Civil Aviation Bill

Graham Stringer Excerpts

Tuesday 22nd May 2012 Commons Chamber

[Graham Stringer (Blackley and Broughton) (Lab)]

My point probably applies more to Heathrow than it does to Gatwick, which is obviously the hon. Gentleman’s main interest, but does he agree that the decision of COMAC—the Commercial Aircraft Corporation of China—to locate in Paris rather than in London, mainly for airport capacity reasons, shows that the Government’s aviation policy has failed because it is essentially an anti-aviation and anti-business policy?

[Henry Smith]

I would not accept that the Government’s aviation policy is either anti-aviation or anti-growth, as shown by the fact that we are now on Third Reading of a Bill that will produce greater flexibility in this sector—vital for a trading nation such as ourselves. I believe the Government should be congratulated by hon. Members on both sides of the House on that achievement.

Returning to my principal interest of Gatwick airport—I am the local Member of Parliament—I believe that it can grow by a further 11 million through-passengers than the current market share shows. The airport’s overall market share is only about a quarter of the total. Gatwick is not a monopoly, so it does not need to be economically regulated. The market should be allowed to work. Deregulation would allow Gatwick the flexibility to invest with pace in new infrastructure to accommodate developments such as the new A380 aircraft and undertake much-needed investment in areas such as the border zone. Through deregulation, Gatwick can emerge fully in line with the views expressed by my right hon. Friend the Prime Minister as an airport that can fairly compete with Heathrow and others. As an economically regulated airport, Gatwick cannot invest flexibly or price services according to what individual customers want or what the market will support.

The Bill outlines a series of tests that must be met for an airport to be regulated. These aim to determine whether an airport has substantial market power and, if so, whether there is a risk of abuse of that position, which existing competition law is insufficient to control. An airport that meets the market power test requires from the CAA a licence to operate, which may include a price cap on what can be charged to carry passengers.

With Gatwick being sold by BAA two and a half years ago and now separately owned and operated, I very much agree with the Transport Select Committee’s findings:

“Given the greater degree of competition that now exists between airports in the south east of England…the CAA should undertake its economic regulatory duties with a relatively light touch.”

Several members of the Public Bill Committee expressed a similar view. On Report, my hon. Friend the Member for Rochester and Strood (Mark Reckless) said, correctly in my opinion:

“If Gatwick feels that it should invest significant sums of money in better terminal facilities in order to service the A380s and…allow the sorts of routes to high-growth markets in Asia that we so strongly support, I see no strong reason why it should be prevented from doing so and charging what the market will bear. I believe that that could be to the benefit of the consumer.”—[Official Report, 25 April 2012; Vol. 543, c. 1031.]

Similarly, in Committee my hon. Friend the Member for Amber Valley (Nigel Mills), whom I am pleased to see in the Chamber, noted that the CAA started

“from a position that… airports are regulated, and appears to want to keep them that way…. we should regulate airports only where there is a definite need to do so, and where there is a real advantage to the user, rather than looking to regulate unless we can find a way out of it.”––[Official Report, Civil Aviation Public Bill Committee, 28 February 2012; c. 153.]

There is clear evidence that Gatwick is now competing with other London area airports. Airlines and passengers are moving between those competing airports in the south-east, and airlines are choosing Gatwick in preference to other airports to establish brand-new routes to countries that are key trading partners. Any legal test should reflect those trends, and there should be no risk of presumption towards regulation.

The correct threshold for economic regulation of any company, including an airport, involves the application of the legal concept of dominance, which is well established in both European Union and United Kingdom competition law. It is used, for example, to determine whether telecom network operators should be subject to economic regulation in all EU member countries. Any test for market power should also be one of dominance. That would ensure a consistent approach to assessing whether there is a need to regulate in line with the regulation of other industries.

I welcome this updating of legislation for the air industry. I believe that it gives us an opportunity to enhance our gift as an innovative aviation and trading nation, and to grow the economic prosperity and employment that we need.

--- Later in debate ---

[Gavin Shuker (Luton South) (Lab/Co-op)]

I am extremely grateful for this opportunity to speak. It is particularly expedient that I should do so after the hon. Member for Cambridge (Dr Huppert), for reasons that I shall come to. First, let me address one of the issues at the heart of the Bill: passenger experience. We welcome the Bill, which we sought to amend and improve in Committee. I was proud to serve on the Committee with colleagues from the Opposition Benches, some of whom are present. When things go wrong for someone at an airport their first instinct is to blame the airline, but it is rarely the airline that is at fault. We have seen such experiences at several airports and some bubbling discontentment, particularly more recently as a result of immigration and other issues such as poor weather. That is why we sought to put welfare plans for passengers into the Bill and why we sought to help disabled passengers more explicitly by putting such measures in the licence conditions. The two Front-Bench teams have explained their differences on where the emphasis should be.

For me, the key issue is about holding airport operators to account. I served on the Select Committee on Transport, and I remember seeing the chief executive of BAA come before the Committee shortly after the December 2010 snow disruption and confess that, of the 80 different measures of Heathrow’s success that were taken in December 2010, only three or four had been breached and marked as red, whereas every other box had been ticked green. In a sense, that underlines why we need to be really explicit about what we want to measure. I am sure that the CAA will be good at that, although the Opposition would have preferred the Government to have a more active role at the legislation stage.

The second issue I want to address is environmental responsibilities. In Committee, we felt it would be extremely helpful and effective if the CAA had a clear duty on the environment, and at one stage it appeared that the Department for Transport believed that too. Certainly, as the Bill came through, we saw from its drafting that that would not be included. I am talking about giving environmental information to passengers so that they can make smarter choices and about making sure that the CAA, as an economic regulator, can do its job, balancing the needs of the economy alongside the needs of the environment.

I wanted to speak to this Bill not just because I represent an airport constituency—Luton airport, which many people will know and love—but because I am deeply concerned about growth. We know that there is limited growth in the economy, to put it mildly, and that we need a long-term strategy for growth. As the Minister has pointed out, if aviation is one of the routes for that growth, it is important to have continuity and consistency in the Government’s approach. That is why I am so concerned about the remarks that we heard in Committee, which the hon. Member for Cambridge spoke about.

A Liberal Democrat member of the Committee whom I shall not name—okay, I will, it was the hon. Member for Cambridge—said in Committee:

“I would very much like to see an environmental duty in the Bill. That is an important issue, and I raised it on Second Reading.”

He went on:

“I am confident that she”—

the Minister of State—

“will…find a way to deliver an environmental duty in this Bill…It is not a trivial issue.”––[Official Report, Civil Aviation Public Bill Committee, 28 February 2012; c. 116-17.]

We wait to see whether the Minister is willing to give to her coalition colleague that assurance. We certainly felt that the point might have been more easily pressed home had the hon. Gentleman voted for it in the first place. I say that not to embarrass any particular Member on the Government side—honestly—but because I think the issue goes to the heart of aviation strategy more broadly under this Government. As with many issues under the coalition Government, we have one party on the accelerator and one party on the brake. Sometimes those flip around, but on aviation strategy the nature of the coalition becomes even more disparate. We have two people on the accelerator and one on the brake, or one on the accelerator and two on the brake at different times. There is no clarity for the industry about where this Government want to take aviation. That should be a big concern for us.

We know the issues in aviation; the big one that needs to be tackled is the requirement for greater capacity in the south-east. With reference to Luton airport, we know that the Minister is deeply interested in point to point and she is right. We should make more effective use of the capacity that we have. I hope the ministerial team will bring forward commitments on that in the coming months. We can go from 8 million passengers to a greater number without doing significant ground works or extending the runway.

We need resolution on whether there will be a genuine hub airport—one that does not fall over when it snows, when it rains, when there are small amounts of disruption. While that issue remains unresolved, perhaps because of the nature of coalition government, perhaps because of geographic requirements on Ministers or individual MPs, simply saying no is not a policy.

[Graham Stringer]

I wish Luton airport well; I have used it on a number of occasions. However, the recent report from BAA shows that if we do not have a third runway at Heathrow, which is the only solution to providing a hub airport, we will lose £100 billion in the economy. That is a non-trivial amount. Not having a third runway, as the hon. Member for Wellingborough (Mr Bone) said, is actually bad for the environment.

[Gavin Shuker]

I thank my hon. Friend. I want to make it clear that I think the right approach is to reach a cross-party consensus on the future for a hub airport. In that context, the moves by the shadow Secretary of State and the shadow Minister of State to write to Ministers at the Department for Transport saying, “We will take the option of a third runway off the table,” acknowledging that it has been taken off the table by Ministers, is the right way to go. However, the issue does not go away. In the course of developing policy in both major parties, we cannot continue to dodge the bullet. We need a hub airport that is fit for purpose. That is why I believe it is so important, given the passage of the Bill through the House tonight, that we find a way to tackle the big issues in aviation.