On 25 April 2022, the House of Commons Transport Committee published its latest report ‘UK aviation: reform for take-off’. The Transport Committee’s remit is to scrutinise the expenditure of the Department for Transport and its associated public bodies, which includes the UK Civil Aviation Authority (CAA), and make recommendations to Government.
The report looked at a number of issues, but we focus on four of the most important and offer our view on the Committee’s recommendations:
1. International Travel
While the Committee welcomed the Government’s statement that future international travel contingency measures will only be implemented in extreme circumstances, its conclusions of the Government’s handling of international travel during the pandemic were quite damning, stating::
- The way in which the Government introduced international travel restrictions was inconsistent and it was not always transparent about how decisions were made. The aviation industry experienced severe economic difficulties due to government restrictions that were not based on scientific consensus.
- The traffic light system was opaque, ambiguous and inconsistent causing confusion to industry and passengers alike. Industry was rarely consulted in advance of making decisions (unlike in Germany).
- The international travel restrictions throughout the pandemic were disproportionate to the risks to public health.
On the back of this criticism, recommendations made by the Committee include:
- The Government must publish its aviation recovery plan, which was promised in Autumn 2020, as a priority and no later than 1 June 2022.
- The Government must build international travel into its future pandemic resilience planning. It must develop a transparent and predictable system that can be used to facilitate safe international travel during potential future health crises.
- Any future restrictions on international travel must be proportionate and comparable to those in place across the rest of the UK economy. They must be evidenced by transparent advice and analysis that the Government makes publicly available, and the process must allow for formal representations to be made from affected sectors.
- Where the Government imposes future coronavirus restrictions on the international travel industry, and where such restrictions do not apply on a comparable basis to the domestic economy, the Government must compensate the industry for the economic loss suffered.
Whilst no-one in the industry hopes we ever find ourselves reliving the last two years of uncertainty, proper planning for any future health crisis cannot be underestimated. That planning should include input from industry who must remain part of the solution if the plan is ever enacted.
2. Consumer Rights
a) The Covid testing market:
The Committee found that the market for Covid travel tests was established with no clear protections or means of recourse for consumers and that under-regulation has resulted in a dysfunctional travel testing market.
As some countries other than the UK have retained testing requirements, the Committee believes that Government intervention is required to establish a functional market which should include regulating the PCR travel testing market and tasking the Competition and Markets Authority to review the operation of the market for antigen travel tests, as it has done for the PCR testing market.
Testing to enter other jurisdictions may remain in place for some time yet and so establishing a fairer market for testing is welcomed.
b) Airline Insolvency:
The last Government report on airline insolvency protections was published in May 2019. Following that, the Government’s December 2019 Queen’s Speech included a proposal to legislate on airline insolvency, which would include: (i) a special administration regime to keep aircraft fleet flying long enough for passengers to be repatriated post-insolvency; (ii) enhancing the CAA’s regulatory powers to “improve their oversight of airlines in distress”; (iii) extending the CAA’s remit to repatriate both ATOL and non-ATOL protected passengers; and (iv) establishing a “repatriation toolkit of mechanisms”, such as making it easier for the CAA to grant a temporary airline operating licence to ensure an airline can continue repatriating passengers following an insolvency.
The Airline Insolvency Bill was not mentioned in the 2021 Queen’s Speech and was also not mentioned specifically in the recent 2022 Speech.
The Committee recommended that the Government must introduce an Airline Insolvency Bill in the next session of Parliament to set out a framework to handle future airline insolvencies to protect the interests of consumers, employees and taxpayers.
The Committee’s recommendations came just three weeks before the 2022 Queen’s speech and whilst the Speech did not mention airline insolvencies specifically, it did mention ‘legislation to promote competition [and] strengthen consumer rights.’. We wait and see if this will include changes to the airline insolvency regime.
c) Consumer Redress:
The ability for consumers to secure refunds from airlines was, and in some cases, continues to be, a persistent challenge. The Committee found that the CAA’s enforcement powers in relation to airline refunds “are insufficient in supporting the speedy redress of non-compliance by airline operators”, especially compared to other UK regulators such as the Office of Rail and Road.
The report recognises the problem, which is referred to as ‘a gap in the law’ when a flight goes ahead as scheduled despite the imposition of local restrictions or a national lockdown, and passengers are not able to fly, but it is not clear whether passengers are entitled to a refund because the flight has gone ahead.
The recommendations made by the Committee were that:
- The CAA urgently requires the power to impose financial penalties on airlines that do not provide complete refunds to consumers when they are required to do so by law.
- The Government must introduce a mechanism to ensure that when entitled to a refund by law, airline passengers are granted automatic compensation, eliminating the need for customers manually to apply for a refund.
The report refers to (one of) the (many) current Government consultations launched in January 2022 regarding airline passengers’ rights and perhaps the Committee felt unable to say more due to that consultation. However, whilst the ‘gap in the law’ was mentioned, the Committee did not make any recommendations in that area and this is arguably where most clarity is needed.
3. Sustainable Aviation
The Committee encourages the Government to continue to invest in new aviation decarbonisation technologies (including synthetic aviation fuels) to ensure that the UK aviation sector emits less than it did before the pandemic.
If the Government is to achieve its net-zero targets, new sustainability policies will be required for the aviation sector, which in turn will require robust regulation. The recommendations therefore include that:
- The delivery of the airspace modernisation strategy cannot be subject to further delay, because how airspace is used has a big impact on emissions.
- The government must review how the CAA’s powers can be reformed to enable it to enforce environmental mandates that the Government may introduce.
- The Government must introduce a market mechanism to support investment in sustainable aviation technologies and fuels.
There is no doubt that the entire industry is already looking at what it can do to help achieve lower emissions. There is no quick fix to this but investment and guidance will be welcome. However, will the CAA have the bandwidth to regulate and enforce these environmental mandates as well as all the other enforcement powers it is set to take on?
4. Slot Allocation
The Committee recommended that the Government must include a review of the slot allocation system in its strategy for the recovery of the UK aviation sector (mentioned above). The strategy must consider alternatives to the existing slots framework to encourage new entrants, capitalising on the opportunity to shape the system following the country’s departure from the EU.
Diverging from the EU’s slot allocation system has been seen as one way to get an easy(ier) Brexit dividend. It is an opportunity for the UK; the question is, will we make a move away?
The Government has two months to respond to Parliament on the report so it won’t be too long before we know what, if any, recommendations the Government proposes to take forward. We await these with interest.