Fasten Seatbelts: Brexit Turbulence Hits Airlines

by Denis MacShane | 17.07.2017

The announcement that EasyJet is to set up a separate airline in Austria has attracted little comment. The budget airline tried to be as reassuring as possible. There would be no job losses in Britain, it said, as it moves 110 planes to Vienna to be able to carry on flying in the EU post Brexit.

The total EasyJet fleet is 252 planes, so nearly half are being transferred to “EasyJet Europe” – a long way from its present HQ in Luton. In Switzerland (Geneva and Basle) the airline has 770 employees for 24 planes – 32 employees per plane.  Moving 110 aircraft to Vienna suggests at least 3,000 Vienna-based employees.

Can EasyJet pay the full costs of running two major centres as well as the one at Luton, without its no-frills business model being seriously weakened? While no one at EasyJet wanted to announce job losses, it beggars belief that transferring nearly half its planes to central Europe will have no impact on the Luton economy.

Is the pilots’ union, BALPA, concerned?  Luton has two Labour MPs, a long-standing Eurosceptic, Kelvin Hopkins, and the pro-EU Gavin Shuker. Are they worried?

The impact of Brexit on the airline industry is finally getting some attention, but not what it deserves. In little-reported evidence to the European Parliament’s Transport Committee last week, Britain’s top airline boss Willie Walsh, CEO of International Airlines Group – parent company of BA, Iberia and Aer Lingus – put in an urgent plea for the EU to change its “arcane” airline ownership laws. Currently, at least 51 per cent must be EU citizens. If a change cannot be agreed, IAG might have to buy out a quarter of its shareholders – or risk being broken up.

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    Walsh explained that aviation is excluded from WTO agreements so the UK would have to make a deal with the EU and Britain should remain part of the European Air Safety Agency – EASA. Although he did not spell it out, staying in EASA means accepting the ultimate authority of the European Court of Justice, which Theresa May rejects.

    Michael O’Leary, the sharp-tongued CEO of Ryanair, warned that “there is a real prospect that there will be no flights between the EU and the UK if Brexit ministers stick to the current hard position on freedom of movement of workers and the ECJ”. In a side-swipe at his longtime Irish rival Walsh, the Ryanair boss also predicted that IAG would not survive a hard Brexit.

    John Holland-Kaye, CEO of Heathrow airport, told MEPs that the Single Aviation market was one of the greatest successes of the European project. “We need to protect this for the EU-27 and British citizens,” he added. He stressed Walsh’s point that there is no WTO to fall back on for aviation.

    Ralf Pastleitner, director of group corporate and external affairs at the TUI Group, told MEPs that Brexit could lead to a reduction of tourist round trips, less competition and a loss of tourist spending. The Common European Aviation Area should stay, the UK should stay in EASA and legal certainty was needed as soon as possible, he said.

    All the evidence given at the European Parliament suggested that both airlines and associated businesses see only a downside in Brexit. The question is when will they use any of their resources to explain this to the passengers who take 42m flights a year to Europe, and not just the parliamentarians?

    Edited by Quentin Peel

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