Mr. Sean Kennedy:

I thank the Chairman and committee members for inviting me to participate at this hearing. My name is Sean Kennedy and I am the senior vice president of global government affairs at Airlines for America, A4A. A4A is the trade association representing the leading US-based passenger and cargo airlines. Our members carry approximately 90% of all US passenger and cargo traffic and include American Airlines, United Airlines, FedEx, UPS, and Atlas Air.

I will begin by expressing my appreciation for the opportunity to address this committee. I have worked in both Houses of Congress in Washington, as well in the White House under President Barack Obama. I thought health care was a challenging issue, but Brexit puts health care in the halfpenny place. This committee is tackling the implementation of an incredibly complicated and comprehensive issue that will affect all of Ireland. The range of hearings the committee has held and the countless hours of preparation involved in the work are impressive and are a testament to the committee's solutions-based approach to governing.

Discussion of airlines and air traffic has become a pretty straightforward topic. This is largely because virtually everyone has travelled by air, and at this point takes for granted that it is available to them. My father was 27 years old before he took his first flight. My first flight was when I was five years old. It was a transatlantic flight. Each of my children flew within months of their birth. Air travel is now akin to mobile telephone service, something that was initially a luxury, but is now something woven into our culture and relied upon every day.

My written testimony offers data on the economic impact of commercial aviation for Ireland. Some key statistics are that aviation drives €4 billion of economic activity in Ireland, 4% of its gross national product. Ireland receives 12 million passengers each year from the United Kingdom, and almost three million passengers from the United States. Each day, 30 flights leave the US bound for Ireland. Those travellers have seen their fares - adjusted for inflation - go down 26% since 2000. It is no wonder that Dublin Airport broke another record for transatlantic passenger volume last year.

I do not need to spend much time characterising the significance of air travel between Ireland and the United Kingdom. Multiple carriers in both countries serve the market, offering a wide array of flights. The air bridge between the Ireland and the UK is a critical aspect of their cultural, business, and family ties.

Air services are exchanged globally through hundreds of bilateral and multilateral international aviation agreements, without which airlines would not have the legal authority to operate. This system for exchanging aviation rights internationally has been the status quo for decades. In light of this unique system, Governments have historically carved out air services from trade agreements, like the WTO General Agreement on Trade in Services, GATS, agreement. Air services between the US and the EU are based on the 2007 US-EU open skies agreement, which liberalised the transatlantic aviation market, meaning no restrictions on the number of flights, capacity, pricing or market entrants for flights between the US and Europe. This agreement provides the legal foundation for airline alliances, such as Star, SkyTeam, and oneworld, which includes Aer Lingus. The vast majority of our travellers fly on one of these alliances, either directly from the US to continental Europe, or from the US to the UK and then on to other countries, including Ireland. Airlines within an alliance coordinate - with government approval - on routes, schedules, and capacity. This yields more frequent flights spread throughout the day, with better-timed connections for travellers. Competition between alliances keeps fares low.

The United Kingdom is critical to international air transport. Each year, 14 million passengers fly between the US and the UK, representing a third of total US-EU traffic. Over half of those passengers, some 7 million, are flying to or from other member states, using the UK as a stopover. When the UK formally leaves the EU in March 2019, it will no longer be part of the US-EU open skies agreement or the European single aviation market. So on the first day of Brexit, US airlines will no longer have the authority to fly to the UK, or fly through the UK to the EU 27. The same will hold true for Irish airlines.

I noted earlier that other industries, such as agriculture, telecom, or financial services, have a WTO fallback position that allows them to operate in the absence of a bilateral agreement. Airlines do not. Air services are specifically carved out of the WTO. The industry would have to dust off bilateral aviation agreements dating as far back as the 1940s and operate under outdated restrictions which would include limitations on the number of flights and the number of carriers. This would trigger cuts in air services between the US and the UK, and the UK and Ireland. In short, these antiquated agreements do not reflect the reality of what the aviation market represents today. Additionally, the US-EU open skies agreement facilitated the emergence of transatlantic airline alliances, which offer greater connectivity. Government approval of these alliances hinges on a fully open transatlantic market, one that will no longer exist on day one of Brexit. Another complication is that airlines generally sell tickets about a year in advance. The industry needs confidence that it can continue selling tickets to the European market, to the Irish and to the UK, starting in March 2018.

Where does this leave us? At the start of my remarks, I noted that air travel has become akin to cell phone service. I suspect that all of the Senators' constituents assume that, on day one of Brexit, they will still be able to make calls to and from the UK without interruption. By the same token, they will assume the same for air transport. They will assume that they can still fly to the UK and that passengers from the UK can still come to Ireland. This begs for Government and the Senators here to take action now to provide legal certainty for their constituents.

There are two necessary steps to maintain international connectivity between the US, the UK, and the EU. The first is an open skies agreement between the US and the UK, which Airlines for America, A4A, is actively pursuing with both countries. The second step is an EU-UK agreement that will allow access and connectivity between the UK and Europe. This would lead to the continuation of an aviation market that allows continued competition and avoids unnecessary regulation of commercial decisions.

I recognise that Senators have much to do in a very short period of time in finding agreement across industry sectors and with other Governments about Brexit. A major disruption in airline service between the US, the UK, and the EU would wreak havoc for all sides. As an island nation with a critical air bridge to the UK, Ireland is uniquely exposed. As Senators know, there is increased discussion of transitional arrangements to limit the immediate impact on member states by the exit of the UK from the European Union while a future arrangement is being defined. These arrangements will be targeted at those industries most severely impacted. Aviation falls squarely within those goals, and we urge the Irish Government to make this industry a priority.

The severe disruption of air travel from the UK to Ireland should be a disturbing thought to all the Senators. A transitional arrangement between the EU and UK would ensure that the air bridge between the UK and Ireland remains in place and that US airlines can continue to provide the vital link between Ireland and the United States. The US airline industry appreciates the Seanad's leadership in tackling these issues and working on behalf of the Irish people, and we appreciate the opportunity to speak here today. I look forward to the Senators' questions.