Moved by Viscount Younger of Leckie That the Grand Committee do
consider the Airports Slot Allocation (Alleviation of Usage
Requirements) Regulations 2022. Relevant document: 29th Report from
the Secondary Legislation Scrutiny Committee Viscount Younger of
Leckie (Con) My Lords, I beg to move that the regulations be
considered. Slots are a means of managing scarce capacity at the
busiest airports. Ordinarily, airlines must operate slots 80% of
the time to...Request free trial
Moved by
That the Grand Committee do consider the Airports Slot Allocation
(Alleviation of Usage Requirements) Regulations 2022.
Relevant document: 29th Report from the Secondary Legislation
Scrutiny Committee
(Con)
My Lords, I beg to move that the regulations be considered.
Slots are a means of managing scarce capacity at the busiest
airports. Ordinarily, airlines must operate slots 80% of the time
to retain rights to them the following year. This is known as the
80:20 rule or the “use it or lose it” rule. In normal times, this
rule helps ensure capacity is used efficiently and prevents
airlines from hoarding valuable slots without using them.
The Committee will be aware that Covid-19 has caused exceptional
challenges for the travel industry. One way in which the
Government have supported the sector over the past four seasons
has been with generous alleviation of these rules. On 11 February
this year, we lifted most remaining travel restrictions, which
means that people can now travel abroad and visitors can come to
the UK more easily, whether for a holiday, for work or to visit
loved ones. We have reopened the country, and our slot
alleviation plans for the summer season are designed to support
this process.
This package was developed following consultation with industry.
We received 48 responses from air carriers, airports and industry
bodies, which supported a wide range of different measures. Views
ranged from calls for a full waiver to support for full
reinstatement of the 80:20 rule, with most responses somewhere in
between. We have carefully considered these views, alongside the
available data, to develop this package of measures.
I shall give some brief background to this. When the pandemic
initially struck, the 80:20 rule was fully waived to avoid
expensive and environmentally damaging flights with few or even
no passengers on board. Following the UK’s departure from the EU,
the UK Government chose to extend the European Commission’s
waiver of the 80:20 rule to cover the summer 2021 season, which
lasted until 30 October 2021, through the Airports Slot
Allocation (Alleviation of Usage Requirements) Regulations 2021.
Taking the opportunity of our departure from the European Union,
we then used the Air Traffic Management and Unmanned Aircraft Act
2021,or ATMUA, to create a more flexible set of powers that could
adapt to the specific circumstances of the sector. That
legislation was recognised as an essential tool to help to manage
the impacts of the pandemic, and received cross-party
support.
For the winter 2021 season, we used these powers for the first
time. As recovery remained uncertain, our focus was on supporting
the sector. Our measures were generous and exceeded the
alleviation package provided by the EU. By allowing airlines to
hand back full series of slots, we gave them certainty that they
could retain their slots, even if not operated, which helped to
mitigate some of the commercial impacts of the pandemic. This is
because otherwise airlines might have chosen to incur the cost of
operating near-empty flights merely to retain slots. This also
reduced the likelihood of needless emissions from near-empty
aircraft. We are proud that, thanks to these measures, we are not
aware of any flights that have taken place solely to retain an
airline’s slots.
As required by the ATMUA Act, we have determined that there is a
continued reduction in demand, which is likely to persist. We
consider that further alleviation measures are justified for the
summer 2022 season, which runs from the 27 March to 29 October
2022. On 24 January, we therefore published this statutory
instrument, setting out the package of alleviation measures that
we propose to put in place for this coming summer. The draft
instrument applies to England, Scotland and Wales. Aerodromes are
a devolved matter in relation to Northern Ireland and, as there
are currently no slot co-ordinated airports in Northern Ireland,
the Northern Ireland Executive agreed that it was not necessary
for the powers in the Act to extend to, or apply in relation to,
Northern Ireland.
In the draft instrument we are considering, our measures aim to
encourage recovery, while protecting carriers where severe
international travel restrictions remain. This includes changing
the minimum usage ratio to 70:30. This means that airlines are
required to use their slots at least 70% of the time to retain
the right to operate them the following year. This is lower than
the 80% in normal times but higher than the 50% ratio adopted for
the winter season, thereby reflecting progress towards
recovery.
The draft regulations include stronger provisions to avoid
low-volume flying, by expanding the reasons which airlines may
use to justify not using slots to include existing
Covid-19-related restrictions. This will apply where measures,
including flight bans and quarantine or self-isolation
requirements, are applied at either end of a route and have a
severe impact on demand for the route or on the viability of the
route. Unlike during the winter season, this will also apply when
restrictions could reasonably have been foreseen, so as to
protect carriers in markets with long-term restrictions in place.
There will be a three-week recovery period during which the
provisions may still apply following the end of the Covid
restrictions.
In addition, we will allow earlier applications for justified
non-utilisation of slots. By this I mean that, where there is an
official government announcement, either domestic or overseas,
about the duration of the Covid restrictions, at that point the
carrier will be able to ask the slot co-ordinator for justified
non-use to cover the whole period. This can be done in advance
and will mean that the carrier will not have to reapply every
three weeks, as at present. This will allow earlier hand-back of
slots, so that other carriers will have an opportunity to use
them, and it will remove some of the administrative burden on
airlines.
In the winter 2021 season we made provision for “full-series
hand-back”—in other words, allowing an airline to retain rights
to a series of slots for the following year if it returned the
complete series to the slot co-ordinator for reallocation prior
to the season’s start. We have decided not to continue
full-series hand-back this season. It was a generous measure that
reflected the uncertainty around the winter season.
Given the success of the vaccine rollout, the relaxation of
travel restrictions and the more positive demand outlook for the
coming summer, I believe that it is now time to move towards a
normal usage ratio, but with a strengthened justified
non-utilisation provision to provide protection in case of severe
restrictions or the emergence of new variants of concern. These
measures will cover the summer 2022 scheduling period. and we are
currently considering alleviation for winter 2022. I reassure the
Committee that we will consult on this later in the year.
I will say a final word about so-called “ghost flights”. Carriers
in restricted markets will still be protected by our justified
non-utilisation provision. For open markets, the decision to
operate flights is ultimately a commercial one for airlines, but
carriers will be subject to a lower than normal usage ratio of
70%. The alternative of providing unlimited relief would allow
incumbent airlines to retain unused slots at airports while
preventing other carriers from using them, restricting
competition and ultimately harming consumers.
Through this package of measures, we aim to strike a balance
between supporting the sector and encouraging recovery and the
efficient use of slots. The regulations that we are considering
today make use of time-limited powers designed specifically to
respond to the impact of Covid. However, the Government are
focused on supporting the industry not just in the short term. As
the UK’s aviation sector grows, we will review the slot
allocation process as a whole to ensure that it is well equipped
to encourage competition, consumer choice and efficiency. I
commend the instrument to the Committee.
(Con)
My Lords, I thank my noble friend the Minister for his
comprehensive update on the adjustment from 80:20 to 70:30. It is
a reasonable and practical way forward. Could he also take into
account that, although there are fewer long-haul flights to east
Asia due to the impact of Covid, the closure of Russian and
Siberian airspace will also have serious long-term repercussions,
as the traffic from the UK naturally increases for our long-haul
carriers?
Although a side issue, the knock-on effects of these airspace
closures on the reduced frequency of operations will include
increased fuel burn, which in turn will affect ticket prices on
what are normally extremely lucrative routes. As of Sunday,
carriers such as China Eastern, Air China, Cathay Pacific, Korean
Air and some others with bilateral air service agreements with
the UK were still flying over Russian and Siberian airspace to
the UK. Some of those countries actually abstained in the vote on
the invasion of Ukraine at the Security Council meeting, and will
no doubt continue to fly when possible. That brings in a
competition issue. I would be grateful if the Minister could take
on board these points for further consideration.
2.00pm
(LD)
My Lords, I welcome this SI and thank the Minister for his
explanation. It provides stability for the aviation sector and,
importantly, removes much of the incentive for airlines to
operate environmentally damaging ghost flights or flights with
very few passengers just to keep their slots.
The Secondary Legislation Scrutiny Committee questioned the
Government’s decision to opt for 70%, which was the preferred
option of airports, over 60%, the preferred option of airlines.
This is a finely balanced decision based on data that is not
available to me but which I hope the Government have analysed. I
tend to side with the airports and hence endorse the Government’s
decision, because airports have a much less flexible business
model than airlines. You cannot just park up an airport; you have
to keep it functioning, for certain safety reasons, even if you
no longer have any commercial income.
I also welcome the Government’s additional reasons for
non-utilisation of slots. The Explanatory Memorandum refers in
paragraph 12.2 to what I call the game of slots played by certain
airlines. It explains how attempts to consolidate valuable
Heathrow slots have an impact way down the line on smaller
airports—and, it is worth pointing out, on the availability and
choice of flights and their price for passengers. This emphasises
to me that the airlines have the upper hand here. That is another
reason to endorse the Government’s decision.
However, I have one important question for the Minister, which
echoes the points made by the noble Baroness, Lady Foster, with
whom I fully agree. All these decisions were made prior to the
recent awful war in Ukraine and its impact on many long-distance
routes. There is likely to be a deterrent effect on travel to
eastern Europe, which is generally regarded as being potentially
affected by political instability. A vast range of frequent
short-distance flights for leisure travel, as well as for
business travel, to eastern Europe may be affected by this.
The noble Baroness pointed out an important loophole in the rules
on overflying Russia and accepting flights in this country that
have in practice flown over Russia. It is important that the
Government clarify their position and amend their decisions in
that regard. Can the Minister tell us what discussions the
Government have had with the aviation industry about the impact
of the war in Ukraine on it and what trends are emerging from
what they can see so far? This is already being described as a
second major challenge to our assumption that we can rely on easy
international travel.
(Lab)
We are in agreement with the statutory instrument so I do not
intend to speak at any great length. However, I have one or two
questions and queries, which may display the fact that I have not
fully understood the SI rather than anything else.
The reality is, as the Minister said, that we have slots because
of lack of runway capacity and, indeed, airports. Presumably, if
we had sufficient runway capacity and airports, we would not need
slots. Do the Government accept that that is the case? If so, is
that issue of runway capacity and airports, or lack of runway
capacity and airports, one that the Government intend to address,
since it appears that slots are related to that situation?
There is also a reference in paragraph 6.1 of the Explanatory
Memorandum to the
“allocation of slots to air carriers at congested airports”.
I almost certainly ought to know the answer to this but I cannot
think of it offhand. Which UK airports are deemed congested and
therefore have the slots? Is it just the obvious ones that we can
probably think of, or is it rather more extensive?
I believe the Minister said in his comments that, as a result of
the measures that had been taken, the Government were not aware
of any flights that had taken place just to retain the slot—that
is, ghost flights. I may not have understood correctly what the
Minister said but, if I did, how have the Government got this
information and how would they define a flight that has taken
place just to retain slots? As I understand it, during the waiver
period, there were a substantial number of flights at very low
capacity. I know that there may be an argument that they were
carrying cargo, or they may have been repatriation flights, but
does that mean that the Government really have kept tabs on all
those flights and have satisfied themselves that none of them was
flying purely to retain a slot? Admittedly, with a waiver rule,
one wonders why they would have been doing that in any case, but
it would be helpful if the Minister could comment on what I
believe he said about the Government not being aware of any
flights just to retain the slot.
Before the pandemic, can I take it that we were in a situation
whereby no flights took place just to retain slots? In other
words, in the summer of 2019, how many empty or near-empty ghost
flights were operated? Perhaps the answer is none at all, in
order to retain an airline’s historic rights to its slots. Is it
anticipated that, with the 70:30 ratio, on which there has been a
lot of consultation, as the Minister said, there will be no need
for any airlines to start to operate ghost flights to retain that
ratio? Is that how the figure has been determined as the
appropriate one for this summer?
Finally, I come back to a point to which the noble Baroness, Lady
Randerson, referred, on the response of the airlines. As I
understand it from the Explanatory Memorandum, there were rather
more airlines in favour of the 60% usage ratio, and most airports
preferred 70%. The Government have decided on 70%. I am certainly
in no position to say that they have got that wrong, but the
noble Baroness referred to the data on which that assessment was
made. I know that I am repeating a question she has already
asked, but what data led the Government to decide that the 70:30
ratio was appropriate, bearing in mind that they apparently had
airlines more likely to go for 60% and airports more likely to go
for 70%? Was it a case for the Government of tossing a coin, or
is there some hard data and evidence that led them to go down the
road of 70%?
(Con)
I start by thanking noble Lords for their consideration of these
draft regulations. I appreciate the comments that have been made
and the questions that have been asked. Before I respond, I shall
say a few words about the challenges that our aviation industry
has been tackling and take this opportunity to pay tribute to its
efforts.
At the height of the pandemic, in April 2020, passenger numbers
fell by 99% compared with the same month in 2019. Only 330,000
passengers passed through airport terminals. During the summer of
2020, passenger numbers increased as travel corridors were
introduced but remained 80% below the equivalent 2019 levels.
Following the introduction of the traffic light system on 17 May
2021, flight and passenger numbers rose at a steady pace between
May and October 2021. In December 2021, 9.1 million passengers
used UK airports but that was still 57% down on the same month in
2019.
I move on to answering the questions that were asked, if I can,
in no particular order. I will start with the basic but important
question asked by the noble Lord, , about which UK airports we
consider to be congested and which ones fall within the remit of
these draft regulations. There are eight of them in the UK,
including Heathrow, Gatwick, Birmingham, Bristol, London City,
Stansted and Manchester. Of course, there are a lot of other
airports around the UK, but they are not considered part of
this.
The noble Lord, , also asked about engagement;
that ties in with some of the points made by the noble Baroness,
Lady Randerson. I have a bit to say about this. In November and
December, we held a targeted, four-week consultation in which we
asked airports, airlines and industry bodies for their views on
alleviation measures and invited supporting evidence. This takes
account of the noble Lord’s point about the 70:30 or 80:20 split.
We received 48 responses from 36 carriers, seven airports and
five industry bodies, which we carefully considered alongside the
available data. I say “the available data” but, as I said in my
opening speech, we took account of them all and decided to take a
middle line. As ever, in a consultation, you have to take account
of all views.
On the impact of these measures, I want to go a little further in
answering a question asked by the noble Baroness, Lady Randerson.
The impacts were carefully considered—the noble Baroness
mentioned the Secondary Legislation Scrutiny Committee, which is
a fair point—as they were developed. We sought feedback and
evidence from across the aviation sector and an impacts note was
prepared to inform the advice to Ministers following the
consultation. A formal impact assessment has not been prepared
for this instrument because it makes provisions that are to have
effect for a period of less than 12 months. That is my
understanding of how the process works, which the noble Baroness
may know more about than me.
I want to say some more about ghost flights in response to a
question from the noble Lord, . There have been reports,
particularly in the press, of up to 15,000 ghost flights; I think
that is what the noble Lord was alluding to. The figures reported
in one newspaper—it happened to be the Guardian—covered departing
flights from 32 airports between March 2020 and September 2021.
During this period, there was full alleviation of the slot usage
rules in place. One of the purposes of this was to prevent
airlines needing to operate environmentally damaging ghost
flights during the Covid-19 pandemic. We do not hold data on why
flights may have taken place but, given the financial pressure
that the Covid pandemic has put on the aviation sector, I know
that airlines will not have wanted to operate flights unless they
had to. As well as maintenance and training, we believe that many
of these passenger flights will have been for reasons such as
carrying cargo, as the noble Lord alluded to, or returning UK
citizens home when Covid restrictions were introduced or changed
at short notice. I am not sure that the data one can get is an
exact science but I hope that that goes some way to offering a
response; it is certainly as far as I can go.
2.15pm
My noble friend Lady Foster and the noble Baroness, Lady
Randerson, raised some very important and highly topical points
about Russia and Russian airspace. It is too early to give a full
answer on what we are doing, but I will give an overview of the
aviation sanctions we have and explain the sanctions we have in
place, which I hope will go part way towards being helpful. The
Committee might know some of this.
UK Ministers have signed legislation bringing the existing ban on
Russian aircraft under the sanctions legislation. This bans all
aircraft that are Russian registered and owned, operated or
chartered by persons connected with Russia or designated persons
from entering UK airspace and landing in the UK effective from 5
pm on 8 March 2022. This legislation is part of an unprecedented
package of sanctions that delivers the highest economic costs we
have ever imposed on the Kremlin. This is a necessary act to hold
the Russian Government to account for their actions in Ukraine, a
sovereign democratic state.
These measures also include powers to detain Russian aircraft
already at an airport and to direct them out of UK airports, as
well as to ensure that anyone sanctioned by the UK can no longer
register aircraft and will have any existing registrations
terminated in the UK. Our actions are legitimate and
proportionate as a response to Russian aggression towards Ukraine
and its failure to comply with its wider international
obligations. I hope the Committee would wholeheartedly agree with
that.
To address the question raised by my noble friend on our aircraft
flying into Asia and needing to avoid airspace, that is the gist
of my point: it is too early to give a view on that, although it
is quite clear that will have an effect on the length of flights
and fuel consumption. It is something we will get back to the
noble Baroness and the Committee on. She raises a very important
point.
To go back to the regulations, overall, throughout this period,
we have supported the industry not just through slot alleviation
but since the start of the pandemic. We estimate that the air
transport sector will have benefited from around £8 billion of
government support. We have seen some new services start, both to
European destinations and transatlantic. Since the international
travel changes implemented on 11 February, the UK now has one of
the most open and streamlined Covid-19 border regimes in the
world. That is why we feel the time is right to focus on recovery
and to allow the sector to move towards normal, notwithstanding
what is going on in Ukraine.
To conclude, without this instrument there would be a return to
the default 80:20 slot usage rule. Although the sector is
recovering, we believe there is still a need for relief to
reflect lower passenger demand to avoid empty or near-empty
flights, as well as to support carriers serving severely
restricted markets and to protect connectivity. I hope the
Committee has found this informative.
(Con)
Just before my noble friend’s final comments, can he address
another point of concern that I made? Notwithstanding that some
airlines such as those I outlined are still coming into the
UK—China Airlines and so on, which are obviously using Russian
airspace to come here—I emphasised that if that continues we will
end up with predominantly a competition issue, apart from other
issues, whereby we are building our traffic flying to east Asia
but it has to go the long way round, which obviously adds cost,
while the airlines I mentioned may continue to use Russian
airspace, thereby using a shorter route and burning less fuel. It
therefore becomes a competition issue. Will the Minister take
that away, too, for his colleagues to look at?
(Con)
My noble friend makes a good point on incoming flights being
cheaper to operate than other flights. I have got that message.
All that I can do is take that back to the department; I am sure
that the officials will do so.
(Lab)
I ask this more as a matter of interest than anything else. Was
it the case in the summer of 2019—that is, before Covid—that the
80:20 ratio meant that there were no ghost flights and there was
no need for them? Is it the Government’s view that with the 70:30
ratio in operation this summer there ought to be no need for
ghost flights?
(Con)
On the first point, yes, my understanding is that there were no
ghost flights during the operation of the 80:20 rule. I wanted to
make that clear but I will double-check and write to the noble
Lord if I am wrong. I made that clear in my opening statement but
just to be sure I will write to him. With the introduction of the
70:30 rule, the idea is that there should be no need for ghost
flights. That has come about as a result of the consultation that
has taken place.
(LD)
Finally and briefly, when the noble Viscount looks at the issue
that the noble Baroness, Lady Foster, raised, will he undertake
to write to all of us who have taken part in this debate and set
out an explanation of the Government’s view on the matter?
(Con)
Indeed. I thank the noble Baroness for that point. Actually, I
was saying to myself—this goes much wider than these draft
regulations—that I imagine that an enormous amount of work is
going on within the airline sector, the Government and
particularly within the Department for Transport as regards
discussing quickly and on a timely basis how to address these
demanding issues. I undertake to write to the Committee on these
matters.
Motion agreed.
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