It might be necessary. The frequencies of 121,5 MHz and 406 MHz are International Aviation Distress frequencies, and the same all over the world. The new 406 MHz needs to be mapped to the new owner, but there shouldn't be any need of changing the watches hardware. This will be done from Breitling only, it cannot be done from a third party watch maker. I think this can be done as part of a Service, and yes, the service is quite expensive. For the Emergency 1 it was already in a similar range (~700-1000 EUR), so your number could be right.
But easiest way is to quickly call your local Breitling Service Center (I guess you are from UK) and ask them. Maybe, if the watch is in a good condition, they may change the code for you for much less.
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