The authoritative source for independent research on UK-EU relations

11 Jan 2021

Relationship with the EU

In the 25-plus pages it devotes to air transport, the EU-UK Trade and Cooperation Agreement (TCA) ensures important continuity in connections between the UK and the EU, and provides a framework for the development of relations in the future.

It also signals a reduction in the commercial opportunities for the airlines of both sides, the reintroduction of trade barriers, and an increase in bureaucracy and regulation.

But it could have been a lot worse.

In a no deal scenario, contingency measures would have assured no more than basic connectivity and, in the worst case, UK-EU services could have been grounded.

Moreover, both sides can claim success. The EU largely secured its negotiating objectives, including a level-playing field beyond social and environmental issues to non-discrimination in the provision of ground handling services, allocation of slots and the taxation of aircraft fuel.

The UK was largely able to achieve aims that respected its ‘red lines’ and were consistent with its emphasis on sovereignty.

Unscrambling an omelette?

The UK’s withdrawal from the EU’s regulatory system in aviation was never going to be easy or without friction.

International air transport is characterised by detailed regulation, dating back to the 1944 Chicago Convention and the creation of the International Civil Aviation Organisation (ICAO).

Although the rules agreed in Chicago provide the basis for international safety standards, as well as for the bilateral air services agreements through which governments across the world decide the terms on which airlines can fly between their territories, they are uneven, limited and lack legal force.

Against this background, the EU was able to create a regional multilateral system in the form of the European Common Aviation Area (ECAA), which includes several neighbouring states as well as EU members.

The EU system is embedded in, but also transcends, the Chicago regime.  The UK championed and played an active part in involving the EU in the sector, using the EU to implement and spread its liberalising agenda.

Over several decades, UK rules co-evolved with EU laws, and UK authorities delegated key functions to EU bodies. In short, the UK was part of a system, whose development it had encouraged and supported, and which embodied its values.

Within the single market in air services that is at the ECAA’s core, EU licensed airlines that satisfy safety and commercial requirements are granted the freedom to fly from their home country to and from all other EU member states – the staple of air services agreements that elsewhere are negotiated bilaterally between governments.

They also enjoy so-called ‘beyond’ or ‘onward’ rights. These freedoms, which are scarce in international aviation, allow EU airlines to operate services between their home state and other EU states, as well as on domestic routes anywhere in other member states (‘cabotage’).

Moreover, under international agreements signed by the EU, EU airlines can offer flights between any EU state and a number of third countries, including the US.

EU rules also cover many other areas of aviation. In safety, the EU supplements the norms agreed within ICAO and giving them legal force.

In the form of the European Air Safety Agency (EASA) it has created a powerful enforcement authority that carries out certification and inspection responsibilities on behalf of national aviation authorities.

EU regulations also govern the allocation of landing slots, to passenger compensation and ground-handling services.

Traffic rights

Although the TCA offers the same rights to airlines from the two sides, the equality is more apparent than real.

Airlines on both sides are negatively affected by the agreement compared to the status quo, but, with the exception of ownership restrictions, the impact on UK airlines is significantly greater.

In keeping with international norms, the EU-UK agreement confers freedoms only on airlines that are owned and controlled by a majority of nationals of one of the contracting parties. EU airlines must be majority owned and controlled by EU nationals, and UK carriers by UK nationals.

However, exceptionally, the TCA allows UK carriers that are majority-owned by EU or EEA interests, or Switzerland, and that held a valid operating licence on the day the transition ended to continue their operations.

Anticipating a full return to traditional bilateral concepts, some UK airlines had been reviewing their ownership structures or, like EasyJet, created an EU carrier. This gives them entitlement to full market access across the EU.

On the EU side, meanwhile, EU carriers Wizz and Ryanair reportedly decided to remove the voting rights of UK shareholders. Since the ownership provisions are controversial, some analysts expect litigation.

Importantly, the TCA permits airlines on both sides to fly passengers and cargo between the UK and the EU (third and fourth freedoms) without restrictions on volume, frequency or capacity.

However, since the UK is no longer part of the single market, UK airlines can no longer offer services between EU member states (for example, London-Frankfurt-Warsaw) or domestic services within them (e.g. Paris-Marseille).

They have also lost the right under the EU’s international agreements to operate onward passenger services from EU member states to destinations in non-member states (e.g. London-Amsterdam-Bangkok).

Airlines from both sides can operate cargo services involving stops in the UK, the EU and third countries, they can only carry passengers on these routes where the UK government and the EU member state grant this freedom bilaterally and on a reciprocal basis.

Commercial practices, such as leasing aircraft, as well as blocked-space and code-share arrangements, which are a feature of many airline alliances or partnerships, can continue.

However, although UK carriers can lease aircraft with crews from UK or EU operators, EU carriers are required to hire crews only from EU operators.

Safety

Since it has ceased to be part of the EASA system, the UK Civil Aviation Authority (CAA) has assumed the licensing, certification, approval and inspection functions that were previously carried out by the EASA on the UK’s behalf.

These include the licensing of pilots and flight crew, the certification of aircraft parts, design, aeronautical products and overseas airlines.

To maintain continuity of air services, existing authorisations issued by the either EU or the UK including airworthiness certificates, certificates of competency, and licenses which are valid and in force are recognised by the other side, provided that they are ICAO-compliant.

The TCA establishes procedures for consultation between the EU and the UK on safety issues and ramp inspection. And, since the mutual recognition of safety certificates and licences, including for pilots, came to an end on 31 December 2020, it includes a framework for future cooperation between the two sides.

It also contains a process for the reciprocal acceptance of compliance in areas including airworthiness, operation, air traffic management, and personnel training and licencing.

Annexes will be developed by the Specialised Committee on Air Transport, which will set out the terms and conditions for the recognition by each side of compliance and certification practices by the other.

Currently, the only annex covers airworthiness and environmental certification, which sets out a process for the recognition of future design and environmental certificates.

Passengers

The TCA agreement provides that both the UK and the EU will guarantee measures to protect passengers with disabilities or reduced mobility, issue reimbursement and compensation, and handle complaints.

It also sets out the conditions under which passenger name record data may be transferred to, processed and used by the UK for flights between the EU and the United Kingdom, and lays down safeguards.

Conclusion 

The TCA ensures continuity in air services and holds out the prospect of future cooperation, even if it does turn back the dial, especially regarding traffic rights.

Moreover, both sides can claim to have secured their negotiating objectives.

The EU has protected its interests against a partner-turned-competitor that has the largest aviation industry in Europe.

The UK has withdrawn from EU systems and structures, and its airlines can still serve EU destinations, even if it has demonstrated that sovereignty, liberalisation and reducing red tape are not necessarily compatible.

By Hussein Kassim, senior fellow at UK in a Changing Europe.

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