With just a year to go before the UK is scheduled to formally leave the European Union, the reality of what this will mean for airlines with significant British operations or ownership is still far from clear.
In some quarters there is still scepticism – be it wishful thinking or grounded in the sheer complexity of the task – over whether the UK will actually leave the EU at the end of March 2019, despite the invocation of the Article 50 withdrawal clause.
Europe's airlines have all called for clarity, citing the importance of the operating environment for businesses that are already plotting their summer schedules for 2019 and beyond.
Predictably, given the political posturing and gamesmanship inherent in negotiations, such clarity has not been forthcoming. Airlines enter the last year of full UK membership of the EU with little confirmation of the operating environment to come.
That has left the field open for widely differing views of how damaging the impact might be for the airline sector.
"I'm a firm believer that this will get resolved," IAG chief executive Willie Walsh said during the Airlines for Europe (A4E) Aviation Summit in Brussels on 6 March. "There's no better industry at dealing with disruption than ours [and] there's not a lot that needs to be sorted out."
Ryanair chief executive Michael O'Leary paints a different picture. "I think there is going to be a real crisis," he asserts. "I believe there will be disruption in flights between the UK and Europe. I think partly because it is in the German and French interests to push the ownership issue to the maximum extent."
Speaking to FlightGlobal at the same A4E summit, European Commission director-general for mobility and transport Henrik Hololei sounded a warning on the challenges of securing a UK-EU aviation agreement.
He says that discussions regarding a future aviation agreement between the UK and EU must await the progress of the wider framework for the negotiations between the parties. "The whole nature of these discussions is that there are no sectoral negotiations without a general framework in place and there is no cherry-picking as we know," Hololei notes.
That debate came before the striking in March of a transition deal between the UK and the EU, which settled some of the nerves around the March 2019 deadline. This has brought more positive noises from UK and EU leaders about the tone of future negotiations, as they embark on talks to reach some kind of agreement on future relations by October 2018.
Hololei himself earlier suggested that, if a transition agreement could be agreed, the UK's current access to European air markets could be extended for as long as that transition period lasts.
The UK's departure – or that of any other major European country – from the EU is complicated for airlines to unpick because of the consolidation among EU operators and the pan-European expansion of low-cost carriers over recent years. There are UK carriers with prominent intra-EU operations, and vice versa.
Theoretically, the early securing of a new EU-UK aviation deal would help provide the regulatory framework to support the status quo of such operations. But with no guarantee of such an agreement, let alone it being agreed before wider Brexit terms are sealed, many carriers have taken steps to safeguard their operations from a failure to agree an orderly transition or the implementation of a "hard" Brexit.
They have done so largely by working to ensure they have air operator certificates and relevant foreign ownership levels in place to secure the necessary route rights.
London Luton-headquartered EasyJet, with its mix of UK and intra-European operations, has arguably had the most at stake and was among the first to take action when it applied last summer for an Austrian AOC to safeguard its non-UK European route network. It established a Vienna-based European division which conducted its first flights in July 2017. By December, this division had grown to 25 Airbus A320s and three A319s.
EasyJet already has a Swiss AOC to fly routes from Switzerland, which is not part of the EU. It has also established a new company for UK operations.
It says: "EasyJet is now – and will be after the UK leaves the EU – a pan-European airline group with three airlines based in Austria, Switzerland and the UK, together with a commercial and operational services company based in Luton."
The airline has also acted to enshrine, in its articles of association, that the company will remain EU-owned and -controlled after Brexit. Shareholders in February backed a motion designed to ensure the airline remains able to fly between and within EU countries. At the time, chairman John Barton said the airline was close to having 50% of shares held by non-UK European Economic Area nationals.
Central European budget carrier Wizz Air has applied for a UK AOC, as it continues to build its operations in the country.
"This move is also part of our broader strategy to ensure that our UK operations are [post-EU membership] ready," explained Wizz chief executive Jozsef Varadi in confirming the AOC application last October. But he adds the AOC is "not only for Brexit", but also to position Wizz to "take advantage" of potential consolidation opportunities.
Wizz has doubled its UK capacity in the last four years. Luton airport, where Wizz acquired former Monarch Airlines slots from administrators, is the carrier's biggest station by seat capacity.
In June last year the carrier said it was monitoring its ownership status. But it is "not taking actions at this point in time", says Varadi.
Ryanair chief executive Michael O'Leary has been at the forefront of warnings that flights between the UK and mainland Europe could be disrupted by Brexit.
The Irish carrier said it halved its growth plans in the UK in 2017 to around 6% following the referendum result and could further reduce or redeploy its aircraft based in the country after Brexit. It also says it will add a Brexit clause to tickets sold for flights after March 2019 to cover itself legally if services are disrupted.
The airline is also acquiring a UK AOC to ensure it retains domestic route rights. UK operations, spanning six routes this summer, represent a relatively small part of Ryanair's activities.
It has also outlined the need to tackle its foreign ownership levels. Ownership limits would be breached once UK shareholders are classified as non-EU.
O'Leary previously estimated that about 60-65% of Ryanair's shareholding would be non-EU after Brexit. "I do not see that as an issue because we actively want to buy back our shares," he said last September. "I might even force UK sellers to sell my shares to me. I will be the buyer."
Ryanair has undertaken a number of share buyback schemes in recent years including a €750 million ($934 million) buyback in February.
With its Spanish corporate domicile – and with AOCs and airlines based in Spain, the UK, Ireland and France – IAG has steadfastly maintained that its pan-European structure means it is well-set for Brexit.
Chief executive Willie Walsh said in November 2016 that IAG's ownership model had been tested with its creation in 2011 and had proven "robust”. Speaking at the A4E summit in March, Walsh noted: "I have a European company. And the EU must be acting in my interests as a European company. And I'm sure they will. And the idea that Aer Lingus is not an Irish company or Iberia is not a Spanish company is just nonsense – they are."
IAG would be exposed to risk if fifth-freedom rights between the EU and UK were altered as it operates domestic flights within the UK, intra-European flights, and services from the UK to the rest of the EU.
Walsh has called for a comprehensive air transport agreement that would give airlines from the UK and the 27 remaining EU member nations "all the freedoms of the air" post-Brexit.
Further complication appears to lie in marrying ownership requirements to ensure IAG meets EU ownership rules, but also in a future UK deal on transatlantic flights.
British Airways' home country relies on its EU membership for its right to serve US routes, under the wider EU-US aviation deal. Initial talks have already taken place and, after reports that the USA was offering only a standard aviation deal which would require UK carriers to be majority UK-owned, Walsh expressed confidence that a new deal would be reached.
"There will be an agreement between the UK and the [USA]. That will be a comprehensive open-skies agreement," he says. "Anybody who doesn't believe that is living in cloud cuckoo land."
IAG declines to break down the nationality of its shareholders. Its largest single shareholder is Qatar Airways.
VIRGIN ATLANTIC AND NORWEGIAN
Both Norwegian and Virgin Atlantic would also likely be impacted should UK ownership become an issue. The two carriers are the biggest European operators behind British Airways in terms of UK-US capacity, FlightGlobal schedules data shows.
Virgin Atlantic holds a UK AOC. The airline is 49% owned by Delta Air Lines and the rest is held by the Virgin Group. But under a deal struck last summer, Delta partner Air France-KLM will acquire 31% stake in Virgin Atlantic. Richard Branson's Virgin Group would then hold a 20% stake.
Craig Kreeger, Virgin Atlantic's chief executive, has described as "hazardous guessing" the suggestion that the deal could be imperilled by ownership laws if the UK is designated a third country. But he says the various parties can "adjust as necessary if it needs to be adjusted".
Kreeger has highlighted the need for a liberal UK-US open skies agreement to replace the UK's current access to US markets via the EU-US open skies.
Norwegian is the third-largest operator on US-UK routes, which it flies largely under the UK AOC it set up in 2016.
That could add a further dimension to UK-US negotiations if the USA demands more stringent labour practices in any future UK-US open-skies successor, given the controversy that was ignited in the USA when Norwegian applied for a foreign air carrier permit there.
This was evident in the protracted application for US route authority for its Irish operation amid US labour group arguments that Norwegian was using it as a "flag of convenience" to operate with lower labour costs. US route rights for its Irish operation were finally secured in December 2016, and followed for its UK arm in the autumn of 2017.
Norwegian has multiple AOCs, in part reflecting its home country's non-EU status, and relies on bilateral freedoms for the rights to operate its European, US and Asian flights.
Chief executive Bjorn Kjos has previously expressed confidence that the UK and EU can come to a "suitable arrangement to allow air services to continue".
BMI Regional operates UK domestic, UK-EU and intra-European routes, and notably has a Munich base. The airline is majority UK-owned and holds a UK AOC.
Its commercial chief Jochen Schnadt said in November 2017 that the airline would either need a European AOC or to enter a joint venture with a European partner to safeguard its intra-European route network.
Leisure carrier Thomas Cook Airlines holds AOCs in the UK, Germany, Spain and Scandinavia.
In February, Thomas Cook's chief airlines officer Christoph Debus said that only 34% of shares in the group were held by non-European investors, but "we would expect this to rise above 50%" if the UK became a third country. Debus says he is "hopeful" a solution can be found, and suggests that Thomas Cook might need to find "different legal structure in order to be able to operate our airlines going forward".
The UK-based tour operator is including a "Brexit clause" in the terms and conditions of tickets sold for flights after March 2019.
Europe's other major travel group TUI has five AOCs, including a UK one.
Leisure carrier Jet2 operates from UK bases into Europe, with no intra-European operations. Corporate parent Dart Group last summer adjusted its articles of association to restrict non-UK ownership to a maximum 35%. But it believed non-UK ownership was below that level, part of efforts to ensure retention of route rights.
At the time, the impact on Jet2's ownership rights was not known, and Jet2 said it might be necessary to "review such provisions when the regulatory landscape following Brexit becomes clearer".
For UK regional carrier Flybe, the impact has largely been from the weakening of UK currency, evident in its first-half results.
Its network is overwhelmingly UK-EU. Chief executive Christine Ourmieres-Widener told FlightGlobal a year ago that the addition of a European AOC was "not on the table" because only a "very limited number" of continental European routes were being operated.
Flybe's white-label operations could be disrupted if new leasing rules are introduced.
Malaysia Airlines' former chief executive Peter Bellew believes the "messy" situation caused by Brexit is prompting non-European airlines to rethink their strategies around which secondary airports to serve in the region.
"I think that's the first casualty [for the UK] that's happening with Brexit," said Bellew during a conference at the European Parliament in Brussels on 20 March.
Bellew, who is now Ryanair's chief operations officer, says he knows from talking to executives in Asia that "they don't understand the Brexit thing", adding: "And you know what? They don't really want to understand it. They just know there's something messy out there."
That perception means, he says, that carriers are more likely to fly from "Beijing or Xi'an or Xiamen to Brussels" if such services are "less hassle and less risky" than those to Birmingham, Manchester, Edinburgh or Newcastle.
Bellew adds: "And that's actually very important. If you're talking [about achieving] economic generation in the peripheral regions of Europe, you're talking about [having] Asia or [US] inbound [traffic]."
Reporting by Oliver Clark, Graham Dunn, Lewis Harper and David Kaminski-Morrow
Source: Cirium Dashboard