Chancellor Philip Hammond warned that European flights that fly into and out of Britain could be grounded should a no Brexit deal be made.
Giving evidence before the Treasury select committee, Hammond reinforced industry fears that a failure to secure a deal could bring the airline industry catastrophic consequences.
“It is theoretically conceivable that in a no deal scenario there would be no air traffic moving between the UK and the European Union,” said Hammond.
“But I don’t think anybody seriously believes that that is where we would get to.
“There is a range of outcomes and what we would need to do at a point in time is to determine what is a realistic worst-case scenario and plan for and invest for.”
Philip Hammond is the first major government figure to contemplate on what may happen on March 29, 2019, or what is known as Brexit day.
Heavyweights of the airline industry including Michael O’Leary or Ryanair have repeatedly raised the threat of UK-based carriers being grounded if no agreements can be finalised over the next two years.
Europe maintains an Open Skies agreement that lets EU airlines, including those that are registered in the United Kingdom, to operate in each other’s countries without financial penalties.
The aviation industry cannot fall back on World Trade Organisation rules, unlike other sectors.