Call for Evidence – Review of the Regulatory Framework for UK Airports

On 22 April 2008, the Secretary of State launched a review of the regulatory framework for UK airports.  This review will be led by the Department for Transport (DfT) with cross-government support and input.  The Secretary of State will be advised by a panel led by Professor Martin Cave of Warwick Business School.

The Secretary of State recognises the importance of considering the views of all the key stakeholders in the UK aviation sector during the review.  Therefore, the DfT is launching this call for evidence from interested parties.  The DfT is very keen to receive stakeholder’s views at an early stage of the review to help influence the issues considered during the review and to ensure that the full range of perspectives are taken into account.

This will not be the only opportunity for interested parties to participate in the review.  There will be a formal consultation during 2009 on the Secretary of State’s proposals for a new regulatory framework before any changes are implemented.  The DfT anticipates that there will be stakeholder seminars during the review and opportunities for bilateral meetings.  Furthermore, the DfT will carefully consider the views and conclusions reached by the Competition Commission during its market enquiry, and evidence submitted by stakeholders to the Commission that is relevant for this review.

The DfT does not want to unduly constrain the evidence and analysis that interested parties submit, but this document describes the type of evidence and analysis that the DfT expects would be particularly relevant for the review.  The DfT will give greatest weight to those views of stakeholders that are supported by good quality evidence and analysis.

We have set out below the types of evidence and analysis that the DfT would particularly welcome in four categories:

• The objectives for the review and the rationale for regulation – This section focuses on questions about why regulation is required.
• Lessons to learn – This section focuses on questions about the lessons that can be learnt from the current regulatory framework, regulation in other sectors and other countries.
• Market analysis – This section focuses on questions about the nature of the UK airport sector and how this influences the regulatory framework.
• Forms of sector specific regulation – This section focuses on questions about the types of regulation and regulatory framework that might be appropriate for UK airports.

The objectives for the review and the rationale for regulation

When launching the review, the Secretary of State set out three objectives for the future development of the airport regulatory framework in the UK.  These were:

• Improving the passenger experience.
• Encouraging appropriate and timely investment in additional capacity to help deliver economic growth in line with wider Government policy.
• Addressing the wider environmental impacts of aviation on airport development.

The DfT would welcome views on these objectives, including any views on the key issues that need to be addressed to meet the objectives, and whether any other high level objectives should be considered.  For example, what do stakeholders consider to be the key aspects of a good passenger experience?

In addition, the DfT would welcome views more generally on the rationale for any regulation of the UK airports sector beyond the use of general competition law.  Building on the three objectives set out by the Secretary of State, the DfT considers it is important to establish a robust rationale for the future regulatory framework to ensure that it is fit for purpose.  Therefore, the DfT is keen to hear from stakeholders whether they consider that regulation is required over and above general competition law for UK airports.  If so, what are the particular circumstances that give rise to this need and the issues regulation would be seeking to address.  Alternatively, is there evidence that supports the view that the market for the provision of airport services in the UK would meet the Secretary of State’s objectives without sector specific regulation?

Lessons to learn

The DfT would welcome views on the effectiveness of the current regulatory framework for UK airports.  In particular on whether interested parties believe that the current regulatory regime can be expected in whole or in part to meet the Secretary of State’s three objectives.  The premise of launching the review is that a better regulatory framework can be put in place, but this does not mean that some aspects of the current regime might not be working well.

When launching the review, the Secretary of State noted the importance of learning from the regulatory frameworks in other sectors in the UK.  Many of these frameworks have been substantially updated since the Airports Act 1986 established the current regulatory framework for UK airports.  Therefore, the DfT would welcome views on:

• which of the other regulatory frameworks in the UK are most relevant to consider for the airport’s sector, and why; and
• the most important lessons to learn from other frameworks, including any evaluation of their performance.

The DfT would also welcome views on whether there are regulatory frameworks for airports elsewhere in the World that should be reviewed and considered.

Market analysis

The DfT will carefully consider the market analysis developed by the Competition Commission for this review of the regulatory framework, as well as that carried out previously by the Office of Fair Trading, to inform their assessment of the need for sector specific regulation.  However, we welcome additional evidence and analysis about the UK airport’s sector to inform the decisions about the need for regulation and its scope.

The DfT is conscious that there can be a risk that a review of this type focuses on the larger UK airports to the exclusion of considering issues associated with smaller and regional airports.  Therefore, to ensure that the conclusions of the review are appropriate for all UK airports, the DfT would particularly welcome evidence and analysis from smaller and regional airports, and associated stakeholders, about their needs and requirements from the regulatory framework.

Forms of sector specific regulation

Although at this stage of the review the DfT is not focusing on precise forms of intervention or regulation, we would welcome views and evidence on the options for the forms of intervention or regulation that might be appropriate.  This could range from relying on competition and competition law to deliver the policy objectives through to various forms of regulation, including price controls.  The DfT would particularly welcome evidence and analysis that links proposed forms of intervention or regulation to the Secretary of State’s policy objectives and stakeholder’s views about the rationale for regulation.

Form of evidence and analysis

The DfT would like to receive evidence and analysis submitted by email to David.Hart@dft.gsi.gov.uk by 25 July 2008.  If interested parties would like to meet with the DfT to discuss their evidence and analysis, please state this in the response.

The DfT does not routinely publish responses to calls for evidence of this type.  However, such evidence and analysis may in some cases be subject to disclosure following requests under the Freedom of Information Act.  A potential exemption to disclosure under the Act is for confidential information.  Therefore, if any of the evidence or analysis submitted to the DfT is confidential please mark these sections of the evidence and analysis clearly.

If interested parties have any questions about the evidence and analysis they intend to submit, and in particular its relevance to the review, please call David Hart on 020 7944 0083 at the DfT.