Draft Civil Aviation Bill - Transport Committee Contents


5  Conclusion

REFORM NEEDED

81. The draft Civil Aviation Bill is clearly welcome by the aviation industry, including airlines and airports, which believe that it offers a more flexible and appropriate system for economic regulation of airports. The CAA also welcomes the changes to its duties, powers and governance, offered by the draft bill. Although the period for pre-legislative scrutiny has been shorter than previously planned, the industry is pleased to see the bill move up the parliamentary timetable. As the witness from Virgin Atlantic commented:

    In general, the Bill is moving very quickly, but the matter needs to be addressed. We have had the same regulatory framework for almost the same length of time as my airline has been in existence.[118]

Most of the draft bill has been subject to detailed review and consultation over a lengthy period and, allowing for the specific issues raised earlier in this report, it appears to offer a better way to regulate UK airports in the future.

SUPPORTING ECONOMIC GROWTH

82. The Government has claimed that the draft bill would promote economic growth, reducing distortion to competition between airlines and reducing costs for the aviation industry, through a better system of economic regulation. In addition, changes to aviation security regulation would "potentially [...] save [the industry] considerable amounts of money".[119] The Impact Assessment estimates that the interventions contained in the bill would have, in total, a Net Present Value of £149.8 million.[120]

83. Other than the Minister, witnesses to our inquiry were more cautious about the impact of the bill on economic growth. The Chief Executive of the CAA pointed out that the CAA is an independent regulator and has no locus to stimulate economic growth.[121] Industry witnesses were concerned about how the legislation would be implemented and its impact on costs. They pointed to the parlous financial situation of some regional airports, the cumulative cost increases faced by the industry[122] and the danger of policy being imposed without concern for the impacts.[123]

    The provisions in the Bill could cost a 10-million passenger airport in the order of £200,000 a year, which is material for them. Airport MDs often say to me, "I have spent ages trying to save £50,000 out of my costs, but in a stroke those savings have been wiped out by a tweak to the regulations." It is not about these provisions per se; it is more about their cumulative effect on the viability of regional airports.[124]

Some £5 million of security regulation costs will be transferred to the aviation industry from the taxpayer. The other costs will depend on the approach and efficiency of the CAA.

84. The UK needs a healthy, competitive and sustainable aviation industry, which includes regional airports and air services. The bill provides new powers for the CAA to undertake its regulatory roles, and some new duties. The aviation industry has some concerns about the way in which the CAA will implement some of these provisions. Given the greater degree of competition that now exists between airports in the south east of England and the difficult business conditions facing many regional airports, we are clear that the CAA should undertake its economic regulatory duties with a relatively light touch. We believe this would be consistent with the Government's better regulation principles and with what the Government would expect of the CAA. The Government should be open to proposals and suggestions for amendments to the bill to reinforce this principle.


118   Q 73 [Sian Foster] Back

119   Q 152 [Mrs Villiers] Back

120   This is the "best estimate". The estimate ranges from -£91.4 million (low) to £919.3 million (high). Department for Transport, Impact Assessment, p 6.  Back

121   Q 137 Back

122   Q 18 [Mr Siddall] Back

123   Q 65 [Dr Humphreys] Back

124   Q 18 [Mr Siddall] Back


 
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Prepared 19 January 2012