Ryanair’s Ban On British Shareholders – It’s The EU’s Protectionist Rules About Airlines

The European Union is – just like the US – protectionist about airlines. Only those companies which have majority EU ownership, the rules being slightly different but much he same in the US, may do what is called cabotage. If you’re majority owned by people outside the EU then you can’t do cabotage. This is, of course, protectionism. It’s something that shouldn’t exist as it is to the detriment of consumers. But it is these rules which are leading Ryanair to ban new British shareholders. Because upon Brexit they get very close to – possibly even over – non-EU majority ownership. Meaning they lose many of their licences to fly:

Britons will no longer be welcome on the shareholder register of Ryanair should the UK leave the European Union on March 29 without a deal on political and trading arrangements. On that date, British investors who hold stock in the airline will lose their voting rights, their holdings will be classified as “restricted shares” and they will be barred from buying new shares. Europe’s busiest short-haul airline said that it was taking the action to ensure that in the event of a no-deal Brexit, its majority ownership would remain in the hands of EU investors, a stipulation under Brussels laws to retain a flying licence.

It’s not quite retain a flying licence, it’s the ability to do cabotage.

Delta, just as an example, can fly in and out of the EU. So, you don’t have to be majority EU owned to be able to do that. Cabotage is being able to fly in and around the EU and not from your own home country. So, imagine, Easyjet is a UK company (it isn’t, not in the relevant sense, but). It can fly from London to Naples, from London to Faro no problem. Cabotage though is Easyjet, as that British company, flying from Faro to Naples. Flying within the EU but not from the home country. And that’s the bit that they’re not allowed to do if they’re majority non-EU owned.

Or, perhaps in total detail, that’s the sort of licence that Ryanair is worried about losing.

The solution is simple, people just shift their shareholdings in Ryanair into a EU company and that’s that. Or, of course, the EU could stop making us all poorer by abolishing such idiot restrictions. But then one of the reasons we’re leaving is that the EU doesn’t abolish idiot restrictions….

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thammond
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thammond

Strictly it’s not the flying but the taking on of passengers. It’s why BA can fly to New York but can’t then take passengers from New York to LA. The plane could fly to LA but it would have to do so empty.

This problem is not new, BA used to have to do it for US regulators.

Quentin Vole
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Quentin Vole

Not quite, BA can take paying passengers to LA via NYC, but they can’t pick up additional ‘domestic’ fares in NY. It’s all quite complicated. When I was a BA regular to San Francisco from Heathrow (30 years ago), half the flights went via Seattle.