The draft Withdrawal Agreement: the impact on aviation

Posted in Transport The Withdrawal Agreement

The draft EU-UK Withdrawal Agreement was published on 14 November 2018, together with the draft outline Political Declaration. The Withdrawal Agreement will now require the approval of 20 of the 27 EU member states and European Parliament as well as the UK Parliament. It is anticipated that obtaining the approval of the UK Parliament in particular could be difficult and as such we cannot know for certain as yet whether agreement as to the terms of the UK’s withdrawal from the European Union has truly been reached.

We summarise below the key points from the draft Withdrawal Agreement and Political Declaration for airlines:

  • The Political Declaration confirms the intention to negotiate a Comprehensive Air Transport Agreement covering market access and investment, aviation safety and security, air traffic management and provisions to ensure open and fair competition. Implicit in the Political Declaration is a recognition that the UK will not seek to accede in its own right to the European Common Aviation Agreement and that a bespoke agreement will be negotiated. However no further detail is given. In particular there is no reference in the Political Declaration to the UK’s continued participation in EASA, the extent of the market access to be afforded under Comprehensive Air Transport Agreement (notably whether it will extend beyond 4th freedom rights) and as to whether there will be any relaxation of the EU ownership and control regime for airlines.
  • The Withdrawal Agreement contains the proposed terms of the “implementation period” or “transition period”. This will commence on the entry into force of the Withdrawal Agreement and will end on 31 December 2020. During that period, the UK will be subject to both existing EU law and EU law which enters into force during the transition period but the UK will not take an active role in the EU’s decision making processes including those conducted by EU agencies such as EASA. As such until the end of the transition period, UK and EU airlines should maintain the same levels of access to each other’s markets as is currently the case and the same regulatory regime should apply.
  • The Withdrawal Agreement contains a mechanism for the transition period to be further extended beyond 31 December 2020 to an as yet unspecified date pursuant to a decision by the Joint Committee established under the Withdrawal Agreement and comprising representatives from the UK and the EU.
  • Neither the Withdrawal Agreement nor the Political Declaration provides further details as to the extent to which UK airlines will continue to benefit from rights afforded under international agreements entered into by the EU on behalf of member states, notably the US-EU Open Skies Agreement and Bilateral Aviation Safety Agreement. Pursuant to the draft Withdrawal Agreement, the UK will be obliged to fulfil any obligations stemming from international agreements concluded by the EU on behalf of its member states such as the US-EU Open Skies Agreement. A footnote to the draft Withdrawal Agreement contains an agreement by the EU to notify the international counterparties to those agreements to treat the UK as if it were an EU member state during the transition period. However ultimately whether or not the UK continues to benefit from the relevant agreement on the same terms after 29 March 2019 is up to the relevant international counterparty. The Withdrawal Agreement cannot compel international counterparties to continue to apply the benefit of those agreements to the UK. Further clarity on the status of those negotiations is required from the UK Government.

Further briefings covering other areas of an airline’s business impacted by the draft Withdrawal Agreement will be available on our blog in due course.

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