UK-EU Trade Treaty: what does it mean for aviation?

After a great deal of down to the wire negotiating, the EU and the UK published the text of their Trade Treaty, effective Jan 1st 2021.

There are a lot of pages, but the section that matters to us is aviation, and that starts on page 221. Most of this begins with a series of legal definitions and to be fair these are all pretty much standard wording that has been used since the Chicago IATA agreement of 1944.

Now you may remember the articles on the Five Freedoms of Air Travel, which became in effect Nine Freedoms, and that can be found here: The Freedoms of Air Travel. They may help, but as I’ve said many times the full Nine that the UK and EU shared under the 1997 EU Opens Skies were very unlikely to continue, and the trade deal makes clear: they do not.

One of the first key provisions permits that:

The UK and the EU may fly into and out of each others airports, they may stop and pick up passengers and cargo and travel onward to another destination in their respective territories.

Overflight rights continue as they always have.

Stops for purposes that do not include picking up passengers and cargo (such as refuelling and emergencies) are to continue.

Overall the standard first Four Freedoms of Air Travel are reinstated as per the Chicago Treaty of 1944. These had been superseded by the 1997 EU Open Skies Treaty which basically gave unrestricted air access to all airlines form all member states.

The Fifth Freedom has been restricted to direct agreements with individual states and only for cargo.

However, the biggest loss is what RyanAir and easyJet especially didn’t want to have to face, but made provision for it if they did. For example easyJet transferred vast numbers of its UK aircraft registry to Austria, and most of its pilots licences there as well, so that their aircraft could carry on flying say, French Domestic routes while being registered in Austria. Pilot licences are now recognised by both sides.

Overall, EZ made a wise choice, the new treaty means that only EU registered aircraft may fly EU internal flights, UK registered aircraft wont be able to, and the reverse applies.

What is allowed is UK or EU charter flights from any airport to any airport in either sides territory, but there is provision to prevent these from becoming a regular occurrence as ‘disguised scheduled flights’. So for example you can’t employ a British registered 757 on a run from Frankfurt to Malaga and back all through the summer season. Two, maybe three flights and thats it. Similarly, EU registered aircraft can’t fly back and forth from Manchester to London other than as a short charter service.

To determine wether or not these services follow the rules, the UK CAA and EASA will establish an authorisation process.

An interesting area where free trade operations continue to function is on codeshares and ticket sales. These will carry on as before. So as an example you could buy a through-ticket from Amsterdam on KLM, transfer at Heathrow to Virgin Atlantic to carry on to the US. Similarly I could buy a ticket from BHX to FRA and then on to Vienna using Lufthansa and Austrian.

The new agreement also agrees to respect each others AOC -Air Operators Certificate.

My reading of the Article AirTrn 7 reads that the UK has made a concession here. Previously the UK was happily going to let let anyone own airlines in the UK from anywhere in future. Government policy was as long as the owners obeyed the law, they saw no issue with who owned what. That has changed.

The owners of airlines must have majority owners who are UK based and/or EU based, and the same applies in the EU. That means airlines like Delta are still limited to 49% ownership stakes in Virgin Atlantic for example. It also protects IAG who have full ownership of BA but are technically a Spanish owned conglomerate now, thus EU. This will make it difficult for the UK to have a different agreement with the US, as this was one area they wanted removed.

Article AirTrn 9 sates that the two sides will re-examine who can own and control what in respect of airlines, during the next 12 months and that they may amend the agreement at a later date. That tells you that either the UK is willing to allow its ‘we don’t care who owns it policy’ provided the EU does the same. However for now, things carry on as they were. The EU is unlikely to budge on this issue, so I’d be amazed if any real advance happened here.

There is extensive leeway granted for airline staff to work at an airlines base of operations and in either sides territory with quick approval for staff who need to do so being granted.

There was also agreement that neither side shall force the other to use a specific ground handling agent at airports, ensuring competition in that market.

Titan A320

There is also extensive provision for the use of wet (with crew) and dry leasing arrangements to ensure that market remains stable and competitive. This affects especially airlines like Titan and HiFly. However it makes it clear that this type of leasing is subject to short term needs, emergency use, and capacity availability and is not to be used to get around other conditions in the agreement.

There is a wide section on aviation security, the transfer of information and mutual recognition of EU and UK abilities to manage security at airports and in bagage screening.

There is also a wide ranging agreement on Air Traffic Management , system upgrades and developments.

An agreement on consumer rights and protection appears fairly strong, with both sides agreeing to continue to demand high levels of consumer rights and customer service from airlines.

One major area covered is aviation safety and technical maintenance of aircraft. These areas are in essence, mutually recognised by each side, meaning that the UK’s aviation engineering business is well insulated from any changes. However all of it is very much on the basis of willingness to communicate and inform all sides of problems and issues.

Conclusions?

Not a lot has changed, for the average casual traveller, but the UK has taken a hit for leaving the EU in terms of the Open Skies agreement. Airlines in the U.K. have lost many of the advantages they had in the EU. 1997 Open Skies was a revolutionary free market provision that gave UK based airlines a far bigger advantage than they have now.

There is a real danger that if the UK tries to force the ownership issue, permitting airlines for example like Delta to buy up 100% of Virgin, that the EU will not go with that. That will force easyJet for example to move its HQ to Vienna – which currently seems unnecessary. The biggest danger is that all of the UK’s airlines will end up being owned by overseas companies, a situation we’re almost at now.

Overall, for aviation this is a far better deal than no deal, which would have had severe implications. The fact is the UK is now in effect limited to the original Five Freedoms, and is unquestionably a ‘third party state’ to the EU, no different to the US or Canada or even China.

What will you notice as a passenger? Immigration control, passport restrictions, longer lines at airports (although some countries will not be so picky, like Spain and Portugal who deal with millions of UK tourists and have said they won’t make life difficult). The biggest thing is you’re now limited to 90 days in Europe in any 180 day period, and you might need a visa for even short working periods.

The biggest change will be in 2022 when all non-EU citizens will need an EU version of the US ESTA to even get on a plane or ferry or the Eurostar.

If being in the EU was a 10/10 score for aviation in the U.K., no agreement would have been a 2/10. The new agreement is a 6/10.