MEPs push to relax aviation ownership rules for no-deal Brexit
EU parliamentarians seek revamp to allow ‘limited’ air traffic to continue with the UK
The European Parliament is pushing to relax aviation ownership rules that threaten the flying rights of airline groups including IAG, owner of British Airways, in the event of a no-deal Brexit.
MEPs leading negotiations on the contingency plans to cope with a hard Brexit are also attempting to scrap the automatic cap on flights between the UK and EU, which was proposed by the European Commission.
The changes are contained in a draft report seen by the Financial Times setting out amendments the parliament’s transport committee is demanding to an EU law that will allow “limited” air traffic to continue with the UK, even if it leaves the bloc without a deal on March 29.
The parliament has yet to approve these amendments and they could be removed in further stages of negotiation. But they are a striking divergence from the commission’s stricter positions. Most EU member states have so far resisted relaxing ownership rules in their negotiations, but some member states are pressing for the EU to grant UK operators a broader range of flying rights. The contingency measures, as proposed by the commission, are limited to around a year.
Brexit poses a big challenge for some European carriers, which will have to show they are more than 50 per cent EU-owned and controlled to retain their flying rights in the bloc. Certain companies — including IAG — have yet to ensure they will reach that threshold after Brexit, when UK nationals will no longer count towards the tally.
This week easyJet announced it had 49 per cent European ownership.
The parliament’s amendment says that the commission “may grant a temporary exemption from the ownership requirement” lasting until the end of March 2020 as long as the airline has a valid operating licence and is less than half-owned by UK nationals.
But it also said the airline must present “credible plans to change its ownership structure in a shortest possible time to comply with the ownership requirement”.
The commission’s proposed regulation, announced last month, was designed to avoid severe disruption in the case of a no-deal Brexit. But it also contained a provision to cap flight numbers between the UK and EU at 2018 levels, which the draft proposal would change.
Airports Council International has suggested that the cap could lead to the loss of 140,000 new flights and nearly 20m passengers between the UK and EU this year.
A further amendment in the report would allow UK and EU27 airlines to continue “code-sharing”, where carriers can sell seats on each other’s flights, “to maintain mutually beneficial levels of connectivity”.
Part of IAG’s strategy to maintain both UK and EU operating rights is to stress that its most important individual airlines, BA and Iberia, are domestically owned through a complex series of trusts and companies, rather than being viewed as part of the bigger group, which has a high proportion of non-EU investors.
The EU has expressed reservations about this structure, although the Spanish government has said it considers Iberia Spanish.
IAG, which is a Spanish company that has its headquarters in the UK, said: “We are confident that we will comply with the EU and the UK ownership and control rules post-Brexit.”
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