This is a House of Commons Committee report, with recommendations to government. The Government has two months to respond.
Airlines and airports: supporting recovery in the UK aviation sector
Date Published: 25 April 2022
This is the full report, read the report summary.
1. The coronavirus pandemic precipitated the worst financial crisis experienced by the UK aviation sector since commercial air travel became accessible and affordable for the general public in the second half of the twentieth century. As the pandemic developed, the Government introduced a national lockdown in March 2020 to protect public health. The aviation industry responded to the Government’s restrictions by organising repatriation flights for British citizens stranded around the globe. After those initial repatriations, flight availability decreased as the Government limited the circumstances in which people could travel internationally. Those restrictions changed more than 15 times between 2020 and 2022.
2. As the restrictions changed in response to the pandemic, the industry reacted by keeping certain routes open for essential travel and instituting measures to protect travellers, such as requiring passengers to wear masks on flights. At the time of writing (April 2022), most international travel requirements have been removed, but they could be re-introduced at any time.
3. The coronavirus pandemic led to an unprecedented decline in the number of flights in early 2020. There were 5,800 passenger flights to and from the UK in April 2020 compared with 201,000 flights in April 2019, which is a 97% reduction.1 The Civil Aviation Authority’s most recent flight data are from quarter four of 2021, covering October to December 2021. During that period, 30.9 million passengers flew in and out of the UK on 315,202 flights.2 Those statistics represent a steady recovery for the sector with flight and passenger numbers at the highest levels since quarter one of 2020. However, those statistics also show a 55% decline in passenger numbers compared with the same period in 2019, before the coronavirus pandemic.3 The International Air Transport Association (IATA) forecasts that total passenger numbers to, from and within Europe will reach 86% of 2019 values in 2022, before making a full recovery in 2024 at 105% of 2019 values.4
4. IATA’s forecast does not include the potential effects of the Russian invasion of Ukraine, although the association states that “in general, air transport is resilient against shocks and this conflict is unlikely to impact the long-term growth of air transport”.5 IATA’s assessment is that “it is too early to estimate what the near-term consequences will be for aviation, but it is clear that there are downside risks”.6 Several factors will determine the extent to which the conflict will affect the UK aviation sector’s recovery from the pandemic. Those factors include the geographic extent, severity and time-period of sanctions and of airspace closures.7 Airline costs could also be affected by fluctuations in energy prices or rerouting to avoid Russian airspace.8 Finally, the conflict could affect consumer confidence and economic activity “even outside of Eastern Europe”.9 The Government must consider the effects of the Russian invasion of Ukraine as it develops its policy to support the recovery of the aviation sector.
5. We launched our inquiry, ‘Airlines and airports: supporting recovery in the UK aviation sector’ on 10 September 2021. The inquiry examined UK airlines’ and airports’ recovery from the coronavirus pandemic, including how the Government’s international travel restrictions, such as testing requirements, have affected that recovery. The inquiry also examined how the sector can improve domestic connectivity and sustainability and deliver better for consumers as it recovers from the pandemic. We held four oral evidence sessions. We received 47 written evidence submissions from the public, private companies and other organisations. We are grateful to everyone who contributed to and engaged with our inquiry.
6. Medical experts argued that enhanced travel restrictions may initially be effective at slowing the rate of transmission of a coronavirus variant of concern but have little utility as public health measures once a variant has entered a particular country.10 When the Omicron variant emerged, Director of the Rosalind Franklin Institute at Oxford University, Professor James Naismith, said that although the introduction of a travel ban would decrease the transmissibility of the Omicron variant, Omicron would still reach the UK in “a few more weeks”.11 Similarly, a Journal of Emergency Management study found “limited evidence about the effectiveness of travel bans to minimise global EID [emerging infectious disease] spread”.12 On 28 November 2021, the World Health Organization [WHO] recommended the proportional implementation of travel restrictions:
Travel restrictions may play a role in slightly reducing the spread of Covid-19 but place a heavy burden on lives and livelihoods. If restrictions are implemented, they should not be unnecessarily invasive or intrusive, and should be scientifically based, according to the International Health Regulations.13
7. On 19 January 2022, the World Health Organization’s Emergency Committee praised South Africa’s “rapid identification, and transparent and rapid sharing of information” on the Omicron variant.14 The Emergency Committee expressed concern about the “blanket travel bans” some member states introduced in response to the variant, stating that such bans
are not effective in suppressing international spread (as clearly demonstrated by the Omicron experience), and may discourage transparent and rapid reporting of emerging VOC [variants of concern].15
8. Edge Health and Oxera Consulting analysis found that if no travel restrictions had been in place at all in November and December 2021, coronavirus cases would have peaked seven days earlier and the peak would have been 8% higher than without any travel testing.16 Compared with a simplified requirement for passengers entering the UK to take an antigen test within two days of their arrival, a day two polymerase chain reaction (PCR) and pre-departure testing regime would have delayed the peak of cases by just five days and reduced the peak by only 3%.17 The analysis concluded that “when a variant is already highly prevalent in the domestic environment, travel restrictions are likely to have a very limited impact on the growth and the peak of cases and hospitalisations.”18 The organisations estimated that, if UK travel restrictions introduced in response to the Omicron variant had not been removed, those restrictions could have led to an additional £3.1 billion loss in gross value added and £1.5 billion loss in tax revenue over the subsequent year.19
9. On 15 February 2021, the Government introduced a requirement for anyone travelling to the UK from a “high-risk” country to quarantine in a Government-approved facility for 10 days.20 Those countries were put on a special list to indicate their high-risk status, named the “red list”. The Government classified countries as high-risk based in part, but not entirely, on recommendations from the UK Health Security Agency (UKHSA).21 In addition to UKHSA recommendations, the Government took account of economic and diplomatic factors.22
10. The red list still exists in theory, but it is currently unpopulated and the managed quarantine programme is concluding. Previously, when countries were added to that list, guidance required people arriving in England from those countries to quarantine in a managed hotel, regardless of their vaccination status.23 British Airways’ Acting Chief Commercial Officer, Colm Lacy, told us that “no other European country has forced hotel quarantine and [the] cost [is] £2,285, which is completely prohibitive”.24 Using case numbers as an indicator, there is no evidence that the requirement for travellers from certain countries to quarantine at a hotel, rather than at a location of their choice, has improved the UK’s coronavirus situation compared with other European countries. In 2021, the UK’s total coronavirus case numbers (10.6 million) were higher than those of Germany (5.4 million) or Spain (4.4 million), for example.25
11. The Government added six countries in the southern Africa region to its red list on 26 November 2021 and subsequently added additional countries to that list.26 The Government added the countries to its red list for international travel to “slow down the spread of [the Omicron] variant here in the UK, because measures at the border can only ever minimise and delay the arrival of a new variant rather than stop it all together”.27 Within a week of adding those countries to the travel red list, the Government explained that the geographical spread of Omicron had “increased considerably”, with 37 countries around the world reporting Omicron cases and more than 134 cases identified in the UK.28 Those statistics suggest that new travel requirements, including the addition of countries to the red list, exhibited limited efficacy in significantly slowing the spread of the variant to the UK. The Secretary of State for Health and Social Care stated:
if, as I think is likely, we see many more infections and [Omicron] becomes the dominant variant, there will be less need to have any kind of travel restrictions at all … [and] we can start removing those restrictions very quickly.29
12. All countries that were added to the red list in response to the emergence of the Omicron variant were removed on 14 December 2021.30 UKHSA Chief Executive, Dr Jenny Harries, told us that “travel restrictions have a time and a place”.31 She added that “countries should never be held on a list any longer than is absolutely necessary”.32 We note that no remedial action was taken by the Government to address the reduction in restrictions and the consequential need for hotel quarantine.
13. The Government relaxed PCR travel testing requirements from 24 October 2021 for arrivals into England who were fully vaccinated and who had not been in a red list country in the 10 days before their travel to the UK.33 Travellers who met those standards were able to take a lateral flow test on or before day two of their arrival, instead of a PCR test.34 However, following the identification of the Omicron variant, the Prime Minister announced on 27 November 2021 that from 04:00 on 30 November 2021, taking a PCR test on or before day two of arriving to the UK from another country would be made compulsory for all travellers, including those who were fully vaccinated.35 Travellers who were in England for less than two days were not exempt from the requirement and were required to quarantine until they received a negative test result or until they left England, “whichever is sooner”.36 The Prime Minister explained that the measure would be “temporary” and subject to review after three weeks on 20 December 2021.37 PCR tests for travel must be purchased from private providers. Free National Health Service [NHS] tests cannot be used to fulfil international travel testing requirements.38
14. The requirement for fully vaccinated passengers travelling from non-red list countries to take a pre-departure test before entering the UK was removed on 22 September 2021.39 That requirement was subsequently reinstated in response to the Omicron variant. On 3 December 2021, one day before the Government’s decision to re-introduce a pre-departure testing requirement, the Secretary of State for Transport said that people would not be asked to take tests before they arrive in the UK, because the Government does not want to “kill off the travel sector without knowing that you need to”.40 Also before the requirement was introduced, the Minister for Science, Research and Innovation George Freeman explained that
Ministers have to make tough decisions about balance of health and economically here in the UK … we are making sure we are not supporting the spread of the virus internationally but do need people to be able to come here and do deals.41
15. On 4 December 2021, the Government announced that a negative lateral flow or PCR pre-departure test would be required for entry to the UK from 04:00 on 7 December 2021.42 Passengers were required to take that test no earlier than 48 hours before arriving to the UK. As with PCR testing, passengers cannot use NHS lateral flow tests for travel.43 Testing rules applied to passengers arriving from all countries, regardless of those countries’ case numbers or overall UKHSA coronavirus risk assessment rating. There was no exemption to either the day two PCR test or the pre-departure test for those who were abroad for less than 48 hours and were fully vaccinated.
16. On 5 January 2022, after passengers and businesses expressed confusion about the re-instated international travel requirements, the Prime Minister said that because of the prevalence of the Omicron variant in the UK, international travel measures were “having limited impact on the growth in cases, while continuing to pose significant costs on [the] travel industry”.44 The Government therefore removed the pre-departure test requirement, acknowledging that the requirement “discourages many from travelling for fear of being trapped overseas and incurring significant extra expense”.45 The Government also removed the requirement for passengers to self-isolate on arrival in the UK until receipt of a negative PCR test result and stated that passengers would be allowed to use a lateral flow test to fulfil the day two testing requirement.46 Subsequently, the Government announced that the day two testing requirement would be removed altogether.47 That requirement was removed on 11 February 2022.48
17. Testing international arrivals to the UK has public health benefits. UKHSA Chief Executive, Dr Jenny Harries, told us that sequencing tests from arrivals from red list countries in late 2021 allowed the organisation to assess the effect of vaccines on the Omicron variant at an early stage.49 She also said that sequencing PCR tests allows the agency to monitor for new variants.50
18. The cost of testing acts as a deterrent to travelling abroad, affecting the aviation sector and the UK’s economic recovery. International Air Transport Association Director General, Willie Walsh, told us that the Government’s summer 2021 travel restrictions “were excessive, for too long a period”.51 Adopting international travel restrictions for a fixed time period after which those restrictions expire could have balanced the need for medical experts to take time to assess new variants of concern before they became dominant strains and sources of internal transmission, while ensuring that such intrusive measures were not indefinite.
19. On 14 March 2022, the Government announced that at 04:00 on 18 March 2022, all remaining international travel restrictions would be removed, including the passenger locator form and testing requirements that were still in place for unvaccinated travellers. The Government also announced that the remaining managed hotel quarantine capacity would be “fully stood down” from the end of March 2022.52 However, the Government stated that
to ensure the protection of public health, [it] will maintain a range of contingency measures in reserve, which would enable it to take swift and proportionate action to delay any future harmful variants of COVID-19 entering the UK should the need arise.53
20. The Government stated that its future “default” approach to international travel restrictions will be less austere, although stricter measures would be reintroduced “if appropriate”:
in future, the…default approach will be to use the least stringent measures, if appropriate, to minimise the impact on travel as far as possible—given the high personal, economic and international costs border measures can have—and the contingency measures will only be implemented in extreme circumstances.54
21. The Government sought to balance the needs of the economy against the maintenance of public health during the pandemic.55 However, the Government has not always been transparent about how decisions on restricting international travel were informed or made. The Transport Select Committee visited Germany in November 2021 to examine that country’s approach to international travel restrictions. We met government officials and representatives from the German aviation industry. In Germany, authoritative sources described, off the record, transparent and collaborative dialogue between the private sector and government. German aviation industry representatives stated that they were able to feed into the German Government’s decisions on international travel. For example, the German aviation industry raised concerns about international travel restrictions with both the Federal Ministry of Health and the Federal Ministry of Transport and Digital Infrastructure. In response, the German Government formed “Team Take-off” to facilitate discussion on those restrictions with industry. In that forum, aviation industry stakeholders collaborated with the Federal Ministry of Transport to shape international travel restrictions, holding regular meetings to discuss topics such as mask-wearing in airports. The forum also ensured travel entry regulations and restrictions were streamlined across Germany’s federal states.
22. Informed witnesses told us that UK Government communication with the aviation industry was poor. Airlines UK Chief Executive, Tim Alderslade, noted that although there was “some element of transparency”, industry did “not have transparency around the criteria” used to inform decision-making on risk classification of individual countries. He concluded, “I do not think we will ever get that”.56 Airport Operators Association Chief Executive, Karen Dee, said that industry had
never really been given, or understood, what a threshold is. As countries were being categorised as red, amber or green, it was very difficult either to predict or to understand what mix of criteria was going into that and being used by the Government.57
Although a public health methodology was made publicly available, the rationale behind decision-making on the classification of individual countries as ‘red’, ‘amber’ or ‘green’ was not.58
23. The Minister for Aviation explained that decisions on country classification are taken by the “Covid-O Cabinet Sub-Committee”, formally the Covid-19 Operations Sub-Committee.59 The Chancellor of the Duchy of Lancaster, the Chancellor of the Exchequer and the Secretary of State for Health and Social Care serve on the Committee. Other Cabinet Ministers are “invited according to the agenda”.60 The Covid-19 Operations Sub-Committee apparently does not permit formal representation from industry. The Minister said that as part of the decision-making process on international travel restrictions:
there is a paper, with recommendations, that is drawn up by the Covid-O secretariat, which sits under the Cabinet Office. They are Cabinet Office officials. That paper is then debated in Covid-O by Ministers and the decision is made. The paper draws from a number of sources. One of the sources that it draws from is UKHSA, as you have heard this morning. It will also draw from other Government Departments, and it will take into account other factors like diplomatic factors, supply chain impacts and economic impacts. All of those factors are taken into account and the paper is drafted, with a recommendation, which is then debated by Ministers in Covid-O Committee. Then the decision is made.61
Although the Global Travel Taskforce sought the views of industry stakeholders across the travel and tourism sectors, the UK Government did not consult industry through a formal structure akin to Germany’s “Team Take-off” forum.62
24. The aviation sector did not receive specific financial support linked to the introduction of new travel requirements at the end of 2021. The Minister for Aviation, Robert Courts MP, described “approximately £8 billion-worth of support from the cross-economy schemes that the Treasury introduced at the beginning [of the pandemic]. That is £8 billion to the aviation sector itself”.63 The aviation sector did not receive £8 billion in sector-specific financial support. That sum was the total financial support that the sector received through cross-economy schemes such as the Covid Corporate Financing Facility (CCFF). Other sectors of the economy received tailored support throughout the pandemic, including the hospitality and leisure industry. For example, the Government announced an extra £1 billion of funding to support the hospitality and leisure sector after the emergence of the Omicron variant.64
25. The Minister cited the airport and ground operations support scheme as an example of how the Government has supported the aviation sector during the pandemic. The first iteration of the scheme provided almost £87 million in funds.65 Two further iterations of the scheme were subsequently introduced, and a total of £175 million has now been provided through the scheme.66 Those funds could only be used to meet operational expenses, such as security, contracted services for runway maintenance and ground handler costs.67 The Minister also told us that the Department for Transport can “do things like the Aviation Skills Retention Platform” to support the aviation sector.68
26. Although all international travel restrictions have now been eliminated, further human and financial resource may be needed to support the aviation sector as it recovers from the pandemic. In April 2021, Heathrow Airport’s Chief Solutions Officer, Chris Garton, told us that
it always was a problem to process passengers at the border from a resource point of view. We would like to see more resources at the border anyway, but Covid has just made that so much worse than it was before.69
Mr Garton noted that Heathrow “even [had] to involve the police service to help” process passengers at the border.70
27. The UK aviation sector can contribute to the country’s economic recovery from the pandemic. The air transport sector alone contributed £5.47 billion to the UK economy in 2019, with the entire aviation industry contributing almost £22 billion.71 Air passenger duty raised £3.6 billion for the Exchequer in 2019–20.72
28. In September 2020, the Department told us that it aimed to publish a plan, setting out a strategy for the recovery of the UK aviation sector out to 2025, “this Autumn”.73 The Government explained that the recovery strategy will “support not only the restart of the sector, but will drive the sustainable growth of the sector, creating high quality, skilled jobs across the UK that support the levelling-up of our economy and strengthen the Union”.74 The Government also stated that it is examining the recovery of the sector in the context of the UK’s “green ambitions”.75 Almost two years later, the strategy for the recovery of the UK aviation sector has not been published.
29. The way in which the Government introduced international travel restrictions during the pandemic was inconsistent, confusing industry and passengers. The aviation industry, which connects the UK to the world, experienced severe economic difficulties due to Government restrictions that were not based on scientific consensus. As international travel restarted in the summer of 2021, the industry, its workforce and passengers were subjected to a traffic light system that was opaque, ambiguous and inconsistent. Government restrictions on international travel throughout the pandemic were disproportionate to the risks to public health.
30. The reimposition of travel restrictions had little effect on the spread of the Omicron variant in the UK. The Government appeared to recognise that outcome and belatedly reversed most of those restrictions in early January 2022. Overly strict international travel restrictions can have unintended consequences, such as encouraging countries not to report Variants of Concern for fear of experiencing negative economic effects.
31. We welcome the Government’s decision to remove all international travel requirements. We also welcome the Government’s statement that future international travel contingency measures will only be implemented in extreme circumstances. That decision gives the UK a competitive advantage over countries that were slower to remove such restrictions, providing an incentive for tourists and businesspeople alike to visit the UK. Enabling test-free travel makes the UK a more attractive destination for tourists and business travellers, who will support the country’s economic recovery from the pandemic. The Government has intimated that it will continue to monitor coronavirus outbreaks and new variants, but it must make clear what that monitoring mechanism will entail and how it will be funded.
32. As the aviation industry’s economic recovery from the coronavirus pandemic is now well under way, the Government’s aviation recovery plan must be published as a priority. That strategy should be published no later than 1 June 2022, when the summer travel season will begin in earnest.
33. The Government must build international travel into its future pandemic resilience planning, developing a transparent and predictable system that can be used to facilitate safe international travel during potential future health crises. The Government’s strategy for the recovery of the aviation sector must include a commitment to developing such a plan.
34. The Government must set up an international travel toolkit based on the following principles:
35. The Government must convene a global taskforce to promote the standardisation of the remaining international travel requirements that were introduced in response to the coronavirus pandemic. The Government should pursue bilateral negotiations with countries with high rates of vaccination to facilitate the removal of such restrictions.
36. Passengers travelling abroad during the pandemic repeatedly expressed concerns about the navigability and pricing structure of the travel testing market.76 On 6 August 2021 the Secretary of State for Health and Social Care wrote to the Competition and Markets Authority (CMA) to request a review of the market for PCR travel tests.77 The CMA completed its review on 8 September 2021. The review found that
competition alone will not deliver the right outcomes for consumers from the PCR testing market, even when backed by ex post enforcement of consumer law. A combination of ex ante regulation and ongoing monitoring and enforcement is also needed.78
37. In response to the review, the Secretary of State for Health and Social Care said that the Government had “identified even more providers that were messing around with costs”, and as a result removed 91 providers from the GOV.UK list.79 He explained that from 21 September 2021 the Government would introduce new penalties for companies that engaged in unlawful practices, including fixed fines of up to £10,000.80 The Government also acted on inaccurate prices advertised by 135 private providers, who were warned that they would be removed from the list if they advertised misleading prices again.81
38. Those actions were apparently insufficient to improve the travel testing market and to deter providers from advertising misleading prices. In early December 2021, as the Omicron variant was in the early stages of its spread, Which? found that there were 443 testing providers on the GOV.UK website approved provider list with prices ranging from £15 to £399.82 The Government’s list offered no analysis of the providers’ quality of service.83 Which? Head of Campaigns, Neena Bhati, told us that “the passenger experience has been that it is quite difficult to navigate [the travel testing] market” because
the expectation has been on consumers to do all of the market research as to who is the best provider, although they do not have the quality of information or the understanding of what is actually important in that market to be able to make informed decisions.84
39. Ms Bhati told us that consumers expect the Government to check providers, if those providers are featured on the Government’s approved list. She said that because of the lack of analysis on individual providers on the list, consumers are “just being told to look by price rather than understanding that there could be some quality, reliability and consumer protection issues if something goes wrong”.85
40. The Government’s list of testing providers raises further issues. On 7 December 2021, the Prime Minister’s representative said that
there are many tests available, both PCR and [lateral flow], within the £20-£50 price range. We will continue to monitor the actions that the companies are taking. It is clearly unacceptable for any product testing company to take advantage of holidaymakers. The average price of a day two test is now under £45.86
However, Which? analysis of the list on 13 December 2021 found that fewer than one in five tests on the GOV.UK list were advertised for less than £45 and that only five providers advertised tests for £20.87
41. Which? also found that travel testing companies continued to utilise drip-pricing practices in December 2021. For example, 20 firms quoted tests for ‘self swab at home’ for less than £30, but when costs such as delivery charges were added before check-out, the total price increased, “in some cases to £80”.88 Some companies did not have tests available for the price they stated on the GOV.UK list. The Times identified one company listing a 30 pence test.89 However, when journalists clicked on the link to that test, an ‘unavailable’ notice appeared.90 The next cheapest test that company provided cost £59.91
42. The Government has focused on addressing concerns with the PCR travel testing market, but Which? told us that the shortcomings with that market also apply to the antigen travel testing market.92 The need to provide transparent, reliable information on testing providers is applicable to both the PCR and the antigen travel testing markets. Despite those concerns, the CMA’s September 2021 recommendations for improving the PCR travel testing market have yet to be implemented in full, and no review examining the antigen travel testing market has been carried out.
Table 1: CMA’s recommendations to the Government to produce better PCR testing market outcomes
CMA recommendations: improving the PCR testing market
DHSC should enhance the basic rules and requirements to which retail test providers must adhere, as a pre-condition to getting on and remaining on the GOV.UK list. Non-compliance with these rules and requirements (which should include compliance with consumer law) should be grounds for DHSC to remove a test provider.
DHSC should ensure a comprehensive monitoring and enforcement programme for retail test providers is set up, with appropriate sanctions.
DHSC should ensure that it has robust quality monitoring procedures in place to assure the accuracy of test results.
DHSC should develop the NHS Test and Trace PCR travel test currently listed on GOV.UK and use it to establish a ‘benchmark’ product to drive better market outcomes.
We do not recommend that DHSC introduces a price cap at this stage. Instead, DHSC should monitor and gather evidence on price levels and costs on an ongoing basis. DHSC should be prepared to re-evaluate this position if other measures it decides to take do not improve market outcomes.
DHSC should improve the retail test provider listings on GOV.UK so that consumers can more easily search for, obtain and act on the information they need.
Subject to any legal restrictions, DHSC should make data on retail test providers available, for example through an open Application Programming Interface (API).
DHSC should work with HMRC to provide guidance to retail test providers on how VAT should be applied.
43. Under-regulation has resulted in a dysfunctional travel testing market. The travel testing market was established with no clear protections or means of recourse for consumers. To date, the onus has been on consumers to perform market research, which has required them to navigate often misleading claims by companies. Unclear pricing, misleading advertisements and delays in receiving tests and test results still persist more than a year after the Government first introduced travel testing requirements. The Government has been far too slow to address those issues.
44. Although the UK has, at the time of writing (April 2022), removed all testing requirements for international travel, many other countries have retained testing requirements. Therefore, some passengers will need to access safe and affordable coronavirus testing options in the near-to-medium term. Government intervention is required to establish a functional market for travel testing to benefit consumers. That intervention should include:
a) implementing in full the Competition and Markets Authority’s recommendations for regulating the PCR travel testing market, so that if PCR tests are reintroduced as a travel requirement, the market will function fairly for consumers; and
b) tasking the Competition and Markets Authority to review the operation of the market for antigen travel tests to follow the regulator’s September 2021 review of the PCR testing market.
45. Several airlines have collapsed in recent years, including Monarch, Thomas Cook and Flybe. Those insolvencies occurred before the onset of the coronavirus pandemic. Further airline insolvencies are likely to occur in future. Department for Transport analysis showed that only around 80% of UK-originating passengers have some form of protection from financial loss due to the failure of an airline.93
46. The former Secretary of State for Transport, Chris Grayling MP, commissioned a review of airline insolvency protections in 2018.94 The review was announced in response to the collapse of Monarch Airlines in October 2017, when 85,000 passengers were repatriated by the CAA at cost to the taxpayer.95 Since the review was commissioned, other airlines have failed. In September 2019, winding-up orders were made against the Thomas Cook Group companies.96 Following authorisation by the Government, the CAA orchestrated the repatriation of more than 140,000 Thomas Cook passengers.97 Flybe Limited, Europe’s largest regional airline, entered administration on 5 March 2020 and ceased trading with immediate effect.98 According to the CAA, few Flybe passengers were ATOL (Air Travel Organiser’s Licence) protected, and the Government did not commission the CAA to organise any repatriation flights.99 It was thought that the market had sufficient capacity for people to travel via alternative airlines, rail and coach operations.100
47. The Department for Transport published the final report on airline insolvency protections in May 2019.101 The Airline Insolvency Review considered both refund and repatriation protection in the event of an airline’s failure. The report recommended:
48. The Government’s December 2019 Queen’s Speech included a proposal to legislate on airline insolvency.103 The main elements of the legislation would:
49. In October 2020, the Government stated that it had considered the Airline Insolvency Review’s recommendations and was keeping “under review the scope and timing of any future reforms in this policy area”, because it was “mindful of the need to consider the challenges faced by the aviation sector as a result of COVID-19”.105 The Airline Insolvency Bill was not mentioned in the 2021 Queen’s Speech.106
50. Chair of the CAA Consumer Panel, Jenny Willott, told us that there are
definite benefits to passengers if an airline that is going into insolvency can carry on flying and be wound up in an orderly way, in the way it is done in a number of European countries, rather than having a mass operation to repatriate being run by the CAA.107
51. Ms Willott noted that the Department for Business, Energy and Industrial Strategy and the CAA are reviewing several issues “around airlines and holiday companies becoming insolvent”.108 She argued that it would be “helpful” to review such issues
in a holistic way to make sure that we do not have…little bits being done in different ways…so that we do not have different people on the same flight with different protections under different bits of legislation, which starts getting really complicated and confusing for consumers.109
52. Ms Willott explained that insolvency legislation would also help to improve consumer confidence. She explained that
when you are booking a flight, often quite a significant time in advance and often one of the most expensive things that people pay for in a year, knowing that your money is safe and that if something happens in the interim you will be protected, or if you are abroad that you are going to be safe and get back home again, it gives you much more confidence to book in advance.110
53. Other countries have protections to support consumers in the event that businesses, including individual airlines, become insolvent. For example, the United States’ Bankruptcy Code includes a provision where a debtor remains “in possession” of its asset, has the powers and duties of a trustee, may continue to operate its business, and may, with court approval, borrow new money.111 Introducing such a binding code in the UK to cover airline insolvencies could enhance consumer protection and deliver a functional, transparent insolvency procedure.
Table 2: United States bankruptcy protections
Chapter 11 - United States Bankruptcy Code
A case filed under chapter 11 of the United States’ Bankruptcy Code is often referred to as a “reorganization” bankruptcy. Typically, the debtor remains “in possession,” has the powers and duties of a trustee, may continue to operate its business, and may, with court approval, borrow new money. A plan of reorganisation is proposed, creditors whose rights are affected may vote on the plan, and the plan may be confirmed by the court if it gets the required votes and satisfies certain legal requirements.
54. The Government must introduce an Airline Insolvency Bill in the next Session of Parliament to set out a framework to handle future airline insolvencies to protect the interests of consumers, employees and taxpayers.
55. The ability for consumers to secure refunds from airlines has been a persistent challenge throughout the coronavirus pandemic. In response to our Report The impact of the coronavirus pandemic on the aviation sector, the Civil Aviation Authority (CAA) stated that its enforcement powers in relation to airline refunds “are insufficient in supporting the speedy redress of non-compliance by airline operators”.112
56. The CAA’s powers derive from the Enterprise Act 2002. They allow the regulator to “request information from businesses, seek undertakings from the business and enforcement orders from the courts to stop an infringement”.113 However, the CAA explained that that involves “a lengthy process…to ensure compliance”.114 The CAA explained that the process is “not well-suited to swift action … it can take a considerable period of time for a case to come before the courts” and “this leads to a period of time when a business may be able to continue breaching the law without sanction”.115 Chair of the CAA Consumer Panel, Jenny Willott, described the process as “extremely expensive and resource-intensive”.116 For example, the CAA has been pursuing enforcement action against Ryanair for more than three years, because the airline refused to pay compensation to passengers affected by industrial action taken by its pilots in 2018.117 The CAA concluded that those passengers were “protected by law and that Ryanair could not claim that its delayed and cancelled flights were ‘extraordinary circumstances’”.118 The High Court agreed with the regulator’s interpretation of the law. Following an appeal by Ryanair, the Court of Appeal upheld the High Court’s decision.119 The process is still ongoing, because Ryanair may seek to appeal that judgment in the Supreme Court.120 If the regulator had the power to impose financial penalties, consumers could have received redress sooner.
57. UK regulators such as the Office of Rail and Road can issue financial penalties to businesses in response to shortcomings. The CAA previously called for such powers to create “a more flexible enforcement toolkit to allow us to deal more effectively with a wide range of compliance issues”.121
58. The CAA published a review of airline practices on refunds in July 2020.122 Which? concluded that the CAA’s review of airlines’ behaviour was “largely ineffectual in changing airline refund practices”.123 That is because although the regulator identified several carriers that were not paying refunds ‘sufficiently quickly’, it opted not to pursue any enforcement action after receiving commitments from the airlines to improve their performance.124
59. In that context, we note that the Chief Executive of the Civil Aviation Authority told us on 15 December 2021 that the aviation sector is in “a much better position now on consumer refunds than we were … [airlines have] paid back over £2 billion worth of consumer refunds”.125 He explained that the refunds were also being processed in a timely manner, noting that when the CAA “last spoke to airlines and looked at their data, they’re all within the current seven day timetable for refunding consumers”.126
60. Passengers experienced difficulties in securing refunds for flights that they could not take because of the UK’s spring 2020 lockdown. The Chair of the CAA Consumer Panel, Jenny Willott, said that those challenges were “pretty much in hand” by the end of summer 2020.127 However, she identified a second issue with refunds that is “still outstanding”.128 That is when a flight goes ahead as scheduled despite the imposition of local restrictions or a national lockdown.129 Ms Willott said that it “is not really clear whether passengers are entitled to a refund or not” in that situation, because of “a gap in the law”.130 She noted that neither the Competition and Markets Authority nor the CAA could pursue the issue until the law is clarified.131 Ms Willott concluded that “if your Government are telling you that you are not allowed to travel, it seems quite extraordinary that you are then not allowed to get your money back”.132 She explained that confusion over that area of the law may also have a negative effect on airline bookings. She stated that “the more complications there are, the more complexity and the more different things you have to understand to be able to book a flight, the more it puts people off and they are not going to book”.133
61. Even when airline passengers are entitled to a refund, they can struggle to secure the refunds that they are owed. Those challenges apply to both individual passengers and travellers who book flights through third parties. Accessing refunds from airlines has been a long-standing challenge for consumers, pre-dating the coronavirus pandemic. In 2017, former Which? Managing Director of Home Services, Alex Neill, said that “the process for making a claim for a delayed or cancelled flight can be lengthy and time consuming”.134 Therefore, consumers sometimes hire claims management companies (CMCs) to secure refunds that they are entitled to.135 Mr Neill called for consumers that are entitled to refunds to be automatically compensated by airlines to avoid the need to pay a CMC to secure their refund.136
62. In April 2021, the Global Travel Taskforce report stated that airlines should be “flexible in recognition of the impact the pandemic has on consumers’ bookings”.137 The report stated that the Government would seek to “build consumer confidence and develop trust in booking travel by putting further measures in place to ensure their money is safe in case bookings are cancelled wherever possible”.138 The report explained that that “will include reforming the enforcement powers that the CAA has on airlines that breach consumer rights, which will be detailed in the strategic framework for the aviation sector to be published later this year”.139 As the coronavirus pandemic enters its third year, that strategic framework has not been published, and the CAA’s enforcement powers have not been reformed.
63. Despite slow progress in addressing passenger concerns over refunds during the pandemic, the Government launched a consultation on new proposals to strengthen airline passengers’ rights in January 2022.140 The proposals included amending the compensation procedure for delayed UK domestic flights. The Government is seeking views on whether compensation for delays to domestic flights should be calculated as a percentage of the cost of a ticket. It is also consulting on a proposed compensation scheme that could include the following measures:
64. The Government noted that such a scheme would “align domestic aviation compensation for delays and with other domestic modes [of transport]”.142 For example, the Government cited the domestic rail sector, where the National Rail Conditions of Travel set out the minimum level of compensation payable (50% of the ticket price, depending on the ticket type) for delays of more than an hour.143 Compensation rates for international flights that are delayed are set by the 1999 Montreal Convention. However, the Government is also consulting on alternative international approaches to link delay compensation to the costs of travel.144
65. The Government has proposed a mandate requiring all airlines that travel to and from the UK to join the aviation alternative dispute resolution (ADR) scheme, which would “give consumers a route for escalating certain complaints that cannot be settled between the consumer and airline without needing to go to court”.145 Participation in some form of ADR is mandatory in most regulated sectors, including rail and energy.146 ADR schemes allow consumers to escalate complaints and to seek redress without entering court. The Department for Transport noted that although some airlines are members of an ADR scheme in the UK, membership is voluntary. If an airline is not a member of an ADR scheme, a passenger travelling with such an airline has “limited options to seek redress, with court action being costly and time consuming”.147
66. In April 2021, the Global Travel Taskforce recommended that the Government consult on additional, flexible and modern tools to enforce consumer rights before the end of 2021. Although long overdue, the Government is now consulting on the merits of granting the Civil Aviation Authority additional powers to enforce aviation consumer protection laws. The Civil Aviation Authority urgently requires the power to impose financial penalties on airlines that do not provide complete refunds to consumers when they are required to do so by law.
67. In the absence of additional powers, the Civil Aviation Authority must utilise its existing powers to challenge businesses and to pursue enforcement orders from the courts to tackle infringements of consumer rights in relation to refunds. Although that process may be lengthy and costly for the regulator, it is the best form of recourse available to consumers trying to secure refunds, until the Civil Aviation Authority is granted the power to impose financial penalties.
68. The Government must introduce a mechanism to ensure that when entitled to a refund by law, airline passengers are granted automatic compensation, eliminating the need for customers manually to apply for a refund.
69. We welcome the Government’s decision to seek views on the length of delay that should trigger compensation for domestic flights as part of its airline passenger rights consultation, as well as the requirement that all airlines that fly to and from the UK participate in the alternative dispute resolution scheme. However, the Committee is concerned that the effect of the Government’s proposed compensation scheme, which is out for consultation, could result in much reduced compensation for passengers, albeit it that a greater number of passengers may benefit from such a scheme. Although moving to a compensation scheme that is similar to the Delay Repay rail scheme might be desirable for consistency, in many cases flight delays are far more costly to the passenger than a delayed rail journey. Delayed air passengers can face missing holidays or increased travel and accommodation costs. The Government must take those factors into account in designing a new scheme.
70. It is disappointing that the Government’s ‘reforming aviation consumer policy: protecting air passenger rights’ consultation does not seek views on the enforcement of consumer rights in relation to the private testing market for travel. The consultation should be expanded to assess how the private travel testing market could be regulated to make it function effectively for consumers.
71. The domestic aviation sector must not be overlooked as part of the UK’s broader economic recovery from the coronavirus pandemic. The UK’s 42 regional airports provide employment, support local economies and help to connect the UK’s nations and regions.148
72. Domestic air routes are key to connecting the UK. The Union Connectivity Review interim report found that air routes between Northern Ireland and Great Britain are critical, because the Irish sea acts as a barrier to rail and road routes.149 Domestic air travel is centred on London. The top 10 UK domestic air routes all have an origin or destination point at a London airport, with Heathrow-Edinburgh being the most flown route “by a significant margin”.150 Flights across the Scotland-England border comprise much of the demand for domestic air passenger travel.151
73. The Civil Aviation Authority (CAA) publishes data on 42 regional airports.152 During 2019, the latest year unaffected by the Covid-19 pandemic, regional airports conducted 1.05 million air passenger transport movements.153 That accounted for 48% of all air passenger transport movements across all UK reporting airports (London area and regional).154 Domestic air passenger movements were the largest portion of travel for nine of those 42 regional airports (domestic air passenger transport was almost exclusive for Dundee and Belfast City airports), while for the other 33 regional airports, air passenger movements were primarily international.155
74. Domestic air travel has decreased in the past decade from 612,500 flight movements in 2009 to 484,300 in 2019 (a decrease of approximately 21%).156 That trend has been exacerbated by the effects of the coronavirus pandemic. Comparing passenger movements in December 2021 with December 2019 before Covid-19 travel restrictions began, the number of domestic passengers at regional airports was 41% lower.157 The number of passengers travelling to and from EU destinations from those airports was 60% lower, and the number of passengers to and from those airports to other international destinations was 56% lower.158 Regional and City Airports Director, Clive Coleman, stated that “what we will see as we come out of [the pandemic], both domestically and internationally, is fewer airlines, with fewer aircraft”.159 If that scenario is borne out, passengers could have fewer options for domestic travel. The Government must therefore introduce measures to facilitate a competitive domestic aviation industry based on key regional routes.
75. Public Service Obligation (PSO) routes are classified as a form of state aid.160 They are defined as “socially and economically necessary air services to be subsidised by national or local authorities, to protect ‘lifeline’ routes to peripheral or development regions”.161 PSO routes are used to support connectivity in isolated areas, such as the Highlands and Islands of Scotland.162 PSO routes are funded by devolved Administrations, UK central Government, or both. However, current PSO guidance only allows for central Government to establish PSO routes on a restricted basis.163 Only routes that run to and from London and are exclusively operated by one airline are eligible for support from the UK central Government.164 Devolved Administrations can support PSO routes that are wholly within their nation.165 It is not possible to establish PSO routes between two of the UK’s nations, unless that route is to and from London.166
76. In October 2020, the Government asked Sir Peter Hendy to undertake a review of transport connectivity within the Union. Specifically, the Government requested that Sir Peter manage a “detailed review of how the quality and availability of transport infrastructure across the UK can support economic growth and quality of life across the whole of the UK”, making recommendations on where future investment should be targeted.167 The Union Connectivity Review final report concluded that PSO rules “limit their extent, consumer choice and competition”.168 Notably, all aviation stakeholders that were consulted as part of the review recommended the development of “open PSOs which would support specific routes by removing APD and allowing multiple airlines to operate”.169 The report also stated that
the development of region to region and open PSOs would strengthen connectivity between different parts of the UK outside London and South East England, providing greater benefits for regions with lower levels of productivity and supporting the UK Government’s levelling up agenda.170
Based on those conclusions, the Union Connectivity Review recommended that
where journeys are too long to be reasonably taken by road or rail, the UK Government should revise existing subsidy rules for domestic aviation to allow support for routes between different regions of the UK (rather than just to and from London) and to allow multiple airlines to serve a single route.171
77. Informed witnesses advocated an approach similar to that recommended in the Union Connectivity Review. Director of Communications and Sustainability at AGS Airports, Brian McClean, described the rules on PSO routes as “cumbersome and restrictive”.172 He said that “we need to look at relaxing the rules around PSOs”.173 Director at Regional & City Airports, Clive Coleman, called for “a more flexible PSO arrangement … where APD (Air Passenger Duty) could be free on new routes”.174 PSO routes are exempt from paying APD. However, if such routes become commercially viable over time, their PSO status is revoked. Such routes are then classified as normal air routes and are required to pay APD.175 Mr Coleman explained that “there would not be a [tax revenue] loss to the Treasury” if new PSO routes were introduced, “because if the route did not exist [the Treasury] would not have that income” in the first instance.176
78. Implementing more flexible rules on the provision of Public Service Obligation routes can improve connectivity between the four nations of the UK. To improve domestic air connectivity, we agree with the Union Connectivity Review’s recommendation that the Government must revise subsidy rules to allow:
a) multiple airlines to operate individual PSO routes, fostering a competitive market for regional services; and
b) central Government to fund PSO routes between and within the UK’s four nations.
We also recommend that central Government agree which routes should be funded and how much funding should be allocated to those routes in consultation with the devolved Administrations.
79. In the October 2021 Budget, the Chancellor of the Exchequer announced that the Government will introduce a package of Air Passenger Duty (APD) reforms to “bolster UK air connectivity” through a 50% reduction in domestic APD and “further align with UK environmental objectives” by adding a new ultra-long-haul distance band.177 The Treasury explained that such a band will support the Government’s environmental objectives by “ensuring that those who fly furthest incur the greatest level of duty”.178 Environmental groups expressed concern about the new APD policy. Campaign for Better Transport Chief Executive, Paul Tuohy, described it as “wrong-headed [because the UK] is not a large country: many of these journeys can be made in just a few hours by train with just one-seventh [of] the carbon impact”.179
80. The Treasury’s APD reforms will be introduced from 1 April 2023.180 The Government will introduce a new domestic band for APD set at £6.50. The rate will apply to all flights between airports in England, Scotland, Wales and Northern Ireland.181 As a result, the Government claims that “around 9 million passengers will pay less APD in 2023–24” which will “benefit connectivity between Great Britain and Northern Ireland”.182 Stakeholders who responded to the Treasury’s consultation on aviation tax reform noted that
any domestic reduction [of APD] could support the viability of existing domestic air routes, and potentially lead to increased frequency and/or the introduction of new domestic air routes.183
Airport representatives who responded to the consultation noted the importance of “intra-UK air connectivity in enabling greater labour mobility, creating a more resilient transport network and supporting local economies”.184
81. Loganair Chief Commercial Officer, Kay Ryan, welcomed the reduction in domestic APD, noting that there are several domestic air routes that “are not big enough to warrant a four a day service on a 100-seater aircraft” and therefore would not be financially sustainable to operate with an APD charge.185 Ms Ryan said that “without this cut in APD, Loganair would have struggled to keep flying at least 45 routes that we currently operate”.186 Other regional aviation witnesses also welcomed the Government’s APD reforms.187
82. Ms Ryan highlighted that the APD reforms will not be introduced until 1 April 2023. She acknowledged the “historical reasons” underpinning the implementation schedule, but added that because of the pandemic “this is the one time when it could be brought forward, particularly on the domestic side”.188 Director of Communications and Sustainability at AGS Airports, Brian McClean, and Director at Regional & City Airports, Clive Coleman, also questioned why the reforms could not be implemented until 1 April 2023.189
83. The Government’s changes to Air Passenger Duty are welcome. However, that system will not be introduced until 1 April 2023. The Government should bring that date forward to 1 July 2022 to support domestic routes that might otherwise collapse because of the coronavirus pandemic.
84. The Climate Change Committee’s sixth carbon budget identified aviation as a sector that is likely to have “significant remaining positive emissions by 2050, given the limited set of options for decarbonisation”.190 The Climate Change Committee added that “zero-carbon aviation is highly unlikely to be feasible by 2050”.191 It recommended limiting passenger numbers to a 25% increase on 2018 levels and not expanding net airport capacity.192 The Government’s Jet Zero Consultation stated that “the sector can achieve Jet Zero without the Government needing to intervene directly to limit aviation growth”.193 The consultation also stated that the Government will focus on promoting uptake of new fuels and technologies rather than on capping demand.194
85. In 2019, domestic and international aviation accounted for approximately 8% of the UK’s total greenhouse gas emissions.195 In 2020, UK air transport movements declined as a result of the coronavirus pandemic.196 That decline in movements resulted in a decrease in the amount of greenhouse gasses emitted by the UK aviation sector. The Climate Change Committee reported that “2020 has likely seen a drop in GHG (greenhouse gas) emissions of over 60% from 2019, due to the impact of COVID-19”.197 That trend will reverse as pandemic travel restrictions are removed within the UK and across the world.
86. The Department for Transport tasked the Civil Aviation Authority (CAA) with preparing and maintaining a co-ordinated strategy and plan for the use of UK airspace up to 2040, including modernisation.198 Put simply, airspace modernisation is making changes to airspace design so that air traffic can be efficiently redistributed. In 2018, the CAA published its finalised airspace modernisation strategy.199 The strategy set out a shared objective between the CAA and the Department for Transport for modernising airspace to “deliver quicker, quieter and cleaner journeys and more capacity for the benefit of those who use and are affected by UK airspace”.200 The CAA later committed to updating the strategy to account for the challenges presented by the coronavirus pandemic.201
87. The Department for Transport and CAA released a statement in July 2020 confirming a continued commitment to airspace modernisation, highlighting the Airspace Change Organising Group’s (ACOG’s) report on remobilising the airspace change programme.202 In March 2021, the Department and the CAA provided an update on that work, accepting the majority of the ACOG’s recommendations for how to progress the airspace modernisation programme.203
88. On 30 December 2021, the Minister for Aviation wrote to the Committee to update on progress on implementing the strategy.204 Six of the 15 initiatives are assessed as on track, with one implemented.205 Five initiatives required attention.206 Four initiatives were assessed as having “major issues”.207 The Minister said that delayed timescales of delivery against the original plans set out in the strategy “predominantly shifted because of ongoing recovery of the aviation industry from the pandemic”.208
89. The CAA’s airspace modernisation strategy cited “improving environmental performance” as an objective.209 Modernising the UK’s airspace can enable aircraft to follow more efficient flightpaths, as aircraft “often fly further than necessary in the upper airspace on flightpaths that are determined not by the shortest or most cost-effective route to their destination, but by airspace design…needing to safely separate traffic”.210 According to the regulator, aircraft experiencing delays “often have to fly sub-optimal routes, at less efficient altitudes and speeds, to avoid bottlenecks in the airspace network”.211 Modernising airspace can therefore reduce emissions and mitigate noise effects.
90. Flights inbound to airports that operate at near to maximum capacity can suffer congestion that results in queuing and delays. In current operations, arrival queues are managed using holding patterns such as ‘stacks’ or ‘arcs’ that cause traffic to circle in lower airspace “burning extra fuel and creating visual blight”.212 The CAA observes that “growing traffic levels are putting greater pressure on runways, which, if the airspace is not modernised, will lead to greater use of ‘stacks’ in the future”.213
91. The CAA stated that “one of the most significant environmental impacts associated with the airspace at lower altitudes is aircraft noise”. It added that “airspace modernisation is expected to result in a reduction in the average noise levels per flight, for example by enabling aircraft to climb and descend continuously”.214
92. If International Air Transport Association (IATA) forecasts are borne out, then UK airspace will likely become more crowded, with resulting negative environmental effects.215 The need to modernise the UK’s airspace remains pressing.
93. The delivery of the airspace modernisation strategy cannot be subject to further delay. Urgent attention is required if the strategy’s target deadlines are to be met. The need to deliver the strategy’s initiatives is particularly acute in the context of the Government’s decarbonisation targets and the expectation that passenger numbers will return to pre-pandemic levels in the next two years.
94. Despite the importance of airspace modernisation, and the relative speed with which it could be introduced compared with other decarbonisation measures, the Airspace Change Organising Group is not a member of the Jet Zero Council. The Committee recommends that the Airspace Change Organising Group should be elevated to full membership of the Jet Zero Council. That would signal the serious intent of the Government to implement the required changes to airspace modernisation as quickly as possible.
95. The Climate Change Committee’s sixth carbon budget stated that aviation emissions that remain in 2050 will need to be offset by greenhouse gas removal.216 However, carbon capture technology is still in the early stages of development. Aviation Environment Federation Policy Director, Cait Hewitt, told us that “at the moment, we do not know how it [carbon capture and storage] is going to be delivered [or] who is going to pay for it”.217
96. Given the challenges implicit in carbon capture technology, investment is needed in other aviation decarbonisation technologies and fuels. Informed witnesses told us that hydrogen-powered planes, electric planes and sustainable or synthetic aviation fuels might all contribute to the decarbonisation of the aviation sector.218 Senior policy adviser at the Green Alliance, Helena Bennett, highlighted the benefits of e-kerosene.219 Low-carbon aviation fuels have the potential to reduce UK aviation carbon dioxide emissions by 5% to 30% by 2050.220 The Climate Change Committee estimated that by 2050 new technologies could reduce emissions per aircraft by 40% compared with UK emissions in 2000.221
97. The Government proposed a sustainable aviation fuels (SAF) mandate requiring jet fuel suppliers to blend an increasing proportion of SAF into aviation fuel from 2025. It is currently consulting on that policy.222 The Government is also consulting on its Jet Zero Strategy, which proposed further aviation decarbonisation measures.223 The private sector is collaborating with the Government through the Jet Zero Council to support the development of sustainable aviation technologies. The Government announced the formation of the Jet Zero Council on 12 June 2020.224 The council is a partnership between industry and the UK Government, designed to facilitate collaboration between ministers and business leaders to deliver the aim of “delivering zero emission transatlantic flight within a generation, driving the ambitious delivery of new technologies and innovative ways to cut aviation emissions”.225
98. According to the Jet Zero Council’s terms of reference, the purpose of the council is to “provide advice on the Government’s ambitions for clean aviation” and “focus on developing UK capabilities to deliver net zero emission commercial flight”.226 The council proposes to develop those capabilities by:
The council includes two delivery groups focused on sustainable aviation fuels and zero emission flight, respectively.
99. CAA Chief Executive, Richard Moriarty, told us that over the course of the pandemic, the regulator has “seen an up-tick in entrepreneurs and private capital wanting to come to the UK to trial and experiment on new technologies” for sustainable aviation.228 The CAA has an “innovation hub” team whose role is to support innovators to bring new aviation technologies to the UK. That involves assessing those technologies and conducting “experimental flights”.229 Mr Moriarty said that the CAA “is the only example” of a regulator that has such a team in Europe.230 He told us that the CAA does not “work in sequence” when it comes to regulating new aviation technologies. He explained that
I do not want the technologists to trial some stuff and then only come to us at the end and say, ‘What about regulatory certification?’ We have to work really closely with them as partners throughout the process.231
100. Mr Moriarty said that the CAA is “keen for the UK to play a leading role in eVTOL (electric vertical take-off and landing technology)”.232 However, he noted that “most of the major companies will also wish to export that technology” across the globe.233 Therefore, the CAA is co-operating with other regulators, including the United States Federal Aviation Administration, to allow new technologies to be brought to market, while ensuring they are safe for public use.234
101. The CAA has limited powers to monitor and enforce decarbonisation by the aviation sector. It “follows government policy and guidance on carbon emissions and air quality in making decisions about airspace change” and “has a role” in
If the Government were to introduce new environmental requirements for the aviation sector, such as the proposed SAF mandate policy, new powers could be granted to the CAA to enable the regulator to hold the aviation industry accountable.
102. Informed witnesses identified scaling up new sustainable aviation technologies to make them commercially viable, as a key challenge in decarbonising the sector.236 Aviation Environment Federation Policy Director, Cait Hewitt, explained that “well under 0.1% of total aviation fuel used is from an alternative fuel source … if we are talking about turning waste such as chip fat into aircraft fuel, there are obvious scalability issues”.237
103. Sustainable Aviation Programme Director, Dr Andy Jefferson, explained that in the United States, “both the Federal Government and state governments are providing incentive policies to make the sustainable aviation fuel price the same as buying fossil jet fuel”.238 He explained that in the UK renewable offshore wind energy industry, the Government introduced a policy called contracts for difference that “effectively enabled offshore wind to be provided as a solution, as part of the energy grid, at a price comparable to other sources of energy provision at the time”.239 He called for a “similar mechanism” to improve uptake of sustainable aviation fuels.240
104. The UK Government’s initial reforms of the electricity market included the contracts for difference model. A contract for difference (CFD) was conceived as a private law contract between a low-carbon electricity generator and the Low Carbon Contracts Company (LCCC), a Government-owned company.241 A generator party to a CFD was paid the difference between the ‘strike price’, which was “a price for electricity reflecting the cost of investing in a particular low carbon technology”, and the ‘reference price’, which was a “measure of the average market price for electricity in the Great Britain market”.242 The Government said that the model provided “greater certainty and stability of revenues to electricity generators by reducing their exposure to volatile wholesale prices, while protecting consumers from paying for higher support costs when electricity prices are high”.243 Such a model could be adopted to support investment in the alternative aviation fuels market.
105. The Government must take steps to limit greenhouse gas emissions as air transport movements increase. The Government should continue to invest in new aviation decarbonisation technologies, including synthetic aviation fuels, to ensure that the UK aviation sector emits less than it did before the pandemic.
106. If the Government is to achieve its targets on net-zero aviation, new sustainability policies will be required for the aviation sector, which in turn will require robust regulation. The Government must review how the Civil Aviation Authority’s powers can be reformed to enable the regulator to enforce environmental mandates that the Government may introduce for the aviation sector.
107. The Government must introduce a market mechanism to support investment in sustainable aviation technologies. The Committee has been investigating market mechanisms that the Government might introduce to scale up alternative fuels in our ongoing inquiry, Fuelling the future: motive power and connectivity. We will report on our findings at the conclusion of that inquiry.
108. The UK co-ordinator for slots is Airport Coordination Limited (ACL).244 ACL has an arm’s-length relationship with the Department for Transport and the Civil Aviation Authority (CAA).245 Neither the Department nor the CAA has any involvement in the slot allocation process.246 From the early 1990s until the UK left the EU, slot allocation in the UK was governed by the EU Airport Slot Regulation.247 The EU rules were based on the worldwide airport slot guidelines, produced by the International Air Transport Association (IATA).248 Although those rules have been transposed into UK law, the UK Government can replace those rules with new national rules.249
109. In the EU’s slot allocation process, once historic slots are accounted for the remaining slots are brought together in what is called the ‘slot pool’.250 The slot pool includes slots created through new capacity and slots that have been returned to the pool.251 Under the global guidelines, half the pooled slots must be allocated to requests from new entrants and the other half to non-new entrants.252 Under the EU rules, half the slots in the pool are reserved for new entrants, but there are no requirements on how the remaining half should be allocated.253 The UK Government could replace those rules with new national rules.
110. Historic precedence or ‘grandfather rights’ allow airlines to retain their slots if those slots were used for 80% of the time in the last equivalent winter and summer season.254 That 80:20 slot usage rule is used to monitor compliance and determine whether airlines can retain their legacy slots. According to the Competition and Markets Authority (CMA), grandfather rights strengthen the market power of legacy carriers at congested airports, because they allow airlines to retain slots indefinitely if they comply with the 80:20 rule.255 It is important that carriers retain slot ownership for a sufficient period of time that their investment in those slots pays off. However, some airlines that struggle to meet the 80:20 ratio operate ‘ghost flights’ to maintain their rights to those slots, ensuring that new entrants cannot increase their share.256 Assessments could be carried out, potentially every 10 years, to review whether carriers conducting a high proportion of ‘ghost flights’ to maintain control of their slots should be permitted to retain those slots.
111. The EU suspended the 80:20 rule in response to the coronavirus pandemic.257 After leaving the EU on 31 December 2020, the Government took the decision to extend the 80:20 rule waiver.258 The Government took that decision in order to reflect the low demand for air travel, to help airlines’ finances and to reduce the environmental effects of ‘ghost flights’.259 On 26 February 2021, the Government again extended the slot waiver, which was due to expire in spring.260 The legislation to extend the waiver came into force from 26 March 2021, two days before the start of the summer slot season.261
112. Airlines such as Ryanair raised concerns over the extension of the waiver to the 80:20 slots rule. In February 2021, Ryanair stated that it
oppose[s] the extension of slot waivers into summer 2021 because this will lead to fewer flights and higher fares for consumers as legacy airlines at hub airports…will have no incentives to operate flights because the normal ‘use it or lose it’ slot rules have been waived.262
113. In November 2021, Gatwick Airport, Edinburgh Airport, Belfast International Airport and Wizz Air called on the Government to reinstate the 80:20 slots rule before summer 2022.263 In a letter to the Secretary of State for Transport, the companies stated that reviving slot rules will allow industry to increase flight schedules and boost hiring, “allowing competition to flourish”.264
114. The Department for Transport introduced further slot alleviation measures for the winter 2021/22 season and did so again for the summer 2022 season.265 The adjusted ratio for the summer 2022 season is 70:30.266 The Government stated that the adjusted ratio will
provide further support for aviation sector recovery, increase flexibility and protect the environment as airlines will not have to operate carbon-inefficient ‘ghost flights’ to retain their slots where markets are substantively closed.267
115. Between March 2020 and September 2021, approximately 15,000 ‘ghost flights’ operated in the UK.268 In the near-to-medium term, the Government’s flexible approach to the 80:20 rule may need to be maintained to mitigate the negative environmental effects perpetuated by current slot rules. Some airlines may also decide to fly empty planes to maintain their slots if passenger demand is affected by the Russian invasion of Ukraine and by increases in the cost of living. In the context of those challenges, the Government’s flexible approach to reinstating the 80:20 rule is welcome.
116. The Committee’s June 2020 Report, The impact of the coronavirus pandemic on the aviation sector, recommended that the Department for Transport and the CAA explore “every avenue available” to ensure that changes to the slots regime and their effect on the availability and distribution of airport slots do not unfairly affect passengers.269 The Committee recommended that the whole aviation industry be referred to the Competition and Markets Authority for a market study and possible investigation.270
117. In response to the Committee’s report, the CAA confirmed that it would support any work that the Government chooses to do while developing its recovery plan for the aviation industry.271 The Government responded that it has been “actively considering, for some time, whether there is a need to reform UK slots policy”, asserting that the slots allocation process should aim to encourage competition and provide connectivity for UK consumers.272 The Department added that the aviation recovery plan will “consider the role of the slot system in rebuilding a competitive aviation sector”.273
118. The Government must not reimpose the 80:20 rule until the effects of the Russian invasion of Ukraine on the UK aviation market are apparent. That will protect against a potential increase in the number of ghost flights operated by legacy carriers seeking to protect their slots.
119. The Government must include a review of the slot allocation system in its strategy for the recovery of the UK aviation sector. The strategy must:
a) consider alternatives to the existing slots framework to encourage new entrants, capitalising on the opportunity to shape the system following the country’s departure from the EU; and
b) review how ‘ghost flights’, undertaken by legacy carriers seeking to maintain control of their slots, might be mitigated.
The Government must co-ordinate with the Competition and Markets Authority and Airport Coordination Limited in carrying out the review.
120. The CAA has powers under the Civil Aviation Act 2012 to regulate airport operators that pass the market power test stated in the Act.274 The market power test consists of three parts:
121. Heathrow Airport Limited (HAL) passed the market power test. In February 2014, the CAA granted a licence to the airport.276 That licence included a price control on airport charges for the period 1 April 2014 to 31 December 2018.277 That price control has since been extended several times, with interim price caps introduced to account for factors such as the coronavirus pandemic.278 The CAA introduced an interim price control arrangement to apply during the first part of 2022 until the regulator makes its final decision on the price control to apply from 2022 to the end of 2026 (the “H7” price control period).279 The price control will set the maximum charges that Heathrow can charge its airline customers for using the airport for that period.
122. On 19 October 2021, the CAA published its initial proposals for the next price control at HAL alongside a consultation on those proposals. The CAA stated that it
recognises that there is still significant uncertainty in the shape of the aviation industry’s recovery from the COVID-19 pandemic. These proposals will deliver affordable charges for consumers and allow the airport to continue to invest in service quality, while also supporting consumer demand as the industry recovers.280
123. The package of measures set out in that consultation included:
124. Commenting on the initial proposals, CAA Chief Executive, Richard Moriarty, said that
While international air travel is still recovering, setting a price control for Heathrow Airport against the backdrop of so much uncertainty means we have had to adapt our approach. Our principal objective is to further the interests of consumers while recognising the challenges the industry has faced throughout the Covid-19 pandemic.282
125. The CAA noted that an “excessive increase in prices would dampen consumer demand”.283 According to the CAA, the effects of the pandemic and uncertainty about how quickly the industry will recover makes it “very difficult to forecast with confidence the expected number of passengers over the five-year period”, which is a key consideration in deciding Heathrow’s price control.284 The CAA accounted for that uncertainty in the initial proposal it set out for a range of airport charges per passenger from £24.50 to £34.40. Currently, the CAA is “hon[ing] [its] assumptions and narrow[ing] this range as [it] finalise[s] the price control”.285
126. To manage uncertain passenger numbers, the CAA is introducing a new traffic risk-sharing mechanism.286 The initial proposals are based on a ‘mid case’ projection of traffic volumes for the airport over the next five-year period.287 That means that if actual traffic levels are lower than this projection, the CAA will allow Heathrow to recover part of the difference by charging slightly higher prices in future price control periods.288 However, if traffic is greater than expected, the CAA will “ensure that Heathrow shares the benefits with consumers by reducing the amounts that Heathrow can charge in future price control periods”.289
127. Heathrow had requested that the CAA increase the cap on its charges per passenger to between £32 and £43.290 In 2020–21, carriers paid £22 per passenger.291 A Heathrow spokesperson said that the airport’s “aim is to reach a settlement that enables us to give passengers a great service while operating a safe, resilient and competitive hub airport for Britain”.292 The spokesperson added that the settlement was not designed to “shield airlines from legitimate cost increases or the impacts of fewer people travelling”.293 Heathrow told us that “no net equity value [for the airport] has been generated over 15 years – not enough to even meet annual average inflation” and as such, “the investors and shareholders returns for their investments made at Heathrow have been negative to neutral at best”.294 Heathrow also told us that airlines benefit from the airport’s “world-class” facilities, “as well as the private investment that has transformed the airport from ‘Heathrow hassle’ to one of the best airport services in the world”.295
128. Heathrow is operated through a regulatory asset base (RAB) model.296 Such a model helps to encourage private sector involvement in infrastructure asset management. Heathrow explained that:
At a time when the Government is seeking to use the RAB-based model to encourage private investment across existing and new UK infrastructure, it is important that the H7 decision returns investor confidence in the RAB-based regulatory model. If the model does not give investors a fair opportunity to recover their costs and earn a reasonable return this will have lasting and damaging effects on these ambitions.297
129. International Air Transport Association (IATA) Director General, Willie Walsh, criticised Heathrow’s initial proposals for a price increase, calling the airport a “greedy monopoly”.298 Airlines UK Chief Executive, Tim Alderslade, said that the trade association would oppose the increase “in the strongest terms”, adding that
the CAA is our last line of defence against a monopoly-abusing hub airport...monopolies will always try it on and that’s why we need a strong regulator to clamp down on what is blatant gouging. How on earth can it be in the interests of consumers to ramp up charges by as much as 50%? Passengers need to be front and centre here—it’s Heathrow’s shareholders and not our customers who should be asked to foot the bill.299
Virgin Atlantic Chief Executive, Shai Weiss, echoed that sentiment, stating:
Initial proposals from the Civil Aviation Authority fail to protect the British consumer, paving the way for Heathrow Airport to introduce unacceptable charges, just as international travel resumes at scale. The world’s most expensive airport risks becoming over 50% more expensive, as Heathrow and its owners seek to recoup their pandemic losses and secure hundreds of millions in dividends to shareholders.300
Virgin Atlantic stated that Heathrow’s proposals were based on a forecast that was too pessimistic. Virgin Atlantic told us that Heathrow
claims that 2019 levels of demand won’t return until beyond 2026, an average reduction of 24% in passenger volumes over the next five years (versus 2019). Virgin Atlantic and IATA expect Heathrow is more likely to return to 2019 levels in 2024, due to its resilience as evidenced in previous crises.301
130. The Civil Aviation Authority must factor in the premise that Heathrow is one of the most expensive global airports when making its decision on the price control. Ensuring that the airport’s charging is set at a fair range can create a competitive edge for Heathrow, making it more attractive for airlines to operate out of compared with other European hub airports.
131. The UK aviation sector’s recovery from the pandemic is still in its early stages. The Civil Aviation Authority’s price control proposals, due to be implemented in summer 2022, must be postponed by one year to allow the collection of further data on the aviation sector recovery.
132. In early April 2022, passengers using major British airports, including Manchester, Birmingham, Gatwick and Heathrow, experienced severe disruption and delays.302 Airlines cancelled flights. Long queues formed at security and check-in.303 Some passengers missed their flights; others had their flights cancelled; and many experienced inordinate delays. These events occurred after the Committee had finished taking oral and written evidence for this inquiry. However, we included them in this Report because they highlighted important issues faced by the aviation industry.
133. The disruption to airlines and airports was driven by a sharp increase in demand. In March 2022, airport passenger numbers increased to their highest level since the start of the pandemic.304 For example, Heathrow Airport was used by 4.2 million travellers in March 2022; in February 2020, the last month before the Government introduced restrictions on international travel, it was used by 5.4 million passengers.305 Manchester Airport observed that demand rebounded to 70% of the pre-coronavirus level in a matter of weeks. The trend in increased airport usage was maintained into April 2022 and was compounded by a spike in holiday traffic due to the start of the Easter holidays. The need to process destination countries’ residual coronavirus restrictions for outward passengers apparently exacerbated delays at check-in. To tackle that problem, the Government should adopt our recommendation that it pursue bilateral negotiations with countries with high rates of vaccination to minimise coronavirus-related requirements for passengers [see Paragraph 35].
134. The April 2022 disruption showed that airlines and airports currently have insufficient staff to handle resurgent demand for flights. In that context, Heathrow’s plan to recruit 12,000 new staff illustrated the scale of the vacancies in the aviation industry.306 Despite the introduction of the furlough scheme, airlines and airports decreased their workforces during the pandemic. The British Airways workforce decreased by 10,000 jobs, while EasyJet closed its bases at Stansted, Southend and Newcastle with the loss of 670 positions.307 The uncertain economics of the aviation industry reportedly led some workers to change career. Now airlines and airports must recruit and train sufficient staff to meet demand.
135. The Government has criticised the industry for not recruiting staff in time for the reopening of international travel. The aviation industry was only notified on 18 March 2022 that all restrictions would be lifted. It was subject to Government restrictions for longer than had been expected. It lost millions in revenue over that period of time. It appears unfair for the Government to blame the aviation industry for a lack of readiness, when the Government failed to provide the notice and certainty requested by the industry. Recruiting and training staff for the aviation industry is an extensive, labour-intensive process. For example, applicants for security and retail roles at airports must:
136. Those checks must be completed before applicants undertake any training. Some applicants apparently struggled to obtain five years of employer references, because their previous employers ceased trading during the coronavirus pandemic.
137. Security staff is reportedly one category of airline worker where vacancies are acute. In addition to the four checks listed above, security staff must undergo a counter-terrorism check. The convoluted system involving multiple checks apparently leads a significant proportion of applicants to take other jobs before the process is complete. One airport told us informally that some 50% of applicants offered security-related jobs had already taken another job when the vetting process was completed. Another airport stated informally that it was short of 200 security officers for the month of April. Although it had made 222 job offers to successful applicants, only 22 of those staff were deployed in April.
138. To help airports and airlines manage the sudden increase in demand for aviation, the Government should:
Any such changes should not decrease security standards at airports. Some of those recommendations may require the Government to deviate from legislation introduced when the UK was an EU Member State. Such changes could be quickly introduced under the negative Statutory Instrument procedure.
1. The way in which the Government introduced international travel restrictions during the pandemic was inconsistent, confusing industry and passengers. The aviation industry, which connects the UK to the world, experienced severe economic difficulties due to Government restrictions that were not based on scientific consensus. As international travel restarted in the summer of 2021, the industry, its workforce and passengers were subjected to a traffic light system that was opaque, ambiguous and inconsistent. Government restrictions on international travel throughout the pandemic were disproportionate to the risks to public health. (Paragraph 29)
2. The reimposition of travel restrictions had little effect on the spread of the Omicron variant in the UK. The Government appeared to recognise that outcome and belatedly reversed most of those restrictions in early January 2022. Overly strict international travel restrictions can have unintended consequences, such as encouraging countries not to report Variants of Concern for fear of experiencing negative economic effects. (Paragraph 30)
3. We welcome the Government’s decision to remove all international travel requirements. We also welcome the Government’s statement that future international travel contingency measures will only be implemented in extreme circumstances. That decision gives the UK a competitive advantage over countries that were slower to remove such restrictions, providing an incentive for tourists and businesspeople alike to visit the UK. Enabling test-free travel makes the UK a more attractive destination for tourists and business travellers, who will support the country’s economic recovery from the pandemic. The Government has intimated that it will continue to monitor coronavirus outbreaks and new variants, but it must make clear what that monitoring mechanism will entail and how it will be funded. (Paragraph 31)
4. As the aviation industry’s economic recovery from the coronavirus pandemic is now well under way, the Government’s aviation recovery plan must be published as a priority. That strategy should be published no later than 1 June 2022, when the summer travel season will begin in earnest. (Paragraph 32)
5. The Government must build international travel into its future pandemic resilience planning, developing a transparent and predictable system that can be used to facilitate safe international travel during potential future health crises. The Government’s strategy for the recovery of the aviation sector must include a commitment to developing such a plan. (Paragraph 33)
6. The Government must set up an international travel toolkit based on the following principles:
7. The Government must convene a global taskforce to promote the standardisation of the remaining international travel requirements that were introduced in response to the coronavirus pandemic. The Government should pursue bilateral negotiations with countries with high rates of vaccination to facilitate the removal of such restrictions. (Paragraph 35)
8. Under-regulation has resulted in a dysfunctional travel testing market. The travel testing market was established with no clear protections or means of recourse for consumers. To date, the onus has been on consumers to perform market research, which has required them to navigate often misleading claims by companies. Unclear pricing, misleading advertisements and delays in receiving tests and test results still persist more than a year after the Government first introduced travel testing requirements. The Government has been far too slow to address those issues. (Paragraph 43)
9. Although the UK has, at the time of writing (April 2022), removed all testing requirements for international travel, many other countries have retained testing requirements. Therefore, some passengers will need to access safe and affordable coronavirus testing options in the near-to-medium term. Government intervention is required to establish a functional market for travel testing to benefit consumers. That intervention should include:
a) implementing in full the Competition and Markets Authority’s recommendations for regulating the PCR travel testing market, so that if PCR tests are reintroduced as a travel requirement, the market will function fairly for consumers; and
b) tasking the Competition and Markets Authority to review the operation of the market for antigen travel tests to follow the regulator’s September 2021 review of the PCR testing market. (Paragraph 44)
10. The Government must introduce an Airline Insolvency Bill in the next Session of Parliament to set out a framework to handle future airline insolvencies to protect the interests of consumers, employees and taxpayers. (Paragraph 54)
11. In April 2021, the Global Travel Taskforce recommended that the Government consult on additional, flexible and modern tools to enforce consumer rights before the end of 2021. Although long overdue, the Government is now consulting on the merits of granting the Civil Aviation Authority additional powers to enforce aviation consumer protection laws. The Civil Aviation Authority urgently requires the power to impose financial penalties on airlines that do not provide complete refunds to consumers when they are required to do so by law. (Paragraph 66)
12. In the absence of additional powers, the Civil Aviation Authority must utilise its existing powers to challenge businesses and to pursue enforcement orders from the courts to tackle infringements of consumer rights in relation to refunds. Although that process may be lengthy and costly for the regulator, it is the best form of recourse available to consumers trying to secure refunds, until the Civil Aviation Authority is granted the power to impose financial penalties. (Paragraph 67)
13. The Government must introduce a mechanism to ensure that when entitled to a refund by law, airline passengers are granted automatic compensation, eliminating the need for customers manually to apply for a refund. (Paragraph 68)
14. We welcome the Government’s decision to seek views on the length of delay that should trigger compensation for domestic flights as part of its airline passenger rights consultation, as well as the requirement that all airlines that fly to and from the UK participate in the alternative dispute resolution scheme. However, the Committee is concerned that the effect of the Government’s proposed compensation scheme, which is out for consultation, could result in much reduced compensation for passengers, albeit it that a greater number of passengers may benefit from such a scheme. Although moving to a compensation scheme that is similar to the Delay Repay rail scheme might be desirable for consistency, in many cases flight delays are far more costly to the passenger than a delayed rail journey. Delayed air passengers can face missing holidays or increased travel and accommodation costs. The Government must take those factors into account in designing a new scheme. (Paragraph 69)
15. It is disappointing that the Government’s ‘reforming aviation consumer policy: protecting air passenger rights’ consultation does not seek views on the enforcement of consumer rights in relation to the private testing market for travel. The consultation should be expanded to assess how the private travel testing market could be regulated to make it function effectively for consumers. (Paragraph 70)
16. Implementing more flexible rules on the provision of Public Service Obligation routes can improve connectivity between the four nations of the UK. To improve domestic air connectivity, we agree with the Union Connectivity Review’s recommendation that the Government must revise subsidy rules to allow:
a) multiple airlines to operate individual PSO routes, fostering a competitive market for regional services; and
b) central Government to fund PSO routes between and within the UK’s four nations.
We also recommend that central Government agree which routes should be funded and how much funding should be allocated to those routes in consultation with the devolved Administrations. (Paragraph 78)
17. The Government’s changes to Air Passenger Duty are welcome. However, that system will not be introduced until 1 April 2023. The Government should bring that date forward to 1 July 2022 to support domestic routes that might otherwise collapse because of the coronavirus pandemic. (Paragraph 83)
18. The delivery of the airspace modernisation strategy cannot be subject to further delay. Urgent attention is required if the strategy’s target deadlines are to be met. The need to deliver the strategy’s initiatives is particularly acute in the context of the Government’s decarbonisation targets and the expectation that passenger numbers will return to pre-pandemic levels in the next two years. (Paragraph 93)
19. Despite the importance of airspace modernisation, and the relative speed with which it could be introduced compared with other decarbonisation measures, the Airspace Change Organising Group is not a member of the Jet Zero Council. The Committee recommends that the Airspace Change Organising Group should be elevated to full membership of the Jet Zero Council. That would signal the serious intent of the Government to implement the required changes to airspace modernisation as quickly as possible. (Paragraph 94)
20. The Government must take steps to limit greenhouse gas emissions as air transport movements increase. The Government should continue to invest in new aviation decarbonisation technologies, including synthetic aviation fuels, to ensure that the UK aviation sector emits less than it did before the pandemic. (Paragraph 105)
21. If the Government is to achieve its targets on net-zero aviation, new sustainability policies will be required for the aviation sector, which in turn will require robust regulation. The Government must review how the Civil Aviation Authority’s powers can be reformed to enable the regulator to enforce environmental mandates that the Government may introduce for the aviation sector. (Paragraph 106)
22. The Government must introduce a market mechanism to support investment in sustainable aviation technologies. The Committee has been investigating market mechanisms that the Government might introduce to scale up alternative fuels in our ongoing inquiry, Fuelling the future: motive power and connectivity. We will report on our findings at the conclusion of that inquiry. (Paragraph 107)
23. The Government must not reimpose the 80:20 rule until the effects of the Russian invasion of Ukraine on the UK aviation market are apparent. That will protect against a potential increase in the number of ghost flights operated by legacy carriers seeking to protect their slots. (Paragraph 118)
24. The Government must include a review of the slot allocation system in its strategy for the recovery of the UK aviation sector. The strategy must:
a) consider alternatives to the existing slots framework to encourage new entrants, capitalising on the opportunity to shape the system following the country’s departure from the EU; and
b) review how ‘ghost flights’, undertaken by legacy carriers seeking to maintain control of their slots, might be mitigated.
The Government must co-ordinate with the Competition and Markets Authority and Airport Coordination Limited in carrying out the review. (Paragraph 119)
25. The Civil Aviation Authority must factor in the premise that Heathrow is one of the most expensive global airports when making its decision on the price control. Ensuring that the airport’s charging is set at a fair range can create a competitive edge for Heathrow, making it more attractive for airlines to operate out of compared with other European hub airports. (Paragraph 130)
26. The UK aviation sector’s recovery from the pandemic is still in its early stages. The Civil Aviation Authority’s price control proposals, due to be implemented in summer 2022, must be postponed by one year to allow the collection of further data on the aviation sector recovery. (Paragraph 131)
27. To help airports and airlines manage the sudden increase in demand for aviation, the Government should:
Any such changes should not decrease security standards at airports. Some of those recommendations may require the Government to deviate from legislation introduced when the UK was an EU Member State. Such changes could be quickly introduced under the negative Statutory Instrument procedure. (Paragraph 138)
Huw Merriman, in the Chair
Draft Report (UK aviation: reform for take-off), proposed by the Chair, brought up and read.
Ordered, That the draft Report be read a second time, paragraph by paragraph.
Paragraphs 1 to 138 read and agreed to.
Summary agreed to.
Resolved, That the Report be the Fifth Report of the Committee to the House.
Ordered, That the Chair make the Report to the House.
Ordered, That embargoed copies of the Report be made available, in accordance with the provisions of Standing Order No. 134.
[Adjourned till Tuesday 26 April at 3.00 pm
The following witnesses gave evidence. Transcripts can be viewed on the inquiry publications page of the Committee’s website.
John Holland-Kaye, Chief Executive Officer, Heathrow Airport; Stewart Wingate, Chief Executive Officer, Gatwick Airport Ltd; Sophie Dekkers, Chief Commercial Officer, Easyjet; Colm Lacy, Acting Chief Commercial Officer, British AirwaysQ1–56
Tim Alderslade, Chief Executive, Airlines UK; Karen Dee, Chief Executive, Airport Operators Association; Willie Walsh, Director General, International Air Transport AssociationQ57–120
Neena Bhati, Head of Campaigns, Which?; Rt Hon Jenny Willott OBE, Chair, CAA Consumer PanelQ121–159
Kay Ryan, Chief Commercial Officer, Loganair Limited; Clive Coleman, Director, Regional and City Airports; Brian McClean, Director of Communications and Sustainability, AGS AirportsQ160–214
Dr Andy Jefferson, Programme Director, Sustainable Aviation; Helena Bennett, Senior Policy Advisor, Green Alliance; Cait Hewitt, Policy Director, Aviation Environment Federation (AEF)Q215–252
Dr Jenny Harries OBE, Chief Executive, UK Health Security Agency; Edward Wynne-Evans, Director of All-Hazards Intelligence, UK Health Security Agency; Jonathan Mogford, Senior Responsible Officer for Borders and Managed Quarantine Service, UK Health Security AgencyQ253–403
Robert Courts MP, Minister for Aviation, Department for Transport; Richard Moriarty, Chief Executive, Civil Aviation AuthorityQ253–403
The following written evidence was received and can be viewed on the inquiry publications page of the Committee’s website.
AAS numbers are generated by the evidence processing system and so may not be complete.
1 ABTA (AAS0018)
2 ADEPT – Association of Directors of Environment, Economy, Planning & Transport (AAS0012)
3 ADS Group Ltd (AAS0016)
4 AEF (AAS0021)
5 Airlines UK (AAS0034)
6 Airport Operators Association (AAS0026)
7 BALPA (AAS0027)
8 Board of Airline Representatives in the UK (AAS0038)
9 Bristol Airport (AAS0009)
10 British Aviation Group (BAG) (AAS0044)
11 British Vehicle Rental & Leasing Association (BVRLA) (AAS0042)
12 Cazenove and Loyd (AAS0005)
13 Civil Aviation Authority (AAS0047)
14 Civil Aviation Authority Consumer Panel (AAS0020)
15 Confederation of British Industry (CBI) (AAS0011)
16 Department for Transport (AAS0045)
17 Gatwick Airport Ltd (AAS0043)
18 Green Alliance (AAS0015)
19 Groves, Paul (AAS0033)
20 HACAN (Heathrow Association for the Control of Aircraft Noise) (AAS0013)
21 Heathrow Airport (AAS0048)
22 Heathrow Airport Ltd (AAS0023)
23 International Air Transport Association (AAS0040)
24 Latin American Travel Association (AAS0002)
25 Loganair (AAS0039)
26 London Luton Airport (AAS0010)
27 Manchester Airports Group (AAS0003)
28 Martinez, Francisco (Cabin Crew, British Airways) (AAS0001)
29 Merkin, Alex (AAS0004)
30 No Third Runway Coalition (AAS0030)
31 PGMBM (AAS0007)
32 Qured (AAS0029)
33 Rae, Mr Anthony (AAS0028)
34 RiverOak Strategic Partners (AAS0006)
35 Rolls-Royce plc (AAS0022)
36 Royal Aeronautical Society (AAS0019)
37 Save Future Travel Coalition; and ABTA (AAS0014)
38 Stop Heathrow Expansion (AAS0036)
39 Sustainable Aviation (AAS0024)
40 TUI (AAS0032)
41 The Business Travel Association (AAS0008)
42 The UK Civil Aviation Authority (AAS0031)
43 The UK Regional and Business Airports (RABA) Group (AAS0046)
44 Transport & Environment (AAS0035)
45 Virgin Atlantic Airways (AAS0041)
46 Which? (AAS0049)
47 Which? (AAS0017)
All publications from the Committee are available on the publications page of the Committee’s website.
Zero emission vehicles
Major transport infrastructure projects
Rollout and safety of smart motorways
The impact of the coronavirus pandemic on the aviation sector: Interim report: Government Response to the Committee’s Fifth Report of Session 2019–21
Road safety: young and novice drivers: Government Response to Committee’s Fourth Report of Session 2019–21
Trains Fit for the Future? Government Response to the Committee’s Sixth Report of Session 2019–21
Safe return of international travel? Government Response to the Committee’s Seventh Report of Session 2019–21
Zero emission vehicles: Government Response to the Committee’s First Report
Rollout and safety of smart motorways: Government Response to the Committee’s Third Report
Major transport infrastructure projects: Government Response to the Committee’s Second Report
Appointment of the Chair of the Civil Aviation Authority
The impact of the coronavirus pandemic on the aviation sector
E-scooters: pavement nuisance or transport innovation?
Road safety: young and novice drivers
The impact of the coronavirus pandemic on the aviation sector: Interim report
Trains fit for the future?
Safe return of international travel?
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11 “Coronavirus variant fear sparks Africa travel curbs”, BBC News, 26 November 2021. The first sample of the Omicron variant was isolated on 8 November 2021 by South Africa. The Omicron variant was first reported to the World Health Organization from South Africa on 24 November 2021. The UK Health Security Agency announced Omicron as a variant under investigation (VUI) on 26 November 2021. Accordingly, the Omicron variant was in circulation internationally and may have been transmitted into the UK.
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79 Department of Health and Social Care, Response to CMA recommendations regarding PCR travel test market, 11 September 2021
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146 Department for Business, Energy & Industrial Strategy, Alternative Dispute Resolution impact assessment, June 2021; Department for Transport, Aviation Consumer Policy Reform, January 2022
147 Department for Transport, Aviation Consumer Policy Reform, January 2022
148 In total there are 52 airports included in Civil Aviation Authority publications. The ten that are omitted in the count here are the six London airports (Heathrow, Stansted, Luton, Gatwick, London City and Southend), and four non-UK reporting airports (Alderney, Guernsey, Isle of Man and Jersey).
149 Department for Transport, Union Connectivity Review: Interim Report, March 2021
152 The term ‘regional airport’ is not statutory or legislative, although it is widely used in briefings on UK airports. The Transport Sub-committee of the Environment, Transport and Regional Affairs Select Committee conducted an inquiry into regional air services in 1997. The definition of regional airports that Committee adopted is: “any UK airport other than London airports (Heathrow, Gatwick, Stansted, London Luton, Southend and London City), and the airports on the Channel Islands and the Isle of Man”.
153 Air passenger transport movements refers to landings and take-offs. Civil Aviation Authority, ‘UK airport data’, accessed 24 February 2022. Refer to the House of Commons Library analysis of those statistics in the regional airports debate pack.
156 Department for Transport, Union Connectivity Review: Interim Report, March 2021
157 Civil Aviation Authority, ‘UK airport data’, accessed 16 February 2022
160 Department for Transport, Public service obligation: regional air access to London, December 2013
161 The Committee has adopted the House of Commons Library definition of PSO routes. House of Commons Library, ‘Westminster Hall Debate: The Future of Regional Airports’, 6 July 2021
162 Department for Transport, Union Connectivity Review: Final Report, November 2021, p 65
163 Department for Transport, Public service obligation: regional air access to London, December 2013
167 “UK government publishes Union Connectivity Review: proposed transport investments for stronger and better-connected United Kingdom”, Department for Transport press release, November 2021
168 Department for Transport, Union Connectivity Review: Final Report, November 2021
175 Department for Transport, Union Connectivity Review: Final Report, November 2021, p 64
177 HM Treasury, Autumn Budget and Spending Review 2021: A stronger economy for the British people, October 2021
179 Campaign for Better Transport, Cutting Air Passenger Duty ahead of COP26 is ‘tone-deaf’, says charity: 27 October 2021, accessed 24 February 2022
180 HM Treasury, Autumn Budget and Spending Review 2021: A stronger economy for the British people, October 2021
183 HM Treasury, Consultation on aviation tax reform: Summary of responses to the consultation, October 2021
190 Climate Change Committee, ‘Sixth Carbon Budget’, December 2020. The Committee’s sixth carbon budget was the first to include the UK’s share of international aviation emissions.
191 Climate Change Committee, Letter from Chairman Lord Deben to the Secretary of State for Transport: Net-zero and the approach to international aviation and shipping emissions, September 2019
193 Department for Transport, Jet Zero Consultation, July 2021
195 Department for Business, Energy & Industrial Strategy, Final UK greenhouse gas emissions national statistics: 1990 to 2019, June 2021
196 Civil Aviation Authority, ‘UK airport data’, accessed 24 February 2022
197 Climate Change Committee, The Sixth Carbon Budget: Aviation, December 2020
198 Civil Aviation Authority, Airspace Modernisation Strategy, December 2018
201 Civil Aviation Authority, Airspace Modernisation – 2020 Progress Report, December 2020
202 Department for Transport, DfT and CAA update on airspace modernisation: July 2020, July 2020
203 Department for Transport, DfT and CAA update on airspace modernisation: March 2021, March 2021
204 Department for Transport, Letter from the Minister for Aviation, Maritime and Security to the Chair of the Transport Select Committee, 30 December 2021
209 Civil Aviation Authority, Airspace Modernisation Strategy, December 2018
215 International Air Transport Association, ‘Air Passenger Numbers to Recover in 2024’, accessed 14 March 2022. The association forecasts that total passenger numbers to, from and within Europe will make a full recovery in 2024 (at 105% of 2019 values)
216 Climate Change Committee, The Sixth Carbon Budget: Aviation, December 2020
218 Q237; Q239; Sustainable Aviation (AAS0024)
219 Q239; Green Alliance (AAS0015)
220 Sustainable Aviation, Decarbonisation Road-map: A path to net zero, February 2020. Analysed by the Parliamentary Office of Science and Technology.
221 Climate Change Committee, Net Zero Technical report, May 2019. Excludes low-carbon aviation fuels. Analysed by the Parliamentary Office of Science and Technology.
222 Department for Transport, Sustainable aviation fuels mandate A consultation on reducing the greenhouse gas emissions of aviation fuels in the UK, July 2021
223 Department for Transport, Jet Zero Consultation, July 2021
224 Department for Transport, Transport Secretary’s statement on coronavirus (COVID-19): 12 June 2020, 12 June 2020
225 Department for Transport and the Department for Business, Energy & Industrial Strategy, ‘Jet Zero Council’, accessed 24 February 2022
226 Jet Zero Council, Jet Zero Council Terms of Reference, accessed 24 February 2022
235 Civil Aviation Authority, ‘Environment: An overview of the CAA’s role in relation to aviation and the environment’, accessed 24 February 2022
239 Ibid. The Contracts for Difference (CfD) scheme is the Government’s main mechanism for supporting low-carbon electricity generation. CfDs incentivise investment in renewable energy by providing developers of projects with high upfront costs and long lifetimes with direct protection from volatile wholesale prices, and they protect consumers from paying increased support costs when electricity prices are high.
241 Department for Business, Energy & Industrial Strategy, Electricity Market Reform: Contracts for Difference, February 2015 (accessed 24 February 2022)
244 Airports Slot Allocation Regulations 2006 (SI 2006/2665); EU Airport Slot Regulation (Regulation 95/93(EEC)); International Air Transport Association, Worldwide Airport Slot Guidelines, April 2020; Refer to the House of Commons Library analysis of slot rules in the airport slots research briefing
255 Competition and Markets Authority, Advice for the Department for Transport on competition impacts of airport slot allocation, December 2018
256 Ghost flights are empty flights that are operated by airlines in order to meet the 80:20 slot usage quota to retain their slots.
257 “COVID-19: EU adopts slot waiver to help airlines”, European Council press release, 30 March 2020; European Commission, Statement by Commissioner Adina Valean on the Commission’s intention to extend airport the slot waiver, 14 September 2020
258 “Government’s multimillion-pound support scheme for airports opens today”, Department for Transport press release, 29 January 2021
260 “Slots waiver extended in boost to UK airlines”, Department for Transport press release, 26 February 2021
262 “Ryanair accuses Grant Shapps of handing unfair advantage to BA”, The Telegraph, 6 February 2021
263 Gatwick Airport, Edinburgh Airport, Belfast International Airport and Wizz Air, Letter: Slot rules at UK airports for the summer season 2022, November 2021
265 The Airports Slot Allocation (Alleviation of usage requirements) (No. 2) Regulations 2021 (SI 2021/1200); “Government supports aviation sector recovery with airport slot alleviation for summer 2022” Department for Transport press release, 24 January 2022
268 HC Deb, 7 February 2022, col 119801WA [Commons written answer]
269 Transport Committee, Second Report of Session 2019–21, The impact of the coronavirus pandemic on the aviation sector, HC 268
271 Transport Committee, Second Special Report of Session 2019–21, The impact of the coronavirus pandemic on the aviation sector: Government and Civil Aviation Authority Responses to the Committee’s Second Report, HC 745
274 Civil Aviation Authority, ‘Airport market power assessment’, accessed 16 March 2022
276 Civil Aviation Authority, ‘Economic licensing of Heathrow Airport’, accessed 16 March 2022. HAL is referred to as Heathrow throughout this chapter, for accessibility purposes.
278 Civil Aviation Authority (AAS0047)
280 “CAA consults on Heathrow Airport charges”, Civil Aviation Authority press release, 19 October 2021. The control period is expected to come into force in summer 2022, with an announcement on a final decision expected in spring 2022.
292 “Heathrow passenger charge to be curbed”, BBC News, 19 October 2021
294 Heathrow Airport (AAS0048)
296 The International Transport Forum states that: “In the RAB model, private (or corporatised state-owned) companies act as the infrastructure manager: they own, invest in and operate infrastructure assets. The infrastructure manager receives charges revenue from users and/or subsidies to fund its operations and recoup investment costs. The infrastructure manager would behave much like a natural monopoly in the absence of regulation – setting prices too high in an attempt to earn ‘super normal’ profits. An economic regulator is therefore established to provide efficiency incentives and to cap prices, revenue or rates or return received by the infrastructure manager to improve social welfare”. In the case of managing Heathrow’s price control range, the Civil Aviation Authority acts as the relevant economic regulator.
297 Heathrow Airport (AAS0048)
298 “Heathrow Airport’s ‘outrageous’ price hikes to airlines ‘could put £100 on the price of a family break’, aviation boss warns”, Daily Mail, 16 October 2021
299 “Heathrow passenger charge to be curbed”, BBC News, 19 October 2021
300 “Airline fury at 53% rise in Heathrow passenger charges”, The Independent, 19 October 2021
302 BBC News, What’s causing flight disruption this Easter?, 8 April 2022
303 BBC News, Easter travel delays: Call to fine airlines over airport travel chaos, 13 April 2022
304 The Guardian, More flights cancelled as increased Easter passenger numbers pile on pressure, 11 April 2022
307 BBC News, What’s causing flight disruption this Easter?, 8 April 2022