Airports Slot Allocation (Alleviation of Usage Requirements etc.) Regulations 2025

Considered in Grand Committee

18:05:00

Moved by

That the Grand Committee do consider the Airports Slot Allocation (Alleviation of Usage Requirements etc.) Regulations 2025. Relevant document: 12th Report from the Secondary Legislation Scrutiny Committee

My Lords, these draft regulations were laid before Parliament on 4 December 2024 and will be made under powers conferred by the Retained EU Law (Revocation and Reform) Act 2023, also known as the REUL Act. They are an example of the UK making use of the freedom gained from the UK’s departure from the European Union. This legislation amends Council Regulation (EEC) No 95/93, which sets out the rules for allocation of airport slots. In taking these amendments forward, we are moving ahead before the European Union. Slot allocation rules apply only at what are known as co-ordinated airports, where capacity at the airport is unable to meet demand for slots at those airports. Nine airports are now covered by these rules, including the main London airports of City, Gatwick, Heathrow, Luton and Stansted, as well as Birmingham, Bristol, Manchester and Leeds Bradford. The regulations will update the definition of a new entrant air carrier—or airline, as most of us would refer to it—for slot allocation purposes. This will allow air carriers with a small presence at a co-ordinated airport the opportunity to benefit from greater priority in the allocation of airport slots from the slot pool, prior to the start of the summer or winter scheduling seasons. This change not only aligns UK regulations with international guidelines but has the potential to provide more choice for consumers in terms of routes, destinations and the carriers they can fly with. In addition, the regulations will amend assimilated EU law to enable the UK to respond in the event of a pandemic, epidemic or other outbreak of disease, such as was experienced during the Covid-19 pandemic. It will remove the need for emergency legislation to provide alleviation from slot usage rules, as was the case during the Covid-19 pandemic, in order to protect consumers, the environment and the aviation sector. Noble Lords will be aware that co-ordinated airports are the UK’s busiest airports and that gaining a slot at them can be a challenge. It is not uncommon for air carriers to have to spend several years on the waiting list before being allocated a slot. Added to this, the current new entrant definition restricts new entrant carriers from being able to obtain enough slots for the number of daily rotations necessary to make a route commercially viable. Pursuing the necessary number of slots results in them losing their new entrant status and the benefits that come with it. This hampers competition, which is why my department wants to update the definition of a new entrant. This seemingly small change is the difference between a new entrant air carrier being able to successfully establish and maintain a service and having to give up after a few years. The revised definition of a new entrant also brings the UK’s legislation in line with the Worldwide Airport Slot Guidelines, which provide the air transport industry worldwide with a single set of standards for the management of airport slots at co-ordinated airports. Regulation 95/93 sets out that air carriers must operate their airport slots 80% of the time in order to retain the right to those same slots the following year. This is known as the 80:20, or the “use it or lose it”, rule. Under normal circumstances, the 80:20 rule helps encourage the efficient use of airport capacity while allowing air carriers a degree of flexibility in their operations. However, throughout the Covid-19 pandemic, the 80:20 rule was waived to avoid environmentally damaging and financially costly flights with few or no passengers—so-called ghost flights. Using powers afforded to the Government in the Air Traffic Management and Unmanned Aircraft Act 2021—known as the ATMUA Act—a full waiver from the 80:20 rule was initially provided. However, as the industry recovered from the pandemic, usage ratios and other measures set out in that Act were amended, allowing a managed return to business-as-usual operations as demand for aviation recovered. Due to the unpredictability of the Covid-19 pandemic, the powers granted under the ATMUA Act were necessarily time-limited; they expired in the summer of 2024. However, the experience of Covid-19 has shown that a permanent provision for slot alleviation relating to a pandemic, epidemic or other outbreak of disease is needed. This is to provide a means by which a collapse in aviation demand because of an event of a similar magnitude to Covid-19 can be managed as part of normal operations by the UK’s airport slot co-ordinator. Without this provision, if a health crisis similar to Covid-19 were to occur, the Government would need to bring forward further primary legislation, as was done through the ATMUA Act, in order to enable alleviation from the 80:20 rule. Turning to the content of the statutory instrument, this draft instrument will amend Regulation 95/93 to change the definition of a new entrant carrier. The purpose of the new entrant rule is to stimulate competition. New entrant carriers are given priority in the allocation of slots, as the regulation requires that 50% of slots shall first be allocated to new entrants unless the requests made by new entrants are less than 50%. Currently, an air carrier is a new entrant if it has fewer than five slots at an airport on a given day. Under this instrument, a new entrant is defined as a carrier that holds fewer than seven slots at an airport. The update to the new entrant rule is designed to enhance the presence of new entrant carriers at slot co-ordinated airports. As I said, the instrument will also build on previous regulations that provided carriers with slot alleviation during the Covid-19 pandemic by introducing a permanent provision for carriers in order to obtain slot alleviation where there are government-imposed measures relating to a pandemic, epidemic or other outbreak of disease, provided that certain conditions are fulfilled. This will put in place a much simpler process by which an event such as Covid-19 can be managed for slot co-ordination purposes. In conclusion, in this instrument, the Government have recognised the need to update the definition of a new entrant and to provide additional reasons for allowing alleviation from slot usage rules in order to protect the aviation sector from the potential impact of another pandemic occurring, however remote that possibility might or might not appear. The provisions in the instrument were subject to consultation with the aviation sector in 2023 and received strong support from across industry. The Secondary Legislation Scrutiny Committee flagged these regulations as an instrument of interest but did not make any adverse comments. The Joint Committee on Statutory Instruments did not report this instrument. I hope that noble Lords will join me in supporting these measures. I beg to move.

My Lords, I want to make a shortish contribution. First, in general, I welcome these proposals. I declare my interest as a former director of Newcastle Airport, which is of course not on the list of co-ordinated airports because of the lack of congestion—I think that is the term used. I am also a private pilot so I have a particular interest in the way in which this interesting phenomenon of slots has developed over the years. It seems to me that, in terms of their balance sheets, quite a lot of airlines would not be able to operate unless they had slots as part of the asset base, which isa little unreal and unacceptable. In my opinion, that also puts pressure on obtaining slots out of the pool—or, indeed, in any other way possible. Airport Coordination Limited, which is the organisation that decides on the allocation of slots, therefore has a difficult job, particularly in areas where the return of slots from airlines is quite a difficult situation. Obviously, there are far too few slots relating to all the airports on the list of co-ordinated airports. Interestingly, although Leeds Bradford Airport is now included as a co-ordinated airport, it certainly does not appear in much of the evidence that I have read in relation to ghost flights, and so on. Will the Minister let me know whether Leeds Bradford Airport has been a late entrant on this list? I would be interested to know.

18:15:00

When the returning slots come in, they will have to be used 80% of the time or they will be lost—but how exactly is that determined? Also, the Minister mentioned the relief that was granted below that when we had something such as Covid but, looking at these regulations, I cannot find other things as well as Covid or other medical or pandemic situations that would allow some kind of dispensation here. Perhaps my noble friend has found that—I do not know. It is terribly important that sufficient slots come into the pool so that new entrants can use them.

I welcome very much the change in the number of movements that will now be the basis of giving new entrants slots. Of course, there is an issue regarding the viability of routes. Five was unacceptable because, for the way in which airlines work out their economic viability, it matters to have routes that actually go to and come back from places, but they also have to be sufficient to make it worth while. I welcome this very much; indeed, I probably would have liked it to have been a bit more extensive, to benefit smaller airline operations, which are trying to get under way and compete with the big boys that seem to have the whole industry under their control.

Finally, a mammoth amount of consultation appears to have gone into this—just to look at the sheer size of the document that we have in front us, for instance. Everybody but everybody has been consulted. Is the Minister of the view that we have consulted sufficiently organisations that do not have an axe to grind in relation to those slots? The financial elements of the slots seem to be very well represented in the consultation process, but I am not sure whether consumer interests have been as well represented.

I say again how much I support what is happening here, by and large. The industry is going through considerable difficulties. Airports are under enormous pressure; we have a shortage of pilots worldwide, which is very difficult to fill, and we have a great shortage—although it is not mentioned anywhere here—of professionals who work in air traffic control and other areas of the running of our important airports. So, I welcome this, but I would be grateful for some more reassurance from the Minister on the points I have raised.

My Lords, I have been following these issues for some years, and I find myself in broad agreement with the noble Lord, Lord Kirkhope. He mentioned air traffic control and the fact that restrictions are regularly placed on flights coming in and out of Heathrow, in some cases because of the absence of qualified staff. I welcome the end of ghost flights, which were a nonsense not only environmentally but economically for the airlines. It was ridiculous having flights with half a dozen people, or none, going around, so that is a perfectly sensible provision. However, I want to draw it to the Minister’s attention that on two occasions I brought the Airports (Amendment) Bill to this House. It passed through this House twice. The noble Lord, Lord Ahmad, who was the Minister at the time, said that the problem, from the Government’s point of view, was that because of our membership of the European Union, we were not able to address the matter that I was raising. That matter was the slots at London airports. Let us face it—Heathrow is the primary national hub, though I accept that other London airports are important—but there is no requirement to ensure that the main regional airports have access to Heathrow. We in Northern Ireland do not have much in the way of an alternative; in fairness, Boris Johnson promised us a bridge, but that has gone the way of all flesh so, in practical terms, we are left primarily with one way of getting here. You can get a ferry—but that can take a couple of days. This applies to Edinburgh, Glasgow and Manchester. The Secretary of State does not have the ability to guarantee that the main regional airports have access. This is all to do with national connectivity. The primary clause in my Bill was: “The Secretary of State may give to any airport operator a direction requiring him (according to the circumstances of the case) to do, or not to do, a particular thing specified in the direction, if the Secretary of State considers it necessary to give such a direction in the interests of ensuring sufficient national air infrastructure between hub and regional airports”. It was to give the Secretary of State a power to deal with this. Even if competition is improved by these regulations, which I would support, that has nothing to do with where those slots are allocated. Maybe they are allocated to an airline, but they can fly anywhere. There is still a gap here. Now that we are not bound by the European regulation, will the Minister reflect on this? I appreciate that it is not in these proposals, but I am sure that he can see the rationale of ensuring this. At the moment, we are well served—I have no issue with that. There are a number of airlines, albeit the competition has narrowed recently—but we are entirely at the mercy of the airlines. We have no ability to ensure that they travel on that route. It is a bit like the 80:20 rule; most of the time it works fine, but there could be circumstances in which it does not. We can also see that competition is limited and our fares are high, so there is a link to the consumer. The noble Lord, Lord Kirkhope, made that point; the consultation was wide, but consumer interests perhaps did not dominate to the extent that they should have. I broadly support these proposals, but I ask the Minister to consider that with his department, because there is no guarantee that our key regions will have access, particularly to Heathrow. In those circumstances, the Secretary of State should have that power.

My Lords, I will speak about the Northern Ireland aspect of this. Any legislative changes aimed at increasing competition in the airline industry and allowing smaller airlines to enter the market are to be welcomed. However, I am sure I speak for all Northern Ireland Peers when I say that more competition—and many more services, particularly between Belfast and London—is not a luxury but an absolute necessity. We have no other means of getting here other than the ferry. Getting flights at short notice and at an affordable price is becoming difficult to the point of impossibility. As we know, parliamentary business changes all the time and being able to contribute to debates and attend other meetings is a duty on all of us. However, there are times when there are simply not enough airline seats for noble Lords and elected representatives in another place to get to Westminster, and that is not acceptable. I raised this matter several times in the past Parliament, only to be told by Ministers and the Government that there was not a problem. I am afraid that there is a problem. As I said previously, and I say it again today, I urge the Ministers and their officials to please take my concerns seriously and work with airlines and airports to ensure that air connectivity between Great Britain and Northern Ireland is swiftly and significantly improved. The problem that I highlight also impacts on businesspeople wishing to travel across the Irish Sea. Failure to address the issue will continue to have a detrimental impact on the Northern Ireland economy until more services are created. Although most of the provisions in this legislation are UK-wide, some do not extent to Northern Ireland. In his reply, can the Minister clarify which specific aspects of the regulations do not apply to Northern Ireland, and why? Is there any link between these exemptions and the continued diversification of rules and regulations between Great Britain and Northern Ireland, caused by the imposition of an Irish Sea border? I look forward to the Minister’s response.

My Lords, I appreciate the opportunity to discuss this statutory instrument, which amends airport slots. I thank the civil servants who spoke to me on Friday to provide more detail to the background, and the Minister for the opening statement. Put simply, these slots provide the permission to use airport infrastructure on a specific date and time for take-off or landing, and they apply, as the Minister has outlined, to congested airports in the UK only. The first change is logical—it is putting in place rules to cover scenarios such as a pandemic. Slot alleviation was granted on a temporary basis during Covid to prevent flights running empty in order that airlines could keep their slots. These new rules would cover any government-imposed measures whereby passenger travel would be significantly reduced. I am pleased to read that nine out of 10 respondents supported this, and it makes clear sense. Perhaps the Minister could advise whether this is something that is also being implemented in the EU or in other countries post pandemic. The second area is an amendment to the definition of a new entrant carrier from an airline that has fewer than five slots at an airport on a day to one that has seven. My key question when reading the statutory instrument was where the demand has come from to raise this number to seven. Why do the Government want to make this change? I could not see anywhere that the airline industry was clamouring for it. Paragraph 7.3 of the Explanatory Memorandum states that “some respondents felt that the suggested change to fewer than seven slots was too small to have a tangible effect on competition and wanted a higher threshold”. What conversations has the department had with the airline industry? Is there any consensus or appetite for the definition of a new entrant carrier to include a higher number of slots? Conversely, is there a concern that while raising the slot threshold to seven could make it easier for new entrants, it might also limit opportunities for smaller carriers? Surely we need to ensure safeguards and encourage broader market diversity. Perhaps the Minister can clarify how the Government will ensure that the allocation of slots increases choice for passengers. What conversations has the department had with the EU about its plans in this area? While I understand that this change would bring UK legislation in line with international guidelines, which were updated in 2020, in these areas it is often sensible to be aligned with our nearest neighbours, and it would be good to understand where the EU is in this particular field. In my view, it is not an area where divergence is necessarily needed. I would appreciate some responses from the Minister to these questions—but, overall, the statutory instrument is acceptable in its current form.

My Lords, I reiterate the words of my noble friend Lord Kirkhope and the noble Lord, Lord Empey. Many years ago I used to do business with National Air Traffic Services. As noble Lords have highlighted, that body does an excellent job—often in the background, but it plays a crucial role. The regulation of airport slot allocation is an important aspect of maintaining the efficient operation of the UK’s busiest airports, which are often constrained by capacity. This statutory instrument implements measures raised in the previous Government’s consultation on airport slot allocation. In line with the International Air Transport Association’s guidelines, the core objective of airport slot co-ordination is to optimise the use of available airport infrastructure, benefiting consumers and industry alike. Airport slots are allocated by independent co-ordinators to airlines for their planned operations, particularly at level 3 airports such as London Heathrow, London Gatwick and others where demand consistently exceeds available capacity.

18:30:00

Historically, the system has adhered to the principles of historic rights and the “use it or lose it” rule. These principles prioritise airlines based on past usage, requiring them to operate at least 80% of their allocated slots to retain them for future use. However, recent events, particularly the Covid-19 pandemic, have exposed vulnerabilities in this framework, necessitating alleviation measures to address global disruptions.

The first key provision of the SI revises the definition of a new entrant in the context of airport slot allocation. As we have heard, the amendment increases the threshold for airlines to qualify as new entrants from those holding fewer than five slots per day to fewer than seven. This change is a significant shift in policy, with the potential to broaden access to congested airports for smaller carriers, thereby encouraging greater competition. This change is intended to make it easier for smaller airlines to obtain slots at busy airports, because the threshold for being considered new has been raised. We hope it will encourage greater competition by giving smaller airlines a chance to access slots at crowded airports.

The second provision introduces more expansive alleviation measures. These measures, which were previously temporary, will be made permanent and apply in cases where airlines cannot meet their slot usage targets due to government-imposed restrictions. The alleviation provisions state that these restrictions must significantly affect the viability of air travel—for instance, through flight bans, border closures, health crises or severe restrictions on airport operations. The goal of these changes is to make the aviation sector more resilient to unexpected events.

While these changes aim to increase resilience in the aviation sector and foster competition, they also raise several concerns regarding their long-term impact. The changes to the new entrant definition are likely to allow a greater number of airlines to access slots at congested airports. However, it remains uncertain whether this will lead to an increase in competition or simply allow larger airlines to take advantage of the rule changes to expand their operations at these airports, thereby maintaining or even strengthening their market dominance, rather than creating more opportunities for smaller carriers. As the noble Baroness, Lady Pidgeon, asked, what safeguards will be in place to ensure that new entrants, rather than established players, are gaining access to these valuable slots?

In addition to the changes regarding new entrants, the proposed measures also introduce permanent alleviation provisions for airlines that are unable to meet their slot usage targets due to extraordinary circumstances, such as another pandemic or health crisis. These alleviation measures are designed to provide flexibility when government-imposed restrictions, such as flight bans, border closures or quarantine requirements, significantly disrupt the viability of air travel.

While these provisions were initially introduced as temporary measures during the Covid-19 pandemic, making them permanent aims to enhance resilience in the aviation sector. This flexibility will ensure that airlines are not penalised for circumstances beyond their control, thereby preventing unnecessary losses or forced ghost flights—those operated without passengers simply to retain slots.

However, the introduction of permanent alleviation raises concerns, particularly in terms of its long-term impact. The Government must ensure that these alleviation measures are applied only in cases of significant and severe disruption. With the broad discretion given to co-ordinators in determining eligibility, there is a real need for clarity and oversight, so we must ask the Minister this: how the Government will monitor and assess the effectiveness of these alleviation measures to ensure that they are applied judiciously, fairly and consistently without inadvertently limiting competition or disadvantaging smaller carriers?

I thank noble Lords for their consideration of these draft regulations. I will attempt to respond to as many of the specific points raised as I can. The noble Lord, Lord Kirkhope of Harrogate, asked about Leeds Bradford Airport. It is a late entrant, entered in 2024, and is subject to slot allocations only in the summer months. The noble Lord also asked how the 80:20 rule is administered. The answer is that, if under 80% of flights over the entire season are not used, they are lost. For desperate circumstances other than Covid, the regulations already have some alleviation, but this statutory instrument adds to them in respect of Covid. I will come back to the change from five to seven slots in answering some other points. The noble Lord made a serious point about consumer interest in consultation. The Competition and Markets Authority was consulted and supported all the changes. The Civil Aviation Authority was also consulted because it has consumer protection obligations; it, too, fully supported this measure. The noble Lords, Lord Empey and Lord Rogan, mentioned the provision of adequate services to Northern Ireland from Great Britain. From some previous work that I did on the union connectivity review, I know that this is a subject of much concern—and, occasionally, criticism—in Northern Ireland. Recently, I answered a Question in your Lordships’ House about the cancellation of an early flight from Belfast to London; that cancellation seems to have been astonishingly ill advised from the point of view of the airline operator, judging by the number of noble Lords and Members of the other place who were inconvenienced by it. So I understand the noble Lords’ points and the previous proposals for Bills in this direction. The noble Lord suggested a more fundamental review of slot allocation system; such a wider reform would need primary legislation. The previous Government consulted on this from December 2023 to March 2024, and the current Government are now considering the need for wider slot reform; I am sure that the specific availability of slots from Northern Ireland will be part of that consideration. I draw to the attention of both noble Lords the fact that, as I noted in the union connectivity review, the Government have a public service obligation and support flights from Derry/Londonderry to London precisely to make sure that there is connectivity from Northern Ireland to London. The noble Baroness, Lady Pidgeon, made two points about the extent to which the European Union is in advance of or behind these changes. In both cases, we are making these changes in advance of the EU making similar changes in respect of both Covid and the minimum slot allocation. On her point about moving from five to seven slots, that move is certainly helpful to consumers because, as other noble Lords have noted, increasing the number gives an opportunity for new services to support themselves in viability and, therefore, to be more permanent. So the answer to that question is that it will help. On whether the number is the right one, there was certainly consensus that the number should be increased but little consensus about what it should be, so bringing ourselves in line with international legislation seems, frankly, a pretty sensible thing to do. The noble Earl, Lord Effingham, asked whether new entrants can be protected in some way. Of course, I raised in my original speech that new entrant carriers are given priority in the allocation of slots, as the regulation requires that 50% of the slots shall first be allocated to new entrants unless the requests from them are less than 50%. That seems a sensible provision to allow new entrants a first opportunity here. Lastly, the noble Earl asked how the Government will ensure that the provisions for severe disruption are used only in exceptional circumstances. In respect of something like a pandemic, it is pretty clear that the provisions have to be drastic. There are other provisions in existing regulations for alleviation, which will continue to apply. I hope that I have covered all the points made by noble Lords on this proposed statutory instrument. I conclude by saying that it will make two permanent changes to Regulation 95/93, reducing barriers to entry at UK airports and making the slot allocation system more resilient. This instrument is putting the UK on the front foot; as I said, we are now in advance of the European Union on both of this measure’s substantial subject matters. I commend this instrument to the Committee.

Motion agreed.