UK Exit from the EU and its impact on the UK Aviation Industry
July 2018 – Brexit and Aviation
Following the publication of the UK Government’s White Paper, titled ‘The Future relationship between the UK and the EU’, some clarity has started to emerge on the direction that the UK Government is taking with Brexit negotiations and its impact on aviation entities based in the UK. This paper aims to capture the latest policy positions and agreements as they emerge and discusses their potential impact on UK aviation.
This is a Baines Simmons interpretation of the Government’s White Paper put together by Bob Simmons, dated July 2018. The paper aims to capture the latest policy positions and agreements as they emerge and discusses their potential impact on UK aviation.
Updated 16 May 2017
Following the recent triggering of Article 50, many UK aviation businesses remain unsure about what the future holds, with widespread concerns about how the changing economic landscape will affect EASA approved organisations in the UK. Baines Simmons Managing Director, Justin Scarborough, gives his view on the ongoing uncertainty around the effect of Brexit on the UK Aviation Industry.
What happens next for Civil Aviation Regulation?
The UK Government’s Policy Paper was published in February 2017 and with Article 50 being triggered on 29th March, the commentary in the paper still holds. There are 2 references to aviation but neither reveal anything new:
8.32 In the transport sector, there is a substantial body of EU law covering four transport modes (aviation, roads, rail and maritime), which governs our current relationship with the EU, and which will need to be taken into consideration as we negotiate our future relationship. For example, in aviation, the standard international arrangement is that air services operate under rights granted through bilateral air services agreements between nation states. In the late 1980s and early 1990s the EU created an internal aviation market whereby any carrier licensed in the EU is entitled to operate any service in the EU, superseding the old bilateral arrangements. As we exit the EU, there will be a clear interest for all sides to seek arrangements that continue to support affordable and accessible air transport for all European citizens, as well as maintaining and developing connectivity. We will also seek to agree bilateral air services agreements with countries like the US, where our air services arrangements are currently covered by an agreement between the EU and the US.
8.42 There are a number of EU agencies, such as the European Medicines Agency (EMA), the European Chemicals Agency (ECHA), the European Aviation Safety Agency (EASA), the European Food Safety Authority (EFSA) and the European (Financial Services) Supervisory Authorities (ESAs), which have been established to support EU Member States and their citizens. These can be responsible for enforcing particular regulatory regimes, or for pooling knowledge and information sharing. As part of exit negotiations the Government will discuss with the EU and Member States our future status and arrangements with regard to these agencies.
Although the EU regulations establishing EASA will cease to apply on Brexit, it will be in the interests of all parties for the UK to continue to participate in EASA. There are precedents for non-EU participation and this should be workable for the UK, but this is another critical piece of the post-Brexit jigsaw which will need to be addressed.
UK approval, permission and licence holders will be required to follow the requirements of UK Law (the Air Navigation Order or ANO) rather than EU law as is presently the case. However, we would expect the CAA to adopt the current EU requirements, by simply replicating the requirements as a Civil Aviation Publication (CAP) and referring to these in the ANO or possibly by referring to the EASA requirements directly (if this is an option legally).
What are the key challenges?
Brexit will present various key challenges for the CAA and UK industry, including:
- Currently, the UK CAA is a major contributor to EASA working groups (along with France and Germany), and as such has a significant influence on the published requirements. Should the UK adopt EASA requirements, the UK CAA and UK industry would have no formal mechanism to affect the content of the requirements or their future direction once the UK exits the EU
- The UK would become a ‘Third Country’ under EASA, therefore, all current approvals would in theory need to be overseen by EASA or NAA’s from existing EU states.
- Release documents (Form 1’s, CRS) issued under the UK ANO would not have mutual recognition in EU member states.
- Licences may require ‘validation’ to be used in other EU member states.
While the CAA may initially adopt EU EASA requirements, with an industry as large as that of the UK it would be unlikely that EASA would wish to oversee all existing approvals or issue validations for licence holders. Additionally UK industry may become concerned in their lack of formal influence on EASA requirements in the longer term.
One potential scenario is the possibility of the CAA and/or other UK-based organisations, becoming a Qualified Entity in accordance with the Basic Regulation, Annex V, to allow them to complete organisation oversight activities on behalf of EASA in the most cost-effective manner.
Given that the UK CAA has not published a plan of action for the UK’s exit from the EU, it is likely that Approval holders will have ongoing concerns over the long-term viability of their EASA Approvals. Organisations with multiple sites may wish to consider the potential for relocating their primary site to another EU member state; note that there are differences in the interpretation of a ‘principle place of business’ across the EASA requirements and the European single skies agreement has clear references not just to the aforementioned principle place of business but also the shareholder/capital structure of such organisations e.g. majority ownership needs to sit in an EU member state.
If you have any specific concerns about how Brexit will affect your organisation directly, do get in touch with us so that we can put your mind at ease. Baines Simmons is committed to meeting the needs of our European clients whichever regulatory and system of government.