Brexit To Airlines: Getting The Heave Ho

The countdown to the United Kingdom’s exit from the European Union begins with Article 50, which went into effect Wednesday.

While it is expected to take two years for the U.K. and the E.U. to finalize their divorce, E.U. officials already are in closed-door meetings with the airlines—both U.K. and Euro-owned carriers such as Air France-KLM, Finnair, Lufthansa and SAS—to work out the details.

U.K. carriers including easyJet, Ryanair, British Airways and the Tui Group, whose airlines include Thomson, are being advised to relocate their businesses to the E.U. in order to continue doing business there. Carriers that operate lots of intra-European routes must have a significant presence in Europe, and the majority of shares must be E.U.-owned, in order to be included in the E.U.’s “open skies” agreement, which allows European carriers to fly to and between E.U. countries.

Ryanair already has warned that the U.K. might be left without any flights to and from Europe beginning in March 2019 unless Brexit negotiators come up with an agreement

easyJet has said it plans to keep its headquarters in Luton, but will apply for licenses in Switzerland and the E.U.

While British Airways does not operate intra-European flights, its parent company does. It may need to ditch its British-owned shares in order to comply with the new regulations and maintain a presence on these routes.

Given that the U.K. is the first country to ever leave the E.U., it is facing what is expected to be a painful and complex process. Will the E.U. go hard or soft on such shifts of headquarters and stock ownership? That is still up in the air. No pun intended.

And just fyi, travel agents, the fun has just begun: watch Scotland as it seeks another referendum regarding its independence from Mother England.

This report is based on several U.K. sources.