UK Government to pursue ultra-liberalised aviation strategy post-Brexit

 

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The UK Government issued a Green Paper – used for consultations, but also outlining intended policy, for the countries aviation sector over the next 25-30 years.

The proposals are broad ranged and include some serious liberalisation of the aviation market.

Examples include:

  • Removing ownership restrictions (currently limited to 49%) for non-UK owned and registered companies
  • Removing nationality restrictions on individuals owning shares in airlines
  • Changing the right of access to the UK’s inbound, outbound and domestic routes to reflect its ‘primary place of business’. For example a Chinese company won’t get access to domestic routes in the same way an Irish or UK-based airline might. However it’s entirely possible it might be allowed to own and operate a UK-based airline with strong Chinese connectivity.

“The government believes that such restrictions are obsolete—what matters is that an airline is safe, secure and properly regulated, not the nationality of the owner.”

Air travel from the UK is expected to rise from its current level of 284 million passengers a year to 435 million by 2050, and some analysts predict this will happen far sooner.

A big boost will occur when the third runway at Heathrow is completed, this will see domestic and short-haul demands rise from the new terminal with a rush of demand for access to the new international slots. Indeed it’s expected that within 5-8 years of the runway being open, the airport will be back at capacity. This time however there will not be a fourth runway and alternatives will have to be found.

The governments hope is that the limits will enable larger amounts of capital to be raised  by UK airlines and strengthen the countries capabilities, to deliver air services and transfer routes into the mid-century.

One thing the airlines were not happy about, was the intention of the government to continue with Airport Departure Tax into the forseeable future, claiming the airline industry was ‘relatively under-taxed compared to others’. Quite how that works is beyond anyone as VAT is payable at the current rate as it is on any other purchase. Adding specific fees brings in £3.6 to £4.5 billion a year in tax, and having it is far to difficult to surrender.

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