|
| “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, 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.”
 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.”
Geoffrey |
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