The UK government has published new guidance, meeting a White Paper commitment to clarify how regional air access to London can be protected through the use of Public Service Obligations (PSOs).The guidance follows a three-month consultation exercise undertaken in 2004 by the Department for Transport to help formulate the new guidelines.
The Secretary of State for Transport - Alistair Darling - said:
“The Government’s White Paper, ‘The Future of Air Transport’ recognised regional concerns about access to London airports.
“This new guidance strikes a sensible balance between the need to protect regional services to London, while at the same time avoiding the heavy hand of Government intervention.”
Today’s guidance aims to clarify how Government will interpret the criteria set out in the relevant European legislation when assessing applications for PSOs.
The guidance seeks to guarantee a minimum of two daily return flights for regions with existing air services to London. However, all PSO applications will be looked at on a case-by-case basis, as in some instances more provision may be required.
The guidance also presents a new voluntary ‘early warning system’, whereby airlines are asked to give the regions and Government at least four months’ notice of any intention to withdraw services. The Government believes this provides a suitable time to find a solution which aims to ensure services to London are maintained.
1. There is no evidence that any existing services are about to be withdrawn; however, the pressure on slots is likely to increase in future years and there is a possibility that some regional services out of London might be threatened.
2. There are over 200 daily return flights to London from the regions, run by 12 different airlines. No PSOs have been imposed on any of these routes.
3. The only way to protect slots at congested airports is by imposing a Public Service Obligation (PSO). Slots at congested airports may then be reserved. Only slots at airports designated as “fully co-ordinated” in European law can be reserved. In London, this means Heathrow, Gatwick and Stansted.
4. European Regulation 2408/92 sets out the circumstances under which PSOs may be imposed. In addition, European Regulation 95/93 allows Member State Governments to reserve slots on routes where a PSO has been imposed.
Publication of Guidance On Regional Air Access to London
The Secretary of State for Transport (Mr Alistair Darling): Government has today published guidance on the Protection of Regional Air Access to London, copies have been placed in the Libraries of the House. This guidance was foreshadowed in The Future of Air Transport White Paper (December 2003) and follows extensive consultation with stakeholders.
The aim of the guidance is to clarify how Government will interpret the criteria in the relevant European Regulation (EC 2408/92) when assessing applications for Public Service Obligations (PSOs) to protect existing regional air services to London. A more precise definition of the criteria will provide a firmer basis for the discussion of individual cases with both airlines and regional bodies.
The Future of Air Transport White Paper recognised the concern of regional stakeholders about the availability of landing and take-off slots at major London airports. It stated that Government was prepared to intervene in well defined circumstances to protect slots at the London airports for regional services through imposing PSOs. Where services already exist from UK regional airports to London (defined as City, Gatwick, Heathrow, Luton and Stansted airports), this intervention would guarantee a minimum level of scheduled air services on these routes.
The criteria for PSO imposition are set out, but not precisely defined in EC Regulation 2408/92. In 2004, Government consulted on interpretations of these criteria and the agreed definitions are set out in the guidance. Government considers that in order to justify intervention in the market, a PSO application must illustrate the benefits to the regional and national economy that would otherwise be lost if a service was withdrawn. It will be the responsibility of regional bodies to make a case for a PSO against the criteria. In order to assist regional bodies in assembling the evidence required to demonstrate wider benefits, the guidance contains an Annex which provides a common methodology for assessing the economic benefits of maintaining an adequate air service to London, so as to ensure transparency and comparability.
Final judgment on the eligibility of a route for PSO imposition rests with me, as Secretary of State for Transport, and would be based on the merits of each case set against the criteria in Regulation 2408/92. If an application is supported, the Department would notify the European Commission and air carriers operating the route, and a PSO would be imposed to the extent necessary to ensure on that route the adequate provision of scheduled air services satisfying fixed standards of continuity, regularity, capacity and pricing. After a PSO has been imposed on a route, European Law (Regulation 95/93 as amended) allows Member States to reserve slots at airports on that route so that an airline cannot use them for a service to an alternative destination. The reservation of slots is at the discretion of the Member State and can only take place at airports designated as “co-ordinated”, which in London are Heathrow, Gatwick and Stansted.
Government thinks it unlikely that the imposition of a PSO on a route to London would require subsidy. All regional routes to London are currently commercially viable. Should subsidy be required, however, it would be the responsibility of the relevant regional body to reimburse the Department for these funds. PSOs will be reviewed every three years to ensure that their imposition is still appropriate and the obligations set out are being met.
In addition to clarifying the interpretation of the European Regulation, the guidance also supports a voluntary early warning system for airlines operating regional routes to London. This invites airlines to provide as much notice as possible, preferably at least 4 months, of their intention to withdraw from, or reduce services on routes to London. Whilst I recognise that airlines operate within a competitive commercial environment, I believe that the early warning system strikes a good balance between the need to maintain an adequate level of regional services to London, and limiting Government intervention in the market. The system offers regional partners together with Government the time and opportunity to explore all potential solutions to ensure continuity of regional services into London.