Air Passenger Rights and Air Travel Organisers’ Licensing (Amendment) (EU Exit) Regulations 2018

Baroness Sugg Excerpts

Tuesday 12th February 2019 Lords Chamber

Moved by

[Baroness Sugg]

That the draft Regulations laid before the House on 28 November 2018 be approved.

[The Parliamentary Under-Secretary of State, Department for Transport (Baroness Sugg) (Con)]

My Lords, these regulations will be made using powers in the European Union (Withdrawal) Act 2018 and will be needed if the UK leaves the European Union without a deal. This draft instrument corrects three EU regulations that provide an important consumer protection regime for passengers travelling by air. It also makes some changes to the Civil Aviation (Air Travel Organisers’ Licensing) Regulations 2012, which were amended recently to implement elements of the package travel directive.

The three EU regulations are: Regulation 261/2004, which establishes the rights of passengers, including their right to compensation and assistance if they are denied boarding against their will, or if their flight is cancelled or delayed; Regulation 1107/2006, which establishes the rights of disabled passengers and those with reduced mobility to access air transport, and establishes their right to receive free-of-charge assistance; and Regulation 2027/97, which harmonises the obligations of Community air carriers regarding their liability for injury to passengers and damage to baggage, in line with provisions in the 1999 Montreal Convention.

The package travel directive provides for consumer protection in relation to package holidays and other linked travel arrangements. The directive is implemented in the UK primarily by the Package Travel and Linked Travel Arrangements Regulations 2018. Corrections to these regulations so that they continue to work after exit day have already been made through the Package Travel and Linked Travel Arrangements (Amendment) (EU Exit) Regulations 2018.

Provisions under the directive relating to insolvency protection are implemented in part through the Air Travel Organiser’s Licence—ATOL—scheme. The directive provides for the mutual recognition among EEA member states of insolvency protection regimes. This instrument makes changes to the ATOL scheme to reflect that this mutual recognition will no longer apply to the UK after exit day in a no-deal scenario.

The withdrawal Act will retain the three regulations I have just listed in their entirety in UK law on exit day. The draft instrument we are considering makes corrections to these retained EU regulations as well as the 2012 ATOL regulations to ensure that the statute book continues to function correctly after exit day. This means that air passengers can continue to benefit from the rights and protections set out in EU legislation.

On Regulation 261/2004, the substantive rights of passengers to assistance, rebooking and compensation in the event that they are denied boarding or subject to long delays or cancellations remain the same. The EU regulation sets out that these rights apply to passengers travelling on a flight departing any airport in the EU, and flights departing an airport in a third country to an airport in the EU, if the carrier is an EU carrier. This instrument makes changes to the scope of the retained regulation to reflect that the UK will no longer be part of the EU after exit day. The retained regulation will apply in relation to all flights departing an airport in the UK and flights departing an airport in another country if the carrier is a UK carrier.

To ensure full continuity on the routes in relation to which passengers can benefit from the rights and protections set out in Regulation 261/2004, the retained regulation will also apply in respect of flights into the EU from countries other than the UK, if they are operated by a UK carrier. It will also apply in respect of flights from third countries to the UK if they are operated by an EU carrier. Other changes the instrument makes reflect that the UK will no longer be part of the EU, and include converting compensation amounts set out in euros in the EU regulation to pounds sterling.

Finally, the instrument ensures that the CAA is fully and effectively able to enforce the retained regulation. It sets out that provisions relating to complaints, and domestic legislation containing criminal offences for persistent breach by air carriers of provisions in the retained EU regulation, apply to the same routes—

[Lord Foulkes of Cumnock (Lab Co-op)]

My Lords, on a previous occasion, the Minister was not able to say how many extra staff the CAA has taken on to deal with this extra responsibility. Is she now able to give us that figure? How much will it cost?

[Baroness Sugg]

If the noble Lord will wait, I will come on to CAA resourcing. Obviously, we work very closely with the CAA to ensure that it is sufficiently resourced.

[Lord Foulkes of Cumnock]

Did the Minister say she will tell us how many extra staff are required and how much this will cost at a later stage in the debate? I did not quite catch that.

[Baroness Sugg]

I will come on to CAA resourcing at a later stage in this speech, if the noble Lord will give me a minute.

Finally, this instrument ensures that the CAA is fully and effectively able to enforce the retained regulation. It sets out that provisions relating to complaints and domestic legislation containing criminal offences for persistent breach by air carriers of provisions in the retained EU regulation apply to the same routes and air carriers as the retained EU regulation itself.

On Regulation 1107/2006, the rights that disabled passengers and persons with reduced mobility are able to benefit from when travelling by air also remain unchanged. These include the right to assistance at airports without additional charge and the right to assistance by air carriers without additional charge. Once again, this instrument ensures full continuity for consumers by making certain that the retained regulation—Regulation 1107/2006—will apply after exit day to passengers using or intending to use commercial passenger air services on departure from, transit through or arrival at UK airports.

Certain provisions will also continue to apply in relation to flights departing from a third-country airport to the UK if the flight is operated by a UK air carrier. Like Regulation 261/2004, these provisions will also apply to flights into the EU from countries other than the UK if the flight is being operated by a UK carrier and flights from third countries to the UK if the flight is being operated by an EU carrier. These provisions set out that: air carriers and tour operators cannot refuse travel to passengers on the grounds of disability or reduced mobility; that if it is not possible for an air carrier, agent or tour operator to accommodate a passenger with a disability or with reduced mobility on the grounds of safety or the size of the aircraft or its doors, the passenger shall be reimbursed or be offered rerouting; and that air carriers are required to provide assistance without additional charge, such as allowing assistance dogs in the cabin of the aircraft and arranging seating suitable to meet the needs of the individual.

The third regulation covered by this instrument is Regulation 2027/97, which sets out provisions relating to the liability of air carriers in relation to the injury or death of passengers, as well as damage to or loss of baggage. Most of the provisions in this regulation implement elements of the 1999 Montreal Convention, and the changes that this instrument makes to the retained regulation are limited to those needed to reflect the fact that the UK will no longer be an EU member state after exit day; for example, substituting references to “Community air carrier” with references to “UK air carrier”.

--- Later in debate ---

[Lord Adonis (Lab)]

My Lords, the Minister is talking about EEA-registered operators that operate in the UK. An issue was raised in the House of Commons about whether there would be full ATOL protection in respect of people purchasing packages in the UK under those EEA-registered operators. The Minister there was not able to give an answer but said that he would write to MPs. I have not seen a copy of that letter—could the Minister tell us the answer to that specific point, which of course will be quite significant if there is no deal?

[Baroness Sugg]

I hope I can answer the noble Lord’s question. Those EU and EEA companies which sell package holidays in the UK will need to be covered by the ATOL scheme. They will need to apply for an ATOL from the CAA. We believe that there are only about 13 such companies.

[Lord Adonis]

Is the Minister saying that that will be a requirement under these regulations? Is she saying that there will be full ATOL protection for all passengers and purchasers of package holidays in that eventuality?

[Baroness Sugg]

Yes, that is what I am saying. As I said, at the moment there are only 13 EEA-established businesses currently selling to the UK that would be affected by the requirement, and the CAA is used to processing around 1,000 cases a year. Therefore, in answer to the question put by the noble Lord, Lord Foulkes, the CAA is confident that it is fully resourced to achieve this.

[Lord Foulkes of Cumnock]

My question is not whether the CAA is fully resourced. My question—which I asked in Grand Committee a number of weeks ago, so the Minister has had plenty of notice of it—is how many extra staff is the CAA taking on, and how much extra is it going to cost? She said she was going to answer it later in her speech. Could she please answer it now?

--- Later in debate ---

[Baroness Sugg]

I am afraid I will have to come back to the noble Lord on the exact number of staff who have been taken on. As he will understand, this is a moving feast, and the CAA is taking on extra people to deliver all the requirements that will be placed on it in the event of a no-deal Brexit. But I will endeavour to come back to the noble Lord later in the debate with a specific answer on the latest figure for the number of new staff at the CAA.

[Lord Deben (Con)]

I want to explain to my noble friend why this question is important. Every time we discuss one of these statutory instruments, we do not have the figures for the cost. My concern is that in each individual case it is said, “Well, it is not all that much and somebody is doing some arrangement”, and all the rest of it. But if you start to add them up, you possibly have a very significant cost. That is why it is important that we understand precisely what the figures are.

[Baroness Sugg]

I entirely understand my noble friend’s point of view. Of course it is important that we understand the full costs of this. The CAA is taking on a number of new responsibilities and functions after EU exit. As I said, we have confidence in its preparations. Regarding ATOL—I mentioned the figures before—we think the current level of staff will be able to provide this service, so we do not expect to see a significant increase in workload from this SI. The latest figure for the number of new staff is around 59, most of whom will carry out safety functions. The House will debate another SI on safety, which will have cost implications. I will ensure that I am able to provide actual cost implications for future aviation SIs. In this case, there are none, as we are expecting only a small number.

The best outcome for the UK is to leave the EU with a deal, and delivering a deal negotiated with the EU remains the Government’s top priority. However, as a responsible Government, we must make all reasonable plans to prepare for a no-deal scenario. This instrument ensures that, in the event of a no-deal exit from the EU, passengers travelling by air can continue to benefit from the same rights as they currently do, and that the aviation industry and consumers have clarity about the regulatory framework which would be in place in a no-deal scenario. I beg to move.

[Baroness McIntosh of Pickering (Con)]

My Lords, I have two brief questions on this statutory instrument. My noble friend the Minister has stated that compensation will be paid in pounds, converted from euros. What if the pound to euro ratio changes substantially over, say, the next two years? Is this something that her department and the Government are likely to keep under review?

I tried to follow the Minister’s explanation as closely as I could. If I have understood correctly, there is one category of flight that UK passengers will no longer be compensated for. I dealt with this myself when I was an MEP and, at one stage, rapporteur on civil aviation in the European Union. I would just like her confirmation that this category of flight is covered. These are flights where passengers start with a UK carrier out of London Heathrow, Gatwick or Stansted, but change at an airport within the EU, such as Amsterdam, to a connecting international flight operated by, for example, Singapore Airlines or Delta Airlines—both of which my husband worked for at separate times—to a destination such as New York or Singapore. Is my noble friend saying that, under these regulations, or in the event of no deal, a UK passenger who is denied boarding that flight in a third-country airport such as Amsterdam will no longer be compensated?

--- Later in debate ---

[Lord Tunnicliffe (Lab)]

My Lords, I rise wearily to my feet. The first thing I would like to register is my objection to being here. Once again, we are here to discuss a statutory instrument which addresses the issue of what we do if we leave without a deal. It is a deeply depressing pastime, discussing statutory instruments to lead this country into a catastrophic situation.

It is also depressing that the Government, if they wanted to hang on to what might be an intellectually narrow point, that any responsible Government should prepare for the worst scenario, if they had truly believed that, then surely they would have started the process much earlier so that we are not shovelling SIs through this Chamber by the shovelful, for want of a better way of doing it.

One of the problems of the sheer volume is that I certainly am not having enough time to give the level of scrutiny that I think is appropriate. Therefore, one tends to have to use short methods. The first that one is left to have to use is looking at the regulation itself, which is usually impossible. You need a very expensive lawyer to go through the regulations, see what they amend and what the effects are. The only thing a reasonable amateur such as myself can do is to go to the Explanatory Memorandum and see if it makes sense. If one does that, one comes to paragraph 2.3, which is “Why is it being changed?” I will read it because it is so reassuring:

“This instrument makes the changes needed to retained EU legislation on air passenger rights and domestic legislation made to implement the UK’s obligations under the Package Travel Directive. These changes ensure that the legislation continues to function correctly after the UK has left the EU. They also ensure that there is continuity in terms of the passenger rights that apply to air travel and that consumers will continue to be protected if there is no mutual recognition of insolvency protection regimes after exit day”.


Now, I think that says it is going to be all right, but I am required to scrutinise, so I did my best, and I have worked my way through the document. I confess I did not pick up the ownership point, and I look forward to the Minister’s response on that. If that statement is right, one works through the Explanatory Memorandum, and it puts in changes and does things to make that right. If it is right, can the Minister answer this question: in the event of a no-deal situation and this SI then becomes operative, is there any group of passengers or consumers whose rights and protections are diminished or lost after exit day?

The second question I have relates to the optimistic scenario, where there is a deal and this SI will not be required. One constantly looks for a sunset clause in these SIs which would allow that to operate. Could the Minister explain how we will handle this SI and the others that we are going to face today if there is a deal? Experience has taught me that one of the few things you have to go to in these SIs is the commencement provision. That says that Regulations 5(1) and 5(2) will be commenced 22 days after the regulations are made. That, I assume, will be somewhat before exit day. At present, it seems that the decision on whether we have a deal will be very close to exit day, so, if there is a deal, how is this SI going to be stopped from being enacted without a mechanism within it?

[Baroness Sugg]

My Lords, I thank all noble Lords for their consideration of these draft regulations. I am grateful for the scrutiny provided by noble Lords. These are important pieces of legislation, and it is right that they are properly scrutinised. I would not class the noble Lord, Lord Warner, or indeed any other noble Lord as a trouble-maker. I will attempt to get to all the questions, but if I do not manage to cover them, I will respond in writing.

On the point made by my noble friend Lady McIntosh, the Explanatory Memorandum sets out the exchange rate used to calculate the amounts. It is the average for the year to 31 December 2017, which has been used across the statutory instruments. There are currently no plans to change that.

In response to the noble Lord, Lord Berkeley, let me say that this regulation will cover all carriers with a UK operating licence. That is issued by the CAA, so that is how we define who will be covered by these regulations in the event of a no-deal exit. The requirements of the operator’s licence are set out in the operation of air services regulations, which we debated last year.

On enforcement, if it is a UK carrier—that is, one with a UK operating licence—the CAA will enforce it. If it is departing from an EU member state, that member state will enforce it, and if it is a UK carrier departing from a third country, the CAA will again enforce it. So the example that my noble friend Lady McIntosh used of a flight departing from the UK will be enforced by the CAA, and the flight which then departs from the EU will be enforced by that relevant member state—I cannot remember which member state she referred to.

[Baroness McIntosh of Pickering]

My question was about those UK passengers who board the next leg of the flight in Amsterdam or what would be a third country with an international carrier. Does the regulation now exclude them from denied boarding rights and other privileges that they would otherwise be entitled to?

[Baroness Sugg]

I should first point out that these regulations apply to everyone who travels on a plane regardless of nationality, so actually the nationality is not important. The important part is the carrier that operates the flight. In that example, as I said, the flight leaving the UK would be covered by the CAA and the flight leaving Amsterdam, regardless of the nationality of the passenger, would be covered by the existing EU regulations, so that would not change.

[Lord Berkeley]

Will the Minister explain what would happen in the reverse direction? Say you are flying Nigerian Airways from Lagos to Amsterdam with a through ticket to London with another carrier. What is the enforcement on the compensation rules there?

[Baroness Sugg]

They will remain the same. The flight operating into the UK from a third country will be enforced by the CAA, and a flight operating into the EU would be covered by that EU member state. I understand that this is a little complex, so I will list exactly what will be covered.

But before doing that, on code sharing, asked by my noble friend Lady Altmann, the carrier operating the flight will be liable under the regulation, irrespective of who sold the ticket.

I will attempt to be a little clearer than I was in my opening speech. This regulation will apply to: all flights departing a UK airport; flights to the UK from a country other than the UK if on a UK air carrier; flights to EU airports from a country other than the UK if on a UK air carrier; and flights to UK airports from a country other than the UK if on an EU air carrier. That applies to passengers of any nationality.

So in answer to the question asked by the noble Lord, Lord Tunnicliffe, about who will be disadvantaged by this, in short no one will be adversely affected. The aim of this SI is absolutely to maintain continuity after exit day. In the event of no deal, passengers will retain the same rights as they have today. In the event of a deal, which will obviously get us to an implementation period, this SI along with many others will be amended or revoked.

I take the point made by my noble friend Lord Deben that all things aviation will not stay the same in the event of no deal. That is why we are trying to avoid that. But in the case of this SI, the rights will stay the same—

[Lord Adonis]

The Minister says that no one will be adversely affected. I accept that in response to all carriers or travel businesses that are registered in the United Kingdom, but if a UK resident buys a ticket or a package from a company or carrier that is registered only in the EU or EEA, they may well suffer diminution of their rights. Is that correct?

[Baroness Sugg]

All EEA and EU companies which sell in the UK will be required to have an ATOL scheme licence.

[Lord Adonis]

If, after a no-deal Brexit, a UK citizen buys a package or flight from an operator which is in the EU or EEA but which is not registered in the United Kingdom, we have no guarantee that there will be reciprocal continuation of ATOL rights.

[Baroness Sugg]

Each member state has its own version of ATOL, and the companies which sell in that member state are obliged to follow it. In the event of no deal, there will not be mutual recognition; that is simply one of the consequences of no deal. Those companies will be covered by the EU regulations. I said that no one is affected, but some of the companies which sell into the UK will need to get an ATOL licence. However, for air carriers, airports and passengers, there is no change to the routes on which the regulations apply. After exit day, in the event of no deal, the combined scope of UK and EU legislation on air passenger rights will be the same as under the current EU regulation. I hope that is a slightly simpler explanation than the one in my opening speech.

My noble friend Lord Balfe is right that, in the event of no deal, this simply takes a snapshot in time. I agree with him and the noble Baroness, Lady Randerson, that what happens in the EU in future will affect the UK, whether that is a change in currency exchange or EU law. However, that is something for the future; it may well depend on a future aviation agreement, if we end up with no deal. I am afraid I cannot predict the future, so I cannot say how we may respond to any future change in EU law. What I can say is that this statutory instrument does not contain any powers to make further SIs, and any future changes are likely to require primary legislation and would therefore have sufficient parliamentary scrutiny. However, I take the noble Baroness’s point that changes in the EU regime will have an effect on us.

On the issue of confidence in booking flights, we are completely focused on ensuring that there is no disruption of aviation, as this would be in nobody’s interest. In our technical notices last summer, we confirmed that we envisage granting permits to EU carriers to operate in the UK, and we have seen the EU take similar steps to avoid disruption. There were Commission communications on the EU’s preparedness in November and it has said it intends to bring forward measures to allow UK air carriers to continue to fly to the EU. Most recently, this includes its no-deal contingency plan, which was published on 19 December. Detailed EU regulations are being discussed in the Parliament and the Council at the moment. We welcome those proposals, which will ensure that flights between the UK and the EU are maintained. There are a number of pieces of clear evidence that both sides in aviation are determined to ensure we maintain air connectivity.

We work very closely with the aviation industry, which shares our confidence that arrangements will be in place to avoid disruption to flights. I take the point from the noble Lord, Lord Adonis, that many conversations about aviation—those that he has had and those that others will have in future—take place at a European level and, indeed, an international level, at ICAO. We hope to continue our close relationship on aviation with all our European partners, regardless of how we leave the European Union.

On the noble Lord’s point about consultation, the noble Lord, Lord Berkeley, was quite right to say that the same text is used here and in the next SI. As you would expect, I meet people from across the aviation sector very regularly, whether from airlines, airports or industry groups such as the Airport Operators Association and Airlines UK. We have not had meetings specifically about single SIs—there are quite a few of them—but we are discussing our SI programme with the aviation sector and sharing our plans with it. Throughout our SI programme, and certainly in aviation, we are replicating the current situation so that there will be no change. The compensation is perhaps not universally popular among our airlines, but they accept that the important thing is to maintain continuity, so that passengers and airlines understand what will happen. That is what we have been trying to do.

On communications, I agree with the noble Lords, Lord McNally and Lord Warner, that it is really important that we keep consumers informed. The noble Lord, Lord Adonis, highlighted one of those adverts on Spotify; there are others. We have a cross-government campaign putting out the information that is available on GOV.UK, and we are also working very closely with airlines and consumer groups to ensure that the right information is available. For example, Thomas Cook has a very good Q&A section around Brexit on its website. We are trying—

[Lord Warner]

I am grateful to the Minister for giving way. Just to go back to my earlier exchanges with the noble Lord, Lord Adonis, the government website seems to be telling people to be careful about making bookings after 30 March. However, in this debate the Minister is spreading balm and harmony about the fact that people would not have any of their rights and protections diminished. If there is no diminution of rights and protections, why does the Government’s website urge people to be careful about making bookings after 30 March?

[Baroness Sugg]

I am not sure that the Government’s website uses the word “careful”. As I said, we are confident that flights will be maintained. There is an EU regulation going through the EU Parliament and EU Council at the moment to confirm that. In the same way that this statutory instrument has not yet been passed, that regulation has still not been passed. We are confident that flights will continue, but we say that customers should contact their air carrier and check their terms and conditions in order to ensure they are fully aware of all the information that they need.

On the rights and protections, as I have said, this SI continues them; we are confident that, should noble Lords choose to pass it, we will be able in the event of no deal to ensure that consumers still have the same protections.

While we are working to agree a deal with the EU that is supported by Parliament, we think it is responsible to continue to make preparations in the absence of an agreement so that there is a functioning statute book. This SI, and the others that we will debate later and in the coming weeks, are a key part of those preparations. Both the UK and the EU have set out their clear intention to put in place arrangements to ensure that planes can continue to fly to and from the EU in the event of a no-deal exit. Both sides want to avoid any disruption to flights, as that would be in no one’s interests.

Our contingency preparations, of which these regulations are just one element, should provide reassurance to industry and consumers that, even in the event of no deal, passengers will continue to benefit from the same rights as they currently do. They ensure that our legal and regulatory framework for aviation is set up for flights to continue, whatever the outcome of negotiations. I beg to move.

Motion agreed.