Brexit: losing control

13/02/2017

What was intriguing about my exploration of the timber industry was the way industry pundits were prepared to hold fire on the effects of Brexit on their sector, awaiting more information. And months after the referendum, they are still holding their breath.

In fact, the impact of Brexit on the industry as a whole might be relatively slight, although those few companies which do export timber to the EU may have difficulties, while some UK enterprises would regret the absence of EU law.

B&Q, for instance, had a long-standing policy of selling only sustainable timber to its customers. But it went early, before the adoption of the EU timber regulations, putting it at a competitive disadvantage. EU law, therefore, restored the level playing field, reducing the penalty for "doing the right thing".

But, as we are seeing, many industries aside from just the timber business have been muted in their responses to Brexit. And here, a particularly glaring example is Air Traffic Management (ATM), the system which controls commercial flights and keeps them safe.

After the referendum, the trade magazine was quick to respond, posting a comment piece on 24 June. But then it only noted that, "the industry fallout… will take some time to become clear". Nearly eight months later, it has yet to return to the subject.

That the magazine should have been so cautious is probably wise. The provision of ATM in Europe is anything but straightforward and even describing the system is not simple.

Basically, day-to-day management of controlled airspace is vested in national entities, such as NATS in the UK. This is a public private partnership between the Airline Group, which holds 42 percent, NATS staff who hold five, UK airport operator LHR Airports Limited with four percent, and the government which holds 49 percent and a golden share.

The legislative framework for this and other Member States is provided by a complex of EU legislation. The main instrument is Regulation (EC) No 550/2004 on the provision of air navigation services in the single European sky, as amended by Regulation (EC) No 1070/2009, all under the designation Single European Sky (SES).

The SES programme was established in 1999, and there have been several additions and revisions to the legislation and structure since. Amongst other things, it carves European airspace into what are known as Functional Air Blocks (FABs), related to traffic flows rather than national borders. Currently, UK airspace is part of the UK-Ireland FAB, the first of its kind to be fully operational.

However, the legal framework which defines the overall ATM system is no longer confined to the EU Member States. In December 2005, the EU concluded an agreement on the European Common Aviation Area (ECAA), extending the entire aviation acquis to partners in South-Eastern and Northern Europe. These were: Albania, Bosnia and Herzegovina, Croatia, the former Yugoslav Republic of Macedonia, Montenegro, Serbia, Kosovo under UNSCR 1244, Norway and Iceland.

In addition to EU institutions, there is the 41-member intergovernmental Eurocontrol, which was founded in 1960 by the Eurocontrol Convention, and ratified in 1963. It was set up with the idea of harmonising ATM throughout Europe but scuppered by the French and British, largely due to concerns over control of military airspace.

The body lingered in a sort of half-life existence, running the Upper Area Control Centre (MUAC), located at Maastricht Aachen Airport, which started operations in 1972. This managed traffic above 24,500 ft over Belgium, Luxembourg, the Netherlands, and north-west Germany, alongside a military control unit, handling the conflicts between military and civilian traffic.

In 1997, though, its mandate was renewed and the European Union became a member of Eurocontrol in its own right, able to vote on behalf of its members, rather as it does in the UN or the WTO. This led to a new lease of life for the organisation when, in 2011, the Commission, using its voting power, set it up as the Network Manager for the whole of European airspace.

Its job is to take charge of the wider European air traffic system, with the brief to ensure that the whole system functions efficiently. Additionally, it provides policy-setting and regulatory support to the Commission, and plays a part in the research and development of the ATM system.

Crucially, Eurocontrol also runs the Central Route Charges Office (CRCO), through which airspace users pay for the air traffic services they use. The CRCO calculates the route charges due to the Member States for the services provided, bills the airspace users and distributes the route charges to the States concerned.

The other major part of the matrix is the SESAR project (Single European Sky ATM Research), which was jointly founded by Eurocontrol and the Commission.

Established in 2007 as a public-private partnership, the SESAR Joint Undertaking (SESAR JU) is responsible for the modernisation of the ATM system by coordinating and concentrating all ATM relevant research and innovation efforts in the EU. For its legal base, it relies on Council Regulation (EC) 219/2007, modified by Council Regulation (EC) 1361/2008 (and last amended by the Council Regulation (EU) 721/2014).

This is the bare bones of an extremely complex system but, without at least a basic understanding of its components and how they interrelate, it is not possible to ascertain what the potential effects of Brexit might be.

Assuming no agreement is reached under Article 50, one can assume that the UK will remain a member of Eurocontrol and will also keep control of NATS, ensuring continuity of management in UK airspace. The UK Government, though, would have to negotiate with the Irish Government to maintain the UK-Ireland FAB, particularly to ensure management of trans-Atlantic flights.

As regards the Single European Sky (SES), the extensive aquis - largely comprised of Regulations which have direct effect – would fall with the advent of Brexit. The Great Repeal Bill would have limited effect as the SES is a Europe-wide system of ATM. As before, while the UK can legislate for its own territory, it cannot require the EU or its Member States to recognise its provisions.

Thus, while the UK could import the EU regulatory structure to govern its own airspace, its ATM would not longer be integrated with the rest of Europe. As the UK would no longer part of the acquis and without the benefit of bilateral agreements brokered under ICAO, Member States would be under no obligation to provide ATM to UK registered aircraft and there would be no mutual agreement of the charging of fees for services provided.

If we took the reducto ad absurdum premise of a totally isolated UK, refusing to negotiate with its neighbours, commercial flights to (and potentially from) the rest of Europe would cease, although not necessarily immediately.

Through its membership of the European Common Aviation Area, the UK benefits from the Single European Sky and, by one reading of the Agreement, services would cease one year after we left the EU. Even then, air services operated at the date of expiry of the Agreement are still allowed to continue until the end of the scheduling season.

Should the UK wish to continue ATM cooperation – and it is hardly conceivable that it would not – then it must look to renewing its membership of the European Common Aviation Area (ECAA). That, of course, pre-supposes that its membership does lapse as a result of Brexit. But since this depends explicitly on its status as a EU Member State, one must assume that it will be out on its own.

By some ironic quirk of fate, however, the UK cannot apply to rejoin. The Agreement states that "enlargement" – as it would become – can only take place by invitation of the Commission. Therefore, the UK Government would have to go cap-in-hand to Brussels, asking the Commission to invite it to join. One can only guess as to the price that might be extracted.

The standard condition for membership of the ECAA, though, is full compliance with not only the EU law on ATM but with a wide range of aviation and related law. This is listed in Annex I, and includes consumer protection issues such as the package holidays directive, the regulation on air carrier liability and much, much more.

Rather frustrating Mrs May's commitment to "taking back control", EU Directives and Regulations listed "shall be binding upon the Contracting Parties and be, or be made, part of their internal legal order".

That said, provided the UK commits to full and continued compliance with EU law – over which we would genuinely have no say (as opposed to the EEA where we have some consultation rights, and can invoke safeguard measures) – we should have no particular difficulty ensuring continuity of air traffic management.

The tremendous irony, though, is that while the rights of the EEA Agreement Contracted Parties are protected, the UK outside the EEA would have fewer rights. And, in terms of the dispute procedures, a role is allocated to the ECJ, on similar terms to those found in the EEA Agreement. Thus, anyone objecting to EEA participation on the grounds of ECJ jurisdiction must object to this agreement on exactly the same grounds.

Notwithstanding this, it is inconceivable that the UK could stand apart from the European Common Aviation Area, while it is scarcely possible that anything else would be on offer from the Commission. The UK will either have to bite the bullet, or face the prospect of terminating flights to and from mainland Europe (and even overflights over the ECAA territories, including Norway and Ireland). The alternative is to broker an entirely new agreement under the aegis of ICAO, with all the attendant complications of having to start from scratch.

At the very least, this could make for some entertaining, if protracted negotiations in Brussels over the next two years, to add to all the other issues that must be resolved.