Chancellor Philip Hammond said the British government was preparing for all eventualities, and that included a 'no deal' scenario in which event, he said, it was "theoretically conceivable" that the day after Brexit, "there will be no air traffic moving between the UK and the European Union".
Flights to a further 17 countries, including Norway, Switzerland and the US, would also be at risk in this case, as their aviation agreements with the UK are currently arranged through the EU.
Hammond added that he did not think "anyone seriously believes" this would occur, but said the government would invest in and plan for a "realistic worst-case scenario". The speech was given to the UK's Treasury Select Committee, and was one of the first comments from a British government ministers about possible scenarios for March 29th 2019.
Within the EU, any airline is allowed to fly between any two EU airports if there is an available slot, under the EU's Single Aviation Market.
Once the UK leaves the EU, therefore, it will need to establish an entirely new treaty in order to continue flights not only to the 27 EU countries, but also to 17 other countries whose air services agreements with the UK are arranged through the UK's membership of the EU.
The EU accounts for 54 percent of scheduled commercial flights from the UK, and the 17 other countries for a further 31 percent, according to figures from the British Airport Operators Association (AOA).
But even if the UK is unable to reach a formal agreement with the EU before leaving the bloc, Hammond said "mutual self-interest" made it likely that a new arrangement on flying rights would be made.
A spokesperson from the International Airlines Group, the parent company of airlines including British Airways, Iberia and Vueling, told The Local: "We're confident that a comprehensive air transport agreement between the EU and the UK will be reached. It's in Europe's interest to have a fully liberalized aviation agreement. 900 million travellers each year have benefitted from open skies in Europe. That not only benefits customers but creates jobs and wealth across the continent."
The Chief Executive of the British Airport Operators Association (AOA) Karen Dee said in a statement that she "welcomed" Hammond's recognition of the importance on an aviation deal.
"International aviation connectivity will be the foundation upon which a truly global Britain is built, enabling the UK's trade in goods and services as well as supporting tourism," said Dee. "The Chancellor is right that we will need a new legal framework the day after Brexit to ensure continuity of air services. The AOA believes this is well understood on both sides of the negotiations."
The UK pilots' union BALPA had said on Tuesday that the British aviation sector would be "devastated by a Brexit 'no deal'".
BALPA General Secretary Brian Strutton said: "Unlike most other sectors there are no World Trade Organisation or any other rules to fall back on for aviation if there is no deal."
"UK airlines could find they have to stop flying – it's that serious. And this would impact passengers long before March 2019 because airlines couldn't sell advance tickets and, frankly, would passengers risk buying them?" said Strutton, calling on the government to work on a post-Brexit plan for aviation.