Ryanair Says Brexit May Cut U.K. Off If Aviation Deal Drags

  • Discount giant makes case for industry to be ‘priority No. 1’
  • Marketing chief calls on Brussels to end ‘saber rattling’

Here's What Brexit Means for Airlines

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The U.K. could lose its air links with European Union countries after Brexit becomes a reality in 2019 if aviation isn’t made a priority in negotiations on the terms of the schism, Ryanair Holdings Plc warned.

In splitting from the EU, Britain could lose even the most basic flying rights and won’t be able to simply revert to bilateral treaties, Kenny Jacobs, the Irish carrier’s chief marketing officer, said Wednesday as Prime Minister Theresa May’s government prepared to trigger the legal exit mechanism.

Ryanair’s Jacobs on What Brexit Means for Airlines

Source: Bloomberg

“If you don’t see a solution by March 2019 there’s now the distinct possibility that for a number of months there may be no flying between the U.K. and Europe until a new deal is put together,” Jacobs said in an interview with Bloomberg TV. “That’s the extreme situation, but this is unprecedented.”

Britain and the EU need to make air travel “priority number one in the negotiations” and ideally develop a plan guaranteeing the continuity of flights this year to avoid the worst disruption, the executive said. With carriers already planning timetables for 2018, the current uncertainty means capacity is likely to shrink on some European routes next spring, he added. Ryanair Chief Executive Officer Michael O’Leary was an outspoken opponent of Brexit in the run up to June 23’s vote and London Stansted as the company’s biggest base.

Discount rival EasyJet Plc said separately that its minimum requirement is a “straightforward bilateral aviation agreement” allowing U.K. airlines to fly into the EU and vice versa.

Both sides stand to lose out, Jacobs said, with 150 million of the 200 million people entering and leaving the U.K. each year being Europeans, and 80 percent of vacationing Britons choosing Europe for their foreign holidays.

‘Hostility’

The executive, who spoke in London, called for an end to the divisiveness of the Brexit debate in which “everybody here is talking about access to the market, and in Europe people are saying pay us the 50 billion pounds first” -- a reference to the approximate sum the EU is seeking to cover prior British commitments to the bloc.

“In the past nine months we’ve seen a lot of the politicians here just talking to each other, and we’ve seen a lot of hostility and saber-rattling from Brussels as Europe feels like the aggrieved side in this divorce,” Jacobs said.

While based in Dublin, Ryanair draws about 40 percent of its customers from Britain. Europe’s largest discount carrier would also need to source a U.K. air operating certificate to continue offering domestic services in the country, though those account for less than 2 percent of its business.

“If we need to get one and we want to continue to operate those routes we think that will be straightforward,” Jacobs said. “That’s not that big a deal.”

More at Stake

Luton, England-headquartered EasyJet, has more at stake, requiring an EU AOC in order to maintain most flights from 17 continental bases where two-thirds of its 6,000 workers are employed. The company is now close to making an application, it said after Britain formally invoked Article 50 of the Lisbon Treaty, the legal exit mechanism.

The new EU arm would need to be majority owned by investors from the bloc, though with 49 percent of shareholders -- excluding those in the U.K. -- already domiciled there, that “will not present a challenge,” EasyJet said.

Ryanair’s call for an expedited aviation deal maintaining the status quo contrasts with comments from Deutsche Lufthansa AG Chief Executive Officer Carsten Spohr, who told Bloomberg Monday that he expects France and Germany to take a hard line in the negotiations.

It’ll be “virtually impossible” to reach a comprehensive agreement in the time available, making disruption almost inevitable, Spohr said, adding that continental governments and the EU Commission won’t be prepared to “pretend that nothing has happened.”

Jacobs said that politicians and bureaucrats needs to think more about “the consumer in the middle” of the Brexit debate.

“No one voted for restricted air travel, no one voted for higher fares and no one voted for isolation, but that’s a possibility,” he said. “We hope it doesn’t happen.”

— With assistance by Benjamin D Katz

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