Saturday, 4 November 2017

Aviation regulation: initial overview

On 25Oct2017, three experts gave oral evidence to the House of Commons Treasury Select Committee.

On 30Oct2017, four leaders of the UK aviation sector gave oral evidence to the House of Commons Transport Select Committee.

This blog entry is simply a set of notes about those two hearings, plus limited comment related to them.  Including the contents and references, it is 2019 words long.

Contents
Conclusion
30Oct2017: representatives of the industry
About legal infrastructure
Long-term agreement with Europe
25Oct2017: Sir Ivan Rogers et al
Comment & review
Bibliography:

Other sources (not read in detail)

Conclusion

On balance, the UK is a signatory of the European Common Aviation Area (ECAA), alongside the EU itself as a separate signatory.  On Brexit, there is no automatic withdrawal of the UK from the ECAA treaty.  The ECAA explicitly says that it has no impact upon any party and the European Economic Area (article 5).

The easiest way for UKGov to keep flights flying is re-sign the ECAA treaty at midnight on Brexit Day, perhaps just before re-activating its membership of EFTA to retain compliant access to the EEA.

Both ECAA and the European Free Trade Association offer the same type of off-the-shelf solution for the same immediate-term issue: to maintain continuity of trade.  The UK should seek to stay in both ECAA and EFTA (remain in the EEA) to solve 90% of immediate-term compliance  problems, thereby buying time - a long of time, say 10 years maybe more - to develop a more open European market for goods and services, without the meddling political projects and sinister non-tariff, protectionist barriers-to-entry.  To re-sign the ECAA and re-activate UKGov’s membership of EEA is the least-worst policy choice UKGov could make.

But if UKGov just walks away from everything, then the UK shall have no regulation in place to permit foreign flights to land (in some cases), or to permit UK flights to travel to anywhere covered by the EU-US Open Sky Agreement (article 3).

Note that a presumption of continuity might be available for both ECAA and the EU-US Open Sky Agreement.  The UK is a separate signatory to each, but listed as an EC member nation, which means that there is a valid question of enforceability, but a thin possibility of temporary continuity, subject to further agreement as a transitional measure.  The alternative interpretation would be that the UKGov would fall out of scope of both agreements as under the Vienna Convention of the Law of Treaties given that Brexit arguably triggers a material change to the UK’s circumstances (article 62, cf articles 42-44).  But this presumption might be academic, because membership (and compliance) of the EEA is still relevant to the aviation sector and its operations, so for the UK to re-sign the EECA without re-activating its  EFTA membership would be pointless.

The rest of this blog features only scratch-notes and jaundiced comments about the two select committee hearings.

30Oct2017: representatives of the industry

About legal infrastructure

Walsh (IAG): Emirates can fly to the UK because of an open-skies deal between UK and UAE (Q20).  Really?  Well, yes, it seems that a bilateral deal does indeed exist - it was reportedly updated by an MoU in Feb2012 - but doesn’t appear online.  Does UK has competence over such deal, or does to TFEU article 208 et seq (title II Common Commercial Policy, the exclusive competence of the EU in negotiating and concluding trade deals) apply?  According to the EU, the latter case applies.  According to Regulation 847/2004 of 29Apr2004, Member Nations had to amend existing bi-lateral deals to bring them into line with Community law (recital 6).  A European Parliament briefing explains that the old bilaterals did and probably do exist.

The witnesses expressed doubts that the UK couldn’t reasonably replicate the function of the pre-EASA CAA. (Q10)

Walsh (IAG): “170 countries, and probably 140 of them are dealt with by bilateral arrangements”.  (Q21)  The implication is that 140 are governed by non-EU bilateral arrangements and that 30 are governed by an EU arrangement.  But, as

Walsh (IAG): “There might need to be a transition in understanding how the UK will participate in EASA, whether that is full participation or some form of associate membership.” (Q23)  Does does EASA work such that bilateral deals remain valid and enforceable?  Q30 suggests that EU third party agreements have indeed replaced UK bilateral deals.  Walsh’s response was to suggest that the UK is a signatory to the EU-US open sky agreement, “but as a member of the EU.”  In other words, the UK cannot have signed it, because lawfully UK cannot sign it (TFEU article 208 et seq applies).  Without a trace of irony, Walsh then said, “Formally, [on Brexit day] you would require to replace the EU-US open skies agreement with a UK-US open skies agreement.”

Walsh expects UKGov to choose a unilateral open sky policy for the UK (Q29).  Even if UKGov did, how enforceable would it be, and in which jurisdiction?  Could Parliament define as such without prejudice to future open sky agreements?  Whose operating standards and safety regulations would apply?  On balance, a unilateral open sky policy for the UK sounds like pure, unworkable, fantasy.

Walsh (IAG): “I do not think I am arguing that the UK should continue to stay within the ECAA. There are alternatives. A comprehensive air transport agreement can take many forms. I am not arguing that the UK has to continue to operate exactly as it is today. It is clear that there are certain issues that would not be acceptable to the UK Government, but I do not believe that that will necessarily stop the remaining EU27 and the UK reaching a comprehensive agreement on air transport.” (Q34) How would this be lawfully and politically possible for the EU27?

Long-term agreement with Europe

ECAA participation or a network of bilaterals?  Like the unilateral UK open sky, a network of bilaterals sounds unworkable given the existence of the ECAA.

All four witnesses want a comprehensive air transport agreement (“CATA”), a bilateral deal between UK and EU27 (Q51).  But Walsh doubts the intentions of Air France (Q53), which he perceives “hates competition and therefore, I would argue, against the consumer.  I think most other airlines in Europe would be pro-consumer and would want a liberal environment.”  EU airlines would also want to continue passenger transfers through the UK, so a CATA between UK & EU would impact the operation of the EU-US open skies agreement.  KLM is particularly keen to retain access to the UK market (Q54).  In spite of Air France allegedly wanting to sabotage consumer interests, the nation of France might think differently, in view of Air France-KLM just having bought a slice of Virgin (Q56).

Q57 asked the witnesses to choose between bilaterals between UK and individual EU member nations, as if TFEU didn’t exist.  Astonishingly, the witnesses answered by picking countries (“It is more difficult because you are dealing with 27 rather than one, but not impossible”, “The biggest countries tend to be France, Germany and Spain.”, “It is likely that the Commission would seek the mandate from those member states to negotiate as a bloc rather than see all of those arrangements put in place separately”).

As the discussion progressed, confusion and contradiction reigned.  Having outed himself as a remainer (Q31), Walsh later said, “I think they [UKGov] can [get a better deal on its own rather than having the EC negotiate on the UK’s behalf], because you are looking after the interests of one country rather than 28 as it is now, or 27 going forward. Some countries have particular issues over protection of their state airlines, or former state airlines, that tend to influence the way they approach those negotiations, trying to shield them.”  (Q62)  It’s a bizarre position for a remainer to take: why choose to belong to a Union if would has less confidence in the Union than in one’s own government?

Such is the general level of ignorance, the MPs don’t even know current compensation arrangements, with one MP wanting to ask the airports how they compensated passengers for delays and cancellations (Q64).  Walsh and Dekker had to correct the MPs on two further occasions (Q69, Q74).

Walsh implied continuity of flight compensation Regulation EC 261 2004 in the UK post-Brexit (Q72).  Is Walsh assuming that UKGov’s EU Withdrawal Bill - “the photocopy bill” - is going to work?  Dekker assumed so explicitly in Q88.  Walsh then seemed to mangle the speculation of how the regulation would supposedly work post-Brexit in Q89.

There existed uncertainty about UK’s role in European Aviation Safety Agency (Q84).

25Oct2017: Sir Ivan Rogers et al

Rogers: “With no agreement in place, our air carriers lose the right to operate EU-UK air services.  Any flights between the EU and the UK would cease to operate.  UK air carriers that had been operating within the single market pre-Brexit would lose their EU air traffic rights.  To keep operating flights within the EU and continue to qualify as EU air carriers, which is the precondition to operate intra-EU air services, those companies would need to relocate their principal place of business into the EU27, i.e. where they oversee those air services’ conduct, maintenance and repairs and maintain their principal financial functions.

“This is not theoretical.  Air companies were coming and talking to me about that in 2015, 2016.  Immediately after the referendum CEOs were coming to talk to me.  The UK would fall out of 50 aviation agreements between EU and third countries, including the EU-US Open Skies Agreement, under which UK-US air traffic currently accounts for about 40% of the EU-US air traffic.  We need to negotiate new bilateral agreements with third countries in replacement.

“Then you say, “Can you not revive the old bilateral air service agreements with the individual member states?  Would that not provide a solution?”  I defer to my legal colleagues, but my advice is I do not think so, because those are outdated, restrictive and unfit for purpose.  Where the EU has exercised competence, which it has in this case, it seems to me very improbable that individual member states would step back.” (Q30).

Comment & review

At best, a CATA could offer terms equal to the EU-US open skies agreement, but politically the EU would be likely to want severe limitations within the CATA as part of the EU’s on-going mission to use regulation as a barrier to entrants into EU markets.  It is highly improbable that the EU would deviate from its “minimum standards” style of regulatory protectionism.

This basic ignorance paraded on 30Oct2017 of how TFEU regulates the EU (and its executive the EC) is eye-watering!

Bibliography:


Other sources (not read in detail):


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