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EU-US open skies agreement should serve as blueprint for Brexit aviation deal

March 14, 2017

 

Article 50 of the Treaty of the EU (the Lisbon Treaty) allows that the UK may decide to withdraw from the EU in accordance with its own constitutional requirements. It goes on to mention that obligations will cease to apply from the date of entry into force of the withdrawal agreement between the UK and the EU or two years after notification by the UK. However, the period of two years can be extended, subject to certain procedural conditions.

 

With the UK government’s triggering of the Brexit procedure pursuant to Article 50 imminent, one of the areas which will gain a lot of attention is air transport. As the completion of the liberalised internal market for air transport has been a success for the last two decades, expectations are that a lot of potential damage to the aviation industry can be done with the UK departing the EU. Key feature is that UK airlines will no longer enjoy unlimited access to, from and within the EU market. The same would apply to EU airlines with respect to the UK market.

 

Obviously, the final outcome of the Brexit process and its implications for the future relationship between the EU and the UK so far remain unclear and will also be heavily influenced by political interests. Therefore, the solution needs to be ‘politically’ agreeable as well. However, within the aviation industry and among lawyers there seems to be somewhat of a consensus about the possible models of future cooperation in the field of air transport.

 

Under the European Economic Area (EEA) agreement, access to the EU single aviation market has also been granted to air carriers from Norway, Iceland and Lichtenstein. In addition, the European Economic Aviation Area agreement (ECAA) allows market access to airlines from a number of Eastern and Southern European countries. Companies from Switzerland enjoy such access as well on a purely bilateral basis with the EU. One would expect any of these options to be a feasible result of the Brexit negotiations, despite that all have upsides and downsides for both parties. On the other hand, and as the most negative result, no deal at all would revert all to ICAO and WTO conventions, treaties and principles.

 

However, institutions and industry are in a position to use one of their most successful achievements in recent history to gather momentum quickly. An option that seems to be slightly overlooked so far is the EU-US open skies agreement of 2007 which came into force in 2008. It has almost completely liberalised the transatlantic air transport market which - facilitating more than 50 million passengers annually - is the largest market in the world. The EU and US have long argued that their agreement should be used as a blueprint for further regional agreements and cooperation in the field of international aviation. The European institutions - including Council, Commission and European Parliament - as well as the UK have acquired almost a decade of experience with the transatlantic open skies agreement. It would therefore provide a solid basis to build on. Why not use the Brexit issue as a case for such an approach?

 

The EU has used the basic principles of the EU-US open skies agreement to facilitate its neighbourhood aviation policy and it has been reasonably successful in including key elements of the open skies agreement in various air services agreements with non-EU countries, in Europe as well as outside. It has also – with variable success – been able to achieve regulatory convergence with a number of non-EU countries, including the US, on non-included topics.

 

Is the EU-US open skies agreement the ideal deal? By no means. It would certainly require amending some of the elements in the agreement to effectively use it as a basis for a balanced EU-UK Brexit deal. Important issues to be resolved would include operations to slots-constrained EU and UK airports, discarding the unbalanced EU-US ownership & control rules of 25% vs. 49% and clarifying new requirements, possible inclusion of the emissions trading system ETS and traffic rights within each other’s territory (contrary to the EU-US agreement). Also, questions such as UK compliance with EU safety measures (EASA), consumer protection legislation and security measures will have to be solved.

 

Speed matters. Uncertainty and un-clarity for the air transport industry need to be avoided as much as possible. In addition to the institutional and legal questions there are issues and concerns regarding the economic impacts, such as exchange rate issues and opportunities for economic activity. A long lasting process would be unacceptable by any standards.

 

The EU, UK and industry are in a position to achieve a jump start. Despite indications from the Commission that no special deal with and for aviation is possible, it is in everyone's best interest to roll out the groundwork already.

 

If not, the process is going to be long, difficult and rough. Very rough.

 

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