Speech for Eversheds Aviation Seminar

Delivered by:The Rt Hon Theresa Villiers MP
Publisher:Department for Transport
Delivered date: 14 December 2010
Type:Speech
Event: Eversheds Aviation Seminar

Thank you for that kind introduction

I’m delighted to be here today to set out some of the Government ideas on airports and aviation.

Events such as this one are always a useful reminder of the unique contribution the aviation industry makes to our economy and to our daily lives.

Our airports, airlines and associated industries generate billions of pounds worth of economic output for the UK.

They are a catalyst for growth, creating and supporting hundreds of thousands of jobs.

Aviation has broadened our horizons and shrunk our world….bringing people, communities and countries closer together than ever before.

Testing times

And it is beyond any question that aviation has been through testing times over recent years.

Grappling with fluctuating oil prices and the global recession is one thing ….

…. but I suspect few in the industry could have predicted that an Icelandic volcano would add to their woes as Eyja-fyalla-yokull blasted ash into the atmosphere across Europe last April.

Add to that the long running and intense debate on the local and global environmental impacts of aviation … and it’s clear that the industry faces a formidable set of challenges.

I am certain no one here would dispute the fact that international travel provides a hugely positive contribution to the quality of life of millions of families in the UK.

But nor can there be any doubt that the local environmental impact of aviation … such as noise … can have a corrosive impact on quality of life for those under the flightpath.

The task we face today is to find a way to enable the aviation industry to deliver the benefits we want in a sustainable way … with reduced environmental impacts.

With our decision to reject new runways at Heathrow, Gatwick and Stanted … we need to start a new chapter in the history of aviation …

… one that promotes a competitive industry … supporting UK economic growth .. while recognising the need for restraint.

We need to find a way to create the right conditions for aviation to flourish within a capacity constrained environment.

Key to achieving that is making the best use of the capacity we have and improving the quality of the passenger experience at UK airports.

Environmental impact

On the environmental side … I’m pleased to say that real advances are being made.

Airports, airlines, air traffic managers and manufacturers are working together to develop new ways to mitigate the environmental impact of aviation.

New aircraft are getting steadily quieter … and more fuel-efficient.

Progress is being made on improving operating practices to reduce fuel consumption.

And research on sustainable biofuels is producing some striking results.

 
But the scale and urgency of action required means that multilateral measures like ETS also have a pivotal part to play. 

APD reform can also help …

… and let me make it clear that our goal on APD is to deliver the change we need without imposing excessive and disproportionate burdens on the industry or their customers.

But the Coalition will continue to press for the global action and global solutions we need to successfully address aviation’s climate change impacts.

Three stages

Today I’d like to outline some of the key projects we are undertaking to deliver the new chapter in aviation policy we’ve promised.

I’ll take three core stages in turn …. early priorities for the next few months …. then medium and longer term initiatives.

 
Early priorities - SEAT

To help us deliver early progress on some key aviation issues … we have established the South East Airports Taskforce.

Its remit covers measures to improve the passenger experience at Heathrow, Gatwick and Stansted.
But I’d like to emphasise that while the Taskforce is focused on the big airports in the south east … the Government fully recognises the vital importance of regional airports right across the country.

They can be vital economic drivers for the regions they serve ….. providing crucial connectivity and helping to support local businesses.

 
A key part of our approach to aviation is to seek to create the right conditions for regional airports to flourish.

We believe that they have a valuable part to play in delivering the Coalition’s commitment to rebalancing our economy and reduce the prosperity gap between north and south.

They also have the potential to help relieve overcrowding at south east airports.

Turning back to the Taskforce … I’d like to consider three of its key workstreams:

… resilience and delays,

… border controls

… and security.

Resilience and delays

Clearly the decision we have made to reject new runways at Heathrow, Gatwick and Stansted makes it more important than ever that we use the capacity we have in an efficient way.

So I have asked the Civil Aviation Authority to work with Taskforce members to explore what further measures might be taken to improve the overall performance of these airports within their existing capacity limits.

Aspects of this work cover … for example … performance management issues such as scheduling and movement of aircraft on the ground.

The group is also looking at ways to use terminal capacity more efficiently to help improve flows through the airport.

Border controls

Another recurrent topic in the Taskforce is border control.

Industry representatives continue to express their concerns about long queues for people arriving in the UK.

I gather that these concerns were highlighted once again by Baroness Valentine in her speech earlier today.

Well let me make it clear that I understand these concerns and I believe it is very important that improvements are made.

Securing our borders is vital if we are to combat illegal immigration and turn away criminals seeking to come to Britain.

But we also recognise the importance of providing an efficient system for processing passengers.

Nor do we under-estimate the impact first impressions can have on visitors arriving in the UK.

 
So the Department is working with the Home Office and the Borders and Immigration Agency to find workable solutions here.

Technological advance provides real cause for optimism here.

For example, electronic gates that will accept the new generation of chipped passports have real potential to improve performance.

And the advance provision of electronic passenger information could allow whole flights to be cleared with only limited checks needed on arrival. 

Security

A third key issue for the Taskforce is security … working alongside the invaluable input from the Department’s wider industry group the National Aviation Security Committee.

Now there are certainly a few political challenges to be negotiated in this context.

The tension faced by policy-makers is neatly illustrated by two quotes from the Sun newspaper from just a few weeks ago.

On 28th October … in the wake of Martin Broughton’s comments on security checks, the paper’s editorial said: 

“many will agree with BA chairman Martin Broughton, who says our airport security checks have got out of hand.”

That was followed just three days later … after the cargo bomb plot was uncovered, the Sun said:

“Stay strong:  “this is not the time for police to heed the calls of disgruntled airline bosses or holiday-makers by relaxing airport checks.”   
 

There’s no doubt that the recent cargo bomb plot provided yet another illustration of the ever-present threat posed by terrorists and the continuing Al Quaeda focus on aviation.

And I’d like to pay tribute to the people in our police and security services, in Transec and in industry who work tirelessly every day to keep flying safe and secure.

And let me make it clear … security of passengers will always be paramount.

We will not compromise the high standards of security that are currently delivered.

However, the Coalition recognises that the aviation industry has been arguing for some time that the regulatory framework for aviation security needs reform.

We agree that changing the way aviation security is delivered could yield greater efficiency without compromising passenger security.

We inherited a system from the previous Government that mandates highly detailed processes for delivering aviation security standards. 

 
We are working on a fresh approach …

… one where the Government concentrates on setting rigorous security outcomes to be achieved …

… but gives industry much more flexibility to devise the processes which will deliver those outcomes in the most efficient and passenger-friendly way.

In the safety field the aviation industry has achieved outstanding results in developing safe systems and inculcating a highly effective safety culture.

We believe we can draw on that experience in improving aviation security.

 
I believe a move to outcome-focused … risk-based regulation will enable the industry, not just to maintain current high standards in security, but to improve them still further.

And I believe the new approach will enable these results to be delivered more efficiently with benefits for airlines, airports and passengers.

We propose to consult formally on reform proposals early in the New Year.

Consumer protection

The remaining issue I’d like to look at as part of our programme of work on early priorities is reforming consumer protection.

Protecting consumer interests is an important goal in itself …. but it’s also the case that measures which enhance consumer confidence in international travel can have a positive impact on the aviation industry.

The Government believes that the ATOL scheme which is supposed to protect passengers if their tour operator or travel agent goes bust must be modernised.

Our aims are threefold:

… to adapt the scheme to catch up with the realities of today’s complex holiday market.

… to provide much greater clarity to consumers on when they are protected …

… and to secure the financial sustainability of the fund.

In particular … we recognise the urgent need to address the loophole in the scheme revealed by the Travel Republic.

The result of this legal judgement is that products which look almost exactly like package holidays can be sold in such a way as to fall outside the ATOL scheme.

This leaves holiday-makers unprotected and the financial sustainability of the fund under threat.

We expect to be making an announcement early next year on how we propose to address this issue.

Turning to another aspect of consumer protection … I recognise that EC261 is now operating in a way that was simply not foreseen when the legislation was adopted.

In particular, the Sturgeon judgment that equates a 3 hour delay with a cancellation and consequently mandates high pay-outs is difficult to reconcile with holding a fair balance between industry and customer.

My colleague, the Secretary of State, raised this at his very first attendance at the Council of Ministers …

… and the Department is continuing to work with the Commission on a way forward on this.

That said … the slow pace of legislative change in the EU means that this issue is one that blends into the next section of my speech … namely medium term projects.

But there can be no doubt that change is needed.

Medium term

Our medium term priorities include progress on the Single European Sky project which has significant potential to cut down on delays, improve resilience and see our airports working better.

But the centre-piece of our medium term work is modernisation of the framework for economic regulation of airports. 

We signalled our intention to legislation in this area in the Queen’s speech.

The current airport economic regulation model was established back in the 1980s.

Both the industry and the CAA agree it is out-dated and in need of reform.  

So we want to replace the existing framework for setting price caps at regulated airports with a more flexible system.

 
Rather than focusing the bulk of regulatory action on a single price review every few years … we want to give the CAA the powers it needs to become a more responsive regulator throughout the regulatory control period.

Whether it’s security queues, passenger facilities, or aircraft stands …

… the licence based system we propose should to enable to regulator to become much more activist in intervening where an airport is failing its customers.

New enforcement powers including financial penalties should enable the CAA to tackle poor performance more effectively.

As well as encouraging improvements to the way airports operate … we believe the new regime should incentivise investment in the right kind of new facilities …

…. such as better baggage handling equipment and terminal improvements that are in tune with what passengers want.

A key part of our reform package involves giving the CAA a new primary duty to promote the interests of passengers.

But let me emphasise that this does not mean that the voice of airlines will go unheard or disregarded by the regulator.

I fully recognise the importance of ensuring that the reformed system is responsive to the concerns of airlines as the direct users of airports.

It’s crystal clear to me that protecting the passenger interest will often be best served by listening to the airlines whose business it is to give their customers what they want.

I know the airline community is concerned about the decision to focus the new regulatory system on passengers … ie the end-user of airports …

… but this is consistent with the regime in operation in other regulatory contexts …

… and I really don’t think it is unreasonable to ask the regulator to give priority to passenger interests in the limited range of cases where the interests of airlines and their customers are not aligned.

And we have listened to industry concerns on Labour’s proposal to give a role to Passenger Focus.

Instead we are working with the CAA to build on the work of the long-standing Air Transport Users Council … to create enhanced advocacy for passengers alongside a stronger consumer focus within CAA.

Longer Term/Conclusion

In my concluding remarks this afternoon, I’d like to outline our longer term plans for delivering a successful and sustainable aviation industry.

Next Spring, the DfT will issue a scoping document setting out the key issues we are seeking to address in our overall strategy for aviation …

… a strategy to support economic growth, protect Heathrow’s status as a highly successful global hub and addresses aviation’s environmental impacts.

We will then open up a dialogue with a wide range of stakeholders to seek their views and to draw on their knowledge and experience.

Our intention is to publish a draft policy document for formal consultation early in 2012 … with a view to adopting our new aviation strategy in 2013.
Across the board on aviation … the Coalition is already engaging on multiple levels and in many different ways with a range of stakeholders … including the airports, aviation and aerospace industries.

As we move forward in developing our more detailed strategy … your input will be invaluable … alongside that of a host of interested parties who care passionately about the decisions we will be making …

… like community groups, environmentalists, local authorities, business organisations and passengers.

We want this to be a very open and inclusive process.

Input from all of these diverse interests and perspectives will be hugely beneficial in helping us get the right answers on aviation …

… answers which improve connectivity, generate prosperity and continue to provide millions of people with the benefits that travel abroad can bring …

… but do so in a way which does not impose an unacceptable cost in terms of our environment or our quality of life.
I do not under-estimate how difficult this task will be but it is vital that we achieve it.

And let’s remember that it’s barely a hundred or so years since the Wright brothers first risked life and limb by taking to the skies in box shaped bi-planes made of spruce and kept aloft with 12 horse power engines.

During that period … Britain’s world beating aviation and aerospace industries have solved many seemingly intractable problems.

I have every confidence that by working together … we can do so again.

Thank you.

(This speech represented existing departmental policy but the words may not have been the same as those used by the Minister.)