Professor KEITH HAYWARD FRAeS analyses the latest technical position papers from Whitehall on the potential effects of a no-deal Brexit on the British aviation and aerospace.

The British Government has published several additional position papers outlining the likely effects of the UK leaving the EU without an agreement in March 2019. The papers represent a ‘prudent’ response to a ‘no deal’ scenario inviting those affected to begin advance planning for an abrupt exit in 2019.

The official position remains that a ‘no deal’ scenario is ‘unlikely. However, since Part 1 of this blog was written, there are some signs that relations between the UK Government and the EU – the Commission and a number of key Member States – have deteriorated. The EU Summit at Salzburg in September was, from a British perspective, not a success and has re-enforced hard line sentiments on the part of UK Brexiteers.

Following its Party Conference, the Labour Party has left its ‘options open’ on the question of a second referendum, but it has stated that the Parliamentary Party will vote against the Government’s official proposal - the so called 'Chequers' format. Although several Labour MPs could vote with the Government (to complicate matters at least one would vote against 'Chequers', but for a ‘no deal’ outcome) with an unknown number of Conservative dissenters likely to vote against, the Prime Minister cannot be assured of success.

This week’s Conservative Party conference will further stoke the flames of political controversy, with set speeches from leading Brexiteers and delegates largely comprising a membership set against remaining. Counter-proposals include variants of the EU-Canada trade deal and ‘Chequers’ with options to revise after leaving the EU.

All of these counter-proposals notwithstanding, major stumbling blocks still remain over the exact nature of the UK’s post-exit trading relationship, especially its regulatory aspects with the EU and the status of the Northern Ireland border. The EU still remains firmly opposed to the 'Chequers' outline agreement.

On balance, while the likelihood of a ‘no deal’ scenario has increased even since the first part of this blog, some form of agreement based on presented by the Government during the summer still seems to be a likely outcome. There is also a possibility that there will be an extended ‘transition’ period after March 30th when more detailed arrangements may be settled. However, the EU is reported to have begun planning an emergency sequence of legislative action for April, which might include aviation safety and security issues. Large UK located manufacturing companies are also beginning to anticipate breaks or delays in supply chain operations

The new papers cover Flights to and from the UK, Aviation Safety, and Aviation Security.

Flights to and from the UK

 

How will airlines be affected by a no-deal Brexit? (Heathrow Airport)

If the UK leaves the EU in March 2019 with no agreement in place, UK and EU licensed airlines would “lose the automatic right to operate air services between the UK and the EU without seeking advance permission. This would mean that airlines operating between the UK and the EU would need to seek individual permissions to operate”. The UK government assumes a mutual interest in preserving the status quo or something very close; this could be either based on a multilateral or bilateral basis. This might be a ‘bare bones’ agreement, but “if such permissions are not granted, there could be disruption to some flights”.

EU registered airlines will require licensing authority from the UK CAA, and likewise UK registered airlines authority from EASA. EASA has yet to provide the details for how and when it would process applications from UK airlines in advance of the UK leaving the EU. “However, the UK would expect the recognition of equivalent safety standards to be on a reciprocal basis”.

In the case of ASAs with non-EU states, for airlines from one of the 111 countries with whom the UK has a bilateral ASA, including China, India and Brazil, there will be no change. For airlines from one of the 17 non-EU countries including the US where the EU has negotiated individual ASAs, replacement arrangements will be in place before exit day: “The UK is working closely with these countries to agree replacement, bilateral arrangements designed to come into force as soon as the EU-negotiated agreements cease to apply to the UK. The UK has already agreed a number of these agreements and is confident the remaining agreements will be agreed well in advance of the UK leaving the EU”.

Licensing and ownership

An operating licence is required before an airline can undertake commercial services. It provides the means through which the CAA can ensure that airlines principally based in the UK are properly managed, and comply with key requirements regarding ownership and control, safety, finance and insurance.

States have traditionally used both their licensing regime and the provisions of their ASAs to restrict foreign ownership of airlines to ensure that the prime beneficiaries of an ASA are nationals of the parties to that ASA. EU airlines must be majority owned and effectively controlled by EU nationals to qualify for an operating licence.

EU-licensed airlines would need to consider how to continue to meet that requirement if, for example, they had significant investment from or ownership by UK nationals. EU airlines that have received significant investment from UK nationals will have to check the implications for the validity of their operating licence with the relevant national authorities.

UK operating licences issued before exit would remain in place and valid as a result of the EU Withdrawal Act. Following EU exit, the UK would not impose nationality restrictions on the conditions for an operating licence. However, UK airlines would also need to consider whether the nationality and level of investment of their shareholders is permitted under the conditions of the ASAs under which they operate their services.

Slot allocation

The current rules for the allocation of slots at UK airports would remain unchanged in the event of no deal.

Air traffic management

There would be no disruption to the UK’s provision of air navigation services as a result of leaving the EU without a deal. The UK would also remain a full member of EUROCONTROL and a contributor to EUROCONTROL’s functions and services. EUROCONTROL is an intergovernmental organisation of 41 countries designed to foster close co-operation in air traffic management across the wider European continent, and the UK’s participation in EUROCONTROL is independent of our EU membership.

The UK’s air navigation service provider (NATS) will continue to provide services to aircraft operating in the airspace in which NATS is licensed to operate. NATS will continue to work collaboratively with neighbouring air navigation service providers to ensure the service is safe and efficient, principally through the UK’s EUROCONTROL membership. The UK will not remain part of the Single European Sky (SES) initiative but would seek with EU members increased efficiency and effectiveness of European air traffic management.

Passenger rights

For air passengers on a flight departing the UK, the same passenger rights as apply today would continue to apply after the UK left the EU and will be incorporated into British law. There is no indication that UK will water down passengers rights, as this is a major domestic sensitivity, despite airlines’ loud complaints.


Aviation safety

The UK is planning to recognise EASA licences and certificates, in assumption of reciprocal recognition.    

The functions currently performed by EASA in relation to approvals for UK designed aeronautical products and approvals for third country organisations would be conferred on the CAA. The CAA has been preparing to take on these responsibilities since the EU referendum. The Government has also been working with third parties over the mutual recognition of licences and approvals.

A large number of different safety certificates are issued to organisations and individuals involved in the design, production, maintenance and operation of aircraft.

If there is no deal, the automatic mutual recognition of aviation safety certificates, provided for under the EASA system, would cease to apply to the UK. A large number of different safety certificates are issued to organisations and individuals involved in the design, production, maintenance and operation of aircraft and details on which certificates would be recognised in the UK and EU.

Aircraft registration

If there is no deal, the automatic mutual recognition of aviation safety certificates, provided for under the EASA system, would cease to apply to the UK. A large number of different safety certificates are issued to organisations and individuals involved in the design, production, maintenance and operation of aircraft and details on which certificates would be recognised in the UK and EU. At the end of 2 years (or sooner if the certificate expires during the intervening period) new certificates issued by the CAA under UK legislation would be required.

The EU has indicated that it would take a different approach to the UK. The information notices issued by the European Commission say that certificates previously issued by the CAA before exit day would no longer be automatically accepted in the EASA system after 29 March 2019. Those certificates would have been issued in accordance with EU rules, and UK aviation will remain as safe the day after exit as it was the day before exit, so the UK encourages the EU to take reciprocal action in recognising UK-issued certificates.

Individual licensing

Brexit could affect any individual requiring a personal licence, pilot, engineer, cabin crew, air traffic controllers etc. The effects of leaving the EU without a deal are outlined in the Paper, and those with a specific interest these issues are strongly advised to go directly to the UK Government web site on https://www.gov.uk/government/publications/aviation-safety-if-theres-no-brexit-deal

The effects could vary according to specific licences. The CAA will assume the responsibility for issuing licences progressively after March 2019. But in some cases, the EU as indicated that it will not recognise some licences; in particular “the EU has indicated that it would take a different approach to the UK on the recognition of engineer licences. Engineers with licences issued by the CAA should be aware that the European Commission has stated that those licences would no longer be valid in the EASA system after exit day”. Cabin crew may be similarly affected.

Aircraft design and production

After 29 March 2019, the CAA would take on the functions and tasks of the state of design for products where the certificate holder is UK based. This means that the CAA would issue and oversee the appropriate type-certificates, environmental certificates and certificates for existing and new products, parts and equipment.

Certificates and approvals associated with aircraft production issued by an EASA competent authority and in force before exit day would continue to be valid. This would mean that for a transitional period of up to two years, UK-registered aircraft could still be fitted with new parts certified in accordance with EU rules prior to exit day.

The EU has indicated that it would take a different approach to the UK. The information notices issued by the European Commission state that certificates previously issued by the CAA, or by organisations approved by the CAA, before exit day would no longer be automatically accepted in the EASA system after 29 March 2019.

This would mean that parts manufactured and certified by organisations approved by the CAA could not be installed on EU registered aircraft. The affected organisations could be approved as third country production organisations by EASA. However EASA has yet to provide the details for how and when it would process applications from UK manufacturers in advance of the UK leaving the EU.

Maintenance

For a period of up to two years, UK-registered aircraft could still be maintained by organisations and engineers with certificates issued by an EASA competent authority. However, the EU has stated that maintenance organisations approved by the CAA could not perform maintenance on EU-registered aircraft. The affected organisations could be approved as third country maintenance organisations by EASA. However, EASA has yet to provide the details for how and when it would process applications from UK maintenance organisations in advance of the UK leaving the EU.


Aviation security

UK passengers could face extra delays transferring between flights in the EU (Heathrow Airport)

If the UK leaves the EU in March 2019 with no agreement in place on aviation security, the existing regulations and procedures will still be retained in domestic law under the EU Withdrawal Act. This would ensure that the UK would continue to have a robust aviation security system. The Government is confident that the UK already has one of the most rigorous regimes in the EU.

Passengers

There will be no difference in the passenger screening experience within the UK. However, if there is no deal, and the EU does not recognise UK procedures, UK originating passengers transiting through an EU airport may have face baggage rescreening and consequential delays. In the preparedness notices issued by the European Commission they have indicated that they will not recognise the UK aviation security system. This could have significant operational and cost implications for those EU airports, and passengers may have to factor increased time for rescreening into their travel schedule.

Cargo

In respect of cargo, an outcome where the EU does not immediately recognise UK security standards as equivalent (even these are higher than in the EU) would have significant implications for the EU air cargo industry, their supply chains, and the consumers of the products to be shipped. Therefore the UK expects that its recognition of EU security standards will be reciprocated in turn by the EU, recognising the UK’s existing higher security standards.

In the case of cargo from the rest of the world into the EU, the EU has set out that all security designations of carriers from third countries previously granted by the UK will be treated as expiring on the UK’s exit from the EU. The EU has not yet set out a mechanism for these designations to be reissued by EU Member States. Without such a mechanism those carriers from non-EU countries will not be able to carry cargo into the EU after the UK leaves the EU. As set out above, the same carriers will be allowed to fly cargo into the UK after the UK leaves the EU.

Commentary

What happens next?

The underlying sentiment in all three of these papers is that it is in the EU’s interest as much as the UK’s either to adopt a seamless and uncontested transfer from the status quo to the post-Brexit environment. There is also an assumption that there will be a timely and adequate domestic organisational response to the post Brexit situation. Neither of these assumptions can be guaranteed.

Equally, it is evident that all three areas covered by these papers, especially aviation safety, relate to detailed regulatory functions determined by precise legal provisions, where the effects of a ‘no deal’ scenario are difficult to predict. As matters stand, the involvement of UK based manufacturers in a EU supply chain would be seriously affected by the absence of mutually recognised licencing and registration. It would seem inconceivable that the EU would refuse to negotiate arrangements that would address this issue – this is the British Government’s oft-stated view – and that details could be sorted out in the transition period by 2021. However, this assumes good will and a pragmatic approach to functional areas of the relationship between the EU and the UK. Such assumptions cannot be guaranteed, especially given the complexity of the issues involved.

The inherent complexity of the issues raised by 40 years of engagement on aviation and aerospace questions explains why this article has referred readers where necessary directly to the relevant website and has quoted extensively the exact wording. It also underlines the uncertainty facing a regulatory-dependent industry presented the prospect of a sudden and comprehensive change in its fundamental operational environment.

My personal judgement is that the Government’s optimism that there will be a non-disruptive Brexit agreement that satisfies all of the complex requirements of aviation operations is misplaced. It is possible that some of these issues will be resolved, especially over time and if the two-year transition period is implemented. This, of course, depends on mutually agreed terms for the 30 March deadline. This in turn hinges on whether in the final analysis that the EU27 really do fear the negative consequences of a ‘no deal’ Brexit sufficiently to compromise on key aviation-related issues.

Prof Keith Hayward FRAeS
2 October 2018