Will Brexit Affect The Aviation Industry

Will A Brexit Affect The Aviation Industry

David Cameron vowed to campaign with his "heart and soul" to keep Britain in the European Union.

A 'Brexit,' Britain exiting the EU, will mean the UK will relinquish their traffic rights with EU member states. Airline fares could rise if a Brexit does occur. The liberalised aviation market within the EU provides benefits for member states such as no restriction on capacity, frequency, or pricing.

The British prime minister, David Cameron, said back in October 2015 that "if we leave the EU, the price of air fares could rise."

A British exit (Brexit) of the EU could damage the aviation industry as the conditions that helped create cheaper flights would no longer exists.

Affordable trips to the continent that Britain has come accustomed to might well be unsustainable should a Brexit occur.

Willie Walsh, Aer Lingus chief executive, said that a Brexit from the European Union would not have a "material impact" on the business.

He did go on to say that the possibility of a so-called Brexit was causing uncertainty in the market.

Talking on the impact a Brexit vote would have on the airline, he told BBC Radio 4 programme:

"We have taken advice from a number of sources, we have looked at this internally, we have undertaken a risk analysis."

"Obviously there is uncertainty in the market which is weighing on people's minds. But our view is should there be a vote we don't believe it will have a material impact on our business."

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Willie Walsh Aer Lingus Brexit

 
 

Ryanair's Michael O'Leary warns that if Britain do exit the EU it would affect foreign investment, but said that airline fares would not increase.

Michael promised last week to "bore everybody to death" with pro-EU messages until the June referendum.

Stating that Ryanair plans to back the remain campaign in the EU referendum with advertising and by lobbying its customers.

While accepting that a Brexit would not be "the end of the world" and predicted that it alone would not cause UK air fares to rise.

But he did warn that there would be "undoubtedly three or four years of uncertainty and less economic growth."

“One of the great things that most people in the UK will have benefited from is deregulation. Europe is the one [thing] that has delivered low fare air travel and cheaper holidays for British citizens,” O’Leary said.

Ryanair employs over 3,000 people within the UK, flying 35 million passengers between the UK and Europe each year.

Read More: Dublin and Shannon Airport traffic Soars.

Michael O'Leary Brexit

The liberalised aviation market in the EU.

The biggest benefit that the UK aviation industry gets from EU membership is the traffic rights and the nationality of airlines.

Airlines that are owned and controlled by nationals of EU member states are free to operate anywhere within the EU, without restrictions on capacity, frequency or pricing.

In the 1990's Europe liberalised the internal aviation market and it was a catalyst behind the rapid development of Low-Cost Carriers.

The vast travel networks that have been built up by European LCC's (Ryanair, easyJet, Vueling, Norwegian) were dependent on this free access.

Norway is not part of the European Union, but Norwegian Air Shuttle has equal access to the internal European market for air transport, thanks to the European Common Aviation Area (ECAA.)

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Europe Air Travel Market

 

I attended a breakfast meeting at Dublin Chamber of Commerce, on Thursday 3rd of March, on the topic of a Brexit occurring and the repercussions it might have on EU member States (particularly Ireland's Economy.)

Oliver Morgan, Chief Economist for AIB, said "If the UK leaves [European Union], it is going to be a messy divorce."

The EU is far more important to the UK, compared to vice-versa. 

The EU accounts for 45% of exports from the UK. That is comparable to 10% of the total EU exports which go to the UK.

Ireland's trade relationship with EU member states is dependent on the EU-UK relationship. 

If a Brexit happens, it will weaken the UK's economy significantly due to uncertainties, loss of trade, and migrant workers being forced to leave the UK (reduced labour force within the UK.)

A weaker UK economy will effect the Irish one and potentially increase inflation rates and reduce exports.

Read More: Ryanair order 200 new Boeing 737-Max aircraft.

EU Brexit | Excel Aviation

 

The possibility of a Brexit occurring has heightened over recent months.

Mark Hennessy, Ros Kellaway, and Oliver Mangan all agreed if Britain stayed in the EU the referendum results would be 52% (For) to 48% (Against.)

Boris Johnston is one of the key politicians in favour of leaving the EU (mainly because he opposes everything David Cameron has the say.)

If Britain do however manage to escape the grasps of EU membership, it will have significant short-term impacts on both the UK and Irelands economies.

The aviation industry's potential impact from a Brexit are so uncertain that Michael O'Leary is actively campaigning pro-EU messages with advertising and lobbying its customers.

Excel Aviation is monitoring the situation and believes that the UK will remain an EU member.

Membership of the European Union provides many benefits that the UK will not be able to obtain otherwise. Our opinion on the aviation industry's effect from a Brexit is that air fares, capacity, and frequency will not be directly effect. Although it will have indirect effects in the longer-term.

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