Published on June 26th, 2016 | by Jim Lee0
EU and UK aviation markets should remain integrated say ACI, as IATA releases preliminary analysis of the impact of ‘Brexit’
With the impact of the UK’s referendum on EU membership, and the decision to leave (the so called ‘Brexit’) still reverberating, ACI Europe (the European region of Airports Council International [ACI]), the only worldwide professional association of airport operators, called for the EU and UK aviation markets to remain integrated.
ACI Europe, which represents close to 500 airports in 45 European countries, in a statement on 24th June, following the results of the previous day’s referendum, said that the EU and UK aviation markets must remain fully integrated in the future, to safeguard and promote vital air connectivity for consumers, as well as for continued economic development.
Olivier Jankovec, Director General of ACI Europe commented “The EU and the UK are faced with the challenge of establishing a new relationship. While there is for now much uncertainty as to what will be the model, structure and modus operandi for this new relationship, it will be essential that it allows for the UK and EU aviation markets to remain fully integrated and based on totally aligned – if not common – rules. The EU’s single and fully liberalised aviation market has delivered tremendous benefits for consumers and businesses across Europe – with increased air connectivity at lower fares at its core. By putting so many airports not just on the European but also the global aviation map, the single European aviation market has transformed them into engines of growth for their communities – especially in the regions. We simply cannot afford to go backwards on what is now one of the backbones of our economies.”
He added; “Securing legal certainty over the continued integration of the EU and UK aviation markets must be one of the key priorities of the future EU & UK relationship. This is about avoiding any risk in terms of connectivity & business disruption. As the voice of Europe’s airports both within and beyond the EU, ACI Europe will pursue this agenda on behalf of its members.”
ACI Europe is also urging the UK and the EU to keep a common aviation security agenda – with a focus on reinforcing cooperation on intelligence and data sharing to effectively address terrorism threats.
IATA release Report on the impact of ‘Brexit’ on UK air transport
Also on 24th June, the International Air Transport Association (IATA), released a preliminary analysis of the financial and economic impact of the Brexit decision, on the air transport industry.
“The Brexit vote has triggered much uncertainty-financial and otherwise. As leaders in the UK and the EU work to establish a new framework for their relationship, one certainty to guide them is the need and desire of people on both sides of that relationship to travel and trade. Air transport plays a major role in making that possible. There were 117 million air passenger journeys between the UK and the EU in 2015. Air links facilitate business, support jobs and build prosperity. It is critical that whatever form the new UK-EU relationship takes, it must continue to ensure the common interests of safe, secure, efficient and sustainable air connectivity,” said Tony Tyler, IATA’s Director General and CEO.
The main points of the report are:
Now that the UK has voted to leave the EU – the so-called ‘Brexit’ scenario – considerable uncertainty remains regarding the precise detail of the exit. As 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.
Preliminary estimates suggest that the number of UK air passengers could be 3-5% lower by 2020, driven by the expected downturn in economic activity and the fall in the sterling exchange rate. The near-term impact on the UK air freight market is less certain, but freight will be affected by lower international trade in the longer term.
A big issue is with aviation regulation. The uncertainty around the future regulatory environment is likely to amplify the short term negative economic impacts. It also follows that the more protracted the process of agreeing new terms between the UK and the EU, the greater the negative impact on investment and many other types of activity.
This creates a potential trade-off between reaching a quick deal to mitigate the short-term impacts and reaching the best deal to mitigate the long-term economic consequences of Brexit. In the longer term, the regulatory impact on the aviation sector will depend on the nature of the exit terms and future arrangements between the UK and the EU.
Essentially, the UK faces a trade-off between accessing the European Single Aviation Market and having the policy freedom to set its own regulations.