Section 1: CAA’s general duty
32.Subsection (1) provides that the CAA must carry out its functions under Chapter 1 of Part 1 of the Act in a way which it thinks will further the interests of users of air transport services regarding the range, availability, continuity, cost and quality of airport operation services (the “primary duty”). The CAA must do so, where appropriate, by promoting competition in the provision of airport operation services (subsection (2)).
33.“Airport operation services” are defined in section 68 and “air transport services” are defined in section 69.
34.The primary duty refers specifically to the interests of users of air transport services in respect of airport operation services: it does not empower the CAA to take into account whatever general interests these persons might have in other capacities (for example as a local resident).
35.There may be conflicts between the interests of users of air transport services. For example, current users may not want to pay for investment that benefits future users. Subsection (5) empowers the CAA to determine how to fulfil its primary duty in cases where such conflicts arise.
36.Subsection (3) lists a number of matters to which the CAA must have regard in performing its duties under subsections (1) and (2). The duty to have regard to these matters does not, individually or collectively, override the section 1(1) and (2) duty. The matters to which the CAA must have regard under subsection (3) include:-
the need to secure that each licence holder is able to finance its provision of airport operation services (subsection (3)(a)). Whilst this should require the CAA to encourage efficient and economic investment by allowing a reasonable return over time, the financing duty does not require the CAA to ensure the financing of regulated airports in all circumstances, for example the CAA would not be required to adjust regulatory decisions in order to take account of an operator’s particular financing arrangements or put the interests of users at risk by making them pay for an inefficient operator’s financing decisions.
the need to secure that reasonable demands for airport operation services are met and the need to promote economy and efficiency in the provision of such services (subsection (3)(b) and (c)). One would expect both of those needs to be met in a competitive airports market where airport operators provide the services demanded by passengers at minimum cost. The requirement to have regard to those needs reflects the fact that the ultimate aim of economic regulation is, as far as is possible, to replicate the outcomes of a competitive market.
the need to secure that each licence holder is able to take reasonable measures to address the adverse environmental effects of the licensed airport to which the licence relates, including aircraft using that airport (subsection (3)(d)). Environmental effects includes (amongst other matters listed in subsection (6)) substances, noise, vibration and emissions and the effect of works carried out at the airport. For example, having regard to this need, the CAA may decide that the costs of relevant environmental measures should be included in an airport operator’s regulatory settlement(10).
guidance issued to the CAA by the Secretary of State on how it carries out its functions under Chapter 1 (subsection (3)(e)). For example the Secretary of State may issue guidance to the CAA on the Secretary of State’s preferred approach to resilience licence conditions.
any international obligations notified to the CAA by the Secretary of State to the CAA (subsection (3)(f)).
The regulatory settlement is a term used to embrace the setting of a price control condition and associated obligations.
