192.These sections define what an airport is for the purposes of this Part of the Act.
193.Section 66(1) states that an airport comprises an aerodrome (as defined in the CAA 1982) as well as other land, buildings and structures used for the purposes described in paragraphs (a) to (f).
194.Section 105(1) of the CAA 1982 defines an aerodrome as “any area of land or water designed, equipped, set apart or commonly used for affording facilities for the landing and departure of aircraft and includes any area or space, whether on the ground, on the roof of a building or elsewhere, which is designed, equipped or set apart for affording facilities for the landing and departure of aircraft capable of descending or climbing vertically”.
195.Section 67 provides further clarification on what is and is not included in the definition of an airport. For example it states that a passenger (who has not arrived by air) arrives at the airport when they arrive at one of the following:
the passenger terminal building;
the terminal forecourt; or
a car park with pedestrian access to the terminal.
196.The Secretary of State may by regulations provide that land, buildings and other structures are or are not to be treated as part of an airport, or part of the core area of an airport, for the purposes of Part 1 of the Act.
197.The CAA’s primary duty (section 1(1), which governs all of its functions under Chapter 1 of Part 1) is to further the interests of users of air transport services regarding the range, availability, continuity, cost and quality of airport operation services.
198.Subsection (1) defines what services provided at an airport (as defined in sections 66 and 67) comprise “airport operation services”. They include services provided for the landing, taking off, servicing and parking of aircraft and for the arrival, departure and processing of passengers and cargo. For example, providing facilities for baggage reclaim is included and so is providing lighting on the runway. Subsections (3) and (4) provide further clarification on what services are and are not included in airport operation services. For example, they do not include air transport services (defined in section 69) or air traffic services (defined in section 72) or retail sales in terminal shops.
199.For the purposes of this Part of the Act subsection (5) clarifies that “airport operation services” include permitting a person to access or use land. Section 72(2) further clarifies that any reference to providing a service includes providing a facility. As a result the provision of space to retailers in the terminal building would be caught by the definition of airport operation services; however, due to section 68(3)(c), the provision of retail services (for example duty free sales) would not.
200.The Secretary of State may by regulations provide that services are or are not to be treated as airport operation services for the purposes of Part 1 of the Act.
201.The CAA’s primary duty (section 1(1), which governs all of its functions under Chapter 1 of Part 1) is to further the interests of users of air transport services regarding the range, availability, continuity, cost and quality of airport operation services.
202.This section defines “air transport service” and “provider” and “user” of such services. Users comprise: current and future passengers of both commercial and private flights; and those with current and future property rights in cargo which is transported by air.
203.The definition of users of air transport services does not include airlines, pilots or other members of crew.
204.Only flights to or from airports in the United Kingdom are covered by the definition.
205.Subsection (1) of this section defines joint operators in relation to airport areas. There are joint operators where two or more persons jointly have overall responsibility for the management of all of the area. This mirrors the provision made by subsection (1) of section 9 in relation to sole operators.
206.One example of joint operators would be where the ownership structure of an airport area is a partnership. Partnership is defined by section 1 of the Partnership Act 1890 as “the relation which subsists between persons carrying on a business in common with a view of profit”.
207.Subsection (2) clarifies that the power of the Secretary of State to make regulations under section 9 about when a person is or is not to be treated as having overall responsibility for the management of an airport area includes power to make provision about when two or more persons are to be treated as jointly having overall responsibility for the management of an airport area.
208.Subsection (3) clarifies that the CAA’s powers in section 10 to make operator determinations include the making of a determination that there are joint operators.
209.Subsection (4) empowers the Secretary of State to make regulations modifying the provisions of Chapters 1 and 3 of the Act in respect of joint operators. This is required because aspects of Chapters 1 and 3 may need to be modified in order to apply in the intended way where there are joint operators.
210.Sections 3, 16, 21, 23, 25, 44 and Schedule 2 refer to the concept of “connected persons”. Section 71 defines this concept for the purposes of Part 1 of the Act. Connected persons are 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. Subsection (3) enables the Secretary of State to modify the “connected persons” definition for the purposes of Part 1.
211.This section repeals Part 4 of the AA 1986 and revokes Part 4 of the Airports (Northern Ireland) Order 1994. It also gives effect to Schedule 8 (consequential amendments relating to the status of airport operators as statutory undertakers in Great Britain and Northern Ireland), Schedule 9 (other consequential amendments) and Schedule 10 (transitional provision).
212.Part 1 of Schedule 8 amends Part 5 of the AA 1986 and Article 2 of the Airports (Northern Ireland) Order 1994 (the “1994 Order”) to make provision for conferring the status of statutory undertaker on certain airport operators.
213.Under the AA 1986 an airport operator has statutory undertaker status if a permission to levy charges under Part 4 of the AA 1986 has been granted in respect of the airport, or there is a subsisting pending application and it is not for these purposes an excluded airport under section 57(2) of that Act. Under section 37(2) of the AA 1986 permission to levy charges is necessary where the annual turnover of the airport operator exceeds £1million per financial year in at least two of the last three financial years.
214.Part 1 of the Act will repeal section 37 of the AA 1986 and this financial threshold will no longer be the determining factor as to whether an airport is regulated. Therefore consequential amendments are needed to the AA 1986 to enable the status of statutory undertaker to be conferred upon airport operators and preserve the position in respect of existing airport operators which have had such status conferred upon them.
215.Section 57 of the AA 1986 is substituted with section 57A, which provides that a relevant airport operator will have the status of a statutory undertaker where a certificate has been granted in respect of the airport of which it is the operator. The CAA will grant such a certificate if the airport operator has applied for the certificate, has paid the relevant charge, and is eligible. An airport will continue to be eligible where the annual turnover of the business carried on by the operator at the airport exceeds £1 million in at least two of the last three financial years.
216.Airports owned solely or jointly by a principal council, an Integrated Transport Authority (as defined by the Local Transport Act 2008) in England or a metropolitan county passenger transport authority in Scotland are excluded from being an eligible airport.
217.A certificate may be withdrawn by the Secretary of State (in relation to an airport in England and Wales) or the Scottish Ministers (in relation to an airport in Scotland) if the airport no longer meets the eligible annual turnover in the relevant financial years. Before withdrawing a certificate the Secretary of State or the Scottish Ministers (as appropriate) must consult the CAA and the airport operator. The withdrawal of a certificate does not affect rights or liabilities accrued during the period when a certificate had been granted.
218.The Secretary of State may make regulations about the operation of new section 57A of the AA 1986 in cases in which there is more than one operator at an airport (see paragraph 5 of Schedule 8).
219.The Secretary of State may make an order substituting a greater sum than £1 million.
220.Separate arrangements exist in Northern Ireland for the conferral of statutory undertaker status on airport operators. Part 2 of Schedule 8 makes amendments to the 1994 Order for airports in Northern Ireland to achieve a similar effect to the Great Britain arrangements.
221.Part 1 of Schedule 10 to the Act contains the key elements for the transition to Part 1 of the Act from the existing regulatory regime set out in Part 4 of the AA 1986 and Part 4 of the 1994 Order. Further transitional provision will be made in secondary legislation.
222.Paragraph 1 of Schedule 10 defines for the purpose of this Schedule an interim period, which will run from the date of commencement of section 3 (“the commencement day”) until 31 March 2014. The remainder of the Schedule makes provision about the operation of the AA 1986, the 1994 Order and the Act during that period.
223.Paragraphs 2 and 3 apply where an airport is designated under the AA 1986 or the 1994 Order at the beginning of the interim period. There are currently three designated airports - Heathrow, Gatwick and Stansted – which are subject to price controls that expire on 31 March 2014. The Government has made a commitment not to disturb the current price control settlements for those airports.
224.Paragraph 2(2) and (3) provide that, on the commencement day”, a designated airport under the AA 1986 will be treated as having met the market power test under section 6 and as if the CAA had published a notice of that determination under section 8.
225.Paragraph 2(4) has the effect that the CAA may not treat this determination as having been previously made for the purposes of section 7(5). Therefore the CAA could not refuse a request from the operator of the airport area and/or other persons whose interests are likely to be materially affected by the determination on the basis that there has been no material change of circumstances since section 3 came into force.
226.Paragraph 2(6) disapplies the right of appeal in relation to the market power determination which is treated as made under paragraph 2(3). But it does not remove the right of appeal under section 13 and Schedule 1 where a market power determination is made in response to a request made after the commencement day”. The CAA is obliged to respond to a request made by the operator of the airport area in question or a person whose interests are likely to be materially affected by the determination (see section 7).
227.Paragraph 3(2) provides an exemption during the interim period from the prohibition under section 3. In brief, section 3 prevents specified persons from requiring others to pay relevant charges for airport operation services provided in an airport area if the operator of the area does not have a licence. The exemption under paragraph 3(2) applies to any person at an airport which is a designated airport on the commencement day”.
228.Paragraph 4(1) provides that if a decision was made to designate an airport, or to confirm or revoke a designation, on or after 10 November 2011, the CAA can refuse to make a market power determination (if it is requested to do so) if it considers that there has not been a material change of circumstances since the previous decision. The Airport Charges Regulations 2011(SI 2011/2491) came into force on 10 November 2011. They amended the AA 1986 and the 1994 Order to provide for mandatory procedures whereby the CAA examines whether airport operators have or are likely to acquire substantial market power.
229.Paragraph 4(2) provides for the handling of requests made before the commencement day” for an order designating an airport or revoking its designation. If the Secretary of State (or the Department of the Environment in Northern Ireland) has not made such an order (or a decision not to make such an order) before the commencement day”, the request will be treated as a request for a market power determination under the Act.
230.Paragraph 5 provides that during the interim period no orders can be made designating an airport under the AA 1986 or the 1994 Order. If, during the interim period, a designated airport ceases to be a dominant airport for the purposes of Part 1 of the Act, an order must be made revoking the designation subject to the specified restrictions set out in paragraph 5(4). The decision on whether an airport is still dominant will be made by the CAA and, if the CAA’s decision is that the airport has ceased to be dominant, the Secretary of State (or the Department of the Environment in Northern Ireland) must then make an order revoking its designation. The Secretary of State (or the Department of the Environment in Northern Ireland) is to have no discretion when making such an order.
231.Paragraph 5(4) provides that the Secretary of State (or the Department of Environment in Northern Ireland) must not revoke such an order in three circumstances: 1) during the sixty day period in which a person may make an appeal to the Competition Appeal Tribunal against the market power determination; 2) at a time when the effect of the market power determination has been suspended by the Competition Appeal Tribunal or when the Secretary of State or the Department of the Environment in Northern Ireland considers it may be suspended; or 3) if all or part of the market power determination has been set aside or quashed.
232.Paragraph 5(5) provides that where a request is made during the interim period for an order revoking an airport’s designation and the Secretary of State (or the Department of the Environment in Northern Ireland) has not made such an order before the end of this period, the request is to be treated as a request for a market power determination.
233.Paragraph 6 makes provision to address the different definitions of an “airport” under the AA 1986 or the 1994 Order and sections 66 and 67 of this Act to ensure that the provisions in this Schedule are properly applied during the interim period.
234.For example, paragraph 6(3) provides that where an airport (as defined in the AA 1986 or the 1994 Order) is designated under that Act or Order, the effect of paragraph 2(2) and (3) of Schedule 10 is that the main operator’s airport area will be treated as having met the market power test. The main operator’s airport area is the area at the airport (as defined in this Act) which is under the overall management of the person who, immediately before the commencement day”, was the operator of the airport for the purposes of the AA 1986 or the 1994 Order.
235.Paragraph 7 restricts the power under section 108 for the Secretary of State to amend Part 1 of Schedule 10 so that the power cannot be used to end the interim period before 31 March 2014. This prohibits any amendments which would in effect remove the exemption from the prohibition for people at designated airports from the prohibition before 31 March 2014. It does so in order to ensure that the current price controls affecting designated airports are not disturbed before 31 March 2014, unless the designations are revoked.
236.Part 2 of Schedule 10 makes transitional provision for airport operators that currently have the status of statutory undertakers by virtue of Part 5 of the AA 1986 or Article 25 of the 1994 Order.
237.Under the AA 1986 an airport operator has statutory undertaker status if a permission to levy charges under Part 4 of that Act has been granted in relation to the airport or it has a pending application for such a permission and the airport is not an excluded airport described in section 57(2) of that Act. Excluded airports include airports owned by certain types of local authority. Under section 37(2) of the AA 1986 permission to levy charges is necessary where the annual turnover of the airport operator exceeds £1million per financial year in at least two of the last three financial years.
238.Under new section 57A of the AA 1986 (to be inserted by Schedule 8), an airport operator will have statutory undertaker status by virtue of Part 5 of the AA 1986 if a certificate has been granted under that section in respect of the airport.
239.Paragraph 9 of Schedule 10 provides that, where a permission to levy charges is in force in respect of an airport immediately before the day on which Schedule 8 to the Act comes into force, the permission is to be treated as if it were a certificate given under section 57A of the AA 1986. So the airport operator’s status as a statutory undertaker will be uninterrupted.
240.Paragraph 10 of Schedule 10 makes similar provision for cases in which an application under section 38 of AA 1986 for permission to levy charges is pending on the commencement day”.
241.Separate arrangements exist in Northern Ireland for conferring statutory undertaker status on airport operators under the 1994 Order. Paragraphs 14 to 18 of Schedule 10 make provision in relation to airports in Northern Ireland that achieves a similar effect to the Great Britain arrangements described above.
242.This section provides that Chapter 1 (other than sections 50 to 52 on obtaining information), Chapters 2 and Chapter 3 bind the Crown, subject to certain exceptions mentioned in or provided by the section. It also provides that Chapters 1 and 3 do not affect Her Majesty in her private capacity.
243.Subsection (5) provides that nothing in Chapters 1 and 3 prevents a person from requiring payment of, or recovering, charges in respect of services provided in the course of carrying out exempt Crown functions (as defined in subsection (12)), i.e. customs functions, immigration functions, police functions and other functions exempted by regulations, to the extent that such functions are carried out by or on behalf of the Crown.
244.Subsection (6) provides that if the operator of an airport area exercises overall responsibility for its management in the course of carrying out exempt Crown functions, the absence of a licence in respect of the airport area does not prevent charges being imposed in respect of services provided at another area in the same airport. It also removes the possibility of the CAA being required, in response to a request under section 7(2), to make a market power determination in respect of a core airport area operated by a person exercising exempt Crown functions; and disapplies section 14(4) so that any person carrying out exempt Crown functions is not to be treated as having applied for a licence in respect of the relevant airport area in the event of the area becoming a dominant area at a dominant airport.
245.Subsections (7) to (9) provide for services provided in an exempt Crown airport area to be excluded from the scope of economic regulation. “Exempt Crown airport area” is defined in subsection (10), which provides amongst other things that the area must be part of a small airport (an airport where the number of passenger movements did not exceed 5 million during the previous calendar year or the airport was not open to commercial traffic) and that it must be explicitly excluded from the scope of economic regulation through regulations made by the Secretary of State.