Commentary: Choppy skies post-Brexit – FreightWaves

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The United Kingdom officially leaves the European Union on Dec. 31 after an 11-month easing-out period. The final closing of the door, so to speak, on Brexit involved many preliminary steps. One of these was for the U.K. to establish a bilateral air service agreement with the United States. This open skies agreement was crafted in November 2018, finally signed by both parties last month and goes into effect on Jan. 1. In effect, the U.S. and the U.K. will maintain operations as they did under the U.S.-EU open skies agreement of 2007.

As a member of the EU, for just a few more weeks, the U.K. takes part in the European Common Aviation Area (ECAA). Created in 2006, the ECAA gives U.K.-based air carriers access to 44 countries, which include the 27 EU nations and 17 other countries the EU pulled into the ECAA via horizontal agreements. The EU nations within the ECAA enjoy the widest options for routing. This covers commercial entry and exit (known as “third and fourth freedoms”) all the way to cabotage (known as “eighth and ninth freedoms”). Of course, none of the 17 non-EU members offer cabotage options. These freedoms of the skies designations were first set out in 1944 under the Convention on International Civil Aviation, also called the Chicago Convention.

Beyond the EU, the U.K. will have to busy itself establishing bilateral air service agreements with other countries as well. To date, bilateral agreements have been finalized with Albania, Canada, Georgia, Iceland, Israel, Kosovo, Montenegro, Morocco, Switzerland and the United States.

Once it is officially out of the EU trade bloc, the U.K. will be able to negotiate agreements with countries that the EU has not or will not. On the other hand, the U.K. and EU ought to re-ratify their Comprehensive Air Transport Agreement (CATA), which also expires on Dec. 31. If they cannot, and fail to agree to some sort of extension, both parties’ air carriers will see their operating licenses invalidated between them. Trying to maintain cabotage rights, if that were desired, would require moving carrier domiciles from one party to the other. Majority ownership would have to be swapped as well. Such a topsy-turvy move of, in effect, taking on foreign routing options at the expense of domestic ones would obviously be untenable. Barring any agreement, both parties might simply default to the typical elements covered in a standard bilateral air service agreement. This would limit commercial aviation activity to first-freedom through fifth-freedom routing.

The U.S.-U.K. and U.S.-EU open skies agreements now rest alongside each other. Just like a free trade agreement does not really mean free and unfettered trade flows, an open skies agreement is more about entry and exit routing than about intracountry routing. Beyond granting co-terminalization options, cabotage would have to be further negotiated. Just like the removal of most nontariff barriers would lead to true free trade, sovereign skies cannot really be considered open unless cabotage were granted to foreign passenger and air cargo carriers. Words have power but they can also have nuance. Just like an income tax cut is not really a gift from the government — it is only an allowance to hold on to more of one’s own income — free trade and open skies agreements are matters of degree and intent on the part of governments.

Click here to see other commentaries by Darren Prokop on American Shipper and FreightWaves.

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