DPPR/12-13/14
Civil Aviation Bill
Memorandum for the House of Lords Delegated Powers and
Regulatory Reform Committee
Introduction
1. This memorandum has been prepared by the Department for Transport
(“DfT”) for the purposes of the House of Lords Delegated Powers and
Regulatory Reform Committee. It identifies the provisions in the Civil
Aviation Bill which confer power to make delegated legislation. It explains
the purpose of the delegated power proposed; why the matter is to be
dealt with in delegated legislation; and the nature and justification for any
parliamentary procedures which apply.
Background
2. The legislative framework for the economic regulation of airports, the Civil
Aviation Authority (CAA), and aviation security is set out in a number of
existing Acts, most notably the Aviation Security Act 1982 (the “ASA
1982”), the Civil Aviation Act 1982 (the “CAA 1982”) and the Airports Act
1986 (the “AA 1986”) and the Airports (Northern Ireland) Order 1994 (the
“1994 Order”). The Civil Aviation Bill seeks to modernise the regulatory
framework in these areas and confers certain security functions on the
CAA.
3. The previous Government undertook a Consultation - Reforming the
framework for the economic regulation of UK airports - in March 2009 on
its proposals to update and reform the framework for the economic
regulation of the airports sector. This followed the House of Commons
Transport Committee’s 2006 recommendation in their report The Work of
the Civil Aviation Authority that DfT should carry out a review of the CAA,
including the central elements of the framework for the economic
regulation of airports.
4. The current legislative framework for airport economic regulation was
established under Part 4 of the AA 1986. Under this regulatory framework
the Secretary of State is responsible for deciding which airports should be
“designated” for price cap regulation. The CAA is then responsible for
regulating these airports by setting the maximum amount they can charge
airlines over a five year period, and setting service quality conditions linked
to these charges. The consultation on reforming the regulatory framework
has illustrated that the aviation industry, the regulator and other
stakeholders believe the current regime is burdensome, disproportionate
and in need of reform.
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5. Advice from an independent expert panel, and the response to the public
consultation, supported the case for reform to the framework for the
economic regulation of airports, and in December 2009 the previous
Government published its decision document - Reforming the framework
for the economic regulation of UK airports - which set out the case for
reform in this area.
6. In the Queen’s speech of May 2010, the Government announced its
intention to reform the framework for the economic regulation of airports by
replacing the existing statutory framework for regulation at designated
airports with a more flexible licence-based system. The aim is to give the
CAA the powers it needs to become a more responsive regulator and also
strip out unnecessary regulation and support passenger-focused
investment in existing airport infrastructure.
7. Conferring certain aviation security functions on the CAA will enable the
regulation of aviation security and safety to be in one place and will also
mean that the ‘user pays’ principle is applied to aviation security as it is
currently applied to aviation safety.
8. Sir Joseph Pilling, in his 2008 Report of strategic review of the CAA
concluded that reforming the CAA’s governance structure would help the
CAA to continue performing as a modern regulator. Some of his
governance recommendations have been implemented without the need
for legislation, for example the creation of a separate Chair and Chief
Executive. Others require primary legislation. The CAA’s statutory
framework is 30 years old in 2012 and we have taken the opportunity to
make a small number of further modernising changes.
Overview of the Bill
9. The purpose of the Bill is to provide for those elements requiring primary
legislation of the Government’s reforms of the economic regulation of
airports regime and CAA as well as conferring certain aviation security
functions on the CAA. It replaces, amends or supplements a number of
existing Acts, most notably the ASA 1982, CAA 1982, AA 1986, Transport
Act 2000 and the Regulatory Enforcement and Sanctions Act 2008.
10. The Bill is organised into the following parts;

Part 1 (Clauses 1-77) – Airports;

Part 2 (Clauses 78-106) – Other Aviation Matters including Aviation
Security and provision about CAA;

Part 3 (Clauses 107-112) – Final provisions; and

Schedules 1-14.
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11. The Bill will replace the existing economic regulation regime under the AA
1986 with a new regime setting out a clear primary duty on CAA to further
the interests of passengers and owners of cargo. The CAA will regulate
dominant airports by prohibiting operators from levying charges for airport
operation services provided at the airport unless they hold a licence (or are
treated as having a licence). An airport (or area therein) is dominant if
CAA considers the market power test is met which comprises three
cumulative limbs to ensure that operators of an airport are only subject to
economic regulation if: (A) the operator has, or is likely to acquire,
substantial market power; and (B) competition law on its own is not
sufficient to address the risk the operator abuses its market power; and (C)
the benefits of regulating the operator outweigh the costs.
12. An operator cannot levy any charges on another person at a dominant
airport (or dominant area at a dominant airport) if they do not have a
licence in respect of that dominant airport or area. The CAA may include
such conditions on the licence as they consider necessary or expedient
having regard to the risk of the licence holder engaging in conduct
amounting to abuse of substantial market power and their primary duties
under clause 1 of the Bill. A licence remains in force until revoked by the
CAA (in accordance with its terms) and can be modified at any time. The
CAA will have power to obtain any information that it reasonably requires
from any person (with the exception of information that could not be
compelled to be provided as evidence in civil proceedings) for the
purposes of carrying out its economic regulation functions.
13. Any contraventions of a licence condition (including a requirement to
provide information under a licence condition) can be enforced by CAA
and ultimately civil penalties imposed. Operators (and persons who are
materially affected) have rights of appeal against market power
determinations to the Competition Appeal Tribunal, imposition and
modification of licence conditions to the Competition Commission,
enforcement orders, penalties and licence revocations to the Competition
Appeal Tribunal.
14. The Bill will also provide the CAA with powers to enforce competition law
which will be held concurrently with the Office of Fair Trading. These
powers are confined to the enforcement of competition law in the airport
operation services sector and include the ability to make market
investigation references to the Competition Commission.
15. The Bill confers certain aviation security functions on the CAA, including
the review of aviation security directions, advice and assistance to industry
and appointing authorised persons (inspectors). The Secretary of State will
remain responsible for aviation security policy and giving aviation security
directions under the ASA 1982. The Bill also enables transfer schemes to
be made in connection with the aviation security functions to be conferred
on the CAA.
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16. The Bill makes provision to amend and supplement the functions of the
CAA. It will enable the CAA to make amendments to arrangements for
membership of the CAA, makes provision for the CAA to make use of
alternative civil sanctions alongside existing criminal penalties and
introduces changes to the existing charging schemes whereby CAA
recovers its regulatory costs from industry by imposing a statutory
obligation on the CAA to consult charge-payers and reduces the 60-day
notice period to 14 days.
17. It will create a new duty upon CAA to publish or arrange for the aviation
sector to publish, in a format which permits comparisons, such information
and advice as CAA considers appropriate: (i) to assist users (passengers
or freight service users) or potential users of air transport to compare
services and make more informed choices; and (ii) to inform the public
about the environmental effects (including emissions and noise) of civil
aviation in the UK and measures taken to limit the adverse environmental
effects. It also contains measures to reform the Secretary of State’s
powers to regulate the provision of flight accommodation, which is the
basis of the Air Travel Organisers’ Licensing (ATOL) scheme run by the
CAA. It will also permit the CAA to disclose medical information for
medical research purposes.
18. The Bill extends to England and Wales, Scotland and Northern Ireland.
Provisions for delegated legislation
Clause 9: Operators of areas
Power conferred on: Secretary of State
Power exercisable by: Regulations made by statutory instrument
Parliamentary procedure: Affirmative resolution (see clause 73)
19. Clause 9 provides that the operator of an airport area is the person with
overall responsibility for the management of that area. It is the operator of
the area who is subject to regulation under the provisions of Part 1 of the
Bill.
20. It is possible that two or more persons may exercise differing degrees of
management responsibility over the same area, causing uncertainty as to
which person is properly subject to regulation. The degree to which this
may become a significant problem in the future is unclear: it may for
example depend on the nature of specific agreements such as leases
which may split management responsibility between different persons. It is
not expected that difficulties will arise in identifying the operator of an
airport area subject to regulation under the present management structure
of designated airports.
21. Subsection (4) sets out a number of matters over which a person may
have control which are relevant to determining whether or not that person
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has overall responsibility for the management of an airport area for the
purposes of Part 1 (see clause 10(4)).
22. Against this background, it is considered requisite for the Secretary of
State to be empowered to make regulations to make provision about when
a person is or is not to be treated as having overall responsibility for the
management of an airport area (at subsection (2)). The power expressly
includes making provision for determining which person has overall
responsibility for the management of an airport area where more than one
person has some control over the matters listed in subsection (4).
23. Regulations under subsection (2) may include provision about when
persons are or are not to be treated as jointly having overall responsibility
for an airport area (joint operators) – see clause 70(2).
24. Clause 10(4) provides that when the CAA makes an operator
determination in relation to any person (including a joint operator
determination – see clause 70(3)) it must, in particular, have regard to
regulations under clause 9 and the extent to which the person controls or
may control the matters listed in clause 9(4). Accordingly, the regulation
making power may be used to provide greater clarity about when a person
is or is not likely to be regarded as an operator of an airport area.
However, because it may have a material effect on determining who is
subject to regulation it is considered appropriate to make the exercise of
the power subject to the more rigorous scrutiny afforded by the affirmative
resolution procedure.
Clause 28: Determination of appeal: time limits
Power conferred on: Secretary of State
Power exercisable by: Regulations made by statutory instrument
Parliamentary procedure: Negative resolution (see clause 73)
25. Clause 28 specifies time limits within which the Competition Commission
must determine appeals under clause 24 and clause 25 (respectively
appeals about the inclusion or absence of a condition in a new licence and
appeals about licence modifications).
26. Subsection (9) empowers the Secretary of State to modify the time
periods. Whilst it is believed that the time limits set out in the legislation
provide a fair balance between the need for the Competition Commission
to have reasonable time to determine an appeal and the need for
reasonable expedition, this power would be available if it becomes
apparent that the time limits set out at clause 28 require revision. This
should facilitate the better working of the legislation in respect of largely
procedural matters. Having regard to the purpose for which the power will
be exercised and its subject matter, the negative resolution procedure is
considered to afford a requisite level of Parliamentary oversight and
control.
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Schedule 2, paragraph 32: Appeals under sections 24 and 25
Power conferred on: Secretary of State
Power exercisable by: Regulations made by statutory instrument
Parliamentary procedure: Negative resolution (see clause 73)
27. Schedule 2 makes provisions in respect of appeals from the CAA’s
decisions on licence conditions included in or excluded from a new licence
and in respect of appeals on licence modifications to existing licences.
28. Rules in Schedule 2 include time limits within which applications for
permission to appeal must be made, within which representations must be
made and within which the Competition Commission must take decisions.
29. It is considered prudent to empower the Secretary of State to modify any
time period specified in Schedule 2 in the event the time period proves
inappropriate or sub-optimal in the light of experience.
30. As this power is largely procedural in effect, and having regard to the
purpose for which the power will be exercised and its subject matter, the
negative resolution procedure is considered to afford a requisite level of
Parliamentary oversight and control.
Clause 44: Amount of penalty: fixed amount
Power conferred on: Secretary of State
Power exercisable by: Regulations made by statutory instrument
Parliamentary procedure: Affirmative resolution (see clause 73)
31. Clause 44 sets a cap on the rate of fixed penalties imposable under
section 39 or 40 for a contravention of a licence condition, or enforcement
order or urgent enforcement order. The maximum fixed amount is 10% of
a person’s qualifying turnover for the qualifying period which is to be taken
as the qualifying turnover for that period as reported in accounts which a
person is required to prepare by a licence condition. Qualifying turnover
and qualifying period are defined in subsections (2) and (3) respectively.
32. Subsection (7) confers a power on the Secretary of State to make
regulations to amend or otherwise modify the definition of qualifying
turnover and to make provisions about how a person's qualifying turnover
for a qualifying period is to be calculated. This delegated power is
necessary to ensure that the definition and calculation of qualifying
turnover can be amended in the event that regulatory accounts
themselves (and the definition of qualifying turnover employed in them)
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should in future no longer be employed. Airports subject to price control
currently prepare regulatory accounts in a manner determined by the CAA.
It is conceivable that the CAA may in the future not make use of regulatory
accounts in this way.
Clause 51: Enforcement of information notice
Power conferred on: Secretary of State
Power exercisable by: Regulations made by statutory instrument
Parliamentary procedure: Affirmative resolution (see clause 73)
33. Clause 51 enables the CAA to impose a penalty for failure to comply with
an information notice given under clause 50. A penalty under this clause
may consist of either a fixed amount or a daily amount which must be
appropriate and proportionate to the failure in respect of which a penalty is
imposed. The maximum penalty payable in respect of a fixed amount and
a daily amount are specified in subsections (4) and (5) respectively.
34. Subsection (9) confers on the Secretary of State a power to make
regulations to replace the amount for the time being specified in
subsections (4) and (5). The power is necessary to ensure that the
maximum amounts set in the Bill can be adjusted over time to reflect
changes in monetary value thereby ensuring that the amount of penalty
remains a dissuasive and proportionate means for ensuring compliance.
Schedule 6, paragraph 6: Restrictions on disclosing information
Power conferred on: Secretary of State
Power exercisable by: Regulations made by statutory instrument
Parliamentary procedure: Negative resolution (see clause 73)
35. Schedule 6 imposes a qualified prohibition on the disclosure of information
relating to the affairs of an individual or a particular business obtained
under or by virtue of Chapter 1 of Part 1 of this Bill or clause 85 subject to
specified exceptions. Those exceptions include where information is
disclosed by the CAA to facilitate carrying out its regulatory functions
under Part 1 of this Bill and clause 83 and 84 and disclosure for the
purposes of law enforcement or criminal proceedings.
36. Paragraph 6 empowers the Secretary of State by regulations to amend the
list of exceptions under paragraphs 4 or 5. It is considered prudent to
provide this power to allow for changes to be made reflecting new
legislation or different regulatory regimes to which there should be a power
to supply information that would otherwise be subject to the prohibition.
37. Having regard to the purpose for which the power will be exercised and its
subject matter, and to the fact that any new legislation or regulatory regime
will itself receive appropriate Parliamentary scrutiny, the negative
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resolution procedure is considered to afford a requisite level of
Parliamentary oversight and control.
Clause 65: Power to modify CAA’s competition powers
Power conferred on: Secretary of State
Power exercisable by: Regulations made by statutory instrument
Parliamentary procedure: Affirmative resolution (see clause 73)
38. Clauses 60(2) and 62(2) provide that the CAA may exercise concurrent
functions in relation to “airport operation services”, which are defined at
clause 68.
39. Clause 65(1) enables the Secretary of State to modify the scope of the
CAA’s concurrent powers; specifically, to narrow the scope by excluding
certain types of airport operation services or to expand the scope by
including particular services at an airport that are not airport operation
services. Clause 65(2) confers power to make consequential, incidental or
supplemental provision amending Chapter 2 of Part 1. (As set out below,
the definition of airport operation services is also subject to changes in
scope by affirmative statutory instrument).
40. This legislation is expected to subsist for at least 25 years and it is likely
that the services offered at airports will develop and change over time. It
would therefore be prudent to allow the scope of services subject to the
CAA’s concurrent competition powers to be narrowed or widened to adapt
to different services. Although there is power under clause 68(5) to alter
the definition of “airport operation services”, the power in clause 65(1)
allows for the coverage of concurrent competition and economic regulation
powers to diverge. This will allow the Secretary of State to widen or narrow
the scope of regulatory powers under concurrent competition powers but
not economic regulation, or vice versa, providing future flexibility.
41. Regulations under clause 65(1) can only be made where a draft of the
instrument has been laid before, and approved by a resolution of, each
House of Parliament. The scope of this power, and the fact that it includes
a power to amend primary legislation, requires the greater scrutiny
afforded by affirmative resolution.
Clause 66: Airports
Power conferred on: Secretary of State
Power exercisable by: Regulations made by statutory instrument
Parliamentary procedure: Affirmative resolution (see clause 73)
Definition of “airport”
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42. Chapter 1 provides for the regulation of operators of dominant areas within
a “dominant airport” (see clauses 3, 4, 5 and 14). Furthermore, both the
CAA’s and the Secretary of State’s general duty (at, respectively, (clauses
1 and 2) require functions under Chapters 1 and 3 to be carried out so as
to further the interests of users of air transport services in respect of
“airport operation services”. “Airport operation services” is defined at
clause 68 by reference to specified types of service provided “at an airport”
for specified purposes.
43. Accordingly, the definition of “airport” affects the scope of persons who
may be subject to regulation and the application of the general duty. It may
also have an impact on the market power test at clause 6 in that Test A
relates to a market for one or more types of airport operation service
provided within the airport area in respect of a market which
geographically comprises or includes all or part of the airport area (at
clause 6(6)).
44. The central importance of the definition of “airport”, the fact this legislation
is intended to subsist for 25-30 years (and because over that timescale
what is or is not properly to be regarded as part of an airport may change)
means it is necessary to have a power by regulation under clause 66 to
provide that for the purposes of Part 1 land, buildings or other structures
shall or shall not comprise part of an airport (at subsection (3)(a)).
45. This power necessarily extends to making amendments to subsection (1)
of that clause and to clause 67 which describe what is and what is not
comprised in an airport for the purposes of Part 1 of the Bill (as set out at
subsection (4)(a) of clause 66).
Definition of “core area”
46. Clause 5(4) defines what part of an airport comprises its “core area” for the
purposes of Part 1. In broad terms, the runways and associated structures,
passenger terminals and cargo processing areas comprise the core area.
47. Clause 5(2) provides that an airport is dominant if all or part of its core
area is or is part of a dominant area (i.e., the clause 6 market power test
has been met in relation to that area).
48. Clause 3 provides that an operator of a dominant non-core area at an
airport shall only be subject to the prohibition on levying charges (and so in
effect brought within regulatory scope) if some or all of the core area at the
airport is dominant. So the definition of “core area” is relevant to the scope
of regulation in respect of other parts of the airport.
49. Clause 6(6) qualifies the circumstances in which Test A of the market
power test is met. Clause 6(7) in turn qualifies clause 6(6). It provides that
when conducting Test A of the market power test in relation to an airport
area that includes all or some of the core area, the requirements at
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subsection (6) shall be read as if references to the “airport area” were
references to the core area (or to part of the core area). So the
definition/scope of the “core area” is relevant here, too.
50. Clause 66(3)(b) provides for the Secretary of State to specify in
regulations what shall or shall not comprise part of the “core area” of an
airport. This includes a power at subsection (4)(b) to modify the definition
of the core area set out at clause 5 of the Bill.
51. Similar points arise in respect of these powers as those applicable to the
powers described above to amend the definition of “airport”.
52. The scope and importance of these powers requires the greater scrutiny
afforded by affirmative resolution, particularly as each includes a power to
amend primary legislation.
Clause 68: Airport operation services
Power conferred on: Secretary of State
Power exercisable by: Regulations made by statutory instrument
Parliamentary procedure: Affirmative resolution (see clause 73)
53. The definition of “airport operation services” at clause 68 is relevant to the
CAA’s and Secretary of State’s general duty (at clauses 1 and 2
respectively). Each are required to carry out their functions under Chapter
1 in a manner which each considers will further the interests of users of air
transport services regarding the range, availability, continuity, cost and
quality of airport operation services.
54. The definition is also relevant to Test A of the market power test (at clause
6(3). Test A is concerned with an operator having, or being likely to
acquire, substantial market power in a market. Clause 6(6) qualifies this by
providing, inter alia, that Test A is only met if that market is a market for
one or more of the types of airport operation service provided in the airport
area.
55. Clause 68(6) empowers the Secretary of State by regulations to provide
that, for the purposes of Part 1, services are or are not to be treated as
airport operation services. Subsection (7) empowers the Secretary of State
to modify subsections (1) to (5) to this end.
56. The central importance of the definition of “airport operation services”, the
fact this legislation is intended to subsist for 25-30 years (and because
over that timescale what is or is not properly to be regarded as part of
airport operation services may change) means it is necessary to have a
power by regulation to provide that for the purposes of Part 1 the definition
may be modified.
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57. The scope and importance of this power requires the greater scrutiny
afforded by affirmative resolution, particularly as it includes a power to
amend primary legislation.
Clause 70: Joint operators of areas
Power conferred on: Secretary of State
Power exercisable by: Regulations made by statutory instrument
Parliamentary procedure: Affirmative resolution (see clause 73)
58. Part 1 generally contemplates one person being regulated in respect of an
airport area. Where more than one person exercises some management
control over the same area, the person who on the facts has overall
responsibility is subject to regulation (see clause 9(1)).
59. There is a remote possibility that joint operators may in future control an
area (for example, if the area is controlled by a simple partnership),
although this is considered commercially unlikely to arise.
60. Against this background it is considered prudent to empower the Secretary
of State by regulations to provide that where there are joint operators of an
airport area she may modify the provisions of Chapters 1 and 3 of Part 1 in
respect of their application to joint operators (see clause 70(4)).
61. The scope and importance of this power requires the greater scrutiny
afforded by affirmative resolution, particularly as it includes a power similar
in effect to a power to amend primary legislation.
Clause 71: Connected persons
Power conferred on: Secretary of State
Power exercisable by: Regulations made by Statutory Instrument
Parliamentary procedure: Affirmative resolution (see clause 73)
62. This clause confers power on the Secretary of State to make regulations to
make provision about when one person is connected with another for the
purposes of Part 1 of the Bill. The definition of “connected persons” is
relevant to the application of clauses 3, 16, 21, 23, 25 and 44 and
Schedule 2. It is presently defined by reference to the Companies Act
2006 using the definition of “Group Undertaking” set out in section 1161 of
that Act in order to cover any arrangements an operator may have within a
company group. These powers are needed to allow the definition to be
amended in light of any anti-avoidance measures that may be used to
circumvent the proper application of these clauses. The regulations will be
subject to the affirmative resolution procedure.
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Clause 73: Regulations
63. This clause makes general provision about the powers to make delegated
legislation in Part 1 of the Bill. Clause 73 provides that regulations made
under Part 1 of the Bill may include different provisions for different cases,
make general provision or provision for specific cases; and make
consequential, incidental, supplemental, transitional, transitory or saving
provision. The clause requires the affirmative resolution procedure for all
regulations under Part 1 that amend any provision in the Act with the
exception of clause 28(9), clause 77, paragraph 32 of Schedule 2 and
paragraph 6 of Schedule 6 which do not and therefore are considered
more appropriate for the negative resolution procedure.
Schedule 8, paragraphs 2 and 7: Status of airport operators as statutory
undertakers etc
Power conferred on: Secretary of State
Power exercisable by: Order
Parliamentary procedure: Negative resolution (under section 79 of the AA
1986)
64. Schedule 8 provides amendments to the AA 1986 in respect of airport
statutory undertakers in consequence of the current economic regulation
regime in Part 4 of the 1986 Act being repealed by the Bill. An airport that
held a permission to levy charges, which was required if their turnover
exceeded £1 million per financial year in at least 2 of the last 3 years, was
deemed to be a statutory undertaker. To preserve the status quo it is
necessary to make consequential changes and the £1 million threshold
has been retained as a continuing threshold for whether or not an airport
has statutory undertaker status. In subsection (11) of substituted section
57A a power is conferred upon the Secretary of State to substitute a
greater sum for the £1 million threshold. This will enable the threshold to
be raised, if necessary, in future for example to take account of any
inflation. Similar arrangements are made for Northern Ireland in
substituted Article 2A(9) of the 1994 Order.
Schedule 8, paragraphs 4 and 9: Status of airport operators as statutory
Undertakers etc
Power conferred on: Secretary of State
Power exercisable by: Regulations made by statutory instrument
Parliamentary procedure: Affirmative resolution (see clause 73)
65. In paragraphs 4 and 9 of Schedule 8 powers are conferred to enable the
Secretary of State to make regulations to modify the statutory undertaker
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provisions in Schedule 8 and make necessary consequential amendments
to relevant legislation in Great Britain and Northern Ireland respectively to
enable such provisions to apply where there is more than one operator at
an airport. This is necessary because Part 1 of the Bill introduces the
concept of an ‘airport area’ to allow for the possibility of there being more
than one operator at an individual airport. Currently all airports are under
unitary control. At this stage it is not known what form having more than
one operator at a particular airport would take in practice for the purposes
of economic regulation. Therefore to ensure the statutory undertaker
provisions can properly apply in such circumstances the power will enable
the Secretary of State to make provision for different scenarios involving
more than one operator rather than attempt to predict all possible
scenarios at this time. The power ensures we do not preclude the
possibility of more than one operator at an airport because they are not
able to obtain this status. Rather once we have a better understanding of
how it will begin to work in practice we can then adopt a focused and
proportionate approach through secondary legislation.
Clause 77:Crown application
Power conferred on Secretary of State
Powers exercisable by: Regulations made by statutory instrument
Parliamentary procedure: Negative resolution (see clause 73)
66. This clause provides, inter alia, that Parts 1 and 3 bind the Crown, subject
to limited exceptions. The reason for this is because insofar as the Bill is
giving effect to provisions of the Airport Charges Directive (2009/12/EC), it
is necessary that it should do so in order properly to implement that
Directive. However, the scope of economic regulation under the Bill is
wider than that covered by the Directive. Specifically, the Directive only
applies to airports in the UK open to commercial traffic with more than 5
million passenger movements per year.
67. Accordingly, clause 77(10) empowers the Secretary of State by
regulations to exempt from regulatory scope airport areas operated by the
Crown which are not required to be regulated under the Directive. The
Government is minded to use this power to exempt military airports, which
are not subject to the Airport Charges Directive, since the Government
does not feel it is appropriate for these airports to be subject to economic
regulation.
68. There is a similar concern that where the Crown is providing airport
operation services which do not have to be made subject to regulation
under the Directive, it should not be subject to regulation under the
legislation. Presently, this appears to be limited to functions described at
clause 77(12)(a),(b) and (c). It is possible that in the future the Crown may
carry out other functions which need to be exempted. Hence the power to
exempt other functions, at (d).
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69. Clause 77(5) disapplies the prohibition on levying charges in respect of
services provided in the course of carrying out “exempt Crown functions”.
This has the effect that an operator of an airport area who manages the
area in the course of carrying out exempt Crown functions does not
require a licence under Chapter 1 of Part 1 of the Bill.
70. Having regard to the scope and purpose of these powers, it is considered
that the negative resolution procedure is requisite because the exercise of
these powers will give effect to the convention that the Crown is not
ordinarily bound by legislation.
Schedule 11, paragraph 17: Aviation security directions etc: minor and
consequential amendments
Power conferred on: Secretary of State
Power exercisable by: Regulations made by Statutory Instrument
Parliamentary procedure: Negative Resolution (see section 21G(5) of the ASA
1982)
71. Schedule 11 makes amendments to the CAA 1982 and the ASA 1982 as
a consequence of the Bill conferring certain aviation security functions on
the CAA.
72. Paragraph 17 of Schedule 11 amends section 21G of the ASA 1982.
Section 21G is a regulation-making power that enables the Secretary of
State to make regulations about the duty to report certain occurrences.
73. Paragraph 17 of Schedule 11 amends section 21G of the ASA1982 by
providing that the regulations made under this section may require reports
of certain occurrences to be made to the Secretary of State or the CAA.
74. It also adds the CAA to the list of persons to be consulted by the Secretary
of State before making regulations requiring persons to report certain
occurrences.
75. Regulations under section 21G are currently subject to the negative
resolution procedure. The Department is of the view that none of the
amendments being made by paragraph 17 of Schedule 11 warrants a
change to the level of scrutiny required. Accordingly, it is considered that it
is suitable for the negative resolution procedure to apply.
Clause 79: Approved providers of aviation security services
Power conferred on: Secretary of State
Power exercisable by: Regulations made by Statutory Instrument
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Parliamentary procedure: Negative Resolution (see section 20A(6) of the ASA
1982)
76. Clause 79 makes a number of amendments to section 20A of the ASA
1982.
77. Section 20A of the ASA1982 is a regulation-making power that enables
the Secretary of State to make regulations about approved providers of
aviation security services.
78. Subsection (2) of clause 79 amends subsection (2) of section 20A of the
ASA 1982 so as to enable the regulations made under this section to
provide for the CAA, rather than the Secretary of State, to maintain the list
of persons who are approved by it for the provision of a particular aviation
security service.
79. Subsection (3) of clause 79 amends subsection (3) of section 20A of the
ASA 1982 so as to enable regulations made under section 20A of the ASA
1982 to provide for: approval to be given, and persons to be listed,
generally or only at a particular location; factors to be taken into account
when deciding whether to grant an application; employees of listed
persons to be treated as listed in respect of the provision of that service
generally or at that location (as appropriate) in specified circumstances;
and make provision about other conditions applying to a listing. Subsection
(4) inserts new subsection (3A) of section 20A of the ASA 1982 which
provides that regulations must include provision for appeals against the
refusal of applications for inclusion in a list and removal from a list, and,
where appropriate, appeals against conditions. Subsection (5) inserts new
subsection (5A) of section 20A of the ASA 1982 which defines “listed
person”, in relation to an aviation security service, as meaning a person
who is listed in respect of the provision of that service generally or at the
relevant location.
80. Regulations under section 20A of the ASA 1982 are currently subject to
the negative procedure. The Department is of the view that none of the
amendments being made by clause 79 warrants a change to the level of
scrutiny required. Accordingly, it is considered that it is suitable for the
negative resolution procedure to continue to apply.
Clause 81: Power to modify functions of CAA etc relating to aviation
security
Power conferred on: Secretary of State
Power exercisable by: Regulations made by statutory instrument
Parliamentary procedure: Affirmative resolution (see subsection(5) of new
section 21J of the ASA 1982)
81. Clause 81 inserts new section 21J into the ASA 1982 (power to modify
functions of CAA etc relating to aviation security) that enables the
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Secretary of State by regulations to modify the aviation security functions
of the CAA and the functions of authorised persons authorised by the
CAA.
82. Subsection (2)(e) of new section 21J empowers the Secretary of State by
regulations to amend or repeal an enactment (whenever passed) including
a provision of Part 2 of the ASA 1982 and amend or revoke a provision of
an instrument made under an enactment (whenever made).
83. The Department has included on the face of the Bill the aviation security
functions that are to be conferred on the CAA. However, it may become
necessary to make changes to the CAA’s aviation security functions. It is
appropriate to put in place a mechanism for new functions to be conferred
by secondary legislation, rather than doing so by primary legislation
because, if changes are necessary, those changes may need to be made
quickly.
84. For example, there could be new European Union regulations in the area
of aviation security, perhaps as a result of a new type of threat or a new
threat target. It may, therefore, be necessary to amend the CAA's
functions or powers in order for the CAA to be able to undertake work
related to the new threat or threat target. In addition, it may be necessary
to confer new powers, functions or duties on the CAA. It may also be
desirable to restrict the CAA's functions, such as limiting the number of
authorised persons that it can appoint, or requiring the CAA only to appoint
persons who meet certain criteria.
85. The Secretary of State must consult the CAA before making regulations
under this section. Because of the purpose of this power and the fact that
it includes a power to amend primary legislation, any exercise of this
regulation-making power should be subject to a high level of parliamentary
scrutiny to provide sufficient democratic accountability. The regulationmaking power is, therefore, subject to the affirmative resolution procedure.
Clause 82: Transfer schemes
Power conferred on: Secretary of State
Power exercisable by: Transfer scheme
Parliamentary procedure: None
86. This clause makes provision for the transfer to the CAA of rights, powers,
duties and liabilities of the Crown in connection with individuals employed
in the civil service of the Crown, and other property, rights and liabilities of
the Crown.
87. It provides that a scheme may transfer only such property, rights, powers,
duties and liabilities as the Secretary of State considers appropriate having
regard to the functions conferred on the CAA by or under Part 2 of the
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ASA 1982, as amended by this Bill, and the functions of authorised
persons authorised by the CAA.
88. Schedule 12 lays down the parameters governing the transfer schemes,
outlining technical provisions and what the schemes can cover. It is
appropriate to set out these further particulars to ensure that there can be
no ambiguity over what can be included in the transfer schemes. These
parameters render additional Parliamentary oversight unnecessary.
Clause 86: Enforcement of information notice
Power conferred on: Secretary of State
Power exercisable by: Regulations made by Statutory Instrument
Parliamentary procedure: Affirmative resolution (see clause 86(11))
89. Clause 86(9) confers on the Secretary of State a power to make
regulations to replace the maximum amount for the penalties that the CAA
can impose on a person who fails to comply with a notice under clause 85
without reasonable excuse. The power is necessary to ensure that the
amounts set in the Bill can be increased over time to reflect changes in the
value of money thereby ensuring that the penalty remains dissuasive and
proportionate to the failure in respect of which it is imposed. The
regulations must be made by statutory instrument and are subject to the
affirmative resolution procedure.
Clause 94: Regulation of provision of flight accommodation
Power conferred on: Secretary of State
Power exercisable by: Regulations made by Statutory Instrument
Parliamentary procedure: Negative resolution (see section 102 and Part II of
Schedule 13 to the CAA 1982)
90. Clause 94 amends section 71 of the CAA 1982 to expand the existing
regulation-making power so as to allow regulation of (a) operators of the
relevant aircraft when the flight accommodation is made available other
than as a flight-only provider and (b) businesses acting as an agent for a
consumer in procuring the flight accommodation. This will allow new
regulations to be made which will create clarity for the consumer and
improve the consistency and coherence of the coverage of the Air Travel
Organisers’ Licensing (ATOL) scheme.
91. Clause 94 also amends section 71 so as to create a new power allowing
the Secretary of State to make regulations imposing obligations on ATOL
licence holders and giving consumers a right of action against ATOL
licence holders where there is a contravention of such obligations. This is
intended to allow consumers who suffer a loss as a result of an ATOL
licence holder’s contravention of the regulations to sue the licence holder
directly.
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92. The regulations may also impose criminal penalties for contraventions of
the regulations not exceeding in the case of each contravention a fine of
the statutory maximum on summary conviction and a fine and
imprisonment for a term not exceeding two years on conviction on
indictment.
93. Regulations under section 71 are currently subject to the negative
resolution procedure. The Department is of the view that none of the
amendments being made by clause 94 warrants a change to the level of
scrutiny required. Accordingly, it is considered that it is suitable for the
negative resolution procedure to continue to apply.
Clause 100: CAA charges
Power conferred on: Secretary of State
Power exercisable by: Regulations made by Statutory Instrument
Parliamentary procedure: Negative resolution (see section 102 and Part II of
Schedule 13 to the CAA 1982)
94. Section 11(1) of the CAA 1982 allows CAA to make a charging scheme for
determining the charges which are to be paid to the CAA in respect of the
performance of its functions. The scheme allows the CAA to recover
certain costs from industry. The CAA is not required to consult charge
payers, although in practice it does so. Currently, the CAA must allow 60
days before a published scheme of charges come into force. This delay
can adversely affect the accuracy of the budgetary information on which
the CAA can base its charging scheme.
95. Clause 100 amends section 11 to reduce the 60 day period to 14 days and
introduces a statutory obligation on the CAA to consult charge payers.
This will allow the CAA to base its charging schemes on more accurate
information.
96. The Department considers it appropriate that the CAA continues to
recover its costs for the performance of its functions from industry through
charging schemes as the charges will need to be updated regularly.
97. Section 11(3) of the CAA 1982 provides that the Secretary of State may
make regulations for determining the charges which are to be paid to the
CAA, or for securing that no charge is payable to the CAA, and for
determining the charges. Clause 100 amends this existing regulationmaking power to add new subsections 3A and 3B to section 11. These
subsections require that the Secretary of State consults prior to making
regulations, unless such consultation is thought unnecessary by the
Secretary of State in view of the consultation carried out by the CAA. The
Department considers this appropriate given the new duty on the CAA to
consult prior to making charging schemes.
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98. Regulations under section 11(3) are currently subject to the negative
resolution procedure. The Department is of the view that the amendments
being made to the Secretary of State’s power in section 11(3) do not
warrant a change to the level of scrutiny required. Accordingly, it is
considered that it is suitable for the negative resolution procedure to
continue to apply.
Clause 107: Power to make consequential and transitional provision
Power conferred on: Secretary of State
Power exercisable by: Regulations made by Statutory Instrument
Parliamentary procedure: Negative resolution
99. Clause 107 provides the Secretary of State with a general power to make
consequential, transitional, transitory and saving provision in relation to
any provision of the Bill. The power includes power to amend primary
legislation passed before the end of the Session in which the Bill is
passed, including an enactment contained in the Bill and to amend
subordinate legislation made before the provision of the Bill comes into
force.
100. The Department considers that the negative resolution procedure is
appropriate in this case because the power is confined to consequential,
transitional, transitory and saving provision. The power does not extend to
“supplementary” or “incidental” provision. The Committee did not object to
this approach in relation to the Financial Services Bill (see DPRRC’s 5 th
Report 2009-10, paragraph 15). Also, the Department has attempted to
identify and include all consequential changes on the face of the Bill.
Accordingly, the power is very much a reserve power in case any
necessary changes have not been identified.
Clause 109: Commencement
101. Subsection (1) provides, with certain exceptions, for the provisions of
the Bill to come into force on such day as the Secretary of State may by
order made by statutory instrument appoint. As is usual with powers to
make commencement orders it is not subject to any Parliamentary
procedure.
102. There is a specific restriction on the use of this power to amend or
otherwise modify the end date of the transitional period set out in Schedule
10 (see paragraph 6 of that Schedule). The current price controls on
Heathrow, Gatwick and Stansted airports under the AA 1986 do not expire
until 31 March 2014 and the Department does not want to disturb, or be
seen to be able to disturb, those existing controls before their end date as
it could create uncertainty and have unintended financial implications for
these operators.
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Department for Transport
22 May 2012
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