Story ID: 307
Finding Freedoms Post-Brexit
By: Kate Sarsfield
Caption: Britain’s exit from the European Union brought a level playing field to an abrupt end for UK business aviation
Word Count: 1585
Britain’s exit from the European Union (EU) brought to an abrupt end for the UK business aviation sector years of operating on a level playing field with its EU-based counterparts. When the 11-month transition period concluded on December 31, unfettered access to the markets of some 27 member states was halted for the UK’s unscheduled operators, and a whole new relationship with the bloc began under stricter and often burdensome terms.
“It came a complete shock to us on January 1,” said Alex Durand, chief executive of UK charter company SaxonAir. “We had already had a poor year in terms of movements and revenue due to the Covid-19 pandemic, so the end of the transition period was like falling off a metaphorical cliff. It’s been a slow-moving car crash.”
Durand, who is also vice-chair of UK industry trade body, the British Business and General Aviation Association (BBGA), said during January and February the company recorded a 90 percent downturn in business year-on-year. “Europe-wide travel restrictions and border closures were already impacting demand across our fleet of helicopters and light jets, but we were also faced with the added challenge of having to secure approval from each [27] EU member to perform a commercial flight,” he noted.
Durand described this experience as “incredibly frustrating.” Overnight, he said, UK unscheduled operators "went from having unfettered access to EU airspace to holding third-party operator status with new rules and restrictions to navigate.”
SaxonAir’s poor performance in the early part of 2021 is reflected in the depressed state of the UK business aircraft charter market as a whole during the period. German data research company WingX Advance recorded a 64 percent fall in departures of UK-registered charter aircraft to EU member states in January and February 2021, to 175 movements. This compares with 482 departures during the same period in 2020, and 658 in the first two months of 2019.
Furthermore, the fall in traffic this year hit UK charter revenues by more than €1 million ($1.19 million) a month. It also resulted in an estimated €6 million deficit in landing, handling, and parking fees across the UK’s top three business aviation airports: Biggin Hill, Luton, and Farnborough. (Photo: RVL Group)
“The most crushing aspect of our new situation on January 1 was to see our competitors take businesses from under our noses, as there was no agreement in place between the UK and EU post-transition to allow non-scheduled carriers to operate without securing costly and time-consuming permits on a flight-by-flight basis,” admitted David Lacy, head of commercial for business and specialist aviation services RVL Group.
In contrast, the UK government allowed EU operators post-transition to continue exercising third and fourth Freedom rights—allowing flights to and from the UK—under a three-month block permit agreement. Such freedoms were not reciprocated by many EU countries, Lacy said. “We got to the stage where we didn’t bother bidding for jobs, and some brokers didn’t consider UK operators for EU-bound contracts,” he added.
These frustrations reverberated across the UK charter market and fed back to the Department for Transport (DfT) and Civil Aviation Authority (CAA). The pair began talks on January 1 with each of the 27 EU member states to replicate the flexibility of the UK's block permit system, with renewal conditional on each EU country offering reciprocal third and fourth-freedom services to UK operators.
Negotiations are ongoing with member states to secure fifth and sixth Freedom permit processes—allowing operators to fly to or from a third member state and to carry traffic via the UK. Seventh and eighth freedoms, which permit operators to make flights to and from a third state and traffic between two points in a member state, are also being sought.
“A return to full Open Skies between our nations would be an ideal end-goal for all concerned, but we have to take it one step at a time,” said BBGA chief executive Marc Bailey.
British Business and General Aviation Association CEO Marc Bailey. (Photo: BBGA)
He described the UK’s block permit agreement as a “good-will gesture” from the government, and placing a time limit of three months has allowed the CAA and DfT to gather “vital evidence” from industry on the conduct towards UK operators of other aviation authorities and gain vital leverage over them going forward. It has been a mixed response.
“Some small EU states struggled to issue permits as they simply haven’t had the manpower to do so and have had to set up a dedicated department from scratch,” Bailey explained. But other larger established authorities such as Austria, Germany, France, and Spain, simply lacked the willpower, he said.
The dearth of reciprocal freedoms persuaded the CAA to play tough and not to renew UK block permits from April 1 for unscheduled operators within those offending countries. This stance paid off, Bailey said. Many authorities were “persuaded” to adopt a more benevolent approach to UK providers following pressure from their domestic operators.
He cited Portugal, home to fractional ownership provider NetJets Europe, as an example. The country was “slow off the mark," so NetJets and their legal team put pressure on the aviation authority “and brought them to the table," said Bailey.
Austria is another case in point. With the UK deciding not to renew the block-permit agreement from April 1 for the country’s 20 unscheduled operators, intense lobbying of the government followed, resulting in a reciprocal agreement being offered to UK companies before the March 31 deadline. 
“We were faced with having to apply for a permit every time we wanted to fly to the UK—one of our largest and most important markets—which would have been time-consuming and costly,” said Bernhard Fragner, founder and chief executive of GlobeAir, Austria’s largest business aircraft operator.
By April 20, the CAA had secured reciprocal arrangements with 24 member states and said negotiations were continuing with Bulgaria, Latvia, and Lithuania. “At the moment these agreements are renewed every three months, however we are hoping to formalize them into more permanent arrangements,” said the CAA.
Fragner welcomed this strategy and suggested long-lasting agreements “will provide much-wanted stability for the industry going forward."
SaxonAir’s Durand proposed that future arrangements should offer more flexibility for UK and EU charter providers, especially as Covid travel restrictions are starting to ease across Europe and demand for business aircraft is expected to soar. “Flexibility is a key dynamic of this industry, and critical to a competitive landscape,” he said. 
Applying for seventh and eighth Freedom permits today, Durand argued can be risky and time-consuming for UK operators as they must secure a “no-objection” from local EU carriers.  “Before Brexit, we could just accept the job without thinking about it,” he said.
Time-critical cargo operations are particularly difficult under these circumstances, noted David Lacy from RVL. “We have one hand tied behind our back due to the length of time it can take to secure agreements from all EU countries concerned,” he said.
Since January 1 the East Midlands airport-based company has undertaken only one seventh-freedom flight. This compares with around one flight a week in 2020. “This was a side of our business that we wanted to grow, but Brexit has prevented us from doing so,” said Lacy. RVL operates a fleet of 14 aircraft including six Reims-Cessna F406s, four Beechcraft King Airs, two Cessna 404s, and a pair of Saab 340Bs (used for cargo transport).
He described the current arrangement between the UK and the EU as a “sticking plaster." “Had negotiations between the UK and the EU 27 been permitted during the transition period, we could be in a much stronger position today," Lacy said.
The plight of RVL and other UK operators is acknowledged by the European Business Aviation Association (EBAA). “Most European countries understand that it is not in the interest of anyone to apply procedures that would ultimately prevent operators to fly to and from the UK,” said chief operations officer Robert Baltus.
Based on feedback from EBAA members, Baltus suggested that “the promotion of an Open Skies agreement between the UK and the EU could be a solution going forward."
However, he stressed that a return to “pre-Brexit open access” only works if there is a level playing field between the two in areas such as tax, flight-time limitation rules, and safety regulations. “This is a long-term process where the UK needs to commit to EU rules like they did before. From that perspective this is a thorny issue that is playing out at the highest political level,” said Baltus.
Meanwhile, as laid down in the EU-UK Trade and Cooperation Agreement, “it is in the hands of the 27 Member states to define what agreement they want with the UK going forward,” he added.