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

Baroness Vere of Norbiton Excerpts

Tuesday 19th January 2021 Grand Committee

Moved by

[Baroness Vere of Norbiton]

That the Grand Committee do consider the Airports Slot Allocation (Amendment) (EU Exit) Regulations 2021.

Relevant document: 38th Report from the Secondary Legislation Scrutiny Committee

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

My Lords, these draft regulations will be made under the powers conferred by the European Union (Withdrawal) Act 2018. They amend provisions of the EU airports slot regulation—No. 95/93, which I will call “the slots regulation”—to provide airlines with relief from the impacts of Covid-19 on passenger demand.

EU regulation 2020/459 was adopted to amend the slots regulation as a result of the Covid-19 outbreak to provide airlines with relief from the 80:20 rule—otherwise known as the “use it or lose it” rule—which requires airlines to use their airport slots 80% of the time. In normal circumstances, the 80:20 rule mandates that, provided an airline has used its airport slots 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. This helps to encourage efficient use of scarce airport capacity, while allowing airlines a degree of flexibility in their operations.

Due to the significant impact of Covid-19 on demand, in March last year amendments to the slots regulation instructed airport co-ordinators, when determining slot allocation for the upcoming season under the 80:20 rule, to consider slots as having been operated, whether or not they were actually used. By providing airlines with legal certainty that they would be able to retain their slots even if not operated, the aim of the amended regulation was to help mitigate the commercial impacts of the Covid-19 outbreak on the industry—because airlines might otherwise opt to incur the financial costs of operating flights at low load factors merely to retain slots—and support sustainability by reducing the likelihood of needless aviation emissions from near-empty aircraft. Those amendments to the slots regulation entered into force on 30 March 2020 and became applicable retrospectively from 1 March until 24 October 2020.

The amendments introduced by EU regulation 2020/459 and subsequent amending instruments also granted delegated powers to the Commission until 2 April 2021 to extend the period during which the slots allocated should be considered as having been operated by the requesting airline. Those delegated powers, which can no longer be exercised in the United Kingdom, could be exercised by the Commission where it found, based on Eurocontrol figures and best-available scientific data, that the reduction in air traffic levels is persisting as a result of the Covid-19 outbreak. This delegated power was used by the Commission before the end of the transition period to extend relief to airlines beyond 24 October 2020 to 27 March 2021.

The draft instrument being considered today applies to England, Scotland and Wales, and will transfer this delegated power to the Secretary of State, exercisable until 2 April 2021. Aerodromes are a devolved matter in Northern Ireland, and as there are currently no slot co-ordinated airports in Northern Ireland and the power is exercisable only until 2 April 2021, the Northern Ireland Executive have agreed that it is not necessary for this instrument to extend to, or apply in relation to, Northern Ireland.

To say a bit more on the contents of the SI, the withdrawal Act retained the slots regulation, as amended, in UK law after the end of the transition period. The draft instrument we are considering makes the changes necessary to ensure that the slots regulation continues to function correctly. This is essential to ensure the continuation of an effective regulatory regime for airport slot allocation.

This instrument is subject to the affirmative procedure because it creates or amends a power to legislate. The most significant amendment being made to the slots regulation provides the Secretary of State with the power to grant further relief to airlines if the reduction in air traffic caused by the Covid-19 pandemic were to continue. This power is intended to deal only with the impacts of the pandemic, and so was given to the Commission for a limited duration only. To transfer this power, the term

“Commission shall adopt delegated acts in accordance with Article 12a”

is replaced with

“Secretary of State may by regulations”.

This enables the Secretary of State to extend the period during which the UK airport slot co-ordinator, when determining slot allocations for the upcoming season, is to consider slots as having been operated, whether or not they were actually used. A decision to extend the period must be based on relevant data on passenger demand and scientific data on the impacts of Covid-19 on that demand.

Other changes being made to this regulation are mostly minor and technical in nature—for example, replacing the phrase

“which is the network manager for the air traffic network functions of the single European sky”

with the words “or other relevant data”. This enables the Secretary of State to take into account data from other sources, such as NATS, as well as from Eurocontrol.

The other amendments being made to the slots regulation are minor but equally important. They clarify that the Secretary of State’s power to make regulations to extend the relevant period may not be exercised after 2 April 2021, which is the same limit as on the Commission’s power. Therefore, as the exercise of the power must be based on data, any further relief provided under this power from the 80:20 rule would likely be for the summer 2021 season only.

Given the time-limited nature of this delegated power, the Government have tabled amendments to the Air Traffic Management and Unmanned Aircraft Bill, which is currently proceeding to Report stage in your Lordships’ House. These amendments would provide the Secretary of State with temporary powers to adopt relief, as appropriate, for seasons from winter 2021 onwards.

This instrument will ensure that airlines can be provided with further relief under the airport slots rules from the impacts of Covid-19 on passenger demand, if appropriate. I beg to move.

--- Later in debate ---

[Baroness Vere of Norbiton (Con)]

I thank all noble Lords for their contributions this evening to what I think was an hors d’oeuvre for the much longer discussion around slots alleviation which will happen later on this week on Report on the Air Traffic Management and Unmanned Aircraft Bill. But I will be able to cover some of the points raised, particularly by the noble Lord, Lord Tunnicliffe, in my remarks. I hope to answer as many questions as possible and to go for a complete run so that I do not have to write any letters. Let us see how we do.

The consultation on this is incredibly important. My department launched a targeted consultation on 30 December with the aviation industry and, of course, with the airlines, the IATA, the slot co-ordinated airports in the United Kingdom and the independent slot co-ordinator, Airport Coordination Ltd, on the proposed amendments to the regulations. The consultation is due to close tomorrow and a decision will be made as soon as possible thereafter.

I would like to point out that I agree with the noble Lord, Lord Tunnicliffe: I find sometimes that lobbying is done by external organisations literally the day before, or the day of, the discussion, and I find it very unhelpful. He, too, will understand that the consultation is extremely important. Heathrow will have contributed to it, and the timeline from then is that we will consider all the evidence we receive, decide whether we can justify an extension on the basis of the evidence before us, and then use the powers in this regulation that have been given to the Secretary of State. The Secretary of State will then make a negative statutory instrument, which will grant this further alleviation and associated conditions. We expect this to happen fairly quickly because the summer season approaches quite rapidly. Indeed, it begins on 28 March, so we intend to lay the negative SI in February.

It is important to note that some slots will then be freed up, and my noble friend Lady McIntosh asked what would happen to them. In normal circumstances, they would be allocated in the normal way, whereby there is a tension, or an allocation to incumbent airlines and to new entrants. We are well aware that we need to maintain a robust competitive position in the UK market and that will be a consideration, but there are only certain things that we can do quickly.

I recognise the issue that the noble Baroness, Lady Randerson, mentioned about Virgin, for example, at Gatwick. One of the conditions we are considering and consulting on is whether an airline that ceases to operate at a particular airport might be excluded from a future waiver unless it gives up its slots. All these things are out for consultation.

My noble friend Lord Naseby asked why Glasgow, a very important international airport, was not on the list. It is not a question of how international or what size the airports are but whether the demand for slots exceeds the capacity. It does not at Glasgow, and therefore it does not need to be on the list, so I do not believe that there is any need to change the list of airports at this time. I note, for example, that Bristol has summer only in terms of its restrictions or need to be on the list. Obviously it is kept under review, but that is why Glasgow is not there.

Returning to the point made by the noble Lord, Lord Tunnicliffe, about the WASB—the Worldwide Airport Slot Board—and some of its proposals, part of the consultation is to understand what people are doing and what they want domestically but also internationally. It is also true that we currently do not have the powers to change the ratio. All we can do under the withdrawal Act is correct deficiencies in the commission’s current powers; the commission will obviously have the same restrictions that we have. However, we need primary legislation to change the waiver. I will come on to that very shortly— right now, in fact.

The noble Lord, Lord Tunnicliffe, asked about the relationship between what noble Lords are discussing today and what will be in the ATMUA Bill. He rightly pointed out that it was not in the Explanatory Memorandum; that is because we did not know. It became clear to us that, to extend changes beyond summer 2021, we would need to lay primary legislation; as noble Lords will know, this is not an easy thing. We became aware that the primary legislation could be added in to the ATMUA Bill. As it was going through your Lordships’ House, it was still in the first House, and we felt, although it is very unusual, that it could go in before Report. I think noble Lords will see, when it is debated on Thursday, that this is appropriate and the right thing to do.

What noble Lords are discussing today is the SI that solely takes the commission’s powers and gives them to the Secretary of State, and is for summer 2021. As I explained, the powers fall away on 2 April 2021, so we will need primary legislation for every period after that. This is because one is not able to make a decision about winter 2021-22—often October—based on the data that we have now. I take the point about consultation prior to taking decisions before each season happens—I will explain that further in due course—because we will end up in a cycle whereby, for every season, there will be the data received, a consultation and then an affirmative SI laid before your Lordships’ House. It will then be debated, which will cover the season ahead of us. In that, we will be able to explore questions around competition, the conditions attached and all the things that are happening to the aviation sector at that particular time. That is why it is so important that we have that cycle of consultation, laying the right proposals for the period ahead as, hopefully, we come out of the pandemic, people start to travel again and airlines come back stronger. That is why the ATMUA Bill contains these amendments.

The noble Lord asked why we are saying until 2024-25—that is, do we expect the pandemic to last that long? That is just future-proofing the legislation. Obviously, I expect that we will see a change over that period. It may be that we do not need to change anything in 2024-25, but it is better to be safe than sorry.

Slots and the reform of slots policy have been on the Government’s mind for quite a while. They will be considered in the round with any future review of aviation policy, so we may do something before 2024-25 anyway. We may well take a different approach but within established international slots guidance, because of course it is a very international sector. However, we support competition and believe that there may be some changes that we wish to make in slots allocation. That is definitely not for now; we will leave that for another day.

On aviation support, I note that we had two slightly differing views: the noble Lord, Lord Blunkett, was keen on capacity for passengers and freight—I am on his side on this one—while the noble Lord, Lord Bradshaw, seemed a bit more cautious. However, I note that the caution of the noble Lord, Lord Bradshaw, was around climate change and noise. The Government have made some significant interventions on both of those and we continue to do so. We will consult on aviation decarbonisation shortly, and of course we have the transport decarbonisation plan coming through. There is a lot of work to do on aviation decarbonisation. Again, on noise, we established ICCAN and various other interventions such as the airspace modernisation programme, which again will impact on noise. I suspect that in due course, with quieter, cleaner and greener planes, the impact of aviation will be less than the noble Lord fears. I am therefore with the noble Lord, Lord Blunkett, in that we should be able to build back our capacity for both passengers and freight. That is incredibly important, which is why the Government are focusing, first, on the immediate restart of the aviation sector. We have introduced the test to release programme and in due course, as more passengers are able to travel safely, we will look at making sure that we can protect transfers of passengers within travel corridors, for example, or whatever other ways we can think of to protect public health while supporting aviation.

However, in the medium and long term, an important piece of work is being done with regard to a recovery plan. That is looking at things such as connectivity between Northern Ireland and the rest of the UK, protecting consumers, supporting the sector by confirming that we will stand behind the Air Travel Trust Fund, supporting the industry through skills and making sure that they are maintained, and of course working with the CAA on regulatory easements.

I hope that I have answered all questions today. I am grateful for everybody’s input. We will return to this subject on Thursday, and I look forward to it. I commend the regulations to the Committee.

Motion agreed.