Conclusions and recommendations
Viability
1. We
welcome the range of consumer choice provided by the comparatively
large number of smaller airports in the UK. The Government is
rightly cautious about making direct interventions in this market,
which rewards enterprise and provides consumers with competitive
prices and choice. There is no case for a general policy of state
intervention to keep all smaller airports open. (Paragraph 9)
Air Passenger Duty
2. We
welcome the acknowledgement of the negative impact of APD on the
aviation sector in the autumn statement 2014. However, exempting
children from APD was a marginal change which did nothing for
business travellers and little for smaller airports. (Paragraph
15)
3. APD prevents airports
in Northern Ireland competing on a level playing field with airports
in the Republic of Ireland. This has cost Northern Ireland jobs,
growth and connectivity. (Paragraph 17)
4. If APD were scrapped
in Scotland, airports in England would be subject to a similar
competitive disadvantage to that currently experienced in Northern
Ireland. The further devolution of APD to, for example, north-east
England or Wales would ultimately serve to extend a patchwork
of APD-derived market distortions across the UK and drive a race
to the bottom on regional APD rates. We would prefer the Government
to act strategically and in the national interest to address APD
(Paragraph 18)
5. The way in which
APD is double-charged on domestic return flights is damaging to
UK smaller airports. In effect, it incentivises airlines and passengers
to fly from airports located in other EU member states. It cannot
be revised to allow UK airports to compete on a level playing
field in the European marketplace because of the operation of
EU competition law. The proposed devolution of APD to Scotland
threatens to create further market distortions which could severely
disadvantage airports in England. It is disappointing that the
concerns we raised previously about APD in our First Report of
Session 2013-14 on Aviation strategy were ignored by the
Treasury. We urge Transport Ministers to pursue those recommendations
and the important concerns raised by smaller airports with the
Treasury. (Paragraph 20)
Public Service Obligations
6. The
DfT should regularly report on the number of applicants and of
successful applications to the Regional Air Connectivity Fund
to support new air routes and publish this information on its
website. (Paragraph 24)
7. The DfT should
set out a timetable for negotiations with the European Commission
on its "Draft Protocol for UK start-up aid for airports handling
fewer than 3 million passengers per annum" to allow smaller
airports and local authorities that are considering accessing
the Regional Air Connectivity Fund to plan effectively. (Paragraph
25)
8. The DfT should
work with the European Commission to clarify what a "duly
substantiated exceptional case" means in practice. Certainty
on that point will allow UK smaller airports handling between
3 million and 5 million passengers a year to engage with the DfT's
PSO policy, which could play an important role in facilitating
regional air connectivity. (Paragraph 26)
9. We welcome the
DfT's policy of promoting PSOs both to support existing air routes
and to start up new air routes. As currently implemented and given
its current level of funding, however, this policy represents
a marginal change to the smaller airports market rather than a
strategic intervention. For example, although the maintenance
of air routes from Dundee to London Stansted and from Newquay
to London Gatwick may be desirable, it is unclear why those air
routes should attract public subsidy while others do not. PSOs
could become strategically significant if they were used to facilitate
regional connectivity to an expanded hub airport in the south-east
(Paragraph 27)
Airports Commission
10. The
whole country will be able to share in the economic benefits of
an expanded hub airport in the south-east only if that expansion
entails airlines securing sufficient slots to maintain services
to smaller airports in the English regions, Scotland, Wales and
Northern Ireland. The way in which new slots at an expanded hub
airport in the south-east might be allocated is currently opaque.
The DfT should assess (a) how new slots might be allocated; (b)
whether some of those slots could be ring-fenced for domestic
services to smaller airports; (c) whether the Public Service Obligation
mechanism could be applied to new services using any such new
slots; and (d) what proportion of new slots would need to be allocated
to flights to UK smaller airports to support regional connectivity
effectively. (Paragraph 35)
11. We recognise that
the Airports Commission has carefully defined the scope of its
inquiry. Nevertheless, we note that it has on occasion considered
the role of smaller airports. We encourage the Airports Commission
to reflect on the role of smaller airports in its final report.
In particular, it should consider how new slots at an expanded
hub airport in the south-east might be allocated to services to
smaller airports in the UK. (Paragraph 36)
Case study: Manston
12. We
recommend that Ann Gloag places the joint venture agreement between
herself, Chris Musgrave and Trevor Cartner to redevelop Manston
in the public domain to make it clear who would benefit from the
proposed redevelopment of Manston and to repudiate allegations
of asset-stripping. We would be happy to publish this document
on our website. (Paragraph 46)
13. We expect higher-tier
local government bodies to fulfil their strategic oversight functions
by supporting local planning authorities in resolving one-off,
complex cases involving nationally significant transport assets.
(Paragraph 48)
14. Kent County Council
has the legal and financial resources to assess complex CPO cases.
Despite having agreed a motion to support Thanet District Council,
it failed to deploy those assets. In failing to support Thanet
District Council's scrutiny of the proposed CPO at Manston, Kent
County Council also failed to fulfil its strategic oversight function
as the local transport authority. (Paragraph 52)
15. That the DfT judged
it necessary to intervene in the Manston case shows the extent
to which Kent County Council failed to fulfil its strategic oversight
role. (Paragraph 53)
16. We welcome the
DfT's decision to appoint a consultant to examine the Manston
case. The uncertainty faced by the public and other interested
parties could have been reduced if it had not taken three months
before the DfT acted. The DfT should set out clear terms of reference
for the consultant who is contracted to examine the Manston decision-making
process and place them in the public domain. Those terms of reference
should include (a) an explicit requirement to assess whether RiverOak
is an appropriate indemnity partner for Thanet District Council;
(b) a deadline for the consultant to report back to the DfT; and
(c) an expeditious timescale for subsequent DfT decision making.
To ensure that similar cases are handled promptly and effectively
in future, the Government should clarify precisely how (a) central
Government and (b) higher-tier local authorities are responsible
for supporting lower-tier planning authorities in cases where
a strategic transport asset is subject to a proposed compulsory
purchase order. (Paragraph 55)
17. We agree that
there is no general case for the Government to purchase airports,
including Manston. (Paragraph 56)
18. The DfT should
review what powers it has to intervene in cases where strategic
transport assets are at risk and whether those powers are fit
for purpose. (Paragraph 56)
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