Brexit US Aviation: What is the Impact?

  Editor's Note: Although the publishing hiatus was planned for July and August, we simply could not resist writing a post on Brexit, so now the break will be in August and September. This time off publishing will be used to improve the website, launch a new airport service and relax a bit. We will be back in October with a new post. Until then!


I was originally scheduled to write a follow up to an earlier post on the increasing challenges airports are facing in attracting and retaining talent. This is an important issue, and it is the subject that is likely to occupy much of an airport executive's time and thoughts when he or she has a few moments and can think about almost anything (I always say that the best clue to what is important to you is what you think about when you can think about anything at all). And I know from experience that the search for talent is a subject very likely to be discussed when airport executives are having a drink together. But given the recent Brexit vote, and the Istanbul attack, I decided the talent piece could wait until after the summer.

Brexit Through American Eyes

The Brexit vote was barely a couple of weeks ago as I write this, and already a good deal of ink has been spilled by people writing about it (and given the backstabbing in the British Parliament, a good deal of figurative political blood as well). What I would like to do is to talk about it from the perspective of an American; and an American who has spent a great deal of time in, and dealing with, the EU and one who works in aviation.

What you first must understand about the reaction in the US to Brexit is this: It is about us. Here in America, it is always about us. While some of us (myself very much included) care deeply about what happens politically and economically in Europe and in Britain, the overwhelming majority of Americans want to know how it will impact them. The rest is just academic, elitist, detail (and in our newly populist politics, academics and elites are not very popular here, just as they have proven not to be in Britain).

So, when Donald Trump said that the falling British pound was a good thing because it would bring more people to his golf course, most Americans just shrugged their shoulders. He was looking at it the same way they were. Most Americans don't own a golf course, but those who might want to travel spent a lot of time looking at exchange rates and air fares.

Yes, the US stock market took a big hit the first couple of days. Ironically, the financial second quarter ended on June 30th and the quarterly retirement statements we get from our retirement accounts might have gotten some attention if they took a hit. This is where Brexit might have become real to us in a personal way. But the pre-Brexit stock market rally (when most people thought Brexit would fail), and the rally since have the market about where it was when this all started. So, people have started getting their statements and there was no negative impact in them. If three hundred million people shrugging their shoulders could make a noise, that's what you would hear. But shoulder shrugging is a silent activity, and there will be no noise. Indeed, those (like Trump) who thought Brexit was a good thing might even use this as evidence that post-Brexit economic fears are overblown. Your vacation is cheaper, your retirement account is fine. Nothing to see here. Move along.

Brexit and the Presidential Race

On the political side, again remembering that to most Americans it's all about us, Brexit is a sort of Rohrsbach Test. What you see and think largely depends on your predilections before the vote. If you love Donald Trump then it just shows that the elites and politicians are driving our countries into the ground and we need massive change and we need to "take our country back."  If you love Hillary Clinton, you see it as more evidence that the world is an uncertain place and we need a steady hand at the tiller.

Another thing to look for going forward, though, is the extent to which Brexit leads to distasteful outcomes, whether economic, social or political. If it leads to economic distress and social meltdown; resulting in polls showing a lot of buyers remorse, it could persuade enough independent American voters who wanted to vote Trump to send a message, figuring he could never actually win, to reconsider that choice. As Eugene Robinson said in a Washington Post column recently, "catharsis is not a plan." Absent that, though, Brexit is likely to only reinforce whatever views and leanings Americans already had going in.

Oftentimes "off year" elections (such as those for Members of the European Parliament), are used as protest votes, resulting in unusual outcomes but minimal actual consequences. I wonder if the Brexit vote was such an occasion. Except this time consequences are real. I wonder if that may be a cautionary note for some who want to vote Trump seeking to send a message.

Everyone Hates Trade

Indeed, the major loser in the US presidential contest so far is not any one candidate, but the whole idea that international trade and commerce is a good thing. Candidates are racing to the fringes on this issue over here, and the Brexit vote and resulting rhetoric will do nothing to stop that. It is lousy economics, but right now it is good politics to be against trade and international commerce.

Everyone Loves Political Intrigue

One further thought on how Americans are viewing this: The betrayal, if that's what it is, of Boris Johnson by Michael Gove only adds to the enjoyment for Americans. For those who think Britain is all about Downton Abbey, this House of Cards element is quite juicy indeed. It may even elevate the reputation of Britain around here. 

There are some of us, though, who are a bit more thoughtful about this. The Brexit vote leaves me very concerned about the future of Britain. There is a lot of focus on what Scotland might do, rightly so. Perhaps a more interesting question lies in Ireland. Once this is implemented, that is where Britain's only land border with the EU will be located. As border control seems a major motivating factor in the Brexit vote (and seems a major motivating factor in Michael Gove deciding to throw Boris Johnson under the bus) it is hard to imagine that big changes will not be coming in Ireland. I greatly fear for the roll back of progress that has been made there over the years.

Demography is Destiny

If you had told me 30 years ago that Britain would take this vote and that there would be a major disagreement between young and old on the outcome, I would have guessed the split would be exactly the opposite of what occurred. Given the success of the EU in transforming a war torn continent, and the memories my contemporaries and those older would have of the post-war years, I would have guessed they'd vote to stay, while younger people who may take their freedoms to work and travel for granted, might vote to leave. That, in the end, it was exactly the opposite, is an interesting subplot. Those who opposed the outcome the strongest have to live with it the longest. (yeah and only 30% of the young voted!)

US - British - European Engagement

This vote should call into question the wisdom of those who think NATO has outlived its usefulness. Even those in the "Leave" camp said that NATO keeps Britain and the US tied together with Europe in the most meaningful way. I would guess Hillary Clinton will try to point this out to Donald Trump (who has called NATO outdated and said the US should reduce or even end its involvement); but I don't think most people will care.

On the aviation side of things, I know the US State Department had a meeting with key stakeholders the day after the vote to talk about what might happen from here. Will Britain have to revert to Bermuda II? Can Britain be covered by the EU agreement, or some hybrid? ACI Europe has called for the internal aviation market to continue to include Britain. Several airline leaders have said the same. Indeed, airline CEOs were among the most prominent "Remain" supporters. In the end, Britain will leave the EU, but it is hard to believe the aviation landscape will be allowed to change much. But then again, a lot of things have happened this year that are hard to believe.

Many of the European low cost carriers are reassessing their plans, and even the countries in which they hold operating certificates, after the vote. For Americans this will become very interesting since many use those airlines (Easyjet, RyanAir, Vueling etc) to get around Europe on their holidays.


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Lessons

I recall a conversation with a friend who works for the EU commission. I said to him that it took the US two centuries to go from a country with a barebones Constitution to one that started regulating what can go into certain foods if they were going to be called certain things. Europe was attempting to do this in a few decades. I wondered if Europe was moving too fast; especially since Europe does a poor job of explaining itself to people and getting their buy-in. My concerns were dismissed by my friend, but I do think this is a lesson.  

In a more recent discussion, I was speaking with an American friend who is much more conservative than I am. He was reading into the Brexit vote what he wanted to see, that it is a vote against elites and a vote to take their country back. To him, the EU was a faceless mass of regulations. I pointed out to him the role the EU has played in changing the political face of Europe. That in the decade before they joined, Greece, Spain and Portugal had all been dictatorships, and obviously the Eastern European members were part of the Soviet bloc (to me, this is the EU's greatest achievement). He hadn't even stopped to consider any of this; may not even have been aware.

The Brexit vote is a story of self-inflicted wounds. Cameron's disastrous decisions. The EU's reluctance to better explain itself. The untruths and distortions during the campaign on all sides. But this American thinks those wounds will have ramifications for years to come, that it is not all about whether my upcoming trip will be cheaper, that the achievements of the past are never assured, and that the future looks a bit murkier than it did a couple of weeks ago.

Istanbul

I can't sign off without at least mentioning the Istanbul attacks. I have previously written on security twice in this space and have always stated that attempts to ensure some kind of perfect security were a fools errand that would only mislead the public.

In my aviation security post and aviation security update I have made the point that many of the steps we take to provide "more" security are counter-productive and will only serve to provide terrorists with new and even richer targets of opportunity. In other pages, I have also criticized the media for hyping the fear we are all supposed to feel, and for feeding a sense that someone should be able to provide perfect security every day. Every now and then I get criticized for these points.  Especially after an attack.

But there is no perfect security. Everything we do to improve, the terrorists study and try to beat. That will go on forever. Now, some people want to move the security perimeter further away. All this does is move potential targets around, indeed by creating new bottlenecks in harder to secure areas, it actually creates softer targets.

One of the most frustrating moments in the post-Istanbul coverage in the US was hearing a CNN anchor express surprise that the Istanbul airport was open the day after the attack. How could they be so....resilient?! I saw a tweet from a local reporter in Washington that included a picture of an empty Turkish Airlines ticket counter the next morning. The tweet noted the Istanbul airport is open but the ticket counter is empty. It did not note that the one daily flight from Washington to Istanbul wouldn't leave for 12 hours and that's why the ticket counter was empty.

One of the best American commentators on homeland security is a woman named Juliette Kayyem. She is the author of a new book called Security Mom, and is a welcome presence on CNN, where she provides commentary. She is a welcome antidote to the voices of so many who insist we can have perfect security and must find blame when we don't. Her message is that there is no such thing as perfect security (unless we want to become North Korea or unless we just stay home, in which case incidents of bathtub falls and accidental gunshot wounds would likely spike anyway). That we must allow for our freedom and for our country to function, while providing the best security we can. And that when something happens, we must learn from it and keep improving.

That's the true lesson from Istanbul and Brussels. Learn what happened. Get better. Stay vigilant. Ensure intelligence is of the highest order. But maintain our freedom. Resolve to be resilient. Keep moving forward. And remember that terrorism doesn't truly work if we don't provide the "terror" in response to these ghastly acts.

Just prior to publication Theresa May has been selected as Prime Minister and she has appointed Boris Johnson as Foreign Minister. Some Americans will look for evidence in the Prime Minister's ascension that might auger well for Hillary Clinton. They appear from various news accounts to have a fair amount in common. More likely though, many Americans will think it's almost as if Hillary Clinton appointed Donald Trump Secretary of State! For me, frankly, it looks as if Britain has become fortunate with this choice. A steady hand is required and the new Prime Minister appears to offer just that.