The British aerospace industry has stepped up plans for a Brexit exodus from the UK aviation regulator, as a second deadline for the UK leaving the EU without a deal looms.
More than 600 British aerospace firms have now applied to be regulated in Europe as third-country parties under a scheme for companies seeking access to the single market in case of a no-deal Brexit. The scheme opened in October.
The UK’s Civil Aviation Authority (CAA) gives regulatory approval for British-made parts to be used throughout the EU, but that ability will lapse if the UK leaves without a deal.
The number of applications by UK firms for EU authorisation to cover themselves for a no-deal Brexit has tripled between December and July. In December 2018, the Guardian revealed that only 200 UK aerospace manufacturers had applied to come under the jurisdiction of the European Aviation Safety Agency (EASA) as third-country parties, suggesting many firms would not have been prepared for a no-deal Brexit on 29 March.
Manufacturers which have not received authorisations from the EASA or other European aviation authorities would be unable to sell new parts to European customers, dealing a potentially crippling blow to many UK exporters.
The latest total of applications submitted by UK firms to the EASA for third-country certificates is 636, according to European commission sources, while about 10 more are in the process of completing their applications, almost four months after the date when the UK was first scheduled to leave the EU.
The aerospace lobby group ADS estimates that about 800 companies will eventually need new regulatory arrangements under a no-deal Brexit.
While the regulatory changes do not involve major job moves out of the UK, industry insiders said it could contribute towards making the UK less attractive for future inward investment. If the UK leaves the EU with a deal the EASA applications will immediately lapse, as CAA approvals will continue to be valid across Europe.
British manufacturers Rolls-Royce, Cobham and Meggitt are among the 636 businesses that have applied to the EASA. Canada’s Bombardier and the US company GE Aviation, which both have significant operations in the UK, have also applied.
The UK narrowly avoided leaving the EU without a deal on 29 March after the EU agreed to extend the negotiating period, following the then prime minister Theresa May’s repeated failures to pass her withdrawal bill.
The aerospace industry has been among the most forthright in its opposition to leaving the UK without a deal. Airbus, Europe’s largest aerospace company, has warned it will consider closing British factories in the event of a no-deal Brexit.
Paul Everitt, ADS’s chief executive, said the industry faces another “challenging period” as it looks to buy warehouse and transport space during the peak pre-Christmas period. Firms are also being forced to tie up money rebuilding stockpiles.
Everitt called for the government to provide a temporary VAT holiday to businesses if there is a no-deal Brexit, and added that the government should work with banks to temporarily relax loan repayment terms.
The aerospace and defence sectors together employ more than 260,000 people in the UK, according to ADS. The group fears that a no-deal scenario will impose billions of pounds worth of extra costs on the industry, with the impact on some goods equating to about 38% of their sale value. ADS estimates that new customs checks alone will cost an extra £1.5bn a year.
Other industries have also been forced to plan for a no-deal Brexit. The chemicals industry, Britain’s biggest goods exporter, has faced a similar search for new regulators. Sixty-six applications have been made for a new competent authority to regulate their use of poisonous chemicals – up from 50 applications made by February.
