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A

BILL

[AS AMENDED ON REPORT]

TO

Make provision about the regulation of operators of dominant airports; to
confer functions on the Civil Aviation Authority under competition legislation
in relation to services provided at airports; to make provision about aviation
security; to make provision about the regulation of provision of flight
accommodation; to make further provision about the Civil Aviation
Authority’s membership, administration and functions in relation to
enforcement, regulatory burdens and the provision of information relating to
aviation; and for connected purposes.

Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and
consent of the Lords Spiritual and Temporal, and Commons, in this present
Parliament assembled, and by the authority of the same, as follows:—

Part 1 Airports

CHAPTER 1 Regulation of operators of dominant airports

General duties

1 5CAA’s general duty

(1) The CAA must carry out its functions under this Chapter in a manner which it
considers will further the interests of users of air transport services regarding
the range, availability, continuity, cost and quality of airport operation
services.

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(2) The CAA must do so, where appropriate, by carrying out the functions in a
manner which it considers will promote competition in the provision of airport
operation services.

(3) In performing its duties under subsections (1) and (2) the CAA must have
5regard to—

(a) the need to secure that each holder of a licence under this Chapter is
able to finance its provision of airport operation services in the area for
which the licence is granted,

(b) the need to secure that all reasonable demands for airport operation
10services are met,

(c) the need to promote economy and efficiency on the part of each holder
of a licence under this Chapter in its provision of airport operation
services at the airport to which the licence relates,

(d) the need to secure that each holder of a licence under this Chapter is
15able to take reasonable measures to reduce, control or mitigate the
adverse environmental effects of the airport to which the licence relates,
facilities used or intended to be used in connection with that airport
(“associated facilities”) and aircraft using that airport,

(e) any guidance issued to the CAA by the Secretary of State for the
20purposes of this Chapter,

(f) any international obligation of the United Kingdom notified to the
CAA by the Secretary of State for the purposes of this Chapter, and

(g) the principles in subsection (4).

(4) Those principles are that—

(a) 25regulatory activities should be carried out in a way which is
transparent, accountable, proportionate and consistent, and

(b) regulatory activities should be targeted only at cases in which action is
needed.

(5) If, in a particular case, the CAA considers that there is a conflict—

(a) 30between the interests of different classes of user of air transport
services, or

(b) between the interests of users of air transport services in different
matters mentioned in subsection (1),

its duty under subsection (1) is to carry out the functions in a manner which it
35considers will further such of those interests as it thinks best.

(6) For the purposes of subsection (3)(d) the environmental effects of the airport,
associated facilities and aircraft include—

(a) substances, energy, noise, vibration or waste, including emissions,
discharges and other releases into the environment,

(b) 40visual or other disturbance to the public,

(c) effects from works carried out at the airport or the associated facilities
or to extend the airport or the associated facilities, and

(d) effects from services provided at the airport or the associated facilities.

(7) Section 4 of the Civil Aviation Act 1982 (CAA’s general objectives) does not
45apply in relation to the carrying out by the CAA of its functions under this
Chapter.

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2 Secretary of State’s general duty

(1) The Secretary of State must carry out the functions listed in subsection (3) in a
manner which the Secretary of State considers will further the interests of users
of air transport services regarding the range, availability, continuity, cost and
5quality of airport operation services.

(2) The Secretary of State must do so, where appropriate, by carrying out the
functions in a manner which the Secretary of State considers will promote
competition in the provision of airport operation services.

(3) Those functions are—

(a) 10the Secretary of State’s functions under this Chapter, and

(b) the Secretary of State’s functions under Chapter 3, other than the
functions under sections 66(3) and 68(6).

(4) In performing the duties under subsections (1) and (2) the Secretary of State
must have regard to—

(a) 15the need to secure that each holder of a licence under this Chapter is
able to finance its provision of airport operation services in the area for
which the licence is granted,

(b) the need to secure that all reasonable demands for airport operation
services are met,

(c) 20the need to promote economy and efficiency on the part of each holder
of a licence under this Chapter in its provision of airport operation
services at the airport to which the licence relates,

(d) the need to secure that each holder of a licence under this Chapter is
able to take reasonable measures to reduce, control or mitigate the
25adverse environmental effects of the airport to which the licence relates,
facilities used or intended to be used in connection with that airport
(“associated facilities”) and aircraft using that airport, and

(e) the principles in subsection (5).

(5) Those principles are that—

(a) 30regulatory activities should be carried out in a way which is
transparent, accountable, proportionate and consistent, and

(b) regulatory activities should be targeted only at cases in which action is
needed.

(6) If, in a particular case, the Secretary of State considers that there is a conflict—

(a) 35between the interests of different classes of user of air transport
services, or

(b) between the interests of users of air transport services in different
matters mentioned in subsection (1),

the duty under subsection (1) is to carry out the functions in a manner which
40the Secretary of State considers will further such of those interests as the
Secretary of State thinks best.

(7) For the purposes of subsection (4)(d) the environmental effects of the airport,
associated facilities and aircraft include the effects mentioned in section 1(6).

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Prohibition

3 Prohibition

(1) Subsection (2) applies where for a period—

(a) a person (“P”) is the operator of an airport area (“area A”) that is a
5dominant area or part of a dominant area,

(b) area A is located at a dominant airport, and

(c) P does not have a licence in respect of area A.

(2) The persons mentioned in subsection (3) may not require a person to pay a
relevant charge in respect of airport operation services that are provided
10during that period in—

(a) area A, or

(b) any other area that forms part of the same airport and in respect of
which P is the operator and does not have a licence.

(3) Those persons are—

(a) 15P,

(b) a person who is connected to P,

(c) a person to whom P or a person connected to P has assigned the right
to require payment of the charge, and

(d) a person acting on behalf of a person within paragraph (a), (b) or (c).

(4) 20If a person requires payment of charges in contravention of subsection (2)

(a) the charge is not recoverable by the person, and

(b) if paid, the charge is recoverable from the person.

(5) A charge is not irrecoverable under subsection (4)(a) or recoverable under
subsection (4)(b) by reason of—

(a) 25the invalidity of a market power determination (and the consequent
continuation in effect of a previous market power determination), or

(b) the invalidity of an operator determination,

if it is a charge in respect of services provided before invalidity is finally
determined in legal proceedings.

(6) 30Subsection (5) applies—

(a) whether or not the charge is required to be paid before the final
determination of invalidity, and

(b) whether or not the charge is paid before that determination.

(7) The CAA may enforce subsection (2) in civil proceedings for an injunction or,
35in Scotland, an interdict.

(8) In this section “relevant charge” means any charge other than—

(a) a penalty payable by virtue of section 38C of the Civil Aviation Act 1982
(breaches of noise control schemes),

(b) a penalty payable by virtue of section 78A of the Civil Aviation Act 1982
40(penalty schemes established by managers of aerodromes), or

(c) a charge payable by virtue of section 73 of the Transport Act 2000
(charges for chargeable air services).

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4 Prohibition: exemption

(1) This section applies if a person who is the operator of an airport area (“area A”)
on a day on which area A becomes a dominant area located at a dominant
airport, or part of such an area, does not have a licence in respect of area A on
5that day.

(2) For the purposes of section 3, the person is to be treated as having a licence in
respect of area A during the preliminary period.

(3) The preliminary period begins for area A on the day mentioned in subsection
(1).

(4) 10The preliminary period ends for area A when one of the following occurs—

(a) a licence is granted to the person in respect of area A or an area that
includes all of area A;

(b) the CAA publishes a notice of its decision to refuse to grant a licence to
the person in respect of area A;

(c) 15the person ceases to be the operator of area A;

(d) area A ceases to be a dominant area or part of a dominant area;

(e) the airport at which area A is located ceases to be a dominant airport.

(5) If subsection (4)(a), (b), (c) or (d) is satisfied in relation to a part of area A, the
preliminary period ends for that part of the area.

20Dominant airports

5 Dominant areas and dominant airports

(1) For the purposes of this Part, an airport area is dominant if the CAA has—

(a) made a determination that the market power test is met in relation to
the area (see section 6), and

(b) 25published a notice of the determination.

(2) For the purposes of this Part, an airport is dominant if all or part of its core area
is a dominant area or part of a dominant area.

(3) In this Part—

(4) In this Part “core area”, in relation to an airport, means—

(a) the land, buildings and other structures used for the purposes of the
landing, taking off, manoeuvring, parking and servicing of aircraft at
35the airport,

(b) the passenger terminals, and

(c) the cargo processing areas,

(subject to regulations under section 66).

(5) In subsection (1) the reference to a determination does not include a
40determination that has ceased to have effect (see section 7(9) and (10)).

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6 Market power test

(1) The market power test is met in relation to an airport area if tests A to C are met
by or in relation to the relevant operator.

(2) For the purposes of tests A to C “the relevant operator” means the person who
5is the operator of the airport area at the time the test is applied.

(3) Test A is that the relevant operator has, or is likely to acquire, substantial
market power in a market, either alone or taken with such other persons as the
CAA considers appropriate (but see subsections (6) and (7)).

(4) Test B is that competition law does not provide sufficient protection against the
10risk that the relevant operator may engage in conduct that amounts to an abuse
of that substantial market power.

(5) Test C is that, for users of air transport services, the benefits of regulating the
relevant operator by means of a licence are likely to outweigh the adverse
effects.

(6) 15Test A is met only if—

(a) the market is a market for one or more of the types of airport operation
service provided in the airport area (or for services that include one or
more of those types of service), and

(b) geographically the market consists of or includes all or part of the
20airport area.

(7) In relation to an airport area that includes all or part of the core area of an
airport (as well as all or part of the rest of the airport), subsection (6) has effect
as if the references to the airport area were references to the core area or, as
appropriate, the part of the core area.

(8) 25For the purposes of test B conduct may, in particular, amount to an abuse of
substantial market power if it is conduct described in section 18(2)(a) to (d) of
the Competition Act 1998.

(9) In test B “competition law” means—

(a) Articles 101 and 102 of the TFEU,

(b) 30Part 1 of the Competition Act 1998, and

(c) Part 4 of the Enterprise Act 2002 (market investigations).

(10) In applying tests A to C, the CAA must have regard to—

(a) relevant notices and guidance published by the European Commission
about the application and enforcement of the prohibitions in Articles
35101 and 102 of the TFEU;

(b) relevant advice and information published under section 52 of the
Competition Act 1998 (advice and information about the application
and enforcement of the prohibitions in Part 1 of that Act and Articles
101 and 102 of the TFEU);

(c) 40relevant advice and information published under section 171 of the
Enterprise Act 2002 (advice and information about the operation of Part
4 of that Act).

(11) In this section “the TFEU” means the Treaty on the Functioning of the
European Union.

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7 Market power determinations

(1) The CAA may make a determination that the market power test is or is not met
in relation to an airport area (a “market power determination”) whenever it
considers it appropriate to do so.

(2) 5The CAA must make a market power determination in respect of an airport
area if—

(a) it is asked to do so by a person listed in subsection (3),

(b) the area is located at an airport that is a large airport at the time the
request is made, and

(c) 10the area consists of or includes all or part of the core area of the airport.

(3) Those persons are—

(a) the operator of the airport area, and

(b) any other person whose interests are likely to be materially affected by
the determination.

(4) 15For the purposes of subsection (2)(b), an airport is a large airport during a
calendar year if, in the previous calendar year, the number of passenger
movements at the airport exceeded 5 million.

(5) Subsection (2) does not apply if—

(a) the CAA has previously made a market power determination in respect
20of the airport area (or an area that includes all of the airport area), and

(b) it considers that there has not been a material change of circumstances
since that determination.

(6) The CAA may treat a request under subsection (2) in respect of an airport area
(“area A”) as if it were—

(a) 25a number of requests in respect of a number of airport areas that consist
of or include different parts of area A, or

(b) a request in respect of an area that includes all of area A.

(7) When choosing an airport area that is to be the subject of a market power
determination, the CAA must have regard to the market or markets that are
30relevant for the purposes of test A (see section 6(3)).

(8) The CAA may, in particular—

(a) make separate market power determinations in respect of different
areas which are located at the same airport and have the same relevant
operator (within the meaning of section 6(2));

(b) 35make a market power determination in respect of an airport area that
consists of two or more areas that are not adjacent if the areas are
located at the same airport.

(9) A market power determination in respect of an airport area ceases to have
effect if the CAA publishes a notice of a further market power determination
40in respect of the airport area or in respect of an area that includes all of the
airport area.

(10) Where the CAA

(a) publishes a notice of a market power determination in respect of an
airport area (“determination A”), and

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(b) subsequently publishes a notice of a market power determination in
respect of part of the airport area or in respect of an area that includes
part of the airport area,

determination A ceases to have effect in relation to that part (but continues to
5have effect in relation to the rest of the airport area).

(11) In this section “passenger movements” has the same meaning as in Directive
2009/12/EC of the European Parliament and of the Council of 11 March 2009
on airport charges.

8 Publication of market power determinations

(1) 10As soon as practicable after making a market power determination the CAA
must—

(a) publish a notice of the determination, and

(b) send a copy of the notice to each person listed in subsection (2).

(2) Those persons are—

(a) 15the operator of the airport area that is the subject of the determination,

(b) if the CAA was required by section 7(2) to make the determination, any
other person who requested the determination, and

(c) such bodies representing airport operators or providers of air transport
services as the CAA considers appropriate.

(3) 20If the notice does not include the CAA’s reasons for the determination, the
CAA must as soon as practicable after publishing the notice—

(a) publish its reasons, and

(b) send a copy of them to each person listed in subsection (2).

9 Operators of areas

(1) 25For the purposes of this Part, a person is the operator of an airport area if the
person has overall responsibility for the management of all of the area.

(2) The Secretary of State may by regulations make provision about when a person
is or is not to be treated for the purposes of this Part as having overall
responsibility for the management of an airport area.

(3) 30The regulations may, in particular, make provision for determining which
person has overall responsibility for the management of an airport area where
more than one person controls or may control the matters listed in subsection
(4) to some extent.

(4) Those matters are—

(a) 35the types of services that are or may be provided in the area,

(b) the prices that are or may be charged for services provided in the area,

(c) the quality of services provided in the area,

(d) access to the area, and

(e) the development of the area.

(5) 40The regulations have effect subject to operator determinations by the CAA
under section 10.

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10 Operator determinations

(1) The CAA may determine whether, in a particular case, a person has overall
responsibility for the management of an airport area.

(2) A determination under subsection (1) is an “operator determination” for the
5purposes of this Part if the CAA states in the determination that it is made for
the purposes of this section.

(3) If the CAA publishes a notice of an operator determination in respect of a
person, the person is to be treated for the purposes of this Part as having or not
having overall responsibility for the management of the airport area in
10accordance with the determination until the CAA publishes a notice
withdrawing it.

(4) When making an operator determination in respect of a person, the CAA must
have regard, in particular, to—

(a) regulations under section 9, and

(b) 15the extent to which the person controls or may control the matters listed
in section 9(4).

(5) The CAA must make an operator determination in respect of a person and an
area that consists of or forms part of a dominant airport if it is asked to do so
by the person.

(6) 20Subsection (5) does not apply if—

(a) the CAA has previously made an operator determination to the effect
that the person requesting the determination does or does not have
overall responsibility for the management of the airport area,

(b) it has not published a notice withdrawing that determination, and

(c) 25it considers that there has not been a material change of circumstances
since that determination.

(7) Subsection (5) does not apply if the CAA considers that it is possible to
ascertain whether the person has overall responsibility for the management of
the area from—

(a) 30information that is in the public domain, and

(b) information that is in the person’s custody or under the person’s
control.

(8) The CAA may treat a request under subsection (5) in respect of an airport area
(“area A”) as if it were—

(a) 35a number of requests in respect of a number of airport areas that consist
of or include different parts of area A, or

(b) a request in respect of an area that includes all of area A.

11 Publication of operator determinations

(1) As soon as practicable after making an operator determination the CAA
40must—

(a) publish a notice of the determination, and

(b) send a copy of the notice to each person listed in subsection (2).

(2) Those persons are—

(a) the person in respect of whom the determination was made, and

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