The first in a series of case studies looking at Brexit compliance headaches examines what an airline must do in order to continue operating within the EU following a British exit from the Union.
From a layman’s point of view, the answer to that question would probably be ‘Nothing. Can’t they just fly the same flights?’ But compliance officers know better. Under EU law, an airline of any EU member state can fly any route within the EU.
In the case of easyJet, it already has a U.K. operating licence and an Air Operators Certificate (AOC) there which means that, as the United Kingdom is still in the EU, it is an EU airline and can fly within the Union. easyJet also already has a Swiss operating licence and AOC to, since Switzerland is not in the EU, enable it to fly into and out of Swiss airports.
However, following Brexit, U.K. airlines without operating licences in Europe will not be able to service airports there, so it is imperative to establish a licence in a country that is remaining within the EU. It is not uncommon for airlines already to have a number of AOCs. For example, IAG, Lufthansa Group, as well as Air France KLM, Norwegian and TUI have multiple airlines and, therefore, multiple AOCs, as well as multiple partner airlines, enabling them to fly intercontinentally as well as internationally.
In order to solve this problem, earlier this year, easyJet applied to Austro Control for an AOC and to Austria's Federal Ministry for Transport, Innovation and Technology (BMVIT) for an airline operating licence. In a statement, easyJet CEO Carolyn McCall said the decision was “the result of an extensive and thorough regulatory process in Austria...Austria’s aviation regulator Austro Control was selected, as it is the best fit for easyJet.”
“In addition, like all other European airlines, we continue to lobby for an EU-U.K. aviation agreement which, as a minimum, will enable flights between the EU and the United Kingdom,” McCall added.
The application was made so that easyJet could establish a new airline, easyJet Europe, which will be headquartered in Vienna and will “enable easyJet to continue to operate flights both across Europe and domestically within European countries after the United Kingdom has left the EU (regardless of the outcome of talks on a future U.K.-EU aviation agreement).” easyJet said it conducted a “comprehensive and rigorous process to select the right country for its European airline,” which included conducting “in-depth research and meetings with a number of regulators to understand which would be the best fit for easyJet.”
To qualify for an AOC, there are a number of minimum requirements stipulated by the relevant local federal agency. First, the operator must have personnel and procedures in place to ensure the safety of its operations. The certificate must also list aircraft types; aircraft registrations to be used; for what purpose aircraft are to be used and in what area, for example, specific airports or geographic regions; and an operating licence, which allows commercial operations to take place.
easyJet made the announcement that it was applying for an AOC early because the “AOC approval process requires the updating of easyJet’s safety systems and processes” and thus the regulator easyJet had applied to was going to be made public anyway. The criteria used to select Austria were based on its “rigorous approach to safety regulation, contributing to EASA’s [European Aviation Safety Agency, an agency of the EU] drive towards shaping future safety regulation with an emphasis on performance based safety regulation.”
On 20 July this year, the company announced that it had been awarded an AOC by Austro Control and an airline operating licence by BMVIT, which allowed it to set up easyJet Europe as operational. That same day, the first Austrian-registered aircraft flew from Luton to Vienna. At the same time, it announced the appointment of Thomas Haagensen as managing director of easyJet Europe, who was formerly easyJet’s country director for Germany, Austria and Switzerland.
The process of re-registering easyJet’s remaining EU27-based aircraft will be phased in over the next two winters, covering the remaining aircraft, around 110 planes, that will be required for the full operation of easyJet Europe. This re-registering process, allowing planes to operate in Europe, will be completed by March 2019 in advance of the U.K.’s exit from the EU. The process does not mean that these aircraft are going to be based or operated from a different place from where they are now. easyJet’s network remains unaffected by the setting up of the new AOC; it simply means that the planes will be registered in the EU.
Concurrent with the announcement, easyJet Europe became a pan-European airline group with three airlines: one based in Austria, another in Switzerland, and the original airline based in the United Kingdom. All these airlines continue to be owned by easyJet plc which, while it will be EU owned and controlled, will continue to be listed on the London Stock Exchange and based in the United Kingdom.
easyJet Europe’s principal place of business will be in Vienna and “the management of easyJet Europe will have full operational control and financial oversight of the company.” easyJet was founded by Stelios Haji-Ioannou and his family, who hold Cypriot passports and own around a third of the outstanding shares. Including the Haji-Ioannou stake, EU27 shareholders own just under half of the outstanding stock. It is not anticipated that this situation will change significantly either post new AOC or post Brexit.
Initially, the company announced that the move will not necessitate any new hires, as the employees necessary for the licence were already employed and based in EU27 countries. For example, easyJet has operated in Austria for 11 years already and it already has around 100 aircraft and employs around 4,000 people across six EU27 countries on local contracts in their home countries and “in full compliance with local and EU rules and regulations.”
However, once easyJet Europe became operational, the company amended this statement, saying that it would be hiring staff for new jobs in Austria. These will not be transfers from the United Kingdom, however; all of easyJet’s U.K. employees will continue to be based at its headquarters in Luton and its other 11 U.K. offices.
In addition, easyJet said it continues to have “constructive discussions” with the Civil Aviation Authority (the U.K. equivalent of BMVIT), and with the U.K. government about the future regulatory framework for U.K. aviation post-Brexit. The company said remains confident that it will be able to continue its operations out of the United Kingdom after the country has exited the union. The company’s position on this, and the future of the aviation business in Europe, is one that is supported by many of the region’s small and large airlines.