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No look-in for environment in government’s economic regulation of airports

22nd July, 2010

The government has announced its plans for reform the framework for the ‘economic regulation of airports’.

For the larger airports, where there is a likelihood of monopoly power, the government exercises economic regulation.

Secretary of State for Transport Philip Hammond said: “In the Queen’s Speech the Government announced its intention to reform the framework for the economic regulation of airports. Today I am announcing the direction of our proposals.

The Government has previously announced that it does not support the construction of a third runway at Heathrow airport nor additional runways at either Stansted or Gatwick airports. Instead, it is the Government’s intention to make these airports better and not bigger, delivering better outcomes for passengers without additional runways.

.. We presently expect this regime will apply initially to Heathrow, Gatwick and Stansted airports.”

AEF supports the concept of “better not bigger”. But we take a broad view of “bigger”. The government appears to interpret “bigger” as just meaning no new runways at Heathrow, Gatwick and Stansted.  But we would regard new terminals, new roads, etc as making airports bigger. More night flights and, in the case of Heathrow, dropping runway alternation, could also make airports in effect bigger.

Philip Hammond continued “To deliver operational improvements at these airports I have recently announced the creation of the South East Airports Taskforce and that group has already begun its work.

I plan to introduce a new set of duties for the Civil Aviation Authority’s (CAA) economic regulation of airports which will put the interests of passengers unambiguously at the heart of the regime. Under these proposals the CAA’s primary duty will be to promote the interests of existing and future passengers.

It will be seen that passengers are put absolutely first and foremost. Nowhere are the interests of third parties – noise, air pollution and safety for those living near airports – mentioned.

It is possible that environmental issues will be addressed in parts of the CAA re-organisation that are not part of economic regulation. But ‘economic instruments’, such as airport charges to airlines which are dependent on the noise and pollution of aircraft, are potentially a powerful weapon in reducing the impacts of aviation. The government appears to be ruling these out.

In its response to an earlier government consultation, AEF noted that environment is mentioned only as a ‘supplementary duty’ and should be considered, it is specified, only insofar as relevant legal and planning requirements exist. That is, preventing action to protect the environment beyond the present very weak legal constraints.

We said: “Restricting airports’ powers to raise revenue environmental goals beyond those required by law will, for example, make it difficult for airports to act in accordance with the government’s [stated] policy that noise concerns are best resolved at a local level, since mitigation policies, such as airport noise action plans, comprise a set of voluntary commitments on the part of the airport that are not required by law.”

This lack of concern about the environment is compounded by the government’s refusal to confirm the previous government’s commitment on climate change – to limit emissions from aviation in 2050 to 2005 levels.

See DfT website for government press release and written statement.