Airlines warn of disruption if no quick Brexit aviation deal

Wed Mar 29, 2017 9:10am EDT
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By Conor Humphries and Victoria Bryan

DUBLIN/BERLIN (Reuters) - Britain must prioritize aviation in Brexit negotiations if it is to avoid major disruption to air travel, budget carrier Ryanair (RYA.I: Quote) warned on Wednesday, echoing growing concerns across the sector as Britain triggers its exit from the European Union.

Airlines based in the EU have the right to fly to, from and within any country in the bloc thanks to the single aviation market created in the 1990s, but Britain now has just two years to renegotiate access or come up with an alternative system.

"There is a distinct possibility that there may be no flights between the UK and Europe for a period of time after March 2019," Ryanair's chief marketing officer Kenny Jacobs said on Wednesday.

UK-based low cost carriers, especially Luton-based easyJet (EZJ.L: Quote), are among those most affected by Brexit, because they typically make more use of the EU rights to fly between other member states and not just to and from the UK.

They could lose that right after Brexit. EasyJet said on Wednesday it was close to applying for a license to set up an operating company within the EU to protect its intra-EU flights. Its headquarters and listing would remain in Britain, it added.

Jacobs said there was no time to lose to strike an aviation deal between Britain and the EU, as airlines need to finalize their 2019 summer schedules in the first half of next year.

While British Prime Minister Theresa May has said no Brexit deal - and a return to World Trade Organisation rules - was better than a bad deal, aviation is not covered by WTO, creating greater uncertainty over what might happen.

Since Britain's June 23 vote to leave the EU, easyJet shares are down 35 percent, Wizz Air's (WIZZ.L: Quote) are down 18 percent, Ryanair's are up 4 percent and British Airways owner IAG's (ICAG.L: Quote) are up 0.7 percent. Shares in Germany's Lufthansa (LHAG.DE: Quote), meanwhile, are up 24 percent.   Continued...

A Ryanair aircraft takes off during a foggy day on Riga International Airport in Riga, Latvia December 21, 2016. REUTERS/Ints Kalnins