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Brexit and aviation

Insights / 04-08-2016 / London

The UK’s referendum vote to leave the European Union is likely to have a far-reaching impact on the UK aviation industry. From a constitutional standpoint, the “Brexit” referendum is considered an expression of the electorate’s opinion; it is not by itself legally binding. Nevertheless, the ruling Conservative government has committed itself politically to put it into practice and to set in motion the process for the UK to withdraw from membership of the EU. 

Under Article 50 of the Treaty of European Union, the leaving Member State must formally notify the EU Council of Ministers, starting a two year process of exit. The period can be extended by the unanimous agreement of all the remaining 27 Member States (“EU27”) and the UK, a situation that may arise if the parties cannot finalise a treaty of withdrawal within the set two-year period. It is worth noting that the treaty of withdrawal envisaged by Article 50 will cover the extrication of the UK from the Union: such an agreement would cover issues such as the status of EU subsidies and funds made available to the UK after exit, budgetary reconciliations, the status of EU nationals continuing to reside in the UK (and vice versa), and the future status of British officials working in the EU institutions. There may also be a trade or association agreement between the departing state ant the EU, but this is not the withdrawal agreement envisaged by Article 50.

The UK’s treaty of withdrawal must also be accepted by a majority vote of the European Parliament and a qualified majority of the EU27 in the Council, such a qualified majority representing at least 65% of the members and at least 72% of the population of the remaining EU. It must also be accepted by the UK Parliament. The mechanics of Brexit are explained in the Ince briefing note available on our website.

This article will concentrate on describing the impact of Brexit on the aviation sector, looking in particular at the situation in Switzerland (a member of the European Free Trade Association (EFTA) with further bilateral agreements with the EU) in order to illustrate what might happen to British carriers should the UK eventually opt for a much looser association with the EU. Links to these can be found below:

Status of UK carriers after Brexit: "Community carrier" status and EU Market access

Possible solutions for UK carriers: Restructuring to become a Community carrier

Impact on Transatlantic services

Future impact of EU legislation affecting the aviation industry

The position of air services from British overseas territories and dependencies

A Swiss perspective

Gillie Belsham

Gillie Belsham Global Head of Aviation, Joint Head of Energy & Infrastructure, Partner

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