The UK has officially triggered article 50 and made the first steps towards leaving the EU. British Prime Minister Theresa May has been positive about the impact that this will have on British business and British industry, but many business leaders have been vocal about their scepticism. Chief among those concerned is the aviation industry.
Impact is imminent
The British decision to leave the EU will have a dramatic impact on Britain’s relationship with the rest of the European Union, excluding the country from many EU rules and regulations. Aviation will not be exempt from its effects because of the ‘Open Skies’ policy that currently exists between the UK and other countries within the EU. Air links between Britain and the EU are currently very liberal. However without the 'Open Skies' policy in place, and no idea what kind of collaborative policies will replace it, there is a distinct possibility that airlines will be unable to finalize their schedules for after March 2019 (a process that most airlines complete by mid-2018), dramatically affecting the commercial airline industry out of the UK. Kenny Jacobs, chief marketing officer at low cost British-based airline Ryanair said in a recent interview, “There is a distinct possibility that there may be no flights between the UK and Europe for a period of time after March 2019.”
An increasingly expensive pastime
Jetting away on a family holiday is already an expensive pastime for the British family, with the average British family spending £1,300 on their annual week in the sun. This cost includes their flights and accommodation at an average of £782, and an average of £529 for any travel money that they take with them to spend on food and souvenirs. These figures are forecast to get more expensive as a result of Brexit and the changes to the aviation industry, with estimates suggesting that leaving the EU could add an extra £230 to the cost of the average family getaway. For many families, these increased expenses could price them out of the market, potentially leaving airlines struggling to fill their seats. This would impact profit margins as they attempt to mitigate the risk of flying half-empty planes. It would also impact Middle East traffic from the UK–in 2016, the UK was Dubai’s number three tourist market bringing in nearly 1.25 million visitors, according to figures from Dubai's Department of Tourism and Commerce Marketing (DTCM).
What next for the aviation industry?
Professor Herve Morvan, director for the Institute of Aerospace Technology (IAT) has suggested that in order to ensure that it maintains a strong aviation industry (something he considers to be ‘essential’) Britain should look toward the Asian market, increasing its links and ties in the East rather than continuing to look to Europe. The UK economy has continued to be robust following the announcement that the country will be leaving the European Union, and this is thought to be a positive sign for future growth and investment within the industry. Growing new commercial relationships, both inside and outside of the European Union will continue to be very important. Encouraging and supporting growth in alternative markets will be key to British business survival after Brexit, and that includes the aviation industry.
A number of British businesses are making moves to set up offices in Europe to ensure that their interests are protected. Concerned reign heavy around the 2 year Brexit time line laid out by the EU and that it simply won’t be enough to complete all of the negotiations needed. The uncertainties that the aerospace and aviation industries face in the wake of Britain’s exit from the common European market mean that the next two to three years will be among the industries most challenging.