{"id":2487,"date":"2017-03-22T13:13:58","date_gmt":"2017-03-22T13:13:58","guid":{"rendered":"http:\/\/chief-exec.com\/?p=2487"},"modified":"2017-04-12T08:39:42","modified_gmt":"2017-04-12T08:39:42","slug":"aviation-caught-in-battle-of-brexit","status":"publish","type":"post","link":"https:\/\/chief-exec.com\/?p=2487","title":{"rendered":"Aviation caught in battle of Brexit"},"content":{"rendered":"

A sector that in 2015 contributed \u00a355bn to UK GDP and supported 945,000 jobs is calling for air transport not to be caught up in any \u201chorse-trading\u201d that might take place in the general trade negotiations, reports Aban Contractor.<\/em><\/span><\/h4>\n

Airlines in the United Kingdom are looking at registering part of their operations in other European Union countries \u2013 a move that after Brexit could see them cease to be UK airlines.<\/p>\n

To avoid significant damage to the UK aviation sector, either a UK-EU bilateral air services agreement must be sealed before the UK leaves the EU in 2019, or a transitional arrangement must be adopted, to allow continuing UK participation in the EU single market for aviation pending conclusion of a comprehensive agreement, a House of Lords report published today said.<\/p>\n

\u201cFaced with the real risk that the UK may not achieve either of these objectives by 2019, airlines are considering registering part of their operations in other EU member states,\u201d Brexit: trade in non-financial services<\/em><\/a> said.<\/p>\n

\u201cThis will probably require them, after 2019, to comply with requirements that they be effectively controlled by shareholders from an EU member state. In other words, they could cease to be UK airlines.\u201d<\/p>\n

\n

To protect the UK\u2019s status as a global leader of trade in services, the Government will need to secure the most comprehensive FTA that has ever been agreed with the EU.<\/span><\/h4>\n<\/blockquote>\n

According to the Office for National Statistics (ONS), globally in 2015 the UK exported \u00a324.1 billion worth of transportation services. Approximately two-thirds of the value of those exports consisted of aviation services (\u00a316.4bn).<\/p>\n

The British Air Transport Association (BATA), now known as Airlines UK, told The House of Lords European Union internal market sub-committee who compiled the report, that the UK has the largest aviation sector in the EU and the third largest globally, after the USA and China.<\/p>\n

The International Air Transport Association (IATA) said that the UK\u2019s air market was \u201cdominated by outbound traffic\u201d, which accounted for \u201cjust over two-thirds of total flows\u201d \u2013 in 2015, there were 53.9 million visits overseas by UK residents, compared to 26.2m visits to the UK by overseas residents\u201d.<\/p>\n

The aviation sector is important to the UK\u2019s economy, contributing \u00a355bn to UK GDP in 2015 and supporting 945,000 jobs in the UK. IATA said the average employee generated \u00a384,000 in GVA (gross value added) annually, which was \u201cover 60 per cent higher than the whole economy average in the UK\u201d.<\/p>\n

The EU is also the single biggest destination market for the UK, accounting for 49 per cent of passengers and 54 per cent of scheduled commercial flights. According to the ONS, in 2015, 46 per cent of all the UK\u2019s exports and 56 per cent of all the UK\u2019s imports in transportation services were associated with the EU. The UK had a \u00a31.1bn deficit in transportation services with the EU in 2015, importing more services from EU based transportation providers than it exported.<\/p>\n

The benefits of the single market in air services are clear, the report said. Sophie Dekkers, UK country director at easyJet, said the \u201cliberation of the EU aviation market was part of the growth and the basis on which we grew as an airline and low cost [travel] grew within Europe\u201d.<\/p>\n

She said that \u201caverage fares are now down by 40 per cent in real terms\u201d since 1996, and \u201cnumbers of routes have increased by 180 per cent\u201d.<\/p>\n

Those giving evidence on behalf of the aviation industry argued that the Government should keep air services negotiations separate from wider EU withdrawal and trade negotiations.<\/p>\n

Brian Pearce, Chief Economist at IATA, said \u201cone of the fears\u201d in the industry was that \u201cair transport will get caught up in any horse-trading that might take place in the general trade negotiations\u201d.<\/p>\n

EasyJet argued that aviation \u201cshould be ring fenced from the final agreement\u201d.<\/p>\n

The Airport Operators\u2019 Association said the \u201cfailure to agree a new air services agreement would seriously disrupt important trade and tourism links for the UK\u201d.<\/p>\n

IATA, however, highlighted that such agreements took \u201ccertainly longer than two years\u201d to negotiate, and that the European Commission had a \u201cgrowing backlog of uncompleted mandates\u201d. They said it was \u201cunclear whether the UK would be able to jump the queue\u201d.<\/p>\n

The report also looked at the potential impact of Brexit on trade in four other services sectors: professional business services, digital services, creative services and tourism, education and health-related travel services.<\/p>\n

The report concludes that a \u201cno deal\u201d scenario, or a deal that gave no special consideration to UK trade in non-financial services, would risk significant damage to these sectors. For instance, WTO rules do not provide for trade with the EU in aviation or broadcasting services at all.<\/p>\n

While the UK\u2019s global standing in services may mitigate some negative consequences, faced with a \u2018no deal\u2019 scenario, businesses could be forced either to re-structure or relocate in order to continue to operate in the way that they do today.<\/p>\n

The chairman of the committee, Lord Larry Whitty, said the UK is the second largest exporter of services in the world and the EU receives 39 per cent of the UK\u2019s non-financial service exports.<\/p>\n

\u201cThis trade is critical to the UK\u2019s economy as it creates employment and supports goods exports \u2013 we can\u2019t afford to lose that,\u201d he said.<\/p>\n

\u201cTo protect the UK\u2019s status as a global leader of trade in services, the Government will need to secure the most comprehensive FTA that has ever been agreed with the EU. Walking away from negotiations without a deal would badly damage UK plc, particularly in sectors such as aviation and broadcasting which have no WTO rules to fall back on.<\/p>\n

\u201cGiven the consequences of a \u2018no deal\u2019 scenario and the length of time agreeing an FTA will take, the Government must prioritise securing a transitional trading arrangement with the EU to operate as we leave the EU in 2019 until a full comprehensive FTA with the EU can be concluded.\u201d<\/p>\n

 <\/p>\n

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\"\"<\/p>\n","protected":false},"excerpt":{"rendered":"

A sector that in 2015 contributed \u00a355bn to UK GDP and supported 945,000 jobs is calling for air transport not to be caught up in any \u201chorse-trading\u201d that might take place in…<\/p>\n","protected":false},"author":5,"featured_media":2488,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5,115],"tags":[137,50,54,138,31],"class_list":["post-2487","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-beyond-brexit","category-featured-news","tag-airlines","tag-european-union","tag-fta","tag-services","tag-tourism"],"_links":{"self":[{"href":"https:\/\/chief-exec.com\/index.php?rest_route=\/wp\/v2\/posts\/2487","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/chief-exec.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/chief-exec.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/chief-exec.com\/index.php?rest_route=\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/chief-exec.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2487"}],"version-history":[{"count":7,"href":"https:\/\/chief-exec.com\/index.php?rest_route=\/wp\/v2\/posts\/2487\/revisions"}],"predecessor-version":[{"id":2496,"href":"https:\/\/chief-exec.com\/index.php?rest_route=\/wp\/v2\/posts\/2487\/revisions\/2496"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/chief-exec.com\/index.php?rest_route=\/wp\/v2\/media\/2488"}],"wp:attachment":[{"href":"https:\/\/chief-exec.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2487"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/chief-exec.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2487"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/chief-exec.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2487"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}