Air Traffic Management and Unmanned Aircraft Bill [HL]

Debate between Baroness Vere of Norbiton and Lord Bruce of Bennachie

Report stage & Report stage (Hansard) & Report stage (Hansard): House of Lords
Thursday 21st January 2021 Lords Chamber

[Baroness Vere of Norbiton (Con)]

My Lords, Amendments 12A, 18A, 18B and 44 are a series of government amendments to provide temporary powers for the alleviation of airport slot usage rules. This will amend retained EU regulation 95/93, which governs the allocation of UK airport slots.

Prior to the Covid-19 pandemic, the 80:20 rule—or the so-called use it or lose it rule—encouraged the efficient use of scarce airport capacity, while allowing airlines a degree of flexibility in their operations. There are eight slot-constrained airports in the UK to which the 80:20 rule applies: Heathrow, Gatwick, London City, Luton, Stansted, Bristol, Birmingham and Manchester. The 80:20 rule mandates that, provided an airline has used its airport capacity at least 80% of the time in the preceding scheduling period—either winter or summer—it is entitled to those slots in the upcoming equivalent period.

Due to the unprecedented impact of the Covid-19 pandemic, in March last year the EU Commission took the decision to waive the 80:20 rule. Airport co-ordinators were instructed, when determining slot allocations for the upcoming summer season, to consider slots as having been operated regardless of whether they were actually used. This waiver covered the summer 2020 season and was subsequently extended to cover winter 2020-21. The UK supported the EU’s position.

Without alleviation, airlines may have incurred significant financial costs by operating flights at low load factors merely to retain their slots. Alleviation has helped to protect future connectivity and airline finances and reduced the risk of ghost flights being run to retain slots.

We anticipate that the effects of the Covid-19 pandemic on the aviation industry will continue for some time. Passenger demand is not predicted to return to 2019 levels until at least 2024-25. After we exited the UK-EU transition period on 31 December, regulation 95/93 was retained in UK law. However, when it was retained, the powers of the Commission to extend the period of alleviation from the 80:20 rule—which are being transferred to the Secretary of State—were expressly limited to 2 April 2021. As we expect disruption to air travel to continue for several years, it is therefore imperative that the UK has the necessary powers at its disposal to provide alleviation beyond the summer 2021 season should the evidence suggest that it is warranted.

Amendment 12A inserts a new clause after Clause 11 in Part 2 of the Bill. The new clause would insert a new Article 10aa into retained Council Regulation (EEC) No 95/93 of 18 January 1993 on common rules for the allocation of slots at United Kingdom airports. This would provide the Secretary of State with a power, exercisable until 24 August 2024 and not in respect of a scheduling period after winter 2024-25, to provide air carriers with alleviation from the requirement to operate airport slots allocated to them 80% of the time in order to retain the slots for the next equivalent scheduling period.

To allow for flexibility, this amendment also includes powers to modify the 80% requirement relating to slots usage. This will be an alternative to applying a full alleviation of the 80:20 rule for a specified scheduling period or season. This recognises that there could be alternative ratios, not 80:20, which could be applied to ensure the efficient use of slots. It will also allow the Secretary of State to apply conditions to an alleviation of the 80:20 rule, such as by setting a deadline for the return of slots not intended for operation, or that a waiver will not apply to a series of slots of an airline that, for example, ceases to operate at an airport.

The amendment also allows the Government to make other changes to the operation of the rules relating to the allocation of slots under this regulation for the duration of the relevant scheduling period. For example, the Government could change co-ordination parameters to reflect partial closures of airports, adopt temporary rules for the most efficient allocation of unused slots, and give the slot co-ordinator enforcement powers—for example, where unused slots are not returned with sufficient time to enable them to be effectively reallocated to other carriers. Having the powers to vary the 80:20 ratio and apply conditions to be in place on application of the rule will allow appropriate measures to support the sector’s recovery as passenger demand returns.

The use of this power will require secondary legislation, subject to the affirmative procedure, for any applicable scheduling period in which evidence supports the conclusion that relaxation of the 80:20 rule is appropriate. The nature and extent of any relaxation will be subject to targeted consultation and, of course, there will be a debate in both Houses.

This approach will allow us to use current data and evidence, as well as to consult stakeholders, to make judgments on whether alleviations are required for each period and, if so, to what extent. We will also assess other institutions’ analysis and recommendations on slots usage rules for future seasons, including the Worldwide Airport Slot Board, and proposals from other areas, such as the European Union and the United States.

Amendment 18A is a consequential amendment to Clause 19 to reflect that the new clause on airport slot allocation extends to England, Scotland and Wales but not Northern Ireland, where aerodromes are a matter reserved for the devolved Assembly. As noted, however, all slot co-ordinated airports in the United Kingdom are currently in England.

Amendment 18B is a consequential amendment to Clause 20 and provides for the new clause to come into force immediately when the Bill is passed and becomes an Act. This amendment ensures that regulations could be made under the new Clause 11A, relating to airport slot allocation, following Royal Assent, so that they are ready to come into force as soon as appropriate thereafter.

Amendment 44 amends the long title of the Bill to include reference to airport slot allocation. I beg to move.

[Lord Bruce of Bennachie (LD) [V]]

My Lords, I thank the Minister for her introduction to these amendments and her explanation of the background. I should explain to the House that for most of my time as a Member of the other House I represented Aberdeen Airport; I say “most of my time” not because the airport relocated, but because my constituency boundaries changed. As a result of that, and of the fact that I commuted weekly by air to Parliament for decades—until lockdown last March, I continued to do so—I have taken an interest in aviation. Until lockdown I was also a frequent traveller around Europe and the rest of the world, and have experience of a variety of airlines and airports, large and small.

The allocation of airline landing slots is controversial, in terms of competition and commercial opportunity, as well as of access from feeder airports to the co-ordinated airports—a particular concern of mine. I completely understand the reason for the current waiver of the 80:20 “use it or lose it” rule, in the present climate. As the Minister said, we are following the same measures as the EU. Since she touched on this, does she foresee any circumstances in which the UK would, or should, take a different approach—for example, in how the proportions are reallocated? What would be the criteria or the conditions for that to happen?

I understand the complexity of managing slots, especially when airlines have seen their incomes decimated, and the fact that, as the Minister said, the predictions are for a long, slow period of recovery. At the same time, airport managers understandably wish to maximise traffic through their airports and resent it if airlines retain slots that they do not use, especially if other airlines are seeking additional slots with the intention of building a service. Given the need to maintain good relations with its airline clients, an airport may be unwilling to express its frustration. Clear, legally enforceable rules would be helpful, so does the Minister think that legal enforceability of the slots rules should be considered?

Access to services to and from London airports is especially critical for Scottish and Northern Ireland airports, both for access to London and for connections to Europe and the rest of the world. Of course services are driven by demand and commercial reality, but it is acknowledged that wider economic consideration for linkages is also important. That was demonstrated by the Government’s intervention on the collapse of Flybe, in relation to certain regional services.

Leaving aside the case for subsidies—I am not engaging with that in this debate, even for lifeline services, as it seems an important but separate issue—there has been a belief among many airport users that feeder routes to London may be profitable, but that the slots could be more profitably used for long-haul routes. The feeder routes were not necessarily uncommercial, but perhaps less profitable. Control and possible hoarding of slots by the larger airlines restricts competition and makes it difficult for other airlines to develop alternative services.

At the height of oil and gas activity in Aberdeen, we had daily flights to not only Heathrow but Gatwick, London City, Luton and Stansted; more recently Loganair trialled a service to Southend, but that did not last long. British Airways pulled out of providing a service to Gatwick and London City years ago. I found that hard to understand, as many of the airline’s holiday flights operate from Gatwick and transfers from Heathrow to Gatwick are not relaxing. EasyJet pulled the last Gatwick link, and Flybe and Eastern ended the City flights. Flybe and Virgin both attempted to offer a Heathrow service but neither became established, although it was Flybe’s demise that ended its Heathrow link.

As of this week, because of the pandemic, we have one or two return flights a day to Heathrow, compared with the six or seven we would expect in normal times. EasyJet will start providing daily flights to Luton from March, and—hallelujah—to Gatwick from May, Covid permitting. No doubt users of Belfast Airport will have a similar story, while Inverness has had to fight to retain links to London. Indeed, the reduction in services to London has seen business switch to Amsterdam and Paris, to which we have direct services, although those services, too, are currently limited.

As has been said, airlines’ recovery post-pandemic is likely to be slow but could also be ruthlessly competitive. Will the Government consider how the allocation of slots can be managed to ensure that it works in the best interests of all stakeholders, including the flying customers and feeder airports? Can airlines be prevented from hoarding routes they do not use, if that keeps out feeder routes or newcomers?

What steps can be taken to ensure that the allocation of slots takes into account the economic and social needs of remote communities, which are by definition more dependent on air links? Just for the record, the train journey from Aberdeen to London takes a minimum of seven hours, and at the moment we have only one direct service without changes; the others take longer. For people living in such areas, flying is not a luxury but an essential part of life.