Brexit’s Open Skies dilemma divides airlines
One of the most vexed issues for many British-based airlines is their ownership structure
Brexit’s impact on the airline industry is of more than just a business interest. Of the innumerable consequences of a “no deal” Brexit, the prospect of grounded planes and mass airport disruption rank as some of the most apocalyptic.
But with just 12 months until the UK’s planned EU exit date, the airline sector’s response and preparedness isn’t as uniform as you might expect.
Five bosses from Europe’s biggest airlines gathered for a debate in Brussels on Tuesday, and when quizzed about what Brexit meant for their industry, came up with at least three different answers.
One of the most vexed issues for many British-based airlines is their ownership structure. Under EU rules, carriers in Europe have to be effectively controlled by European nationals, with at least 50 per cent of shares held by the bloc’s citizens.
These foreign ownership requirements are a standard feature of most international and bilateral aviation deals and will also apply to British airlines running routes to the US when the UK falls out of the EU-US Open Skies agreement. Earlier this week, the FT reported the White House was gearing up to give the Brits a worse deal than they’ve enjoyed inside the EU.
IAG — owner of British Airways and Aer Lingus — is among the biggest carriers facing a possible crunch under the ownership rules. Its current shareholder structure means it could struggle to hit the 50.1 per cent ownership threshold to allow it to keep flying in Europe when UK nationals become third-country nationals.
But speaking at an event hosted by an airline lobby group on Tuesday, IAG boss Willie Walsh (pic below) was having none of it and even took a dig at the FT for reporting “fake” news.
“I am completely relaxed” he said, insisting the UK government’s determination to strike a deal with the EU and US would mean no flight disruption and no shareholder problems for IAG. “There will be a comprehensive Open Skies agreement. Anybody who doesn’t believe that is living in cloud-cuckoo land.”
Mr Walsh’s fellow CEOs weren't as sanguine. Michael O’Leary, chief executive of Ryanair, whose current ownership structure would also see it classified as a non-EU controlled airline after Brexit, is predicting “a real crisis” in April 2019. “There will be disruption, partly because it is in the interests of the Germans and the French to push the ownership agenda”.
What do the Germans think? Carsten Spohr, boss of Lufthansa, made a pointedly political intervention. Flight disruption, he said, was one of the ways the airline industry could show the Brits the full consequences of the Leave vote and “that might be a good thing”.
“It’s only when you get to that stage [disruption], where you’re going to persuade the average British voter they were lied to in the entire Brexit debate”, he said.
On the ownership headache, when pressed on how IAG was planning to convince regulators British Airways was both UK and EU controlled after Brexit, Walsh retorted: “magic”.