In brief: airport operations in United Kingdom

Airports

Who owns the airports?

Since the British Airport Authority (BAA) was privatised in 1986, the state does not own any of the airports in the UK. Heathrow is now owned and run by Heathrow Airport Holdings Limited (formerly BAA), which is in turn owned by FGP Topco Limited, a consortium led by Ferrovial SA of Spain. Aberdeen and Glasgow (former state-owned airports) and Southampton are now owned by AGS Airports Limited, which is in turn jointly held by Ferrovial (via Faero UK Limited) and AGS Airports International Sarl (a Luxembourg company). Ferrovial did also own Gatwick, Edinburgh and Stansted Airports, but was compelled by the Competition Commission to sell them. Gatwick is now majority-owned by French VINCI Airports, while the remainder is owned by Global Infrastructure Partners. London City Airport is owned by a Canadian consortium made up of AIMCo, OMERS, Ontario Teachers’ Pension Plan and Wren House Infrastructure Management.

There are, however, a number of airports owned by local authorities through public airport companies, and the Scottish government owns a number of the airports in the Highlands and Islands of Scotland. Other major airport owners include the Manchester Airports Group, which, in addition to Manchester and Stansted, owns the East Midlands airport, and the Peel Group, which owns Liverpool John Lennon, Durham Tees Valley, Doncaster Sheffield airports and a heliport at Manchester City Airport.

What system is there for the licensing of airports?

Although no airport is required to be licensed, aircraft engaged in public transport flights or for instruction in flying can generally only take off or land at a licensed airport. The CAA must grant a licence if various specified safety requirements are met. A licence may be granted either for private use or for public use, and in the latter case the airport must be available to all persons on equal terms and conditions at all times when it is available for the take-off or landing of aircraft.

Is there a system of economic regulation of airports? How does it function?

The system of economic regulation of airports that had been provided by the Airports Act 1986 was replaced by a new system introduced by the Civil Aviation Act 2012. Under this system an airport operator that has, or is likely to acquire, substantial market power requires a licence from the CAA where the benefits of this are likely to outweigh the adverse effects from the point of view of users of air transport services, and competition law does not provide sufficient protection. Heathrow and Gatwick currently hold licences, which include conditions relating to price controls, service quality and operational resilience. On 31 December 2019 the current regulatory controls on charges and services that Heathrow Airport Limited offers to airlines are due to expire. As such, Heathrow is currently undergoing major consultations especially on capacity expansion. Although Stansted had previously been regulated, the CAA found that it did not meet the market power test and consequently it has not required a licence since 1 April 2014.

Are there laws or rules restricting or qualifying access to airports?

Under the Airports Act 1986, the Secretary of State has the following certain powers to restrict or qualify access to airports:

• by means of a direction where necessary or expedient in the interests of national security or external relations;
• through traffic distribution rules between airports serving the same area in the UK (which must comply with the conditions relating to such rules in the Regulation);
• through the imposition of a limit on the number of movements at an airport; and
• by means of a scheme prepared by the CAA, at the direction or the Secretary of State, allocating capacity at the airport.

How are slots allocated at congested airports?

Slot allocation at airports in the EU is regulated by Regulation (EEC) No. 95/93 (as amended) and (to the extent they are compatible with the Regulation) the IATA Worldwide Scheduling Guidelines. Revision of the regulation is currently under consideration. The EU regulation is implemented in the UK by the Airports Slot Allocation Regulations 2006.

Most congested airports are designated as coordinated airports, although an airport with a lesser degree of congestion may be designated as a schedules facilitated airport. At a coordinated airport, the allocation of slots is carried out by an independent coordinator (in the UK, Airport Coordination Limited). The bedrock of the slot allocation system is the principle of ‘grandfather rights’, whereby an airline which has used a slot for at least 80 per cent of the time during a traffic season is entitled to have it allocated to it in the next equivalent season, but if it cannot show at least 80 per cent usage, then the slot must be given up to the slot pool. There are certain other rules about priority, including that priority in the allocation of 50 per cent of slots from the slot pool must be given to ‘new entrants’ (as defined).

Slots may be transferred by an air carrier between its routes and between carriers in a group, but cannot otherwise generally be transferred. However, they may be exchanged between air carriers. In reliance on this right the practice of slot trading has developed, at any rate at the London airports, whereby valuable slots are exchanged for worthless slots plus money and thus effectively sold. This practice was sanctioned by a judgment of the High Court in 1999 (in R v Airport Coordination Limited ex parte the States of Guernsey Transport Board) and, although it had previously expressed doubts on the legality of the practice, by the Commission in a communication issued in April 2008. In November 2017, the Court of Appeal found that even a financially defunct airline that has ceased operations can be considered an ‘air transport undertaking’ in line with the regulation, and is therefore entitled to obtain and transfer slots (in R (Monarch Airlines Ltd) v Airport Coordination Ltd).

Are there any laws or rules specifically relating to ground handling. What are they?

Directive 96/67/EC liberalises access to the ground handling market at EU or EEA airports, and is implemented in the UK by the Airports (Groundhandling) Regulations 1997.

The main effect of the directive and the regulations is to:

• require member states to allow access for third-party ground handlers to the ground handling market at airports with annual traffic of not less than 2 million passengers or 50,000 tonnes of freight, subject to the ability of member states to impose limits in certain circumstances; and
• oblige member states to ensure that airlines can self-handle at airports with annual traffic of not less than 1 million passengers or 25,000 tonnes of freight, subject to the possibility of limiting this in certain circumstances.

Revision of the directive is currently under consideration.

Who provides air traffic control services? And how are they regulated?

The principal provider of air traffic control services in the UK is NATS Holdings, a public-private partnership between the state, the Airline Group (a company whose shareholders include the principal UK airlines), NATS staff and UK airport operator LHR Airports Limited. This company is licensed by the CAA under the Transport Act 2000, and providers of air traffic control services at other airports are similarly licensed.