Home Flexcit Impact Assessments Monographs Contact

Brexit: a shockwave of tsunami proportions

2018-06-15 06:33:13

Following on from my discussions on Wednesday with that dismal example of British management, it was already evident that the whole of industry was not asleep to the potential adverse consequences of Brexit. The pharmaceutical industry (alongside banking) was ahead of the game, and some sections of the chemical industry are aware that trouble lies ahead.

Slow off the mark (publicly, at least) was aerospace manufacturing, which I flagged up as a high-risk element in November last year and again in December, with a further piece in April.

The attention paid by the legacy media has been minimal, although last April the Telegraph and a few others took brief notice as Rolls-Royce engines reported that it was to transfer the "signing off" of British-made airliner engines to Europe. This hardly got the measure of the story but, at least, the paper revisited the general story a few days ago (11 June), with a more realistic headline (online), declaring: "Warning aircraft could be grounded as aerospace industry calls for it to be separated from Brexit talks".

It says a lot for the febrile mood of the media, obsessed as it is with the empty posturing of parliament, that this was given a low-key slot in the business section and (as far as I can see) largely evaded the coprophagic tendencies of the rest of the legacy media.

Yet, the essence of the Telegraph story was that two aviation bodies, ADS and the General Aviation Manufacturers Association (GAMA), had joined together to write a letter directly to Michel Barnier, asking him to intervene directly to mitigate the potential damage which Brexit could cause.

It says something that these bodies are writing to Barnier rather than his UK counterpart, or even a departmental minister, but then the scenarios which they are addressing are not only potentially devastating, but could have consequences for the aerospace industry throughout the entire EU.

The issues addressed centre on the points I have raised in my posts that, in the absence of a Withdrawal Agreement, approvals of aircraft and components made or maintained (or designed) in the UK will no longer be valid.

As a result, "any aircraft containing engines, parts and spares manufactured in the UK will not be able to fly under EASA's jurisdiction", and UK businesses "would not be able to deliver products such as engines and propellers to EU manufacturers, thereby stopping aircraft production in the EU".

One has to step back to take in the full implications of what is being said here, not only will thousands of aircraft be grounded but also no further aircraft in the entire EU area can be built or maintained using parts manufactured in the UK, closing down an industry turning over in excess of 70 billion a year.

Doubtless, the extravagant nature of the threat is the very thing which is preventing it being taken more seriously. The argument will be raised (as it was on Wednesday by the fine example of British management that I met) that the situation is so serious that neither the UK governments nor the EU could allow it to transpire.

In this, there has to be an element of truth. As we have seen with vehicle type approval legislation, picked up by one of our eagle-eyed commenters, the EU is preparing to make adjustments which will enable European manufacturers to keep operating.

This has been noted, incidentally, by the Financial Times with reference to this blog and its "veteran Eurosceptic author who rarely misses such things (or the chance to be grumpy about journalists)". The ability to keep on top of things, though, is why I value so much the interactive comments, where readers volunteer information that is then fed back into the blog.

However, should the Commission deem it necessary to make adjustments for the aviation sector (which undoubtedly it will), then it stands to reason that it will attend to the needs of EU enterprises first. The 207 CAA-certified British firms will be at the end of the queue, and what is settled will not necessarily be to their advantage.

Actually, dealing with the issues is complex. The ADS/GAMA letter talks of the need conclude bilateral aviation safety agreements, on the lines of the 136-page US-EU Agreement, and this sort of agreement does not come easily or quickly. Furthermore, the UK cannot negotiate with the EU until it is a third country, which means that talks will have to be pursued during any transitional period.

This is one of the reasons why seasoned commentators don't think the EU will cut the UK adrift yet not in the coming June or even on Brexit day on 29 March next year no matter how provocative the behaviour of the UK government. The EU and Member State governments are simply not ready: they need more time to get their ducks lined up.

However, the issues raised by aerospace manufacturers are by no means the full extent of the problems faced by the aviation industry in its broadest manifestations. If the Telegraph hacks had done the journalistically impossible, and read the relevant Notice to Stakeholders (or the EUReferendum.com blogposts), they might have got a fuller picture.

They would have found that the EASA jurisdiction, and the writ of EU law, does not just cover aircraft and their parts. It extends to such things as operating certificates for aerodromes, air traffic management and air navigation system providers.

In the event of the UK government failing to settle a transitional agreement, on the stroke of midnight (our time) on 29 March 2019, no EU-registered aircraft will be able to fly into UK airspace (as this would involve relying on uncertified air traffic management systems and navigation beacons). And even if they could, they would not be able to land at any UK airport. Heathrow and Gatwick will be closed to them for the duration.

I wrote about air traffic management back in February last year, but that issue has been hardly rehearsed in public. And again, it could be argued that the EU could never allow approvals of ATM services to lapse, as it would affect air services throughout Europe, as well as trans-Atlantic, trans-polar and other services.

That aside, there are numerous other functions, such as licences and medical certificates for air traffic controllers, certificates for air traffic controller training organisations, certificates for aero medical centres and aero medical examiners responsible for air traffic controllers, certificates for persons responsible for providing practical training or assessing the skills of air traffic controllers.

There are also pilot licences, pilot medical certificates, certificates for pilot training organisations, certificates for aero-medical centres, certificates for flight simulation training devices, certificates for persons responsible for providing flight training, flight simulation training or assessing pilots' skill, and certificates for aero medical examiners, and also certificates for air operators and attestations for the cabin crew.

Brexit is akin to dropping a huge rock into the aviation industry, causing a shockwave of tsunami proportions, the potential consequences of which have not yet come to be appreciated. And, because our international aviation agreements are wrapped up with the EU, it will have global impact.

Getting the attention though, at the moment, is the fate of Rolls-Royce and its announcement of 3,000 job losses. By the time Brexit is over, we could be looking at losses in the hundreds of thousands, and the wreckage of a once-vibrant industry.

If this alone makes a "no deal" scenario an unlikely proposition no matter what the loons say - the way Mrs May is handling the negotiations means that the "accidental Brexit" cannot be ruled out altogether. It seems we're more reliant on the good sense of EU players than we are our own government to avoid a disaster. But, if that is the case, there will be a price to pay and it will not be to our liking.