Brexit impact on UK Aviation

[Bagso]

I notice a thread on this appeared but has now dissappeared?

.... a new service from say Newquay to Norwich may be significan't but I would have thought a discussion on the implications of exiting the EU might also be of mild interest to some ?

[EI-BUD]

Bagso, more than a mild interest! Front and centre!

I'm guessing the UK government will want to leave all as is and continue to be part of an open skies arrangement with the rest of EU.

We are unlikely to go back to the days of regulations and the need for bilaterals between the UK and all other EU countries. Should the government implement a range of barriers to non UK carriers, Ryanair surely would feel the greatest impact. BA though owned by Spanish parents unlikely to be in the same boat.?

While I don't expect to see any major changes, any intervention by the government could offer some level of protection to the existing UK airlines, the number of which is now very small. Let's not forget the sheer impact of deregulation has in effect seen lots of UK airlines disappear. Though that's a debate for another day, pax are up but we now have a few dominant carriers and new start ups are now less likely than ever due to that dominance.

However, are we likely to see Heathrow expansion speeding up if Boris gets into the driving seat at number 10?

[stab3.5up]

Will duty free return as flying outside the eu?

[SWBKCB]

What we do know is that we don't know (as an example, just look at the number of topics on Prune about the what our relationship to EASA will be - anybody seen a definitive answer? and that's one issue in one industry).

Might be not much different to now, might not - who knows?

What that does mean is that the likes of EZY, RYR, etc will be putting lots of effort into contingency planning etc, which is effort that they aren't putting into growing the business. What's this uncertainty doing to investment plans?

UK govt will also be totally pre-occupied with Brexit for the foreseeable future - so just looking at topics of interest to these forums, what happens to decisions on R3/HS2, Northern Powerhouse (surely Osborne is now a dead man walking?)

Now multiply that impact across other industries - interesting times... :eek:

[Bagso]

It's certainly interesting times.

I suspect there is a good chance HS2 could be pulled, the costs are going up and up but there would still be time to save the cash.

I think Heathrow is a dead duck. Lilkey leaders will surely come from the outers not the remain. Even those sympathetic are surely not going to take on another fight that they might lose. AND to some degree its why there was a groundswell of protest in the North in respect of the EU vote. Lets not kid ourselves this was just about the EU.

I suspect quote a few took the opportunity to stick two fingers up to Westminster not specifically due to the EU but because for the first time ever they could make a difference ....unaware of the wider implications.

As for the Northern Powerhouse (see above) Osborne gone and possibly the opportunity? Whilst he wasn't everybodies cup of tea it could be argued that under him we made more progress in 3 years than we did in the previous 30. It was Osborne who got the Chinese PM here and as likely result Hainan.

Will another cabinet minister commit? Well given what's happened it should in effect be a wake up call to do even more not skulk away in Westminster !

[AndrewH52]

Bagso...I presume you mean Heathrow's third runway is dead duck, not Heathrow per se...

The problem nationally is the risk we don't get any leadership. No one for Leave or Remain wants to be the one to negotiate Brexit as it's likely to ruin their careers.

In terms of aviation, Kenny Jacobs from Ryanair was on the BBC on Friday basically saying that following the result Ryanair will concentrate growth outside of Britain, within the remainder of the EU. Presumably, irrespective of any open skies agreement, if they want to operate services within the UK and employing staff here, they will have to set up a UK subsidiary; EZY will similarly have to set up a European-based subsidiary. They could do that relatively easily via acquisitions, but presumably at significant cost?

The north is, in the short term, probably screwed. Much of the investment delivered in recent years in the north has been as a result of EU structural funds. The Northern Powerhouse is too closely associated with the Chancellor who will most likely follow the PM in resigning; the project (including Transport for the North) is still in its infancy and so likely to be fatally wounded as a result. Significant funding would have flowed in due course - I can't see that happening now.

No-one expected Leave to win so there is no plan on what happens next, absolutely no comprehension of the scale of the task ahead and no understanding of the implications for the everyday activities of businesses operating across borders in the EU.

[Barling Magna]

are we likely to see Heathrow expansion speeding up if Boris gets into the driving seat at number 10?

I doubt it very much. Just as long as he doesn't resurrect his bonkers island airport idea.......

[j636]

Boris will not get into number 10 anytime soon, it would be suicide for the Tory part outside London! It will likely be somebody from the remain side or somebody not as vocal during the leave campaign.

It's certainly interesting times.

I suspect there is a good chance HS2 could be pulled, the costs are going up and up but there would still be time to save the cash.

I think Heathrow is a dead duck. Lilkey leaders will surely come from the outers not the remain. Even those sympathetic are surely not going to take on another fight that they might lose. AND to some degree its why there was a groundswell of protest in the North in respect of the EU vote. Lets not kid ourselves this was just about the EU.

I suspect quote a few took the opportunity to stick two fingers up to Westminster not specifically due to the EU but because for the first time ever they could make a difference ....unaware of the wider implications.

As for the Northern Powerhouse (see above) Osborne gone and possibly the opportunity? Whilst he wasn't everybodies cup of tea it could be argued that under him we made more progress in 3 years than we did in the previous 30. It was Osborne who got the Chinese PM here and as likely result Hainan.

Will another cabinet minister commit? Well given what's happened it should in effect be a wake up call to do even more not skulk away in Westminster !

Any small slip in the economy and all these projects will be top of the list to cut costs before the leave side have to hit people's income and services.

[Skipness One Echo]

No one knows yet, it's way too soon to say. People just need to put their heads in a paper bag and breath. Everything is going to be OK.

[Bagso]

Surely the politicians got a bloody nose precisely because we relied on EU funding rather than proper investment from our own country?

I'll say again we don't want hand outs, subsidies BUT some proper investment in infastructure on a proportional basis. Our own MPs of BOTH persuasions are accountable.

..and yes we agree S1E it will be ok ��

[Trash 'n' Navs]

Spot on S1E.

It appears there's a few sore losers though (I'm not a Brit so just an observation).

[TSR2]

One would assume bang goes the EU compensation for flight delays.

[LGS6753]

One would assume bang goes the EU compensation for flight delays.

Only:
a) when we actually leave
b) if we decide to drop the requirement

[Charlie Roy]

One would assume bang goes the EU compensation for flight delays.

Only one of the airports needs to be in the EU.

[MAN2SIN2BKK2FRA]

Interesting discussion, but still needs to be ratified by Parliament and from what I can see it is unlikely that UK will leave now that the statements and claims made by Brexit are unravelling

[840]

Don't worry, Boris will ensure there is no impact through investment in flying pigs.

[eggc]

Easyjet shares down 19.5% this morning :eek:

They'll be off to Switzerland sharpish.

I'm aware of a new 6 a/c base at a UK regional airport from May 2017, that now looks to have been put off indefinitely, to add to Ryanair's claims all UK growth suspended.

The effect looks sizable to me.

[sinbad73]

Which airport was that?

[BHX5DME]

I'm aware of a new 6 a/c base at a UK regional airport from May 2017, that now looks to have been put off indefinitely, to add to Ryanair's claims all UK growth suspended.

Hopefully not BHX ?

[Shed-on-a-Pole]

Corporate Britain has entered prudent short-term 'wait and see' mode. Not a mindset of 'never invest here again.' Don't forget that both possible referendum outcomes were destined to produce near-term market turbulence as investors adjusted to the outcome. Currency exchange rates are fluid. They will shift again as the US faces its controversial presidential election and Euroland addresses the next tranche of the Greek bailout (and other internal issues). Remember too that market moves produce winners and losers either way. A 10% reduction in GBP exchange rates is akin to a lottery win for UK exporters. It also heads off the spectre of deflation (a government's worst nightmare).

[Tom Sawyer]

IATA are having problems seeing an upside, and that is even before we get into having the CAA draft and implement new regs for aircrew licensing / airfield ops/ engineer licensing / aircraft production / ops and all the other stuff currently directed by EASA -

http://www.iata.org/whatwedo/Documents/economics/impact_of_brexit.pdf

[El Bunto]

IATA are having problems seeing an upside

Well there really is a silver lining to every cloud!

IATA having problems, I can't think of better news to end the day.

[toledoashley]

EasyJet shares might be down, but its the strikes, terrorist attacks and operational problems which have caused the profit warning and have been brewing for a while - the EU pull out though is only going to make things worse.

[LGS6753]

... and of course a reduction in the value of the £ makes those euros EZY earns worth more of the currency in which they account, and in which their shares are traded.

This is, however, short-term volatility which will settle down fairly quickly.

[nguba]

If the UK really does leave the EU, I would not estimate what an enormous task lies ahead for Government and business.

The process will take several years and cost both business and Government tens of billions of pounds.

The Government needs to review all of our laws and decide which European laws that apply to the UK need to be replaced by UK legislation. The Civil Service at it stands simply does not have the resource to do this and the process of passing new laws will choke up the UK parliament.

UK businesses will have to review everything, staffing, contracts with suppliers and customers, regulations, supply chains, IT systems etc.

I would not be surprised if easyJet is looking at splitting its UK and European hubs into a two separate airlines and adopting an IAG type structure.

[Brigantee]

EasyJet boss says it 'remains to be seen' if airline moves HQ after Brexit (http://www.telegraph.co.uk/business/2016/06/28/airline-bosses-try-to-calm-investor-brexit-fears/)

[Una Due Tfc]

As regards Open skies, that will be on the table, along with access to the EEC free trade market. Your status as a net importer will stand to you here, but full access to the free trade market would require unrestricted movement of EU citizens into the UK a la Norway/Iceland/Switzerland....which was one of the big pro leave side's bug bears. Open skies will also feature in those negotiations as well as God knows how many other things.

EZY have far more to lose here than RYR, as the portion of EZY's business threatened is far larger.

That EU rule about non-EU companies not being allowed own more than 49% of EU airlines will be gone, so DAL can swallow up VIR. The unmentionable airline and QTR might come sniffing around some carriers too.....BA being owned by a Spanish company won't be affected by that obviously.

But I agree that cool heads need to prevail here. An awful lot of jobs in the UK and across Europe are at risk, hundreds of thousands at a minimum.

[Una Due Tfc]

And Norwegian will be badly affected by this ex UK. Even if they get approval for the Irish subsidiary, they won't have access to Open Skies II, as that's a US-EU agreement, which Norway, despite being in the single market doesn't have access to, hence the need for the Irish subsidiary in the first place, so that mooted long haul base at MAN.....

[Fairdealfrank]

As regards Open skies, that will be on the table, along with access to the EEC free trade market. Your status as a net importer will stand to you here, but full access to the free trade market would require unrestricted movement of EU citizens into the UK a la Norway/Iceland/Switzerland....which was one of the big pro leave side's bug bears. Open skies will also feature in those negotiations as well as God knows how many other things.


But not EFTA member Liechtenstein.



That EU rule about non-EU companies not being allowed own more than 49% of EU airlines will be gone, so DAL can swallow up VIR.

Who knows, the UK may have its own arrangements. As a UK carrier can't "swallow up" a US carrier, it's doubtful that the reverse will be allowed. These things are usually reciprocal.

[Una Due Tfc]

But not EFTA member Liechtenstein.

There are more companies registered in Liechtenstein than there are passport holders, that's a different kettle of fish altogether.

[LGS6753]

We don't need access to the Single Market, because that's where the bureaucracy comes from that stifles our economy, and where the Free Movement of People is a requirement. What we need, and what we will get, is tariff-free access.
From an aviation perspective, we will seek to remain in the Single European Sky, which includes the likes of Norway, Israel and Morocco.

[eye2eye5]

We don't need access to the Single Market, because that's where the bureaucracy comes from that stifles our economy, and where the Free Movement of People is a requirement. What we need, and what we will get, is tariff-free access.
From an aviation perspective, we will seek to remain in the Single European Sky, which includes the likes of Norway, Israel and Morocco.

Please let's not get into an In / Out argument in this Forum, there are plenty of opportunities to put your thoughts elsewhere.

[Kim Jong Il]

VLM's AOC is for sale on the cheap I reckon...

[pholling]

nd Norwegian will be badly affected by this ex UK. Even if they get approval for the Irish subsidiary, they won't have access to Open Skies II, as that's a US-EU agreement, which Norway, despite being in the single market doesn't have access to, hence the need for the Irish subsidiary in the first place, so that mooted long haul base at MAN....

Norway and Iceland are part of Open Skies II, as of the amendment from 21 July 2011. The real question is will the UK still be included, without further amendments, as of the date they exit the EU. The UK is individually named, but so named as a member of the EU. If the UK were deemed not be be a party then there would be huge issues. Further, if as a 5th party it were not deemed part of the EU side there might be questions as to the citizenship of BA, which could be considered Spanish.

Obviously no-one wants that to happen so it should be fairly straightforward to amend the agreement. However, that requires civil servants to work on it. We don't have enough as it stands.


...nah all it needs is a bottle of Tipex, delete "EASA", write in "UK", even the CAA can do that (well ok with a bit of supervision)

Seriously though I'm tending to think the fat lady has not sung on Brexit yet (ok that's no way to talk about Angela), but having obtained a clear mandate to leave puts the UK in a real bargaining position in any re-negotiation, once all the bluster and posturing has burnt itself out and Jean-Claude and his bunch of muppets have been sidelined.

The CAA isn't really geared up to take over all of the rule making aspects that have been handed off to EASA. Obviously it can be done in the future, but developing the human resource takes time. Further companies like RR are not going to want to move away from the EASA model, which is highly harmonised with the FAA as that significantly increases their costs. If the UK abandoned EASA/harmonisation then RR might move their primary certification to Germany or Indianapolis.

Also, you can't really sideline Jean-Claude as the EC has a say in the adoption of the separation agreements. Yes the individual countries make the decision, but he controls the discussions. It remains to be seen what level of negotiating power the UK will have. However, my impression from the state of the civil service is we don't currently have the expertise.

[sinbad73]

Ryanair: 'To focus growth on European Union' - BBC News (http://www.bbc.co.uk/news/business-36646837)

Ryanair will not deploy new aircraft on routes to and from the UK next year, following the Brexit vote, and will instead focus on the European Union.

The Irish low-cost airline, will "pivot all of our growth into the European Union," chief executive Michael O'Leary told the Wall Street Journal.

Ryanair carries more than 100 million passengers a year and UK routes account for 40 million of those travellers.

Ryanair has its largest hub at London's Stansted Airport.

The airline's shares have fallen more than 23% since the United Kingdom voted on Thursday to leave the European Union.

Mr O'Leary, one of the most vocal business leaders campaigning in favour of continued EU membership, had repeatedly warned he would cut investment in Britain if it voted to leave.

He said the airline's overall growth targets remained unchanged.
Mr O'Leary said he expected three or four months of "considerable uncertainty" due to the British vote, but forecast a limited impact on near-term bookings to and from Britain.

[LGS6753]

That's Ryanair spotting an opportunity for free publicity, and the BBC spreading doom and gloom.
I will be astonished if this new Ryanair "policy" lasts beyond the spring.

[PPRuNeUser0176]

He did an interivew on sky:
Airline To Shift Investment And May Consider Profit Warning (http://news.sky.com/video/1719385/ryanair-boss-on-eu-exit-impact)

[ATNotts]

That's Ryanair spotting an opportunity for free publicity, and the BBC spreading doom and gloom.
I will be astonished if this new Ryanair "policy" lasts beyond the spring.
Sorry, that is a business reconsidering it's positioning following a sudden, and unexpected change to circumstances within it's operating area.

It isn't the first, and won't be the last.

If things pan out in a sensible way, from a business point of view, the surely these sorts of decisions will be amended - perhaps even by the spring. If they don't, what happened last weekend on the financial and stock markets will seem like a side show.

[Flitefone]

A comprehensive analysis worth the read..
http://ht.ly/lhlF301ByMZ

FF