Airports Slot Allocation (Amendment) (EU Exit) Regulations 2021

Baroness Randerson Excerpts

Tuesday 19th January 2021 Grand Committee

[Baroness Randerson (LD) [V]]

My Lords, I thank the Minister for her explanation. Slot allocation at busier airports is an important method of ensuring free and fair competition in the industry. It is based, as the Minister told us, on the 80:20 rule, otherwise known as the “Use it or lose it” rule. Providing an airline has used 80% of its slots in the preceding season, it is entitled to those slots in the upcoming equivalent season. When the shock of the pandemic hit the industry, and travel restrictions were imposed, it was a very sensible response for the EU to suspend the 80:20 rule. If that had not been done there was a real likelihood that airlines would have flown empty flights, known as ghost flights, just to maintain their right to keep their slots. For environmental reasons, that would clearly have been undesirable.

As the pandemic has lasted much longer than initially expected, it has been necessary to extend the period for slot waiver. That was last done in October, lasting to the end of March. Now that the transition period has ended, this SI gives the Secretary of State the powers to extend the period again. This is a sensible approach, but I have some questions to raise with the Minister.

First, slot allocation is an international approach to competitiveness in the market. It is intended to ensure that new providers can enter the market, and that consumers get a good deal. The Government pride themselves on leaving the EU, because they want to exercise their independence from the rules followed by our neighbours. So what are the Government’s intentions on this in the long term? How far are the Government bound to the slot system by international agreements generally? Is there scope to take a different approach?

Secondly, there is increasing concern within the industry that the conditional agreements, voluntarily entered by the airlines, have not been effective—in particular, the agreement that an airline which suspends operations at the airport should immediately return its slots to allow reallocation. There has been publicity about the Gatwick situation. Virgin has said it will no longer fly from Gatwick. It no longer has a base there, but it keeps its slots. JetBlue, meanwhile, has confirmed that it wants some of these slots. Under the current non-statutory rules applying to this situation, it seems that Virgin can effectively prevent a competitor establishing itself. I am keen to hear from the Minister what the Government intend to do to prevent this situation continuing. It is not just bad for JetBlue; it is bad for Gatwick and for customers. Do the Government intend to introduce legally enforceable rules? Slots are very valuable commodities and the distortion of the market will artificially inflate their price, with the cost going directly on to ticket prices.

As airlines have grappled with the impact of the pandemic, they have been forced to reduce the size of their workforce and of their fleets. A major downsizing has occurred. There is now a serious mismatch between many airlines’ slot holdings and their capacity to operate those slots. It is therefore important that there is no incentive and no loophole that encourages slot hoarding.

I know that the Government have consulted the industry about the continuation of the slot waiver and I would appreciate it if the Minister could tell us what its views are. When does the Minister think that the Government will be in a position to make a decision on the next season? Finally, do the Government have any plans to change the list of airports for which the slot system applies?