Airports Slot Allocation (Alleviation of Usage Requirements) (No. 2) Regulations 2021

Baroness Randerson Excerpts

Tuesday 19th October 2021 Grand Committee

[Baroness Vere of Norbiton (Con)]

My Lords, we were talking about the content of the SI and discussed the first element, which changes the minimum usage ratio to 50%.

The second element is that the regulations allow airlines which hand back a full series of slots to the slot co-ordinator before the start of the season to retain the right to operate that series of slots the following year. This will provide an opportunity for other airlines, including new entrants, to apply for and operate these slots on a temporary or ad hoc basis. This measure will apply to traded and leased slots but not to newly allocated ones; this is to prevent carriers acquiring slots with no intention to operate them. Airlines which have announced that they have permanently ceased or will permanently cease operations at an airport before the start of the winter 2022 season will not benefit from this measure in winter 2022.

Finally, the draft regulations expand the reasons which airlines may use to justify not using slots to include Covid-19-related restrictions. This provides a backstop against the risk of unforeseen Covid-19-related measures or restrictions being imposed during the season. This will apply where unforeseen Covid-19-related measures—including flight bans and quarantine or self-isolation requirements—are applied at either end of a route and have a severe impact on demand for the route or its viability. It will apply where restrictions could not reasonably have been foreseen in time to hand back the full slot series. There will be a three-week recovery period during which these provisions, sometimes known as force majeure, may still apply following the end of the Covid restrictions. These measures will cover the winter 2021 scheduling period, as I have noted. We are currently considering alleviation for summer 2022 and plan to consult with industry to inform our policy decision later this year.

This instrument provides necessary relief for the aviation sector for the winter 2021 scheduling period. Through this package of measures, we have aimed to strike a balance between supporting the financial health of the sector and encouraging recovery. I commend this instrument to the Committee.

[Baroness Randerson (LD)]

I thank the Minister for her very clear explanation. I certainly appreciate the need for these adjustments to take the heat off the airlines during what is still a difficult time for aviation.

I note that one of the reasons why the non-use of slots is justified is a result of government-imposed measures which make routes unviable. It is a pity that the airlines are getting the benefit of this alleviation on slot allocation when there appears to be no clear obligation on those same airlines to return money to consumers on the basis of the same government restrictions on flying. Not all airlines by any means have behaved badly, but the CMA has recently cited a lack of clarity in consumer legislation for its abandonment of attempts to ensure that all airlines did the decent thing and offered proper refunds. Can the Minister say whether the Government have any intention to clarify consumer law?

I note also that there has been no impact assessment because this legislation is designed to be for a period of less than 12 months. But in fact, although it sets out rules for 2021-22, it also bestows rights to the control of future slots into 2023. That is what the winter period of 2022 becomes—it moves over into 2023. This situation has already existed for 18 months, and, as the Explanatory Memorandum itself points out, slots have significant competitive operational and financial value. Taken together, this will have a distorting impact on the industry—it can have nothing else. The Explanatory Memorandum warns of the impact on smaller airports and the likelihood that the relief to a 50% level for the use of slots will have an impact on small airlines wanting to accumulate new slot rights at congested airports. Therefore, although this measure is undoubtedly environmentally desirable and commercially necessary at this time, it will favour the big and established airlines. I would be interested to hear the Minister’s comments on that.

Paragraph 7.6 of the EM recognises the dubious practices of some airlines, which seek basically to game the system by seeking to accumulate new slots for this winter which they have no intention of using, simply to gain historic rights for use in the future. So my question to the Minister is this. In the past, Gatwick has had some concerns about what it saw as unfair hoarding of slots. Is the Minister aware of this issue—I am sure she is—and has it been resolved to the satisfaction of Gatwick Airport?

Paragraph 3.1 of the EM refers to reasons for delay in laying the draft SI and the need to use the latest data on the level of air traffic. Can the Minister please give us an update on what the latest level of air traffic is at the moment? What percentage are we up to compared with 2019, for example?

Finally, is the Minister aware of what action our neighbouring countries are taking on this issue? Are they taking similar action on slots? Everyone started from a similar position on the rules on slots across the EU and in neighbouring countries. In the early period of the pandemic, I recall that they all moved forward in a fairly similar way. Are we still in tune with the actions of our neighbours?