Airports Slot Allocation (Alleviation of Usage Requirements) (No. 3) Regulations 2022

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Airports Slot Allocation (Alleviation of Usage Requirements) (No. 3) Regulations 2022.

My Lords, these draft regulations will be made under powers conferred by the Air Traffic Management and Unmanned Aircraft Act 2021, or ATMUA. Following our departure from the European Union, this legislation created a more flexible set of powers for Ministers to implement alleviation measures related to the impacts of Covid, subject to a vote in both Houses. This allows the Government to adopt a bespoke approach to best support the recovery of the aviation sector. Ordinarily, airlines must operate their airport slots 80% of the time to retain the right to them the following year. This is known at the 80:20 rule, or the “use it or lose it” rule. This encourages efficient use of scarce airport capacity.

This summer, we saw a promising recovery in passenger demand. It is welcome that so many people have been able to travel on business, visit family and friends or travel abroad for a much-deserved break. However, demand remains below pre-Covid levels, and this recovery has not been without its challenges. It is well known that the sector struggled to ramp up operations. This caused some disruption at airports in early summer, which abated as the summer progressed, supported by swift action from the Government.

We have designed a package of measures for the winter 2022 season that aims to balance the recovery of the sector with enabling airlines to plan deliverable schedules. When the pandemic struck, the 80:20 rule was fully waived to avoid environmentally damaging and financially costly flights with few or no passengers. We then offered generous alleviations for four seasons while travel restrictions remained and demand was uncertain. Last summer, we implemented a 70% usage ratio, reflecting the more positive outlook in demand. We provided additional alleviation during the summer season in response to the high levels of disruption at airports arising from the continuing impact of Covid-19.

My Lords, I thank the Minister for her comments. Slot alleviation has become routine in the last couple of years. I have always accepted it as an important aspect of ensuring that we do not have unnecessary flights. “Half full” would be an overstatement; “almost empty” would be more accurate during Covid. However, I have got to the point where I question whether it is justified any longer in the current terms that the noble Baroness presents.

The Explanatory Note refers to an expansion of the list of reasons for slot alleviation, but that expansion is still in terms of Covid. Paragraph 7.2 of the Explanatory Memorandum refers to demand being at or around 80% to 85% of 2019 levels during May to July. Does the Minister now have access to figures for August and September?

The irony is that the reduction in demand over the summer was significantly affected by the cancellation of flights because airports instructed airlines not to fly, not because of Covid but because they did not have the ground-handling capacity. That happened at both Gatwick and Heathrow. The impact was, of course, to reduce the number of flights, but it also suppressed demand beyond those who thought that they had booked flights. I am sure we all know people who found that their flights were cancelled or deferred, and people who simply gave up trying to fly abroad as a result of the congestion at airports. There was suppressed demand over the summer, so the alleviation of slot rules could be said to be no longer appropriate for those reasons. It is time the Government reconsidered it, because it distorts the market.

Finally, I point out that there is no impact assessment for this. The grounds given for this are that it is for less than 12 months, but this has actually been going on for years, as the Minister pointed out in her explanation. I draw the Committee’s attention to the 12th report of the Secondary Legislation Scrutiny Committee, Losing Impact: Why the Government’s Impact Assessment System Is Failing Parliament and the Public. At this stage, now that we appear to be through the immediate emergencies of Covid, it is important that the Government restore the standards they once had in legislation, in terms of impact assessments.

My Lords, I congratulate the Minister on taking over full responsibility for air—until the next reshuffle anyway. I think that happened last week.

These are very interesting regulations. As the noble Baroness, Lady Randerson, said, I can see that in the Explanatory Memorandum there is a sort of conflict between wanting not to lose slots at airports, wanting to preserve monopolies and wanting to encourage competition. We do not really like running ghost flights if that is the only way to do it.

The question I would like to ask the Minister relates, as the noble Baroness, Lady Randerson, said, to some of these lists of reasons, which could become cop-outs for just about everything an airline or airport does not want. The noble Baroness mentioned shortage of airline or airport staff and strikes, which have been happening and will probably continue.

Then there is slot limitation. The noble Baroness mentioned Heathrow Airport limiting slots. I looked at the website for Schiphol Airport and it has similar limitations on slots, I suspect for similar reasons. Perhaps the Minister could tell us what is happening to these limitations on slots, certainly at Heathrow, because I think the present one finishes at the end of October. Is that matched with Schiphol and other regional or local airports in Europe? Presumably you have to have similar restraints at either end of a flight, and an awful lot of them go to Schiphol and places such as that.

The other interesting item in the list of reasons, for me, is in paragraph 7.6 of the Explanatory Memorandum, which is to do with the

“closure of airports or hotels”

and the effect that it might have on the passenger. That is a very subjective way in which to decide on slots, if one is relying on the number of people who are complaining, or what you think the solution is. I am not sure that the regulations will help matters much, in that way.

I turn to paragraph 12.2. I do not really understand what it means when it refers to airlines, in order to

“retain their historic rights to the most valuable slots”,

seeking

“to consolidate their operations at Heathrow … with adverse consequences for other smaller airports”.

Do the Government actually mind whether that happens? There is lots of debate about Heathrow’s expansion, but surely there is a policy issue here that needs to be taken into account.

The next paragraph talks about “loss-making flights”. Can the Minister give us any indication of how many of those ghost flights take place in a month? Are we talking about hundreds, or thousands, or two—and are they relevant? They are pretty bad for the environment, as the Explanatory Memorandum says, so it would be nice to know how serious a problem it is.

Finally, paragraph 12.4 refers to the concern about negatively impacting

“new entry and competition amongst airlines.”

I shall finish on that note. It is lovely to be able to say that we are encouraging the airlines and making sure that they stay in a good financial state. On the other hand, we have seen over the years how competition has really helped to deliver better services and lower fares. It is a challenge, and I hope that the Minister will keep abreast of those challenges—as well as customer service, at which some airlines are doing very much better than others—when she comes to look again at these regulations in six months’ time.

My Lords, I thank the Minister for her helpful introduction—she got airborne and made height. She might know that there is one airport in Wales, in Cardiff, and that the Welsh Government bought it for some £50 million some years ago. Previously, there were difficulties, and it was thought that the lovely land of Wales needed an airport—at the very least one. So I think that the Welsh Government were right to make their intervention. Cardiff Airport was undoubtedly not congested before purchase.

Could the Minister make a statement here in this Committee about Cardiff and slots—the 80:20 rule? Can she explain the general situation as it might concern Cardiff? One presumes that these regulations apply to Wales—it is there on page 1. Does the Minister have the information? How does the 80:20 rule impact on Wales’s one and only airport? Can she make any remarks of a helpful nature about Cardiff Airport in the context of the pressures on Heathrow and Stansted? What is the impact of the regulations on Cardiff Airport?

My Lords, I thank the noble Baroness for introducing the instrument, which I welcome and which again amends the airport slot usage rules, this time to 70:30, for the winter 2022 season. The aviation industry brings growth and prosperity to the UK and, as we deal with the after-effects of the pandemic, the Government are right to amend rules such as these. However, they must also plan for the long term and provide certainty to airlines, passengers and businesses that rely on the industry.

The airline industry is now recovering from significant challenges and levels are still at around 80%. As a result, airlines would likely operate ghost flights without an amendment to the rules. None the less, I would appreciate clarification of how the department decided that 70:30 is the correct rule for the fall/winter period. Will the Minister confirm what formula was used to decide this? I hope she can confirm whether the Government expect to extend the relaxation further when this instrument expires.

I listened to the case for reconsidering. We do support the extension as it stands, but I recognise that, to some extent, this solution is looking a bit tired—I have a vision of sticking plasters stuck round it to try to make it work. My recommendation to the Minister and the department is to be extremely careful with any modification. It would be very easy to have significant unintended consequences. Ideally, we should hope that growth which allows us to grow out of the need is in sight. Once again, we support this instrument.