With a referendum taking place on Thursday 23rd June, the implications of Britain leaving the European Union could have far-reaching consequences for many airlines, both British and European. Currently, the creation of the single aviation market in the 1990s has allowed all member states access to each other’s skies. Additionally, it means that such carriers as Ireland’s Ryanair can fly from Spain to Britain, while any UK airline can operate domestic flights within Germany or France.
Currently, the second-largest airline in France is easyJet, while Ryanair’s biggest market is Britain. As a consequence, both carriers have campaigned for Britain to stay in the EU. In 1996, 69 million passengers travelled between Britain and Europe. Last year, 2015, it was over 130 million. According to accountants KPMG, over £10.5 billion (US$15.4 billion) was generated as revenue by the top-eight UK airlines flying between Britain and other EU member states.
The options for airlines are as follows:
Britain could agree access to the European Common Aviation Area – comprising all EU member states, plus some non-EU states such as Norway, Iceland and Albania. Head of IATA, Tony Tyler, said this could be a possible outcome. “If that were to happen, there would not be much impact, but nobody can make predictions.”
Alternatively, Britain could negotiate bilateral deals with the EU as a whole, in the way Switzerland has done, or with individual EU countries. However, according to easyJet Chief Executive, Carolyn McCall, “We think it would be very difficult for our government to negotiate with 27 other member states to get the flying rights that we have today within the EU.”
Of course it is not just European routes that will be affected. British airlines have the benefit of unlimited flying rights to the United States, particularly on lucrative trans-Atlantic routes, thanks to the EU-US Open Skies agreement. Consequently, Britain could perhaps negotiate joining the Open Skies deal, or look to create its own bilateral agreement with the U.S.
UK-based IAG (British Airways, Aer Lingus in Ireland, Iberia and Vueling in Spain) has innumerable code-share arrangements which have been relaxed. CEO Willie Walsh has indicated he did not anticipate any material impact.
easyJet, on the other hand, does not operate code-share flights for cost reasons, and has been reported as looking to establish a separate holding company in order to obtain an air operator’s certificate in an EU country. However, Oxera has indicated that this may not be possible owing to restrictions on ownership rules, which forbid non-EU investors from owning a controlling stake in an EU airline.
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