With the British Government seemingly unable to comprehend the enormity of the problems facing ailrines alone, easyJet has applied for an air operator’s certificate (AOC) in Austria. As with all British based airlines, it faces uncertainty about being able to continue flying in the European Union post-Brexit. The UK government seemingly unaware until recently there would be a problem! The new airline, easyJet Europe, will be headquartered in Vienna.
easyJet’s network depends heavily on EU route rights. A European AOC would safeguard the company’s routes, should the UK and EU fail to agree on a new aviation agreement before the UK leaves. Part of the problem is the UK wants to quit the European Court of Justice system, which is the agreed forum for resolving issues over EU open skies.
easyJet says that with the new company structure, the airline will become a pan-European group with three subsidiaries. It will be registered in Austria (easyJet Europe), and include existing easyJet Switzerland along with easyJet UK.
Apparently, the application process is in the later stage of approval and Austrian AOC will be granted in the near future. How could it not? Austria isn’t going to turndown millions of tax Euros from having one of the largest airlines in Europe based in its capital!
An EU AOC is essential for easyJet, 50% of its 75 million passengers a year, come from the EU’s 27 member states. 100 Airbus A320 aircraft, 4,000 employees are based in six EU member states with more in non-EU associated member Switzerland, having 25 aircraft and 950 staff. The UK has 140 aircraft and currently 6,000 staff.
110 aircraft will be deployed for EU operations and registered with an OE-xxx code. The aircraft re-registration process will occur over the winter of 2017-18 and 2018-19. For legal reasons the process must be completed before Brexit takes effect at the end of March 2019.
Many head office functions will move to Vienna but much will remain in the UK. However for legal and tax reasons the company will be Austrian inside the EU and no longer British. It will still pay taxes like VAT and UK departure tax, on income earned inside the UK but not as a a UK corporate tax payer, that money will go to Austria.
This of course is but the start. IAG will be working on the same thoughts over BA’s European flight network, Flybe will be doing the same thing along with airlines like Thomas Cook and the British side of Tui. The reality of Brexit may finally start to hit home.