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Civil Aviation Bill

I strongly support our policy of promoting High Speed 2 for inter-regional transport within the UK. I recognise the value of transfer passengers at Heathrow for the provision of the network it has, but I do not ultimately see how it is a disaster for the British economy if some people from the regions transfer at a European hub for some flights, rather than always coming to Heathrow. What I would like to see at Heathrow is high value flights that produce the best outcome for the country as a whole. Having Heathrow operated effectively would be very sensible. It has significantly increased its landing charges in order to pay for the third runway and, under the quinquennial review, Heathrow-BAA has carried on raking in that money, even though it is not investing in the third runway that that money was meant to fund. I do not see how that makes sense. Most people refer to the CAA as a good and effective regulator, but how will it remain so? What certainty do we have about that? That is why a role for the NAO, expectations that it should be efficient in its management, and a role in ensuring the effectiveness of licence holders are, in principle, sensible things to ask for. I hope the Minister, the Department and in due course the CAA will listen to Members and ensure that those things happen. The point made by my hon. Friend the Member for Daventry (Chris Heaton-Harris) about freight transport—that the consumer is indifferent to the mechanism used for that freight transport—may also apply to Heathrow. As an economist, my assessment is that the end user, the consumer of flight services through Heathrow, may be indifferent to the level of landing charges to the extent that the price of tickets is set by the scarcity and the monopolistic pricing at Heathrow, rather than on the basis of the cost of using Heathrow. Therefore, just as I previously suggested that there might be a great deal of investment in Heathrow, which could be good for consumers without pushing up prices for those end users, so, if the CAA were to be a flabby and inefficient regulator that was putting its own charges on the industry, it could potentially do that without the statutory constraint of acting in the interests of the users of those services. We have seen that the scarcity at Heathrow has become capitalised in the costs of slots. When they are traded, it can be £5 million or £10 million now per pair of take-off and landing slots, to the great benefit potentially of BA, but to who else's benefit? That has happened not through a decision of the House, and not even through the development of the common law, but through the development of European jurisprudence in this area. There is very significant value there. The CAA could potentially transfer that value from BA to BAA with little, if any, impact on the consumer, or it could allow for significantly greater investment, or it could be quite flabby and inefficient or, to the extent that Government policy influences this and we have air passenger duty which is higher for the south-east or particularly higher for Heathrow, that might raise money to help the Government close the deficit, without having a negative impact on the users of Heathrow. All these are significant points that need to be considered, along with the value for money and the effectiveness propositions. I should like to address briefly the issues raised in Government amendment 19 in relation to the market power determination. I support the Bill and the Minister, and I will defer to her judgment on this, but I am nervous about the extent to which we are giving power to the CAA to make this market power determination. It used to apply to Manchester; it no longer does. I have heard arguments with respect to Stansted and to Gatwick as to why it should not apply. The risk with Stansted, I would have thought, is not so much that it would shove up the prices massively, but that Stansted may not be competing effectively with Heathrow as it would if it were under separate ownership. We have just heard comments about flights to Asia and emerging markets, but we have recently seen significant openings of routes into and out of Gatwick to places such as Vietnam and South Korea. There may be the prospect of significant further movement in that direction. But larger airlines—A380s and so on—currently do not have particularly good service at Gatwick, and it is difficult for Gatwick to invest to service the A380s and to have people transferring straight from the plane into the terminal, because of the significant cost involved and the need at least to bring along the current airline users of the airport and the great difficulty of putting through the investment if they are fighting it tooth and nail. If Gatwick feels that it should invest significant sums of money in better terminal facilities in order to service the A380s and that type of airline and allow the sorts of routes to high-growth markets in Asia that we so strongly support, I see no strong reason why it should be prevented from doing so and charging what the market will bear. I believe that that could be to the benefit of the consumer. The CAA might be a good regulator and take that into account, but at least the idea, in principle, of allowing freer competition and having less regulation and fewer airports with the market power determination—it is only really Heathrow where there is clearly substantial power—might lead to a more competitive system in which Gatwick and Stansted were free in the way Manchester now is. I am not certain, but it might do so. Under the Bill, it will now fall to the CAA to make that decision, unless this is reconsidered before the Bill is passed. I would like to pay my regards to the Minister and say that I trust her position on this and hope that the CAA will make the right decisions as well.