Europe's transport chief has warned airlines that they must face up to their obligations to overhaul share-ownership structures in order to continue qualifying for single-market flying rights after brexit.
Adina valean, the eus transport commissioner, told the financial times that brussels would maintain its strict rules requiring airlines to be effectively owned and controlled by eu nationals if they wanted to retain operating licences to fly in the bloc after january 1 2021.
The rules have implications for how aviation giants, including british airways owner international airlines group, navigate brexit as uk shareholders will no longer count as eu nationals.
Airlines that fail to be at least 50 per cent owned by eu nationals risk losing their operating licences, relinquishing extensive flight privileges enjoyed in the single market, and having to rely on agreements other countries have with the bloc to try to preserve basic access.
Ms valean called on airlines to draw up honest plans that prove compliance with the rules. she said it was the job of national regulators to vet whether airlines still qualified for a licence, but that the european commission would use its investigatory powers if other airlines or member states complained to brussels that a company was breaking the rules.
We are counting on the national authorities to carry out due diligence on this, said the romanian commissioner.
If an airline believes that some other airlines are not complying with this obligation, then they can complain to the commission, she said. we are going to look very carefully and would like to see compliance, not only nominally but effectively too.
Iags post-brexit strategy has attracted particular scrutiny as the company effectively straddles the brexit divide: it is a spanish-registered company listed on both the london and madrid stock exchanges with its operational headquarters near heathrow airport in west london.
The conglomerate became one of europes most profitable airline groups following the 2011 merger of british airways and iberia, but has faced persistent questions over its contingency plans for brexit.
Iag placed a cap on the number of non-eu investors who could own its shares for most of 2019, after its non-eu share ownership reached 47.5 per cent approaching the 50 per cent threshold.
The group lifted the restrictions in january this year, when it said non-eu ownership had fallen to 39.5 per cent a figure that did not consider uk nationals as being outside the eu. the board warned that it could reimpose the cap if the proportion of non-eu investors crept back up.
The government of qatar is the biggest shareholder in the group with a 25.1 per cent stake.
For the moment, uk shareholders count as eu nationals because of the post-brexit transition period which expires at the end of the year.
Iag has said it has agreed contingency plans with national regulators, including in spain and ireland, though refused to go into detail about them when contacted by the ft.
Spains transport ministry also declined to reveal details of the plans, though it confirmed that they had been signed off by regulators.
This is all without prejudice to the european commissions competence in terms of verifying compliance as established by the relevant regulations, the ministry said.
Should the commission investigate and find an airline to be in breach of eu rules, brussels has the power to demand the company take action to meet the ownership requirements, or be stripped of its licence.
Iag has repeatedly called for issues around the eus ownership rules to be addressed as part of the negotiations over the uks future relationship with the bloc.
But eu diplomats said that it was far from clear that any agreement would grant special rights in the sensitive area of ownership and control.
Diplomats noted that allowing any degree of leniency on the shareholding rule would run counter to brussels push for the eu to assert its strategic autonomy across economic sectors, not least because of the sizeable qatari shareholding in iag. officials also warned of the repercussions for the eus single market for aviation if other third countries demanded similar rights.
In general people are reticent to give in to more flexibility on ownership and control, said one diplomat.
Ms valean said that no matter what the outcome of the brexit talks, it is clear that uk carriers would no longer have the same market access rights as an eu member state from 2021.
A statement from iag said the company expects the eu and uk to agree a comprehensive air transport agreement. flights will continue to operate as normal.