Beyond COVID-19: Crisis response or road to recovery?
Crisis response or road to recovery?
The referendum held on June 23, 2016 resulted in a majority vote in favour of the United Kingdom leaving the European Union. However the referendum result itself does not have any direct effect. Pursuant to Article 50 of the Treaty on European Union a member state wishing to leave the EU should give formal notice of that decision to the European Council to initiate a withdrawal process. At the time of writing, the UK has not given an Article 50 notification, and UK politicians have indicated that it may be some time before a notification is given. From the date of any Article 50 notice, the EU and the UK would have two years (or a longer period if agreed) to negotiate the terms of a withdrawal before the withdrawal takes effect.
Nonetheless, as a consequence of the referendum result the aviation industry has been forced to consider the impact of a possible exit by the UK from the EU – a so-called “Brexit”. As a member of the EU, the UK has benefited from the internal market for air transport and from air traffic rights negotiated at the EU level with third party countries such as the US under the EU-US Open Skies Agreement. Questions therefore arise as to whether the UK would continue to benefit from those arrangements if the UK leaves the EU. Similarly EU or other non-UK airlines who operate to the UK via air traffic rights negotiated at EU level will also need to consider whether those rights would be retained following any Brexit. The continuing application post-Brexit of other EU legislation affecting aviation such as the EU Emissions Trading Scheme, competition rules and EASA safety regulation would also need to be addressed.
However at present the impact of any Brexit on the aviation industry remains largely a matter of speculation pending any agreement as to the terms of a withdrawal. It is possible for example that, following a Brexit, the UK could remain a member of the European Common Aviation Area (ECAA). Membership of the ECAA would retain access for the UK to the EU internal market for air transport but would require the UK to accept EU aviation laws. Other more bespoke arrangements such as bilateral, multilateral and/or association agreements could also be negotiated by the UK with the EU and other relevant third countries.
In the meantime it is important to remember that notwithstanding the referendum result the UK currently remains a member of the EU. Rules and regulations in force prior to the referendum continue to apply. That is likely to remain the case for some time until any alternative arrangement is finally agreed.
At Norton Rose Fulbright we are monitoring these issues closely and have set up a dedicated Brexit site with a blog and a specific section on the possible consequences for the transport sector, including the aviation industry.
As the global aviation industry looks towards post-pandemic recovery and less turbulent skies, it is the topic of decarbonisation that is increasingly top of everyone’s agenda. There have been a number of eye-catching announcements around the world in recent weeks, from United Airlines announcing its intention to purchase 100 electric aircraft, an increased focus on the use of sustainable aviation fuel (SAF) from several airlines, and Korean Air utilising the green bond markets.
© Norton Rose Fulbright LLP 2021