Air Traffic Rights: is the UK getting closer to reaching a deal with the EU?

By Simon Phippard, Obi Jegede

03-2019

Recent political developments may leave many people with uncertainty of how the UK will leave the EU or even when.  The possibility of a "no deal" Brexit has focused attention on the basis on which flights would continue to operate between the UK and EU27 in that event.  While there has been some assurance, the process is not complete and would not, as matters stand, entail even a temporary continuation of all elements of the status quo. 

The Withdrawal Agreement, if implemented, would have continued the current arrangements, whereby EU27 and UK airlines have free access to routes throughout the European Common Aviation Area, until December 2020.  Under the Political Declaration the parties would have sought to ensure connectivity through a Comprehensive Air Transport Agreement and explored UK co-operation with EASA. 

Following the Contingency Action Plan issued in November [1] the Commission issued draft regulations governing both traffic rights and safety on 19 December 2018.These drafts are currently going through the formal legislative process which, prior to implementation, will need to be passed by both the European Parliament and the Council.  

In January 2019 we wrote on the initial draft of the "basic air connectivity" regulation. Since then there have been various iterations as part of the EU legislative process, but on 19 February 2019 the Romanian presidency announced a provisional agreement with the European Parliament on the final form of the regulation, so as to limit the disruption to air connectivity. The agreement covers carriage of both passengers and cargo between the EU and the UK, in the event the UK experiences a hard Brexit. This note supersedes our earlier note and sets out our understanding of the current form.

So far as traffic rights are concerned, UK airlines are granted the right to operate commercial services between the UK and EU27 countries. There are, however, two significant limitations on UK carriers.

  • First, no rights are granted for intra-EU27 routes. 
  • Second, the regulation is time limited:  it ends on 30 March 2020 unless a formal agreement is reached between the UK and the EU on air transport before that date. 

The original proposal for a cap on scheduled capacity provided by the UK at the level of the IATA 2018 winter and summer seasons has been dropped. However, for all cargo services, the current form of the regulation would permit UK air carriers to perform all cargo services between EU27 and third countries, as long as it is part of a service that has its origin or destination in the UK. This carriage would be for a maximum of five months and is subject to a cap by reference to capacity in 2018.

For the purposes of the draft regulation, an airline may qualify as a UK airline so long as it is majority owned and controlled by UK and/or EU27 nationals, but if it is not majority owned and controlled by UK nationals it must have held an operating licence immediately before Brexit to exercise these traffic rights.

Furthermore, if, in the event of a hard Brexit, an airline with an operating licence issued by a Member State no longer qualifies as an EU air carrier for the purposes of Regulation 1008/2008, that air carrier will have six months to meet the relevant ownership and control requirements. To take advantage of this exemption such air carriers will have to submit a plan of remedial action to the relevant licensing authority, showing the steps they will take in order to satisfy those requirements. This plan has to be submitted two weeks from the first date the regulation is implemented. If the air carrier fails to submit this plan within the stated time frame, the licensing authority has the right to immediately revoke its operating licence.

Our earlier item explained how, on 7 January 2019, the UK Secretary of State for Transport issued a public letter welcoming the fact that the Commission was taking steps to maintain connectivity and confirming that DfT officials were working with their EU counterparts to that end. In doing so he reiterated the UK position, taken in the Technical Notice issued in September 2018, to grant EU airlines permission to operate on a reciprocal basis, and emphasised:

"We do not anticipate imposing, or wish to impose, any restrictions on EU airlines compared to what they are able to do at the moment."

Since then, on 7 March 2019, the UK government set out details of the measures intended to ensure flights will continue if the UK leaves the EU without a deal. This will include guidance and a policy to the Civil Aviation Authority on the issue of foreign air carrier permits to EU air carriers in accordance with Article 250 of the Air Navigation Order 2016. The UK's approach to liberalised traffic rights and ownership criteria is also reflected in this guidance. EU air carriers will be obliged to comply with the CAA requirements including safety and security requirements. Foreign air carrier permits may be issued on a seasonal basis for scheduled operations, for a series of charter operations or an individual permit for an ad hoc flight.

On any view a long term arrangement will be necessary in due course. The current proposals certainly indicate that cross channel services can continue for the medium term. The UK has adopted a similar approach to the EU in that airlines from EU countries may not be permitted to operate intra-UK services without a permit. However, to provide short term continuity, the UK intends to allow EU air carriers to operate services within the UK for the duration of the IATA summer season 2019. For continuity in the longer term, in the absence of an agreement allowing cabotage for all UK and EU air carriers, EU air carriers that desire to carry out air services wholly within the UK after the summer 2019 can do so if they are able to establish an airline in the UK with an operating licence issued by the CAA. 

This article is part of our Brexit series


[1] https://www.twobirds.com/en/news/articles/2016/uk/how-will-brexit-affect-the-airline-industry-from-a-regulatory-perspective