Civil Aviation Bill

Jim Shannon Excerpts

Tuesday 22nd May 2012 Commons Chamber

[Jim Shannon (Strangford) (DUP)]

I congratulate the Minister and the Government on bringing the Bill to the House on Third Reading, and the Opposition on the hard work that they did in laying the foundations for legislative change when they were in power. It should be recognised that the Opposition have done a lot of work on the matter.

The thrust of the Bill is to reform the economic regulation of airports, with particular focus on those airports with market dominance. We are talking about Heathrow, Gatwick and Stansted. As a Northern Ireland MP travelling every week, I have become very familiar with Heathrow and Gatwick. Since the British Airports Authority was privatised in 1986, London’s largest airports, Heathrow, Gatwick and Stansted, have been subject to the same economic regulatory regime, which was designed to ensure that these major airports did not abuse their monopoly position.

The prices that Gatwick charges airport passengers are currently capped by the Civil Aviation Authority, which sets them in accordance with a Competition Commission recommendation. The revenues from these prices often appear on passengers’ tickets as airport charges. They are used to pay for runways, airfield facilities, terminals, security, baggage systems and future development. Price caps are usually reviewed every five years, but the Bill reforms that process.

As a Northern Ireland MP, I would ask for some clarification on a number of issues. The Bill has some consequences for all Northern Ireland airports, which I will briefly touch on. The Government are rightly always looking to consult the public, but sometimes the cost is astronomical. Airports have expressed concern to me that the CAA is running a consultation that may lead to a significant increase in the charge it levies on airports, so a cost element comes into the CAA process, which it is important to take into consideration.

In addition, there is the proposal to transfer some of the aviation security oversight functions from the Department for Transport to the CAA, which in turn will directly charge airports for those services, which is not currently the case. As the Bill contains no provision for the airport operator to pass the charges directly to users, that will mean an increase in cost that the operator has to absorb, and those costs are extreme. At Belfast International airport, it is likely to be in the region of £100,000 to £120,000 annually. Obviously, that is unwelcome, because it eats into the capability to reinvest in infrastructure, yet the Government’s first objective was to encourage reinvestment in the airports. There are perhaps unintended consequences, but they are significant when we take into account the fact that the annual CAA licence, which is based on passenger numbers alone, presently costs the likes of Belfast International airport £202,000 a year, which is a 50% increase on top of what it already pays. That is very concerning. Who can absorb such colossal sums of money annually?

It has also been pointed out to me by officials from Belfast International airport that we must recognise the relationship between the economic regulation of London’s airports and the Government’s priority of attracting new, direct routes to emerging economies that will help the UK economy to grow. The Bill is about regulating, but it is also and should be about encouraging growth in our airports to encourage growth in our businesses and tourism, and the Bill has a part to play in that. We in Northern Ireland want a balance between regulation, growth and opportunity for our airports, Belfast International, Belfast City and Londonderry.

The hon. Member for Crawley (Henry Smith) also referred to that in relation to Gatwick, and he outlined the issue of regulation. Gatwick wants the regulation system to reflect the way in which the aviation sector operates. Gatwick is clearly emerging as a business airport, competing with Heathrow, and it has space available—another issue that has emerged. In determining whether an airport should be regulated, the CAA must find that an airport is dominant, as interpreted in competition law by the European Commission and referred to in the CAA’s own competition assessment guidelines, and Ministers should provide clarification on that matter.

The CAA has said that it fully expects more than 50% of all decisions to be appealed under the new system. That suggests that the present system is not perfect, and that changes should be made sooner rather than later. Will the Minister clarify how the Government have assessed the financial and business impact that the new appeals system will have, and whether they will consider additional safeguards to reduce the burden that it will place on regulated airports, such as a narrower right of appeal?

The Transport Committee recommended that the information publication requirements should not create disproportionate burdens for the aviation sector, and that is another issue of concern. Gatwick is now competing with other London airports. There is clear evidence of that, with airlines and passengers moving among competing London airports and Gatwick, and airlines choosing Gatwick over others to establish brand new routes to key trading partners. There should be no risk of presumption towards regulation.

I will conclude with a final comment on the CAA. It has been indicated to me that the CAA is unable to deliver slots for Heathrow airport. Indeed, it has been identified that the European Union needs to amend regulations in order to enable flight slots for regions, for example for Belfast International airport and Belfast City airport. Can the Minister confirm that the Government have no power as a result of EU regulations to retain or safeguard routes between Belfast and Heathrow? I understand that if she is unable to confirm that, amendments to the Bill will be tabled in the other place. I look forward to the Minister’s response to those questions.

Question put and agreed to.

Bill accordingly read the Third time and passed.