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Grand Committee

Volume 738: debated on Monday 2 July 2012

Grand Committee

Monday, 2 July 2012.

Arrangement of Business

Announcement

My Lords, as I am sure all noble Lords present are aware, if there is a Division in the Chamber while we are sitting, this Committee will adjourn as soon as the Division Bells ring and resume after 10 minutes.

Civil Aviation Bill

Committee (2nd Day)

Relevant document: 4th Report from the Delegated Powers Committee

Clause 7 : Market power determinations

Amendment 17

Moved by

17: Clause 7, page 6, line 42, at end insert—

“( ) The CAA must, at such intervals as it considers appropriate, review market power determinations made on the basis of an earlier analysis.”

My Lords, this is a probing amendment. The Bill provides that operators of dominant areas located at dominant airports require a licence to levy charges for airport operation services, and states that an airport area is dominant if the CAA makes a determination that the market power test is met in relation to the area. Subsection (8) of Clause 7 states that the Civil Aviation Authority may make separate market power determinations in respect of different areas at the same airport with the same relevant operator and may also make a market power determination in respect of an airport area that consists of two or more areas that are not adjacent if the areas are located at the same airport. Subsection (9) then states that a market power determination ceases to have effect if the Civil Aviation Authority publishes a notice of a further market power determination in relation to the airport area or in relation to an area that includes all of the airport area.

The effect of the amendment, which would add further words to the end of Clause 7(8), would be to require the Civil Aviation Authority, at such intervals as it considers appropriate, to,

“review market power determinations made on the basis of an earlier analysis”.

It is not clear whether other wording in the clause, or elsewhere in the Bill, is intended to require the Civil Aviation Authority to review decisions that it has made on market power determination. Circumstances can change over a period of time, and factors that were important in the original decision may cease to be so, or other factors may come into play.

Other subsections in Clause 7 say that the Civil Aviation Authority may make a determination that the market power test is or is not met in relation to an airport area, and that the Civil Aviation Authority must make a market power determination if asked to do so by the operator of the airport area or any other person whose interests are likely to be materially affected by the determination, subject to certain laid-down criteria being met.

There ought to be a requirement for the Civil Aviation Authority to review market power determinations it has made, irrespective of whether it is asked to do so. Subject to what the Minister has to say in reply, that does not appear to be a requirement laid down in the Bill. Even the reference in subsection (1) to the Civil Aviation Authority making a determination whenever it considers it appropriate to do so is not clear as to whether it also means reviewing a market power determination it has made that the test has been met or whether it applies only to making determinations where it has not previously been decided that the test has been met.

If the Minister does not intend to accept the amendment, I hope that he will say why the Government do not consider it appropriate, if that be their argument, or which provisions already in the Bill cover the issue raised in the amendment. Perhaps the Minister could also say how often the Government expect the Civil Aviation Authority to be making market power determinations. Are they likely to be regular occurrences and is it anticipated that such decisions will have to be revised or amended on a regular or frequent basis or only rarely? I beg to move.

I was surprised at the last sitting of the Committee when my noble friend made it clear that it is envisaged by the Government that there should be competition between two different terminals at the same airport. At an airport such as the JFK International in New York, where the terminals are situated widely apart and are approached in different ways, there may be some sense in that. Even in as large an airport as Heathrow, which now has five terminals, I find it difficult to conceive how there could be competition between the various terminals. It is built into this clause, on which the noble Lord, Lord Rosser, has moved his amendment, which seems to have some merit.

I would be grateful if, in responding, my noble friend could describe how he sees such competition arising. At the moment, taking Heathrow or Gatwick as an example, they are all under the same management. It may be separate between the airports; I find it difficult to conceive how it might happen between terminals. I would be grateful if my noble friend could explain how this might come about. It would obviously need to involve a change of ownership between the different terminals. Is there any prospect of that or is it somehow envisaged that there should be competition without a change of ownership? Perhaps my noble friend might explain that.

Like the noble Lord, Lord Jenkin, I, too, was confused. I suppose there could be competition with baggage handling taxi services. The heart of an airport is, after all, the runways. Is it envisaged that there is competition between two runways? If it is, that is remarkably stupid. One never knows, and it will be interesting to hear what is subject to competition in this clause and what is definitely not, within a particular airport.

My Lords, I thank the noble Lord, Lord Rosser, for the explanation for the rationale behind this amendment. I am afraid that I must oppose it, for two reasons. The first is substantive and the second is technical.

The amendment would oblige the regulator to review its market power determinations at such intervals as it considers appropriate. Clause 7 provides that a market power determination is a determination by the CAA that an airport operator does or does not meet the market power test in relation to an airport area. Where it does, the operator is subject to economic regulation under the Bill. Where it does not, it is not subject to economic regulation.

Let me now turn to my reasons for opposing this probing amendment. The substantive reason is that the amendment is unnecessary. Clause 7(1) expressly empowers the CAA to make a market power determination,

“whenever it considers it appropriate to do so”.

I am mindful of the underlying purpose of Part 1 of the Bill which is broadly to further the interests of end users by regulating airport operators where necessary. I note also the CAA’s subordinate duty at Clause 1(4)(b) to have regard to the principle that,

“regulatory activities should be targeted only at cases in which action is needed”.

In answer to the question of the noble Lord, Lord Rosser, it is implicit that where changes in circumstances lead the CAA to believe that there are reasonable grounds to believe an operator presently subject to regulation should cease to be regulated, or vice versa, then it would investigate further. If appropriate, it would then conduct a full market power determination. I am reinforced in my view because Clause 7(2) obliges the CAA to make a market power determination in certain circumstances. Against this background, the noble Lord’s amendment adds little to the Bill

There is a further technical difficulty with the amendment, which I accept is a probing one. It is not wholly clear what is meant by a “review” of a market power determination. Presumably it is something short of conducting a full market power determination. Perhaps it may involve a consideration of whether the underlying circumstances have changed. However, no further provision is made to publish the results of the review or to take action in the light of its conclusions. In short, neither the purpose nor the effect of undertaking a review is made clear in the amendment.

My noble friend Lord Jenkin asked about competition between different facilities in an airport. The recommendation was made by the Competition Commission; we are implementing it.

My noble friend must explain how it would work. I find it very difficult to see how it would if the facilities were under the same management.

My Lords, if they were under separate management there could be a competition situation. Under the current legislation, one simply cannot regulate because it does not provide for competition within one airport. Therefore, we are future-proofing the legislation.

The CAA’s functions under Chapter 1 comprise, broadly, deciding whether an airport operator should be subject to regulation—and if it should, regulating it accordingly. Clause 1(1) requires the CAA to carry out its functions under Chapter 1 in order to further the interests of passengers and freight owners in the provision of airport services. Under Clause 1(2) the CAA is required to promote competition when doing so, but only where it is appropriate to its carrying out its functions under Chapter 1. This is set out in Clause 1(2).

The concept of competition in provision captures competition in the provision of airport operational services between all airports, regulated and non-regulated, and competition in airport operational services within airports—for example, competition between terminals. However, the CAA must promote competition only where appropriate. It would not be appropriate to promote competition where the CAA was not carrying out its duty under Clause 1(1)—specifically, where promoting competition does not further the interests of users of air transport services in the range, availability, continuity, cost and quality of airport operational services.

Perhaps I might seek confirmation of what the Minister said to the noble Lord, Lord Jenkin. Will he confirm that Clause 7(4) applies to airports where the number of passenger movements exceeds 5 million—I refer to a Written Answer of 20 June to the noble Lord, Lord Laird—and that therefore Heathrow, Gatwick, Stansted and Luton would all be covered by the clause?

My Lords, the large airport test certainly applies in Clause 7(2), which refers to areas located in large airports. It goes on to define a large airport. I suspect that the CAA can make a determination on any other airport at a later stage if it becomes apparent that it might be in need of regulation and meets the tests in the Bill. Therefore, I invite the noble Lord, Lord Rosser, to withdraw his amendment.

Perhaps I might ask the noble Earl one last question before I withdraw my probing amendment. The thrust of his response seemed to be that what I sought to achieve with the amendment was covered by other parts of Clause 7. Do other parts of Clause 7 allow the CAA to initiate a review of an earlier decision that it has made off its own bat, or only if it is asked to by a person listed in subsection (3)?

My Lords, my understanding is that as soon as the CAA realises that it is appropriate to initiate a review because circumstances have changed, it can do so.

That is a very clear answer. The Minister has said that the CAA can do it off its own bat. I will want to read the Minister’s response carefully but my initial reaction is that if the Minister is saying that my amendment is covered by other wording in Clause 7, the point that I seek to establish has been met. I will not go down the road of competition, which has been raised, since that will be dealt with by a subsequent amendment. I will wait for it to appear. I thank the Minister for his response and beg leave to withdraw the amendment.

Amendment 17 withdrawn.

Clause 7 agreed.

Clause 8 agreed.

Clause 9 : Operators of areas

Debate on whether Clause 9 should stand part of the Bill.

My Lords, as the Committee will recognise, we are anxious about Clause 9 and the two succeeding clauses, which relate to the very issue that we discussed under the previous amendment. This gives us a chance to explore much more fully the kind of issues that were opened up by the probing amendment a few moments ago. It may be looked on as something of a blunderbuss to fire at the Minister at this stage, particularly when he was so generous in his response to a question that I asked earlier in the House today. However, the blunderbuss is there simply because, like the noble Lord, Lord Jenkin, we are not quite sure what the implications of the Bill as it is drafted are. Therefore, we want as full and wide a debate as possible about an extremely important area.

The first question that the Minister needs to answer is: where is the demand for this provision of inter-terminal competition from the industry? All submissions that noble Lords will have received on this issue are, for a very good reason, critical of and hostile to the proposal that the Government have put forward. Airports require substantial investment. They need the confidence of investors in the resources that they intend to utilise. However, here there seems to be a proposal that the authority could promote competition between terminals when the whole structure of an airport’s finances is on the basis that such competition does not exist and, for very good reasons, ought not to exist. I shall elaborate on those reasons in a moment. However, what is more, the Bill says that if a decision is taken on this, it will be done through secondary legislation. We all know the limitations of secondary legislation in debating the fundamental principles of how an airport is to operate.

The noble Lord, Lord Jenkin, referred to the one airport that most us know has inter-terminal competition at present, namely JFK International Airport. He was quite mild in his assessment of the position there. Many other people are pretty critical of just how expensive that airport is, its lack of efficiency and the competition between terminals. It has the features to which the noble Lord, Lord Jenkin referred—a wide expanse of differentiation between terminals and a large number of them. However, that still does not mean that many of us, and much of informed opinion, cannot see the advantages that have been derived there from such competition. Representations from the industry show that it is extremely critical of this proposal. The Minister used the phrase “future-proofing” as the reason for this potential development, but the trouble with that is that it might cause disruption, consternation and anxiety here and now against a most uncertain future. When airports have made their representations on this issue, they have been pretty forthright about the disadvantages.

First, they foresee the potential for a substantial increase in operating costs because the economies of scale that airports are able to realise in their present arrangements through their ability to optimise capacity across all their terminals will be lost. That would be a substantial disadvantage to passengers. Secondly, inter-terminal competition is conceivable only where there is significant spare capacity. If one target for this is London Heathrow, “spare capacity” is just about the most inapplicable concept one could think of. The Minister should tell us where he thinks there is a large airport with more than one terminal that has sufficient spare capacity to be able to adapt to this situation. Where there is any spare capacity, the airport operator has an element of freedom to deal with the exigencies of particular situations. The Minister will have to explain the rationale behind Clause 9.

Moreover, the Minister will be all too well aware that airlines have very different needs. The reason an airport has different arrangements in its terminals is because it seeks to cater for the range of different needs of the various airlines. It will want to be in a competitive position so as to attract airlines through these differences. It is clear that no-frills operators have different needs from those who operate a full service on long-haul scheduled carriers. A single operator can accommodate these differences. I shall give one example. One of the terminals at Manchester airport is set up for holiday traffic. Because of the nature of the arrivals and departures of those flights, Manchester has made specific provision in the terminal to cope with it.

It must be recognised, of course, that difficulties can arise when airlines move. They have the freedom to do so and they exploit it to move to different airports. Gatwick made representations to the Committee and the Government indicating that when Delta, a large airline, quit Gatwick, that had a significant effect on its traffic and accordingly it had to make considerable changes. To adapt terminals to accommodate all sorts of traffic would be expensive. It would run counter to the investment that has already been made in our major airports.

There are other anxieties about the Government’s proposals. Obviously, when planning is carried out for airport development, it will not be easy to put forward proposals which envisage the possibility of a substantial section of the airport—one of its terminals—being sold off and therefore being subject to a different strategy from that in which people have invested. It also affects the airport in dealing with its suppliers. Airports can strike deals with significant suppliers of the very large amount of commerce which is transacted within them. Under the proposal which is envisaged here, these arrangements could be severely disrupted. One terminal would potentially deal with one group of suppliers and another could deal with another group of suppliers.

We do not feel that the Government have taken on board the industry’s anxieties about a piece of future-proofing which appears to be of potential benefit to the Government in terms of legislative time but has very little to do with the actual operation of airports. The Government are clearly not able to identify it as a demand within the industry. It would cause severe difficulties. There have been difficulties just on the relatively minor, if still important, issues of airlines choosing under the free market, as they are entirely entitled to do, to change their requirements and move to another airport. The concept of competition between terminals takes us a massive stage further.

The Minister indicated in the debate on Amendment 17 that he thought that it was unnecessary, and that the clause provided an opportunity for action when it is needed. I am not at all clear that a case has been made for action in terms of competition between individual terminals. I cannot see just where the demand is coming from at this stage. However, I am aware of airports’ anxieties about losing a great deal from the arrangements, and the fact that that the arrangements might prove largely unworkable.

Again, I apologise to the Committee for the fact that our amendments are not more precise on these issues, but this a pretty general problem. That is why we thought that it would be advantageous for us to speak against the clause standing part in Committee, in order that voice could given to the general issues which are raised by Clause 9 and the immediately subsequent clauses.

My Lords, I shall expand a little on the comments of my noble friend Lord Davies of Oldham. A question needs to be asked: who will benefit from these three clauses? Will the passengers benefit? In my experience, when I want to go from A to B by air, I go to a website and look at the different airlines on different routes. Let us consider Stansted, for a change; we keep on talking about Heathrow. We are told that Stansted has lots of capacity. It has one terminal and one or two satellites from where the lower-cost airlines operate, and they make you walk a hundred miles to compensate you, presumably for paying lower landing fees. I suppose that those satellites, with a little engineering work, could be converted into a separate terminal, but how will the passengers benefit? When you book with an airline, you do so by considering price, timing or convenience. If you are going to book with easyJet to go to Dublin, for example, you do not have a choice of which part of the terminal, or which terminal, the plane will arrive at after landing. You are told where it will be. The passengers do not, therefore, have any choice over which terminal they can go to. They choose the airline and the airline tells you where you are going to end up.

I still cannot see who is going to benefit from these clauses. The airlines will not benefit, I imagine. Some of them pay lower landing charges than others and, as a result, are told to use a particular terminal—either close by or far away from convenient public transport and other facilities. You do not book with an airline because there is a better class of McDonald’s or a restaurant in some terminals. Are the airport operators going to benefit? I cannot see how. It will cost more, as my noble friend said. The suppliers will not get as big a volume of trade as they would if they were supplying a whole terminal. You could argue that they or someone might benefit from competition. And the passengers? I would be pleased to hear from the Minister about how they would benefit from these clauses.

My Lords, I thank noble Lords for their contributions but I am afraid that I must oppose the amendment and support the Question that these important clauses stand part of the Bill.

Inter-terminal competition may be some time off and the Bill makes no provisions about timing. However, it is important that we future-proof the legislation. The noble Lord, Lord Davies of Oldham, talked about disruption and consternation. Clearly, this would not be in the interests of passengers, and the CAA would therefore not allow such competition because it would be in conflict with its primary duty to the passengers and owners of cargo.

The noble Lord said that different airlines have different needs. He is, of course, quite right. Some airlines want to run a premium service and others want to be no-frills. However, the CAA will have to strike the balance between those differing requirements as well as replicate the effect of competition.

The Bill does not, in general, require inter-terminal competition but does accommodate the possibility. Promoting competition between terminals under the Bill would not happen if the cost implications of doing so meant that it would not benefit the passengers, again under the CAA’s primary duty. In the circumstances postulated, there is no question that the CAA would seek to require inter-terminal competition. If, however, an airport chose, say, to lease a terminal to a third party, the Bill would remain in service, and I will come back to that in a moment.

Clause 10 empowers the CAA to determine, by applying the criteria set out in Clause 9, including in cases where one or more separate entities have some form of management control over that area. Clause 11 contains provisions for the publication of operator determinations made under Clause 10 by the CAA. Clause 12 empowers the CAA to make operator determination in advance, on the basis of circumstances that may not yet have arisen.

The amendments to Clause 12 seek to remove the CAA’s powers to carry out an advance operator determination. However, before I get on to why the amendments are not desirable, I wish to reassure your Lordships on why “standard” operator determinations under Clauses 9, 10 and 11 are a necessary part of the legislation. These clauses are important for regulatory certainty, enabling a person to know whether they are the operator of an airport area for the purposes of Part 1. Otherwise, in difficult cases it will be uncertain who the operator is and who is not, and therefore who is and who is not subject to economic regulation. This means that they cannot be clear as to their legal obligations, and neither they nor their financial backers can know with certainty whether they will be subject to economic regulation.

The clause is not focused solely on the possible future scenario where intra-airport competition can be introduced. For example, it could apply where a whole airport was leased and some management functions were split between lessor and lessee. However, noble Lords have rightly pointed out that these clauses are important for ensuring that the Bill allows for the regulatory regime to work in a scenario where there are multiple operators of different airport areas at one airport—in other words, where there is inter-terminal competition. Inter-terminal competition is more likely to lead to more complex ownership arrangements.

I have already mentioned that it was a recommendation of the Competition Commission in its BAA Airports Market Investigation report of 2008 to allow for the regulatory regime to function where inter-terminal competition is present. The present legislation, the Airports Act 1986, does not allow for this possibility. If we, the Government, had not made these provisions, no doubt noble Lords would suggest that we should have done so, praying in aid the Competition Commission’s recommendations. It is important to note that these clauses do not empower the CAA to introduce inter-terminal competition; they merely ensure that if inter-terminal competition becomes a reality, the regulatory regime can accommodate the scenario.

Clause 10 empowers the CAA to make binding operator determinations on the basis of the circumstances at the time the determination is made. However, this is considered insufficient where a person wants to know whether they will comprise the “operator” in the event that they take some control over an airport area. Against this background, to allow for greater regulatory and commercial certainty, Clause 12 empowers the CAA to make advance determinations—that is, determinations on the basis of circumstances that have not yet arisen. This would include a determination that, if a lease were executed with specified terms, the lessee would or would not comprise the operator.

The first amendment would deprive the CAA of the power to make an advance operator determination. The Government cannot agree to this because it would increase regulatory uncertainty and possibly stultify commercial transactions. I therefore urge noble Lords to withdraw their opposition to the clauses.

My Lords, the Minister made the best fist that he could of a fairly weak argument. Of course, I recognise the merits of the clauses, in that he made it clear that it is important to define the operator and to know whom we are talking about. Who could possibly gainsay that proposition?

In objecting to the clause, I am not objecting to the sense that lies behind the elements within the clause to which the Minister addressed some of his remarks. I indicated that in opposing the clause I recognised this to be a fairly blunderbuss approach and that we have not refined our opposition in amendments—something that we may do in due course, perhaps on Report. However, I say to the Minister that in this general debate anxieties have been expressed across the Committee, and he has not allayed those anxieties at all, apart from—

I am afraid that the noble Lord is mistaken. The Minister has very much allayed my anxieties about this matter. I see these clauses as facilitating competition between terminals at a particular airport. What is the matter with that? When the operator comes to choose the terminal from which he wishes to operate, he will select the one that offers him the best deal—maybe it has the best duty-free shops or is the cheapest—and these benefits will be passed on to the passengers. I am very much in favour of these clauses and I hope that the noble Lord will not press the question of whether they should stand part of the Bill.

I am delighted that the noble Lord had his anxieties allayed. They are obviously not as acute as those on this side of the Committee. In particular, if the noble Lord is all in favour of inter-terminal competition, perhaps he will ask the Minister to identify just where this is a raging success that we would want to encourage. The only specific example that we have so far is subject to considerable criticism. As the noble Lord indicated, airport operators are accurately defined in the legislation; I will not gainsay the necessity of that. None of them speaks well of future-proofing what they regard as a disadvantageous element of the Bill, which will introduce the possibility of inter-terminal competition. In particular, by putting it in the Bill in the way that they have, the Government limit parliamentary debate to secondary legislation. We know the limitations of that.

However, I seek to identify that this concept is a significant departure from how any British airport is run at present, and from how any successful airport is run elsewhere. Unless the Minister produces some evidence of how competition works to the benefit of the passenger—which he signally failed to do in his earlier contribution—the Committee will recognise that, far from my anxieties being allayed, they are more pronounced. Of course, I recognise that objecting to a clause standing part—or three clauses in this case, which is the first time that I have engaged in such an extensive operation—is something from which I shall have to resile fairly promptly. However, I do so to air a significant aspect of this debate. I say to the Minister that we are so dissatisfied with the response at this stage that he must assume that we will take this issue further on Report.

I am curious about the noble Lord’s attitude to the Competition Commission’s recommendation that we should provide for inter-terminal competition. Does he support that view or not?

Of course, I recognise the role of the Competition Commission and we applaud a great deal of its work. However, when it makes recommendations, one must also consider the industry’s likely response to the proposal that is being put forward. All I say is that the noble Earl has not identified any aspect of British industry that considers this to be an intelligent and sensible development. Nor is he able to identify any example from elsewhere in the world where this form of competition has redounded to the benefit of the consumer.

With the noble Lord’s permission, I will cite an example. Many years ago, I landed my aeroplane at Miami International Airport. I had not chosen the terminal at which to land. I negotiated with three different terminals over the radio, found the cheapest and in I went—very good, too.

My Lords, that is a very good illustration. If the noble Lord had also indicated that hurricanes were raging at the time and he was able to put down with the help of the airport, I have no doubt that we would all regard that as an extreme benefit.

However, airports always adjust to emergencies, so if the noble Lord is saying that as the pilot of a private plane he can see stupendous advantages in inter-terminal competition, how many people do I have to count in order to introduce into legislation a very significant development? Is it is the number of people who own and fly private aircraft? Our consideration of government legislation ought to be undertaken on a wider perspective than that and the Government’s defence of it ought to be a jolly sight wider too. But, of course, I shall withdraw my opposition to the clause standing part.

Clause 9 agreed.

Clauses 10 and 11 agreed.

Clause 12 : Advance determinations

Amendments 18 and 19 not moved.

Clause 12 agreed.

Clause 13 agreed.

Schedule 1 : Appeals against determinations

Amendment 20

Moved by

20: Schedule 1, page 66, line 13, leave out sub-paragraph (3)

My Lords, in moving government Amendment 20, I shall speak also to government Amendments 21, 22, 23, 30, 32, 33, 35 to 45 and 61 to 63. These 20 amendments are being taken together because they all relate to appeals to the Competition Commission and the Competition Appeal Tribunal. Some 13 of the amendments give effect to our position that the Competition Commission and the Competition Appeal Tribunal should decide appeals on the same grounds. The other seven amendments ensure that both the Competition Commission and the Competition Appeal Tribunal have regard to the duties imposed on the CAA as set out in Clause 1 when deciding an appeal. For brevity, I will refer to the Competition Commission as the CC and to the Competition Appeal Tribunal as the CAT.

It has come to the Government’s attention that the current drafting in the Bill gives rise to inconsistency between the grounds on which the CC and the CAT may allow an appeal. In the present drafting, although the legal grounds on which an appeal may be allowed are the same, the CAT is specifically required to decide the appeal by reference to these grounds and “on the merits”. There is no equivalent provision for the CC to decide the appeal “on the merits”.

The Government are concerned that this inconsistency creates unnecessary and undesirable legal uncertainty. We wish to correct this to shut out any risk that under the current wording it could be interpreted that different powers are being conferred on the CC and the CAT. In summary, these amendments propose changes to the provisions about appeals to the CAT to align them with provisions about appeals to the CC.

Amendment 30 is to one of the grounds on which the CC may allow an appeal under Clauses 24 or 25 which relate to appeals against conditions of new licences and modifications to the licence conditions. The amendment would change the ground on which the CC may allow an appeal from,

“that the decision was based on the wrong exercise of a discretion”,

as it is currently in the Bill, to,

“that an error was made in the exercise of a discretion”,

as per the amendment. This amendment is being made to clarify the current drafting.

The remaining amendments are specific to appeals brought before the CAT. Amendments 35, 36, 37, 40, 43 and 61 delete the subsections that contain the current grounds on which the CAT may allow an appeal in Schedules 1, 3, 4, 5 and 13. Amendment 20 deletes a provision stating that an appeal may be brought on only one of the current grounds. Amendments 21, 38, 41, 44 and 62 replace these grounds with the same grounds as provided for in Clause 26 concerning appeals to the CC from,

“that the determination is based on the wrong exercise of a discretion”,

to,

“that an error was made in the exercise of a discretion”.

In particular, Amendments 21, 38, 41, 44 and 62 ensure that the CAT’s consideration of appeals is consistent with the CC’s by, first, removing the phrase “on the merits” from the grounds on which the CAT must decide an appeal, as just discussed; secondly, introducing an overall requirement that the decision appealed against was wrong on specified grounds—error of fact, wrong in law, and error in the exercise of discretion; thirdly, restricting the grounds for determining the appeal in the same way as for the CC; and, fourthly, reflecting Amendment 20 which, as I have just mentioned, clarifies the grounds of wrong exercise of discretion.

The overall result of these 13 amendments is that both the CC and the CAT may allow an appeal only to the extent that they are satisfied that the decision appealed against was wrong on one or more of the following grounds: that the decision or determination was based on an error of fact; that the decision or determination was wrong in law; and that an error was made in the exercise of a discretion.

These amendments are important to deliver the Government’s policy intention that the grounds on which the CC and the CAT decide appeals should be the same. They are also in keeping with our wish to deliver an efficient and effective appeals regime. These amendments allow the CC and the CAT to take a decision that offers something more than judicial review but does not extend to a potentially lengthy full rehearing of the case. The remaining seven amendments again ensure consistency between the two bodies. Amendments 32 and 33 to Clause 30 specify that when the Competition Commission is carrying out its functions as specified under subsection (4) of Clause 30, it must have regard to the matters,

“in respect of which duties are imposed on the CAA by section 1”.

Amendments 22, 39, 42 and 45 import an express duty on the CAT to have regard to the CAA’s duties as set out in Section 1 when deciding an appeal under Schedules 1, 3, 4 and 5. Amendment 63 imports an express duty on the CAT to have regard to the CAA’s duties as set out in Section 4 of the Civil Aviation Act 1982 when deciding an appeal under Schedule 13. My officials have engaged extensively with the CAT and the CC on this matter and they are content with the amendments. I commend them to your Lordships.

My Lords, perhaps I may take one of the amendments in the group to make my point. Government Amendment 30 deletes paragraph (c) in Clause 26, which says that the Competition Commission may allow an appeal under Section 24 or 25 only to the extent that it is satisfied that the decision appealed against was wrong on one or more of the following grounds, one of which is that the decision was based on the wrong exercise of a discretion. That wording has now been replaced in government Amendment 30 with the wording,

“that an error was made in the exercise of a discretion”.

I endeavoured to listen carefully to what the Minister had to say about this group of amendments and, if he did cover my point, I would be grateful if he could repeat his explanation. He seemed to say that this was all about clarifying the current drafting as opposed to explaining what the difference was between the wording in the Bill and what is being proposed, bearing in mind that it is not the same wording and therefore presumably does not mean exactly the same.

It would be helpful if the Minister could explain what this change in wording means. I refer to government Amendment 30 to paragraph (c) in Clause 26. Does the change from “wrong exercise” mean that although a decision was made incorrectly, the process was fine and the options to choose from were correct, the proposed wording,

“an error was made in the exercise of a discretion”,

is meant to imply that the exercise itself was flawed, had the wrong information to hand, was conducted incorrectly and options were considered that should not have been? It is important that we do not just get told, “We are seeking to clarify the current drafting”, but that we have a full explanation as to what the current wording in Clause 26 means—this relates to,

“that the decision was based on the wrong exercise of a discretion”,

and how that differs in meaning from the wording with which Amendment 21 replaces it,

“that an error was made in the exercise of a discretion”.

I hope that the Minister can clarify the position.

Before the Minister replies, I was looking at this with some interest. I cannot help feeling that the issue might be one of parliamentary drafting. I would like to know whether the CAA, the airlines or the Competition Commission asked for the wording to be changed. My noble friend Lord Rosser has already pointed out that there is a change of wording, with “the wrong exercise”, but it is also odd that the original wording from Schedule 1 is in the present tense, whereas the wording in the amendment is in the past tense. I cannot help feeling that the parliamentary draftsman who did it first was found to have got something slightly wrong; I am not sure what. It is puzzling why that wording has changed from the present to the past tense, unless it is just for a legal reason. If there is another reason, I would like to see where the amendment came from and why.

My Lords, I am full of admiration for the textual criticism of the noble Lords opposite. I have a rather simpler question for my noble friend. As I listen to him, and I try to do so carefully, the main purpose of this large group of amendments is to ensure that the same rules apply to the Competition Commission and the Competition Appeal Tribunal. How is it that anybody ever thought that the rules should be different? Why is it only at this stage that we are making them all the same? Was there some purpose to the way in which the Bill was originally drafted? I would be most grateful for an explanation. I am sure that there is a perfectly good reason, but I do not know what it is.

There is a reason I am picking up on this, of course. I am a member of the Delegated Powers and Regulatory Reform Committee. We are getting increasingly worried about the quality of drafting of government Bills. It looks like a case where the drafting has changed for some reason. I do not want to be critical of the parliamentary draftsman concerned without knowing the facts but, if we flag it up as rather odd, there might be an explanation. I do not know what it is, and I would quite like to.

My Lords, the Committee will recognise that parliamentary draftsmen work in peculiar ways. It may be helpful if I read out what I said on this particular amendment again. Amendment 30 is to one of the grounds on which the CC may allow an appeal under Clause 24 or Clause 25, which relate to appeals against conditions of new licences and modifications of licence conditions. The amendment would change the grounds on which the CC may allow an appeal from,

“that the decision was based on the wrong exercise of a discretion”,

to,

“that an error was made in the exercise of a discretion”.

The view was taken that the drafting in Clause 26(c) could have been better expressed. There was no external request to change this wording, but the Committee will understand that officials go over the drafting again. It seems to me that it is better drafting. Originally, the grounds of appeal were based on statutory precedent, based on retrospective appeals to the CC and the CAT. The wording varied slightly. That is how the inconsistency first arose.

Perhaps I may come back briefly. In a way the Minister has answered the question. The Delegated Powers Committee—not just the parliamentary draftsmen—worries about the quantity of legislation and the way in which it is often hastily drawn up. We end up making changes of this type which do not seem to come anywhere other than in Bills that are brought out by the Government in a state of incomplete readiness. We end up having an awful lot of amendments on the Floor of the House. This has happened under successive Governments and therefore successive parliamentary draftsmen. I suspect that the fault lies both in the way we manage government and in the expectations we place on parliamentary draftsmen. It is an indication of how things can go wrong. My guess—it is only a guess; I am not a lawyer—is that the interpretation by a court of the original wording in the Bill would have been different from the interpretation by a court of the amendment tabled by the Government. On that basis I understand it but I am glad that the Minister clarified it.

Perhaps I may ask the Minister to clarify what the wording means. When I made my contribution a few moments ago, I asked whether the current wording,

“wrong exercise of a discretion”,

meant that if a decision was made incorrectly, the process was fine and the options to choose from were still correct. I then asked if the new wording,

“error … made in the exercise of a discretion”,

was intended to imply that that the exercise itself was flawed, that it had the wrong information to hand or was conducted incorrectly, and that options had been considered that should not have been. Does the wording we now have mean one of those two options—and, if so, which one?

I have not heard an answer to my question. Why were there different rules for the Competition Commission and the Competition Appeal Tribunal? What was the original reason for having different rules? I entirely support the proposition that the rules should be the same; it makes a great deal of sense. However, I am puzzled by why somebody at some stage thought they should be different.

My Lords, as I said, originally the grounds of appeal were based on statutory precedent and retrospective appeals to the CC and the CAT. The wording varied slightly; that is how the inconsistency arose.

Amendment 20 agreed.

Amendments 21 to 23

Moved by

21: Schedule 1, page 67, line 4, leave out sub-paragraph (1) and insert—

“( ) The Competition Appeal Tribunal may allow an appeal under paragraph 1 only to the extent that it is satisfied that the market power determination or operator determination appealed against was wrong on one or more of the following grounds—

(a) that the determination was based on an error of fact;(b) that the determination was wrong in law;(c) that an error was made in the exercise of a discretion.”

22: Schedule 1, page 67, line 35, at end insert—

“( ) When deciding an appeal under paragraph 1 (including giving directions) or making a market power determination or operator determination, the Competition Appeal Tribunal must have regard to the matters in respect of which duties are imposed on the CAA by section 1.”

23: Schedule 1, page 67, line 35, at end insert—

“( ) When deciding an appeal under paragraph 1 relating to a market power determination (including giving directions) or making such a determination, the Competition Appeal Tribunal must have regard to the notices, guidance, advice and information described in section 6(10).”

Amendments 21 to 23 agreed.

Schedule 1, as amended, agreed.

Clauses 14 to 17 agreed.

Clause 18: Licence conditions

Amendment 24

Moved by

24: Clause 18, page 13, line 13, at end insert—

“( ) A licence must include an obligation on licence holders to procure and publish annual surveys of passenger satisfaction, including but not limited to—

(a) baggage handling services, and(b) arrangements for delays to affected air passengers.”

My Lords, I shall speak also to Amendments 25 and 26 in this group. Amendment 24 is fairly straightforward. We should remember that a principle of the Bill is ensuring customer satisfaction and the welfare of passengers. We seek through the amendments in this group to make the possibility of those satisfactions greater by ensuring that there is an annual survey of passenger satisfaction that would include baggage-handling services, which we recognise are outside the control of the airport operator because they are under private contract, and arrangements after delays to air passengers.

All forms of transport can produce their irritations and even the most trouble-free journey can attract criticism. However, dissatisfaction with air transport hits the headlines from time to time—regular travellers, given their experience, probably feel that it does not hit the headlines often enough. Amendment 24 would require the airport authorities to carry out regular surveys in order better to inform them on the nature of consumer dissatisfaction. The surveys would cover all delays and the arrangements made as a consequence, because there is no doubt that delay is an all-too-common feature of air travel and causes a great deal of disturbance to passengers.

There are commendable parts of the Bill and the Minister appreciates that we are broadly in favour of it. As we indicated on Second Reading, we accept its principles. One of the principles is the value of open data and publishing information that will advance the service provided by airports. There is no doubt that information about delays and the experience of the services offered at airports can do two things: improve the performance of the airport that is subject to criticism through these reports and inform the passenger of comparative performance. Given that airports can be competitive in terms of the services that they operate and the airlines that fly from them, this information for passengers should be welcomed.

I put forward these principles in the knowledge that other Members of the Committee are likely to be well disposed towards something more than just freedom of information requests and consider that accurate information on performance should be volunteered to the general public. We all know that when things go wrong, they often go very badly wrong indeed. In its pre-legislative scrutiny of the Bill, the Select Committee on Transport in the other place said that, where possible, airport licences should be structured to address key areas of passenger satisfaction. The surveys that are carried out demonstrate, in the main, a positive attitude to the flight experience, because people are successful in getting from one point to another. Not many people do that on a daily basis, although I have no doubt that a few benighted souls are forced to depend on air travel to that extent. However, levels of satisfaction show less than optimum agreement on baggage handling, which can often prove to be a massive irritation, and on delays at border control, which is a substantial issue.

I am conscious that in the other place it was indicated that the Bill cannot impact directly on government policy on immigration control and the Home Office’s operational control of UKBA. I respect that limitation. However, we cannot discuss issues about airport delays without making reference to the obvious fact that security considerations often prove to be the source of some of the most irksome delays. Therefore, when the Minister replies, I hope that he will not just fall back on the point that I have already conceded—that this legislation can deal with them directly—but that he will appreciate, when considering the issue of the welfare of passengers and the satisfaction that they derive from their flights, because problems occur because there has not been sufficient anticipation of the demands made of the border force, because there are insufficient officers on duty, or because a decision is taken, for security reasons, that every single passenger, whatever their category, should be subject to exactly the same controls. We are bound to acknowledge that this is of concern to us. We all have the welfare of the industry at heart, but this is a subject of very considerable anxiety among passengers.

I have discussed this issue externally in order to get a slightly more objective view, rather than just being critical of the arrangements in the United Kingdom. I have friends who regularly experience the delights of entering the United States of America—delights that often translate into great appreciation of the country once they are there but scarcely describe the experience they often encounter at US airports. British people enter as aliens, of course, and are subject to what often looks like a somewhat arbitrary operation on the part of the American authorities. Huge queues develop and it is not unusual for people disgorged from aircraft to have to wait for several hours in queues for entry into the country. I take it that we seek to make representations on behalf of British citizens when these problems arise, so we ought to pay the same due consideration with regard to flights into Britain.

Amendment 25 would require,

“the holder of a licence to develop passenger welfare plans”.

This was a recommendation made by the Transport Committee following its pre-legislative scrutiny of the Bill. We pay tribute to the fact that the Civil Aviation Authority has made some constructive moves in this direction. It has established a consumer panel to act as a critical friend. We certainly would like to buttress the position of the Transport Committee, which is that the consumer panel ought to focus on the welfare of passengers. The panel was established recently and, as I say, its purpose is to act as a critical friend. It provides a consumer perspective on all aspects of the CAA’s work, which is very welcome, and in particular it is meant to concentrate on the passenger experience and the enforcement of consumer protection legislation. The panel members are looked to to provide a source of challenge to the Civil Aviation Authority on how to identify consumer interests and to ensure that they are reflected in the authority’s work. However, in this legislation the Government have not included passenger welfare plans as part of a licence for airports. They simply claim that the CAA will draw up licences to cover such welfare.

I have paid due respect to the CAA’s intentions and to what it has done so far, but we do not think that this provision in the Bill is strong enough. If the primary duty of the Bill is to the passenger, then developing welfare plans further reinforces the focus on giving passengers the best experience at our airports—something that clearly has not happened in the recent past. We all recall the experiences of the winter before last and the distress caused to a very large number of people who had no guidance at all on how to cope with the severity of that emergency. Those are not scenes that we ever wish to see repeated. As I indicated, I recognise that some steps have been taken, but I cannot see why the Government are not firm enough in this legislation to make direct provision for welfare plans, which is why I am speaking as positively as I can to Amendment 25.

It is quite clear that the licence holder has to take responsibility for passengers stranded at airports. If a whole series of flights is stopped and people are left in the airport concourse, they will be largely devoid of the wherewithal and resources to get themselves out of that appalling situation. That is why it is necessary that efforts are made to ensure that the airport knows what to do in such an emergency, however large the scale. I do not underestimate the problem—I know how difficult it is—nor do I underestimate the efforts that were made even on the occasion a year or so ago that attracted so much attention. However, the legislation before us creates the conditions for an airport licence and surely we must include within them the stipulation that the airport must have a strategy for dealing with those kinds of difficulties.

I move Amendment 24 and speak to the other two amendments in the group against a background where nothing is more damaging to the aviation industry than the kinds of headlines that have been attendant upon the worst of these calamities. We should appreciate just how distressing these situations are for the people involved, who often include a large number of children and individuals who just do not have the capacity to cope with the travails attendant upon people in these delays. Leaving passengers on airport concourses is not good enough. I beg to move.

I ask my noble friend to consider very carefully the arrangements now in place in the bus and rail industries for taking care of passengers. These have been built up over a long period, although they are certainly not completely fair. Statistics on performance are very regularly published but this issue goes very much wider than performance; it relates to things such as looking after people who miss their connections or trains. When I was chairman of the bus users’ council, I was concerned about people who were left in draughty old bus stations because the last bus did not run, or something of the sort. These are all people who need protection. I am slightly surprised, but I am perhaps better advised, by what the noble Lord, Lord Davies, has said: people at airports should at least be protected as well as passengers who use buses or trains.

I am broadly sympathetic to this group of amendments tabled by my noble friend Lord Davies, and to the recommendations of the Transport Select Committee. It is always dangerous to put too much in a Bill, but on this we need to start with the recognition that when a person comes into an airport, particularly to a major airport such as Heathrow, it is their first impression of the United Kingdom. If they are coming here from any of the emerging countries—especially China, India or Brazil—the image for someone who is thinking of setting up a business and investing here is not good. It has got a lot better since Terminal 5 opened at Heathrow. I readily accept that there is a much greater desire to do things about this. I also accept that, as my noble friend Lord Davies has pointed out, a lot of the recent problems were not caused by things that the Bill will cover; they were caused by immigration control and so on. The image of vast queues moving very slowly—which is what were seen, even if that issue will not be covered by these amendments—is very bad for Britain. It is less true for other airports but it is still true; so we need to get our act together and do rather better on this.

I was trying to envisage someone who had just emerged from one of these long queues taking part in one of these surveys, whether for immigration purposes or anything else. They might give some short, sharp answers to the questions. We have to do better. That is the thrust of these amendments and of what the Transport Select Committee was saying. I urge the Minister to look at this matter sympathetically and see whether he can come up with some way of constantly emphasising the importance of the passenger having a good experience. It does not do our business or general tourist travel any good at all to have the images we have had.

I dread to think of what will happen if we have problems of runway availability at Heathrow during the Olympics. You can see what will happen if there is a severe weather event that causes a back-up because there is no alternative runway space. You then have the inevitable position of all the other problems at the airport, and you will have some very disappointed people coming into Britain. This is rather important and the airports and the Government need to look at this whole area.

My Lords, I am sure that most of us travelling through airports have been approached at one time or another by the person with the dreaded clipboard. No doubt all noble Lords here were free and giving of their time and answers to help these people establish their true feelings.

Whether the particular methodology contained in these amendments is right, I am not sure. No one wants to add to the difficulties of getting a licence or to the bureaucracy involved. Nevertheless, underneath all that, the noble Lord, Lord Davies, is making a fundamental point that we all share. There have been a number of cases in recent years where the whole image of this country and the welfare of many thousands of passengers have undoubtedly been put to the test. Unfortunately, on some occasions, the relevant airports have failed that test. One constantly hears that there is an absence of information being fed back to the passenger.

Of course, these emergencies obviously come out of the blue in many cases. Sometimes the airports are not properly prepared, they do not have enough staff or facilities and one understands that this is not easy to cure. Nevertheless, it should be at the core of what we are trying to do. We are trying to make aviation more efficient but, in parallel with that, we have to make it a more pleasurable experience.

In so many walks of life—we are talking mostly about finance—consumer welfare and consumer benefits are put at the core of many of the things that we do in this country. That is right and there is therefore some merit in these amendments. Whether this methodology is the right one is not necessarily the issue today. The point is that there is a fundamental issue, and I hope that the Minister will refer to it in his reply. Should there be a broadly understood standard that would apply to all airport operators in the event that an emergency will arise, as it inevitably will; and how are people to be treated? Are we to continue to see our television screens covered with images of passengers complaining about their treatment, delays and lack of information?

In order to raise standards, which is our general objective, there should surely be some methodology. I have an open mind as to whether or not it should be this precise mechanism but I hope the Minister will at least acknowledge that this must be at the core of what we do.

My Lords, following the comment of my noble friend Lord Soley about immigration, by coincidence I have in the Crime and Courts Bill an amendment about the immigration service which may be discussed later tonight. The service is woefully inadequate, as my noble friend said. The delays are reflecting very badly on the country.

Passenger satisfaction should be measured in respect of immigration delays as well as many other things, because they are quite significant. My suggestion that I shall probably put tonight is that the immigration service should be given targets. I am not sure that this Government like targets but there might be a target for people with EU passports to wait for not more than 10 minutes, and for those from third countries to wait for not more than half an hour. We can debate what the targets should be. The crucial thing is that the immigration service should be required to pay some kind of compensation to the airlines if they exceed those targets, unless there is an emergency or something like that.

As several noble Lords have said, the key is to have this information. I would much rather see it come from the licence holder than from the immigration service, which might be tempted to massage the figures slightly. My noble friend Lord Davies can think about whether it should go in as a further amendment on Report, but we ought to measure this matter along with some of these other issues to get independent information on passenger satisfaction regarding everything they see when they arrive at or leave an airport.

My Lords, I am aware that similar amendments were tabled in the Committee and Report stages in the House of Commons. These amendments provide us with a welcome opportunity to return to some important issues for passengers.

The noble Lord, Lord Bradshaw, talked about comparisons with the bus and rail industry arrangements. There is no reason, however, why the CAA cannot look at those rules and regulations when devising licence conditions and learn from what happens in another industry. The noble Lord, Lord Soley, talked about first impressions. They do matter and I have been impressed with the work going on at Gatwick to improve the appearance of the airport and the way it works.

The noble Lord, Lord Empey, touched on the issue of a market survey and said that passenger satisfaction is at the core of what we are trying to do. It is, but it is the duty of the CAA to achieve the desirable outcomes by means of the licence conditions.

The noble Lord, Lord Berkeley, talked about immigration issues, as did other noble Lords. A few years ago, I declined to visit the United States, even at public expense, because, frankly, I thought that the immigration arrangements there were so awful that I did not want to do it. I just said, “No, I will stay here and be with your Lordships”.

We will see what happens in the next reshuffle.

My honourable friend the Immigration Minister is reviewing what additional data may be published by the Home Office and shared with port operators. Meanwhile, the border force has responded to recent problems in a number of ways. It is tackling short-term peaks with a pool of trained staff, working with airports and airlines to ensure that they provide more accurate passenger manifests and flight schedules so that the border force can flexibly deploy staff at the right times and places, creating a new central control room for the border force at Heathrow that uses mobile teams for rapid deployment, and implementing new rostering and shift patterns. The border force is also working with Gatwick and Heathrow airports to improve passenger flows, using more specific measures such as e-gates and other biometric checks.

There can be no doubt that passengers want efficient baggage-handling services when they travel by air. The experience of recent years has also demonstrated how vital it is that airports prepare effectively for potential disruption. It is clear that the aviation sector as a whole needs to have effective means of dealing with passenger welfare during disruption of services. While I can therefore understand and agree with the sentiment behind these amendments and what noble Lords have said, I cannot recommend accepting them into the Bill. The text of the Bill already provides the most effective means of protecting passenger interests in relation to the matters raised.

Clause 18 and the licensing regime as a whole will give the CAA the flexibility to tailor licence conditions to the specific circumstances facing individual airports with substantial market power. This flexibility is an important means of minimising the distortions associated with regulatory intervention and ensuring that action taken by the CAA is proportionate. However, we also believe that giving the independent expert regulator flexibility and discretion in deciding the content of the licence is the most effective way to protect the interests of present and future passengers. If Parliament chooses to use this legislation to hard-code certain points in licences, it would constrain the regulator’s freedom to decide what priority should be afforded to different passenger concerns and what costs should be allowed for the delivery of competing consumer priorities. As the Minister of State said in Committee in the House of Commons, amendments such as these would make the licence system unbalanced because passengers care about a whole range of different issues. Moreover, a prescriptive approach in the Bill is likely to make it more difficult for the regulator to adapt its approach to the changing concerns of passengers. In 2005, who would have thought that volcanic ash would have been a major problem later on?

If we were to adopt these amendments, they would oblige the CAA to give greater weight to these factors than other matters that might become equally or more important to passengers in the future. This danger was recognised by the noble Lord, Lord Soley. Your Lordships can be very confident that the CAA will already use the new licensing powers proposed in the Bill to focus on, for example, operational resilience and passenger welfare in the event of extreme disruption—not least because of the CAA’s Clause 1 duties, as the noble Lord, Lord Davies, recognised. And why it would it not do so?

As we have discussed in Committee, in response to a request for advice from the Secretary of State, the CAA published an indicative licence in January to assist Parliament in its scrutiny of the Bill, and a copy has been sent to the House of Commons Library. At the request of the Department for Transport, the draft licence includes provisions on operational resilience. The proposals in condition 7 would require the licence holder to operate the airport efficiently and use its best endeavours to minimise detriment to passengers arising from disruption. The noble Lord, Lord Davies, mentioned disruption due to winter. When I visited Gatwick Airport before the most recent winter and saw all the new equipment in place, I was absolutely confident that the winter would be very mild.

It would also require the airport to draw up, consult on and gain the CAA’s approval for an annual resilience plan setting out how it would secure compliance with its obligations under the condition. The licence holder will then be obliged to comply with the commitments it has made in its resilience plan. The CAA sought initial views from industry in drafting the indicative licence. However, since Parliament has not yet concluded its consideration of the Bill, the CAA has not yet started to consult on proposed licence conditions for each airport that will be subject to regulation.

If the system proposed in the Bill is implemented, the CAA will consider the extent to which it is necessary or expedient to include conditions in a licence for operational resilience and other matters such as passenger welfare. The CAA expects that activities that might be expected to be part of the new licence regime would include taking into account other obligations on service quality standards, and the success of codes of conduct and voluntary arrangements being adopted by industry. Against this background we believe that putting specific requirements in the Bill on issues such as baggage handling and operational resilience could prove to be a disproportionate response that would place an unnecessary restriction on the CAA’s flexibility to develop proportionate and effective ways to address passenger concerns—and might even lead it to address the wrong ones.

In summary, the Bill provides the CAA—the body with the relevant operational expertise—after appropriate consultation, with the flexibility to determine appropriate and effective licence conditions. The amendments in this group could undermine our goal of giving the specialist regulator a flexible toolkit to protect the passenger. Therefore, I hope that the noble Lord will withdraw his amendment.

My Lords, I am grateful to noble Lords who introduced significant points, to which the Minister paid due regard—about as much regard as he paid to the points that I made in my opening speech. If through the amendments in this group I had sought to introduce microscopic instructions to the CAA on what it ought to do that would limit its capacity to fulfil its duties, I would quite understand the thrust of the Minister’s response. However, the first of the three amendments to which I addressed my remarks requires publication of an annual survey. This is not desperately specific but merely indicates that it would be a very good idea if the licence holder—the airport authority—gave some account to the general public of the effectiveness of its operation.

The second amendment suggests that the licence holder should develop passenger welfare plans. That is not specific; it merely indicates that it should be incumbent on the licence holder to fulfil the obligation that apparently underpins the Bill, which is to provide a better service to passengers. The third amendment merely suggests that support is necessary and should be provided for stranded passengers at airports. There is no Member of this Committee—including the Minister—who does not agree that action must be taken in this area. The Minister went so far as to indicate that strenuous efforts had been made to ensure that the numbers of such stranded passengers would decrease. I am not sure that Gatwick has the equipment to affect the climate and make our winters milder, but I know exactly what he meant. It now has the equipment to keep aircraft manoeuvring and able to fly, whereas over the winter that caused so much distress the airports did not have that.

We are merely asking for provision to be made for stranded passengers—an objective that the Minister says he shares—and I cannot think that the actions of the Civil Aviation Authority are cabined, confined or constrained by including these amendments in the provision on how the licence is granted. However, at this stage, I accept that the Minister is not as warm about these amendments as he is about the forecast for future winters, and I beg leave to withdraw the amendment.

Amendment 24 withdrawn.

Amendments 25 and 26 not moved.

Clause 18 agreed.

Clauses 19 and 20 agreed.

Clause 21 : Content and effect of licence conditions

Amendment 27

Moved by

27: Clause 21, page 14, line 31, at end insert—

“( ) provisions requiring the holder of a licence to prevent users of air transport services buying preferential access to check-in and security processes on an outbound journey and immigration control and baggage reclaim processes on an inbound journey.”

My Lords, it is my approach today to produce completely uncontroversial amendments, and I am sure that this will be the least controversial. I am not entirely confident that the Minister will accept it but I know that the sentiments behind it will be shared by all Members of the Committee.

The subject of concern tackled by the amendment is obvious enough, such are the difficulties at our airports at certain times. Heathrow, being the largest and dealing with the largest number of passengers, inevitably has the longest passenger queues, which are the bugbear of people entering the country. The proposal is that, if some people pay enough, they can bypass the restrictions. Surely that is so contrary to the main principle on which the coalition works—that we are all in this together—that not a single Member of the Committee will beseech the Minister to accept the proposition.

It is proposed that substantial amounts of money can be garnered by the airport by offering preferential opportunities to those who are prepared to pay. It is suggested that £1,800 will enable passengers to avoid the queues. Heathrow is thus offering a back-door service for wealthy air passengers. This does not appear in any of the normal communications to passengers but is offered discreetly to the well favoured. Wealthy air passengers can pay £1,800 to bypass the passport check queues.

I have already indicated to noble Lords that I recognise the limitations of the Bill with regard to the UK border force but this provision relates directly to the way in which passport checks are operated. Whereas some people endure queues of up to three hours because passport control desks may be understaffed, or because the pressures and anxieties surrounding the security position justifiably lead to more intensive scrutiny of passengers coming in, rich passengers can get through in minutes.

Border staff may be taken away from their regular duties to process this arrangement for the privileged, which is a VIP offering that Heathrow sought to keep secret. The airport should not pursue such strategies. It should come to an end. However, the best way of guaranteeing that neither Heathrow nor any other airport contemplates this heinous practice is to put it in legislation. I beg to move.

My Lords, while I am sympathetic to the noble Lord’s wish to ensure that there is no corruption through people buying their way through the airport, there are some people whom I would wish to have preferential treatment—for example, members of the Royal Family and the heads of state of other nations. How does the noble Lord think they should be accommodated if the restrictions that he proposes are put in place?

My Lords, I do not think that the issue of payment is likely to arise with members of the Royal Family or diplomatic staff because the arrangements for how they should be treated are agreed with the airport authorities. That is very different from saying that you can enhance the value of your ticket with extra money to get through the queue quickly. That is the practice to which I object. I am not saying that the Royal Family fit into that category. I imagine that it is also not the case for diplomats. We also have control over the process of entry to the country for air crews, but we do not expect them to take their turn in the queue because we recognise that special arrangements should be made for them. I do not want to exclude some special arrangements; I object to a scheme that enables those who are wealthy enough to purchase privilege.

I suppose my noble friend is thinking in particular about those bankers who are now all over the press for possibly having committed criminal acts to fiddle the LIBOR. They are probably the only people who could afford to spend an extra £2,000 or so to save five or 10 minutes—or maybe several hours—coming into the country. There is just one thing that I would add to this. There is some benefit in having famous people who are prepared to speak out going through the same process as everyone else. Occasionally, they get so fed up that they go to the media and complain about it. I suspect that part of the reason why things are getting better at immigration in airports is that one or two people have had the guts to speak out and say, “This is iniquitous”. If these people were tempted to jump the queue by paying £1,000 or £2,000, we would lose that. My noble friend has made a very strong argument for having this in legislation on the basis that people should not pay extra for special treatment.

I should like to be reassured that the noble Lord, Lord Davies of Oldham, does not seek to insist that everyone must stand in the same queue for check-in. If you buy a first-class ticket, many airlines have special check-in counters for such travellers. That seems entirely appropriate and entirely different from going through immigration, either outwards or inwards. The amendment specifically mentions check-in. However, it seems entirely appropriate that if you buy a first-class ticket you can go to a first-class check-in desk and not wait as long as you would if you had bought a standard fare.

Perhaps the noble Lord will tell us how he proposes that disabled people should be handled. They often have special provision at airports, which is necessary and very proper.

On the latter category, we are shortly to debate the arrangements for the disabled, and I hope to provide reassurance. I accept what the noble Lord is saying; of course there are special arrangements for the disabled. We all know why it is necessary for the law to be strengthened in that area, and I shall be proposing an amendment to deal with that matter.

The situation that I have identified is not concerned with people going through different routes according to their ticket, but the question of how one goes through the state’s immigration controls. The contention that you are less of a security risk because you are wealthy is dubious. After all, I seem to remember Bin Laden did not come from a totally impecunious family. It is not the case that those who have a great deal of money are better security risks. Why on earth should everyone else, for the necessary security of the nation, be obliged to suffer some of the privations that occur from time to time? I fail to understand how one can market a package that guarantees that one is whisked through security.

Does my noble friend agree that the key to the amendment is the word, “buying”. There is nothing to stop the provision of different queues for first-class passengers or others at check-in or security. The question is: have they paid extra to go through that facility rather than for the facilities on the flight?

My Lords, I am aware that a similarly worded amendment was tabled in Committee in the House of Commons, but that related to Clause 83, on provision of:

“Information for the benefit of users of air transport services”.

The stated aim of that amendment was to close a perceived gap in the information that will be published under that clause on what passengers can expect to experience when departing or arriving at an airport, especially in relation to how long they should expect to wait to have their passport checked. The Government supported the broad intention of that amendment. Giving consumers more information on the quality of service provided by airports and airlines will help to maximise the benefits that markets deliver to passengers. However, the Minister of State ultimately resisted the amendment on the basis that the Bill already enables the CAA to require the collection and publication of information on check-in, baggage handling and security queues. He further explained that the UK border force, the authority responsible for border controls relating to arriving and departing passengers and goods, is responsible to Ministers and Parliament, and said that this is a more effective and appropriate means to hold the UK border force to account than giving the CAA power to oversee its activities.

The amendment today goes further than the previous one by seeking to prevent users from buying preferential access to check-in, security, immigration control and baggage reclaim processes. In considering the amendment, the Committee should note the distinction between check-in and baggage reclaim processes, and aviation security and border-control processes—the latter being subject to exacting standards enshrined in legislation. For example, airports are required, pursuant to international standards and EU and domestic regulatory requirements, to ensure that all passengers undergo security screening to specified levels. This is subject to monitoring and enforcement through security inspections and tests by the regulator. Legislation also requires full travel document checks to be conducted on all passengers, including all British citizens, arriving at the UK border. As the Minister of State made clear in the House of Commons, the security of our borders and the checks that need to be undertaken to protect us from those who would enter our country to do us harm are treated with paramount importance.

I am aware that the BAA runs a VIP suite scheme at Heathrow. The UK border force does not charge BAA or the VIPs any money for the provision of this service, nor does the BAA cover any border force costs. I will write to the noble Lord, Lord Davies of Oldham, with full details of the number of years that these arrangements have been in place. As long as standards of security and immigration are maintained at all times and in respect of all passengers, the Government do not wish to prevent the market offering access to these services, which are tailored to the needs of passengers. However, there is no question of reduced security, as suggested by the noble Lord, Lord Davies.

Your Lordships will no doubt be aware that a number of airlines offer faster check-in services to premium travellers who are willing to pay a premium for the service. The Government do not wish to prevent passengers benefiting from such products. If the concern is that the purchase of preferential access to check-in or baggage control processes would be an impediment to competition, the Bill already provides the CAA with the necessary powers to address that.

In summary, aviation security and immigration processes at UK airports must comply with exacting standards that are enshrined in legislation. There is no scope for passengers to pay to avoid these processes. The Government believe that the amendment goes too far in attempting to prevent the market offering access to these and other services that are tailored to the specific needs of users. I hope, therefore, that the noble Lord will consider withdrawing the amendment.

I am grateful to the Minister for his response, although I still believe that he is failing to recognise the context in which we find ourselves. That answer might have sufficed a decade ago, but as he knows only too well, we are operating a very stringent security regime at our airports. We all know the privations that occur from time to time. We know that people have to queue for hours on end because of the necessary requirements. The Government say that it is about security and the market has the right to provide preferential treatment for some. It seems to me that the concept of security is an obligation for every citizen. I do not see why there are favoured circumstances for a few, nor do I think it is conducive to the implementation of the security requirements if people believe that there is an inherent unfairness. The noble Earl made no reference whatever to that. Of course I recognise that no payment has been made by the airport to the Home Office with regard to this. However, if people are being transferred from heavily pressed desks to facilitate entry for those who have paid a premium, one should not be at all surprised that the difficulties occurring at airports are growing acutely. I beg leave to withdraw the amendment, but the Minister may come to rue the day.

Amendment 27 withdrawn.

Clause 21 agreed.

Clauses 22 and 23 agreed.

Clause 24 : Appeal to Competition Commission: conditions of new licences

Amendment 27A

Moved by

27A: Clause 24, page 17, line 10, at beginning insert “except in relation to a relevant financial arrangements condition,”

My Lords, we can also discuss Amendments 28A, 28B and 29A. I can deal with this fairly briefly because I made a point about it at Second Reading. No doubt noble Lords will recognise that this is the amendment which raises in Committee the issue that I described to the House on 13 June at column 1379. The problem is relatively simple. Appeals can be made by anybody who considers himself disadvantaged as a result of decisions affecting the airports.

The British Airports Authority raised the question of whether it could be to their huge disadvantage if they were trying to raise the large sums of money that they invest every year. I quoted the figures at Second Reading. It is investing very large sums in our airports. That investment depends entirely on confidence and a degree of certainty, otherwise the markets will be less likely to advance money, or will charge more, which of course would immediately affect the costs of the operation and therefore the charges to passengers.

I was encouraged by the number of people who supported this argument at Second Reading and recognised that there was a problem. I have heard nothing since then to suggest that our fears are groundless. On the contrary, everybody has recognised that there is a genuine point here—including the Minister, who after the debate met representatives and advisers from BAA to discuss what should be done. The position seems to be that the Government believe that it is extremely unlikely that an appeal, for example by an airline or conceivably by the CAA, could put at risk financing arrangements—I referred specifically to Heathrow—that BAA has in place to raise money for its investments. However, unlikely as it may be— I accept that—the consequences of it happening could be very serious. It might be described as a black swan. Perhaps that is a misuse of the analogy.

The people who met my noble friend came away with the impression that, as always, he listened very carefully and understood the nature of their anxiety. However, he could give no indication as to whether the Government would be prepared to respond, for instance by amending the Bill. Clause 24 applies to the conditions of new licences. Clause 25 refers to the modification of those conditions. The amendments in this group would exclude from the right of appeal something that would affect the relevant financial arrangements. Amendments 28A and 29A specify that somebody appealing on the grounds of potential detriment could not put at risk what could be hugely important financing arrangements for investment.

The noble Lords, Lord Berkeley and Lord Soley, said that they might add their names to the amendment, but unfortunately I missed the deadline and the amendment appeared on the Marshalled List only just before the weekend, so many people did not have the chance to see it. However, I know that they support it and I am very grateful for that. Now that my noble friend has heard the arguments at Second Reading and met the people who are expressing concern, is he in a position to give any sort of comfort and an indication that we might see some recognition and awareness of the problem, and a measure that would reduce or eliminate the risk? It has been impressed on me that it is very serious, however unlikely it may be. I beg to move.

My Lords, I shall not detain your Lordships for more than a moment. I very much support what my noble friend Lord Jenkin of Roding has been saying on this matter. There is a serious problem here. As my noble friend explained, it is a very unlikely circumstance but, if it did happen, it could be catastrophic, and I do not think that the Bill can be allowed to proceed to the statute book with this difficulty identified.

I shall be similarly brief and just wish to add to what the noble Lord, Lord Jenkin, said. The figure involved for investment at Heathrow alone is £100 million a month. Putting that into context, you raise that on the bond market and you secure it against the airport in just the same way as someone buying a house secures a mortgage against the house. If there were appeals of the type indicated by the noble Lord, Lord Jenkin, they could have a very disruptive effect on the financial markets. I think that there is a question about whether the bankers entirely agree with BAA about the risk involved but the point is that, if the risk is there and we can deal with it fairly easily, then frankly we should. If there were an appeal, it would be a severe and difficult embarrassment, particularly if the fight became bitter. The risk of a challenge to £100 million a month investment at our major airport is not funny. I suspect that the CAA would not allow an appeal but, again, this is a case of being sure that we have the safeguards in place, as the noble Lord, Lord Jenkin, indicated, and I certainly support his amendment.

My Lords, I, too, support the noble Lord, Lord Jenkin, and others on this amendment. An appeal may be very unlikely but, as other noble Lords have said, the consequences would be bad. I cannot see how anyone appealing under Clauses 24 and 25 would find it relevant to question the financing of BAA—or any other operator, for that matter. That would seem to have nothing to do with any appeal but one occasionally gets vexatious appeals. Given the size of the sums and the disaster that would ensue if investments did not go ahead because the bankers became uncertain about an appeal, this would seem to be an extremely sensible set of amendments. I, too, shall be interested to hear what the Minister has to say in response.

My Lords, I have listened very carefully to the points that have been raised. As my noble friend Lord Jenkin pointed out, I have met BAA to discuss this issue in some detail, and since that meeting I have considered its concerns.

First, I assure the Committee that the Government remain of the opinion that there are good reasons to include derogations to financial resilience licence conditions where these would otherwise cut across existing financing arrangements. The CAA, which will be issuing the first airport licences, has also confirmed that it supports the broad principle that ring-fencing licence conditions, which does not cut across existing financial arrangements, could bring benefits to users.

The practical effect of the amendment would appear to shut out an airline’s right of appeal in respect of an entire licence condition, even if only a small part of it contained an exception relating to financial arrangements. Therefore, the scope of the amendment appears to be wider than the reason advanced for its inclusion. None the less, it is a perfectly good amendment for us to debate. The Government remain of the opinion—

The point that the noble Earl makes is a fair one but it is perfectly possible, with the government draftsmen, to make a more refined and specific amendment, if necessary.

I absolutely agree with the noble Lord, Lord Soley. It is my duty to point out a drafting error in case my noble friend wants to run the amendment on Report. If I had not identified the problem in Committee and suddenly jumped up on Report and said, “Actually, the amendment is defective”, I think I would be a little unpopular.

The Government remain of the opinion that the broad rights of appeal provide an effective means of improving the accountability of key regulatory decisions. The process enables the interests of both airport operators and materially affected airlines to be taken into account. We therefore believe it is correct that this right of appeal should extend to licence conditions that relate to financial arrangements. An airline seeking to appeal a financial resilience condition, or the absence of such a condition in the first licence granted to an operator, will need to satisfy the Competition Commission that it is, in this context, a person whose interests are “materially affected” by the decision.

Any dispute over whether a derogation would cause a breach of existing financial arrangements would be most likely to arise from legal questions about the true construction of the loan agreement and/or the licence condition. These could ultimately be resolved through judicial review and, in the mean time, an airport operator could seek an injunction to preserve the status quo. Further comfort may be drawn from the fact that, subject to a government amendment that has been tabled being agreed, the Competition Commission, in deciding an appeal, will be obliged to have regard to the duties imposed on the CAA. Markets should therefore be reassured that the risk of existing creditor protection in an airport operator’s funding structure being unintentionally removed and triggering an event of default is extremely small.

We acknowledge that there is a possibility that the uncertainty created by an airline making an appeal to the Competition Commission on a licence condition relating to financial arrangements could affect an airport operator’s ability to access capital markets to raise finance while the appeal is being considered. However, as the timing of an application for leave to appeal is predictable, we consider that this is something an airport operator could successfully manage by pre-funding its financing requirements. We remain of the opinion that the right of appeal for airlines would not have significant negative consequences for an airport operator’s ability to raise debt in the capital markets.

Will the noble Earl say how long the appeals will take? He said that they would be of no consequence and could be temporarily ignored while the appeal process continued, but how long would that take?

My Lords, it may be helpful to the Committee if I outline the process. The initial consultation stage is a reasonable period set by the CAA. The period to bring an appeal, and the earliest date that licence modifications could come into force, is six weeks. For regulated representations the length of time is eight weeks. The appeal period is 24 weeks. Therefore it could be quite a long period. However, the appeal can be rejected because it is frivolous, vexatious or unlikely to succeed. The Competition Commission can make that determination quickly—but if it thought that there were good grounds for an appeal, the process would take longer. Frivolous or vexatious appeals, or those unlikely to succeed, could be determined quickly.

While the government position is clear and we have already communicated it to BAA, I have listened very carefully to noble Lords’ concerns and will communicate them to my right honourable friend the Minister of State for Aviation. I do not see that it would be in the airlines’ interests to attempt to overturn financial derogations determined by the CAA to be in passengers’ interests, where to do so would cause an event of default. The appeals regime has been designed to deter frivolous or vexatious appeals, as I mentioned. Furthermore, where the CAA proposes to grant a licence, including a condition furthering a financial derogation, or proposes to modify a condition containing a financial derogation, special conditions will apply.

I am grateful but the Minister seems to be heading in the direction of neither moving on this nor looking at it again. He has described an appeal process that could take longer than six months. So it is a six-month possibility. He said earlier that the amendment put down by the noble Lord, Lord Jenkin, was too extensive. I understand that but I do not believe it is beyond the wit of the Government to come back with an amendment that is more specific. It should be possible and I do not see why it cannot be considered.

My Lords, noble Lords suggested that the appeal process would take six months. I am suggesting that the Competition Commission will very quickly be able to determine whether the appeal is frivolous, vexatious or unlikely to succeed. I do not believe the CAA would grant a derogation unless it was absolutely certain that it would pass scrutiny from the Competition Commission. There is also the point that the licence condition does not come into effect until the appeal is heard.

I reiterate that I am not taking this away and I am not reflecting on it. I will, however, discuss the matter in detail with my right honourable friend.

I am bound to tell the noble Lord that his answer has been wholly unconvincing on this matter. I hope he will undertake to reconsider and bring forward amendments if he thinks fit at the next stage.

When my noble friend started his reply by talking about the amendment being too extensive, I thought he was going to move on to say that a redrafted one that was not quite so widely drawn might meet with his approval. As my noble friend proceeded, however, that possibility seemed to disappear over the horizon until we got to the end when he said that he will continue to discuss this with his right honourable friend the Minister of State at the Department for Transport. I hope that will be a serious reconsideration. This is not a frivolous point and it is not covered by saying that the Competition Commission could dismiss appeals as being frivolous or pointless.

Of course, the financial markets would be totally spooked by the threat of an interruption which, as the noble Lord, Lord Soley, said, might last for more than six months. They would not be prepared to go on lending and the whole investment programme would be threatened. This could not be in the interest of passengers. I understand that my noble friend has to be cautious about what he says, but when he said at the end that he would not reconsider it but would discuss it with the Minister of State, I paid more attention to the second point than the first. Perhaps we are making progress. If it is a question of drafting something that removes the risk only so far as is necessary, I am sure that the lawyers working for BAA—perhaps with the department lawyers or parliamentary counsel—would be able to find a form of words. In the mean time, Ministers must be willing to recognise that this problem has to be dealt with and cannot be put off.

Another way of approaching it is to allow the CAA to take into account the risk to investment before coming forward with any appeal. That is another way of coming at the same problem.

I am grateful to the noble Lord, Lord Soley, who has been extremely supportive throughout this, raising a number of useful points. This has been a valuable debate. The point that was raised at Second Reading has now been exposed here. My noble friend met the BAA people and it seems that we are making some progress. However, it takes two to tango. I am not sure I would want to tango with my noble friend, although it might be rather fun, but I hope that what he has said indicates that minds are not closed and that the Government will be prepared to consider this between now and Report stage.

The Government would lay themselves open to criticism if they put anything in this Bill which was liable to put at risk the huge investment programme that BAA has at its airports. That is the point. However unlikely, the damage could be immense. Having said that, I am sure the Minister has recognised the support around the Committee and I beg leave to withdraw my amendment.

Amendment 27A withdrawn.

Amendment 28

Moved by

28: Clause 24, page 17, line 19, at end insert—

“( ) that the appeal does not demonstrably show that it is in the interests of users of air transport services”

My Lords, as we have just been discussing, Clauses 24 and 25 deal with appeals to the Competition Commission in respect of, first, the conditions of new licences and, secondly, modification of licence conditions. Under the Bill, persons who operate a dominant area at a dominant airport require a licence to levy charges. An appeal lies to the Competition Commission against a decision by the Civil Aviation Authority to include, or not to include, a condition in a licence when it is granted, and an appeal also lies to the Competition Commission against a decision by the Civil Aviation Authority to modify a licence condition.

An appeal can be brought only with the permission of the Competition Commission and the Bill states that the Competition Commission may refuse permission to appeal only on one of the following grounds: that the appeal is brought for reasons that are trivial or vexatious, or that the appeal does not have a reasonable prospect of success. Clearly, from the wording in the Bill there is a concern that trivial or vexatious appeals should be stopped. I am sure we would all agree with that objective, and my amendment seeks to add in a further ground on which permission to appeal can be refused—namely, that the appeal does not demonstrably show that it is in the interests of users of air transport services, in order to further minimise the potential for frivolous or vexatious appeals.

The primary duty of the Civil Aviation Authority, as set out in Clause 1, is that it must carry out its functions in a manner which it considers will further the interests of users of air transport services regarding the range, availability, continuity, cost and quality of airport operation services. Surely, then, there must be an argument for saying that in any appeal to the Competition Commission against a decision by the Civil Aviation Authority to include, or not to include, a condition in a licence, or in any appeal against a decision by the CAA to modify a licence condition—both instances relating to persons who operate a dominant area at a dominant airport—it should also have to be shown quite clearly that the appeal is in the interests of users of air transport services, bearing in mind that that is the primary duty and responsibility placed on the Civil Aviation Authority, whose decision is being appealed.

Clause 30, on the procedure on appeals, states that subsections (1), (2) and (5) of Clause 1 apply to the carrying out by the Competition Commission of its function of deciding an application for permission to appeal under Clauses 24 and 25. Clause 30 refers to subsections (1) (2) and (5) of Clause 1, and subsection (1) refers to the Civil Aviation Authority having, where appropriate, to carry out its functions in a manner which it considers will promote competition in the provision of airport operation services. In a debate on an amendment when we were previously discussing the Bill in Committee, the Minister said that subsection (1) of Clause 1 would take priority over subsection (2) as far as the Civil Aviation Authority was concerned if promoting competition in the provision of airport operation services conflicted with its duty under subsection (1) to carry out its functions in a manner which the Civil Aviation Authority considers will further the interests of users of air transport services regarding the range, availability, continuity, cost and quality of airport operation services.

However, it is not clear whether the giving of priority to subsection (1) over subsection (2) in Clause 1 where there is any sort of conflict applies also to the Competition Commission under Clause 30. Without it apparently being clear that it does, the Competition Commission, bearing in mind its name, might well give greater weight to promoting competition when deciding whether or not to refuse permission to appeal, rather than wanting to satisfy itself that the appeal is in the interests of users of air transport services, which is clearly stated in this amendment and is in accordance with the primary, overriding duty of the Civil Aviation Authority as laid down in Clause 1(1).

I hope that the Minister will either accept the amendment or be able to provide an assurance that giving priority to subsection (1) over subsection (2) in Clause 1 applies equally to the Competition Commission in Clause 30 as to the Civil Aviation Authority. I beg to move.

My Lords, I thank the noble Lord for explaining the concerns that his amendments seek to address. However, I believe that the Bill already takes those concerns into account. The proposed appeals process has been carefully designed to ensure that where an appeal is brought, ordinarily for it to succeed, the appeal body should consider whether it is in passengers’ interests in the provision of airport operation services. It is our aim to have in place an appeals process that facilitates transparency and a timely manner of resolution of appeals, and that permission to appeal should be granted only where appropriate. However, we do not wish to stop those whose interests are materially affected from appealing. In meetings with airlines and airport bodies, my officials have sought to assure parties of this.

Clauses 24(5)(b) and 25(5)(b) as currently drafted already ensure that permission to appeal a licence condition or licence modification would be refused if the appeal did not have a reasonable prospect of success. Where an appeal had a reasonable prospect of success, it would be unjust and wrong in principle to refuse permission. In answer to the important question put by the noble Lord, Lord Rosser, I refer the Committee to Clause 30, which contains provisions stating that the Competition Commission “must have regard” to the same duties as the CAA in the discharge of stated functions. Included in these is the determination for permission to appeal under Clauses 24 and 25.

The Bill as drafted empowers the Competition Commission to refuse to grant permission to appeal so as to avoid parties bringing an appeal as a “spoiling” tactic. Nor can appeals be used as a delaying tactic. The default position is that the CAA’s licence condition or modification comes into effect while the appeal is being heard. Therefore, I do not believe that the inclusion of a further subsection in Clauses 24 and 25, as suggested by the noble Lord, would add anything of further substance to the Bill.

In the light of those assurances, I hope that the noble Lord will be willing to withdraw his amendment.

Before I do so, while I think that the noble Earl has probably given me the assurances that I seek, perhaps I may ask him again directly whether he is saying clearly that, under the terms of Clause 30 where it states—as I indicated and the noble Earl has repeated—that subsections (1), (2) and (5) of Clause 1 apply to the carrying out by the Competition Commission of its functions, which include determining appeals brought under the two clauses that we are talking about, in carrying out those functions the Competition Commission is bound in the same way under Clause 1(1) and (2) as the Civil Aviation Authority is itself. Will it have the same general duty in respect of determining whether those appeals should be heard? In other words, it is to give priority—and see as its primary duty as the Competition Commission—to making the decision to furthering,

“the interests of the users of air transport services regarding the range, availability, continuity, cost and quality of airport operation services”,

thus ensuring that that duty overrides the duty to promote competition in the provision of airport operation services. I think that that is what the Minister said to me, but I should be grateful if he could confirm that that is the case.

My Lords, the Competition Commission must have regard to the CAA’s general duty under Clause 30, as per the set of amendments accepted earlier today. We do not believe that it would be sustainable for the Competition Commission to promote competition where to do so would be inimical to the interests of users of air transport services, as described in Clause 1(1).

I do not seek to play with words; I am just anxious to be clear. The Minister said that the Competition Commission must “have regard”. Does that mean that its general duty in hearing these appeals is the same as the CAA’s general duty under Clause 1, which states that its primary and overriding responsibility in determining whether those appeals should be heard is to,

“further the interests of users of air transport services”,

rather than, where there is a conflict, to promote competition? I do not know whether we are playing with words over “have regard to”. In the Minister’s view, does that mean that the Competition Commission is bound in the same way as the CAA is in its general duty under Clause 1(1) and (2)?

In that case, since the Minister’s very specific answer makes it clear that the Competition Commission has the duty in the same way as the CAA has the duty under Clause 1(1) and (2), I beg leave to withdraw the amendment.

Amendment 28 withdrawn.

Amendment 28A not moved.

Clause 24 agreed.

Clause 25 : Appeal to Competition Commission: modification of licence conditions

Amendments 28B to 29A not moved.

Clause 25 agreed.

Clause 26 : When appeals may be allowed

Amendment 30

Moved by

30: Clause 26, page 18, line 10, leave out paragraph (c) and insert—

“(c) that an error was made in the exercise of a discretion.”

Amendment 30 agreed.

Clause 26, as amended, agreed.

Clauses 27 and 28 agreed.

Clause 29 : Determination of appeal: publication etc

Amendment 31

Moved by

31: Clause 29, page 20, line 26, leave out “within a reasonable time” and insert “within the period of 24 weeks beginning with the day on which the Competition Commission published the relevant order”

The amendment relates to Clause 29, which deals with appeals determined by the Competition Commission under Clauses 24 and 25, which we have just discussed. Clause 29 states:

“A determination made by the Competition Commission … must be contained in an order”.

Later, it states that the Civil Aviation Authority,

“must take such steps as it considers requisite for it to comply with the order”.

It then goes on to say:

“The steps must be taken … if a time is specified in the order or is to be determined in accordance with the order, within that time, and … otherwise, within a reasonable time”.

The effect of the amendment would be to remove “within a reasonable time” and insert,

“within the period of 24 weeks beginning with the day on which the Competition Commission published the relevant order”.

This is a probing amendment, which seeks to find out what the Government mean by “within a reasonable time” and how they believe those words should be interpreted. Do they mean more or less than 24 weeks and, if it could be more than 24 weeks, will the Minister give some examples of where it might be reasonable for the Civil Aviation Authority to take longer than 24 weeks to comply with an order made by the Competition Commission when no specific timescale is laid down by it? It would also be helpful if the Minister could say who will be responsible for deciding whether the Civil Aviation Authority has taken steps to comply with an order within a reasonable time. Will it be the Civil Aviation Authority itself, the Competition Commission, the Secretary of State, the courts or some other individual or body?

As I say, this is a probing amendment. I hope I have explained the motive for tabling it and the issue that we hope the noble Earl will address. I beg to move.

My Lords, the amendment seeks to amend subsection (7)(b) of Clause 29. The clause contains provisions relating to the publication of, and other matters connected to, the determination of appeals.

The current drafting provides that the CAA must take steps to comply with the appeal determination within any time period specified in the order. When none is specified, it must do so within a reasonable time. I am unable to support the amendment for two reasons. First, we do not think that it is necessary. Under subsection (7)(a) of the clause, the Competition Commission may specify a time limit in the order. We would expect it to do so if and whenever appropriate. Why would it not do so? Secondly, in circumstances where it is not appropriate to specify a period, it will be necessary to afford the CAA a reasonable time within which to comply with the order. What will comprise a reasonable time depends upon the context. There may be cases where action should be taken in fewer than 24 weeks and others where it is not reasonable to expect the CAA to take action within that period.

The noble Lord, Lord Rosser, asked me to give examples. I do not have any to hand but there may, I suggest, be a requirement to provide IT facilities or some capability that might require the CAA to procure something. It simply would not have time to take the necessary procurement action, although it might have every intention of doing so and perhaps give assurances that it would do so.

Against this background, to set an arbitrary time limit of 24 weeks is not appropriate and may cause injustice. Therefore, it is prudent to retain the flexibility that subsection (7)(b) provides the CAA. This flexibility is consistent with our wish for the CAA to be an efficient regulator but to allow it appropriate periods of time to comply with orders. I hope that in the light of my explanation the noble Lord will be willing to withdraw the amendment.

I have a certain amount of sympathy with what has been said but the trouble with this provision is that it lacks specificity. That is desirable in legislation. I have some doubts—perhaps the Minister can remove them—as to whether these sorts of provisions are capable of determination without difficulty. Perhaps I am wrong about that. The Minister ought to take another look at this matter. We are on the same wavelength on this. There is no doubt that we are in agreement about the provision that the Minister has in mind but I am doubtful about the wording.

My Lords, I am not a lawyer but I do not have any difficulty in understanding the provisions. I do not understand why the Competition Commission or the Competition Appeal Tribunal would not set a time limit if it were appropriate to do so. If it were inappropriate—the CAA might have said that it was already complying and had no intention of stopping complying—it would be totally unnecessary to impose a time limit. However, I would expect the Competition Commission to impose a time limit if it were desirable.

I thank the Minister for his reply. I also thank my noble friend Lord Clinton-Davis for the points he made. Obviously it is my intention to withdraw the amendment since it is probing in nature, but will the Minister respond to the other point I made about who will determine whether it has been done within a reasonable time? The clause provides that it should be done “within a reasonable time” if no time limit is set. Who makes the decision as to whether it has been done within a reasonable time?

My Lords, I do not know the answer to that question, but I imagine that if it was not done within a reasonable time, there would be a mechanism for the appellant to go back to the Competition Commission or the Competition Appeal Tribunal. However, if I have got that wrong, obviously I will write to the noble Lord.

I would have expected the Minister to say that the phrase “within a reasonable time” is used repeatedly in other legislation. Will he consider that?

My Lords, the terms “a reasonable time” and “a reasonable person” are frequently found in legislation. The noble Lord is absolutely right.

I am happy to leave this in the context that if the Minister finds that the response he has given to me on who will determine whether it has been done within a reasonable time is not the position, he will write to say that. As I say, it is a probing amendment to try to find out more about the Government’s intentions so far as the definition of “within a reasonable time” is concerned, and what kind of cases might come within that category rather than in subsection (7)(a), which provides that,

“if a time is specified in the order”.

I thank the noble Earl for his response and I beg leave to withdraw the amendment.

Amendment 31 withdrawn.

Clause 29 agreed.

Clause 30 : Procedure on appeals

Amendments 32 and 33

Moved by

32: Clause 30, page 20, line 29, leave out subsection (2)

33: Clause 30, page 20, line 33, leave out “mentioned in section 1(3) and (4)” and insert “in respect of which duties are imposed on the CAA by section 1”

Amendments 32 and 33 agreed.

Clause 30, as amended, agreed.

Schedule 2 : Appeals under sections 24 and 25

Amendment 34

Moved by

34: Schedule 2, page 80, line 41, after “matter” insert “, information or evidence”

My Lords, this is a minor and technical amendment and as such I do not expect it to be controversial. It seeks to make the drafting in sub-paragraph (2)(a) of paragraph 22 of Schedule 2 consistent with the rest of that paragraph. It corrects the omission of the words “information or evidence” from the phrase “matter, information or evidence”. This phrase can be found elsewhere in paragraph 22. So this amendment makes sub-paragraph (2)(a) consistent with the other provisions in paragraph 22 of Schedule 2, which delineates the circumstances in which the Competition Commission may allow new matters, information or evidence to be adduced in appeals brought before it. Paragraph 22 of Schedule 2 generally prohibits the Competition Commission from considering any matter, information or evidence in an appeal that was not in the appeal before the Civil Aviation Authority.

However, in common with other appellate jurisdictions, there are limited circumstances where, in the interests of justice, this general rule needs to be capable of being displaced. It is necessary for the power to displace this rule so as to be co-extensive with the scope of the general prohibition. I beg to move.

Amendment 34 agreed.

Schedule 2, as amended, agreed.

Clauses 31 to 47 agreed.

Schedule 3 : Appeals against orders and penalties

Amendments 35 to 39

Moved by

35: Schedule 3, page 87, line 38, leave out sub-paragraph (3)

36: Schedule 3, page 88, line 18, leave out sub-paragraph (3)

37: Schedule 3, page 88, line 36, leave out sub-paragraph (3)

38: Schedule 3, page 89, line 2, leave out sub-paragraph (1) and insert—

“( ) The Competition Appeal Tribunal may allow an appeal under paragraph 1, 2 or 3 only to the extent that it is satisfied that the decision appealed against was wrong on one or more of the following grounds—

(a) that the decision was based on an error of fact;(b) that the decision was wrong in law;(c) that an error was made in the exercise of a discretion.”

39: Schedule 3, page 89, line 12, at end insert—

“( ) When deciding an appeal under paragraph 1, 2 or 3 (including giving directions), the Competition Appeal Tribunal must have regard to the matters in respect of which duties are imposed on the CAA by section 1.”

Amendments 35 to 39 agreed.

Schedule 3, as amended, agreed.

Clauses 48 and 49 agreed.

Schedule 4 : Appeals against revocation of licence

Amendments 40 to 42

Moved by

40: Schedule 4, page 90, line 3, leave out sub-paragraph (3)

41: Schedule 4, page 90, line 40, leave out sub-paragraph (1) and insert—

“( ) The Competition Appeal Tribunal may allow an appeal under paragraph 1 only to the extent that it is satisfied that the decision appealed against was wrong on one or more of the following grounds—

(a) that the decision was based on an error of fact;(b) that the decision was wrong in law;(c) that an error was made in the exercise of a discretion.”

42: Schedule 4, page 91, line 6, at end insert—

“( ) When deciding an appeal under paragraph 1 (including giving directions), the Competition Appeal Tribunal must have regard to the matters in respect of which duties are imposed on the CAA by section 1.”

Amendments 40 to 42 agreed.

Schedule 4, as amended, agreed.

Clauses 50 to 55 agreed.

Schedule 5 : Appeals against penalties: information

Amendments 43 to 45

Moved by

43: Schedule 5, page 91, line 34, leave out sub-paragraph (3)

44: Schedule 5, page 92, line 2, leave out sub-paragraph (1) and insert—

“( ) The Competition Appeal Tribunal may allow an appeal under paragraph 1 only to the extent that it is satisfied that the decision appealed against was wrong on one or more of the following grounds—

(a) that the decision was based on an error of fact;(b) that the decision was wrong in law;(c) that an error was made in the exercise of a discretion.”

45: Schedule 5, page 92, line 12, at end insert—

“( ) When deciding an appeal under paragraph 1 (including giving directions), the Competition Appeal Tribunal must have regard to the matters in respect of which duties are imposed on the CAA by section 1.”

Amendments 43 to 45 agreed.

Schedule 5, as amended, agreed.

Clauses 56 to 59 agreed.

Schedule 6 agreed.

Clauses 60 to 65 agreed.

Amendment 46

Moved by

46: After Clause 65, insert the following new Clause—

“Directions to airport operators in the interests of national air infrastructure

(1) The CAA may give to any airport operator a direction requiring him (according to the circumstances of the case) to do, or not to do, a particular thing specified in the direction, if the CAA considers it necessary to give such a direction in the interests of modifying competition to ensure sufficient national air infrastructure between hub and regional airports.

(2) The Airports Act 1986 is amended as follows.

(3) In section 34 (matters to be taken into account by CAA), after subsection (3)(a) insert—

“(aa) the need to ensure adequate services between hub and regional airports;”.(4) In section 82 (general interpretation), after the definition of “functions” insert—

““hub airport” means an airport used as a transfer point for passengers from one flight to another in order to complete a route”.”

My Lords, I shall speak also to Amendment 74. Members will, I am sure, recall that we had a debate in this Room in November last year on transport links between the regions and London. Subsequently, in December last year, I tabled a Private Member’s Bill, the Airports (Amendment) Bill, which was given a Second Reading in the House on 16 March.

The amendment’s fundamental aim is to deal with the situation whereby the regions of the United Kingdom do not have guaranteed air access to our principal airport at Heathrow. As your Lordships are aware, the issue of landing slots is controversial, with their ownership in some cases disputed. What is not disputed is that, particularly as far as Heathrow is concerned, airlines have the use of the slots and even put the value attached to them on their balance sheets.

There is no doubt that there has been a significant improvement in air access between the Greater London area and many of the regions, which is to be welcomed. However, the reality is that, while a number of airports have tried to expand their portfolio of destinations, Heathrow is currently the principal hub airport for the United Kingdom. As a consequence, when we consider the amount of money that the Government have put into regional policy, as well as the considerable resources which continue to be put in by the European Union—indeed, in many cases providing funds for infrastructure at airports to promote links between the regions and our national hub airport—it seems an anomaly that the Government have no powers to intervene to ensure that air access exists between the national hub airport and the regions.

That is a serious weakness. Things are changing that quickly in the airline industry. To take an example from my own city, Belfast, Members will be aware that British Airways took over British Midland Airways Ltd recently. A lot of controversy was created because people said that that could theoretically put the principal route between Belfast City Airport and Heathrow under threat. People argued that, as the slots are more valuable to airlines for international routes than domestic routes, there would be a long-term temptation to switch to those sorts of routes.

There was a second development a few weeks ago when Aer Lingus, which runs three flights per day between Belfast International Airport and Heathrow, decided to move to Belfast City Airport. That means that all the Heathrow to Belfast routes are now going from the one airport. If that was not enough, Etihad Airways put in a bid for a percentage of Aer Lingus and only two weeks ago Michael O’Leary said that he wanted to buy the whole of Aer Lingus. When we look at the profile of Etihad Airways and of Mr O’Leary, I am not confident that we could see a guarantee of our air access to Heathrow.

There is a major European Union dimension to this. As the Minister knows, I have been to Brussels twice in the past few months pursuing issues there because, by coincidence, they are looking at the same issue. In December of last year, the Commission produced draft regulations of the Parliament and the Council on common rules for the allocation of slots at European Union airports. They are looking at this and a number of issues at the same time.

If that were not sufficient, the European Parliament has produced an own-initiative report which was passed by the Parliament in May of this year, paragraph 23 of which says that it,

“considers it essential for regional airports to have access to hubs”.

That is exactly what I am trying to achieve through these amendments, because there is a serious weakness. It cannot be right that, as a nation, we invest heavily in trying to develop the commerce and tourism of our regions and at the same time leave in question one of the principal points of access, particularly for an area like mine where there is not the alternative of a train or of road. There is only travel by ferry or air. If you are trying to develop a region to be commercially attractive, it needs air access to the main hub.

Air access is entirely at the mercy of the airlines. The Minister has repeatedly said that the Government are not able to intervene. That is not satisfactory. It puts regions at risk. I have quoted one example of the significant changes in my own region in the past few weeks. That fills people with concern and creates doubt. Doubt creates a potential obstacle to investment, which we do not want to see.

I understand that the Minister has to have regard to the European dimension, which is critical. I visited the European Union two weeks ago and went to the office of Commissioner Kallas, who is responsible for transport, and discussed issues there, and on a number of occasions with Members of the European Parliament because they are engaged in a co-decision process. We happen to have a legislative vehicle passing through at the moment and they, by coincidence, are doing the same thing and looking at slots. There seems to be a unique opportunity to do something to ensure that the regions will not be left out in the cold.

I know that these are difficult issues. You are effectively interfering in the natural competition process, in so far as these slots are attributed by value and if you interfere with them you affect their value. That is why I met with people in Brussels who have specific responsibility for competition issues as well. All of these things we have to deal with. While there are perfectly good connections, and under EU Council Regulation 95/93 a public service obligation can be given to assist transport between one region and another should there be market failure, there is no provision to link a specific city to a specific airport, which is precisely what we need in our case. While there is no market failure at the moment, and I hope that no market failure will ever occur, the fact remains that a principal instrument of government policy—the promotion and economic welfare of the regions, which is also held as a common view by the European Union—is now entirely at the whim of whatever commercial operation happens to be going on within or between airlines. That is not a satisfactory situation, which is why I tabled Amendment 46.

Amendment 74 deals with the point that introducing my proposals would be against European Union regulations. Amendment 74 merely points out that the powers would reside with the Secretary of State but could not be implemented until they became compliant with European Union regulations. That, in essence, is what I am trying to achieve: that the regions are guaranteed access to the principal hub airport at Heathrow, and that we become compliant with European Union regulations, where Parliament has already expressed that it is essential for regions to have access to hubs. As for its part in the co-decision process, I hope that over the next year or so in Brussels we will be able to make the arguments that will make us compliant with European Union regulations. I beg to move.

Briefly, I have considerable sympathy with the case put forward by the noble Lord, Lord Empey. We appreciate that Belfast and Northern Ireland have a particular interest in air travel. I also draw the attention of the Committee to the fact that Scotland, and Edinburgh in particular, is also concerned about the reduction in services that may be attendant on commercial transactions on slots.

I recognise that this is a difficult issue for the Minister, particularly as we are divided on much of the guidance on what government aviation policy is in the round. This dimension of it therefore explores an area on which the Government are likely to say that we could come back next month, or perhaps the month after. Unfortunately, time and tide wait for no man and neither does legislation, because the Minister has to try to get his legislation through. Here is a clear case of where it would be helpful to have a clear view on government policy.

I am sure that the Minister will do his best on this amendment. I have no doubt that it is quite critical in the development of aviation policy. I therefore very much look forward to hearing what the Minister has to say.

My Lords, just in case the issue about the Competition Commission comes up again during our debate today, I would like to clarify what I said in response to the point made by the noble Lord, Lord Rosser, about the CC having regard to the CAA’s general duty. As an appeal body, the CC must have the flexibility to decide an appeal justly and according to law. A duty to “have regard to” is not the same as a case where the CC must apply exactly the same duty as the CAA, but the primary duty will have great weight in the CC’s decision. It seems very unlikely, having regard to the constrained grounds under which an appeal may be made—an error of law, fact and so forth—that the CC would allow an appeal that was inimical to passengers’ interests.

Flexibility arises from Clause 1(5). Where there is conflict between the interests of different classes of passengers, the CAA is generally free to choose whose interests it prefers. The CC would also have regard to this provision. I will write to noble Lords so that any interested parties can pick up this clarification.

I welcome this debate about the slots and thank the noble Lord, Lord Empey, for explaining his concerns. I also pay tribute to the work that the noble Lord has done not just in Westminster but in Brussels. It is an object lesson in how to achieve these objectives. The new clause is intended to allow the CAA to take actions to help protect the provision of regional air services to congested London airports, such as directing airports to ring-fence slots for regional services or structure their charges so as to favour regional services.

The Government take the matter of regional connectivity very seriously. The noble Lord, Lord Davies, mentioned the problems of regional airports, for example some of those in Scotland. As I said before, we recognise the vital contribution that regional airports make to local economies, and that high-quality regional connectivity is hugely important. For remoter areas of the UK, regional air services are not a luxury but a vital means of connectivity. As the Committee will be aware, and as I confirmed at the first Grand Committee sitting, European Union regulations govern the allocation, transfer and exchange of slots at Heathrow and other slot co-ordinated airports in the UK.

EU slot regulations follow the Worldwide Slot Guidelines determined by the International Air Transport Association, reflecting the fact that commercial aviation is a global business. Council Regulation (EEC) No 95/93 on common rules for the allocation of slots at community airports provides common rules throughout Europe for slot allocation. These are aimed at providing airlines with fair and equal access to airports across the EU through independent and transparent slot allocation procedures. Members are required to ensure that independent airport slot co-ordinators are appointed to manage slot allocation at airports where capacity problems occur.

EU law does not allow either the Government or the CAA to have any role in slot allocation apart from the limited exception provided by the public service obligation procedure. EC Regulation No 1008/2008 allows member states to impose public service obligations to protect air services to airports serving a peripheral or development region or on thin routes to any airport on its territory where such a route is considered vital for the economic and social development of the region.

It would be open to regional bodies—for example, local enterprise partnerships and the devolved Administrations—to apply to the Secretary of State for Transport to impose a PSO on an air route if they feel that a case can be made which satisfies the EC regulation. If approved, this would permit slots to be ring-fenced at a relevant London airport. However, one of the important principles of the PSOs is that they can be imposed only when it is necessary to ensure adequate services between two cities or regions, rather than for the purposes of linking individual airports—a point recognised by the noble Lord, Lord Empey. Importantly, that means that when judging whether a region has adequate services to London, it will be necessary to take into account the level and nature of services to all five of London’s main airports, as well as surface transport connections.

Unfortunately, I have to repeat what I said before: there is no other mechanism for the Government to intervene in the allocation of slots at Heathrow or other London airports. Under European law, the potential for the ring-fencing of slots at Heathrow to protect regional services is to be dealt with by the rules on PSOs only. Therefore, any proposals to override the strict criteria and processes by which European Governments can intervene in route operations would be incompatible with EU law. I think the noble Lord understands that but still seeks a solution.

On the basis of the noble Earl’s argument, it would seem that there can be no grounds for having a third runway at Heathrow until all four of the other airports that he just mentioned are full.

My Lords, this is not a debate about the third runway. Whether we have a third runway at Heathrow is not relevant. If we got a situation in which we had a third runway and then ran out of capacity at Heathrow, we would still have the same problem.

In addition, the application of traffic distribution rules—the TDRs—is also governed by EU law, which prohibits the implementation of discriminatory rules, including on geographical grounds. As a result, the introduction of TDRs to protect particular regional air services is not an option as it would also be incompatible with EU law. If the amendment seeks to empower the CAA to give a direction to the airport to structure its charges so as to discount airport usage for regional services, I regret that this would not be possible for a number of reasons. If it is not in the interests of users of air transport services on the grounds of the range, availability, continuity, cost and quality of airport operation services, it would not be consistent with the primary duty for the CAA to give such a direction.

In addition, EU directive 2009/12/EC on airport charges introduced common principles on the levying of airport charges at community airports above a certain size to ensure transparency and consultation. That directive was transposed into UK law through the Airport Charges Regulations 2011. Airport charges must not discriminate between users but charges can vary in the interests of the public and in the general interest, provided the reasons are relevant, objective and transparent. The CAA has an enforcement role regarding the Airport Charges Regulations, so it would not be consistent for it to direct on the structure of airport charges. However, as your Lordships are aware from the opening remarks of the noble Lord, Lord Empey, the EU slot regulations are in the process of being reformed in Europe at present. The European Commission’s “Better Airports” package includes proposals to amend the EU slot regulations, which provides an opportunity for the UK to highlight this issue with the European Commission and to explore the inclusion of measures to help secure the ongoing provision of air services between UK regions and congested London airports.

I fully understand the concerns behind the noble Lord’s proposed new clause, but I am unable to support it for the reasons given. Nevertheless, I assure the Committee that the Government are committed to supporting regional airports and regional connectivity. We will also consult on a new aviation policy framework, which will include a focus on regional airports. We will also issue a call for evidence on maintaining the UK’s international connectivity. I would welcome the contribution of the noble Lords and their constituents to that debate and I hope that the noble Lord, Lord Empey, will consider withdrawing his amendment.

Before the noble Lord, Lord Empey, speaks, I have to say that that is one of the most convoluted answers that I have ever heard. We say in these debates that we will read Hansard, but we shall do so with a wet towel around our heads this time. I believe it is incumbent on the Government here in London to find a method by which the air services to Belfast, of which I was a regular customer, can be maintained. They are incredibly expensive now compared with similar flights elsewhere. The customer is being short-changed. I hope that the Minister and his colleagues will bear it in mind that this must be put right in any review of aviation legislation.

My Lords, I could paraphrase what I have just said by saying that we cannot do what the noble Lord wants because of EU regulations but the EU is working on it.

I am grateful that I needed no wet towel for that answer. I thank the Minister for his response. It is a very convoluted issue with all these parallel processes taking place. However, at the end of the day, there is a problem that could exist in the future, although it does not exist right now, and we should not be in the position of being entirely at the mercy of a particular airline or of being involved in some kind of commercial tug of war that can isolate a region. This is deliberately not a Northern Ireland-only issue.

To sum up, I thank the Minister. I shall continue to work on this and I believe that there is an appetite to do something about it. I will take the advice of the noble Lord, Lord Bradshaw, and read Hansard, and I will keep open my option of returning to this matter on Report. However, in response to the Minister, I beg leave to withdraw the amendment.

Amendment 46 withdrawn.

Clauses 66 to 72 agreed.

Schedule 7 agreed.

Clauses 73 to 76 agreed.

Schedule 8 : Status of airport operators as statutory undertakers etc

Amendment 46A

Moved by

46A: Schedule 8, page 99, line 2, at end insert—

“(11A) An order under this Part is to be made by statutory instrument.

(11B) A statutory instrument containing an order under subsection (11) must not be made unless a draft of the instrument has been laid before, and approved by resolution of, each House of Parliament.

(11C) Subsection (11B) does not apply where an order made under subsection (11) substitutes a greater sum for the sum specified in subsection (4)(a) to take into account an increase in the general level of prices, in which case it is subject to annulment in pursuance of a resolution of either House of Parliament.”

My Lords, the amendment addresses a recommendation from the Delegated Powers Committee. Paragraph 2 of Schedule 8 enables the Secretary of State to increase by negative order the £1 million threshold specified in sub-paragraph (4)(a) of Schedule 8 as the amount of annual turnover above which an airport operator is eligible for certification by the Civil Aviation Authority as a relevant airport operator.

When the Delegated Powers and Regulatory Reform Committee looked at the Bill, it apparently had in front of it a memorandum from the Department for Transport, which the department had prepared for the committee, explaining the delegated powers in the Bill. The report on the Bill that we now have from the Delegated Powers and Regulatory Reform Committee states that paragraph 64 of the memorandum—which must be the memorandum from the Department for Transport—explains that the purpose of the power in Schedule 8 to increase the £1 million threshold,

“is to enable the amount to be increased, for example to take account of any inflation”.

The Delegated Powers Committee said:

“If it is the Government’s intention that the purpose of the power … is to enable the Secretary of State by order to increase the threshold in line with inflation, this should be specified on the face of the Bill, in which case the negative procedure is appropriate. But if the threshold is to be increased for other reasons, the affirmative procedure should apply”.

My amendment seeks to specify that the Secretary of State can increase the threshold figure only by the affirmative resolution procedure unless the increase is made to keep in line with inflation, in which case the negative resolution procedure will be used.

I hope that the Minister will accept the amendment, which, unless we have misunderstood it, seeks to put into the Bill the views that the Delegated Powers Committee expressed in its report. Although the memorandum from the Department for Transport indicated that it would enable the amount to be increased to take account of any inflation, in which case the negative procedure would be appropriate, clearly if the Government were going to do rather more than simply seek to increase the figure in line with inflation, I would share the view of the Delegated Powers Committee that the affirmative procedure should apply. The purpose of the amendment is to seek to achieve that objective. I beg to move.

My Lords, I am grateful to the noble Lord, Lord Rosser, for tabling the amendment. An amendment of this kind would address a recommendation of the Delegated Powers and Regulatory Reform Committee in its helpful report on the Bill, which was published four days before the start of Grand Committee. I have no complaint, but we will need a little more time to determine which way to go. However, I agree with the general aim of the amendment and have much sympathy with it.

The current drafting of the amendment is not technically correct. It would need alternative drafting to make a consequential amendment to the Airports Act 1986, where the provisions are to be inserted. I therefore wish to consider the matter further, with the intention of bringing forward a government amendment on Report. However, I do not anticipate having any difficulty with accepting the advice of the DPRRC. I hope that this reassures your Lordships that my intention is for a government amendment to be brought forward on this, in order to respond effectively to the DPRRC recommendation that if the purpose of the order provided for in sub-paragraph (11) of paragraph 2 of Schedule 8 is to ensure that the threshold can be increased for reasons other than inflation, the current negative procedure should be amended to an affirmative procedure to give Parliament greater scrutiny. With this assurance, I hope that the noble Lord will withdraw his amendment.

I thank the Minister for that very helpful reply. I fully accept that the amendment might not be worded in the appropriate manner. It appears from what he said that he intends to take the matter away with a view to producing an amendment that is in the right place in the Bill and says the right things to achieve the recommendation of the Delegated Powers and Regulatory Reform Committee. On that basis, I beg leave to withdraw the amendment.

Amendment 46A withdrawn.

Schedule 8 agreed.

Schedule 9 : Regulation of operators of dominant airports; transitional provision

Amendment 47

Moved by

47: Schedule 9, page 101, line 40, leave out “In section 74(3) (exceptions from restrictions on disclosure of information)” and insert—

“( ) Section 74 (restriction on disclosure of information) is amended as follows.

( ) In subsection (3)”

My Lords, the amendments in this group are minor and technical amendments to paragraph 3 of Schedule 9, which contains the consequential provisions for amendments to be made to other Acts. In particular these are amendments to the consequential provisions relating to Section 74 of the Airports Act 1986. Their purpose is to tidy up the consequential amendments in the Bill to Section 74(4) of the Act. The current Bill does not provide for amending Section 74(4) of the Airports Act 1986 and the amendments seek to correct this. Section 74(4) provides that the restriction on disclosure of information does not limit the disclosure of information in reports of the Competition Commission under Section 45 of the Act, and does not apply to information that has been made public as part of such a report.

Section 74(4)(a) will be redundant once Part 4 of the Airports Act 1986 is repealed. This is given effect to in Clause 76(1) of the Bill. However, paragraph (b) will continue to be relevant to information previously disclosed in Competition Commission reports under Part IV of the Airports Act 1986. If Section 74(4) were left as it is, it would not be technically incorrect. However, it is desirable to make this minor amendment to ensure that redundant references are removed, while ensuring transparency over the effects of past reports published by the Competition Commission. I beg to move.

Amendment 47 agreed.

Amendment 48

Moved by

48: Schedule 9, page 102, line 3, at end insert—

“( ) In subsection (4)—

(a) leave out paragraph (a), and(b) in paragraph (b), for “such a report” substitute “a report of the Competition Commission under section 45”.”

Amendment 48 agreed.

Schedule 9, as amended, agreed.

Schedule 10 : Regulation of operators of dominant airports: transitional provision

Amendment 49

Moved by

49: Schedule 10, page 107, line 44, leave out sub-paragraph (1)

My Lords, this is another minor and technical amendment to paragraph 7 of Schedule 10. The schedule contains the main transitional provisions for the regulation of operators of designated airports under the Airports Act 1986. Paragraph 7 provides the power to amend the schedule. The amendment is being made because sub-paragraph (1) of paragraph 7 is no longer required following the minor and technical amendment made to Clause 107 during the Commons Committee stage which contains a power with the same effect. The amendment deletes sub-paragraph (1) of paragraph 7 because it repeats what is set out in Clause 107. Doing so, however, requires sub-paragraph (2) to be amended to make reference to Clause 107. The amendment does not alter the effect of sub-paragraph (2) of paragraph 7 because we believe that it is important to maintain that certain provisions in Schedule 10 should not be able to be amended through paragraph 7, such as the interim period ending at 31 March 2014. This is the last day of the current regulatory settlement known as Q5, and we do not wish to disturb the current regulatory settlement period. I beg to move.

Amendment 49 agreed.

Amendment 50

Moved by

50: Schedule 10, page 108, line 1, after “power” insert “under section 107”

Amendment 50 agreed.

Schedule 10, as amended, agreed.

Clauses 77 and 78 agreed.

Schedule 11 agreed.

Clause 79 agreed.

Committee adjourned at 6.52 pm.