Passengers have today (19 December 2012) been placed firmly at the heart of UK airport regulation as a new Civil Aviation Act becomes law. The act paves the way for the Civil Aviation Authority (CAA) to motivate airports to deliver better facilities, provide more information for passengers and give greater incentives for airports to prepare for disruptive events such as severe weather. The Act also makes provisions for future reforms to the Air Travel Organisers’ Licensing (ATOL) scheme, which offers financial protection for holiday makers in the event of their tour operator going bust.
The new act sees a number of key changes to the powers and responsibilities of the aviation regulator, the CAA, including:
- giving the CAA a single overriding duty, for its airport economic functions, to further the interests of passengers and owners of cargo in the provision of airport operation services
- creating a flexible licensing regime for regulated airports, enabling the CAA to include licence conditions that require airports to respond more effectively when things go wrong (e.g. severe weather)
- allowing the CAA, where appropriate, to replace fixed price caps on airports with lighter touch forms of regulation and removing unnecessary central government involvement from airport regulation
- giving the CAA more effective enforcement powers, allowing it to impose sanctions of up to 10% of an airport operator’s annual turnover and daily amounts of 0.1% of turnover for breaching licence conditions
- providing the CAA with a new role in promoting better public information about airline and airport performance levels, enabling passengers to make informed decisions when making travel arrangements
- providing the CAA with a new role to promote better public information about the environmental effects of aviation and measures taken to mitigate adverse effects
- conferring certain aviation security functions currently carried out by the Department for Transport, on to the CAA. Responsibility for aviation security policy, and giving aviation security directions to industry, will remain with the Secretary of State for Transport
The new act also enables ministers to make future changes to the ATOL holiday protection scheme, including the ability to bring holidays sold by airlines into the scope of the scheme. Earlier this year, the government introduced secondary legislation to update the ATOL holiday protection scheme, making it more relevant to today’s market. The new powers in the Act will enable the protection available to consumers to be further strengthened.
Aviation Minister Simon Burns said:
This is an important milestone in our drive to put the passenger experience unequivocally at the heart of how our airports are run. Aviation is vital for providing the UK with the connections we need to do business, travel for leisure and visit our friends and families around the world. I am grateful for the cross-party support this Act has received during its passage through Parliament – ensuring passengers and those sending cargo can enjoy the benefits of this new regime as swiftly as possible.
Now that the Act has received Royal Assent, the CAA will work to bring the new airport economic regulatory framework fully into force in April 2014.
Notes to editors
The Act introduces, and enables, reform in 4 main areas:
- the framework for economic regulation of airports
- the legislative framework of the Civil Aviation Authority
- the Air Travel Organisers’ Licensing scheme (ATOL)
- conferring certain aviation security functions currently carried out by the Department for Transport, on to the CAA - responsibility for aviation security policy remains with the Secretary of State for Transport
Under the new regulatory regime for airports, the CAA is empowered to carry out a market power test, as set out in the Act, to determine whether an airport operator should or should not be subject to economic regulation. This replaces the designation of airports for price control regulation by the Secretary of State for Transport. Heathrow, Gatwick and Stansted airports are currently designated and their current price controls, set under the Airports Act 1986, will continue to run until 31 March 2014. Over the next 18 months, the CAA will determine how to apply the new regime set out in the Act to the airports that are subject to economic regulation after this date.
Under the existing regime, the CAA has 4 duties for the purposes of economic regulation, these are:
- to further the reasonable interests of users of airports within the UK. Users comprises airlines, passengers and other user of air transport services at the airport
- to promote the efficient, economic and profitable operation of such airports
- to encourage investment in new facilities at airports in time to satisfy anticipated demands by the users of such airports
- to impose the minimum restrictions that are consistent with the performance by the CAA of its functions
In addition, the CAA is also required to take account of international obligations notified to it by the Secretary of State for Transport.
The measures set out today will replace these with a single primary duty and a number of further duties to which the CAA must have regard in carrying out the primary duty for the purposes of airport economic regulation.
- to further the interests of passengers and owners of cargo (both present and future), in the provision of airport operation services and to do so, wherever appropriate, by promoting competition.
- to ensure that licence holders are able to finance their provision of airport operation services
- to secure that all reasonable demands for airport operation services are met
- to promote economy and efficiency on the part of licence holders in their provision of airport operation services at regulated airports
- to secure that licence holders are able to take reasonable measures to reduce, control or mitigate adverse environmental effects of the airport to which the licence relates and aircraft using that airport
- to have regard to guidance issued by the Secretary of State for Transport
- to have regard to any international obligation of the UK notified to it by the Secretary of State for Transport
- to have regard to the principles of better regulation
In addition the CAA will have a duty not to impose or maintain unnecessary burdens.
The expanded regulation-making powers in the act would allow more holidays to be included in the ATOL scheme and would provide even greater clarity for consumers whilst ensuring a level regulatory playing field for businesses selling flight-inclusive holidays. The government’s intention is that such a step would only be taken following full consultation with stakeholders including an impact assessment.