The Possible Impact of Brexit on Air Cargo

Its membership is made up of European logistics organisations. Clecat is by far the most important lobby organisation for the logistics industry in European policy making.

Trying to remain realistic despite capacity problems
The umbrella organisation is very worried about the impact of Brexit, not in the least about border controls, says Senior Policy Manager Aidan Flanagan. “One of our greatest concerns is for the customs’ set-up to be right. The members of our associations need as smooth a Brexit as possible. But we have to be realistic as well.”
Senior Manager Dominique Willems fears there is no such thing as a smooth Brexit. “There are too many implications on trade and customs controls, like weight checks, veterinary regulations and phytosanitary and agricultural inspections that you have to deal with. There is also some misconception about these, even though in customs about 99% is digital.

Brexit generates Job – at customs offices
That means an increase in capacity. According to estimates, the Netherlands aim to employ 850 additional customs officers and France a further 1,000. “We are talking about people who aren’t there yet and, even if they are found, it will need take 2 to 3 years to train them,” Mr Willems states. Belgium is apparently still waiting for the final outcome. “For meat products, you need veterinary inspections, which have to be carried out by vets. You need more of those as well, which may also be problematic.”
These issues taken together are among the many reasons why Clecat advocates a transition period, says Aidan Flanagan. “The EC has put the time limit for the total exit of the UK at December 2020, so as from the 1 January 2021 they are on their own.” During this transition period the UK will have to stick to EU regulation without the right to vote. To that date the UK is still part of the EU budget.

More than traffic rights
Air cargo is only an aspect of aviation as a whole which, in the EU, is governed by the European Common Aviation Area (ECAA). This covers more than the actual EU and has been extended to other countries as well. However, a Norton Rose Fulbright post published on 24 August 2017 reminded of the fact that the ECAA was given effect by a Multilateral Agreement signed by the EU on 9 June 2006. The Multilateral Agreement provides for certain disputes to be resolved by the Court of Justice of the European Union (CJEU). Brexit would, however, bring an end of the CJEU’s jurisdiction in the UK.
This too is a concern for the European forwarding industry, says Dominique. “The rights for airlines to operate on both sides will change overnight. In the absence of an agreement there will even be no overnight right anymore.”
Aidan adds to this: “So you either need an overall agreement between the UK and the EU or different bilateral agreements. The Commission has never been a great fan of bilateral agreements, which, besides this, would take years to negotiate.”

For UK registered carriers there is trouble ahead
For airlines belonging to the IAG consortium there would be implications for their partners Aer Lingus, Iberia and British Airways. Today the majority of the shares are British-owned in an environment in which the EU ownership of airlines is one of the last restrictions in the EU policy. CargoLogicAir too has a British AOC. So to continue operating in the EU they will have to alter their shareholder structure into an EU majority.
When contacted by CargoForwarder Global, U.S.-based integrator UPS says that “as negotiations continue, we will closely monitor changes in applicable laws. Regardless of the outcome, our focus remains helping our customers manage the complexity in crossing borders so that they can focus on growth opportunities – this applies in all parts of the world where we do business. Come what may, we will be ready.”
FedEx says that it is monitoring and assessing the potential impacts that Brexit may have on their business and their customers, specifically, any changes it may bring to the movement of goods or trade into and out of the UK that could have wider implications for its international operations. “To keep abreast of any developments, we are also engaged in on-going discussions with the government at various levels through our active membership of trade associations.’’

Trading with third countries is also impacted
Transatlantic flights are based on the Open Skies Agreement between the U.S. and the EU. Negotiations on a post-Brexit aviation agreement between the U.S. and the UK are apparently underway. Last March Bloomberg reported that Washington has offered the UK an Open Skies aviation deal that would be more restrictive than the UK has as a member of the European Union.
The aviation agreements are not the only trade deals the EU has been able to seal as a block, say Aidan and Dominique. “The UK is part of 75 treaties of the EU. You will need to replace them all.”

What about security?
Another issue directly touching aviation and air cargo is security, says Aidan. “Cargo coming into the EU from the UK would be considered as coming from a third country and thus would be subject to inspection. Today anti-terrorism issues are managed by a separate agency, which also includes Norway and Switzerland. The UK would have to participate in that as well. However, on the positive side, the security issue has been led by the UK. The UK is very strict on terrorism.”
Both Clecat managers think that the real talks will start in a few weeks. In the wake of the divorce bill other agreements will be required, they stress. But, still, the biggest issue is the capacity that will be needed. It is not a matter of how much work, but of how to cope with it. This goes for both the public and the private sectors. Even today the IT systems are already at their limits, they remind.

Marcel Schoeters in Brussels