UK Transport and Brexit News & Views No. 17

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This past week has been particularly interesting as the negotiating positions of the UK and the EU have been further clarified: on the one hand Theresa May is seen to soften her stance on Brexit negotiations by admitting that two years is an unrealistic deadline and pointing to the strong possibility of a gradual taking back of control on borders and a transitional arrangements, not an abrupt change as initially suggested. On the other hand, prominent MPs such as Dominic Raab areportraying a very optimistic outlook on upcoming talks as he sees the EU’s draft negotiating guidelines as very positive, with 60-70 percent of contents already agreed upon. Meanwhile Lufthansa CEO Carsten Spohr believes that the governments of Berlin and Paris will take a stance against giving Britain a special status for air traffic rights.  The same is true for road, rail and maritime where some Governments will put politics before economics.  Our recommendation for businesses and stakeholders involved in Brexit –  take all these declarations with a high degree of caution and begin to engage with your European partners to forge alliances.  This week UKTiE launches our first round of meetings with EU negotiators here in Brussels, putting forward our transport priorities for Brexit.  

1. Theresa May concedes ground, acquiescing to EU legal framework, and that leaving could be a gradual process.
Theresa May has conceded that EU’s legal framework might not allow for a deal to be completed in two years. In comments during her trip to Jordan, Mrs May nevertheless still hopes to have secured some form of agreement or transitional deal by then. The second concession concerns “taking back control” of the borders, which she now says will be a gradual process rather than an abrupt change. This could mean that free movement could go on during the post-Brexit transition. However businesses should not take a “soft” Brexit for granted as there are still many Tory MPs who would rather have no deal than compromise.

2. Brittany Ferries CEO warns: Brexit must be business-lead
Brittany Ferries chief executive Christoph Mathieu has warned that Brexit negotiations have to be “factual, rational and business-led.” Last week, UK Chamber of Shipping met with major UK-European ferry operators, including Brittany Ferries and Stena Line among others, something Mathieu believes is a great start. He believes it is the duty of businesses to remind the politicians that the goal of these negotiation is not to win.

3.  UK Government on the “right track” to an acceptable agreement, writes prominent MP
Dominc Raab MP, member of the Exiting the European Union Select Committee writes this week that there are plenty of reasons to be optimistic about the Brexit negotiations. He thinks that the EU’s draft negotiations guidelines are packed with positives,  and it seems to him that both side agree on about 60-70 percent of what they want in a deal. He believes that “free from Brussels’ straightjacket regulation and trading globally”, Britain will be a massive competitive challenge to the EU’s “languid economy” and that May’s government is on the right track to reach an acceptable agreement.

4. The view from Berlin:
Germany is conflicted about whether Brexit will be a good or a bad thing for them. On one hand they stand to benefit from the relocation of the European Medicines Agency (EMEA) and the European Banking Authority (EBA). On the other hand Brexit will also cause the balance between rich and poor countries to shift so Berlin will not be able to profit from structural funds anymore. Meanwhile, for aviation, the Berlin Morningpost. believes that time is of an issue to minimize disruption with the most likely options for the UK as either joining the European Common Aviation Area (ECAA) or a new specialised agreement with the EU. However Lufthansa CEO Carsten Spohr believes that the governments of Berlin and Paris will take a stance against giving Britain a special status for air traffic rights.

5. ABTA seeks a successful Brexit for travel and tourism
ABTA published a report “Making a Success of Brexit for Travel and Tourism”, which despite the optimistic title, argues for the status quo in nearly all arrangements for the travel and tourism industry – including some social and consumer protection aspects, one of the trickiest areas there is.  Their chief executive said “We believe that the benefits that UK holidaymakers currently enjoy, such as visa-free travel and the EHIC card should be prioritised and protected. (…) Travel and tourism is one of the UK’s largest industries and it is vital that the Government makes sure it can continue to thrive during and after the negotiations.” ABTA highlighted the importance of the tourist industry for both the UK and the EU and again warned that that there are no World Trade Organization rules regarding aviation so a no-deal scenario could be disastrous.

6. Ryanair threatens to “suspend UK flights” without early deal Brexit aviation deal
Representatives of Ryanair said last week “there is a distinct possibility that there will be no flights for a period of time between Europe and the UK” if no replacement for the current open skies regulation. The budget air carrier is considering several options in case of a cliff-edge scenario. These include setting up a UK subsidiary with a British air operating license (AOC) or even to abandon UK domestic flights altogether. Not all airlines are as pessimistic but they are all worried. Chief Executive of Dutch national carrier KLM has said that in the worst case scenario, they will keep flying to Britain under the UK- Netherlands 1960 bilateral agreement. The Guardian’s financial director Nils Pratley believes that Ryanair is over exaggerating the likelihood of no deal, “every hotelier from Corfu to the Canaries would be screaming for a deal if there were a chance that British tourists wouldn’t arrive in 2019”.

7. Virgin Atlantic Airways suffers fall in profits as it calls for quick Brexit airline agreement 
According to a Telegraph article, Virgin Atlantic suffered a two third fall of pre-tax profits last year. The new numbers came across as the airline claimed an aviation agreement with the US is expected to be a high priority  for the UK Government as they are working on an equivalent agreement with the EU. According to Virgin, given that the existing arrangements are covered by an EU wide agreement which it could find itself outside of after Brexit, the Government is expected to prioritize a liberal agreement with the US.  The airline also underlined the importance that the UK continues to be a full member of EASA. Meanwhile, Virgin Atlantic is also doing its best to see the bright side of Brexit by letting Americans know that their holidays to London have just got a whole lot cheaper in this darkly comic commercial.

8. Smaller forwarders can score post in Brexit integrators-independents battle
Managing Director at Priority Freight, Neal Williams has said that the “expected supply chain disruptions are likely to be accompanied by increased demand for express and expedited logistic services” which is good news for smaller forwarders. He believes that integrators may be less willing to get involved in shipments when the likelihood of delays due to increased customs procedures is higher. This may provide a chance for independents to expand and innovate in order to meet demand and Managing Director of WCA e-commerce Alex Allen believes that “integrators would become more reliant on independents to fulfil cross-border and last-mile services.”

9. BIFA and ASM outline their Brexit concerns
During a Brexit Briefing held during the 3 day Multimodal 2017 event in Birmingham, Robert Keen, director general of the British International Freight Association (BIFA) and Agency Sector Management (ASM) chairman Peter MacSwiney discussed their views on Brexit. According to Keen, the effect on trade following Britain’s withdrawal from the EU is not yet clear, and ‘we don’t know any more than we did on June 23’. MacSwiney underlined their highest priority remains a frictionless border, and that it would be a shame to waste the 40 years spent aligning the UK systems to those of Europe just to throw them away now.

10. UKTiE have also put together the latest timetable for Brexit. We will keep this up to date as the process develops: