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Civil Aviation Bill

I am grateful to both Members of the Committee who have contributed to this short debate, particularly the clarity with which the noble Lord, Lord Hanningfield, identified the issues. He listed the four functions of the CAA; none of them is given primacy in the Airports Act 1986. They apply to the 50 or so airports subject to economic regulation—those with more than £1 million turnover per year. They do not apply just to Heathrow, Gatwick, Stansted and Manchester airports, which are designated by the Secretary of State under Section 40 of the Act as requiring a price cap to be set on their charges. In reality, a very light touch is applied to the non-designated airports. The amendment seeks to make the CAA’s duties more prescriptive and impose an additional regulatory burden on the non-designated airports where we do not believe intervention is required because they are in an environment of competition and challenge. But the amendment would extend far beyond the big four airports in its definition. It would require the CAA to scrutinise the other airports’ investment projects, ensure each was commercially viable and might rule out their ability to use revenue from retailing and car parking to fund the investment. Prescribing commercial viability for investment could make it more difficult for other, smaller airports to receive regional infrastructure aid. We think that the amendment would have deleterious consequences for a number of the smaller airports. The noble Lord, as one could predict, had some aspects of Stansted in mind and brought them to the fore. The amendment would not add a great deal to the way in which the CAA performs its duties. It is already required to further the reasonable interests of users and to promote the efficient, economic and profitable operation of UK airports. The combination of these duties has allowed the CAA to promote competition in the interests of users where this is within its power. It decided that Stansted should be regulated on a stand-alone basis, with no cross-subsidy from airport users at Heathrow or Gatwick. Moreover, in line with its duties under Section 39(2), the CAA is already required to satisfy itself that Stansted’s proposed investment is in the interests of its users. The interests of users underlie the Government’s decision on Stansted in the White Paper which followed a very comprehensive consultation exercise. The decision took into account a wide range of environmental, social and economic impacts associated with the expansion of the airport, including the impact on the local and regional economies, housing, service access and noise. The White Paper made it clear that new airport capacity at Stansted and elsewhere should be paid for by airport users. They will not be the only beneficiaries of the development of Stansted. It will bring large economic benefits to the United Kingdom as a whole and to the area in which it is located. It will help realise the Government’s objectives for regional and sub-regional growth in east London, the Lea Valley and the area around Harlow. Growth at Stansted will complement the wider sustainable communities agenda for shifting growth to the north and east of this region, helping to reduce the insistent pressures on London. The problems with the amendment are that it would require the CAA to second guess the airport operator and an additional significant regulatory burden would be placed upon the airports. I understand the principles upon which the noble Lord is working in moving the amendment but we do not see it realising the potential he has described. It would certainly affect smaller airports in ways that we would not wish to see. They are operating in a competitive environment anyway and the amendment would impose unnecessary regulation. As to the noble Lord’s main contention with regard to Stansted, the arrangements we have in place for the development of Stansted will stand the tests of economic efficiency and wider community benefit. I hope that in presenting these arguments I am able to convince the noble Lord that he should withdraw his amendment.