The permit process is improving, but…
OPERATIONS
Since the referendum in 2016 that committed the UK to leave the European Union, the temptation has been to view Brexit as an event that will happen on a particular date. But, as the business aviation sector is finding out, Brexit is a process that will require ongoing work—and its effects will be felt for years.
After the UK formally left the continent-wide trading zone at the start of this year, carrying out ad hoc flights between the UK and the EU has become a much more bureaucratic process. From Jan. 1st, British providers of private air services have been required to register as third-country operators, and they have to obtain permission to operate each flight from the aviation authorities in the EU country they wished to fly in to. Similarly, EU-based operators wishing to fly into the UK had to apply for permission to do so from the UK's Civil Aviation Authority (CAA).
In a move that drew criticism from some UK-based air operator certificate (AOC) holders, the CAA offered block permits to EU operators. Under this system, once approved, the operator could fly in to and out of the UK as many times as they wished on a single permit. These block permits were limited in duration and were designed partly as a tool to help influence ongoing negotiations: the CAA made it clear that, once the initial tranche of permits expired at the end of March, replacements would only be issued to operators based in countries which offered similar terms to UK operators.
As late as March 22nd, the European Business Aviation Association (EBAA) was warning that only two nations—France and Italy—had agreed to offer reciprocal terms to UK operators. Pressure began to build, as EU-based operators with significant volumes of flights into and out of the UK lobbied their own regulators.
"We got on to our [EU-based] members and said, 'Listen: you're going to lose your block permit into the UK if your country doesn't give us a block permit back, so you'd better go and knock on their door,’" says Brian Humphries, a member of the board of the British Business and General Aviation Association (BBGA), a trade group. "One country described it as having woodpeckers at the door." The gambit worked. On April 7, the CAA issued a list of countries with which it had agreed reciprocal block permits. This included 22 of the 27 EU states. Of the remaining five, three—Cyprus, Latvia and Lithuania—cannot reciprocate as they have no domestic operators who would apply for a UK block permit. Block permits are not available from Bulgaria and Croatia.
"The general feeling is this is really positive news," says Adam Twidell, co-founder and CEO of the app-based charter broker, PrivateFly. "This is pretty much open access to the majority of Europe. You can do anything apart from pick-up or drop-off in someone else's country."
However, the publication of the CAA's list does not mean that the issues are all fully resolved. There are limits to the size of aircraft covered by the block permits—usually 19 seats for passenger operations and 10,000-kg maximum take-off weight for cargo flights, although some nations impose tighter restrictions. The permits are presently valid for no longer than three months. And when a UK operator wishes to fly paying customers between two EU nations, the process of establishing what permission is needed is not uniform—in some cases such permits are proving impossible to obtain.
"At the moment, there is no provision for that flight to be approved," says Glenn Hogben, CEO of the Air Charter Association, a British trade group whose members include both UK- and EU-based business aviation brokers and operators. "It can be approved by the two countries involved by applying for permissions for that flight. There's nothing to say that it can't happen. But I know there are a number of occurrences where UK operators are trying to do those flights and are not getting permission."
Approval for such higher-freedom flights, in some countries, is contingent on that nation's operators not objecting to the flight. Twidell says a small number of operators in two nations—Sweden and France—are objecting whenever a permit is requested, meaning that UK AOC holders are effectively prohibited from flying into or out of either country to or from any destination within the EU. There is no obligation on the objecting operator to offer to fulfill the flight in question. Additional Confusion There is also confusion over the availability of block permits with nations on the list issued by the CAA. One of the nations said to have made block permits available is Spain, but operators have been unable to obtain one thus far.
"We've applied for a Spanish block permit but they're just not issuing them yet," says Derek Thomson, commercial director of Air Charter Scotland, an operator based in Glasgow. He describes an application process in three phases: obtaining TCO certification; getting accreditation from the Spanish authorities, which involves submitting a security plan and getting that approved; and then applying for the block permit itself. The company's security plan was approved in late January.
"Since then we've been asking to get a block permit," Thomson says, "but [the Spanish regulator] has come back and said 'That's not available at this moment, but you can apply on a flight-by-flight basis.' So that's what we've been doing, for coming up to three months."
Thomson says the Spanish authorities have been responsive to per-flight permit requests, often issuing them well within the 48 hrs. they have given themselves to process permit applications. However, the permit office—as is generally the case across the continent—only works during standard office hours, making late-notice flights at weekends or during public holidays impossible.
Twidell says around 50% of the flights in any given week on PrivateFly's system are booked within two days of departure.
Working around these issues involves different levels of compromise. Thomson says his company has taken a leaf out of the low-cost carrier playbook and is offering discounts to customers who book far enough in advance for per-flight permits to be obtained. Air Charter Scotland has also set up a subsidiary based in Malta, with its own AOC, which will carry out all the company's intra-EU flights.
This was by no means an easy decision. Thomson estimates the direct costs incurred are in excess of £150,000 and notes that crews for the EU-registered aircraft have had to transfer their qualifications to Denmark because, post-Brexit, pilots with third-country licenses are not allowed to fly EU-registered aircraft. The process was also quite lengthy, with work beginning in the middle of 2020—months before the withdrawal agreement was reached on Dec. 24th, confirming that an EU AOC would be useful.
Unsurprisingly, many UK operators have not opted to establish bases in the EU. The challenges they are facing remain considerable, even with the wider availability of block permits.
Alex Durand, CEO of Norwich-based charter and aircraft-management firm SaxonAir, estimates that around 20% of the company's business pre-Brexit came from intra-EU flights. However, he says, the impact on revenues may be greater.
"We would go job-to-job," he says, of how the firm operated in Europe before Brexit. "How many flights did we pick up because we had, say, a Cannes to Rome booking? Maybe we picked up a London to Cannes flight. That's a great unknown to me. If that 20% is more realistically 30% or 40% because we're not getting linked work, that does become a problem. I'm very uneasy about it."
The relatively low demand due to COVID-related travel restrictions means that companies cannot accurately assess the true impact of the post-Brexit changes. Should the decline in work turn out to be above 20%, Durand says SaxonAir may exit the international charter market. "We're looking at evolving our business so there's less exposure to having an AOC," he says. "I know another operator that has given up its AOC. We don't need any more difficulties. The fundamentals of operating a chartering company in the UK is that these [aircraft] are high-utilization assets, and 80% activity probably makes the difference between whether it's worthwhile owning or not. If you can't have that confidence, I think we're going to see a reduction in the aircraft we operate."
For cargo operators and brokers, the availability of block permits with many EU nations is welcome; but the weight restriction remains a bone of contention. This, coupled with limited opening hours of permit offices, means that operators flying short-notice cargoes into the UK are sometimes having to split larger loads across multiple smaller aircraft, adding significantly to the end-user's costs, but also creating extra carbon emissions. The 10,00kg MTOW limit is a particular issue as it excludes the platform that is carrying out the majority of ad hoc cargo flights across the continent.
"On our platform data, we can see the Saab 340 is the most commonly used aircraft in Europe for time-critical cargo flights," says Ed Gillett, co-founder of CharterSync, a cargo brokerage platform that matches operators with freight-forwarding services. All flights by that type therefore require an individual permit, which can only be issued when the relevant permit offices are open and have available capacity. This is leading to significant frustrations.
"We had a flight confirmed on our system from the UK to a European country, and the aircraft was already positioned at the point of departure," Gillett says. "But because they were over the maximum takeoff weight we needed to get a permit. The permit was subsequently refused, and In the end, the client had to pay almost three times more for an aircraft to position from Europe into the UK to take the cargo off the aircraft that was all ready to go, because [the operator of the second aircraft] happened to have a block permit."
While the current situation is better than some had feared ahead of the deal in December, the restrictions caused by the UK's exit from the EU remain significant. Twidell, Humphries and Hogben, in particular, are fulsome in their praise for the CAA and the negotiating teams that have been working on bilateral deals with the 27 EU nations—but that does not mean the problems are solved.
"It's less terrible," says Durand. "But less terrible isn't good." Negotiations will continue, but progress may not be particularly swift. It seems inevitable that the significant extra frictions experienced in UK-EU operations will cause casualties, and likely that the majority of those will be UK-based rather than EU-based.
"If you look at other bilateral aviation agreements, historically speaking, you're talking years to agree the details," Hogben says. "Obviously, the situation that the UK and Europe find themselves in catalyzes a much quicker response, and what's been achieved so far is good progress. But for UK operators, whether the speed of that progress is sufficient to not impact their business in the longer term is probably quite questionable." Ultimately, many UK operators may feel they are back where they were last year—larger and better-resourced firms weighing up whether they need to set up an EU-based subsidiary, and smaller companies mulling whether to stay in the business at all.
"This could change the landscape of the aviation market in the UK," says Hogben. "If you don't have those smaller carriers that in many cases provide flexibility and competitiveness in the market, you'll end up either with consolidation, or companies going out of business. Once we start to move out of COVID travel restrictions and government support starts to be removed, that will probably be the tipping point for a lot of carriers that are struggling with the operational landscape.”
