Isn't there a problem with the likes of Blue Island, Aurigny operating UK internal services as they do not hold an EU Operating Licence only a CAA Air Transport Licence?
From CAA website
Air Transport Licences
Air Transport Licences are similar both in their scope and their effect to Route Licences, but are granted to air carriers that are either registered or based in the Channel Islands or the Isle of Man, both of which are outside the EEA. These companies are unable to hold Operating Licences and are therefore also excluded from holding Route Licences, which may only be granted to holders of Operating Licences. Air carriers in the Channel Islands and the Isle of Man, which operate UK registered aircraft, are therefore required to hold Air Transport Licences.
1. Air operators which are registered or have their principal place of business in the Channel Islands or the Isle of Man, both of which are outside the EEA, are not eligible under the Council Licensing Regulation to hold Operating Licences and do not benefit from the general access to intra-EEA routes conferred by the Licensing Regulation.
Air Transport Licences | Airline Licensing | Operations and Safety