Airline Regulation Act 2022

The Airline Regulation Act 2022 is the statute by which the United Kingdom of America took back a specific and limited part of the economic authority over air transport that it surrendered in 1978.

It is not a reversal of deregulation and does not pretend to be. The market remains open: any carrier meeting the safety and financial requirements may enter any route, and no ministry approves a fare. What the Act does is impose duties that the open market had been unable to produce on its own, and subject one class of transaction, the merger, to a test tougher than general competition law provides.

It was enacted under the Markham ministry, with Naomi Trask as the responsible Transport Minister, and it passed because the industry it regulated could not agree about it. The carriers that stood to gain supported it, the carriers that stood to pay opposed it, and the resulting split gave the ministry a majority it would not otherwise have had.

Its immediate cause was a proposed merger that the Realm’s general competition law could not have stopped, and its most contested consequence is one nobody intended.

Background

The settlement of 1956

The Civil Aviation and Air Navigation Act 1956, passed after the Grand Canyon collision, created the Civil Aviation Authority of America and the independent Air Accident Investigation Board, and deliberately left economic regulation where it already was, with the Civil Air Transport Board.

The separation was argued for at the time and was correct. A single body able both to deny a safety certificate and to withhold a commercial route would have been the industry’s unreviewable gatekeeper, and Parliament refused to create one. The Board accordingly retained route entry, fare approval and market entry, and the CAAA took safety and navigation and has never had anything else.

The reform of 1978

The Board’s regime lasted twenty-two years. It could require continuity of service and restrain destructive competition, and it also protected incumbents, formalised cross-subsidy without disclosing it, and made new entry a political process. By the 1970s it was attacked from every party at once for high fares, administrative delay and industry capture, and defended chiefly by remote communities which understood, correctly, that the service they had existed because regulation sustained it.

The reform of 1978 abolished the economic regime. Route entry was opened, fares were freed, and the Civil Air Transport Board was wound up, its remaining functions distributed between the Transport Ministry and the Competition Authority. The CAAA was untouched, which is why the 1978 reform could change economic policy without reconstructing safety authority, and which is the reason the two settlements have been separable ever since.

The reform was carried by a cross-party majority and is one of the few large economic measures of the Realm’s twentieth century that no party has since disowned. The Conservative and Crown Union supported it as a market measure. The Liberal Federal Democrats supported it as a consumer measure. Labour split, and the half that supported it did so on the argument that a regulated industry with six protected incumbents was a cartel administered at public expense, which was true. The Bloc opposed it, and has spent fifty years pointing out that it was right about what would happen to the interior, which is also true and is not the same as having been right about the whole of it.

Nobody proposed to restore the Board. The Act of 2022 was drafted by a ministry that had read the Board’s record, and the single most consistent thing its ministers said during the Bill’s passage was that they were not trying to bring it back.

What the open market produced

Forty-four years of an open market produced what open markets produce, and the article records the gains as well as the losses because the Realm’s argument about the Act turns on the balance between them.

Fares fell, substantially and in real terms, and the number of people who fly rose by a multiple that the regulated system had never come close to. Networks reorganised around hubs, which raised frequency and lowered unit cost on the routes that had them. New carriers entered, several of them succeeded, and the incumbents’ comfortable position ended.

The losses fell unevenly. Orbit was nearly destroyed and survives only because its own workforce bought it out of administration. Pan American would have failed and survives only because the Realm owned it and allowed it to buy a domestic network it had never had. Braniff disappeared into Orbit and the name was retired. And service to the interior contracted continuously, decade upon decade, as thin routes were withdrawn in favour of hub feeding, so that a great many cities which had two carriers in 1978 had one in 2000 and none in 2020.

By the 2010s the Realm had six trunk carriers where it had once had a dozen, and consolidation had proceeded far enough that each further merger was harder to justify and easier to approve, because the competition test asks about overlap and the mergers had stopped overlapping.

The record on fares is worth stating carefully, because both sides of the argument have used it dishonestly. Real fares fell sharply between 1978 and about 2000 and have been broadly flat since, and the fall was concentrated on dense routes between large cities. On thin routes to small places, where fares had been held down by cross-subsidy under the old regime, they rose, in several cases by a great deal, before the service disappeared altogether. The average passenger paid much less and a minority of passengers paid much more and then had nothing to pay for, which is a distributional fact rather than an average one, and it is the fact the Act was built around.

The employment record ran the same way. Aviation employed more people in 2020 than in 1978 and paid a materially smaller proportion of them under direct employment, ground handling having moved almost entirely to contractors and agencies across the 1990s. Flight crew terms held up; cabin crew terms held up less well; ground handling terms did not hold up at all.

The proposed combination

In 2021 Delta Air Lines and Southwest Airlines announced their intention to combine, and the announcement is the immediate cause of the Act.

The proposal was, on the Realm’s general competition law, close to unobjectionable. The two carriers’ networks barely overlapped: Delta was a hub operator and Southwest was built on point-to-point density between secondary cities, and on the city-pair analysis the Competition Authority was obliged to apply, the number of routes on which the merged carrier would face materially reduced competition was small.

The objection was not about overlap. It was about hubs. The combined carrier would have held the leading position at roughly half the Realm’s principal airports, and a leading position at a hub is not a share of a market in the sense competition law measures. It is control of the connections through which other carriers’ passengers must pass, of the gates and ground handling those carriers must buy, and of the schedule that determines whether a competitor’s arrival is useful to anybody. The Competition Authority’s own advice to the Transport Ministry said, in terms, that the transaction was probably lawful and probably harmful, and that the difference between those two answers was the fault of the statute rather than of the analysis.

The combination was abandoned in 2022 while the Bill was before Parliament, which its opponents describe as proof that the Act was unnecessary and its supporters describe as proof that it worked before it was even passed.

The proposal also did something the ministry had not expected, which was to make the polities into a lobby. Fourteen polity governments submitted evidence against the combination, most of them interior polities with a single hub connection and a well-founded suspicion about what a merged carrier would do with it, and the submissions were coordinated in a way federal transport policy had not previously provoked. The polities’ intervention is the reason Part 3 is in the Act at all: the ministry’s original instruction to its drafters covered mergers and passengers, and essential air service was added after the polity submissions made plain that a Bill about mergers alone would not command support from members whose constituencies had already lost their service.

Passage

The Bill

The Bill was introduced in the spring of 2022 by Naomi Trask, Transport Minister in the Markham ministry, and was drafted in the Transport Ministry rather than by the Competition Authority, which is the first clue to how it was intended to be administered.

Its structure was set early and did not change much. It would not restore route licensing or fare approval, both of which the ministry regarded as unrecoverable and undesirable. It would impose duties, create a levy to fund one of them, and give the responsible minister a set of powers exercisable in public and answerable in the Commons.

The industry split

The Act passed because the industry could not oppose it together.

Orbit Airlines supported it outright, alone among the carriers, and its support was the single most useful thing that happened to the Bill. Orbit is owned by the people who work for it and is the carrier liberalisation nearly killed, and it came to the committee with a position no lobbyist could have manufactured: that it had watched an open market nearly liquidate a company that several thousand families depended on, that it had bought that company itself because nobody else would, and that a Realm which wanted an air transport industry ought to say what it wanted from one. Its evidence is the most quoted in the parliamentary record of the Bill.

The low-cost and secondary carriers supported the merger provisions and the labour provisions, the first because consolidation threatened them and the second because they already paid at or above the proposed minima and their larger rivals did not.

The large hub carriers opposed the Bill and concentrated their fire on the essential air service levy, which would fall on them because they operate the dense routes it is levied upon.

Pan American said almost nothing, which is its habit in matters where it is publicly owned and the argument is about public money. Its formal submission ran to four pages, took no position on any Part except section 12, and said of that section only that the company had no objection to being treated in the same way as its competitors. The submission is generally read as having been drafted in the Transport Ministry, which the company denies and which nobody believes.

The split mattered arithmetically as well as politically. A united industry would have had the Conservative opposition behind it, and the Bill would have failed or been reduced to Part 4. A divided industry gave the ministry cover to describe each provision as the demand of some part of the sector rather than as a general imposition upon it, and the Conservative front bench, which had intended to oppose the Bill outright, ended by opposing the levy and abstaining on the rest.

The trade unions were united in support and were less useful than Orbit, for the straightforward reason that a union supporting a labour provision is expected and a company supporting one is not.

Committee

The Bill spent eleven weeks in committee and was substantially rewritten there, and the changes went in both directions.

Part 3 was strengthened. Section 19’s twelve-month notice requirement was not in the Bill as introduced and was added on the evidence of two polity transport ministers who pointed out that a designation power which operates after a service has ended arrives too late to preserve anything, because a carrier that has withdrawn has redeployed the aircraft. Section 20, on the treaty nations, was also added in committee, after the Realm’s aviation officials were asked whether a designated community inside a treaty nation would be consulted and could not answer.

Part 6 was narrowed. As introduced it applied to every person engaged in aviation; as enacted it applies to flight crew, cabin crew and ground staff, the maintenance and engineering trades having been removed on the evidence of the manufacturers.

Part 7 was gutted, as described below.

And the slots Part was removed entirely. The Bill as introduced contained a Part 8 on slot allocation at congested airports, providing that slots should be held on licence rather than owned and reallocated periodically. It was opposed by the airport authorities, by the polities and municipalities that own most of the Realm’s principal airports, and by every carrier including Orbit, and the ministry withdrew it rather than lose the Bill. The remaining Parts were renumbered, which is why the Act’s administrative Part is Part 8 and its operative Parts stop at 7.

The Lords

The Bill’s difficulties were in the Lords and were about the levy rather than about the principle. It survived, amended in two respects: the levy threshold was raised, which reduced its yield by about a fifth, and the environmental duty at section 34 was softened from a requirement to a duty to consider.

It received Assent in the autumn of 2022 and its principal Parts commenced in stages through 2023 and 2024. Part 4 commenced first, in April 2023, because the ministry wanted the popular provisions working before the levy appeared on tickets. The levy commenced in January 2024. Part 2 commenced on Assent, on the reasoning that a merger provision which announces itself a year in advance is an invitation.

The text of the Act

The Act’s operative Parts are reproduced below. Part 1 and Part 8 are administrative and are summarised rather than set out in full.

Part 2: Market structure

Part 2 is the Part the Act was written for and section 8 is the reason it exists.

Section 8.1 requires the Minister to look at hubs rather than at routes, which is the analytical correction the 2021 proposal exposed, and section 8.2 supplies a threshold so that the question is not left to argument. Section 8.3 is the hard limit: no carrier may hold a leading position at more than a quarter of the Realm’s principal airports, and the only exception is a failing carrier where no less restrictive means exists. That exception is the source of the consequence discussed below.

Section 7.2 preserves the general competition regime alongside this one, so an aviation merger requires two approvals and may be stopped by either. The carriers argued that this was duplication. The ministry’s answer was that the two tests measure different things, that a transaction harmless on overlap may be harmful on hubs and the reverse is also possible, and that a merger which fails either test is a merger the Realm does not want. Section 10.3, which requires the Minister to explain any departure from the Competition Authority’s advice, is the provision that keeps the duplication honest, since it forces disagreement between the two bodies into the open rather than resolving it in correspondence.

Section 11’s power to grant consent on conditions has been used twice, both times to require the maintenance of named services for a fixed period, and both sets of conditions expire before 2031. What happens at the expiry of a condition is not provided for and is the subject of a growing literature.

Section 12 is the settlement with Pan American, and it is drafted in both directions. The private carriers had argued for forty years that the state carrier was favoured, and section 12.2 requires the Minister to disregard Crown ownership whether in the carrier’s favour or against it. Pan American had expected the section and did not oppose it. What it had not expected, and what nobody drew attention to at the time, is that the section governs the treatment of a carrier the Crown owns and says nothing whatever about the Crown acquiring one.

Part 3: Essential air service

Part 3 restores, in a different form, the one thing the regulated system had genuinely done well.

The old Civil Air Transport Board had sustained thin routes by cross-subsidy: it granted a carrier a profitable route on the understanding that an unprofitable one came with it, and the arrangement worked and was never disclosed to anybody. Part 3 does the same thing openly, by levying the profitable routes explicitly, publishing the sums, tendering the service competitively and laying the accounts before Parliament. The Realm’s public administration literature treats the comparison as the clearest available illustration of the difference between cross-subsidy and a subsidy.

Section 19 is the sleeper. Twelve months’ notice before withdrawing the last service from an airport gives the Minister time to designate before the service ends rather than after, and it has been used more often than section 14, because a carrier that must give a year’s notice frequently discovers that it can continue for a year.

Section 13.2 is the provision that keeps the Realm out of the airline business, and it was drafted with some care. The duty is a duty to secure service and not a duty to provide it. The Minister buys a service from whoever will fly it and does not operate one, which is the difference between the Act and the regime of 1956, and it is also why section 15.3 exists: where nobody tenders, the Minister may direct a carrier to fly the route and must pay it, which is compulsion rather than ownership and has been used four times.

Section 15.2 requires a tender to specify the maximum fare, which is the only place in the entire Act where the Realm sets a price. The ministry has been careful to describe it as a term of a contract it is paying for rather than as fare regulation, and the description is accurate and is not how the carriers talk about it.

Section 14.3’s five-year review is the provision the designated communities dislike. A designation is not permanent, the review asks afresh whether the section 14.1 conditions are met, and a community whose circumstances have improved may lose the service that improved them. Three designations have lapsed on review since 2023 and all three were contested.

Part 4: Passengers

Part 4 is the popular Part and the one the Realm actually notices.

Section 21.2 is the whole of it: compensation arises without proof of loss and is not reduced by its absence, which converts a claim that was theoretically available and practically worthless into a fixed sum a passenger can obtain by asking. Section 23.2 is what makes it bite, by naming the three excuses carriers had used and removing them: crew shortage, the carrier’s own equipment, and the consequences of the carrier’s own scheduling.

Section 25.3 is the most quoted provision in the Act, and it is quoted with more affection than any other sentence Parliament passed that decade. A charge for a cabin bag, for a seat for a passenger travelling alone, and for a boarding pass is not a charge for an optional service, and may not be presented as one. The carriers fought it hard, lost, and the Realm has been pleased about it ever since.

Section 24 is the machinery and is the reason the Part functions rather than merely existing. A claim goes to the carrier, which has fourteen days to determine it and is liable for the sum plus interest if it does not, and a dissatisfied passenger may go to an adjudicator whose decision binds the carrier and does not bind the passenger. The asymmetry is deliberate: a passenger who loses before the adjudicator keeps every remedy they had, and a carrier that loses has no appeal on the merits. The industry objected to the asymmetry throughout the Bill’s passage and objects to it still. The ministry’s answer was that the alternative was a scheme in which a carrier could exhaust a claimant, and that a fixed sum recoverable in fourteen days is worth more to a passenger than a perfect procedure.

Section 26, which ranks a ticket ahead of unsecured creditors in a carrier’s insolvency, was added late and is the provision the Realm’s insolvency practitioners most dislike. It shifts loss from passengers to trade creditors and suppliers, most of which are themselves businesses employing people, and the ministry accepted the criticism and enacted it anyway on the ground that a passenger cannot assess a carrier’s solvency and a supplier can.

Section 27 forbids contracting out, without which the whole Part would have appeared in the small print as a waiver within a month.

Part 5: Repatriation

Part 5 is short, uncontroversial and was the least argued-about Part of the Bill. Its cause is not the 2021 merger but a smaller episode: a charter operator had failed in 2019 leaving several thousand people abroad, the Realm had brought them home by improvisation and goodwill, and every party had said afterwards that improvisation and goodwill were not a policy.

The duty at section 28.2 is drawn generously. It reaches any passenger holding a ticket issued by the failed carrier, whether or not they flew out on it, which is more than the industry proposed and was inserted in committee after evidence that the hardest cases in 2019 had been people who had flown out on somebody else.

Part 6: Labour

Part 6 is the shortest operative Part and the one whose inclusion decided the shape of the coalition that passed the Act.

Its purpose is stated plainly in the Bill’s explanatory material: to prevent carriers from competing by reducing the terms of the people who do the work, which is a form of competition that produces no efficiency and transfers the saving directly from the crew to the fare. Section 32.2 is the operative sentence, because it reaches labour supplied through agencies and contracts for services, and the practice the Part was written against was not the reduction of employees’ pay but the replacement of employees with people who were not employees.

The consultation duty at section 33.1 requires the Minister to consult the CAAA as to safety, which is the only point in the Act at which the safety regulator appears. It is there because crew rest is a safety question as well as a labour one, and because the Realm’s aviation legislation has been careful since 1956 to route safety questions to the body that owns them.

Part 7: Environment

Part 7 was the Bill’s most amended Part and is its weakest. Section 34 was introduced as a power to refuse and left the Lords as a duty to consider, which is a smaller thing by a wide margin, and the ministry accepted the amendment because it wanted the Bill more than it wanted that section.

Section 35.2 is the provision that shows where the Act’s priorities actually lie. Emissions limits may not be applied so as to reduce service to a designated community, which means that where the environmental duty and the essential service duty conflict, the essential service duty wins. The Greens voted for the Act and said at the time that section 35.2 was the price of it.

Parts 1 and 8

Part 1 is preliminary. It states the Act’s purpose, which is to secure the maintenance of air service, the protection of passengers, fair terms of employment and effective competition consistent with an open market for entry; defines carrier, scheduled service, principal airport and community; and provides that the Act binds the Crown.

Part 8 is administrative. It provides for the appointment of the adjudicator under section 39, for appeals to the courts on a point of law, for the making of regulations by statutory instrument subject to affirmative resolution, for penalties, and for the annual report the Minister must lay before Parliament. Section 41 is the commencement provision.

Administration

The Transport Ministry

The Act is administered by the Transport Ministry directly, and the decisions under it are ministerial decisions answerable in the Commons.

The choice was deliberate and was argued about. The alternative was an independent regulator, and the ministry’s case against one was that the decisions the Act requires are political decisions wearing technical clothes. Whether a community should keep an air service, at what cost to the passengers on other routes, and whether a merger that would produce a stronger carrier and a weaker market should be permitted, are not questions with technical answers, and a body insulated from Parliament would be answering them without a mandate and without a mechanism by which anyone could disagree.

The counter-argument, made at the time and made still, is that ministerial decisions are lobbied decisions, and that an industry with six large firms and a great deal of money will find a Minister easier to reach than a board. The Act’s answer is procedural: every decision under Part 2 must be published with its reasons, every departure from the Competition Authority’s advice must be explained, every designation and every refusal under Part 3 must be reported to Parliament annually, and the Fund’s accounts must be laid. The Realm’s administrative lawyers regard this as a reasonable answer and not a complete one.

Why not the Civil Aviation Authority

The Act does not touch the Civil Aviation Authority of America, and the omission is the most deliberate thing in it.

The CAAA has held safety regulation and air navigation since 1956 and has never held economic power, because Parliament refused in 1956 to create a body that could both deny a safety certificate and withhold a commercial route. The Realm’s aviation policy has kept that line for seventy years, through the abolition of the Civil Air Transport Board and the deregulation of the market, and the Markham ministry declined to cross it for a Bill about fares and mergers.

The Act therefore builds nothing. It gives powers to a Minister who already existed, funds two Funds, appoints one adjudicator, and creates no institution at all, which is unusual for a statute of its scope and was a matter of some pride to its drafters.

Appeal

A decision under Part 2 may be challenged in the courts on a point of law and on the ordinary grounds of administrative review, including under the American Rights Act where a right declared by that Act is engaged. Section 2.2 of the Rights Act applies to the Minister as to any public authority, which means that a Minister refusing consent must identify the lawful authority for the refusal, and the reasons requirement at section 10.2 of this Act is drawn to satisfy the duty to give reasons at section 62 of that one.

Compensation claims under Part 4 go to the adjudicator, whose decision binds the carrier and not the passenger, so that a dissatisfied passenger keeps every remedy they had.

The Act in operation

What has worked

Part 4 has worked completely and is popular beyond any expectation the ministry had. Compensation claims are made in very large numbers, are mostly determined within the fourteen days, and the sums are large enough to matter and small enough not to threaten a carrier. Punctuality has improved measurably across the industry, which the carriers attribute to their own investment and the ministry attributes to section 23.2, and both are probably partly right. Section 25 ended the practice of advertising a fare that nobody could pay, and the industry’s own figures show that the change cost it less than it had predicted.

Part 3 has worked and has cost more than forecast. Forty-one communities are designated, against the twenty-five the ministry’s original estimate assumed. The tenders have generally attracted bidders, the subsidy per passenger is high and is published, and section 19’s notice requirement has preserved more services than section 14’s designation power has restored.

Part 5 has been used once, in 2026, and worked. A regional operator ceased trading in October of that year with about eleven hundred people abroad, and all of them were home within nine days, at a cost the Repatriation Fund absorbed without difficulty. The episode is regarded as the Act’s cleanest success and is also the least instructive, since the operator was small and the Fund had been accumulating for two years against a demand nobody had yet made.

The ministry’s own review notes the obvious point. A Fund sized by contributions from every carrier is a Fund sized against the failure of a small one, and the failure of a trunk carrier would exhaust it in days. What happens then is not provided for. Section 31 allows recovery from the failed carrier’s assets, which in the failure of a trunk carrier would be worth a fraction of the cost and would arrive years later.

Part 6 has worked at the bottom of the market and has been irrelevant at the top, since the large carriers already paid above the prescribed minima and the practice the Part was aimed at was concentrated among contractors and agencies. Ground handling is where it has bitten, and ground handling is where the Realm’s aviation labour disputes have moved since.

The consequence nobody intended

The Act’s most contested effect was not designed and follows from section 8.3.

A carrier in difficulty can no longer be bought by another carrier. The hub test forbids consent where the transaction would give one carrier a leading position at more than a quarter of the Realm’s principal airports, and the only exception is a failing carrier where no less restrictive means is available. The exception exists and is narrow, and the Realm has discovered that in a six-carrier industry the buyers who would want a failing airline are precisely the ones the hub test excludes.

In 1978 and after, a carrier in trouble was absorbed. Braniff went into Orbit and the name was retired. Pan American, which could not be absorbed because it was publicly owned, bought a domestic network instead. Consolidation was how the industry handled failure, and it was ugly and it worked.

Cardinal Air, a secondary carrier operating from the interior, has been in difficulty since 2027. Three carriers have examined it. Two were refused informal indications under section 8.3, and the third withdrew. It cannot be bought, it cannot presently be rescued by its own creditors, and if it fails, thirteen designated communities lose the carrier that tendered for them and Part 5 is engaged for several thousand passengers.

The remaining buyer is the Realm, and the Realm already owns an airline. Section 12 requires the Minister to disregard Crown ownership in considering an application under Part 2, and it says nothing whatever about the Crown acquiring a carrier, because in 2022 nobody thought to ask.

The argument is therefore about something the Act’s supporters and opponents both failed to anticipate: whether a statute passed to prevent one carrier from dominating the industry has produced a position in which the only available rescuer is the state, and whether a Realm that already owns its flag carrier can acquire a second airline without conceding that it has reversed 1978 by accident.

The lawyers have found three routes and none is comfortable. The failing-carrier exception at section 8.3 could be invoked, which requires the Minister to be satisfied that no less restrictive means is available and would produce the concentration the Act was passed to prevent, in the name of the Act. The Act could be amended to widen the exception, which several members have proposed and which would take a session the ministry does not obviously have. Or the Crown could buy the carrier, which section 12 does not forbid because section 12 is about how a Crown-owned carrier is to be treated and not about how one comes to be owned.

The third route is the one the Realm is arguing about, and the argument has scrambled the usual positions. Members who supported the Act because it constrained corporate power find themselves opposing public acquisition; members who opposed the Act as an interference in the market find themselves preferring public acquisition to a weakened merger test. The Transport Minister has said only that the Act will be applied as it stands, which is what a minister says when the department has not decided.

The ministry’s position is that no decision has been taken. The Conservative and Crown Union’s position is that the Act should be amended to widen the failing-carrier exception. The Left and Solidarity Bloc’s position is that the Realm should buy Cardinal Air and stop pretending the question is difficult. The Register makes no prediction.

The Act and the polities

The Act is federal and the airports are not, which is the structural awkwardness running through its administration.

Most of the Realm’s principal airports are owned by polities, municipalities, counties or airport authorities constituted under polity law, and the federal government owns almost none of them. The Realm’s aviation competence covers the carriers, the airspace, the certificates and the traffic rights; it does not cover the ground. This is why the slots Part could not survive committee, and it is why section 9.1 obliges the Minister to consider a merger’s effect on other carriers’ access to gates and ground handling without giving the Minister any power over gates or ground handling at all.

Part 3 works the other way and is the Act’s most successful piece of federalism. A polity, a treaty nation, a municipality or a county may apply for designation under section 14.2, the Minister must publish the decision and the reasons, and the annual report under section 18.1 must name every community that applied and was refused. The refusals are the part the polities read, and the requirement to publish them has done more to discipline the designation power than the appeal provisions have.

Fourteen polities have designated communities. The largest number are in the interior and the Delta, and three are in Alaska, where the Act operates in conditions it was not drafted for: several Alaskan communities have no surface access of any kind, so the section 14.1 test that no reasonable alternative means of transport is available is satisfied trivially, and the question is not whether to designate but what a tender should specify when the alternative to the aircraft is nothing.

The Act abroad

The Act applies to scheduled services within the Realm and to services from it, and its application to foreign carriers is deliberately partial.

Part 4 applies to any carrier selling a ticket for a journey beginning in the Realm, foreign or domestic, which was contested by two governments during the Bill’s passage and has been enforced against foreign carriers eleven times since. Part 6 applies to persons performing work within the Realm. Parts 2, 3 and 5 apply only to carriers licensed to operate scheduled services within the Realm.

The open skies arrangement with Great Britain was expressly preserved. It is older and more permissive than either realm’s arrangement with anyone else, it rests on the shared sovereign and on mutual recognition of certificates and licences, and the ministry gave an undertaking during the Bill’s passage that nothing in the Act would be applied so as to disturb it. British Airways is accordingly subject to Part 4 on journeys beginning in the Realm and to nothing else.

The Transport Ministry’s traffic-rights negotiations are untouched by the Act, which was the subject of a specific amendment moved and defeated: an attempt to require the Minister to have regard to Part 3 designations when negotiating traffic rights was rejected on the ground that a treaty negotiation conducted under a statutory duty is a treaty negotiation with one hand disclosed.

Criticism

The levy is regressive and the ministry has never denied it. It falls on every passenger on a dense route at a flat rate, which means the same sum is paid by a person flying for a funeral and a person flying weekly on expenses, and it funds services used disproportionately by people who are better off than the median passenger on the routes that pay for them. The defence is that a levy visible on every ticket is politically survivable in a way that a general appropriation is not, and that the alternative to a regressive levy was no levy.

The hub test is a blunt instrument. A threshold expressed as a fraction of principal airports takes no account of which airports, how contested they are, or what alternatives exist, and section 8.3 accordingly forbids some transactions that would be harmless and permits some that would not.

Ministerial administration is lobbied administration. The Act’s procedural safeguards make the lobbying visible and do not reduce it, and the Realm’s aviation press has documented the pattern of access without ever establishing an improper decision. The deeper objection is not corruption but horizon: a Minister decides within a Parliament and the industry invests across decades, and an approval regime running on five-year political time will be gamed by applicants who can wait for a different Minister. Two of the transactions refused since 2023 have been resubmitted in modified form and one is pending.

The compensation regime is paid for by passengers. Carriers price the expected cost of section 21 into fares, as they price fuel, and the Realm’s transport economists estimate that the passenger compensation scheme is funded almost entirely by a small increase in the fares of passengers whose flights are not cancelled. This is true of every insurance arrangement and is not by itself an objection, and it does mean that the Part’s popularity rests partly on the belief that somebody else is paying.

Part 3 has changed who flies the routes rather than only whether they are flown. The tenders have been won disproportionately by small operators flying small aircraft, which was not what the ministry expected and is a rational response to a contract specifying a frequency and a capacity rather than a market. The consequence is that a designated community now typically has a service operated by a carrier the trunk network does not connect to conveniently, so the passenger reaches the hub and then buys a second ticket. The Act secured the service and did not secure the journey, and the ministry’s 2027 review identified through-ticketing as the largest unresolved defect in the Part.

And the Act does nothing about airports. Slots, gates and ground handling are the mechanisms by which hub dominance actually operates, the Bill as introduced contained a Part on slot allocation, and it was removed in committee at the request of the airport authorities and the polities that own them. The Act therefore regulates the carriers and leaves untouched the facilities through which the carriers exclude one another, which its critics regard as the most serious gap in it and which the ministry has undertaken to revisit twice without doing so.

Assessment

The Airline Regulation Act 2022 is a modest statute about a large subject, and its modesty is the most interesting thing about it.

It could have restored the regime of 1956, and its supporters in the Bloc wanted it to. It did not, because the ministry had looked at the Civil Air Transport Board’s record and concluded that a system which set fares and licensed routes had produced high fares, protected incumbents and hidden its subsidies, and that the Realm was not obliged to choose between that and nothing. What the Act does instead is name the things the open market had failed to produce and buy them individually: a service to communities that cannot pay for one, a remedy for a passenger the carrier has stranded, a floor under the terms of the people who do the work, and a test for mergers that measures the thing that matters.

Its drafting reflects that. There is no new institution, no licence to operate a route, no approval of a fare, and no body standing between a carrier and its customers. There is a Minister with a set of duties, two Funds, an adjudicator, and a requirement to publish almost everything.

There is a criticism of the Act’s whole method that is worth stating because it is the serious one. A statute that buys individual outcomes from an open market is a statute that must keep buying, and each of the Act’s duties creates a permanent charge on somebody: the levy on dense-route passengers, the compensation on carriers, the contribution on every ticket for the Repatriation Fund, the labour minima on the contractors. None of these is large and all of them are indefinite, and the Act contains no mechanism by which any of them ends. The regulated system of 1956 at least had the merit that its subsidies were structural and invisible; the Act’s are itemised and eternal.

The ministry’s answer is that an itemised and eternal subsidy is a subsidy the Realm can see, argue about and choose to stop, and that this is what accountability looks like when it is inconvenient.

Whether it has succeeded depends on which Part is being asked about, and the honest answer is that the passenger provisions have worked better than anyone expected, the service provisions have worked and cost more than anyone expected, and the market provisions have worked in a way nobody expected at all. A statute written to stop a single carrier from dominating the Realm’s airports has left the Realm’s largest airline in public ownership, a second airline unsaleable, and no obvious buyer but the government, and the Realm is now conducting, without having intended to begin it, the argument about public ownership of air transport that it thought it had settled in 1978.

That outcome is not an indictment of the Act and the article does not present it as one. It is what happens when a Realm regulates the transaction and not the industry. The Act took the sharpest instrument available to it, a prohibition on a class of merger, and applied it to a sector in which mergers had been the customary means of absorbing failure. Nobody at any stage argued that failure should be absorbed some other way, because in 2022 no carrier was failing and the question looked academic. The provision worked exactly as drafted, and the drafting was complete as to what it forbade and silent as to what should happen instead.

The Realm has done this before. The Rights Act of 1866 was drafted with great care as to what federal authority might not do and silent as to who else was bound, and the silence governed a century. The scale is not comparable and the shape is, which is the observation the Realm’s legislative drafters make about the Airline Regulation Act when they teach it, and it is the reason they teach it at all.

Chronology

Trivia

See also

• AmRail, whose Crown Limited is the surface alternative section 34 has most often in view
• Civil Aviation Authority of America: safety and navigation, deliberately untouched by this Act
• Pan American World Airways: the state carrier, which the Act requires to be treated no better than the others
• Orbit Airlines: the worker-owned carrier, and the only one to support the Bill
• American Rights Act: whose section 2.2 and section 62 govern the Minister’s decisions under this Act
• Thomas Markham: whose ministry carried it
• Institutions and Government

Categories

Institutions · Law · Transport · Aviation · Parliament · Regulation · Public Ownership