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Recent developments and trends
Are there any notable recent developments or trends in the aviation sector in your jurisdiction?
Brexit has created uncertainty for many industries, and aviation is no exception. The UK aerospace industry is overwhelmingly regulated by EU legislation, which affects many areas – including operator licensing, traffic rights, safety regulation and personnel licensing. There is accordingly greater attention paid to how these areas will be regulated once the United Kingdom exits the European Union.
The trend of increasing consumer regulation continues with the Consumer Rights Act 2015, which includes a focus on unfair contractual terms and applies some new remedies to the provision of services, including a right to repeat performance and (partial) refunds. After government consultation, the latter measures are being applied to aviation (as well as maritime and rail services). We have yet to see what impact this will have on consumer claims. Passenger claims pursuant to the Flight Compensation Regulation (261/2004) relating to denied boarding, cancellation and long delays continue to increase; the past two years have also seen growth in both the number of claims management companies and the volume of claims handled.
What is the primary domestic legislation governing the aviation industry in your jurisdiction?
The Civil Aviation Act 1982 and the Air Navigation Order 2016 make up the primary domestic legislation. The former provides, among other matters, for the enactment of measures by the UK government to meet the requirements of the Chicago Convention 1944.
There is also a large body of secondary UK legislation that concerns civil aviation. Much of this derives from, or provides for the application and enforcement of, EU aviation regulations governing, among other matters, safety regulation and licensing, passenger rights, slots and market access, insurance requirements and accident investigation.
What international aviation agreements has your jurisdiction concluded?
The United Kingdom is a contracting party to all major international aviation conventions, including the Chicago Convention 1944, the Warsaw Convention 1929 (and revisions and protocols thereto), the Montreal Convention 1999 and the Tokyo Convention 1963.
In addition, the United Kingdom has entered into numerous bilateral air services agreements with other states providing for the grant and exercise of traffic rights.
Which government bodies regulate the aviation industry and what is the extent of their powers?
The Civil Aviation Authority (CAA) is the primary body with responsibility for regulating the industry in the United Kingdom and has civil powers of enforcement – ultimately through court proceedings – with regard to regulatory compliance. The CAA also has criminal enforcement powers, in the main through the ability to impose criminal fines and/or to revoke or suspend licensing in relation to companies and individuals for regulatory breaches. In respect of safety and licensing, the CAA acts on delegated authority from the European Aviation Safety Agency under whose aegis the applicable regulation is promulgated.
Air carrier operations
What procedural and documentary requirements must air carriers meet in order to operate in your jurisdiction?
Carriers in the United Kingdom must hold an operating licence granted by the Civil Aviation Authority (CAA). Applicants must satisfy a number of requirements, including:
- having their principal place of business in the United Kingdom;
- being majority owned and effectively controlled by nationals of the European Economic Area (EEA);
- holding sufficient insurance; and
- being of good repute.
There are two types of operating licence – type A (operators of aircraft with 20 seats or more) and type B (operators of aircraft with 19 or fewer sears). Type A operators are also subject to certain financial requirements. The CAA continually monitors matters such as financial fitness, and majority ownership and control.
An operating licence can be granted only to an organisation that holds an air operator certificate (AOC) – see below.
An operating licence enables an EEA carrier to operate routes within the EEA. In order to operate routes from the United Kingdom to non-EEA countries, an air carrier requires a route licence. Route licences can be granted only to holders of an operating licence and also require the carrier concerned to be majority owned and controlled by UK nationals. A route licence also requires the air carrier concerned to be designated by the UK government under the terms of the applicable air services agreement in place between the United Kingdom and the third country to which operations are planned.
Air carriers in the United Kingdom require an AOC in order to obtain an operating licence. The AOC is an approval of the carrier's organisation, management, personnel and systems in order to certify that it can safely operate the aircraft that it intends to fly. The CAA grants an AOC pursuant to European Aviation Safety Agency (EASA) regulations and standards. The CAA continually monitors, by way of audit, the competence and organisational structure and management of the AOC holder to ensure that it remains appropriate to the operations being undertaken.
In order to operate flights from, to or within the United Kingdom, foreign carriers (ie, non-EEA airlines) must apply for, and obtain from, the CAA a foreign carrier permit. Applicants must supply certain basic information to the CAA, including evidence of insurance and details of the routes to be operated and aircraft to be used. In addition, applicants must satisfy the requirements of the UK Home Office’s Advanced Passenger Information System, and may also be required to supply more detailed documentation, including a copy of the AOC and certificates of airworthiness for the aircraft that will operate in/to the United Kingdom.
Ownership and control
Do any nationality or other requirements or restrictions apply to ownership or control of air carriers operating in your jurisdiction?
All EEA carriers (including UK airlines) must, in order to obtain and hold an operating licence, be majority owned and effectively controlled by national of EEA states (Operation of Air Services Regulation 1008/2008). UK nationality and effective control requirements also apply in relation to obtaining of route licences (see above).
What financial thresholds must air carriers meet to obtain operating authorisation?
The Operation of Air Services Regulation sets financial fitness requirements for applicants for an operating licence. In the case of large operators (ie, those operating aircraft of 10 tonnes or more or having 20 seats or more), an applicant must demonstrate that it can meet its actual and potential obligations under realistic assumptions for a period of 24 months from the start of operations, and that it can meet its fixed and operational costs as set out in its business plan for a period of three months from the start of operations without taking any income into account. Such applicants must also submit a business plan for the first three years of operation; certain financial and accounting information must also be provided to the CAA, including management accounts, a projected balance sheet, details of start-up costs, details of sources of finance, projected cash flow and liquidity statements, and financing details relating to aircraft purchase or leasing.
Small operators (those operating aircraft of less than 10 tonnes or with fewer than 19 seats) are subject to lighter-touch financial fitness requirements pursuant to the Operation of Air Services Regulation. In fact, the UK CAA typically neither regulates nor monitors the finances of smaller operators, nor seeks financial information from them other than to establish compliance with nationality requirements.
What is the required level of insurance coverage for air carrier operations?
The Aircraft Insurance Regulation (785/2004) establishes minimum insurance requirements for air carriers and aircraft operators in respect of passengers, baggage, cargo and third parties (including war risk). The CAA requires airlines to provide evidence, countersigned by their broker, that they have obtained the required cover. The requirements vary, particularly in relation to third-party cover, according to the weight and size of the aircraft used.
Minimum requirements are as follows:
- Passenger – 250,000 special drawing rights (SDRs) (the unit of account of the International Monetary Fund and some other international organisations whose value is based on a basket of key international currencies);
- Baggage – 1,131 SDRs;
- Cargo – 19 SDRs per kilogramme (kg); and
- Third-party cover – minimum requirements are on a sliding scale increasing according to the maximum take-off mass (MTOM) of the aircraft. Minimum third-party cover ranges from 750,000 SDRs for aircraft with MTOM of up to 499kg, up to 700 million SDRs for aircraft with MTOM of 500,000kg or more.
The Air Carrier Liability Regulation (2027/97), as amended, also requires that carriers be insured for up to at least 100,000 SDRs per passenger and at a reasonable level for third-party risk.
What safety requirements apply to air carrier operations, including with regard to professional and technical certifications?
Aircraft and personnel must be certified and licensed pursuant to regulations promulgated by EASA and applied across the EU, including in the United Kingdom.
An aircraft type requires a type certificate (issued to the manufacturer) and each aircraft requires a certificate of airworthiness. If safety issues arise, either the UK CAA and/or EASA are empowered to issue an airworthiness directive in order to address the unsafe condition, compliance with which is mandatory.
Licensing and certification requirements apply pursuant to EASA regulations for maintenance organisations, maintenance engineers and manufacturers (production and design organisations).
What environmental obligations apply to air carrier operations?
Certain environment matters are regulated by EASA, whose rules apply to UK airlines and aircraft. EASA implements environmental standards from the International Civil Aviation Organisation (ICAO) for aircraft noise and engine emissions by means of rules relating to airworthiness and environmental certification of aircraft and related products, and certification standards for emissions and noise. Compliance with noise and emissions standards is a necessary part of aircraft and engine certification.
Noise certificates for aircraft on the UK register are granted on application to the CAA, either pursuant to EASA regulations or, for non-EASA aircraft, pursuant to national regulations. The CAA also has a role in relation to use of, and changes to, airspace from a noise perspective and also monitors, and publishes information about, noise around UK airports.
Carriers must participate in the European Union's emissions trading system (EU ETS) in relation to flights within EEA airspace. This requires them to monitor their carbon emissions and to buy and surrender allowances equivalent to those emissions. EU ETS does not currently apply to flights outside EEA airspace, pending development and implementation of ICAO's Carbon Offsetting and Reduction Scheme for International Aviation, which is in the course of preparation.
Air traffic control
How are air traffic control services regulated in your jurisdiction?
Licensing of air traffic controllers is regulated by EU legislation. Applications are made to the CAA.
In the United Kingdom, air traffic control for controlled airspace is provided by NATS. Outside controlled airspace, users bear their own responsibility for their own safety and that of others, although they can request help from NATS. NATS is a public-private partnership, with the UK government owning a 49% stake and a golden share; 42% is held by the Airline Group, which includes a number of prominent UK airlines including British Airways, easyJet, Virgin Atlantic and Thomas Cook.
Do any licensing requirements apply to specific routes?
Routes between the United Kingdom and non-EEA states require an operator to hold a route licence. For intra-EU routes, an operating licence is required.
Are any public service obligations in place with respect to remote destinations?
The Operation of Air Services Regulation provides the legislative authority for such obligations to be imposed. The United Kingdom has put in place a number of such public service obligations in respect of routes, chiefly (though not exclusively) between mainland Scotland and the Scottish islands.
Do any special provisions apply to charter services?
What taxes apply to the provision of air carrier services?
The principal tax of relevance is air passenger duty (APD), which is levied on air carriers and calculated on a per passenger carried basis. The tax is payable if the aircraft utilised weighs 5.7 tonnes or more, and the amount payable depends upon the distance travelled and the class of travel. The airline industry has mounted publicity campaigns and engaged in lobbying in order to try to influence a reduction in APD rates, which the industry views as being too high.
The rates of APD (applying from April 2017) are below. The Band B rates applying from April 1 2018 are scheduled to increase slightly.
Destination bands and distance from London (miles)
Reduced rate (for travel in the lowest class of travel available on the aircraft)
Standard rate (for travel in any other class of travel)
Higher rate (for travel in aircraft of 20 tonnes or more equipped to carry fewer than 19 passengers)
Band A (0 to 2,000 miles)
Band B (over 2,000 miles)
Consumer protection and liability
Are airfares regulated in your jurisdiction?
In general, air fares are not regulated. The United Kingdom is bound by the Operation of Air Services Regulation (1008/2008), whose Article 22 provides that “Community air carriers [ie, carriers licensed by an EU member state] and, on the basis of reciprocity, air carriers of third countries shall freely set air fares and air rates for intra-Community air services”. The regulation also contains obligations in relation to fares transparency, requiring airlines:
- to disclose at the start of, and throughout, the booking process the total price that the passenger will pay; and
- to provide a breakdown of additional taxes and charges that have been included in the price.
The regulation does not apply to fares for air services as between the United Kingdom and third countries with whom the United Kingdom has bilateral air services agreements. However, the United Kingdom does not typically require the filing of fares by foreign carriers.
What rules and liabilities are air carriers subject to in respect of:
(a) Flight delays and cancellations?
UK carriers and any carrier (of whatever nationality) operating flights from UK airports are subject to the Flight Compensation Regulation (261/2004) establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights.
In the event of flight cancellation or long delay, the rules outlined below apply.
The passenger must be offered a choice of reimbursement, re-routing at the earliest opportunity or re-routing at the passenger's convenience, together with care and assistance (hotel accommodation, refreshments, telephone calls). The airline may also be obliged to pay compensation of between €250 and €600 to each passenger depending on the length of the cancelled flight, the amount of advance notice that was given of the cancellation and on whether the re-routing option offered causes limited disruption to the passenger's original schedule. Compensation is not payable if the airline can prove that the cancellation was caused by extraordinary circumstances that could not have been avoided even if all reasonable measures had been taken. The scope of the ‘extraordinary circumstances’ defence under the Flight Compensation Regulation has been very substantially eroded since the regulation first came into effect through a series of judgments from the European Court of Justice. In particular, where a technical problem has caused a cancellation or delay, it is very difficult for an airline to use this defence – unless it can prove that the problem stems from a hidden manufacturing defect.
For delays in excess of two hours prior to departure, the passenger must be offered care and assistance (meals, hotel accommodation, telephone calls). The right to care and assistance is triggered on a sliding scale depending on the length of the delay (two to four hours or more) and the length of the fight (up to 1,500 kilometres (km), 1,500km-3,500km and all intra-EU flights, and flights of 3,500km or more). Where the pre-departure delay is at least five hours, the passenger must be offered the option of a refund.
Compensation is also payable (at the same rate as for cancellation – €250-€600) where the passenger is delayed for three hours or more at his or her final destination. The airline can avoid compensation if it can prove that the delay was caused by extraordinary circumstances (as for cancellations).
(b) Oversold flights?
See below – where a passenger is unable to travel because a flight is oversold, this falls within the scope of denied boarding.
(c) Denied boarding?
The Flight Compensation Regulation applies to all passengers departing from UK airports (whatever the nationality of the carrier). Denied boarding pursuant to the Flight Compensation Regulation covers overbooking, but also any other circumstances in which a passenger is refused carriage despite presenting him or herself for check-in according to the airline's requirements and holding a confirmed reservation. Passengers who are involuntarily denied boarding are entitled to compensation of €250 to €600 depending on the length of their flight and must also be given the option of reimbursement or re-routing at the earliest opportunity, or re-routing at the passenger's convenience, together with care and assistance (hotel accommodation, refreshments, telephone calls).
A passenger will not be treated as having been denied boarding for the purpose of the Flight Compensation Regulation, and will have no remedies under the regulation, if there were reasonable grounds to deny him or her boarding, such as health, safety or security, or inadequate travel documentation.
Passengers who agree to voluntary denied boarding are not entitled to compensation of €250-€600 pursuant to the regulation, but are entitled to the option of reimbursement, re-routing at the earliest opportunity or re-routing at the passenger's convenience, together with care and assistance (hotel accommodation, refreshments, telephone calls).
(d) Access for disabled passengers?
This is governed by Regulation 1107/2006. The regulatory regime applies to any passenger "whose mobility is reduced by reason of physical disability (sensory or locomotor, permanent or temporary), intellectual disability or impairment, or any other cause of disability, or age (known as ‘persons of reduced mobility’ or ‘PRMs’).
Regulation 1107/2006 applies to passengers departing from, transiting through and arriving into EU airports. The regulation prohibits airlines from discriminating in relation to acceptance of bookings from PRMs and allowing PRMs access on board aircraft (subject to safety considerations). Airlines and airports are also obliged to provide certain assistance to PRMs free of charge, including in relation to embarkation, carriage of mobility equipment, carriage of guide dogs and having regard to special seating needs.
(e) Lost, damaged or destroyed luggage?
The United Kingdom is a signatory to the Montreal Convention 1999 and applies the provisions of that convention to claims for lost, damaged or destroyed baggage. This applies to domestic as well as international flights.
(f) Retention and protection of passenger data?
This is governed in the United Kingdom by the Data Protection Act 1998 (though the regime is set to be amended significantly when the General Data Protection Regulation ((EU) 2016/679) comes into effect in May 2018). Among other matters, the new regime will introduce dramatically increased fines for data protection breaches – potentially up to 4% of global turnover.
In order to protect passengers' data, airlines must ensure that passenger data is:
- used fairly and lawfully;
- used for limited, specifically stated purposes;
- used in a way that is adequate, relevant and not excessive;
- kept for no longer than is absolutely necessary;
- handled according to people’s data protection rights;
- kept safe and secure; and
- not transferred outside the European Economic Area without adequate protection.
An airline must have sufficient legal grounds for processing passengers' personal data. ‘Processing’ encompasses any activity in relation to personal data, including merely storing it. For standard personal data, the most useful of these grounds from an airline's point of view are that:
- the processing is necessary for the purposes of the legitimate interests of the data controller or a third party;
- the processing is necessary for the performance of a contract to which the data subject is party or in order to take steps at the request of the data subject prior to entering into a contract;
- processing is necessary for compliance with a legal obligation; or
- the individual has given his or her consent to the processing.
In practice, airlines should ensure that they have comprehensive and transparent privacy policies that are brought to passengers' attention and to which passengers are required to agree as part of the booking process, with specific tick boxes for certain kinds of data and processing if the airlines wish to obtain passengers' consent. That practice is designed to ensure that passengers have been informed about how and why their personal data is being used and stored, notified of their data protection rights and, where necessary, have given their consent to the use and storage of their personal data.
What rules and liabilities apply to the air carriage of cargo?
The United Kingdom is a signatory to the Montreal Convention 1999 and applies the provisions of that convention to claims for lost, damaged or destroyed cargo.
Marketing and advertising
Do any special rules apply to the marketing and advertising of aviation services?
Article 23 of the Operation of Air Services Regulation requires transparency of pricing information relating to air fares. The final price to be paid must be displayed at the outset of the booking process, and the passenger must be given a breakdown of any taxes and charges that are included in the fare. Services that are optionally available, such as insurance, must be displayed on an opt-in, rather than an opt-out, basis. The Advertising Standards Agency also sets certain requirements relating to the advertisement of fares in the transport sector, including relating to the advertising of special offers and the extent to which an advertised discounted fare must in practice be available at the time of advertising.
Do any special rules apply to consumer complaints handling in the aviation industry?
There is an increasing participation in alternative dispute resolution (ADR) schemes in the United Kingdom for the resolution of small consumer claims, including – in particular – flight delay and cancellation claims. ADR is not compulsory for such claims, but is promoted as a low cost and efficient alternative to court proceedings. The UK Civil Aviation Authority is an advocate of increased ADR and oversees the ADR providers in this area. Otherwise, there are specific court rules for small claims that involve a simplified procedure and exclude the usual rules relating to costs recovery which apply to other court proceedings.
What are the requirements for entry in the domestic aircraft register?
To be eligible to be entered on the UK Register of Civil Aircraft, the aircraft must be owned or chartered by:
- British citizens;
- nationals of any European Economic Area (EEA) state;
- undertakings formed in accordance with the law of an EEA state that have their registered office, central administration or principal place of business within the EEA, including companies or undertakings incorporated in the United Kingdom;
- firms carrying out business in Scotland;
- the Crown; and
- British protected persons.
An aircraft owned or chartered by Commonwealth persons or entities can be registered in the United Kingdom if appropriate – for example, if the aircraft is based and maintained in the United Kingdom or the aircraft is in storage.
If an aircraft is owned by a national of, or company incorporated in, a state not specified above, it can be registered only if it is not used for commercial air transport while registered in the United Kingdom, and if it could not be more suitably registered in another state that is a member of the International Civil Aviation Organisation (ICAO).
Registration is effected by application to the Civil Aviation Authority (CAA), which involves completion of a simple form, payment of a fee and provision of evidence of insurance.
Registration of an aircraft on the UK register of Civil Aircraft is separate from the procedure for obtaining a certificate of airworthiness or permit to fly that allows the aircraft to be flown legally.
Mortgages and encumbrances
Is there a domestic register for aircraft mortgages, encumbrances and other interests? If so, what are the requirements and legal effects of registration?
Aircraft mortgages may be registered against aircraft that are registered on the UK Register of Civil Aircraft. Once registered, the mortgage will have priority over any subsequent mortgage or charge created and/or registered against the aircraft. There are no statutory requirements relating to the terms of the aircraft mortgages in England, nor a need for it to even be in English.
An aircraft mortgage registered on the UK Aircraft Mortgage Register will take priority over all other mortgages or charges (but not necessarily against unregistrable interests, such as mechanics' liens or statutory liens).
If the mortgage creates an international interest (for the purpose of the Cape Town Convention and its Aircraft Equipment Protocol), registration of that international interest at the International Registry means that the security will take priority over subsequently registered interests on it. Registration on the International Register is complementary to, not a substitute for, registration on the UK Aircraft Mortgage Register.
If the mortgagor is a company incorporated in England and Wales, it will be necessary also to register the mortgage at Companies House. Failure to do so within 21 days of the creation of the mortgage will render it void against an administrator, liquidator or secured creditor of the insolvent mortgagor.
What rules and procedures govern the detention of aircraft?
The UK CAA has statutory power to detain and ultimately sell aircraft for unpaid airport charges and unpaid navigation charges owed to the air traffic control provider NATS and/or the Danish or Icelandic authorities and/or Eurocontrol. The detention can operate either in respect of the aircraft that has incurred the charges, irrespective of whether the party that operates it at the time when the detention begins was the operator that incurred the charges, or in respect of any other aircraft operated by the defaulting party at the time when the detention begins. The latter situation, known in the United Kingdom as a ‘fleet detention’, can accordingly have the effect of one aircraft being detained for charges owed by an entire fleet and is a particularly sensitive issue for lessors and financiers; unless they are able to terminate leasing/financing arrangements promptly in respect of their aircraft such as to remove it from the fleet of a defaulting operator, it is not uncommon to find financiers facing detention of their aircraft for the charges owed by the whole fleet. If charges remain unpaid, the CAA has power to sell the detained aircraft with leave of the court.
The UK Environment Agency also has a power of detention and ultimately sale of aircraft in the event of non-compliance with the EU Emissions Trading System.
Safety and maintenance
What rules and procedures govern aircraft safety and maintenance?
Safety and maintenance regulation and certification in the United Kingdom falls largely under the aegis of the European Aviation Safety Agency (EASA). The key regulations are the EASA Basic Regulation (216/2008) 1321/2014 Part M (continuing airworthiness and maintenance), Part 145 (maintenance of EASA aircraft and engines), Part 147 (training) together with 748/2012 (design and production organisation approvals). National – as opposed to EU – safety and maintenance regulations (British Civil Airworthiness Regulations or BCAR) apply, however, to those aircraft excluded from the EASA regime, such as those used for military, customs, police, search and rescue, firefighting, coastguard or similar activities or services.
What is the state of regulation on unmanned aerial vehicles (drones) in your jurisdiction?
Regulation in this area has existed for some time, but is also developing to meet the expanding recreational use of small unmanned aerial vehicles (UAVs). The Air Navigation Order 2016 provides the following overriding legal obligation of general application also to drone users: "A person must not recklessly or negligently cause or permit an aircraft to endanger any person or property". The Air Navigation Order also contains specific provisions relating to the operation of small UAVs and surveillance UAVs. The essential obligations are to maintain visual line of sight, and not to fly in controlled airspace, in the vicinity of aerodromes or at an altitude in excess of 400 feet. If a drone is to be used for commercial purposes, operation requires approval from the CAA. Additional rules apply where drones are fitted with a camera and they cannot be operated over or within 150 metres of congested areas, over or within 150 metres of certain open-air assemblies of persons or within 50 metres of any vessel or person.
Legislation is currently being contemplated that would require operators of drones weighing 250 grammes or more to register their drones and to complete competency training in matters of safety, security and privacy.
How are air accidents investigated in your jurisdiction?
Aircraft accidents in the United Kingdom (including its overseas territories and Crown dependencies) are investigated by the Air Accident Investigation Branch (AAIB) pursuant to powers devolved by the Ministry for Transport. The AAIB's chief inspector reports directly to the secretary for transport on air safety matters. There are currently six teams of inspectors, each led by a principal inspector. In accordance with ICAO standards and recommended practices, the AAIB is responsible for reporting on air accidents with the objective of explaining the circumstances of accidents (without apportioning blame) and making safety recommendations in order to prevent recurrence and improve safety.
What liability regime governs death, injury and loss arising from air accidents?
The United Kingdom is a signatory to the Montreal Convention 1999 and applies the liability rules of that convention to domestic and international air accidents.
What are the reporting requirements for air accidents?
The following people are required to notify the AAIB without delay if they have knowledge of an air accident occurring in the United Kingdom, a UK overseas territory or a Crown dependency: the crew of the aircraft, its owner, its operator, those involved in its maintenance, design or manufacture, those involved in training the crew of the aircraft, those involved in providing air traffic control, flight information service or aerodrome services to the aircraft, staff of the Civil Aviation Authority and staff of the European Aviation Safety Agency. The commander of the aircraft or the aircraft operator, if the commander has been killed or incapacitated, must also inform the police.
What rules govern the ownership of airports (both public and private)?
There are no specific rules relating to public or private ownership of airports, although usual competition rules apply.
What is the authorisation procedure for the operation of airports?
Any airport used for commercial passenger flights, public transport flights and flying training in aircraft over a specified weight must be licensed by the Civil Aviation Authority (CAA). Aerodrome licensing is in the process of transitioning from domestic to European Aviation Safety Agency regulation. The licence is granted to the aerodrome operator following a safety assessment.
What ongoing operating requirements apply (including obligations relating to safety, security and facilities maintenance)?
CAA inspectors conduct periodic audits to assess both compliance with regulatory and safety requirements, and competence of personnel. Any significant changes to aerodrome facilities or constructions will generally need to be notified to, and approved by, the CAA.
What airport charges apply and how are they regulated?
Airports with more than 5 million passengers in the two years before the current year are covered by the Airport Charges Regulations 2011, which implement into UK law Directive 2009/12/EC on airport charges. The regulations cover the following charges:
- landing charges;
- take-off charges;
- airport air navigation service charges;
- aircraft parking charges;
- passenger processing charges; and
- passenger security charges.
The regulations impose obligations on airports in relation to charges – for example, the obligation to consult airlines about airport charges, to give notice of proposed changes to charges (including how they are calculated), consult airlines on major infrastructure projects and, where differential charges are applied to different airport users, to explain transparently the reason for the differential.
The CAA oversees compliance with the Airport Charges Regulations 2011 and can investigate.
What regulations govern access to airports?
For coordinated airports, the relevant regulations are those relating to slot allocation – the Airports Slot Allocation Regulations 2006, which give effect to Regulation 95/93 on common rules for allocation of slots at EU airports as amended, most recently by Regulation 793/2004. See further the response to the question below on slot allocation.
Otherwise, market access is gained through grant of traffic rights pursuant to bilateral or multilateral air services agreements to which the United Kingdom is a party. Most airports have conditions of use with which operators using the airport must comply.
What regime governs the allocation of airport slots (including slot transfer, revocation and disputes)?
See above. The Airports Slot Allocation Regulations 2006 give effect to Regulation 95/93 on common rules for allocation of slots at EU airports, as amended (most recently by Regulation 793/2004). This regime provides grandfather rights for allocation of slots to existing and new entrants – that is, the ‘use it or lose it’ principle relating to reallocation of slots to the same carrier from one season to the next and the circumstances in which slots can be transferred to, or utilised by, a carrier other than that to which they were allocated. The United Kingdom is one of the few EU jurisdictions in which secondary trading of slots (by way of exchange of slots together with monetary consideration) is accepted as legitimate under the EU slots regulation; such secondary trading is prevalent at London Heathrow in particular.
How are ground handling services regulated?
Ground handling processes are not subject to specific regulation other than general health and safety law. However, the economic market for provision of ground handling services is governed by EU Directive (96/67/EC), which is implemented by the Airports (Ground Handling) Regulations 1997. Under these regulations, which protect competition and choice in supply of ground handing services, airports are prohibited from preventing ground handlers from operating, or airport users from self-handling. The CAA has the power to make exemptions to this prohibition, but exemptions are rarely sought. In the most restricting circumstances, such as a single provider of services (or a ban on self-handling) at an airport, approval from the European Commission is also required.
Do any sector-specific competition regulatory/legal provisions apply to the aviation industry in your jurisdiction?
Despite the existence of relevant empowering legislation, no specific rules have been adopted for the aviation sector other than in the context of state aid (see below).
The aviation industry is therefore subject to the usual EU and UK competition law rules. These prohibit anti-competitive agreements and the abuse of a dominant market position. The aviation industry is also subject to the EU Merger Regulation (139/2004) and the United Kingdom's merger control regime.
Code sharing and joint ventures
What (if any) competition concerns arise in relation to code sharing and air carrier joint ventures?
Code sharing and air carrier joint ventures may be held to constitute a merger – even if the companies to the agreement do not create a separate corporate vehicle – if there is a sufficient level of integration between the participating carriers. In such circumstances, prior clearance from the European Commission would be required if the turnover thresholds set out in the Merger Regulation are exceeded. Alternatively, such arrangements could require prior merger control clearance by the national competition authorities of EU member states, including the United Kingdom's Competition and Markets Authority (although under the UK Enterprise Act 2002, prior merger control clearance is not mandatory).
If there is not a sufficient level of integration between carriers for the arrangement to be treated as a merger, then such agreements have the potential to be in breach of the prohibition of anti-competitive agreements. Carriers will need to ensure that the pro-competitive effects of any agreement outweigh any anti-competitive effects, and in particular ensure that the agreement:
- contributes to improving the production or distribution of goods or services, or to promoting technical or economic progress;
- allows consumers a fair share of the resulting benefit;
- does not impose on the parties to the agreement restrictions which are not indispensable to the attainment of the above objectives; and
- does not afford the parties to the agreement the possibility of eliminating competition in respect of a substantial part of the market.
What rules govern state aid in the aviation industry? Do any exemptions apply?
Detailed guidelines on the application of state aid rules to the aviation industry are set out in the 2014 Guidelines on state aid to airports and airlines. These guidelines set out when and how certain types of investment and operating aid may be granted to airports, and when and how aid may be granted to airlines to set up a new route. Any such aid must comply with the following principles:
- It must contribute to a well-defined objective of common interest.
- There must be a need for state intervention.
- The aid measure must be an appropriate policy instrument to address the objective of common interest.
- The aid must have an incentive effect.
- The amount of the aid must be limited to the minimum necessary.
- The aid must avoid undue negative effects on competition and trade between member states.
- The aid must be awarded in a transparent manner.
Have there been any notable recent cases or rulings involving competition in the aviation industry?
In October 2016 the European Commission announced that it was sending a statement of objections to Brussels Airlines and TAP Air Portugal in relation to a code sharing arrangement that may have contravened the prohibition of anti-competitive agreements.
The commission's press release stated that code sharing agreements in respect of a route on which both parties to the agreement already operate are more likely to raise competition concerns than code sharing agreements in respect of a route on which only one party to the agreement already operates.
In March 2017 the commission re-adopted a cartel decision against 11 air cargo carriers that had participated in a price fixing cartel between December 1999 and February 2006. The commission had originally adopted a cartel decision against the carriers in November 2010. This decision was annulled by the General Court of the European Union on the ground that a procedural error had occurred. As the court did not rule on whether a cartel existed, the commission addressed the procedural error while imposing nearly identical fines in its new decision. The fines levied against the addressees of the commission's decision of March 2017 totalled nearly €800 million. This has been appealed.
What aviation-related disputes typically arise in your jurisdiction and how are they usually resolved?
Aviation disputes falling within UK jurisdiction span a very wide range of circumstances, parties and values. They include:
- small claims by passengers against airlines arising out of delay, cancellation and denied boarding (under the Flight Compensation Regulation (261/2004));
- commercial disputes between parties such as airlines, lessors, manufacturers, maintenance providers, airport service providers or airport operators;
- personal injury compensation claims arising out of air accidents or injuries suffered in flight; and
- disputes arising out of loss of or damage to cargo.
Many disputes involve insurers.
Confidential negotiated settlements concluded pre-proceedings are very common. UK courts expect parties to move disputes forward expeditiously and to explore alternative dispute resolution at an early stage. The costs regime is designed to motivate parties to settle disputes rather than take a claim to trial. Arbitration is also widely used.