My Lords, I thank my noble friend Lord Stephen for tabling the amendment, which provides us with an opportunity to discuss the deeply important
issue of regional connectivity. I certainly have sympathy for the underlying issues, and I hope that I will not have to deal a “technical knockout” to my noble friend. He mentioned rail journey times. I hope that he will join me, the noble Lord, Lord Adonis, and, I suspect, most of the opposition Front Bench in supporting HS2 when we come to debate it.
The amendment would impose wide and unclear obligations on the CAA, as the noble Lord, Lord Rosser, observed. It could be construed as requiring the CAA, when performing any of its regulatory functions, to take into account the economic and social impact not only of the services provided by UK airports but of the people who use them on the entire UK. However, the duties in Clause 1 of the Bill relate only to the CAA’s economic regulation functions. While the intention of the amendment is not clear, I am aware of my noble friend Lord Stephen’s particular concern over connectivity between Aberdeen and Heathrow. The noble Lord, Lord Soley, suggested that this was not the place for this matter. Fortunately, in your Lordships’ House we have great flexibility to discuss whatever we want. I always find the noble Lord’s contributions very illuminating and I am very happy to debate the issue.
The issue of regional connectivity was raised previously in Grand Committee with specific reference to connectivity between Belfast and Heathrow airports. My noble friend referred to the economic activity around Aberdeen, with the oil and gas industry. When I was on holiday in the area, I was definitely aware of that activity. On the issue of connectivity, I will take the opportunity to commend the work of the noble Lord, Lord Empey, who has been extremely active and effective both in Westminster and Brussels on this issue. As the noble Lord observed, he will be promoting his Private Member’s Bill this Friday, and I am sure that he will succeed in breathing life into the Chamber on Friday afternoon.
Noble Lords will be aware that the primary objective of the Bill is to reform the framework for airport economic regulation. However, the amendment appears to apply to all the CAA’s functions, including safety and the enforcement of European consumer protection law. I am sure that that is not my noble friend’s exact intention. For many functions, such as safety, it is not appropriate for the CAA to have regard to economic and social impacts because the safety of an aircraft is of paramount importance. Furthermore, the CAA has well established duties set out in Section 4 of the Civil Aviation Act 1982. These duties are disapplied for some of the CAA’s functions, such as airport economic regulation, where the CAA has alternative duties as set out in Clause 1 of the Bill. It is unclear how the duty contained in the amendment would interact with existing duties. Which set of duties should the CAA prioritise?
Despite these concerns, the duty in the amendment appears to be most relevant to the CAA’s airport economic regulation functions. However, I fear that the amendment would not have the desired effect of improving regional connectivity. Airport economic regulation concerns the regulation of the services provided at an airport by the airport operator, as well as the regulation of the landing fees that the airport operator charges to airlines. The noble Lord made a point
about landing fees and I will write to him about that. Airport economic regulation is not concerned with the allocation and regulation of landing slots, which are governed by EU law, and an airport operator does not have control over where airlines fly to. Consequently, this Bill is not the right vehicle to address my noble friend’s concerns. In the UK, airlines operate in a commercial market environment and thus it is for an airline to determine what services it operates between Aberdeen and Heathrow, doing so based on its own assessment of the commercial viability of the route. These are not matters for economic regulation. Therefore, seeking to impose a duty like the one in this amendment will not influence which routes airlines decide to operate.
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There are also EU regulations that govern the allocation, transfer and exchange of slots at Heathrow Airport and other slot co-ordinated airports in the UK. The UK Government and the Civil Aviation Authority have no role in this process. We will no doubt go into greater detail on that on Friday. However, as part of the EU’s better airports package, the European Commission has proposed amendments to EU slot regulations aimed at making the slot allocation process more transparent and efficient.
In the context of this review, the UK Department for Transport has highlighted the issue of regional connectivity with the European Commission and sought the inclusion of measures in addition to the existing public service obligation mechanism to help to secure the ongoing provision of air services between congested London airports and Scotland, Northern Ireland and the English regions. However, it has proved challenging to devise a mechanism to protect well trafficked, commercially viable air routes without distorting the aviation market and competition across Europe.
My noble friend talked about the possibility of using a PSO. EU law provides some scope to protect regional air services by allowing member states to impose public service obligations to protect air services to airports serving a peripheral or development region, or on so-called “thin” routes considered vital for a region’s economic and social development. It would be open to a relevant regional or devolved body in Scotland to apply to the Secretary of State for Transport to establish a PSO on an air route between Aberdeen and London, should it feel that a business and legal case can be made that satisfies the European regulation. However, I think that my noble friend recognises some of the difficulties in that approach.