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Just about everybody has a pet complaint about the European Union but national politicians and voters in the member states are prone to blaming Brussels for things that are not always the fault of the Eurocrats.
In Ireland’s case, the grievance about having to pay billions to unsecured bondholders in bust banks should not be directed at Brussels at all. This one came courtesy of the ECB in Frankfurt.
There is another phenomenon though which also feeds unhappiness with the EU. When Brussels does something right, often against determined opposition from lobbyists in member states, the Eurocrats get no credit.
A good example is the reform of the European aviation industry, a Brussels initiative dating back to 1986. Prior to that date, each European country had its own over-staffed national carrier, new entrants were barred from the industry, fares were unaffordable and the plain people of Ireland journeyed to London via Holyhead.
The European Commission pushed through a series of liberalising measures which eventually resulted in a highly competitive industry and the opportunity for companies like easyJet, Wizz and Ryanair to bring affordable air travel to the masses.
Along the way, virtually all of the former state airlines were privatised. Some went bust, but these disappearing airlines were promptly replaced by more efficient alternatives.
Ireland has been a big beneficiary of the EU’s aviation policy.
Aer Lingus adjusted to the new environment, changed its business model and has ended up as a unit of the successful International Airlines Group, which also owns British Airways, Iberia and the low-fare operator Vueling. Along the way, the Irish taxpayer collected a return on the investment made in the airline down the years.
Restructuring
Some other taxpayers have not been so lucky – Alitalia is going through yet another restructuring and several other former state airlines, including Air France, are struggling. An even more notable success has been Ryanair, now Europe’s dominant short-haul carrier and a company which did not exist prior to the EU’s market reforms.
As recently as 20 years ago, Ryanair was still struggling, a decade after its foundation. In the period since, it has simply walloped the competition and continues to prosper.
In addition to the creation of an open market in Europe, the EU has also opened up long-haul competition through, in particular, the open skies deal with the United States.
Thirty years ago there were just a handful of transatlantic services out of Dublin, forced to stop in Shannon to keep local TDs happy.
This summer, there will be 25 departures every day for North America, a huge boon to the tourism industry in the Republic and also in Northern Ireland.
Unfortunately, one of the fallouts from Brexit is the threat to Britain’s future participation in the common aviation policy. Each European airline is currently free to fly between any pair of airports in the participating countries and the deal extends to a few non-EU countries as well. Unless a deal is done to keep Britain in the aviation club, this could end. Both Aer Lingus and Ryanair serve UK points from Belfast and will wish to retain those route rights.
Ryanair has a few Scotland-to-London routes but, more importantly, Stansted is the airline’s biggest single base. It may be able to operate a UK subsidiary to get around any new restrictions but would doubtless prefer a simple deal which leaves things as they are.
Irish-based
At least Ryanair is an Irish, hence EU-based, airline. Not so fortunate is easyJet, UK-registered but with an extensive network of intra-EU routes which it could lose. The company might even choose to up sticks and base itself outside the UK.
None of these problems was foreseen by the Conservative party’s jolly band of Brexiteers.
There will be hell to pay if things go wrong and the British public is reintroduced to the delights of the pre-1986 world of European aviation.
Perhaps some means will be found to blame the Europeans. Both Willie Walsh, the ex-Aer Lingus chief executive of International Airlines Group, and Michael O’Learyof Ryanair, campaigned for a remain vote at the UK referendum in June last and it is easy to see why.
When the negotiations on Brexit commence in earnest, most likely at the end of May, it is important that the Irish Government should seek to keep the UK inside the existing common aviation policy.
There may well be protectionists in continental Europe with a different agenda who see an opportunity to put one over on their British and Irish competitors.
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