To paraphrase Groucho Marx, why join a club that wants you as a member? Noted transport journalist Chris Lewis looks at what might happen to airline ground handling in the UK if the country says ‘adios’
Following his victory in the 2015 British election, prime minister David Cameron confirmed that a referendum on continuing UK membership of the European Union (EU) will take place before the end of 2017.
Should they succeed, the ‘Out’ campaigners would pull off a remarkable political feat – the first exit by a member state from a European Union that has steadily grown in size to include 28 members.
Considering the momentous nature of the decision, debate in the UK has so far been remarkably muted, although in fairness the official pro- and anti-membership campaigns had only just launched their manifestos at the time of writing in mid-October. It has not helped that no firm date for the referendum has yet been set.
Almost all the other airlines and operators AGS contacted either refused to make any comment or did not respond at all but it is possible to speculate what a post-Brexit (British exit of the EU) UK airline industry might look like.
Firstly, would leaving the EU affect demand for international air travel or diminish the UK and in particular London’s role as a global hub? It is unlikely; at any rate there are other factors in play that would have a far greater effect.
Few air travellers, if any, choose to fly to the UK because it is in the EU, rather than to another European country. More likely, there are travellers who fly to one of the other EU countries because they are part of the Schengen passport and visa agreement – which the UK is not – because it allows for much easier onward travel to the other Schengen area countries. A Schengen visa gives travellers access to a wide swathe of Europe without further visa or passport controls. So while there may be plenty of reasons why people may already choose not to use the UK as an entry point for Europe, its EU membership – or otherwise – is not one of them.
Airlines may also be put off adding further flights into the UK because of the sheer difficulty of obtaining slots at London’s notoriously overcrowded and overstretched airports, but the EU can hardly be blamed for that. As for the airline and airport industry itself, few if any companies were prepared to put their head above the parapet and comment on this ‘political’ matter. A spokesman for the Star Alliance did say: “From our perspective we would need to first of all have the referendum and if the UK does leave the EU, we would need to see what ground handling legislation is put into place. In essence all our member carriers operate at both EU and non-EU airports and other than the EU having liberalised ground handling some years ago – increasing choice for the airlines – the actual work performed is in essence the same across the globe.”
Would a UK outside the EU blunt ground handlers’ appetite for setting up operations in the country or curb UK-based handlers’ expansion ambitions in EU countries? It is possible, but again it seems unlikely. After all, one of the biggest such firms, Swissport, as its name implies is based in Switzerland, a non-EU country. Moreover, the bigger handling groups are present in dozens of countries around the world – many of them nowhere near Europe.
Overseas-based groups, such as Dubai’s Dnata, will probably look on each country – indeed, each individual airport – as a market on its own merits.
These are companies that are well versed in operating and investing across international boundaries. It’s unlikely that a little matter of an intra-European border would put them off.
One area where the UK could become less attractive if it was to leave the EU could be as a location for global or regional headquarters. Companies with interests in several EU countries might feel that it would be better to have a base inside the EU that could serve several countries in the Union.
A UK freed of EU constraints could, however, offer tax and other investment incentives, making it a more attractive headquarters location.
From an operational point of view, there could conceivably be difficulties if the UK was to leave the EU. Insofar as the practice occurs, ground handling companies seeking to move pieces of equipment from an EU country to the UK – or vice versa – would now find that they had a Customs clearance procedure to contend with. It might make it harder to hold spare parts for equipment in another country if one of those countries was outside the EU.
Prior to the creation of the European Single Market in 1992 – which abolished Customs clearance for goods travelling between EU member states – bottlenecks could sometimes build up at Dover, Heathrow Cargo Centre and other locations as trucks queued for Customs clearance. However, other European countries that are not in the EU such as Switzerland or Norway seem to manage the process pretty slickly these days, thanks to computerisation, so it is unlikely to be a serious problem.
Perhaps the biggest impact of Brexit might be the ease with which handling companies or airports would be able to transfer staff between their UK and EU operations. Presumably, people would need work permits before taking up employment, and there could be restrictions on residence, too. Much would depend on how rigorously the UK and its erstwhile EU partners would seek to impose such regulations. One possible scenario is a ‘Brexit lite’, in which new rules would be imposed with a light touch and in a gradual manner.