Aviation & Brexit 80

It’s a week ago since I last wrote.  It’s been the week of Easter.  Politicians took time off and the news cycle found new stories to cover including exceptionally warm weather.   In terms of progressing towards a solution to the Brexit crisis nothing much happened.  Or at least nothing much happened in public.

Brexit continues to be a lose-lose proposition.  On both sides of the Channel the impasse rattles on.  All the energy absorbed by Brexit has weaken the economies of both the UK and the Continent.  CNN[1] recently reported that its China that is the big winner from Europe’s Brexit chaos.  That could well be the case, if not in the short-term then certainly in the longer term.

The European Parliament (EP) is now in recess until after the European elections at the end of May.  The new EP will be in place in July.  A new European Commission will be appointed.

This means UK holidaymakers will have to make a leap of faith if they are booking a beach holiday on the Continent this summer.  Since Brexit is delayed, but that could be cut short the assumption may be made that conditions remain; business as usual at least for a bit longer.

Since the referendum was first called in 2015 the UK pound (£) has fallen from roughly 1.4 Euro to the £ to its current rate of around 1.15 Euro to the £.   UK holidaymakers will need to take this into account when booking packages.  In all cases measures to keep aircraft flying will be in place but there’s a strong likelihood that higher fares and less choice are on the cards.

As a highly regulated industry the importance of what happens to regulatory relations matters a great deal.  Aviation cannot prosper without a mature and stable framework within which to operate safely.  All the international evidence points in that one direction.

The UK played a major part in the formation of the European Aviation Safety Agency (EASA), but it would seem to be stepping aside.  Regardless of what the UK does, EASA’s tasks within the EU-27 and its 4 associated countries will continue uninterrupted.   The UK’s possible withdrawal puts it in a difficult position with diminished influence.  Any withdrawal will significantly alter EASA’s cooperation with UK authorities.  Even in this peculiar situation there may still be a re-think but just now nothing remains untouched.

[1] https://edition.cnn.com/2019/03/27/europe/china-europe-brexit-italy-bri-intl-gbr/index.html

 

Brexit & Aviation 79

The European Union (EU) has agreed to extend #Article50 a second time.  This could delay any possible #Brexit until 31 October 2019.  What implications will this have on the UK while it remains in the EU?  A British Parliament House of Commons briefing explains the situation.  

The times we are in could never be called normal.  Brexit trundles on laying waste to everything it touches.  At the same time, British MPs go on a jolly Easter holiday as if nothing much is happening.  But political activists on the ground in the UK are busy campaigning vigorously for UK local elections and an almost certain European Parliamentary election.

Over the last week, talking to people in the US, those who are not avoiding the subject are as divided as we are in the UK.  The object of their division is one man.   President Trump is either the best President ever or the source of all a nation’s problems.  The Canadians I spoke to, are confused and mystified by the reported behaviour of the UK.

The event I was attending in Atlanta was run by Aviation Week[1].  They are reporting the substantial impacts of Brexit and there’s nothing positive to say on the subject.   The expectation is that it’s going to be a “difficult summer” to say the least.   The lack of clarity over all aspects of the UK’s current situation remains astonishing.   The danger is that it becomes easier to do business in other Countries and the industry avoids investment in the UK.

To say something positive, it was refreshing to see the UK’s Aerospace Wales[2], a trade body representing the aerospace and defence industries in Wales, was exhibiting in Atlanta.

[1] http://m.aviationweek.com/awincommercial/uk-airlines-airports-already-see-substantial-brexit-impact

[2]  www.aerospacewalesforum.com

 

Brexit & Aviation 78

The political cartoonists are having a field day.  Brexit is giving them so much ammunition.  There’s never been a more fertile time for creative portraits of the ridiculous antics of politicians.  Every metaphor you can think of has been tried at least once.  For me a picture of headless chickens just about sums it up.  UK MPs have had the chance to identifying a way forward but keep coming back to stalemate.

Unfortunately, that leaves the worst-case scenarios still on the table in law.  The worst-case being a No-Deal Brexit outcome.  Study after study[1][2] shows that a No-Deal Brexit threatens to put the aviation and aerospace sector at a significant competitive disadvantage in the UK.  Failure to secure a sound Brexit deal that maintains a good strategic partnership will cause significant supply chain and investment problems.  We must remember that an aircraft may have over 4 million parts. These components come from all over the world to be integrated into a product.

Although some politicians remain in denial this should not come as any surprise.  For one, the EU’s Single Market has over 500 million customers and an economy over 5-times bigger than the UK’s.  Before 2016, the Single Market was often championed by the UK because it made it easier and cheaper for UK companies to sell their products.  Now, we are in the Brexit Twilight Zone[3] there’s a pretence that these facts don’t matter.

In a sad way, it’s ironic that many voted for Brexit and leaving the EU in June 2016 with a view to protecting their jobs in fear of globalisation.  Now, UK jobs will be lost as it’s clear that the civil aviation and aerospace sector is entrenched in the EU.  Miltary spending alone can not support the thriving sector we have come to take for granted.

In a recent statement, the European Commission said: “A No-Deal scenario on 12 April is now a likely scenario”.   A “disorderly” Brexit by accident is still avoidable but it may mean a UK General Election or a further referendum, and if there was a long extension, there maybe participation in the 2019 European elections due to take place between 23-26 May 2019.  Since there’s still no coherent strategy coming from the UK Government, I suspect a long extension is inevitable.  The possiblity of a so called #flextension is already built-in to the existing treaty.  This could be agreed until say; 31 December 2019.   Such an extension could be shortened only if both sides agree.  That would be time enough to work up a coherent strategy with a workable majority in the UK Parliament.   

Update: Now the UK Prime Minister is seeking a further extension from the EU to delay Brexit until 30 June 2019.  So, that’s the starting position with an aim to try to aviod European elections being needed in the UK.  

[1] https://eandt.theiet.org/content/articles/2019/01/no-deal-brexit-threatens-future-of-uk-aerospace-industry-report-warns/

[2] http://www.imeche.org/docs/default-source/1-oscar/reports-policy-statements-and-documents/imeche-brexit-and-aerospace-report-final.pdf?sfvrsn=2

[3] https://en.wikipedia.org/wiki/Nightmare_at_20,000_Feet

 

Brexit & Aviation 77

The original Brexit transition date has gone by.  Am I comfortable writing this on 1st April?  Well it’s past lunchtime so it would now be bad form to make a joke about the whole debacle.

It’s another day of UK Parliamentary “indicative” votes or should I say evening?  We might imagine a compromise be sought and happiness reigns.  However, every time I hear a UK politician talk about compromise, they usually mean others coming around to their point of view.  The outcome of the “indicative” votes held by the House of Commons (HoC) on 27th March were received with disappointment but at least they were an attempt to move forward.   Regarding the future course of the Brexit the, UK Parliament is deeply divided on the big decisions, but voting patterns are starting to emerge.

Clearly, the international money markets think that a “soft” Brexit is the flavour of the day.  UK’s currency hasn’t ducked and dived too much for a while.  On the table is the proposal to remain in a Customs Union (CU) with the EU Member States.  This doesn’t explicitly touch on civil aviation although it does concern the movement of goods and services.  Implicit in this arrangement is close cooperation and collaborative working.  So, it’s conceivable that might extend to such possibilities as participation in European Agencies.

Whilst compromise and consensus are desirable and nice to talk about, the tone of the continuing public debate isn’t getting any calmer.  The BBC News Reality Check[1] team just published a reasonably worded assessment called “Brexit: Will flights be disrupted?”.  Reading some of the comments to this item posted on Social Media indicates that we have a long way to go.  The more polite ones are along these lines: I can’t believe people really think this is an issue, we few our planes before the EU and media starts scaremongering just before the Easter holidays.  The knee-jerk reactions of vocal Brexit supporters are to deem anything that paints their project in a negative light as: bias and scaremongering, regardless of its veracity.

There’s a tendency to ignore the fact that the single market in aviation has transformed flying for British air travellers.  There’s greater choice and competition and new routes across Europe and beyond.   It’s impossible to go back to the 1970s.  And who would want to go back to a State controlled industry without much concern for passengers?  Ignoring the reality that the EU has delivered is twisted and downright foolish.  After nearly 3-years no one knows what Brexit is or will become.  It’s a truly shocking situation.

[1] https://www.bbc.co.uk/news/uk-47225806