18 October 2021 - Virtual
10 November 2021, Virtual
London, UK - November 2021
Airlines could lose the right to fly within the European Union if the U.K. leaves the EU without a deal on March 29, the scheduled date of Brexit. That's a risk to which travel managers should pay attention, experts warned at London's Business Travel Show last week.
"The elephant in the room, as far as I am concerned, is ownership issues for the airlines," said Tim Coombs, managing director of Aviation Economics, a consultancy that advises investment banks, airlines and airports. "The EU rules are quite clear about being EU-majority controlled and owned" to be permitted to operate flights within the EU. Once the U.K. is no longer part of the EU, that balance will be upset for certain airlines. He said the airline group that has the most problems in this area is International Airlines Group, the parent company of British Airways, Ireland-based Aer Lingus and Spanish carriers Iberia and Vueling. "I can't get my head around the thought that BA is going to be British owned and controlled and Iberia is going to be EU owned and controlled. I can't see how they can resolve that issue," he said during the Wednesday panel discussion.
The presidency of the Council of the European Union and the European Parliament reached a basic agreement to mitigate severe disruption to air travel between the EU and the U.K. in the event of a no-deal Brexit. After both bodies adopt the agreement formally, it will apply until an air transport agreement between the EU and U.K. is enforced or until March 30, 2020. Highlights of the agreement:
The previous day, the European Council, which represents member states within the EU law-making structure, announced plans for a six-month grace period in which airlines ceasing to comply with ownership and control requirements could take steps to make themselves compliant. The council and the European Parliament need to adopt the proposed regulation formally, and it would take effect only if the U.K. reciprocated with equivalent rights.
Panelists were not reassured. "If I was running Air France or Lufthansa, I think I would be quite mischievous and challenge the ownership rules within the IAG group to see what happens," said Coombs. BCG global head of travel Gehan Colliander said, "My understanding is that there has already been a protest by some carriers," said Gehan Colliander. "It seems to airlines like Air France and Lufthansa that the EU is being too lenient to IAG, and a protest was initiated by them in writing. That puts us in a very difficult situation because we do not know in that case if our travelers are going to be impacted. The fact there may be some airlines that will be completely impacted where we will not be able to use them for particular routes [is causing] quite a lot of uncertainty."
Ruediger Bruss, category manager for travel and mobility for tire manufacturer Continental, concurred. "Our view is that in the event of a no-deal Brexit, nothing will happen in the first few weeks, but if protests are lodged and then granted, then by May or June, there could potentially be quite a significant impact about what could happen, up to and including flight cancellations," Bruss said. "It's not that we are actively avoiding those carriers, but we are definitely quite mindful."
An IAG spokesperson said, "We are confident that we will comply with the EU and the UK ownership and control rules post-Brexit."
Coombs said similar questions hover over Ryanair's U.K. domestic flights.
Updated Monday, Jan. 25 at 9:55 a.m. Eastern with comment from IAG.