UK airlines and exit from the EU

For some industries it doesn’t make much difference whether the UK is in the EU or out of it. But from the air travel industry point of view, British exit makes no sense.

The EU is – for the airlines of member states – a domestic marketplace. Since it became one it has allowed airlines like EasyJet and Ryanair to provide EU citizens with an unprecedented network of very low cost air travel.

EU air travel deregulation has transformed the market from the early 1980s sparse network of trunk routes on which capacities and the number of operators were limited by bilateral aviation treaties between each pair of states, to today’s vibrant point-to-point marketplace.

If the UK elects to leave the EU, where does that leave British-based European network airlines like EasyJet? If  it were to remain headquartered in a non-EU state (at Luton), how can it continue to enjoy the EU domestic privileges that its Ireland-based rival Ryanair will still have?

Having said that, Ryanair’s biggest single European base is at Stansted, UK (at the moment). Although Ryanair will still be an EU airline, its flights to other European countries from its UK bases will suddenly be international journeys.

So many questions arise. Would it make sense for EasyJet to move its headquarters to one of its bases in an EU state, and for Ryanair to reduce its Stansted services?

Certainly renegotiation of aviation agreements between Britain and the EU states would take all of the two years allowed for it. Far from freeing the industry from Brussels bureacracy, it would be moving from present simplicity to – inevitably – greater regulatory complexity.

Certainly that’s what Ryanair chief Michael O’Leary thinks: “I’m more afraid of UK bureaucracy than EU bureaucracy. To all these ‘Leave’ campaigners who think Brussels bureaucrats are terrible but British bureaucrats are fantastic forward-thinking gurus, I’d point out that they (the Brits) can’t make a decision on a new runway to save their lives. They keep kicking the can down the road, and the only impact they’ve had on air travel for the past 10 years is to raise taxes.” (Quote from Flightglobal)

Luton-based EasyJet and Exeter-based Flybe are not so well placed. They are British, but have bases and hubs all over Europe. EasyJet has formally espoused the “better in the EU” argument, but tells me it has a Plan B.  EZY places its hopes in the two-year renegotiation period, and the fact that the EU has a liberal attitude to air services by non-EU airlines like Norwegian.

But to say they face a period of uncertainty is an understatement.

British Airways is better insulated by virtue of its massive international long-haul marketplace. And it could easily, as an IAG carrier, move its BA headquarters to Spain if it saw fit.

Virgin Atlantic is also more international than European. But if they both stick with the status quo and the Brexit camp wins, they will both lose their status as EU airlines, including the negotiating clout that currently gives them in international bilateral negotiations.

One thought on “UK airlines and exit from the EU

  1. Brexit would clearly be a massive problem and I’m keeping my fingers crossed that the UK votes to stay in. However there must be ways around it. EastJet Switzerland is a separate identity (OK Switzerland is in the EEA which the UK would probably not be if it votes to leave) but I doubt that the average punter knows whether a flight is U2 or DS (or cares). There is no reason why easyJet couldn’t split into a UK based operation and one registered in any EU country.

    Obviously you would have to renegotiate bilateral treaties but an open skies agreement could be reached with the EU.

    The thing that really worries me is impediments to the free movement of labour. EJ (UK) would employ staff with a right to work in the UK & EJ (EU) anyone with European citizenship so it would work but its not exactly a step forward.

    Like

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