Professor KEITH HAYWARD FRAeS assesses the impact of a no-deal Brexit as the UK Government releases position papers on the likely effect on aerospace, aviation and space.    

The British Government has published several brief position papers outlining the likely affects of the UK leaving the EU in March 2019 without an agreement. The official position is that a ‘no deal’ scenario is ‘unlikely; there have also been some positive statements from EU negotiators. The papers represent a ‘prudent’ response to a ‘no deal’ scenario.

However, the situation remains fluid and ambiguous, complicated by a febrile political environment in the UK, particularly within the ruling Conservative Party. This is likely to increase in the lead up to, and during the political party conference ‘season’ beginning in October. Major stumbling blocks still remain over the exact nature of the UK’s post-exit trading relationship with the EU and the status of the Northern Ireland border.

On balance, while the likelihood of a ‘no deal’ scenario has increased, some form of agreement based on the so called “Chequers” format presented by the Government during the summer still seems to be the most probable outcome. There is also a possibility that there will be an extended ‘transition’ period after March 30th when more detailed arrangements may be settled.

Two of the current ‘no deal’ papers have direct relevance to the aerospace and aviation sectors.

Research

What will happen to UK participation in joint aerospace research projects? (Airbus)

The British government intends that UK researchers and businesses would be able to apply to and participate in all those Horizon 2020 calls open to third country participants from the date of exit, with funding provided via the extended guarantee. Third country participation is a well-established part of Horizon 2020 - entities from third countries currently participate in and lead consortia in a wide range of collaborative programmes. The government is seeking discussions with the European Commission to agree the details of continued participation as a third country.

Looking beyond 2020, the UK remains committed to future collaboration in research and innovation and wants to work with the EU on a mutually beneficial outcome. At the same time, the government is signalling a commitment to the future through a goal to increase UK research and development spending to 2.4% of GDP by 2027.

The government is also working in partnership with UK Research and Innovation to develop a new International Research and Innovation Strategy. The Strategy will further set out the government’s desire to build on the UK’s long tradition of international collaborations in research.


Space

The UK would still get free data from the European Earth monitoring Copernicus programme, but would be excluded from bidding for future contracts on the project (ESA). 

Galileo

UK-based businesses, academics and researchers would not be eligible to bid for any future work on the EU Global Navigation Satellite System programmes. The UK Government will pay £92m for a feasibility study of a national alternative to the €10bn Galileo programme. This will inform a decision to create an independent system as an alternative to Galileo. For the public and most UK, EU and other commercial satellite navigation users, there should be no noticeable impact if the UK were to leave the EU with no agreement in place. All devices that currently use Galileo and European Geostationary Navigation Overlay, such as smartphones, would continue to be able to do so.

However, any UK businesses, academics and researchers currently contracted or expecting to carry out contracts on these programmes should contact the relevant contracting authority to make sure that arrangements are in place to comply with the conditions of the contract and to avoid possible penalties.

Similarly UK located companies or those in British overseas territories that currently hold ground infrastructure hosting contracts should contact their contracting authority such as the European Space Agency or the EU Global Navigation Satellite System Agency to verify their future position.
The 18-month feasibility study will be led by the UK Space Agency with support from the Ministry of Defence, and will look at the engineering, design and development of a UK programme.

Copernicus

The UK would no longer be able to participate in the Copernicus programme and would have no role in how it is run. UK-based businesses, academics and researchers will be unable to bid for future Copernicus contracts tendered through the EU, or through any other process using EU procurement rules.

Copernicus has a free and open data policy, which means that the data produced by its satellites (Sentinels) and the Land, Marine Environment, Climate Change and Atmosphere services would be freely available to UK users. Access via continued membership of organisation such as EUMETSAT would not be affected. Other UK users could lose the right to high-bandwidth access to the standard data from Copernicus Sentinels.

The UK is clarifying the situation with the European Commission.

Space Surveillance and Tracking programme

The UK would not be eligible to participate in the EU Space Surveillance and Tracking programme. UK organisations would not therefore be able to contribute to providing services to the EU Space Surveillance and Tracking, to participate in the scientific and technical groups to develop the programme further or be able to receive grant funding to pay for UK involvement.

The UK will continue to receive space, surveillance and tracking data from the United States.

Commentary

Space

The UK has now commissioned work on a Galileo satnav alternative. (ESA) 

The space paper and earlier statements by the UK Government is the clearest sign yet of the government’s determination to protect Britain’s space industry and to ensure the British military has an independent alternative to the US Global Positioning System (GPS).

Under EU rules, non-member states cannot be involved in the development of Galileo’s secure public regulated service (PRS), an encrypted navigation system for government users. British companies have been heavily involved in the development of the service. They are now being blocked out of bidding for contracts unless they are prepared to transfer work to EU locations. EU rules allow for third-country military to use PRS with a security agreement. But Britain has argued that it also needs oversight of the technology and its future development if it is to have confidence in the security of the system. The UK has not required this access to use the US GPS system, having greater confidence with American encryption, and presumably because it has closer security cooperation with the US.

Developing an independent system could cost more than £3bn; nor does the feasibility study appear to include the costs of maintaining an operational infrastructure, which if the experience of GPS and Galileo is a guide, could cost over £500m a year. Developing and operating an independent system for military and security will impinge heavily on a defence budget likely to be increasingly constrained over the next decade by commitments to the carrier strike force and renewal of the nuclear deterrent.

The papers do not seek to determine the extent to which the EU will be negatively affected by losing British contribution to the EU-funded space programmes or British participation in Horizon. Similarly, the expectation is that UK participation in ESA programmes will be largely unaffected by Brexit.

And Aviation?

Heading for departure? (Gatwick Airport)

The elephant in the room remains the UK’s continued access to the Single European Aviation Area (SEAA), as well as the certification and licencing arrangements for UK located manufacturers, airline operators and MRO providers. A paper (or papers) on aviation services and regulation is expected by the end of October.

Various government statements assume that access in some form will continue post March 2019, even if this implies some acceptance of European Court adjudication. However, UK-registered carriers are moving towards a post Brexit environment that, for example, could limit operational flexibility such as flying routes from the UK that would hitherto allow continuation within the SEAA. Additional operational hubs are also being opened in, or work transferred to existing EU-located centres.

There is also an assumption that existing third party aviation agreements will be extended beyond March 2019. The UK Government has hinted that it is close to sealing deals with the US and other governments. Nothing, however, has been officially confirmed in respect of how the UK civil aviation will operate post Brexit.

Military issues

Could Brexit affect UK ambitions to create an international sixth gen fighter programme? (BAE Systems)  

There is uncertainty over the exact nature of post-Brexit relations on military and security programmes that would have a direct impact on the UK aerospace sector. Again the political mood music in London and to some extent in Brussels is that there should be a ‘special relationship’ between the UK and the EU in the security domain. Nothing however, is certain.

Substantively, the UK Government has announced a £2bn demonstration programme to further work on a future combat aircraft, which is designed to provide options for possible international collaboration with either EU or other partners from 2025 onwards. Despite some bullish statements from industry and industry observers, international collaboration in some form will be essential to protect UK capabilities.

Commercial aerospace

How will aerospace supply chains cope? (Airbus)  

Finally, there is no new information on how the UK commercial aerospace sector will be affected by changes in the customs and trading arrangements with the EU. UK-based suppliers remain pessimistic about the outcome. As a result, uncertainty reigns: ADS, the UK aerospace trade association has written to the EU Commission asserting that it is risking “confusion and disruption” in the aerospace sector in the event of a no-deal Brexit because it is preventing talks with EASA in advance of Brexit. Without certification, any aircraft with a UK-certified component could be grounded until agreement is reached. The UK has held preliminary talks with other regulators such as the US FAA, but according to the Commission “without sufficient clarity on both the outcome of the withdrawal process and the future UK legal framework, such discussions would currently be premature”. Clearly without progress in this area, the European commercial aerospace and MRO sectors could be subject to serious disruption from April 2019.

Keith Hayward
14 September 2018