-rushmore-dassault-falcon

Brexit is happening. That’s a fact we must all accept, gladly or reluctantly. What we should not have to accept is Brexit causing avoidable damage to the business aviation industry, not just in the UK but across Europe.

The European traffic and cabotage rights that currently exist for UK-based operators are essentially allowed as a result of the European Union (EU) single market. If the correct representations by the UK and all 27 EU countries are not made in the coming months, those intrinsic industry rights could be lost.

The EU’s political leadership appears determined to exclude the UK from the single market unless the UK commits to maintaining agreements in matters such as the free movement of labour. Germany’s federal minister of finance Wolfgang Schäuble, for example, has bluntly stated: “In is in. Out is out.” And with UK prime minister Theresa May saying the UK “cannot possibly” remain within the European single market, as staying would effectively mean “not leaving the EU at all”, the need for new access agreements for air operators (or at least the resurrection of old bilateral agreements between the UK and the individual EU member states) appears inevitable.

The so-called ‘hard Brexit’ described by Schäuble and May might therefore prove very hard indeed for UK business aviation. If a reasonable status quo, which will be in the best interests of the UK and the EU, is not maintained, UK-based commercial operators will, for example, no longer be able to fly for hire between any two points in the EU. Smaller operators might not survive the new restrictions to their market access. A hard Brexit will be particularly challenging for companies which only hold a UK air operator certificate (AOC) and so cannot reposition aircraft to exploit AOCs in EU nations.

After Brexit, UK operators could also face a seriously reduced empty leg market. To explain, let’s specifically look at two of the nine ‘freedoms of the air’ which will be lost if the UK leaves the EU single market. The seventh freedom of the air is the right to operate a service which flies between two foreign countries but does not originate or end in the operator’s home nation. The ninth freedom is the right to operate between two points in a country that is not the operator’s home nation. Without these freedoms, a UK operator could not, for example, carry a passenger from London to Madrid and then generate empty leg revenue when bringing the aircraft back to the UK by collecting a passenger who needed to fly from Madrid to, say, Barcelona or Paris. Only an empty leg flight back to the UK would be possible.

Must-read: Private jet predictions for 2017

Now, empty legs, by definition, are no operator’s core business. But in an industry of slim margins – perhaps much slimmer than most politicians realise – the ‘bonus’ of empty leg revenue can mean the difference between thriving or barely surviving. UK-based operators should not have to watch in horror as their empty leg market dramatically shrinks.

And let’s not pretend the problems of Brexit will only apply in the UK. The industry in the EU is aware that operators across Europe will suffer from a hard Brexit. Flights into and out of the UK – and most significantly into and out of London, one of the most powerful and therefore popular business destinations in the world – will become governed by two sets of regulations. The volume of paperwork will rise for everyone and pilot licence requirements might change too (if, for example, the UK leaves the European Aviation Safety Agency). No industry can ever reach its potential when stifled by regulation. And Europe still needs London. Brexit won’t change that.

Also read: BBGA highlights the need for change

No one wants to see Brexit cause financial damage, either to the UK or across Europe. And no one who understands business aviation would deny the high economic impact of our industry. But all operators – from small start-ups to large, established businesses – grow best when allowed the freedom to access the largest geographical markets possible. A new business model that would work brilliantly on a European scale might not succeed at all if restricted to the UK market and a few bilateral agreements. We must allow our innovative industry to keep expanding and contributing to the economies of Europe.

Many people will say the triggering of Article 50 finally ends the ‘Leave or Remain’ debate. Perhaps so, but in truth Article 50 is a beginning not an ending, marking the start of the UK’s formal exit from the EU. The work, and the negotiations, have barely begun. As an industry, we must unite to educate and pressure the politicians in the UK as well as making sure our representations are made through supporting bodies such as the European Business Aviation Association (EBAA) and the European Aviation Safety Agency. It is in everyone’s interests to maintain a strong business aviation industry which will strengthen all of Europe. Nobody will win if Brexit is handled badly.

 

By Patrick Margetson-Rushmore, chief executive, Luxaviation UK

Back