How Will Brexit Affect Aviation And Travel?
How Will Brexit Affect Aviation And Travel?
One of the most talked about topic in the past few years is Brexit. A very bizarre decision is turning out to be diving people all around the British Isles, damaging the British economy and affecting business decisions all around the globe. As the uncertainty of Brexit is still hanging above the skies of the United Kingdom, airlines and travelers have just one thing in their minds. How will Brexit affect me? The answer to this question is quite complex. Anyhow, in this article I will present the current situation of the British aviation industry. Then, I will try to showcase the potential impact of the political debacle to airlines, the aviation industry in Britain and to people that travel via air.
Aviation In Britain – The Current Times
Currently, the UK boasts the third biggest aviation sector in the world. According to Eurostat, over 264 million passengers have traveled by air in Britain in 2017. The second biggest market in Europe is Germany, with airlines transferring over 212 million passengers. To illustrate, the passenger gap between the UK and Germany is about the same size as the market in Greece. In 2017, Greece has seen 50 million passengers travel to and from the country. Airports in the UK are also performing phenomenally. For example, out of the top 20 airports in the European Union, 4 airports are in the UK. London Heathrow, Gatwick, Manchester International and London Stansted is the 1st, 7th, 15th and 19th airport in Europe by passenger traffic respectively. The United Kingdom also carries the most passengers between the European Union Countries. Eurostat measures that in 2017, 165 million travelers flew from/to UK’s airports from/to states in the European Union. Considering that the next largest country is Spain, which carried 143 million people, the UK’s airports also carry a lot more passengers. Trans-Atlantic routes play a very big part in the British aviation industry. 20 million passengers traveled between the UK and the US in 2017. Canada added 3 more million passengers. According to KMPG, more than 30% of flights between the US and Europe land in British airports.
easyJet's aircraft at Manchester Airport
And finally, probably the 2 most important numbers of them all. A study by Oxford Economics has concluded that aviation contributes £29 billion to Britain‘s GDP. The number includes contributions made by tourists that have landed in the UK via air. The same study also indicates that aviation, with tourism included, creates more than 565 thousand jobs. In the grand scheme of things, that's almost 5% of Britain‘s GDP and workforce created by aviation. To sum up, the aviation sector is in a very healthy state. Record-breaking numbers for the last few years, rising economic impact makes aviation an important part of the British economy. However, is it really in a healthy state? Some numbers might state otherwise.
Brexit affecting airlines
As mentioned just above, the grass might not be so green after all. After the British government announced Brexit, financially airlines were hit hard. On average, airlines that were registered in the United Kingdom lost 33% share value. Comparing to other economic sectors, Brexit hit the airline industry the hardest. And to be honest, that should not surprise anyone. UK’s airlines still operate under the laws of the European Union and EU agencies control UK’s aviation laws. To be exact, ECAA, EASA and ECJ regulate the unified airspace above Europe. If Brexit goes through without a deal, the airlines registered in the UK and operating under a British AOC (Air Operator’s certificate) will have their inter-EU operations stopped. The potential consequences could be catastrophic. Airlines already struggle due to rising fuel costs. For example, Monarch went bankrupt, Flybe is hoping for a messiah to rescue them (and it seems like they have found one) Plus, the EU negotiated the Open Skies agreement with the US. If the UK were to exit the European Union, this deal would not include the UK and any air traffic between the UK and the US would be stopped. And those are British airlines which struggle amidst rising passenger numbers. Imagine if they had to stop operations for a short period of time - many more airlines would bury their brand names 6 feet under. IATA has predicted the potential consequences of a soft, moderate and hard Brexit in passenger numbers for 2035. If Britain negotiates a soft exit, their passenger numbers in 2035 are forecast to be 309 million. Moderate exit drops that number to 301 million. Similarly, a hard exit means a drop in the forecasted numbers and equals 290 million passengers.
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