Brexit: The final countdown
Adrian Whitmarsh, Premier Aviation
There are two vitally important points.
The first is that the UK remains a member of the European Aviation Safety Agency. Although the UK government has stated they want to, currently nothing has been agreed on the mechanism and how much we will contribute.
Without this, UK aircraft and operators would be isolated and unable to continue flying – they would move wholesale to other EU states, as many are already making plans to do. UK-issued EASA pilot licences would no longer be valid outside the UK.
The second point is flight permissions. Without agreements in place, UK operators will no longer be able to fly domestically within EU states nor fly internationally from one EU state to another, as they currently have automatic rights to do. Likewise, EU operators will no longer be able to fly domestically within the UK nor, for example, would an Austrian operator be able to fly from Germany to the UK.
Time is running out to agree these complex rules and, again, the result will likely be aircraft moving off the UK register to operations set up by their owners in other EU states – eg as EasyJet has already done.
This latter point has great implications for the chartering of aircraft on European tours. Already, we are quoting flights for next summer and having to advise clients that operators may not have the necessary permissions.
“We are quoting flights for next summer and having to advise clients that operators may not have the necessary permissions”
Richard Burnett, Road Haulage Association (RHA)
There has been so much said and written about Brexit – but much less about what it will mean to the British music industry, an industry we know and love, and one that does so much to drive the British economy.
In August, I attended a pre-Brexit meeting at the Department for Transport (DfT), with the secretary of state, Chris Grayling, and his team, to discuss the implications of a ‘no deal’. Our intention was to establish the best possible outcome for our members and the haulage industry after March 2019.
Frustratingly, we left with very little – apart from a strong indication that neither the DfT nor the rest of government understands even the most basic needs of road-freight operators. Even now, with under six months to go until the UK leaves the EU, there is not even a contingency plan – standard practice for any business, surely?
So far, all we have is the proposal of a lorry park at Dover to prevent tailbacks on the M20 – a proposal that we have already spurned as unworkable. The response of one RHA member was, “We would be sat there for days and days, costing a fortune. […] The truck park would be full in half a day.” These comments were widely picked up by broadcast, online and printed media.
We have got to have a clear government commitment, that in the event of a no deal it will seek an agreement that doesn’t impose new permits, quotas or limits on UK international operators, particularly those for whom the ability to plan far ahead is critical.
For the movers of music, time is the critical element. Forward planning is essential. But with such long lead times, how can a logistics supplier accurately plan, when any date post-29 March is such a grey area? Yes, there will be a transition period but that too remains shrouded in mystery.
Right now, all we have is words. But words alone are not enough. We need clarity, we need a workable no-deal contingency plan in place and we need it now. Without clarity, the industry that employs 2.4 million people, including the operators and employers of the 600,000 HGV drivers that keep the UK’s HGV fleet of nearly half a million trucks on the road, contributing £2.54 billion to the UK economy, will just have to hope for the best.
But for the industry responsible for moving 98% of the UK economy, hope just isn’t good enough.
“Right now, all we have is words. But words alone are not enough”
Martin Goebbels, Integro Insurance Brokers
With regard to our specialist area of insurance for the entertainment industry, there have been no indications of change, at this stage, from the insurance markets once Brexit kicks in. Due to the specialist nature of our policies, we generally use UK insurers regardless of whether for EU or overseas policyholders.
There are certain countries, both within and outside of the EU, that have always had their own internal rulings and restrictions on how insurance can be placed and where. Sometimes this has to be placed locally or in the local language, and for these reasons we tend not to work with music industry clients in those countries – any barriers related to insurance never really came down when the UK joined the EU, so leaving it probably won’t make too much difference either!
Perhaps on other types of insurance, such as large, industrial commercial policies involving international insurers, it may have a greater effect.
“Any barriers related to insurance never really came down when the UK joined the EU, so leaving it probably won’t make too much difference either”
Visas and work permits
Tina Richard, T&S Immigration Services
At the moment, only non-EEA acts need work permission to come here for tours, one-off shows, film shoots, etc. The UK government has not yet indicated whether EEA nationals might need some form of work permission post-Brexit.
Tours currently fall into three categories of immigration complexity:
Simple: EU/EEA nationals, who don’t need permission to travel to the UK and perform there. No costs incurred; no paperwork needed. This might change after Brexit.
Medium: Non-visa nationals, from countries such as the US, Canada, Brazil and Australia. They need permission to perform in the UK but just need to present it as an entry document upon arrival. This is very cheap (as low as £21 per act).
Complex: Visa nationals, which include China, Russia, Jamaica, South Africa and more. They need permission to perform in the UK, plus a visa. These are often a nightmare and expensive (several hundred pounds per person).
It’s possible that non-British EU/EEA nationals might be pushed from category one to category two after Brexit. This will mean slightly more paperwork but it’s not too onerous. If any EU/EEA country were to be pushed into category three that would make their lives more difficult, but it seems unlikely at this point.
However, for the last two summers, queues at UK airports have been hellish. It has become almost par for the course to wait two hours or more in order to clear immigration. If they add millions of EU passengers to the lines whose paperwork and intentions have to be checked, then it’s clear they need to hire a lot more immigration officers.
“It has become almost par for the course to wait two hours or more in order to clear immigration”
Taxation and social security
Dr Dick Molenaar, All Arts Tax Advisers
There will be mixed taxation and social security consequences post-Brexit as follows.
Artist taxation: this is based on the bilateral tax treaties and not on the EU treaty. This means that taxation in the performance state and tax credit in the residence state stays the same.
But the Gerritse and Scorpio decisions of the European Court of Justice have given non-residents within the EU the right to deduct expenses and file tax returns. After Brexit, UK artists cannot use this any more and will be paying more tax than now in, for example, Germany.
US artists are better off in the EU than UK artists because the US tax treaties have a minimum threshold of $20,000 per artist per year and allow an exemption for independent production companies. EU artists performing in the UK can keep using the same FEU system because that is a UK unilateral tax measure.
VAT: there will be no reverse charge system any more but goods and services will go in and out of the EU. Administratively, this will be more complicated but will not lead to higher taxes.
Social security: No A1s possible any more for France and other states. If the UK does not create an alternative, this will lead to higher social security contributions without any rights.
The ECJ has given non-EU residents the right to deduct expenses and file tax returns. After Brexit, UK artists cannot use this”
Simon Liddell, Centtrip Music
Big Ben may have stopped chiming but time has not stood still in Westminster. On the contrary, it is quickly slipping away: there are now under 170 days before Britain leaves the European Union, and there is still much to iron out.
While the terms of a transition period have been agreed, negotiations are ongoing on the more contentious matters of the size of the divorce bill and the future status of Northern Ireland. Meanwhile, discussions over how the UK and EU will relate in the future have not even begun.
The biggest unknown remains the true cost to Britain of leaving the EU without a trade deal in place. Once thought remote, the chances of a no-deal Brexit are increasing and that’s already weighing on the pound, which has fallen to its weakest level in a year against both the dollar and the euro. A weaker pound is not good for musicians or labels that have to pay overseas whether for touring or recording. For promoters paying US artists in dollars, the cost per show will have increased by more than 10% over the past few months. Conversely, UK artists touring the US and Europe that are paid in those currencies will benefit.
But what will happen next? A ‘hard’ Brexit is likely to push sterling to parity against the euro and a multi-decade low of £1.18 against the dollar, while a good Brexit deal for Britain would boost the pound to £1.40 against the dollar and £1.20 against the euro.
Artist, managers, agents and promoters can escape the uncertainty of currency movements, though. Fintech companies like Centtrip, which specialise in international payments, foreign exchange and treasury management services, enable you to lock in a rate today for up to two years and mitigate any adverse currency fluctuations. Whichever side of the fence you are on today, you can still have control of your money.
“A ‘hard’ Brexit is likely to push sterling to parity against the euro and a multi-decade low of £1.18 against the dollar”
Get more stories like this in your inbox by signing up for IQ Index, IQ’s free email digest of essential live music industry news.
Hunt & Palmer acquires Aircraft Chartering Services
Premier Aviation parent Hunt & Palmer has acquired Aircraft Chartering Services (ACS), a UK-based company specialising in air-charter services for classical music clients, on the retirement of its founder, Mark Hugo.
Hugo founded ACS in May 1986 – a few weeks before the formation of Hunt & Palmer (H&P) – and has since established a diversified client base comprising world-renowned orchestras, government departments, niche tour operators and corporate clients.
As part of the acquisition, all of ACS’s staff will relocate from Epsom in Surrey to H&P’s offices (‘the Tower’) in Crawley, West Sussex.
Hugo comments: “My decision to invite H&P to acquire ACS Ltd was simple, because
I knew Peter [Hunt] and Jeremy [Palmer] had built a business that shares my professional values and responsibilities to my clients, staff and suppliers.”
“The ACS business very neatly complements H&P’s existing lines of commercial aviation, business jets, cargo charters and music tours”
“Peter and I have known Mark for over 40 years and always enjoyed great mutual respect,” adds Hunt. “We consider it a privilege to be entrusted with Mark’s life’s work and look forward to further developing the ACS Ltd business, as it very neatly complements H&P’s existing lines of commercial aviation, business jets, cargo charters and music tours.
“The ACS Ltd purchase mirrors our earlier acquisition of the music tour specialist Premier Aviation (UK) Ltd, which has consistently produced a significant contribution to the H&P Group.”
Premier Aviation this year celebrates the 24th anniversary of its founding. Read IQ’s 2017 interview with director Adrian Whitmarsh and broking manager Lizzy Templer here.
Get more stories like this in your inbox by signing up for IQ Index, IQ’s free email digest of essential live music industry news.
3 decades and 125+ tours: Premier Aviation at 23
How have the past few years been for you, and how is 2017 shaping up?
Over the last couple of years (2015–16) we looked after more than 30 tours – pretty much 1,000 sectors – across all continents, including many of the top-ten highest-grossing tours and last year’s №1. This one particular tour was over a three-month period, involving seven or eight different aircraft and over 65 sectors, including bringing members in and out from various destinations throughout the course of the tour.
Now in our 23rd year, we are over the 125-tour mark. In the early days there were just one or two tours a year, but now some years there have been as many as 20, from VIP airliners through to small jets, with many regular clients in the top-ten grossing tours of all time. This year is shaping up much the same, with touring already underway in Asia, Australia and New Zealand. We are currently working on the logistics for several other major tours and many smaller ones.
Summers are busy, when we are all flying out to different airports to oversee the VIP procedures in order to ensure the transfers through airports are as smooth and discreet as possible… made difficult in this day and age with every airport worker trying to get selfies!
How has the industry changed since you started out?
From my perspective, I think the primary point is that artists are touring more than ever and truly globally. I have seen a lot of new markets – once called emerging markets – mature and end up on most itineraries. Of course some drop off due to political instability, but those newer markets then want a wider variety of talent.
With the demise of regular major-label tour support to promote recorded material, artists have to get out and promote their own records.
I also think that with TV ‘talent’ shows preoccupied with ‘singers’, it’s harder from musicians and bands to get exposure on TV. As a result, it has enabled some of the longer-established artists to continue being the big draws for live events – and it’s really those artists that are global ticket sellers, so tours get planned over maybe a two-year period around the world. Inevitably, they soak up a lot of ticket sales revenue; however, it has created a hunger for live events which has been good for the newer artists, too.
If you look at the demographics of a major stadium artist’s audience, you’ll often find the age range is from young teens to pensioners. That means those younger audience folks will want to see their generation of artists live, and so it spreads the demand. Of course, we have also seen a huge increase in festivals, which have created new seasonal touring itineraries.
It’s amazing the workload involved in coordinating each airport transit of a major world-famous artist
What’s been your favourite tour in your three decades in business?
Its difficult to single out one favourite. Several come to mind because of the clients themselves. I have been involved in every Genesis air-charter tour worldwide and many of Phil Collins’s solo tours; it was interesting reading his recent autobiography, which brought back some memories. Likewise reading Bruce Springsteen’s autobiography, as I have been involved in every one of his tours of Europe for the past 32 years.
In a different genre, Luciano Pavarotti was a very special client – very charismatic and appreciative. We flew many personal trips for him also, and it was a great honour to coordinate the many flights for his memorial concert in Petra, Jordan. The Three Tenors concerts around the world were magical and I was lucky enough to be invited to their very first public show, in Monte Carlo.
Over the last decade AC/DC became very good clients. They are very down-to-earth folks, including their families – some of the most appreciative and personable people I have ever worked with. Sting has also been a very loyal client ever since Live Aid in 1985, which was the first time I was involved with his travel.
The important point with all of those clients is that it became a close partnership with their tour management and often the artists themselves. It’s very rewarding when a client appreciates one’s advice and enables us to provide exactly what we always set out to do from day one: the best quality service in private air travel. It is a service where expectations are rightly high, but it requires a level of dedication, expertise and customer service in all aspects of aviation to deliver that. It’s an incredibly complex service, but I hope that we make it look easy – it’s a bit like being a swan: calm and serene on the surface but paddling like mad underneath! Over the years I have met and worked with many wonderful people, several of whom I now count as friends.
Have any of the recent political surprises – Brexit, President Trump – had an effect on your business? Are customers more worried now about their ability to easily tour other countries?
Brexit may well have an impact, in that British operators may not have the current unrestricted access to the EU market for flight permissions. Currently any EU operator can fly commercially anywhere across the EU, including domestically within any EU state. If, as currently expected, the UK pulls out of the EU single market, then UK operators may no longer have those rights. This could mean we are unable to use UK operators so easily for European tours. It could also mean that many British-registered aircraft will move to other EU countries of registry, with the consequent loss of business for the UK. It remains to be seen, of course.
Premier Aviation, along with our now parent company, Hunt & Palmer, have always been very active within our aviation industry associations. I myself am involved on flight operations committees and thus we are able to keep abreast of all matters affecting our industry and have an influence on issues. We are well known within the international aviation community, enabling us to work closely with airports, handling agents and aircraft owners and operators. This is vital when it comes to such things as security or political risks, especially since we fly clients worldwide.
How Brexit will affect visa requirements remains to be seen, too, of course. Will it be more difficult for European artists to play in the UK? Will British artists require permits to work within the EU? What about the tax and customs implications for their equipment?
As for the Trump effect, time will tell. However, we live in an increasingly risky world, which is why it is important for us to advise clients on secure travel, including airport security issues. We have always been intimately involved in organising airport transit arrangements, coordinating with all links in the tour travel chain: promoters and their own local security; artists’ personal security and ground transport; airport security. With the latter, perhaps surprisingly, we usually find we have to advise them of the potential security and public order risks involved with high-profile artists transiting through their airports. It’s amazing the workload involved – and importance – in coordinating with artist’s personal security and airport security for each airport transit of a major world-famous artist. So, now more than ever, its important to point out how the use of private aircraft travel, properly organised, can minimise the risks and provide security as well as privacy for travel.
It’s an incredibly complex service, but I hope we make it look easy. It’s a bit like being a swan: calm and serene on the surface but paddling like mad underneath!
As to whether all these issues will affect clients’ concerns about touring, overall I feel the main point is that most artists need to get out and play live. They will certainly look carefully at where they will tour. For example, the Ukraine had been on many European tour itineraries until the hostilities. Likewise, Russia has dropped off of most tours in recent years, for a variety of reasons. Many artists have certain political or moral standards and so are reluctant to visit certain countries as a result.
However, it seems that where one territory drops away another is found to replace it. Of course, much also depends on the economic climate as well. Exchange rates definitely play their part in that. For example, US artists earning income in UK pounds or euros will see a fall in their dollar equivalent or, conversely, it will be more expensive for British and European promoters to contract US artists. Conversely, UK artists’ euro or dollar incomes will be worth more, so it will be good for UK entertainment exports.
What’s the biggest challenge facing a travel company like yours at the moment?
Heightened security requirements in Europe, with terrorist incidents and alert. Last year France suspended EU borderless arrangements, checking all passports on arrivals and departures, even on intra-Schengen flights.
Airports are increasingly restricting night flights, which makes it more difficult to fly artists after show to their next destination.
We have also seen touring group sizes increase, so availability of suitable larger-capacity corporate-layout aircraft is often an issue. And, as previously mentioned, the as-yet unknown issues from Brexit are likely to be a challenge in the coming years.
Finally, you say in 23 years Premier Aviation customers have never missed a show. What’s your secret?
Attention to detail! Careful choice of suppliers and careful planning. Our expertise, resources and ability to respond at short notice to any eventuality.
Adrian Whitmarsh is director and Lizzy Templer broking manager at Premier Aviation UK Ltd.