Following the UK's vote to leave the European Union, we consider the potential implications for the aviation industry.
Traffic Rights: The UK currently benefits from the internal market for air transport and from air traffic rights negotiated with third countries at an EU level - for example, the bilateral "open skies" agreement between the EU and the US, which would need to be renegotiated.
Nationality of Airlines: Airlines currently owned by UK nationals may need to be restructured on a corporate and operational level in order to retain EU carrier status.
Consumer Protection: Passengers' rights to compensation in connection with delayed or cancelled flights under Regulation (EC) No 261/2004 could be affected.
Environment: The EU Emissions and Trading Scheme will no longer apply if the UK also leaves the EEA. However, non-EU airlines could find themselves subject to a similar regime imposed at an international level by the International Civil Aviation Organisation (ICAO).
Safety Regulations: Whilst the standards of the European Aviation Safety Agency (EASA) will continue to apply, the UK may lose its ability to influence the development of the EASA legal framework going forward. Even if the standards developed by EASA remain the same for aircraft certification, aircraft operations and aircraft maintenance requirements in UK, the UK entities concerned (manufacturers, operators, MROs) will be under the authority of the UK authority for civil aviation (CAA), rather than EASA.
Ownership and Control Limitations: EU nationals are currently required to have majority ownership and control of EU airlines. Equivalent UK limitations could have a significant effect on the operation of certain airlines post-Brexit.
Following Brexit, the UK will be required to negotiate new air traffic rights with the remaining EU Member States, and standalone agreements with other third countries, in order to retain its current traffic rights. Whilst access to the EU's internal market for air transport could be retained by joining the European Common Aviation Area (ECAA), this depends on the UK accepting all EU aviation laws and the consent of existing EU members.
UK-owned airlines wishing to retain EU carrier status or subject to new ownership or control limitations may have to undergo significant restructuring efforts involving the relocation of their head office or employees.
Whilst the EU is likely to require compliance with Regulation 261/2004 for the UK to remain in the single aviation market, the UK could choose to ease some of the requirements on UK airlines, particularly on flights from the UK to other non-EU countries.
- Clients should be aware of the implications of any revocation of the UK's air traffic rights following Brexit and the uncertainty caused by the need to negotiate new arrangements bilaterally.
- UK airlines which wish to retain EU carrier status following Brexit will need to adopt flexible business models and be aware of the need for potential restructurings, both at a corporate and operational level.
- Clients should be conscious of potential changes to rules around consumer protection, the environment and control limitations to ensure they are in compliance with any post-Brexit regulatory regime.
For a more detailed analysis of the issues, please contact the authors or your usual DLA Piper contact.