Airline competition and traffic rights

Provision of policy advice and analysis on aviation liberalisation and competition issues in the airline industry.

The CAA has long advocated a liberalised market structure and a reliance to the greatest extent possible on competition rather than regulation as the best way of delivering efficient aviation services and consumer benefits.

This would be achieved through the removal of unnecessary restrictions on the commercial behaviour of airlines, putting aviation on the same footing as other industries.  The CAA has been active in lobbying for such change.  Ultimately the long-term aim would be to achieve open aviation markets across the world.

Traffic rights

The European single aviation market generally allows European airlines to operate air services freely and to charge the prices they wish.

Air services operated by UK and foreign airlines between the UK and a country outside the European single aviation market are generally governed by Air Services Agreements. Some ASAs are negotiated by the Department for Transport between the UK and the country concerned, and some are negotiated by the European Commission on behalf of EU member states. Among other things, the ASA will set out the traffic rights which airlines can exercise.

Licences and operating permits

UK airlines:  the CAA is responsible for granting Operating Licences to airlines based in the UK; route licences to UK Operating Licence holders serving points outside the European single market; and Air Transport Licences to airlines based in the Channel Islands or Isle of Man. The CAA is required by Section 69(1) of the Civil Aviation Act 1982 to publish from time to time a statement of the policies it intends to adopt in performing certain airline licensing functions (see below).

Foreign airlines:  the CAA is also responsible for granting Operating Permits to foreign airlines.

Statement of Policies on Route and Air Transport Licensing

The CAA’s current Statement of Policies was published in August 2008. This states that the CAA believes that the interests of users will be best served if airlines are free to operate air services in competition with one another according to their commercial judgement, subject only to the application of normal competition policy. The CAA is required to consult the UK air transport industry and user representatives before publishing any such statement.

Allocation of scarce capacity

In some cases the traffic rights set out in the UK’s ASAs are limited, and the CAA may occasionally need to allocate the UK’s traffic rights between airlines where these are insufficient to go around.