Ever since the UK’s 2016 referendum kicked off the complicated and uncertain journey towards Brexit reality, the consequences have been felt not only by the British economy, but by various industries all around the world. And the airline industry is one of them. With over 85 million people traveling by air between the EU and UK each year, many are wondering – both passengers and airlines alike – how will Brexit affect flights, and the airline industry as a whole?
With Brexit negotiations now approaching a critical phase, the airline industry is all ears and planning for several possible scenarios. These scenarios, and affiliated consequences, are largely uncertain and depend on whether current negotiations yield a ‘Deal’ or ‘No Deal’ outcome. But airlines should be prepared nonetheless.
Here are some of the expected Brexit consequences airlines should be prepared for.
1. Disruption of air service agreements
The UK’s existing aviation system and regulatory framework was developed according to EU law, including a host of international agreements that affect trade and movement between the UK and other countries. With Brexit, agreements such as the Air Service Agreement come into question and must now be renegotiated.
A ‘No Deal’ outcome would leave no time to establish a comprehensive Air Services Agreement. Instead, the UK would have to scrape together a limited agreement covering basic air connectivity until deals could be struck with every nation around the world. The uncertainty alone could cause major disruption.
According to a recent study funded by the International Air Transport Association (IATA), “In the most extreme scenario, air travel to and from certain countries may not even be possible, if existing air service agreements are not adequately replaced.”
2. Increased border control and passenger management
Since the UK government has ruled out the option of remaining within the customs union and single market, a tighter border is an inevitable post-Brexit outcome. More resources will have to be allocated to passenger management and border operations. Airlines can expect more delays related to increased visa and passport control requirements, in addition to logistical challenges such as missed flight connections.
Potential delays could be mitigated by a continuation of visa-free travel and e-gate usage at border controls. There are also talks of implementing a ‘third lane’ solution, which could reduce some of the waiting time for EEA nationals. However, it is uncertain whether this solution would be effective or just add to the collective burden on resources.
3. Restricted movement of goods
Also hinging on Brexit negotiations is the existence of tariffs on imported goods. The introduction of tariffs and additional border checks can lead to a slow down of supply chain operations and an increase of administration and infrastructure demands.
A 2018 study on the effects of Brexit on airlines, funded by the International Air Transport Association (IATA), discusses this consequence:
‘Air freight is crucial for a healthy economy but also a healthy aviation market – many routes are unprofitable when only carrying passengers, many routes would become commercially unviable if transporting freight is no longer commercially viable. The competitiveness of air freight is heavily reliant on the speed and predictability at which goods are moved across borders.’
4. Decline in airline revenues
Brexit-related fears alone have already led to stalling corporate investments in the airline industry. Airlines can expect the risk of further revenue drops once Brexit comes into effect. In the worst case scenario, a cap on the number of flights in the UK could lead to mass passenger ticket cancellations—up to five million, according to one industry group.
Furthermore, there are possible financial consequences connected to a poorer passenger experience post-Brexit. When passengers are required to spend more money on tickets and visas, as well as more time going through inconvenient border procedures, they may be less inclined to spend money on ancillary products and services—or to buy flight tickets in the first place.
How airlines are preparing for Brexit
Whatever the outcome of Brexit, many airlines have already started taking steps to make sure they are ready to mitigate the consequences.
In the wake of Brexit announcements, Ryanair is one airline that has suffered steep losses.
‘We believe the UK government continues to under-estimate the likelihood of flight disruptions to/from the UK,’ they say in a statement.
Ryanair has subsequently applied to the UK CAA for a UK air operator’s certificate and secured approval to continue operations under Ryanair UK instead.
British Airways has also made announcements about how they will operate in the post-Brexit era, stating that the airline would ‘continue to fly all our customers to their destinations and operate a normal schedule whether a deal is agreed or if the UK leaves the EU with no deal in place.’
To further relieve passenger fears, British Airways has provided answers to frequently asked questions, and published a visa and passports guide for UK residents.
Thomas Cook is another airline that is vocal about post-Brexit operations. A dedicated Brexit Working Group has been set up to implement all their contingency plans.
‘Having already begun the sale of flights and holidays in the post-Brexit era, we now require urgent clarity from the UK government and EU institutions on a transitionary agreement,’ reads a statement by the airlines. ‘We continue to make the case for a comprehensive EUUK air transport agreement in the longer-term.’