While the Irish border problem still lurks unresolved and unresolvable in the background, the focus at the moment seems to be on air travel, especially so since the Irish PM suggested recently that leaving without a deal would mean aircraft being unable to fly over Ireland - or indeed over the entire EU. As usual the pro Brexit press (HERE) and Jacob Rees-Mogg attacked him on his LBC radio show.
I don't know what's going to happen to air travel next March if we fail to get agreement. The issue is mightily complex. But what is certain is that we will definitely fall out of the EU-US Open Skies Agreement signed in 2007 (HERE). There has been expert advice that we would resume something called Bermuda II (HERE) described by one aviation consultant as not a void, but "worse than a void" (HERE). This was agreed in 1977 between Britain and the USA.
The EU - US Open Skies agreement was signed in 2007. Before that the Americans had a series of Open Skies Agreements with individual EU countries signed around 2000 but the UK retained the US - UK Bermuda II agreement until the EU wide Open Skies deal came into force in 2007. In the run up to the UK joining the EU-US Open Skies agreement, parliament published a report in 2000 (HERE) which contains a lot of criticism of Bermuda II:
The call of the US Government and US airlines for an 'Open Skies' agreement was echoed by British Midland. It argued that "the existing Bermuda II agreement is probably the most restrictive bilateral air agreement in the world and was originally designed ... [to protect] the then flag carrier, British Airways. It severely restricts choice and competition from trans-Atlantic services from Heathrow [and] actually forces the price of the product up".
The irony is that British Airways is no longer British owned. But note this from Wikipedia:
"The treaty [US-EU Open Skies] disappointed European airlines as they felt it was tilted in favour of United States airlines: while US airlines are allowed to operate intra-EU flights (if this is an all-cargo flight or a passenger flight if it is the second leg of a flight started in the US), European airlines are not permitted to operate intra-US flights nor are they allowed to purchase a controlling stake in a US operator. The Agreement replaced and superseded previous open skies agreements between the US and individual European countries".
So, when we leave the current EU - US Open Skies deal, negotiated as a bloc of European nations (i.e. from a strong position but already tilted in favour of the US) we would either fall back on Bermuda II or have to negotiate a separate UK - US Open Skies deal. Neither of these are good. As our negotiators apparently found out this year when they walked out of preliminary talks with the Americans after it became clear the US was only going to propose their standard agreement. They are not likely to be flexible and neither will the EU.
I imagine the Americans are in the same position as the EU, they are not going to create a precedent for fear of having to reopen negotiations with other countries.
The big problem, as far as I see it, is that Bermuda II clause 6 (a) requires, "substantial ownership and effective control of that airline are vested in the Contracting Party designating the airline or in its nationals". And I believe the Open Skies deals also requires the same.
But the EU also requires the same ownership rules. This is why Easyjet have opened an Austrian subsidiary. While we are in the EU this doesn't matter but after we leave, if the US will only allow airlines that are substantially UK owned what will happen to British Airways owner IAG, Virgin Atlantic, and Norwegian UK? These are not substantially UK owned according to Business Insider (HERE) and will be unable to fly across to the USA.
Varadkar may be right or wrong on overflying Ireland but whatever happens, leaving without a deal is not going to be easy for the airlines and could create significant disruption.
