Factbox: As Brexit Transition Period Ends, What Does That Mean For Airlines?

LONDON: Britain’s status quo transition period with the European Union will end at 2300 GMT on Dec. 31. There are growing fears for a no-deal scenario as UK Prime Minister Boris Johnson heads to Brussels in a last-ditch attempt to secure a trade deal.

If the two sides cannot agree a deal, there is a risk that flights will be grounded, but neither side wants that and a basic connectivity arrangement is expected.

CURRENT DEAL

Under current arrangements, UK and EU airlines can fly any routes they wish within the bloc but after the end of the transition period, there will be no legal framework for flights to continue to operate between the two sides.

BASIC CONNECTIVITY

Whether or not there is a deal, experts say neither side wants to see flights grounded. In 2019, when the UK and the EU’s relationship previously faced a cliff edge, the EU put in place “basic connectivity” measures to ensure flights could continue.

British transport minister Grant Shapps said in mid-October that he expected the European Union to announce similar contingency measures, as it has done in the past, to ensure flights can continue.

“Of course, we will look to reciprocate that,” he said at a travel conference.

ACCESS CUT

Under a basic connectivity deal, airlines would likely have their access to their non-home market restricted, by comparison with their current freedoms. That deal would allow carriers to fly from the UK and Europe and vice-versa, but it might prevent a UK carrier from flying between two European cities, or a European carrier flying between two UK cities, for example.

AVIATION WITHIN A TRADE DEAL

Should there be a trade deal, Johnson said on Oct. 16 that agreement on aviation issues was advanced.

“A lot of progress has already been made, by the way, on such issues as social security, and aviation, nuclear cooperation and so on,” he said at the time.

The details of that trade deal will need to be revealed before the implications can be understood for airlines.

OWNERSHIP RULES

UK airlines have spent the last four years making plans to prepare for the new relationship between the pair. EU rules state that airlines must be at least 50% owned by EU nationals or risk losing their operating licences.

Britain-based EasyJet set up a new airline in Austria in 2017 to protect its EU flying rights. Currently, the company is 45% owned by non-UK EU nationals and it is trying to add more of those shareholders to reach the 50% threshold.

IAG, which owns British Airways, Iberia and Aer Lingus, is a Spanish-registered company headquartered in Britain. It says it is confident that it will comply with EU and the UK ownership and control rules once the transition period ends.

COVID-19

Prior to the COVID-19 pandemic, 164 million passengers travelled between the UK and the EU each year, but that figure has shrunk by more than 80% as lockdowns and travel restrictions have grounded huge swathes of the industry.

Traffic is expected to pick up over the Christmas period, in what could be the start of a much-needed travel rebound for cash-strapped airlines. A basic connectivity deal is the minimum required to underpin any recovery.

U.S. TRAVEL

Britain signed a deal with the United States last month to allow the continuation of flights, agreeing a new framework to replace the EU-US Open Skies Agreement which will continue to cover the UK until the end of the transition period.

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