Smoother passage

At the time of writing, aviation is much in the news. We have the sale of Edinburgh Airport on the horizon, and the colourful personalities behind some of our airlines have an uneasy truce as they share a stance on lobbying the UK Government to abolish airport passenger duty.

Attracting less of a fanfare perhaps, the Airport Charges Regulations 2011 came into force on 10 November 2011. Increasing inter-airport competition and Community-wide consistency are two of the underlying directive’s aims. The regulations transpose into UK law Directive 2009/12/EC (commonly referred to as the Airport Charges Directive), the aim of which is to establish a common framework for regulating the essential features of airport charges and the way in which they are set.

The regulations govern operators of “regulated airports” (those with more than 5,000,000 passengers per year), “airport users” (such as airlines), and the CAA with respect to reporting, publication, provision of information, consultation, and setting of airport charges. Edinburgh and Glasgow are the only Scottish airports currently caught. The regulations provide an additional layer of regulation over and above what already exists in the UK via operation of the EC Treaty, EU competition law, the Airports Act 1986 and the Civil Aviation Act 1982.

Key duties

The obligations imposed by the regulations are:

• Reporting – operators of regulated airports must inform the CAA of annual passenger numbers (reg 5).
• Publication – the CAA must publish annual lists of regulated airports (reg 6).
• Information gathering and consultation on charges/services – within 30 days of receiving an annual notice from the regulated airport operator, airport users now have an obligation to disclose their forecast traffic. They must also provide information on their development projects and future airport requirements (reg 7). In return, operators of affected airports must annually show their hand in terms of intended charges and services, and their basis for arriving at the charges (reg 8).
  If an operator intends to change the system or level of airport charges or the quality of services, it must give at least four months’ notice unless there are exceptional circumstances.
  After giving that notice, the airport must, so far as practicable, hold consultations with airport users (regulation 9).
• Setting of charges and non-discrimination – operators must have regard to any representations or objections from their consultation exercise before finalising the system or level of airport charges or associated quality of services.
  There is a ban on discriminating between users when setting charges unless there are public and general interest justifications. Those can include environmental reasons – such as rewarding airlines operating newer and quieter aircraft, or other reasons if relevant, objective and transparent (reg 14).
  Where there is more demand for services or facilities than the operator can supply, allocation must be determined on the basis of fair criteria (reg 15).
• Consultation on infrastructure plans – airport operators now have an obligation to consult with airport users on major infrastructure projects before the plans are finalised (reg 27).

Sanctions for breach

In the event of breach of the regulations:

• Regulated airports – breaches give rise to liability for loss or damage and are actionable by those affected (reg 19). There are some defences available, for example that all reasonable steps were taken and all due diligence was exercised in relation to the consultation obligations. The CAA may (or, if it has received a relevant complaint, must) investigate breaches of the regulations (reg 20), and can thereafter require compliance with the regulations and/or the remediation of any loss or damage (reg 21).
• Airport users – similarly, the CAA can impose modest penalties (not exceeding £5,000) on airport users for breaches of their obligations to provide information to airport operators (regs 16-18).

The CAA can examine whether regulated airports have, or are likely to acquire, substantial market power. Steps taken by the CAA can result in them having the power to fix or cap airport charges.

What has changed?

The regulations mean that airports already consulting with airport users on the operation of the airport will, if caught by the new regulations, have to vary the frequency and terms of reference of consultations to cover charging and services.

All relevant airports will need to be able to demonstrate their processes for consultation on major infrastructure projects.

In relation to non-discrimination, the CAA is already provided with powers by s 41 of the Airports Act 1986 to investigate and remedy a number of forms of conduct by airports, including unreasonable discrimination against airport users and the unfair exploitation of a bargaining position. The change brought about by the regulations is that there is now a requirement that any differentiation of charges between airport users is “relevant, objective and transparent”. Also, the transparency and consultation requirements in the regulations should make it easier for airport users to understand airport charges and assess whether an airport is complying with its non-discrimination obligations.

The bigger picture

More than 100 years after Orville and Wilbur Wright developed the first successful aeroplane, the directive and the regulations are just the latest step taken to level the playing field in the aviation industry in this part of the world. It will be interesting to see how commercial pressures on airports and airport users influence their interpretation of the new requirements.