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12 Oct 2017

BY Edward Robertson

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Airlines face bankruptcy over Brexit uncertainty

The uncertainty surrounding aviation’s future after Brexit could drive some UK airlines to the wall.

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More UK airlines could go the way of Monarch unless some business clarity is established

Speaking in a panel debate at the Capa Global Aviation Summit in Heathrow, CityJet executive chairman and chief executive Patrick Byrne said the current economic situation is already causing problems, as Monarch’s recent demise shows.

 

With airlines needing to know what is going on after Brexit by as early as March next year, he added some idea of the how the future will look must be shared soon.

 

Byrne said: “Airlines are not configured to take short-term impacts. Short-term impacts have long-term consequences.

 

“It is impossible to plan with this uncertainty. The damage has already started and some airlines will not survive into 2020 if they continue with this level of uncertainty.”

 

He was backed by Norton Rose Fulbright partner Emma Giddings who also argued that in the event of leaving the EU with no deal, Britain would be forced to fall back on bilateral agreements dating as far back as the 1940s and which are no longer fit for purpose in the modern world.

 

She added everything from safety issues to wet leasing of aircraft could be affected unless a proper agreement is in place.

 

BKH Aviation chairman Barry Humphreys said while there are problems inherent in Brexit, there would be opportunities too.

 

However, he added: “The best outcome for aviation is to go nowhere and maintain the status quo.”

 

He argued that such an outcome would be in the best interests of both the UK and the EU and hoped that politicians would realise this and work accordingly.

 

Meanwhile European Aviation Club chairman Rigas Doganis argued that even if UK airlines had to find more European owners to take stakes in them to meet EU ownership rules, this would not be an issue.

 

He cited the example of KLM, which is now majority-owned by the French, but is still considered a Dutch airline.

 

Doganis also argued that while a new deal will be required between the UK and the US once it leaves the EU, and is no longer covered by treaties and agreements, again the status quo should prevail.

 

He added: “There is a strong incentive from the UK and the US and to a certain extent European airlines, to have an agreement with the US that allows all of these freedoms.”

 

Speaking in a later session, British Airline Pilots Association general secretary Brian Strutton said he believed that the short term solution would see be a British fudge.

 

He added: “We’d have a colution in the short term, the problem is when will we see it? Will we see it before we have consumers saying ‘do I book flights?’ and will investors maintain their confidence?”

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