UK and EU set out their negotiating objectives for a future agreement on aviation

Posted in Transport WTO and international trade

On 27 February 2020 the UK Government published a paper setting out its negotiating objectives for the UK’s future relationship with the EU (UK Negotiation Objectives). This followed the publication on 25 February 2020 by the EU of its own negotiating directives (EU Negotiation Directives). It is clear that both the UK and the EU want to reach an agreement on aviation: however significant differences in approach remain.

Aviation is one of the sectors most vulnerable to the impact of the UK leaving the EU as air transport services (including air traffic rights) are excluded from the WTO General Agreement on Trade in Services. As such, in 2019 the EU and the UK published legislation (the “No Deal Legislation”) to ensure basic connectivity in the event that the UK exited the EU pursuant to Article 50 of the Treaty on European Union without a withdrawal agreement having been signed and ratified. Details of that No Deal Legislation were summarised in our blog post here [include link]. However pursuant to the withdrawal agreement eventually concluded between the EU and the UK in October 2019, the status quo in terms of aviation will be maintained during the implementation period until 31 December 2020. After that, the position remains unclear and is dependent upon the agreement reached between the EU and the UK as to their overall future trading relationship.

Pursuant to the UK Negotiation Objectives, the UK Government will be seeking to enter into a “Comprehensive Air Transport Agreement” with “liberalised market access for air services on a reciprocal basis, close cooperation to maintain high aviation security standards and collaboration on air traffic management to ensure interoperability between UK and EU airspace”. The EU Negotiating Directives however reflect a more general concern that due to the geographic proximity of the UK to the EU, the UK should adhere to “level playing field” commitments, particularly with regard to competition, in order to secure access to EU markets and also that the EU internal market for air transport services should be preserved.

These differences in approach can be seen in the respective provisions of the negotiating mandates regarding air traffic rights. The UK Negotiation Objectives aim to ensure, as a minimum, a right for EU and UK airlines to operate to and from the UK and EU destinations without restrictions on frequency and capacity. The EU Negotiation Directives also assume that any such agreement would need to ensure a basic level of connectivity: however they emphasize that the UK should not benefit from air traffic rights to the same extent as EU members. In particular they imply that the grant of 5th freedom rights (i.e. the right to fly between two foreign countries on a flight originating or ending in the home country of the relevant airline so for example a UK airline flying to Paris and then on to another country) may be dependent on the UK’s adherence to “corresponding obligations” and only then awarded if in the interests of the EU.

The EU Negotiation Directives also refer to the phased implementation of certain elements of the agreement. This is consistent with the approach the EU has taken in other air services agreements. For example the level of market access for non-EEA member state signatories under the European Common Aviation Area Agreement is phased in a manner linked to their adherence to the EU aviation acquis. The EU/Canada Open Skies Agreement also potentially allows full market access in a staged process based upon the opening up of the investment and control regime for airlines in each of the EU and Canada.

The UK Government has previously referred to the EU/Canada Open Skies Agreement as creating a potential precedent for an EU UK aviation deal as it grants market access without requiring regulatory alignment. However it is questionable whether this is realistic given the comparative likelihood for competition with EU carriers.   In short it is apparent that if air traffic rights are to extend beyond the basic (1-4) freedoms of the air and if commercial concessions in other areas such as wet leasing and code sharing are to be achieved, then tensions between the UK’s desire for regulatory independence and the EU’s desire for regulatory alignment as a means of ensuring fair competition will need to be resolved. We will of course continue to monitor developments as negotiations progress.

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