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Select committee inquiry

Smaller airports

Closed

Transport Committee · Opened 9 July 2014 · Closed 24 July 2015

5 recommendations · 13 conclusions
Inquiry on parliament.uk ↗

What the inquiry looked at

“The aim of this inquiry is to examine policy and make recommendations to the Government on the role of smaller airports. The Committee’s objective in undertaking this inquiry is to ensure that this area of policy is properly scrutinised and that the role of smaller airports in improving connectivity is recognised within Government. Report: Smaller airports Report: Smaller airports (PDF 523 KB)”

The committee's words, from the inquiry page on parliament.uk ↗.

What it found

In the committee's words, from the summary of 9th Report - Smaller airports ↗

Smaller airports are economic and social enablers. They facilitate vital national and international connections for people and businesses in the UK.

We found that Air Passenger Duty (APD) is the principal threat to the smaller airports sector. APD cannot be amended to support people, businesses and regional economies because of the operation of European competition law, while proposals to devolve it to the regions would serve only to spread a patchwork of market distortions across the UK. It was disappointing that the concerns we raised about APD in our First Report of Session 2013-14 on Aviation strategy were ignored by the Treasury. We urge Transport Ministers to pursue those recommendations and the important concerns raised by smaller airports with the Treasury.

The Airports Commission will publish its final report on expanding hub airport capacity in the south-east shortly after the general election. The whole country will only be able to share the economic benefits if airlines secure slots to provide services to UK airports outside London. The DfT needs to assess how new slots might be allocated and whether slots could be ring-fenced for domestic services.

The DfT recently began to promote the use of Public Service Obligations (PSOs) to subsidise existing and new air routes from smaller airports. This is an interesting new initiative to facilitate regional connectivity, but the European Commission rules governing PSOs are opaque. The DfT needs to seek clarification from the Commission as a matter of urgency to allow airports and airlines to plan effectively and to engage with this policy.

Manston airport closed just before the start of our inquiry in May 2014. We considered this case in detail both to inform our wider recommendations and because the Kent public are concerned. We found a relatively small district council grappling with complex questions in relation to the current and future use of the airport which were beyond its expertise and resources. We welcome the DfT’s recognition of that point and subsequent intervention, which we hope will provide the district council with access to the necessary advice. To ensure that similar cases do not arise in future, the Government needs to review the backing provided by higher-tier local government and central Government to small district councils in complex, one-off cases and examine whether it has the necessary powers to protect strategic transport assets.

What the government said

The government responded on 24 July 2015.

Summary written by Accountability Index from the government's response.

The government's response welcomes the Committee's support for a market-led approach to smaller airports, refers Air Passenger Duty to the Treasury, and does not accept that a review of its powers to intervene is necessary.

  • On Air Passenger Duty, it says decisions "remain a matter for the Chancellor and the Treasury". The Treasury has confirmed a review of options to support regional airports and mitigate the impacts of APD devolution, with a discussion paper to be published "during the summer".
  • On start-up aid, it has notified the European Commission of the UK scheme and "hope[s] to receive clearance shortly", after which it will publish the approved scheme on gov.uk. It says initial discussions have not clarified the "duly substantiated exceptional case" wording, and it "will continue to engage" with the Commission.
  • On slot allocation at an expanded hub airport, it will not comment "before the Airports Commission publishes its Final Report", to protect the Commission's independence. It will then review the analysis and decide "how, and at what pace" to respond.
  • On Manston, it "does not therefore consider" that a county council has a duty to provide strategic planning oversight for a district council. On powers to intervene, it states it has "the powers that we need" and does not consider there is evidence that a review is necessary.

Read the government's response ↗ Read the report ↗ Report an error

How the inquiry ran

Each dot is a dated item listed on this page, from the inquiry's opening on 9 July 2014 to its close on 24 July 2015.

  1. Oral evidence 3 sessions
  2. Report 13 Mar 2015
  3. Government response 24 Jul 2015

What it recommended 5 recommendations · 13 conclusions

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

Evidence

Oral evidence sessions 3