Is Brexit a danger to the aeronautics sector?
12 Juillet 2016
What was the impact of Brexit on the European aeronautics market situation?
On June 23 2016, the United Kingdom organised an historic referendum concerning its exit from the European Union.
The « Leave » vote won with almost 52% of the votes, triggering a succession of stock exchange and economic fluctuations. The Pound Sterling has undergone a significant drop in its value since June 23. One Euro equalled 0.75 centimes on June 23 and currently equals approximately 0.85.
However, the main problems for British and European Aviation are based on the fact that the United Kingdom air space will no longer be part of the European Union.
Indeed, it is foreseen for example that the United Kingdom will see a 5% slump in passengers by 2020.
The third largest European country in aeronautics, which has more than 230,000 employees and 3000 companies in the sector, including historic companies such as Rolls Royce and GKN, is also one of the leading countries in the creation of manufactured products designed for aeronautics with the installation of the subsidiaries of various global groups (Safran and Airbus, for example). Airbus is already asking itself questions concerning the future of its 15,000 employees in the United Kingdom as well as its significant R&D on British soil, worth 500 million pounds per year.
Free circulation in European air space has also encouraged the growth of Lowcost companies. EasyJet moreover now requests a transporter certificate in a European Union country to be able to ensure access to EU countries.
This exit from the Union also jeopardises the Cabotage practice, which allowed companies to carry out domestic flights in a foreign country after having previously arrived in the country by way of an international flight.
In a country like the United Kingdom, this can prove problematic as London is the leading European city with respect to the number of business flights. The United Kingdom must therefore renegotiate its rights and be sure to remain an integral part of the ECAA (European Common Aviation Area) if it does not want to give too much away in this exit from the European Union. However, Iceland or Switzerland or even Norway benefit from special statutes to nonetheless be an integral part of the ECAA without being part of the European Union.