Brexit casts doubt over future of Europe’s cheap flights
June 27, 2016
The aftermath of Britain’s historic vote to exit the European Union (EU) continues to unfold, and one thing is abundantly clear. The future of Europe’s cheap flights industry is in jeopardy thanks to Brexit. The advent and survival of Europe’s low-cost air travel industry has largely been anchored on the EU’s single market rule. A rule which facilitates waivers of certain aviation operating certificates, licences, and taxes for carriers from member states.
A Hard Hitting Prospect
Britain decided to go it alone, therefore, there is little doubt that low-cost carriers will lose significant leverage. Especially when Britain reinstates operating certificates and other regulatory requirements against EU member countries. And, of course, vice versa.
These grim prospects are hitting hard on both commercial and private aviation industries. Especially those that have invested heavily in Europe’s aviation market. As Richard Quest stated in his news article published on the CNN website on 27th June 2016:
“London’s EasyJet, Dublin’s Ryanair and Spain’s Vueling have opened new bases and routes that crisscross the continent.”
However, Brexit is bound to trigger a rise in the cost of maintaining these operational infrastructures. Along with effectively making it difficult for these operators to continue supporting low-cost travel. This means that the increment of fares will be inevitable.
Financial Turmoil Due to Brexit
In addition to this, Brexit has already created unprecedented magnitudes of hostile reactions in the financial markets in the UK and globally. For example, the pound dipping by 11%, the lowest since 1984. Global stocks and currencies have all shed value and led to losses running to trillions of pounds. All indications are that the British airline industry was hit hard by the immediate post-exit impact. Simply due to the turmoil in the financial markets. Quest stated:
“It was no surprise that British airline stocks fell dramatically – several north of 20% – after the Brexit vote was announced on Friday.”
It is for these reasons that the UK’s aviation industry players are already springing into action. And many are focusing their attempts on salvaging the degenerating situation. A case in point is EasyJet CEO Carolyn McCall, who Quest quoted as saying that they had:
“We have written to the UK government and the European Commission to ask them to prioritize the UK remaining part of the single EU aviation market.”