Clause 100 - CAA charges

Civil Aviation Bill – in a Public Bill Committee at 12:30 pm on 13th March 2012.

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Photo of Graham Stringer Graham Stringer Labour, Blackley and Broughton 12:30 pm, 13th March 2012

I beg to move amendment 6, in clause 100, page 61, line 7, leave out from ‘subsection (1)’ to end of line and insert—

‘(a) omit “, after consultation with the Secretary of State,”; and

(b) after paragraph (c), insert—

“(d) provide specifically for charges to be paid to the CAA by providers of air transport using airports regulated by the CAA.”.’.

Photo of Roger Gale Roger Gale Parliamentary Assembly of the Council of Europe (Full Member)

With this it will be convenient to discuss the following:

Amendment 80, in clause 100, page 61, line 12, leave out

‘consult the Secretary of State’ and insert

‘present the Secretary of State with a representative summary of the consultation conducted under paragraph (a),’.

Amendment 81, in clause 100, page 61, line 12, at end insert—

‘(c) after presenting the summary of the consultation conducted under paragraph (a), consult with the Secretary of State’.

Amendment 82, in clause 100, page 61, line 13, leave out ‘14 days’ and insert ‘30 days’.

Photo of Graham Stringer Graham Stringer Labour, Blackley and Broughton

This is a relatively straightforward amendment to a clause that amends section 11 of the Civil Aviation Act 1982 to enable the CAA to levy charges on airports, pursuant to the consumer protection measures under the Bill, where there are breaches in the regulations, which is sensible.

I am worried because charges will be imposed on airports on the assumption that it will be easy for the CAA to collect the charges from the airlines. If we think about what is covered—airlines being late and baggage handling going wrong—it is items that are not the direct responsibility of the airport. As is the case with many other provisions in the Bill, the distinction between different parts of the aviation industry is not made clear. The basic thrust of the Bill is to change the focus to passengers, but the mechanisms in the Bill for appeals and comments on such changes still relate to airlines. Similarly, many of the service requirements relating to consumers will be breached not by airports, but primarily by airlines. It would be sensible if the Civil Aviation Authority had the right to charge airlines in those circumstances; that is the essential burden of the amendment.

Photo of Jim Fitzpatrick Jim Fitzpatrick Shadow Minister (Transport)

Amendments 80 to 82 are in different territory to amendment 6, which was tabled by my hon. Friend. They are probing amendments that would result in changes to the consultation that the Civil Aviation Authority must hold regarding charging schemes. Under our proposals, the CAA would have to show the Secretary of State the result of the consultation that, under the Bill, it must carry out with those who are likely to be affected or would have an opinion on the charging scheme. It is very much a matter of interpretation, and one on which we should be grateful for the Minister’s reassurance.

Our interpretation is that the wording of the Bill allows the CAA to carry out the consultation, but not pass on the results of that consultation to the Secretary of State, which would mean that she did not get the information, and that the results could be ignored.

Amendment 82 relates to the minimum period of time in which a charging scheme would come into force after being published. Under the Bill, that period would be cut from 60 to 14 days. We are asking a very pertinent question: 60 days is a significant time—two months—and it is being reduced to only two weeks; why does the Minister think that such a massive reduction can be made?

Let me turn to amendments 80 and 81. Subsection (1) of the clause says that section 11 of the 1982 Act is to be amended. Subsection (2) says:

“omit ‘, after consultation with the Secretary of State,’”.

Subsection (3) says:

“Before making a scheme…the CAA must…consult the persons…and…after consulting those persons, consult the Secretary of State.”

It does not say that the information has to be shared. We would not want the Secretary of State to be shut out. The amendments are designed to give us reassurance that the Secretary of State will be fully involved.

Photo of Julie Hilling Julie Hilling Labour, Bolton West

I want to add briefly to the comments of my hon. Friend the Member for Blackley and Broughton, and talk in detail about the implications of the new charges for Manchester airport. They are obviously replicated in all airports, but it is much easier to talk about a specific example.

The regulatory charge for an airport is currently 0.95p—just under a penny. It is going up to 1.26p in April, but additional security charges will add at least another penny. Manchester airport estimates that its costs will go up by something like 216% when the Bill becomes law, which is very difficult. Manchester airport is thriving, but other regional airports are struggling to remain in existence. It is an incredibly competitive market, and they feel unable to put up charges. Whereas regulated airports can put them up through direct charges, things are much harder for regional airports, which are unable to put up charges for fear of losing the flights that they are desperate to attract.

I want to add my voice to those saying how important it is for the CAA to levy the charges directly on airlines, rather than levying charges on airports and expecting airports to claim them back, because the message from airports across the piece is that they feel unable to do that. I add my support to the amendment standing in my name and that of my hon. Friend the Member for Blackley and Broughton.

Photo of Theresa Villiers Theresa Villiers The Minister of State, Department for Transport

I am grateful to hon. Members for setting out the concerns that prompted their amendments. Although I cannot support the amendments, I hope that I can reassure the hon. Members and respond to the points made.

Amendment 6, moved by the hon. Member for Blackley and Broughton, has one defect that I should highlight. The words “subsection (1)” should not be deleted because if they were, the clause would read, “In (a) omit” rather than “In subsection (1)(a) omit”, and that would cause problems. That is a technical issue, but turning to the substance of the amendment, it would specifically allow the CAA to provide, in a charging scheme to be made under section 11 of the Civil Aviation Act 1982, that providers of air transport using airports regulated by the CAA pay charges to the CAA. I hope that I can reassure the hon. Gentleman. Section 11(1)(c) of the 1982 Act already allows for such a specification to be made if appropriate in a particular charging scheme. The CAA’s power to make charging schemes relates to all its functions under the 1982 Act and remains a general power.

I turn to the concern about instances in which the CAA’s charges are levied on airports rather than airlines. The CAA does levy charges directly on UK airlines, in particular for safety regulation, which is the biggest  element of CAA charges. It is not the case that all charges on the aviation industry are routed through airports, but certain charges are, such as those that relate to complaints handling. I understand airports’ concern about charging schemes in which the CAA includes costs in airport charges so that they are effectively distributed across foreign airlines as well as UK airlines. However, other important considerations must be taken into account, such as the practicality of the CAA collecting small charges of one or two pennies per passenger from airlines based outside the UK. The legality of such an approach might also be an issue. Every airline flying into the UK already has a relationship—indeed, a financial relationship—with an airport. Moreover, some consumer issues in the scope of the complaints-handling process fall within the airport’s responsibility, such as providing assistance for disabled passengers. Some passenger experiences will be affected by both airline and airport actions. It would therefore not be easy or proportionate to break down the costs of consumer work precisely between airports and airlines, however desirable it might be to do so in principle.

I can provide reassurance on amendments 80 and 81, which would require the CAA to consult the Secretary of State after presenting her with a representative summary of the consultation it had carried out on its proposed charging scheme. That is exactly what the CAA has done for every year that it has prepared a charging scheme. For example, it consulted with its stakeholders on its 2012-13 scheme of charges from 5 October to 21 December 2011. It should also be noted that both Virgin Atlantic and British Airways are represented, through the British Air Transport Association, on the CAA’s finance advisory committee, which meets regularly to provide input and comment on the development of the CAA’s charges schemes. The CAA produced a 26-page, 21,450-word summary of the 50 consultation responses and its own response to them, and presented it to the Secretary of State. The shadow Minister was anxious for reassurance on that. The CAA also published the summary on its website, so that those who had responded to the consultation could be reassured that their comments had been fairly reflected. In addition, the CAA sent substantive responses to the Secretary of State in advance, so that she was fully informed of trends. It has therefore adopted exemplary practice. Under clause 100, it will be subject to a statutory requirement to consult the industry on its charging schemes.

On amendment 82, as we have heard, the clause provides that new charging schemes will come into force no sooner than 14 days after publication, instead of 60 days, as under the present scheme. The amendment reflects concerns expressed in airlines’ written evidence to the Transport Committee. The reduction in the period will provide the CAA with an additional six weeks in which to prepare a scheme for publication, which will enable it to use more up-to-date information so that the scheme can be more closely based on the latest statistics and trends. Hon. Members will appreciate the fullness of the 12-week consultation process that the CAA undertakes. They will also understand that stakeholders have ample opportunity to make their concerns known, and that the Minister responsible will have visibility of the issues involved. I therefore consider 14 days to be an adequate period for the CAA between publication of the scheme and its coming into operation.

The proposal to remove the 60-day delay notice period was supported by both the Pilling report and the Safety Regulation Finance Advisory Committee, which represents a significant proportion of individuals regulated by the CAA Safety Regulation Group. The intention behind the 60-day period was to allow the industry to make representations to the Secretary of State. In practice, such representations have rarely been made, so Ministers have never taken action as a result of them. The appropriate vehicle for representations is the consultation processes, which, as I have assured the Committee, the CAA can and does carry out in relation to these important matters.

Photo of Graham Stringer Graham Stringer Labour, Blackley and Broughton 12:45 pm, 13th March 2012

To restate the Minister’s comments, she is saying that airports will bear the cost of breaches of regulations or service by airlines. As she made the case that the CAA would be unable to recover the costs, it is also likely—not in every case, because, as she says, there are established relationships, and codes can be worked out and arrangements made—that in some cases the airports will not be able to recover the money. They will certainly not be able to do so easily, and they may not be able to at all.

It is a flaw in the clause if one private sector body is made responsible for the flaws, faults and failings of another private sector body. I accept the Minister’s point that there is a technical error in the amendment, and that we are not talking about huge amounts of money. However, there is a failing in what is proposed, and I may want to return to the point on Report. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 100 ordered to stand part of the Bill.

Clauses 101 to 106 ordered to stand part of the Bill.