With Britain scheduled to leave
the EU on March 29, a reasonable observer might have expected to
find that an orderly withdrawal had been negotiated a
long time before now – after all, Britons did vote to leave by 51.9%
to 48.1% all the way back in June 2016.
Unfortunately, reason and Brexit have long
Instead the ‘Mother of all Parliaments’
is hopelessly divided when it comes to deciding on what terms the UK should
break free from its largest trading partner.
With no version of Brexit seemingly able
to attract a political majority, a ‘no-deal Brexit’ gets ever
likelier as the departure deadline draws near.
For business in general and trade especially,
a no-deal Brexit is certain to be hugely disruptive, as well as economically
disastrous for the UK and damaging for the EU. Just for starters, this
‘jumping off a cliff’ version of Brexit means that on March
29, the UK immediately drops out of the internal EU market for air services,
the Customs Union and the Single Market with next to no advance preparation.
The latter alone means the UK saying goodbye
to no-tariffs and no-tax trade with EU partners, as well as an end to
the free movement of goods, services, capital and people between the UK
and its closest neighbors and largest trading partners.
The EU’s Customs Union sets tariffs
for trade with countries outside the EU and means that once goods have
cleared customs in one country, they can be shipped to others in the union
without further tariffs being imposed.
No Deal Brings New
Again, once the UK exits the EU, it will
need to develop and administer new customs arrangements covering all the
countries it trades with, including EU nations.
A no-deal Brexit will, according to UK contingency
planning, mean the UK must use World Trade Organization rules. This will
mean higher tariffs, trucks and drivers will need new permits, and cargo
will need to comply with whatever customs arrangements can be hurriedly
agreed between the UK and third parties, including the EU. Huge delays
at ports, the Channel Tunnel and airports are expected.
The UK’s departure from the internal
EU market for air services, meanwhile, means an end to participation in
a system that allows any airline licensed by an EU country, and therefore
adhering to common regulations, to operate any route within the EU without
the advance permission of individual national authorities.
According to government advice, if the UK
crashes out without a deal, airlines will need to seek individual permissions
to operate between the UK and EU.
“For airlines licensed outside the
UK and the EU, their eligibility to operate air services to the UK is
be determined by the ASA between the UK and the state in which they are
licensed,” says one government note.
On The Bentley Express?
With only weeks to go before the March 29
exit date, UK businesses have been left high and dry – the uncertainty
about how the UK leaves the EU has prevented adequate preparations being
made and advice from government has been vague, at best.
In fear of a no-deal Brexit, in the last
weeks alone, car maker Bentley has announced it is stockpiling parts and
described Brexit as a “killer” that is threatening its profitability.
Retailers Dixons Carphone and Pets at Home have said they are building
up supplies on the assumption that trade will grind to a halt, while both
Sony and Dyson announced they would move their head offices out of the
Airbus Fly Away?
Airbus, meanwhile, has threatened to relocate
its $6bn annual UK revenue business, threatening 14,000 employees and
110,000 supply chain jobs dependent on its output, with chief executive
Tom Enders warning that a no-deal Brexit would force the company to make
“potentially very harmful decisions for the UK”.
He added: “Please don’t listen
to the Brexiteers’ madness which asserts that because we have huge
plants here we will not move and we will always be here. They are wrong.”
Air freight stakeholders and shippers have
been left to make their own preparations for March 29. Most are hoping
the UK can somehow still find a way of reversing the referendum decision
and stay in the EU, or at least negotiate an orderly withdrawal. But with
no political breakthrough in sight, most are now preparing as best they
can for the worst-case scenario.
Pomlett, the president of Freight Transport Association (FTA) and executive
director of CEVA Logistics, has, almost since the aftermath of the 2016
referendum, been calling on the UK government to stop pretending that
somehow businesses and supply chains will find a way of coping with a
He told FlyingTypers that at present,
there was very little information available to help provide accurate assessments
of what happens to UK air freight and airport operations in the case of
a no-deal Brexit. “At the FTA, we’re trying to seek clarity
on this, because there need to be agreements in place before airlines
can even fly,” he said. “Aircraft
will be grounded, is one possible scenario. I think it would be catastrophic,
but it remains an unanswered question.”
Rogier Spoel, air freight policy manager
at the European Shippers’ Council (ESC), said a no-deal Brexit would
be disastrous for all trade, including air freight.
“You might think the problem would
be more on the passenger side, but in most airports, the passenger operation
is way bigger than the freight operation so you might see the whole airport
being disrupted if you have the worst no-deal scenario played out,”
he told FlyingTypers.
“So, in that respect a no-deal could
be a very serious issue, specifically for aviation. There already have
been some contingency plans looking at how British Airways and other UK
airlines can operate between Europe and the UK. But all this is based
on some sort of assumption which is difficult because nobody knows (on
what terms the UK will leave the EU), which in turn makes it difficult
to give clear-cut advice to our members.”
“There’s a lot of attention
on compliance and customs regulation and about what do we need to do when
the UK becomes a third country and it’s hard to know what the answers
are,” Mr. Spoel said.
What Happens To
EU Main Port?
“What we also must look at is that
the UK is a main port for Europe as a whole,” Rogier Spoel said.
“So a lot of goods come into Europe
or get out of Europe through the UK.
“Whether it’s at the big ports
such as Southampton, or the airports in Heathrow and Gatwick, there will
be freight disruption.
“We are discussing with our members
who use the UK as a gateway to Europe that they might want to look at
other [locations] because a no-deal would cause serious disruptions at
terminals and airports.”
May There Will Be Stoppage
With Prime Minister Theresa May continuing
to push a Brexit solution agreement with the EU, which lacks anything
close to a Parliamentary majority, any sort of Brexit clarity for the
air freight industry might not be possible until we get even closer to
the March 29 wire.
One upshot, as FlyingTypers will
explore in the coming weeks, is that while the air freight industry is
likely to be chaotic post-Brexit, it is expected to be less chaotic than
high volume roll-on/roll-off trades across the UK Channel, which are forecast
to come to a standstill.
As the least-worst impacted mode available
to shippers, air freight might even benefit, at least in the short-term.
Such are the small crumbs of comfort to
be found as Brexit unfolds.
For another view/ update on the current farcical political position,
a satirical viewpoint on Prime Minister Theresa May’s ‘strategy’
is as fit for purpose as anything more academic: Try here.
A searing indictment of the UK’s ruling classes and how they have
approached Brexit can be found here.
More On Brexit:
On The Brexit Menu
Plays The Fool Post Brexit