EU Referendum

Brexit: they still don't get it


The Financial Times is running a piece headed, "Aerospace chief warns delayed Brexit deal threatens industry", with the sub-head: "Industry trade body hits out at failure to prioritise aircraft certification standards".

According to this piece, Tony Wood, president of British trade association ADS and chief executive of aerospace supplier Meggitt, are complaining that ministers' failure to prioritise an agreement on aircraft certification standards in the EU-UK trade negotiations is threatening the future of the UK's £34 billion-a-year aerospace sector.

"We are now at that critical point where political decisions on the negotiating priorities with Europe need to be made", says Wood, adding that the aerospace industry "absolutely requires a comprehensive bilateral agreement with Europe if we are to preserve our position at the top table and number two position in the world".

As with other sectors, aerospace executives are frustrated that the government has focused on fishing rights in Brexit negotiations, hindering a wider trade agreement that would help protect the industry's more than £30 billion in exports.

Wood adds that there appear to be "higher political priorities in other industries", but asserts that it is "time to choose", adding: "The aerospace and defence industries underpin 375,000 jobs in the UK and they are some of the best-paid jobs in engineering and advanced manufacturing".

The FT piece then goes on to say that, "Many in the sector fear that failure to strike a bilateral agreement will add cost and complexity to the certification process, just as the industry reels from the effects of the coronavirus pandemic and embarks on the biggest technological change since the invention of the jet engine".

This, apparently, is in the context of aircraft and aero-engine makers investing heavily in hybrid-electric and hydrogen-powered flight, in an attempt to achieve the industry’s pledge to be net carbon neutral by 2050. Airbus has said it aims to launch a green aircraft by 2030.

But this is a bizarre statement. There are no ifs, buts or maybes. The absence of a bilateral agreement on aviation safety (BASA) will add immeasurably to the costs of the UK industry, and substantially limit its ability to operate in a competitive international sector.

The paper then goes on to assert that responsibility for certification currently lies with the European Union Aviation Safety Agency (EASA), then stating that it has mutual recognition agreements with regulators around the world.

This assertion, though, is so, so wrong. There are no "mutual recognition agreements" in aviation. This term has a very specific meaning: the parties to such an agreement set their own standards which are then recognised unconditionally by the other party, or parties.

What we actually have, as I pointed out earlier, is "reciprocal acceptance" of findings of compliance and approvals, when the parties agree that each party's civil aviation standards, rules, practices and procedures "are sufficiently compatible to permit acceptance of approvals and findings of compliance with agreed upon standards made by one Party on behalf of the other".

This is not pedantry. The "acceptance" is conditional. Reciprocal acceptance is a very different animal from mutual agreement, making the basis for a BASA considerably more demanding.

In the context of Brexit, since the UK has ceded much of its regulatory autonomy to EASA, it no longer has a comprehensive knowledge base, or the experienced personnel who can carry out the full range of regulatory functions.

Significantly, even the CAA gets it wrong, talking of "continued mutual recognition", and existing "mutual recognition provisions established under the EASA Basic Regulation". In terms of the latter, again there is no "mutual recognition". There is harmonisation of standards under the aegis of a common regulator, which again is a very different thing.

As regards new arrangements with the EU, there is no question of "continued" mutual recognition. You can't continue something you don't actually have. Any new relationship will have to be based on "reciprocal acceptance", which will require the EU to take a view on the post-Brexit capabilities of the UK's regulator, the CAA.

As it stands, however, the FT gets one thing right in stating that if there is no deal, all UK-designed parts, components and systems for aircraft will become invalid in the EU on 1 January. Better late than never, I suppose. I've been writing specifically about the need for a BASA since June 2018.

The FT notes that big companies such as Rolls-Royce have already shifted design functions out of the UK to the EU to avoid the extra cost. But, late in the day, it says smaller companies in the supply chain do not have the resources to set up EU-based design offices.

The paper also notes that the industry is anxious that once the transition period ends, the CAA will not yet have sufficient competence to certify the existing and new technologies, exactly the point made earlier in this article.

"In my view, it is going to take five years for the CAA to become as fully capable as Easa is today, in order to be mutually recognised", Wood says, getting it half right, but perpetuating an error that should not be made by such a senior executive.

Another senior aerospace executive backs up Wood on the competence issue, saying: "There is a question as to whether the CAA will be a good enough regulator in what will be a potentially transformational period for global aviation".

Needless to say, the CAA believes it is prepared for the demands of certification regardless of whether there is bilateral agreement. It says deals to ensure mutual recognition of safety inspections have already been signed with the US, Canada, and Brazil, although it says, these include a period of "confidence building".

Once again, the CAA gets it wrong, which in itself does not exactly build confidence. It should be talking of "reciprocal acceptance", which is largely conditional.

However, not all is lost. Tim Johnson, a CAA director, says that, "Since the 2016 referendum, we have been preparing to take over design certification responsibilities for UK companies as we leave the European system for aviation safety. We look forward to playing our part in enabling new and existing aerospace technologies in the future".

It does not help, though, that so many in the industry, including the regulators, just don't get it, having such a sketchy idea of the international regulatory scene. Even when agreements are made, they have no idea what they've actually got.

And for the CAA and the UK government, neither are in a position to mark their own homework. Having been a member of EASA, no organisation is better equipped to judge the residual regulatory capabilities of the UK. With that in mind, I suspect that an EU-UK BASA isn't going to be a slam-dunk.

It is going to be even more difficult, given that the UK government quite evidently hasn't got its act together.

Also published on Turbulent Times.