Airports Slot Allocation (Amendment) (EU Exit) Regulations 2021

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Airports Slot Allocation (Amendment) (EU Exit) Regulations 2021.

My Lords, these draft regulations will be made under the powers conferred by the European Union (Withdrawal) Act 2018. They amend provisions of the EU airports slot regulation—No. 95/93, which I will call “the slots regulation”—to provide airlines with relief from the impacts of Covid-19 on passenger demand.

EU regulation 2020/459 was adopted to amend the slots regulation as a result of the Covid-19 outbreak to provide airlines with relief from the 80:20 rule—otherwise known as the “use it or lose it” rule—which requires airlines to use their airport slots 80% of the time. In normal circumstances, the 80:20 rule mandates that, provided an airline has used its airport slots at least 80% of the time in the preceding scheduling period—either winter or summer—it is entitled to those slots in the upcoming equivalent period. This helps to encourage efficient use of scarce airport capacity, while allowing airlines a degree of flexibility in their operations.

Due to the significant impact of Covid-19 on demand, in March last year amendments to the slots regulation instructed airport co-ordinators, when determining slot allocation for the upcoming season under the 80:20 rule, to consider slots as having been operated, whether or not they were actually used. By providing airlines with legal certainty that they would be able to retain their slots even if not operated, the aim of the amended regulation was to help mitigate the commercial impacts of the Covid-19 outbreak on the industry—because airlines might otherwise opt to incur the financial costs of operating flights at low load factors merely to retain slots—and support sustainability by reducing the likelihood of needless aviation emissions from near-empty aircraft. Those amendments to the slots regulation entered into force on 30 March 2020 and became applicable retrospectively from 1 March until 24 October 2020.

My Lords, I draw attention to my interest in the register.

It seems odd to be sitting here on a Tuesday evening debating what appears to be a very small and sensible update consequent on our departure from the European Union, and specifically in relation to the devastating impact that Covid-19 has had on the whole of the aviation industry. But it is an opportunity to raise the wider context of the need to maintain capacity in the aviation industry, and the fact that so little support has been available so far in keeping that capacity available to us for the future.

I do not mean capacity just in terms of passenger travel, as important as that will be for business and leisure. There are many who feel that people will not want to fly, and that somehow there will be a major drop in people taking business or holiday trips, but I do not believe that for a minute. I think the moment will come when we can be free again to travel and enjoy sunshine and each other’s company, and take a glass on a beach somewhere, and many people who can afford to take advantage of that will do so. But they cannot do so, certainly under anything that is related to British registration, unless the capacity exists.

The most important aspect of this is the fact that so much of our airline industry, including that mainly carrying passengers, is related to freight. At Heathrow—in which I have an interest in terms of skills and employment for recovery—about 90% of its high-value freight goes out in the bellies of passenger aircraft. Of course, it does not at the moment. Maintaining the capacity to do that and maintaining our trading capacity and relationships for the future will be vital to the recovery of our economy and to our place in a very different world.

I make an appeal to the Minister—I gave her notice that I was going to broaden the issue—that the 80:20 rule is a sensible step in terms of ensuring that airlines do not lose that capacity and those air corridors, but it is a tiny gesture to maintain capacity for the future. Substantial help now needs to be given to make sure that we do not fall even further behind our European competitors in terms of airport and airline capacity. To give one example, the relief for business rates that has been made available to very successful and profitable high street stores has resulted in an £8 million contribution to airports in the UK. That is very helpful to the smaller, provincial airports but for an airport such as Heathrow, which has an annual business rate levy of £120 million, £8 million goes a very small way to compensating.

My Lords, I support the changes proposed by the noble Baroness, Lady Vere. The crisis in the airline industry has left us with really no alternative and it is always better to provide an orderly system rather than to leave matters to themselves, as it were.

However, unlike the noble Lord, Lord Blunkett, I do not count myself among those who want to see a return to normal, if normal means that we are going to have the same levels of noise, pollution and disruption which airlines give to many people. Airlines are polluting, and while they bring the mobility benefits to which the noble Lord, Lord Blunkett, referred, we must look forward to quieter and less polluting aircraft. In my view, this sort of thing is not an optional extra. If our concern with climate change is genuine, it is a must. I guess the third runway at Heathrow will itself be a long time coming, if it ever happens, but we have to make a useful contribution very urgently, probably by the time we go to Glasgow for COP 26, because as a nation we have to be able to show that there is a way forward to a genuinely better aircraft industry.

My Lords, I apologise for the House of Commons Division Bells. The noble Lord, Lord Bilimoria, has withdrawn so I now call the noble Baroness, Lady McIntosh of Pickering.

My Lords, I thank my noble friend for so conscientiously bringing forward and explaining the contents of the regulations before us. I note how hard she works for the airline industry and the aviation sector, which I know they greatly appreciate. Can she explain what the response and reaction has been to these regulations, and the extension from the EU Commission to the waiver? I note that IATA has also been active in this field and that among the low-cost carriers—in which we in the United Kingdom seem to excel in normal times, outside of Covid—unhappiness has been expressed about the potential lack of competition and impact in higher fares. I am thinking particularly of Ryanair and Wizz Air, which have expressed their reservations. I do not know whether she has had the opportunity to put their minds at rest, if that is the case.

Can my noble friend please also explain to us what the situation will be if slots have been freed up, particularly the international transatlantic slots which are obviously not operating at the moment? One hopes that by the summer they will be. If it is true that Norwegian airlines is releasing some of these slots, potentially at Heathrow or other international airports in the UK, that will be of interest to other carriers. What procedure will take place at that time?

If, as I understand it, this is the legal basis—which I welcome—for the Secretary of State to be empowered to extend the waiver from the 80:20 or “Use it or lose it” rule beyond the end of March into the busy summer season, I presume that there will be no further opportunities to discuss that decision. Does my noble friend have any indication when that decision might be made? I realise that this is a stab in the dark because we do not yet know what the position will be and how reluctant the travelling public might be. I include myself in that, as I hope to visit my family in Denmark this summer.

My Lords, I thank the Minister and her officials for arranging a briefing yesterday, which was most helpful. I agree with a lot of the contribution made by the noble Lord, Lord Blunkett. I also support in broad terms the relief from the 80:20 rule, because the last thing we want, for a whole variety of reasons, is to have the sight of airlines undertaking ghost flights to hold on to routes even if they have no current passengers.

A couple of years ago—in fact, on two occasions—I introduced a Private Member’s Bill, which passed the House, to give the Government powers on slot allocation in the UK. Of course, it was governed by European competence at that stage. Slots are not only big business; they have huge implications for connectivity. While this measure does not apply to Northern Ireland airports, because they have capacity, at the end of the day a flight cannot take off unless it has somewhere to land. My anxiety has for years been about the risk from the absence of connectivity between the regions and the principal airports—what are called co-ordinated airports —such as Heathrow and Gatwick. I will return to that, although it is not necessary for this SI, but the principle is clear: if you do not ensure that regions have access to major airports with connectivity, that has economic, social and other implications. I ask my noble friend to bear that in mind.

I also doubt very much that airlines could manage even 20% of the flights on a lot of their slots at present. We had a briefing from one of our colleagues—the noble Lord, Lord Deighton, the chairman of Heathrow —where he pointed out that, in a number of months last year, its passenger flow had dropped by 95%. It is quite obvious that there needs to be as much flexibility as possible. As I understand it—I hope I am right in saying this—these measures will be available to apply in the summer season this year, but further secondary legislation or an approval Motion would have to come through to deal with subsequent seasons if the need arose, and there needs to be data on which to base that judgment. I think I have got that right; perhaps the Minister can correct me if I am wrong.

The noble Lord, Lord Berkeley, has withdrawn so I call the noble Lord, Lord Naseby. We do not seem to have the noble Lord.

He has not unmuted himself.

Lord Naseby, are you unmuted? Are you going to speak to us? No? In which case, the noble Lord, Lord Mann, has also withdrawn so we will move on to those winding unless the noble Lord, Lord Naseby, is there.

Can you hear me? I will make a short speech.

In the past, I have advised Singapore Airlines and SriLankan Airlines. I am a former RAF pilot and I support the third runway at London Heathrow. I thank the Minister for her practical and workable solution, delivered on time and with clarity. It is very welcome. However, I wonder whether she can expand on the prediction that it will take until 2025 for normality to return, given the creativity of the travel industry in the UK. I am not entirely clear what happens if a new airline decides that it wants to get going and to have slots. What will the procedure be? I would be grateful for clarification on that point.

I have two other small points to make. First, the Minister talked in her briefing about categories of airport in the UK, such as level 3. I am surprised that Glasgow, with its international connections, is not a level 3 airport. I assume that it is not big enough. Secondly, I re-emphasise what other colleagues have said: these proposals are very welcome but our poor airports are stranded at the moment, almost like whales out of the sea. They are losing millions of pounds. The Government have done something but something more needs to happen. One possible area for this is on air passenger duty.