My Lords, these regulations are made under the powers conferred by the European Union (Withdrawal) Act 2018. They amend EU Regulation 1008/2008, which sets out common rules for the operation of air services. These regulations ensure that Regulation 1008/2008 continues to function correctly in UK law after the transition period. They do so by amending the Operation of Air Services (Amendment etc.) (EU Exit) Regulations 2018.
This SI is necessary because the EU amended Regulation 1008/2008 after the UK’s 2018 regulations were made. EU Regulation 1008/2008 was amended in May last year by EU Regulation 2020/696, which inserted provisions to address problems caused by the sharp decline in air passengers resulting from the Covid-19 pandemic. It also inserted powers for the Commission to extend the new provisions by delegated acts. The Commission used these powers and made further amendments to Regulation 1008/2008 via two delegated regulations adopted on 16 December 2020. These extended two of the new provisions until the end of 2021. The earlier amendment made in May would have seen them expire at the end of 2020.
This SI was made using the “made affirmative” procedure as the only means of bringing it into force before the end of the transition period while ensuring parliamentary scrutiny. As I have noted, the most recent EU amendments were not adopted until 16 December; only then was it possible to determine the precise content of this SI. The SI was laid on 23 December, the earliest opportunity after the Commission’s adoption of the delegated regulations.
I will now describe the provisions in more detail. They allow airlines in financial difficulty to retain their operating licences, subject to certain conditions, and allow airports to urgently replace ground-handling providers should they suddenly cease trading. Both provisions will apply until the end of 2021.
Regulation 1008/2008 requires the Civil Aviation Authority—the CAA—to revoke or suspend the operating licence of an air carrier in financial difficulty; it may replace it with a temporary licence. Such action risks the integrity of the air carrier in the eyes of investors and customers. It would raise concerns about the airline’s viability and could, in turn, lead to deeper financial problems. Normally, such actions are justified to regulate tightly carriers in financial difficulty but, during the Covid-19 pandemic, all air carriers have suffered significant decreases in revenues and a more flexible response is required.
Regulation 2020/696 inserted a new provision allowing regulators not to revoke or suspend operating licences where the carrier is in financial difficulty providing that a financial assessment is undertaken, safety is not at risk and there is a realistic prospect of financial reconstruction within 12 months. The CAA is the UK regulator in this respect.
The second provision concerns ground handling at UK airports where ground-handling suppliers are restricted; for example, on safety grounds. Where a ground handler has ceased trading before the end of
its contract, the new provision allows airports to choose a new provider directly for a limited period rather than undertaking a tender process.
Reduced passenger demand at airports has severely impacted the ground-handling sector and increased the risk of sudden failure of ground-handling companies. The new provision ensures that airports where ground handlers are restricted can select replacement providers quickly and minimise disruption to users of the airport.
The withdrawal Act retained EU Regulation 1008/2008 in its entirety on exit day. The amendment makes the changes necessary so that this EU regulation continues to function correctly alongside the Operation of Air Services (Amendment etc.) (EU Exit) Regulations 2018.
The SI amends Regulation 1008/2008 to fix deficiencies arising from the amendments made by subsequent regulations and Commission delegated regulations. For example, “Union air carrier” is replaced by “UK air carrier”, and references to the ground-handling directive are replaced by references to the Airports (Groundhandling) Regulation 1997, which transposed the directive. Provisions relating to the Commission’s delegated powers are revoked because they are no longer relevant to the UK.
The impact of the Covid-19 pandemic will continue for some time. The provisions that I have described provide the CAA and airports with additional flexibility to respond. I commend the regulations to the Committee. I beg to move.
3.51 pm