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Dr. Ladyman: I hope that my hon. Friend is not suggesting that the British Government should indemnify flying travellers wherever in the world they are, whoever they are flying with and no matter from which country the carrier from whom they bought their tickets emanates. I accept his argument, but there are arguments in favour of putting a levy in place, and, equally, arguments against. The Government do not feel able to rush into a decision. We want to consider it properly. If we decide to proceed, we want to make sure that the regulations we come up with are sound, fair to everybody and compliant with the law. I re-emphasise that we have not ruled it in and are not ruling it out. We want to hear people's views.

Mr. Donohoe: What are the disadvantages?

Dr. Ladyman: They are as I have just pointed out. The larger airlines, which are known to be sound and have a good record of commercial probity, feel that investing in that probity has cost them a lot of money. They do not feel that they ought to be forced to levy a charge against their passengers from which their passengers will never benefit. Secondly, many people choose to buy airline tickets over the internet these days, and there are difficulties about when someone is covered and when not. Those would need to be explained to people. Others buy tickets through travel agents, and agents have made representations saying that they do not want to sell someone a plane ticket and then immediately have to tell them to take out travel insurance against insolvency.

There are strong arguments in favour of the levy and strong arguments against. The Government are simply saying that we want to hear the arguments and take a balanced position to make sure that we make proposals that will work. We did not feel able to do that in time for the Bill, but we are certainly not ruling it out or ruling it in at this stage. Comments in this debate, in Committee and at later stages will influence us. We will make a decision and announce it as soon as we possibly can.

I am aware of concerns expressed in some sections of the travel industry about the lack of financial protection for people who buy a flight on its own rather than a package holiday. As we have just heard, there have been many calls to extend the Bill to cover all air travel. The Government have noted the decline in the proportion of people covered by the ATOL scheme and are evaluating a wide range of options. If we conclude that such an extension of consumer protection is warranted, we will need to consult publicly on the preferred option before bringing forward a further legislative proposal. This is a complex area and it is important that we get it right. We are not prepared to rush something through to include it in the Bill. Powers need to be framed and carefully and thoroughly drafted.

Mrs. Dunwoody: My hon. Friend has been astonishingly kind in giving way. It takes a long time to
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get civil aviation before the House. That is not a new thing. If he really believes the rather weak and—forgive me—wholly indefensible arguments he has put up this afternoon, will he give me a timetable for when the magic time of balance will appear so that we may take a judgment?

Dr. Ladyman: One thing I have noticed about my hon. Friend is that every argument that disagrees with one of hers is entirely indefensible.

Mrs. Dunwoody: That is because I am right.

Dr. Ladyman: The commitment that I have given my hon. Friend is that we will deal with the matter as quickly as we possibly can. At the first possible opportunity, we shall bring forward our proposals, but I emphasise—

Graham Stringer (Manchester, Blackley) (Lab): Will my hon. Friend give way?

Dr. Ladyman: I would rather move on, as I suspect that there are points later in my speech that will be of even more interest to my hon. Friend and on which he can intervene.

I am not saying that we oppose extending the scope of financial protection but that we need to give the matter more consideration, including listening to the views of the House, before bringing forward a legislative proposal, should we decide to do so.

In March 2003, we announced the establishment of the aviation health unit—a dedicated facility within the Civil Aviation Authority for the provision of health advice to passengers, airlines and others. The unit, which has been in operation since December 2003, is funded by the Department for Transport. However, it has been the policy of successive Governments that such costs should be borne by the aviation industry rather than the taxpayer, so we have included a clause to enable the CAA to recover the cost of the AHU from the industry by a suitable charging scheme. The CAA will, of course, consult on the most appropriate charging mechanism but the amount of money involved is extremely small, amounting to less than 0.5 per cent. of what airlines currently pay towards the cost of the CAA.

Under current legislation—section 17(4) of the Airports Act 1986—an airport company owned by a local authority or a group of local authorities, known as a public airport company, or any subsidiary, is prevented from engaging in activities in which none of its shareholding local authorities has the power to engage. That restriction was considered appropriate at the time. However, there have been calls in recent years for it to be relaxed to allow successful public airport companies, such as the Manchester Airport Group, to develop their businesses and better serve their local area and the wider region.

On two occasions, amendments to other Bills were tabled in another place and subsequently withdrawn, but the Government made clear their sympathy with the principles of relaxing the restrictions and clarifying the position where there is uncertainty. In June 2003, in
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another place, my noble Friend Lord Rooker gave a commitment to consider the matter further with a view to introducing legislation when a suitable opportunity arose. We are now honouring that commitment. The Bill will allow the Secretary of State, by regulations, to specify permitted activities that he considers incidental to, or connected with, the business of operating a commercial airport. He will be able to set conditions on the permitted activities—for example, limiting their scope to activities of a commercial nature or to activities carried out in certain countries or territories.

Mr. Garnier: Presumably, as Nottingham East Midlands airport is owned by the Manchester Airport Group, which is owned by 10 local authorities in Manchester, it must follow that my constituents who are affected by the business activities of Nottingham East Midlands airport will be able to vote in Manchester elections.

Dr. Ladyman: I do not think that that follows at all.

The permitted activities could include selling expertise in airport management and development, in air traffic management, airport security, specialised airport fire and rescue services, the ground handling of aircraft, passengers and freight and entering into joint ventures in connection with airports. Our aim is to allow public airport companies the opportunity to compete on a more level playing field in the UK and abroad.

Another measure in the Bill will revoke the role of the Secretary of State as point of appeal in aviation route licence cases. Such cases concern the allocation by the CAA of frequencies available to UK airlines in circumstances where restrictive bilateral aviation agreements between the UK and foreign countries prevent UK airlines from mounting all the services they would like to provide. Airlines make proposals to the CAA about how they would use the available frequencies, and the CAA makes a decision on those proposals, based on its assessment of which of them will bring the greatest benefit to consumers. The CAA gives effect to its decisions by conditioning airlines' route licences. An airline can at present appeal to the Secretary of State against a CAA decision, which is what we are proposing to remove by the reform.

Lembit Öpik: The Minister said that it would be possible for airports to share their expertise—for example, in air traffic management. What protection will there be for aircraft under 2,000 kg from having to pay high or additional charges? Increasingly, light and general aviation is being pushed out of the really large airports by their enormous, extraordinarily high costs, so we are squeezing almost out of existence a multi-million pound sector of aviation.

Dr. Ladyman: I do not have the answer to the hon. Gentleman's question. I can understand the concerns that he expresses. An airport's commercial decisions may well instinctively involve excluding lighter aircraft because it does not see them as such a big business opportunity. In so far as I am aware, the Bill will not change that when enacted, but I will certainly reflect on that and, if the position is different, I am happy to write to him.
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Our intention is to streamline and modernise the process in the interests of consumers and the industry. The CAA is the body with the greatest expertise in assessing the consumer and competition issues on which the allocation depends, and we think it right that the CAA alone should make the necessary determinations. The current possibility of appeal to the Secretary of State adds a political dimension that is no longer appropriate now that the airline industry in the UK is mature and competitive. Experience suggests that, currently, airlines automatically lodge appeals against CAA decisions, as there is no incentive for them not to do so. That can delay the take-up of new services considerably—thereby disadvantaging consumers—to no good purpose in many cases.

We considered the possibility of retaining an appeal to an alternative body, such as the Competition Commission, but concluded that that would continue to slow down the process and burden airlines with extra expense, without adding any value to the assessment carried out by the CAA. We want consumers to enjoy the benefits of additional services with the minimum of delay consonant with a proper assessment of the relative merits of different airlines' proposals for services.

We are confident that the CAA's processes, including a public hearing at which evidence can be examined and questioned, will provide for a full and transparent assessment of the merits of the various proposals. Of course, it will be open to a disappointed applicant to seek a review of the CAA's decision through the courts. We consider that that is sufficient to ensure that the demands of regulatory accountability are met and to safeguard the rights of the parties under the Human Rights Act 1998. I am pleased to say that, when we consulted the airlines, the CAA and the Air Transport Users Council, the majority of those who responded supported the reform.

I consider this a well-balanced Bill. Like many other hon. Members, I have a growing airport in my constituency and I understand the tension that can arise in a community that wants the local airport to succeed while creating local wealth, but that is also concerned about noise and pollution. The Bill will help to resolve those tensions. Too often, airport operators, councils and communities are confused about what can and cannot be done to control the environmental impact of airports. The Bill will help to resolve that confusion. It is a positive Bill that has been much discussed and consulted on and it is fair to consumers, airport operators, airlines and local communities. I commend it to the House.

4.53 pm

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