Serious Negotiations On Brexit Begin

Now that Brexit happened, what does this mean for aviation and aircraft aftermarkets? Wait and see, according to Robert Ricketts, a UK-based solicitor with Holland & Knight. There are some very attractive possibilities, but the real meaning of Brexit for the UK, for Europe and for other nations will only start to clarify as negotiations for a smooth exit are conducted and concluded by the end of 2020.

The true post-Brexit deal is yet to come, and it could be very interesting.

“It’s clear the UK government wants a much more liberal deal,” Ricketts says. “That applies particularly to ownership and control.” Under EU rules, European airlines must be owned and controlled by European citizens, much as most equity in U.S. airlines must be held by U.S. citizens.

Ricketts, a self-proclaimed free trader, does not see why that sort of domestic control is necessary. He points out that UK power and water stations are often controlled by non-UK citizens, and he doesn’t see why aviation should be any different.

Then there are the bilateral agreements that still control much of aviation, and specify which airlines can fly from A to B, with restrictions on the ownership of each party’s airlines. Bilaterals with some countries are starting to lapse, and the Open Skies movement puts the whole bilateral system under pressure. Renegotiation of UK-EU relationships could put more pressure on the bilateral system, Ricketts notes. In theory, at some point in the future the whole bilateral system might collapse.

But “it’s still early days, and everything is uncertain,” the London lawyer stresses. In the first week of February, governments and others will begin to turn their attention to the final terms of UK’s departure from the EU. “There will be horse-trading, and and they must decide who to deal with first, the U.S. or the UK.”

Still, it would be ironic if Brexit, originally feared as a disruptor of aviation and other markets, could eventually help loosen the whole set of national straightjackets that have bound global aviation in the past.