Brexit & Aviation 72

Last week, new implementing procedures agreed under a Bilateral Air Safety Agreement (BASA)[1] between the UK and US, were discussed with the aerospace and aviation industry at the Embassy of the United States in London[2].

In the event of a No-Deal Brexit the UK would not be able to continue to participate in the European Aviation Safety Agency (EASA) regulatory system.  However, the UK is saying that design validation processes will be “similar” to those implemented under the existing EU-US bilateral agreement.   Also, there will be continued acceptance by the UK and US of each other’s aviation maintenance approvals.

The UK is working on other bilateral safety arrangements with the aviation authorities in Canada and Brazil.  These are the major aircraft manufacturing countries that have a long history of cooperation on aircraft certification and maintenance.  The international Maintenance and Certification Management Teams (MMT/CMT), both of which consist of representatives from the National Civil Aviation Agency of Brazil (ANAC), EASA, the US FAA and Transport Canada Civil Aviation (TCCA), are taking steps to mutually recognise each others approved organisations.

The UK Government has published updated guidance for the aerospace sector and is preparing for EU Exit[3].  Clearly more import-export agents are going to be needed in the coming years.  Everyone is preparing for the commercial impacts on all the sectors of the aviation industry.   The political and economic uncertainty continues to be unsettling.

Despite all the preparations that have been made, the EU’s European Economic and Social Committee (EESC) has warned that a No-Deal Brexit could “jeopardise” aviation safety standards[4].  That said, current No-Deal Brexit proposals are just temporary solutions.  Only a comprehensive EU-UK agreement will ensure the seamless air connectivity air travelers have come to expect.

 

[1] https://www.flightglobal.com/news/articles/uk-and-usa-sign-safety-accord-to-apply-in-event-of-n-456652/

[2] https://www.caa.co.uk/News/UK-signs-post-EU-exit-air-safety-agreements-with-USA/

[3] https://www.gov.uk/guidance/the-aerospace-sector-and-preparing-for-eu-exit?

[4] https://www.theparliamentmagazine.eu/articles/news/no-deal-brexit-could-‘jeopardise’-eu-aviation-safety-standards

Days to go

Just a few days to go before the Brexit day set in law.  The national and international news are dominated by other concerns.  And an empty space is opening where no one knows what’s happening.  It’s evident that the UK Government and UK Parliament made a massive mistake by invoking Article 50 without a clear agreed plan.

In the snap UK General Election in 2017 the British electorate returned a Parliament that did not give a Conservative Government a majority.   UK Prime Minister May failed to understand that, if she wanted Brexit that would mean cross-party working and compromise.  All there was tabled, was red-lines and stubborn headbutting so the resulting stale mate should be no surprise.

Until this afternoon, it’s assumed that UK Prime Minister May will try to get her deal accepted by the House of Commons (HoC) by a 3rd vote.  It was assumed that the UK Government would be finding the ways and means to tempt those who have opposed her deal.

Now, HoC speaker John Bercow says Prime Minister May cannot bring further meaningful votes on Brexit unless there’s a substantial difference in what’s being offered.  The logic of this is that it stops a Government bullying the HoC and its members into submission.

Whatever happens, one fixed point is the European Council (Art. 50) meeting on Thursday, 21 March[1].  Here the EU27 leaders will meet to discuss the latest developments.  There will be new developments but it’s difficult to predict what they might be at this stage.   This must be a unique situation in recent international affairs.

My prediction remains that a lengthy delay is in prospect.  If that is agreed there will be need for a plan to be tabled and accepted by all parties.  At last, you might say.

Some say that EU officials are thinking that a Short Term (ST) extension would run beyond 23-26 May 2019.  Thus, the UK could need to make arrangements to participate in European Parliament (EP) elections.  Some are contemplating asking for a second referendum as a condition for a Long Term (LT) extension.  But all is still up in the air at this moment.

[1] https://www.consilium.europa.eu/en/meetings/european-council/2019/03/21/art50/

Another week gone

Last week, I wrote: “I think, the UK House of Commons is likly to reject Prime Minister May’s Deal next Tuesday.  Then on Wednesday it’s likly to reject a No-Deal outcome to Brexit.”  Both have come true.  Now, with the vote planned for today, an extension to the Art. 50 process is possible.  The drama that is being played out is very much a Westminster drama.  Once upon a time we depended upon the BBC’s Eastenders for high drama and suspense but not any more.

Parliament is deadlocked.  It’s abundantly clear, that there is no majority for the PM’s deal.  Bringing that deal back to the Commons a 3rd or 4th time won’t change the situation.  There needs to be a way to break the deadlock.

It was said to me that what we need is an alien invassion to get people to lift up their eyes and consider the big picture.  Whereas the Westminster Parliament was once seen as a example to the world, it no longer holds that position.  The UK’s Brexit drama needs to come to a final conclusion.

My view is that the best way is to revoke Art. 50 and set aside Brexit.  There’s nothing to stop the debate returning again in a couple of decades but this current phase of increasing instability needs to be brought to an end.

There is likly to be dramatic changes to British politics but these have been long overdue.  This domestic change is not a matter for the EU.  We need to get our house in order.  That means a big realignment.

NOTE:

Tonight, MPs have voted to extend Brexit beyond 29 March by backing a Government motion forced on PM Theresa May by the Commons.  Thus we can expect new legislation to come forward to change the Brexit date in UK law.  Also, a request will have to be made to the European Union (EU) to make this happen.

Brexit & Aviation 71

I have an admiration for the staff at the House of Commons library.  At least someone is trying to keep track of what’s going on[1].

So far, there have been 475 Brexit related Statutory Instruments (SIs) laid before the UK Parliament.  That’s 79% of the expected 600 SIs. In other words, a great deal of new UK legislation that needs to be in place the day after Brexit.  What’s astonishing is that we hear nothing from our law-makers about these acts of law-making.  The total focus is on the uncertainly over the direction that will be taken by the UK.  There are statements that Brexit is “deadlocked” but there remain many choices that can be made.  However, unless something is agreed exiting European Union (EU) treaties will, by automatic process of law, cease to apply to the UK in 18 day[2].

This situation impacts treaties with non-EU Countries too.  A House of Commons library paper looks at the UK Government’s progress in renegotiating and agreeing replacement treaties with Countries outside of the EU[3].

The UK Government has published a policy on EU Air Services[4].  Unfortunately, there’s little new in the policy and it’s substantially worse than the current arrangements.  Airlines are enacting their contingency measures, but much remains unknown.   For example; Ryanair[5] have said:

“We welcome the Civil Aviation Authority’s decision to grant our UK based airline, Ryanair UK, with a UK AOC, allowing Ryanair to operate UK domestic routes and UK to non-EU routes in a post-Brexit environment.

The risk of a ‘no deal’ Brexit in March is rising, and despite our robust post-Brexit structures, including our post-Brexit plan around European ownership, we continue to call for the UK and EU to agree a transition deal from 31 March 2019, so that any disruption to flights and British consumer summer holidays in 2019 can be avoided.”

The robust post-Brexit structure they are talking about is to change the voting rights of British shareholders such that the rules of being a European airline can be met.

For travellers who contemplate booking holidays or flights to, from or via the UK it may be prudent to wait for a few days.   Certainly, there’s a need to take out travel insurance that can cover a flight cancellation as a result of Brexit.  The insurance sector maybe one that will be benefiting from the increase in uncertainty but that’s their job.

[1] http://researchbriefings.files.parliament.uk/documents/CBP-8370/CBP-8370.pdf

[2] https://interactive.news.sky.com/2017/brexit-countdown/

[3] https://researchbriefings.parliament.uk/ResearchBriefing/Summary/CBP-8370

[4] https://www.gov.uk/guidance/air-services-from-the-eu-to-the-uk-in-the-event-of-no-deal

[5] https://corporate.ryanair.com/news/ryanair-welcomes-caas-issuing-of-uk-aoc-for-ryanair-uk/

 

Where are we?

It’s astonishing how Twitter is being used.  Tweets range from banal stupidly, viscous abuse and tiresome copycat phrases to matters of international diplomacy and important public information.

Here’s a copy of the Tweets that were posted by the European Union’s Michel Barnier @MichelBarnier on 8 March 2019.

“I briefed EU27 Ambassadors and EP today on the ongoing talks with #UK. Following the EU-UK statement of 20 Feb, the EU has proposed to the UK a legally binding interpretation of the #Brexit Withdrawal Agreement. Most importantly:

2/5 The arbitration panel can already, under Article 178 WA, give UK the right to a proportionate suspension of its obligations under the backstop, as a last resort, if EU breaches its best endeavours/good faith obligations to negotiate alternative solutions

3/5 EU ready to give legal force to all commitments from January letter of @eucopresident and @JunckerEU through joint interpretative statement. (link: https://europa.eu/!Kj44wR) This will render best endeavour/good faith obligations even more actionable by an arbitration panel.

4/5 EU commits to give UK the option to exit the Single Customs Territory unilaterally, while the other elements of the backstop must be maintained to avoid a hard border. UK will not be forced into customs union against its will.

5/5 The EU will continue working intensively over the coming days to ensure that the UK leaves the EU with an agreement.”

I read nothing unreasonable in the public statement above.  If this is insufficient for those MPs in the UK who wish to leave the EU, then it’s unlikely that anything will satisfy them at all.  It’s pushing the interpretation of the Withdrawal Agreement (WA), on the table to the limit.

Northern Ireland (NI) will be treated differently whatever happens – Deal or No-Deal or Art. 50 extension or No-Brexit.  Today, it’s a part of the UK that is treated differently for sounds historic reasons.

I’m sure there are incoherent xenophobes who will still shout like mad about a perceived unfairness.  I’m sure Brexit supporting UK politicians will seek to misinterpret the above in the hope of blaming the EU for their folly.  And I’m sure that far from this being the end of something this could be just the beginning of a decade of squabbling.  The paralysis of Brexit uncertainly is concern about the worst-case outcome, namely a No-Deal.  Those UK polticians saying we should jump straight to that worst case outcome to end uncertainty and end damage to the Brexit myth is laughable, illogical and extream foolishness.  Next week in Westminster will be full of loud voices many of which should not be given the time of day.

Brexit & Aviation 70

I wrote the first of my Brexit & Aviation series a year ago.  Now, this is the 70th one.  A year ago, there did seem to be some form of honest negotiations going on.  Commentary often considered and reasoned over the pros and cons of different approaches to Brexit.  When I said: “Brexit is going to complicate aviation in Europe.” I didn’t realise the level of understatement those words entailed.   Complexity is one aspect of the problem.  It’s the confusion of not having a sense of direction that doubles the troubles.  It’s the legs that fake news strories get that is concerning.

“It has been quite shocking to get so far in the political process without having any real clarity about the future. That can’t be positive for the economy.”  That’s not my writting but that’s the words of Willie Walsh Chief Executive Officer IAG in their Annual Report.

Last year, the possibility that the UK would retain membership of the European Aviation Safety Agency (EASA) was real.  Now, bit-by-bit this possibility is waning as a predominantly anti-European tone has been set by the current UK Government.  The implications of Third Country status are being played out as preparations continue for a No-Deal Brexit outcome.  Industry is taking measures[1], and planning more, to insulate itself from the hard-line taken by Conservative politicians.  Large costs are being incurred and it isn’t going to be long before those cost get passed on to the paying passenger.  Although strangely there are some bargains offered for flights and holiday packages because prices factor in an incentive to overcome the caution and level of uncertainty people feel.

A year ago, I did say: “There’s a chance of reaching Brexit day with no clear vision of the future”.  My crystal ball must have been working overtime that day.  Lawmakers are not doing their job.  In normal times there’s a rigorous sequence that is followed that tests legislation before it hits the statute book.  The extream brinkmanship of the last year leaves the UK with a huge to-do-list and no time to practically test new legislation before it’s enforced.

There was an expectation that Bilateral Aviation Safety Agreements (BASAs) would be signed between the UK and others.  This would be used to detail the cooperation between the UK and others, including any mutual acceptance of certificates.  Unless I am mistaken, there isn’t much signed between anyone at this moment time.

A great deal of the difficulties that the UK faces are associated with the “red lines” that have been the policy for the UK Government.  These have tied the hands of all those involved in negotiations to such an extent that an impasse was inevitable.  UK Brexit advocates dismissed talk of duplication of activities and costs with no tangible benefits.  Nevertheless, that is the position the UK finds itself in.

Next week, if an Agreement is accepted the UK will have until 31 December 2020 to solve the thorny issues of international aviation.  During that time that UK will have many of the obligations of an EU Member State but no so many rights.   If an Agreement is not accepted then it’s back to the drawing board – again!  The prospect that Brexit will fail is becoming real.  Maybe that’s why the £ has gained value.

I think, the UK House of Commons is likly to reject Prime Minister May’s Deal next Tuesday.  Then on Wednesday it’s likly to reject a No-Deal outcome to Brexit.  An impass in the UK Parliament should then trigger a return to the people of Britain.  With so little time remaining on the clock an extended Article 50 period seems certain.  If I’m wrong in these predictions then I’m still no worse a sage than UK Ministers and MPs in Parliament if the recent International Trade Committee is anything to go by.

[1] https://www.aviation24.be/airlines/ryanair/ryanair-moves-spare-parts-from-the-uk-to-the-eu-in-anticipation-of-a-hard-brexit/

Brexit & Aviation 69

Brexit has entered a surreal phase.  The days pass by, now there’s only 26[1] left and circular stories circulate like a perpetual merry-go-around.   Let’s remind ourselves that UK law, as it’s currently written means the UK’s exit from the European Union (EU) on a fixed date regardless of any provisions made for that event.  When you think about it the legislation is truly ridiculous but that is how MPs in the UK House of Commons voted.

The facts are that the Brexit that the public were sold in June 2016 isn’t available.  It doesn’t exist.  MPs who are describing a Brexit “No-Deal” outcome as short-term risks are being irresponsible.  They are like the criminals who in a storm lure ships onto the rocks in order to plunder[2].  Wrecking a Country’s economy and standing in the world is well underway but there’s still time to stop it.

Aerospace design and manufacturing will be hit severely by this ruining poltical behaviour.  Today, the European Aviation Safety Agency (EASA) is responsible for the issuance of civil aircarft Type Certificates and organisation approvals in the EU Member States.  After its withdrawal, the UK will resume these tasks under its obligations as “State of Design” under the Chicago Convention on International Civil Aviation.  That may sound fine, in of itself.  However, at the formation of EASA the UK was encouraging its technical experts to leave the UK and join the new Agency in Cologne in Germany.  That move was successful and as a result the national expertise on the certification of design and manufacturing was run down.

Detailed regulations cover the issue of aviation safety certificates for aeronautical products, parts and appliances.  These are complex, changing and subject to international agreements.   The expertise necessary to be a leading country in aerospace design and manufacturing is not easily acquired.   So how will the UK meet its obligations as a “State of Design”?  The best guess is that it will “cut and paste” the exiting European rules, regulations and their implementation as best it can.  When technical changes happen it will follow those changes.

Will the UK train up a new generation of national technical experts?  Much of that will depend on the funding made available to do so and any ambitions for the future.  In the past, the fees and charges, paid by industry were used to fund the activities of the technical experts.  That route may not be open post-Brexit since industry will strongly object to paying twice for the same service.

Even if new technical departments are created this is not a light bulb that can be switched on in a moment.  To put new bilateral agreements in place, aviation partners will need proof that new technical departments are capable, competent and properly resourced.  All of the above typically take many years not months or days.  Hence my view that Brexit has entered a surreal phase.  The reality and the fiction are widely different.  A delay is highly likely and eminently wise given the impass and the ever revolving poltical merry go around.

[1] https://interactive.news.sky.com/2017/brexit-countdown/

[2] https://en.m.wikipedia.org/wiki/Wrecking_(shipwreck)

 

Brexit & Aviation 68

Steve Bell is an acquired taste.  His cartoons are topical but sharp political satire.   I framed a cartoon of his years ago.  It cruelly depicted the endless march of Liberal Democracy.  The way I remember it was seeing lots of important characters striding purposefully on a staircase that looked like a Möbius strip.   Going round and around.  The cutting point being that lots of energy and industrious activity was going nowhere.

This week has been just like that cartoon depiction but for Conservatives and Labour Party’s.  Walk outs, important meetings, speeches and a flurry of activity but there has been little real progress towards a practical Brexit endgame.  Who would go into a room negotiating and beat yourself up in front of the party across the table?

Now, opening on March 14th is the chance that the UK House of Commons could send UK Prime Minister May back to the EU to request an extension to the Article 50 process.   Even so, it’s not clear what that extra time would be used for even if it was agreed by the EU Member States.

The European Parliament (EP) has 4 plenary sessions when it can ratify the UK Withdrawal Agreement before European elections in late May this year.  If this is not approved at one of those EP sessions, it’s unlikely to be voted on until after the Summer.  An Article 50 extension beyond the end of June 2019 suggest that the UK should take part in European Parliament elections[1].  A mix of interrelated events will always make this last-minute change complex but not impossible.

Extra time would seem to be wise given where we are at this moment.  The latest UK Government publication on the implications for business and trade of a No-Deal exit on 29 March 2019, makes stark reading.  It’s written as a summary document and so detail is missing but the message is one of lack of preparedness (no mention of aviation).  With the votes in the UK Parliament delayed there’s little notice for businesses, employees, investors and communities on what may be the biggest economic and trading change they face in a lifetime.

In aviation, people are moving their approvals and licences to other States.   For example, UK licenced engineers are looking to transfer their UK licences to an EASA Member State.  Not everyone will need to do this and there’s no doubt that a UK license will remain of value around the world.

In addition, some provisions are being made to soften the extremes of an abrupt UK withdrawal, but the effects of a No Deal Brexit will be penalising[2][3].  A so-called World Trade Organisation (WTO) No-Deal Brexit doesn’t exist for civil aviation.

[1] European Parliament elections will begin on 23 May and end on 26 May 2019.

[2] https://www.eesc.europa.eu/en/our-work/opinions-information-reports/opinions/aviation-safety-after-brexit

[3] https://www.adsgroup.org.uk/blog/eu-aviation-safety-regulation-for-a-no-deal-brexit/?ref=upflow.co

 

Any objectivity anymore?

There are UK politicians running around the broadcast studios.  Those advocating a “No Deal” outcome to the current Brexit negotiations are using all their skills to polish gravel in the hope of turning it into diamonds.  Debate has been debased to a frightening degree.

In my career, I spent quite some time in the analysis business.  That’s the world of gathering data and crunching it with the aim of trying to figure out what going on in the “real” world.  This process is essential if the aim is to continually improve something.  Just to over simplify, as is the fashion of the moment, analysis can be broken down into two approaches.

One approach is to collect wide-ranging data and explore it, as best you can and try to distil the story that it’s trying to tell.  It’s to illuminate and discover what is contained within data.  This unbiased objective approach can be more difficult than one might imagine.  It’s the scientific method.  It’s open to peer review and open debate.

The other approach is to start with a set of beliefs or theories.  Bit like an imaginary pulp fiction police detective with a hunch.  Then to dig into the data to see if your preconceived idea can be proven or not.  If not keep quiet or in the extreme case, choose the methods and data that ensures your case is proven.

It’s this second case that seems to be most often applied to Brexit.  Anyone who scrutinises Brexit in an open and objective way is often labelled a saboteur, traitor or mutineer.  The quality of the critical debate we are having is screwed by inflammatory name-calling and blind religious devotion to beliefs and theories.

It’s not unusual for people who take the first approach to find it hard going.  It takes considerable skills of persuasion to demonstrate that an unpopular result is true.  Business books are full of references to a performance-based approach.  Because of the phenomena I’ve described above I’d recommend that a politician or CEO’s reward is never solely based on a measure of “performance”.

Parliament has shown repeatedly that UK politicians are brilliant at deciding to run down rabbit holes.  Wouldn’t it be so much better if a degree of thoughtful objectivity could shine through once or twice.   If a “No Deal” Brexit outcome happens then objectivity has gone out of the window.

Brexit & Aviation 67

I must confess that the detail of aviation environmental policy is not my area of expertise.  Nevertheless, it’s a substantial subject and one of immense importance.  It’s best to note that environmental policy advances at international, regional and national level.  To be truly effective the framework for environmental policy must be adopted within the International Civil Aviation Organisation (ICAO).

This year is an important year for ICAO.   It’s an Assembly year.  Every 3-years an Assembly[1] comprised of all Member States of ICAO meets in Montreal.  During the first 75 years of its existence, ICAO has made an indisputable contribution to the development of worldwide civil aviation.  However, at previous Assemblies, ICAO has had immense problems reaching a consensus on environmental issues.

In the European Union (EU) its agency, the European Aviation Safety Agency (EASA) actively contributes to the ICAO Committee on Aviation Environmental Protection (CAEP) which develops and maintains the international standards for aircraft noise and emissions[2].

With Brexit looming, it remains to be seen what, if any role the UK will have in the future in the development and maintenance of environmental standards for aviation.  That said, there’s more to aviation environmental policy than technical standards.  There’s a useful European Aviation Environmental Report[3] that explains the various mechanisms that are being worked on with respect to aviation environmental policy.

One of the most controversial, for obvious reasons is that of market-based measures[4].  Market-based measures are mechanisms designed to tackle the climate impact of aviation, beyond what operational and technical measures or sustainable aviation fuels can achieve.

In October 2016, the 39th Assembly of ICAO States reconfirmed the objective of stabilising CO2 emissions from international aviation at 2020 levels.  From November 2018, 76 ICAO States volunteered to offset their aviation emissions from 2021 and this represents three quarters of the international aviation activity.

In Europe, the approach has been to adopt an Emissions Trading System (ETS).   ETS and offsetting schemes both address aviation emissions but differ in how they work.  Currently, only flights between airports located in the European Economic Area are included in the EU ETS legislation.  For the UK, the implication being that, post-Brexit it will no longer be covered by such EU legislation.

The UK Government is proposing statutory instruments, or secondary legislation on ETS before the exit date of 29 March 2019.   In the event of a disorderly (“No Deal”) exit from the EU, the UK would not have an agreement in place to continue participating in the EU ETS.  The UK would therefore leave the EU ETS on exit day[5].   The UK’s future approach to carbon pricing is to consider a range of options, including continuing to participate in the EU ETS, a UK ETS (linked or standalone) or a carbon tax.  If the far-right UK Conservative European Research Group (ERG) further get their hands on power there may be no measures on climate change at all.

This lack of clarity and direction are not helpful for aviation operators who need to plan.  With all the time that has passed since the vote it’s sad that all we know is the date of exit and even that is in question.

[1] https://www.icao.int/Meetings/a40/pages/default.aspx

[2] https://www.easa.europa.eu/sites/default/files/dfu/Opinion%20No%2009-2017.pdf

[3] https://www.easa.europa.eu/eaer/

[4] https://www.easa.europa.eu/eaer/topics/market-based-measures

[5] https://assets.publishing.service.gov.uk/media/5c0febf1ed915d0bd3e4da92/081118_MRV_Explanatory_Memorandum_FINAL.pdf