Aviation industry officials call on European Union to adapt to market needs

The forthcoming Brexit vote should be used by the European Union (EU) as an opportunity to have an entire rethink over the political bloc’s problems. Speaking at the Routes Europe 2016 Strategy Summit, in Kraków, Poland, LOT Polish Airlines CEO Rafal Milczarski said he believed the UK’s voters will decide to stay in the EU on June 23. However, even if the decision is made to keep things the same, he urged Brussels not to treat it as a vindication of the current set up.

Milczarski said: “Britain will remain in the EU but the whole issue of Brexit is a debate over the EU and the way it functions. Even if Britain doesn’t exit this time around, we could be facing it (the same situation) 10 years down the line or the exit of someone else. I hope the EU doesn’t treat this as a one-time event… and that they can go back to how it was.”

Watson Farley & Williams LLP partner Jeremy Robinson agreed the vote is unlikely to be the end of the matter, especially if the result is close. He said: “If the result is Britai votes to stay in the EU by 50.1 percent to 49.9 percent then you can expect no change on one level but it doesn’t rid of Britain’s difficult relationship with the EU.”

Robinson cited the example of Scotland where even though those seeking independence were beaten in the vote by a 55 percent to 45 percent split, the question continues to dominate the agenda in the country’s politics. He also argued that if the UK’s aviation sector is to benefit from certain EU rules, in order to do so the country will find itself having to accept other regulations from Brussels.

Bain & Company partner and leader of EMEA air transportation and services practice Geoffrey Weston said should the UK vote to leave, the most immediate impact would be felt on exchange rates.

Otherwise John Grant, the director of JG Aviation Consultants, argued no real impact would be seen for two years as the British government enters into lengthy negotiations with a two-year deadline. If the negotiations are not completed by then, the UK will be out of the club with nothing in place.

The panel also agreed with a live delegate vote that Europe is still facing a period of growth, although for exactly how long remains unknown. However, despite the current benign situation of low oil prices and positive results Grant argued that the industry has handled things badly. He added: “There’s still capacity in excess of demand; it is hard to see where you will make the profits.”

But European Low Fares Airline Association (ELFAA) secretary general John Hanlon said more could be done. ”I’m surprised there isn’t more (capacity) going in,” he said. “Low prices stimulate demand, it can be created with the right price and the right amount of capacity.”

He also praised the EU for continuing its work to break down market restrictions, adding: “Airports will be the beneficiaries of it and airlines will be the beneficiaries of it. The commission is on the right track, it is being itself as a regulator.”

Grant urged governments not to use the current positive trading environment as an excuse to slap more taxes on the industry as three European governments add new green taxes to the industry. He also argued airlines had not done enough during the up period to future proof their businesses, especially since he believes the inevitable downturn is just a year away.

“I am extremely concerned that we are walking with rose-tinted glasses on into a position where some of us will be caught with our pants down,” he said.