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

Huw Merriman Excerpts

Tuesday 19th October 2021 General Committees

[Huw Merriman (Bexhill and Battle) (Con)]

It is a pleasure to serve under chairmanship, Mr Davies.

I welcome what I would effectively call a compromise. At the very start of the pandemic, it would have been absolute madness to expect airlines to fly for 80% of the time or to lose their slots. That would have meant bankruptcy for the airlines, and it would have been bad for the environment. It was therefore right that we took that figure to zero, but to reopen the market it is absolutely vital that we now provide a nudge, and the Government can provide it, to ensure that if airlines do not use their slots for a proportion of time, they will lose them. We need to see new entrants come into the market and airlines given every incentive to fly.

I welcome the regulations, and I have two questions on the detail. First, to use an example of an airport near me, Gatwick, Virgin previously announced that it is moving all of its operations over to Heathrow—permanently, in its view. I agree with my hon. Friend that it is right there is an opportunity for sub-letting to go on, and hopefully airlines will then return back to their airport, unless, as he said, airlines have previously specified that they will be permanently moving operations or ceasing operations. Does that mean that applies to a notice given previously, as indeed Virgin has given to Gatwick, or will there be a more formal period in which airlines may review their decision or lose their slots?

Secondly, I note that the Civil Aviation Authority has just announced the details of a consultation regarding the increase in charges that Heathrow can apply to airlines. That will cause controversy. It is a huge shame that we are starting to see a bit of a squabble between the airlines and the airports about the recovery of revenue. The market has been united in trying to reopen and it is great shame that the seeds of divide and rule have appeared. Has the Minister taken into account the implications of the regulations, under which the Government are trying to encourage more flying, in the light of the announced consultation? What impact will slot reallocation have on allowing airlines to fly and on allowing airports to retain revenue? Heathrow may then not need to increase charges, which as we all know will get passed on to the passenger, as much as proposed.

--- Later in debate ---

[Robert Courts]

I am grateful for the opportunity to respond to the points that hon. Members have made, and I will do my best to go through all of them.

The hon. Member for Wythenshawe and Sale East asked about the hire and refire tactics, and what attitude we would take on slots. As he knows, slot allocation is something that the Government are legally prevented from interfering with or getting involved in; it is a matter for Airport Coordination Limited. I understand the point that he raises, but that is the reason why we cannot do that.

The hon. Gentleman also asked me about the plan for reactivating and re-energising the sector more broadly. He will of course remember that we are due to publish a strategic plan for the recovery of the sector by the end of the year, and I will look to deal with those points in that document. We will be producing that important document in due course. It will also deal with a number of points made by my hon. Friends. My hon. Friend the Member for South Thanet asked about load factors and new entrants. That is an important point and something we should address with a bit of time to breathe and think. What we are dealing with here is essentially an emergency short-term measure. It is not intended to be long-term policy on slots; it is simply providing some alleviation at the current time. He raises important points; we will be considering the matter, and will look to say more about it in the document in due course.

The hon. Member for Rochdale asked a similar question but with regards to the environment. He is familiar with the work of the Jet Zero Council, which has a big part to play. He asked specifically about the environmental impact and slot allocation. We will look at the wider slot policy point in the strategic document on the recovery of the sector and say more about that towards the end of the year. I am not seeking to swerve the question, and the hon. Gentleman has raised an important point, but the regulations are not the right vehicle to consider it, because they are an emergency measure to provide alleviation over the course of the winter season.

My hon. Friend the Member for Bexhill and Battle asked about some of the longer-term implications, and they will be covered in the strategic document. He started by saying that the regulations are essentially a compromise, and he is right. It is a matter of judgment, and to a certain extent that also answers some of the points raised by the hon. Member for Blackley and Broughton. In terms of the financial impact, both hon. Gentlemen will appreciate that that involves an element of judgment. Clearly, the aviation sector has been unable to fly and that has a financial impact. There is a desire for airlines to start to fly their slots again, but without doing so in such a draconian way that it causes them to retrench. That is the challenge.

The Committee will recall that the last time that we debated this issue, it was a matter of full alleviation, so the 80:20 rule did not apply, but now 50% of the time flights are required. There is a judgment and an element of compromise and my hon. Friend for Bexhill and Battle is right to put it in those terms. He also asked about sub-letting, as he put it, and I think he means a full series hand-back, and the ability to come back and to fly some of those slots. If an airline knows that it cannot fly its slots, the intention is to encourage it to hand those slots back rather than to hold on to them and perhaps end up flying them, with all the environmental impact, and the economic impact on that airline. Because we are dealing with an evolving time, airlines may realise that they can fly slots, and that would encourage them to come back to airports where they are already established and start to re-establish services. It may also give an opportunity to new entrants if they are able to fly slots to demonstrate that they are able to do so. It is important to recognise that that would happen over the course of this season, and would not establish a long, historical right to fly slots. The point of the regulations is that airlines will retain their slots for the next season provided that they hand them back in this season.

A wider slot policy issue must be considered, which is why I referred to the strategic document that we will produce and release towards the end of the year. I am keen to stress that we need to look at the policy, but do so with a little bit more time to reflect, and not while the industry is in the midst of the immediate covid challenge.

[Huw Merriman]

I am keen for the Minister to say whether prior notification that an airline is moving away from an airport is indeed the notification that he has cited. Has that airline given the confirmation that it plans no longer to operate from that airport, or will there be a forward, formal date at which to vacate?

[Robert Courts]

I was just about to address that point. I did not mean to give the impression that I was not going to answer. It fundamentally comes down to whether ACL understands that to be a formal revocation. I would have to look at the circumstances to give a proper answer as to exactly what was said. It fundamentally comes down to whether operations have ceased or have been paused.

My hon. Friend also asked about the economic regulation of Heathrow. That is subject to an independent decision taken by the CAA. Obviously, there has been a huge amount of financial challenge over the course of the past 18 months, and that is why a support package, as part of wider economic measures, has been given. When making that independent assessment, the CAA must balance the interests of passengers and the airlines, and the financial viability of the airport. It balances those three factors when it reaches its independent decision.

The hon. Member for Blackley and Broughton asked about the impact assessment, and I apologise for not giving an answer that was quite clear the first time. If I understood him correctly, the November point—he referred to March ’23, which I will address in a second—is about the powers that are conferred by ATMUA, or the Air Traffic Management and Unmanned Aircraft Act 2021, that enable us to introduce this regulation. Although that period is clearly longer than a year, we are dealing here with a shorter period of alleviation. The powers last longer than a year, but the exercise of the powers that we are seeking here is for less than a year. The hon. Gentleman has the draft statutory instrument in front of him. He will see that paragraph 2 refers to a required percentage of

“50 %, in the case of slots with a date falling within the scheduling period from 31 October 2021 until 26 March 2022”.

The start of the period is the date of the end of the month, which I gave in my opening speech, and it will last until 26 March 2022. The powers that we are seeking to exercise apply for this shorter period of less than a year, from the end of October to the end of March.

The hon. Gentleman asked why we did not have an impact assessment for a longer period. That is a perfectly fair and reasonable point, but the difficulty, and the reason why we have not done such an assessment, is that it would depend on the usage ratio that we applied. He will remember that last time we considered this statutory instrument, there was a full alleviation, so there was no requirement to fly the flights at all. That would clearly have one economic impact, whereas we are now talking about a 50% usage rule, which will have a different economic impact. In the next season, there will be another period. I do not know now—we would have to consult—what we would do at that time; clearly that would have another economic impact. We are dealing with a period of less than a year.

The hon. Gentleman also made a point about the end of March 2023. If I understood him correctly, he took that from paragraph 2(4)(b), which is about the entitlement for the air carrier to retain the slots in the next scheduling period. He will remember that the issue we are dealing with here concerns this scheduling period. In normal circumstances, if slots are not flown 80% of the time, they cannot be kept in the next scheduling period. We are operating relief for this scheduling period. New paragraph 2a to the Council regulation states that

“the scheduling period from 31 October 2021 until 26 March 2022 shall entitle the air carrier to the same series of slots for the scheduling period from 30 October 2022 until 25 March 2023”.

If I understood the hon. Gentleman correctly, I think I can answer him by saying that this is not power we are exercising; we are simply pointing out that the airline will get to keep the slot for that scheduling period. I hope that I have explained the detail of the matter, now that I have found the relevant bit of the SI, and that I have understood his point correctly.

The hon. Gentleman asked about a number of other points. He asked about ownership of slots. Slots are a permission to fly, rather than an ownership, and are dealt with by ACL. I understand the substantial point that he makes, which is important, and we will have to look at slots policy, as I have explained, but the slots are a matter that is dealt with by ACL as a process independent of government.

I think I have dealt with the hon. Gentleman’s detailed point. The broader point he made is about assessment of the impact. Clearly there has not been a formal impact assessment, as we have discussed. There is obviously an informal one, but what we are doing here is seeking to allow relief, because if an airline cannot fly, it is quite clearly suffering an economic impact. That is what we are seeking to do. If an airline were not to have this relief, it would be required to fly the flight to keep the slot, and would wasting fuel without a full load factor, and in some cases even empty. Clearly that would have adverse economic impact for the airline, as well as an environmental impact, which I appreciate is separate from the point that he raises.

I think I have dealt with all hon. Members’ points. I am pausing for a second in case anyone thinks I have not. I am grateful for the points that have been made. The regulations are a short-term relief package. If we do not take this action, the default position will accrue and airlines will have to fly 80% of the time or lose the slots. That will mean that an airline either has to lose its slots or fly them empty, with all the adverse financial and environmental consequences that that would have, which I submit to the Committee would be a result that we would all want to avoid. We will, of course, look at the longer-term piece for the aviation industry in more detail at the end of year.

I hope I have covered all the points raised and I urge the Committee to support the regulations.

Question put and agreed to.

Resolved,

That the Committee has considered the draft Airport Slot Allocation (Alleviation of Usage Requirements) (No. 2) Regulations 2021.