easyJet’s new European airline shows businesses already planning for ‘no deal’

It seems easyJet may not be so confident the government will achieve a “smooth and orderly” Brexit.

Today, easyJet announced that it plans to establish a new airline, easyJet Europe, which will have its headquarters in Austria. In a press release, the airline said this “will enable easyJet to continue to operate flights both across Europe and domestically within European countries after the UK has left the EU”. It added in brackets that this is “regardless of the outcome of talks on a future UK-EU aviation agreement”.

The last line suggests the airline is not very confident that the government will be able to negotiate a deal on aviation by the time talks are up.

As a member of the EU, the UK is part of an ‘open skies’ agreement across Europe. This allows airlines from member states as well as other countries in the agreement to fly in and out of any country signed up to it. Clearly, continuing to be part of it is only a benefit to the UK. However, the agreement binds those taking part to regulatory oversight by the European Court of Justice (ECJ). This is only a problem because of Theresa May’s red line regarding the court.

easyJet is reported to have spent £10m to get the relevant licence to establish the new European airline. It’s a vast sum to spend but clearly one easyJet’s management believe is worth it if it gives them certainty that it will be able to continue to fly across Europe.

Ryanair is also making contingency plans but this could see the Irish airline abandoning domestic flights in the UK rather than establish a UK-based subsidiary. Speaking to the Guardian, Ryanair’s chief financial officer Neil Sorahan warned that if an agreement on this isn’t thrashed out quickly, there may be a period after the UK’s withdrawal where there are no flights between the UK and Europe. Sorahan added the airline was already reconsidering its growth plans for the UK saying it “is pivoting its growth away from the UK” and that growth may slow down unless they get “greater certainty” as to what a future agreement will look like.

Ryanair’s chief financial officer also had a message for Theresa May: “please make your mind up quickly and get a decision on an aviation deal and continue to keep Britain flying”.

In a series of tweets, Sky News’ Faisal Islam suggests easyJet won’t be the only business activating contingency plans in case of a ‘no deal’ scenario. And he points out that this is an “example of why the value of a Brexit transition deal diminishes rapidly unless signed rather soon”.

Despite business calls for a transition deal to include single market and customs union membership, the Financial Times reports Brexit secretary David Davis as telling business leaders at a recent meeting that it would be “politically impossible” for any deal to include either post-Brexit. Quite what a transition deal (or implementation phase) would look still remains unclear.

So while the government continues to dither and be vague about its plans, businesses are making their own plans and putting them in place. The danger for the UK is that this will mean less investment and less growth in the country.

Image: © Alexandre Rotenberg /
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"easyJet’s new European airline shows businesses already planning for ‘no deal’" by @brexit24

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