Clause 9 - Operators of areas

Part of Civil Aviation Bill – in a Public Bill Committee at 9:45 am on 1st March 2012.

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Photo of Theresa Villiers Theresa Villiers The Minister of State, Department for Transport 9:45 am, 1st March 2012

As I sought to reassure the Committee on the first day, the Government firmly believe that a primary duty to protect the interests of end users can embrace authorisation of investment in surface access. It would not be appropriate for me to try to prejudge the CAA’s decision about the proposed investment at Gatwick station, but the Government are on record as emphasising the importance of good-quality public transport access to our airports. That is one of the reasons why Thameslink will deliver important improvements to access at Gatwick; it is why Crossrail and HS2 in the future will deliver important improvements at Heathrow; and it is why the upgrade of the London underground will further enhance and improve access to Heathrow.

If I may, I will return to clause 9, which ensures that there is no dual regulation over an airport area, so that two or more persons do not require a licence in respect of the same area. Picking up on one or two of the points made on day one of our deliberations, my hon. Friend the Member for Amber Valley asked how the measures will apply if a group of companies own multiple airports in a market area and, in particular, where one wants to test whether the combined effect of the ownership leads to dominance or market control, whereas ownership of an individual airport perhaps would not. Clause 6(3) contains provisions that address corporate group structures. It allows the CAA, in conducting test A of the market power test, to aggregate the operator with others.

My hon. Friend the Member for Finchley and Golders Green asked whether the reference in clause 9(1) to “all of the area” means the perimeter of the airport or all of  the operational areas within an airport. Subsection (1) refers to the airport area for which the person in question has overall management responsibility—that is, the area for which they are the operator according to the criteria set out in clauses 9 and 10.

The shadow Minister and the hon. Members for Blackley and Broughton and for Bolton West spoke extensively about their concerns over the possible future move to inter-terminal competition. In truth, there needs to be a means to determine who the operator is for the purposes of economic regulation, even in the absence of inter-terminal competition. The need to determine who has overall control is relevant, whether one is talking about the whole of the airport with substantial market power or only part of an airport. We would still need the clause, therefore, even in the absence of any prospect of or attempt at future-proofing for intra-airport competition.

Given the steer that was given by the Chair, I am happy to respond to the wider points. Reference to inter-terminal competition is a useful shorthand, but intra-airport competition is a slightly broader concept. There are various forms of competition within a single airport, but for shorthand purposes I will tend to refer to inter-terminal competition as it is possibly the leading variant of that form of regulatory activity. The hon. Members for Blackley and Broughton and for Bolton West expressed concerns about the cost impact of such an approach, and the shadow Minister followed that by expressing his concerns about the impact on future investment in our airports.

I reiterate that nothing in the Bill mandates the introduction of inter-terminal competition or any other form of competition within a single airport. All we seek to do is to enable the framework for economic regulation to deal with that scenario if it were to occur. I recall that the shadow Minister said twice this morning that it might be appropriate for that to happen in future. If he himself acknowledges that we cannot rule out that possibility, it makes sense and is cost-effective to ensure that the regulatory system we adopt is future-proofed and able to deal with that scenario, should a decision be made in future to move in that direction. That could, in theory, occur if an operator chose to separate the ownership and operation of parts of its airport or, as I said, if a market investigation by the Competition Commission concluded that divestment should take place to enable inter-terminal competition.

As I made clear, neither the clause nor the Bill introduces any powers for the Government to introduce intra-airport competition. Such powers are already vested in the Competition Commission by the Enterprise Act 2002, which the previous Government adopted. Is it likely that that would happen in practice?