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   Vol. 15  No. 49
Monday June 27, 2016

Brexit Pound Foolish?
Brexit Pound Foolish?
“You Make A Grown Man Cry” lament the Rolling Stones, as protestors gather outside N10 Downing Street last Friday. They were greeted by a weepy British Prime Minister David Cameron throwing in the towel and resigning after losing the vote in the EU Referendum.

     The Brexit vote results rolled in early Friday morning and were followed just as quickly by a tidal wave of instantaneous opinions from IATA to IAG to the food truck outside Heathrow Airport as to what an impending change to the way Europe operates might mean for them.
      If you look closely and think on it, you’ll discover that nobody knows much for sure except that things will definitely change. The stock markets took a hit and the value of the GBP nosedived Friday, but both are expected to recover.
      In terms of Brexit’s far-reaching implications, our best guess is that cargo will find a way to get where it needs to be, and airport bosses all over the EU and especially at FRA and CDG may consider investing in projects now that the UK has apparently shot itself through the foot.
      For the record, IATA thinks “it could be two years or more before these issues are fully resolved; prolonged uncertainty will influence both the magnitude and persistence of the economic impacts.”
      Heathrow Airport said:
      “Only Heathrow can help Britain be the great trading nation, connecting all regions of the U.K. to the world.
      “It is the keystone that connects businesses of every size to markets across the world as the U.K.’s only global hub airport.”
      Good luck to them.
      Less than a few hours after the Brexit shockeroo, the airport is calling for a giant building project right when the money is running away from Great Britain.
      International Consolidated Airlines Group (IAG), which includes British Airways, Iberia, and Aer Lingus, said the UK vote to leave the European Union will “not have a long term material impact on its business,” although IAG is saying that it doesn’t expect the windfall profits in 2016 that it saw last year.
      IAG shares dropped 20 percent to 421p on Friday morning after the profit warning and were the sixth-biggest faller in the FTSE 100 index, which fell 5 percent.
      EasyJet shares fell almost 20 percent to £12.35.
      So what does Brexit mean for the airlines?
      Any EU Member state disassociating itself from the European Union triggers a two-year process during which its relationships with all other EU members must be renegotiated on the basis of bilateral agreements.
      What that means for the airlines is that Air Operators Certificates must be granted on common EU standards issued and maintained by the EU Air Transport safety watchdog EASA.
      Any air carrier registered within the EU may offer services to and from other EU member states in accordance with the 1994 EU Open Skies agreement. This agreement covers rights both within the EU and third-state granted traffic rights.
      For British Airways (BA) and EasyJet (U2), this means they will have to apply for traffic rights again to and from any other European airport they wish to serve. While BA as a legacy carrier needs its intra-European network to feed the long-haul flights for itself and its sister companies Iberia (IB) and Aer Lingus (EI) (and can probably shift some of the feeder flights to them), EasyJet’s business model as a no-frills, point-to-point carrier sorely depends on free and unhindered access to the EU market—unlike its main competitor Ryanair (FR), which will not be affected since it holds an Irish registry.
      On the morning after the ballot, EasyJet’s CEO petitioned both the UK government and the European Commission to “prioritize the UK remaining part of the single EU aviation market.”
      That, however, is not likely to happen.
Elmar Brok       Elmar Brok, EU chairman on the Committee on Foreign Affairs, has already urged that “no gifts be given to the British” and that the “UK will have to bear full responsibility for their unfortunate and short-sighted decision.”
Robert Keen       A highly-placed source in air cargo told FlyingTypers, "this Brexit has really caused a lot of confusion.
      “Many believe it will be a good thing in the long run.
      “Brussels seemed to have suffocated the process and decision making.”
      We did like what the UK freight forwarders group BIFA said about all of this. Their comments essentially added up to ‘wait and see,’ as in, if you don’t like what happened, just wait a minute!
      BIFA Director General Robert Keen nailed it: “Today the UK is still a member of the EU and it is too soon to start speculation on the outcome of two years plus of negotiations regarding trade deals and movement of goods.
      “We will be making sure that those undertaking the negotiations recognize the fundamental role that our members’ freight forwarding services, including customs processing, play in underpinning the movement of the UK’s visible trade with Europe.”

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Letters to the Editor for June 22, 2016
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Pow, Right In The Kisser
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Female Air Races USA

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