On June 3, 2020, the Jakarta-based Lion Air group announced that it would be suspending flight operations starting on June…
UK Votes to Leave The European Union, Aviation Sector Reacts
Following the announcement that the British people have voted 52% to 48% to leave the European Union, the UK aviation sector has been reacting accordingly. The vote, followed years of pressure from the British people for the UK government to hold a referendum on the UK’s membership, saw just over 17 million people deciding they wanted to leave the union, out of the potential 46 million registered voters.
Britain, which is part of the European Aviation Safety Agency (EASA), is currently part of the EU’s single aviation market, which allows airlines to fly freely to and within member states. While the UK government is expected to seek the ability to rejoin the single aviation market, there is no certainty that this will be achieved. HSBC Bank said that if Britain did not rejoin the single aviation market 30 percent of easyJet’s operation could be affected or 40 percent if its Swiss Air Operators Certificate (AOC) is also called into question. The bank said that about 30 percent of Ryanair’s operations could be hit and 25 percent at Wizz Air.
Within hours of the decision being announced many of the biggest players in UK aviation attempted to reassure its people.
The head of Airbus said on Friday a decision by UK voters to leave the European Union was a blow to Britain but that he hoped the country would focus on remaining competitive.
“The world will not stand still, nor will Europe,” Chief Executive Tom Enders said in an emailed statement. “I hope the divorce will proceed with a view to minimizing economic damage to all impacted by Brexit. Britain will suffer but I’m sure it will focus even more now on the competitiveness of its economy vis-a-vis the EU and the world at large.” Airbus UK employs 15,000 people and builds the wings of Airbus aircraft. In April, Airbus wrote to its employees warning them about the risks of voting to leave the European Union.
Carolyn McCall’s EasyJet, which saw its shares fall by 23% as the market opened, said “We remain confident in the strength of easyJet’s business model and our ability to continue to deliver our successful strategy and our leading returns. We have today written to the UK Government and the European Commission to ask them to prioritise the UK remaining part of the single EU aviation market, given its importance to trade and consumers.”
In an internal memo to the company’s employees, she added, “The first thing to say is that nothing is going to happen overnight. The process of the UK leaving the EU will take a long time – a minimum of two years – and actually most experts say it’s much more like four years. The decisions will not change our business strategy. Those decisions about our business strategy give us a strong platform to keep growing profitably and sustainably. Now, as you would expect, we have been working on a contingency plan. I’ve talked to many of you because you’ve asked me lots of questions and I’ve reassured you that we have that plan. And we have got a number of options that will allow us to continue to fly to all of our markets”
International Airlines Group (IAG), which owns Aer Lingus, British Airways, Iberia, and Vueling released a statement saying that, while it does not expect the Brexit vote to have a long-term material impact on its business, profit will take a hit in the short term.
“Following the outcome of the referendum, and given current market volatility, while IAG continues to expect a significant increase in operating profit this year it no longer expects to generate an absolute operating profit increase similar to 2015,” the company said in a statement.
The General Secretary of the British Airline Pilots’ Association (BALPA) Brian Strutton said “We are concerned about the potential (EU referendum) effects on the future of our thriving aviation sector. In particular, we note analysts predicting a reduction in demand for leisure & business travel and a reduction in business confidence. The uncertainty ahead will be of great concern to pilots and the other thousands of people who work in the air transport sector. Whatever changes lie ahead, BALPA remains committed to ensuring the aviation sector can continue to thrive outside the EU. BALPA looks after 10,000 members and is the largest collective resource of commercial aviation skills and qualifications in the UK.”
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