Airports Slot Allocation (Alleviation of Usage Requirements etc.) Regulations 2025

Lord Hendy of Richmond Hill Excerpts

Monday 20th January 2025 Grand Committee

Moved by

[Lord Hendy of Richmond Hill]

That the Grand Committee do consider the Airports Slot Allocation (Alleviation of Usage Requirements etc.) Regulations 2025.

Relevant document: 12th Report from the Secondary Legislation Scrutiny Committee

[The Minister of State, Department for Transport (Lord Hendy of Richmond Hill) (Lab)]

My Lords, these draft regulations were laid before Parliament on 4 December 2024 and will be made under powers conferred by the Retained EU Law (Revocation and Reform) Act 2023, also known as the REUL Act. They are an example of the UK making use of the freedom gained from the UK’s departure from the European Union.

This legislation amends Council Regulation (EEC) No 95/93, which sets out the rules for allocation of airport slots. In taking these amendments forward, we are moving ahead before the European Union. Slot allocation rules apply only at what are known as co-ordinated airports, where capacity at the airport is unable to meet demand for slots at those airports. Nine airports are now covered by these rules, including the main London airports of City, Gatwick, Heathrow, Luton and Stansted, as well as Birmingham, Bristol, Manchester and Leeds Bradford.

The regulations will update the definition of a new entrant air carrier—or airline, as most of us would refer to it—for slot allocation purposes. This will allow air carriers with a small presence at a co-ordinated airport the opportunity to benefit from greater priority in the allocation of airport slots from the slot pool, prior to the start of the summer or winter scheduling seasons. This change not only aligns UK regulations with international guidelines but has the potential to provide more choice for consumers in terms of routes, destinations and the carriers they can fly with.

In addition, the regulations will amend assimilated EU law to enable the UK to respond in the event of a pandemic, epidemic or other outbreak of disease, such as was experienced during the Covid-19 pandemic. It will remove the need for emergency legislation to provide alleviation from slot usage rules, as was the case during the Covid-19 pandemic, in order to protect consumers, the environment and the aviation sector.

Noble Lords will be aware that co-ordinated airports are the UK’s busiest airports and that gaining a slot at them can be a challenge. It is not uncommon for air carriers to have to spend several years on the waiting list before being allocated a slot. Added to this, the current new entrant definition restricts new entrant carriers from being able to obtain enough slots for the number of daily rotations necessary to make a route commercially viable. Pursuing the necessary number of slots results in them losing their new entrant status and the benefits that come with it.

This hampers competition, which is why my department wants to update the definition of a new entrant. This seemingly small change is the difference between a new entrant air carrier being able to successfully establish and maintain a service and having to give up after a few years. The revised definition of a new entrant also brings the UK’s legislation in line with the Worldwide Airport Slot Guidelines, which provide the air transport industry worldwide with a single set of standards for the management of airport slots at co-ordinated airports.

Regulation 95/93 sets out that air carriers must operate their airport slots 80% of the time in order to retain the right to those same slots the following year. This is known as the 80:20, or the “use it or lose it”, rule. Under normal circumstances, the 80:20 rule helps encourage the efficient use of airport capacity while allowing air carriers a degree of flexibility in their operations. However, throughout the Covid-19 pandemic, the 80:20 rule was waived to avoid environmentally damaging and financially costly flights with few or no passengers—so-called ghost flights. Using powers afforded to the Government in the Air Traffic Management and Unmanned Aircraft Act 2021—known as the ATMUA Act—a full waiver from the 80:20 rule was initially provided. However, as the industry recovered from the pandemic, usage ratios and other measures set out in that Act were amended, allowing a managed return to business-as-usual operations as demand for aviation recovered.

Due to the unpredictability of the Covid-19 pandemic, the powers granted under the ATMUA Act were necessarily time-limited; they expired in the summer of 2024. However, the experience of Covid-19 has shown that a permanent provision for slot alleviation relating to a pandemic, epidemic or other outbreak of disease is needed. This is to provide a means by which a collapse in aviation demand because of an event of a similar magnitude to Covid-19 can be managed as part of normal operations by the UK’s airport slot co-ordinator. Without this provision, if a health crisis similar to Covid-19 were to occur, the Government would need to bring forward further primary legislation, as was done through the ATMUA Act, in order to enable alleviation from the 80:20 rule.

Turning to the content of the statutory instrument, this draft instrument will amend Regulation 95/93 to change the definition of a new entrant carrier. The purpose of the new entrant rule is to stimulate competition. New entrant carriers are given priority in the allocation of slots, as the regulation requires that 50% of slots shall first be allocated to new entrants unless the requests made by new entrants are less than 50%. Currently, an air carrier is a new entrant if it has fewer than five slots at an airport on a given day. Under this instrument, a new entrant is defined as a carrier that holds fewer than seven slots at an airport. The update to the new entrant rule is designed to enhance the presence of new entrant carriers at slot co-ordinated airports.

As I said, the instrument will also build on previous regulations that provided carriers with slot alleviation during the Covid-19 pandemic by introducing a permanent provision for carriers in order to obtain slot alleviation where there are government-imposed measures relating to a pandemic, epidemic or other outbreak of disease, provided that certain conditions are fulfilled. This will put in place a much simpler process by which an event such as Covid-19 can be managed for slot co-ordination purposes.

In conclusion, in this instrument, the Government have recognised the need to update the definition of a new entrant and to provide additional reasons for allowing alleviation from slot usage rules in order to protect the aviation sector from the potential impact of another pandemic occurring, however remote that possibility might or might not appear. The provisions in the instrument were subject to consultation with the aviation sector in 2023 and received strong support from across industry. The Secondary Legislation Scrutiny Committee flagged these regulations as an instrument of interest but did not make any adverse comments. The Joint Committee on Statutory Instruments did not report this instrument. I hope that noble Lords will join me in supporting these measures. I beg to move.

[Lord Kirkhope of Harrogate (Con)]

My Lords, I want to make a shortish contribution. First, in general, I welcome these proposals. I declare my interest as a former director of Newcastle Airport, which is of course not on the list of co-ordinated airports because of the lack of congestion—I think that is the term used. I am also a private pilot so I have a particular interest in the way in which this interesting phenomenon of slots has developed over the years.

It seems to me that, in terms of their balance sheets, quite a lot of airlines would not be able to operate unless they had slots as part of the asset base, which isa little unreal and unacceptable. In my opinion, that also puts pressure on obtaining slots out of the pool—or, indeed, in any other way possible. Airport Coordination Limited, which is the organisation that decides on the allocation of slots, therefore has a difficult job, particularly in areas where the return of slots from airlines is quite a difficult situation. Obviously, there are far too few slots relating to all the airports on the list of co-ordinated airports.

Interestingly, although Leeds Bradford Airport is now included as a co-ordinated airport, it certainly does not appear in much of the evidence that I have read in relation to ghost flights, and so on. Will the Minister let me know whether Leeds Bradford Airport has been a late entrant on this list? I would be interested to know.

--- Later in debate ---

However, the introduction of permanent alleviation raises concerns, particularly in terms of its long-term impact. The Government must ensure that these alleviation measures are applied only in cases of significant and severe disruption. With the broad discretion given to co-ordinators in determining eligibility, there is a real need for clarity and oversight, so we must ask the Minister this: how the Government will monitor and assess the effectiveness of these alleviation measures to ensure that they are applied judiciously, fairly and consistently without inadvertently limiting competition or disadvantaging smaller carriers?

[Lord Hendy of Richmond Hill (Lab)]

I thank noble Lords for their consideration of these draft regulations. I will attempt to respond to as many of the specific points raised as I can.

The noble Lord, Lord Kirkhope of Harrogate, asked about Leeds Bradford Airport. It is a late entrant, entered in 2024, and is subject to slot allocations only in the summer months. The noble Lord also asked how the 80:20 rule is administered. The answer is that, if under 80% of flights over the entire season are not used, they are lost. For desperate circumstances other than Covid, the regulations already have some alleviation, but this statutory instrument adds to them in respect of Covid. I will come back to the change from five to seven slots in answering some other points.

The noble Lord made a serious point about consumer interest in consultation. The Competition and Markets Authority was consulted and supported all the changes. The Civil Aviation Authority was also consulted because it has consumer protection obligations; it, too, fully supported this measure.

The noble Lords, Lord Empey and Lord Rogan, mentioned the provision of adequate services to Northern Ireland from Great Britain. From some previous work that I did on the union connectivity review, I know that this is a subject of much concern—and, occasionally, criticism—in Northern Ireland. Recently, I answered a Question in your Lordships’ House about the cancellation of an early flight from Belfast to London; that cancellation seems to have been astonishingly ill advised from the point of view of the airline operator, judging by the number of noble Lords and Members of the other place who were inconvenienced by it. So I understand the noble Lords’ points and the previous proposals for Bills in this direction.

The noble Lord suggested a more fundamental review of slot allocation system; such a wider reform would need primary legislation. The previous Government consulted on this from December 2023 to March 2024, and the current Government are now considering the need for wider slot reform; I am sure that the specific availability of slots from Northern Ireland will be part of that consideration.

I draw to the attention of both noble Lords the fact that, as I noted in the union connectivity review, the Government have a public service obligation and support flights from Derry/Londonderry to London precisely to make sure that there is connectivity from Northern Ireland to London.

The noble Baroness, Lady Pidgeon, made two points about the extent to which the European Union is in advance of or behind these changes. In both cases, we are making these changes in advance of the EU making similar changes in respect of both Covid and the minimum slot allocation. On her point about moving from five to seven slots, that move is certainly helpful to consumers because, as other noble Lords have noted, increasing the number gives an opportunity for new services to support themselves in viability and, therefore, to be more permanent. So the answer to that question is that it will help. On whether the number is the right one, there was certainly consensus that the number should be increased but little consensus about what it should be, so bringing ourselves in line with international legislation seems, frankly, a pretty sensible thing to do.

The noble Earl, Lord Effingham, asked whether new entrants can be protected in some way. Of course, I raised in my original speech that new entrant carriers are given priority in the allocation of slots, as the regulation requires that 50% of the slots shall first be allocated to new entrants unless the requests from them are less than 50%. That seems a sensible provision to allow new entrants a first opportunity here.

Lastly, the noble Earl asked how the Government will ensure that the provisions for severe disruption are used only in exceptional circumstances. In respect of something like a pandemic, it is pretty clear that the provisions have to be drastic. There are other provisions in existing regulations for alleviation, which will continue to apply.

I hope that I have covered all the points made by noble Lords on this proposed statutory instrument. I conclude by saying that it will make two permanent changes to Regulation 95/93, reducing barriers to entry at UK airports and making the slot allocation system more resilient. This instrument is putting the UK on the front foot; as I said, we are now in advance of the European Union on both of this measure’s substantial subject matters. I commend this instrument to the Committee.

Motion agreed.