EU-UK Trade and Cooperation Agreement – implications for Aviation

The new trade and cooperation agreement between the EU and UK (the “Agreement”) contains a chapter governing the EU/UK aviation relationship, reflecting the EU’s intention to comprehensively address that relationship within the scope of the envisaged partnership between the EU and UK. A brief overview of the key provisions follows below. The Agreement also establishes a Specialised Committee on Air Transport (the “Specialised Committee”) which has responsibility for certain matters specified in the aviation chapter.

AIR TRANSPORT

Traffic rights and route schedule

The Agreement provides that, subject to its provisions on air traffic rights (described below), the EU will grant rights for UK air carriers to operate on routes from the UK via intermediate points to points in the EU and beyond. Similarly, the UK is to grant EU carriers the right to operate on routes from the EU via intermediate points to points in the UK and beyond.

As to traffic rights, the EU and UK are each to grant the other’s respective air carriers:

• first and second freedom rights (i.e. to fly across its territory without landing and to make stops in its territory for non-traffic purposes); and
• third and fourth freedom rights (i.e. to make stops in one party’s territory to provide scheduled and non-scheduled air transport services between any points in its territory and any points in the other party’s territory).

In addition, individual EU Member States are explicitly permitted to enter into bilateral arrangements with the UK to grant each other’s respective carriers fifth freedom rights (i.e. to provide scheduled and non-scheduled all-cargo air transport services operating between points situated in their respective territories, as part of a service originating or ending in the UK or the Member State respectively).

Neither the EU nor the UK is permitted to unilaterally impose limits on the volume of traffic operated in accordance with these rights, except as may be required for reasons such as customs, technical, safety or environmental reasons.

The Agreement explicitly states that it does not confer rights for UK carriers to operate services on routes which are within individual Member States or between Member States, or for EU carriers to operate services on routes which are within the UK.

Code sharing and blocked space arrangements

The Agreement allows for UK and EU airlines to act either as marketing carrier or operating carrier in codeshare or blocked space arrangements with the other party’s carriers, or with third country carriers which have the necessary rights to participate in such arrangements. Specific conditions are prescribed for codeshare or blocked space arrangements relating to services where both the points of origin and destination are in the other party’s territory, or where one point is in one party’s territory and the other is situated in a third country.

Operating authorisations

EU and UK carriers are entitled to receive operating authorisations from UK and EU aviation authorities respectively if they meet a list of specified conditions, including conditions relating to their ownership and control, principal place of business, holding an air operator certificate, effective regulatory control by their competent authority and safety and security.

As regards ownership and control, a UK carrier must be owned (directly or through majority ownership) and effectively controlled either by UK nationals alone, or – if the carrier held a valid EU operating licence at the end of the transition period – it can obtain an operating authorisation if it is owned by nationals of the EEA, Switzerland and/or the UK (whether in combination or alone). EU carriers must be owned (directly or through majority ownership) and effectively controlled by EEA and/or Swiss nationals. Interestingly, however, the Agreement acknowledges the potential benefits of the continued liberalisation of ownership and control of air carriers, and the EU and UK have agreed to examine within the Specialised Committee options for reciprocal liberalisation of ownership and control within 12 months of the Agreement coming into force, and thereafter at any time following a request to do so from one of the Parties.

The Agreement makes provision for the EU or UK to take action against a carrier of the other party if that carrier fails to meet the conditions applicable to them, subject to specified notification, consultation and dispute resolution requirements. Such action may include revocation or suspension of operating licences.

Non-discrimination and doing business

The EU and UK are obliged (within their respective jurisdictions) to eliminate all forms of discrimination which would adversely affect the fair and equal opportunity of the other’s air carriers to compete in exercising their rights to provide air transport services. They have also agreed to cooperate in removing obstacles to “doing business” for air carriers of both parties where such obstacles may hamper commercial operations, distort competition or affect equal opportunities to compete, with progress in this area to be monitored by the Specialised Committee.

Commercial operations

The EU and UK grant each other certain rights in order to facilitate their respective carriers’ commercial operations. These relate to matters including establishment of offices and facilities by carriers, ground handling, transfers of funds, intermodal transport and dry and wet leasing.

Consumer protection

The EU and UK are to cooperate to achieve a high level of consumer protection, and to consult each other on any matters related to this subject. The Agreement also requires both parties to ensure that effective, non-discriminatory measures are taken to protect consumer interests in air transport. Examples of such measures listed in the Agreement include access to information, assistance for persons with (for example) disabilities and reduced mobility, reimbursement and - if applicable - compensation in the event of denied boarding, cancellation or delays, and efficient complaint handling procedures.

AVIATION SAFETY AND SECURITY

Aviation safety

The Agreement provides for mutual recognition of certificates of airworthiness, certificates of competency and licences issued or validated by the EU or UK’s competent authorities, provided that they were issued or validated pursuant to and in conformity with the relevant international standards established under the Chicago Convention. If either party has concerns that minimum safety standards are not being met (either as a result of consultations or ramp inspections by the concerned party), the concerned party may in certain circumstances revoke or suspend relevant carriers’ operating authorisations or technical permissions, or impose conditions on such authorisations or permissions.

A separate section of the Agreement provides that the parties may cooperate on a number of subjects related to aviation safety, including certificates, personnel licensing and training, air traffic management and air navigation services. Such cooperation will be established by way of annexes covering each subject in detail, which will be adopted by a Specialised Committee on Aviation Safety. These provisions are intended to facilitate reciprocal acceptance of competent authorities’ certifications and findings of compliance and to promote cooperation towards a high level of civil aviation safety and environmental compatibility (among other things), and will allow the EU and UK to e.g. agree on reciprocal acceptance of certificates and findings of compliance which go beyond the minimum safety standards referred to above. This section of the Agreement also requires the parties to keep each other informed of proposed changes to relevant safety rules, exchange safety information and cooperate on enforcement activities.

Aviation security

The EU and UK agree to provide each other upon request with all necessary assistance to address any threats to the security of civil aviation, and to endeavour to cooperate on aviation security matters to the highest extent (including exchanging information on threats and risks, sharing of best practices and cooperation on the technical development and recognition of aviation security standards).

The Agreement provides that both parties will conform with the aviation security standards established by the UN International Civil Aviation Organisation’s and require registered carriers and airport operators in their respective territories to confirm with those standards. Each will each ensure that effective security measures are taken within its territory, including screening of passengers and other persons, screening of baggage and cargo, access control to security restricted areas and other security controls.

Each party is entitled to adopt security measures for entry into its territory, but should take into account the security measures already applied by the other party. In addition, neither party may require the other to implement security measures in the other’s own territory. Specific provision is made for emergency measures to meet a specific security threat and for situations involving the actual or threatened unlawful seizure of civil aircraft or other unlawful acts threatening aviation safety.