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Clause 9 - Operators of areas

Part of Civil Aviation Bill – in a Public Bill Committee at 5:45 pm on 28th February 2012.

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Photo of Graham Stringer Graham Stringer Labour, Blackley and Broughton 5:45 pm, 28th February 2012

Clauses 9 to 12 are sneaky clauses, because they effectively provide for secondary legislation to determine that there will be competition within terminals. In those airports with more than one terminal, which—there may be others—seems to be Heathrow, Gatwick, and Manchester, no case has been made that there is a problem or that they would be improved by having competition within those terminals, and there is no experience in this country of having such competition. Rather than include “just in case” legislation, which may create a burden on people in the future when no case for it has been made, it should not be there.

What we know from experience of John F. Kennedy International airport—I guess that many Members of the Committee will have travelled to New York through JFK, where each of the many terminals is handed over to an airline or several airlines—is that it is a very expensive and inefficient airport. So, where we have international experience, it is not good experience, and where we have domestic experience, it shows that there is no need for this change. On that basis alone, we should not create a power whereby, just through the use of secondary legislation and a statutory instrument, this change can be introduced without proper, full debate and discussion about some of our country’s important economic assets. Again, that indicates to me that this is a regulatory Bill rather than a deregulatory Bill.

If one gets down to specifics, there is not a problem, but if one looks theoretically at what might happen—as these clauses ask us to look—I would speculate, and international experience would almost certainly support  my speculation, that we would get increased costs and capacity issues related to those increased costs; that it would be very difficult, given the configuration that we have in this country, to cater for different airline needs; that there would be transactional costs as one moved from one regime to another, which all Governments of whatever party always underestimate; that it would be more difficult to plan; and that it would be difficult to make price controls that were transparent and fair.

I will talk a little, first of all, about differing airline needs; I can talk in some detail about Manchester airport, but less clearly about Heathrow and Gatwick. The third terminal at Manchester, which I was responsible for signing the contract on, was specifically designed for British Airways to be the centre of its European network of airlines. Because of the changes in the aviation industry, BA has consolidated, primarily into Heathrow and Gatwick. That has left us with a terminal in Manchester that is not suitable for package holiday flights.

I just use that example to show that terminals are not always as flexible as one might expect them to be. If one was to consider how to introduce competition into that terminal, one would find that it would be very difficult to do so. The same is true of the second terminal at Manchester, which opened in 1993 and which I was also responsible for. It has a very simple design; passengers come in at one level and go out at another level, and it is designed entirely for international traffic. It would be very difficult to mix it up with domestic traffic. If one was to introduce competition, there would be large costs involved in changing that second terminal over. There are specific air-bridges designed for the kind of tour operators that use it.

Is anybody seriously saying that, by introducing competition, the costs of running an airport, or even the costs of a single-terminal operator, would be reduced, if there was the much more complicated situation of two operators operating in the same area? Unfortunately, I am old enough to remember when the European regulations came in that demanded competitive baggage handling even though there was not sufficient space for competitive baggage handling within a lot of airports. Baggage handling became not more efficient but less efficient, because there simply was not room to handle the baggage when there were three separate operators. That was a European directive—it was not the Conservative Government of the time—but it was particularly unhelpful for running an airport.

There are also capacity problems. If one is to have competition, which means, I suppose, that different operators operate parts of a terminal and offer different prices for different airlines to use it, it is possible only if there is spare capacity. We have to be able to move from one to the other or to expunge somebody’s contract. Again, spare capacity is likely to increase inefficiency and costs.

I have mentioned the transactional costs of moving from one regime to another. I have never known any Government of any colour to get the estimates right for the transactional costs of moving from one regime to another. Any estimate can normally be multiplied by three.

Airlines think that they decide where they go and that they are mainly responsible for bringing in customers to an airport, but—I have done this myself—airports, particularly competitive airports in the regions that  have it much more difficult than Heathrow and Gatwick, are going out to try to attract airlines into their terminals. If an airport wanted to attract Malaysia Airlines into a terminal, it would be much more difficult if it had to negotiate with two different operators. If an airport wanted to bring business to this country and to the city in which it operated, the proposal would be another unnecessary hurdle to attracting such business. Finally, price controls would also add complications.

This is a particularly ill-thought-out proposal. I do not where it came from. There is not a problem; if there were a problem, this would not be the solution. I hope the Minister will withdraw these clauses, which all address the same issues, or else I would hope to press at least one of them to a vote.