Clause 9 - Operators of areas

Part of Civil Aviation Bill – in a Public Bill Committee at 10:00 am on 1st March 2012.

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Photo of Theresa Villiers Theresa Villiers The Minister of State, Department for Transport 10:00 am, 1st March 2012

The Competition Commission has that power, so the Bill does not give the Government the power to introduce such secondary legislation; it is the Competition Commission that is able to order divestment.

The Competition Commission considered introducing competition as part of its investigation into BAA in 2009. As we know, that option was rejected, but the Competition Commission has expressed the view that it would be useful for the regulatory system to be able to deal with the option of inter-terminal competition, should the need arise in future. It is indeed the case that certain airlines support it.

The hon. Members for Bolton West and for Blackley and Broughton expressed anxiety about the potential impact on Manchester airport. The reality is that Manchester airport is not regulated under the existing rules. There is no indication that that will change under the new rules, and as nothing in the Bill mandates the introduction of inter-terminal competition, perhaps I can reassure the hon. Members that this is not an imminent threat coming round the corner to hit Manchester airport. It is not correct to say that the clause—or indeed, clauses 10 or 11—introduce a dramatic new cost burden. As I said, the Government believe that the Bill would deliver a net reduction in cost to industry, with a present value of about £150 million over 20 years.

Simply ensuring that the legislation can cope with a different variant of regulation in future is not an attempt to gold-plate it; we want to make it flexible and able to adapt to the changing circumstances of the aviation market. I emphasise that before the Competition Commission could take the step of requiring such competition, it would have to undertake a detailed economic analysis, which I expect would include an assessment of the cost impact of such a change.

I also agree with a number of comments suggesting that challenging practical issues might arise if a proposal were made to introduce inter-terminal competition to the UK, and that is one reason, no doubt, why the Competition Commission decided that that was not appropriate when it looked at the matter in 2009. The hon. Member for Blackley and Broughton has referred to some of those issues, including the challenges associated with the duration of the planning process for new terminals.

We cannot predict with certainty what the appropriate regulatory solutions will be over the 20-plus years, at least, that we expect the legislation to last. It therefore makes sense to keep our options open on inter-terminal competition, in case the Competition Commission, in future, comes to the view that it is the best way to deal with economic regulation in the airport sector.