Cantillon: EasyJet faces hard choice on relocation in case of Brexit

EasyJet grabbed the headlines in the UK on Friday, warning that if Brexit did go ahead, it would have to move its legal domicile to an EU country, as it would need an EU airline operator's certificate (AOC) in order to be able to fly people between EU countries. It would also need some kind of deal between the EU and the UK to allow it to fly passengers between Britain and the EU countries.

It is just another of the unintended consequences of Brexit, albeit one that will not actually become necessary until Britain actually leaves. However, businesses have to plan and EasyJet will already be looking at its options.

One possible location it will certainly look at will be Ireland. The regulatory system here is well-respected and cost-efficient for airlines. Ireland is also English-speaking and, more important, has a 12.5 per cent corporate tax rate.

While EasyJet chief executive Carolyn McCall (pictured) was keen to emphasise that the airline would continue to invest in Britain, if it is to get its AOC here, it will have to have a substantial management presence. Goodness knows what Michael O’Leary would make of this.

Indeed there is talk that the EU Commission could choose to use the airline sector as one to drive home to Britain the raw realities of Brexit. The rules are that to fly between European countries you need an EU AOC, and the message to London is that the rules will be applied and that a deal will also be needed to facilitate EU/UK travel. EasyJet featured prominently on UK TV yesterday after the announcement.

It is all part of the horrendous mess that is Brexit, throwing up different considerations for each sector and a huge degree of unpredictability.

Notable, too , was the statement of EU trade commissioner Cecilia Malmström, who said that Britain’s exit would have to be negotiated before a new trade deal could be discussed – and that in the gap before a new deal came into force World Trade Organisation rules would apply, which would mean tariffs and bureaucracy. This may be a negotiating position. But it opens up the prospect of this taking five years at least and perhaps up to a decade. Businesses’ calls for early certainty don’t yet seem to be having an impact.