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26 Sep 2016

BY Edward Robertson

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Airlines await full Brexit impact

Airlines are waiting with bated breath to understand the full impact of Brexit on the European market.

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Airlines await full Brexit impact

Speaking at a World Routes 2016 Strategy Summit panel session considering the state of the industry in Chengdu, China, Finnair chief commercial officer Juha Jarvinen said he remained unsure as to what will happen following the UK vote to leave the European Union (EU) this summer.

 

However, he admitted the initial impact was good, adding: “The real concrete fact is the change to foreign exchange rates to the pound (which fell in value against both the dollar and euro). I would say there’s been an upside as more European people are visiting the UK as it is cheaper.

 

“We are very confident in the UK demand, the UK is popular with Chinese tourists while Edinburgh is performing well from Japan. I don’t see a short term or even long term drop in demand.”

 

US Department of Transportation director, officer of international aviation, Brian Hedberg said it is not until negotiations begin between the UK and the EU over the break up that the impact will be fully understood.

 

He added: “The Europeans and the UK are going to look at some significant challenges. (For instance) UK carriers are currently flying between points in Europe; what happens to those flights and the services they provide?”

 

He also cited the issue of ownership will need to be resolved with UK airlines owning considerable chunks of European airlines.

 

Malaysia Airlines chief executive Peter Bellew said Brexit could ultimately be beneficial for certain businesses, adding: “There’s going to be opportunities for certain carriers that are created out of this.”

 

He also warned European negotiators should not assume they will be holding the stronger hand as the UK will be free to seek route agreements around the world after leaving the EU. “The UK may see better trade agreements with other countries that bypass Europe,” Bellew said. “It could be tricky for Europe. Brexit has been good for us as the exchange rate is bringing a lot of traffic.”

 

Ethiopian Airlines chief executive Tewolde GebreMariam added: “We have a daily flight to London and we have not seen any affect so for us I don’t think there will be any impact in the immediate future as we don’t know what it is.”

 

Meanwhile, IATA regional director – airport, passenger, cargo and security Asia Pacific regional director Vinoop Goel implored those who will take part in negotiations to work together to ensure the current freedoms generated by the European Open Skies arrangement are maintained.

 

He said: “Any government or stake holder action that limits that is obviously bad news for us. We all need to work together to make sure the business of freedom goes on in that way.”

 

With one eye on the upcoming US elections that could see Republican hopeful Donald Trump, who has spoken of building barriers, win the election, Hedberg agreed his own country needs to remain open to the world. He cited the US period of aviation liberalisation in the 1980s as proof of the positive effect keeping an open mind and open skies can have.

 

Chicago Department of Aviation deputy commissioner for air service development Susan Kurland said remaining open to the world can only be good for business. She added each new routes out of her airports can generate a $200 million benefit for the local economy.

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