October 1, 2018

Update - UK Government notices of no deal Brexit and aviation

While the UK government stresses that it is still working on and hoping for a negotiated outcome, the possibility of the UK's departure from the EU on 29 March 2019 without an agreement having been reached with the EU is now being given serious consideration. In August the government started issuing a series of technical notices concerning various aspects of a no deal scenario. On 24 September it published three notices relevant to aviation, concerning flights, security and safety, the main contents of which are summarised and discussed below.

Flights between the UK and the EU

At present, by reason of the UK's membership of the EU single aviation market, any airline licensed by any EU state or EEA state (Iceland, Norway and Liechtenstein) is entitled to operate any route within the EU without advance permission of individual national authorities. After Brexit, without a deal, permission would be needed from the UK and the respective EU state for any such operations. The UK says that it would envisage granting permission to EU airlines to continue to operate, and would expect EU states to reciprocate. Such permissions would best be given on a multilateral basis, but could be given bilaterally.

Airlines would also require:

a foreign carrier permit from the other state. The UK has a long-established procedure for such permits. Processes may vary in different EU states; and
safety authorisation from the CAA (in the case of EU airlines) or EASA (in the case of UK airlines). In principle, the UK will accept a valid EASA AOC as sufficient for such purposes. The EU has yet to provide details about its approach but the UK would expect reciprocity.

Flights between the UK and the rest of the world

For flights between the UK and one of the 111 states with which the UK has a bilateral air service agreement, there will be no change.

For flights between the UK and one of the 17 non-EU states with which the EU has an aviation agreement (which currently governs aviation relations between the UK and such state), replacement bilateral arrangements will be in place by Brexit. A number have already been agreed and the UK is confident that the remaining agreements will be agreed in time. Such states include most European states neighbours to the EU, Morocco, Israel, Jordan, Canada and the US.

Flights - other aspects

Existing UK route licences (required by UK airlines for international operations) would remain in place, as would existing UK operate licences.

The UK would not impose nationality restrictions on the conditions for an operating licence, but:

UK airlines would need to consider whether there were any such restrictions under the relevant air service agreement;
EU airlines with significant UK ownership would need to check their compliance with the ongoing requirement for majority EU ownership and control.

Current rules and processes for slot allocation would continue unchanged.

As would current passenger rights legislation (ie, on denied boarding/cancellation/delay, passengers with reduced mobility and insolvency of travel providers).

Air traffic management

There would be no disruption to the UK's provision of air navigation services. The UK and EU states have international obligations under the 1944 Chicago Convention to provide air navigation services, and the right of overflight is established by the accompanying Two Freedoms Agreement, to which the UK and EU states are party.

Furthermore, Eurocontrol is independent of the EU, and so the UK's membership of it will be unaffected by Brexit.

The UK's air navigation service provider, NATS, would continue to provide air navigation services to aircraft in UK airspace, working with neighbouring providers, principally through Eurocontrol, and regulated by UK law rather than the EU Single European Sky (SES) scheme, in which the UK would no longer be able to directly participate.

Security

Existing rules would continue. As UK rules go above and beyond EU standards, there would be no good reason for the EU not to recognise them as equivalent, but if it did not (and this is the current indication from the Commission):

As regards passengers:

there would be no difference in security screening for most passengers;
EU passengers transferring through UK airports are already re-screened, so there would be no change
UK-originating passengers transferring through EU airports would have to be re-screened at those airports (with significant operational and cost implications for them).

As regards cargo:

The EU cargo security scheme requires carriers, in order to fly cargo into the EU, to hold a designation granted by an EU state (an ACC3 designation), confirming the acceptability of security procedures for every airport used as a last point of departure into the EU. Currently the UK is responsible for granting such ACC3 designations to 37 international carriers.
The UK would intend to grant UK designations mirroring its existing ACC3 designations, and to recognise EU cargo security and not require new designations for carriers from EU airports, but would expect this to be reciprocated by the EU.
The Commission has said that existing ACC3 designations granted by the UK will not be recognised, so that the 37 carriers in question will require fresh designation from a continuing EU state in order to fly cargo into the EU (whether from the UK or from a third country), but it has not yet proposed any mechanism for how this would be achieved.

Safety

The European Aviation Safety Agency (EASA) has taken over many functions traditionally performed by the national aviation authorities of the EU states - essentially, the formulation of common safety rules and standards, which permit mutual recognition of certificates and licences among aviation authorities of the EU states, and the granting of design approvals, type certificates and third country safety certificates.

All EASA rules and standards would be retained in UK law, with current EASA functions transferred to the UK CAA. The CAA has been preparing to take on these responsibilities and is confident that it would be ready to perform these functions if required. Automatic mutual recognition as between the UK and ongoing EU states would cease.

Under the Chicago Convention system, most certificates relating to an aircraft or its operation or maintenance, and licences for personnel involved with an aircraft (flight crew, cabin crew, maintenance engineers) are linked to the state of registration of the aircraft. The position in a no deal Brexit scenario would be complex, and is set out in detail in the government's notice, but the essential elements are as follows.

As regards certificates and licences relating to UK-registered aircraft issued prior to Brexit:

those issued by the CAA would remain valid (and would continue to be recognised as valid under the Chicago Convention system);
those issued by EASA or the aviation authority of an EASA member would remain valid for two years, after which a CAA certificate/licence would be required. Pilots licences would need to be validated by the CAA, and would be so long as the pilot could demonstrate proficiency in the English language.

As regards certificates and licences relating to EU-registered aircraft issued by the UK CAA prior to Brexit, the Commission has said that they would no longer be automatically accepted. However, as they would have been issued in accordance with EU rules, the UK encourages reciprocity on the part of the EU.

Existing aircraft type certificates would be treated as if issued by the CAA (where relevant) and so continue to be valid, and the CAA would be responsible for issuing new type certificates, in accordance with the Chicago Convention system. Certificates of airworthiness for aircraft and parts would be recognised if issued by the CAA, of if issued by an EASA authority for a transitional period of two years. However, the EU has indicated that airworthiness certificates issued by the CAA, or organisations approved by the CAA, prior to Brexit would no longer be automatically accepted in the EASA system, so that parts manufactured and certified by organisations approved by the CAA could no longer be installed on EU-registered aircraft unless they were approved as third country organisations by EASA. EASA has yet to provide details of what it proposes in this respect.

Aircraft wet leasing, which is fairly liberally permitted within the EU as regards aircraft registered in an EU state, would also be affected. The UK would intend to continue the permissive approach as regards the wet leasing of aircraft registered in a continuing EU state, and also to continue the more restrictive approach that applies as regards other aircraft (under which it is necessary to establish justification on grounds of exceptional needs, or the need to overcome operational difficulties, or necessity in order to satisfy seasonal capacity needs). The EU is currently proposing to treat the UK as a third country, so that an EU airline wishing to wet lease a UK-registered aircraft would have to establish justification on grounds of exceptional needs etc.

Finally, there are bilateral safety agreements (BASAs) between the EU and the US, Canada and Brazil. The UK is currently negotiating with these three countries to agree replacement bilateral arrangements.

Our comments

These notices demonstrate the complexities involved and, so far as they go, provide welcome clarification on many points - not least those that have been subject of unfounded scare stories, such as the impending withdrawal of overflight rights. The notices also indicate that the government has been giving serious consideration to a no deal outcome, and working hard behind the scenes. For example, it is encouraging to hear that replacement aviation agreements have already been agreed with a number of non-EU states, and that the government is confident that the remaining agreements will be agreed in good time. However, the notices do not provide all the answers, and could hardly be expected to, at this stage.

Perhaps the most important outstanding question is that of the continuation of present UK-EU services. The government says that it would envisage permitting existing services to continue, and would expect reciprocity from the EU side, but it does not make it clear whether reciprocity would be a condition, or discuss in any detail what the position would be in the absence of a reciprocal approach. One fall-back (not discussed in the notice) would be provided by the existing bilateral air services agreements between the UK and the EU states, which have been overtaken by the EU single market but remain in existence, although currently largely dormant. Many of these are likely to be in old-fashioned restrictive form, and not give the legal basis for all current operations, although some (for example, with the Netherlands) are more liberal, and might cover most current operations. Even where the existing bilaterals are insufficient, current services could possibly be preserved by the operation of the comity and reciprocity principle.

Two types of operation which would not be covered by any of these existing bilaterals, and quite possibly not by comity and reciprocity, would be 7th and 9th freedom services (eg, operation by a UK carrier between Amsterdam and Barcelona (7th) or Rome and Milan (9th)). It is therefore not surprising that airlines who operate such flights have been seeking to establish an operating company in a continuing EU state in order to try to get round the problem.

As the notice says, a multilateral approach is much to be preferred, but the mentioned alternative of bilateral arrangements may not be quite so simple, given that the Commission may claim that it has been given exclusive competence to negotiate with the UK.

It is surprising to read that the UK is not intending to impose nationality restrictions on the conditions for an operating licence, given that in its letter of 9 August to UK operating licence holders the CAA said that the requirement for EU ownership and control would be replaced by one for UK ownership and control. It appears that the government may be intending to take a more liberal approach on this issue even unilaterally, without any guarantee of reciprocity, perhaps in the hope that it will encourage others to follow and help at last bring about the end of the antiquated nationality rules for airlines.

In order to increase worldwide acceptability of the common EU ownership and control area, the Commission has been negotiating with third countries to enter into so-called "horizontal agreements" with the EU, under which they agree to replace the traditional national ownership and control clause in each of their bilaterals with EU states with a clause which recognises EU ownership and control. These efforts have led to the conclusion of over fifty such agreements. In addition, conscientious EU states (such as the UK) in their aviation negotiations with other states have been trying to persuade them to accept such an EU ownership and control clause, and the UK has had some success in this respect. All these agreements now require attention, because, as they are currently drafted, after the UK ceases to be a member of the EU UK airlines will no longer meet the test of the EU ownership and control clause, with the result that the other state would be entitled to withdraw traffic rights. The notice does not mention negotiations in this respect, but it is to be hoped that they are also in progress.

Those who are not expert in the finer details of aviation security may be surprised by what the notice about security says - namely, that if the EU persists with its current position the main consequence as regards passenger security would be to impose significant operational and cost burdens on EU airports (but not on UK airports) and there could be serious disruption of cargo imports into the EU from third countries (but not the UK)! It may be that in this way the government is trying to show to the other EU states that possible disadvantages from no deal being reached would by no means fall only on the UK. Indeed, this is even more true in other more significant respects, most particularly disruption of current patterns of services and traffic flows.

It is to be hoped that, as we approach the endgame, the EU governments will appreciate this, if they have not already, and opt for common sense and benefit for all European peoples and businesses.