Modifying licences
Section 22: Modifying licence conditions and licence area
99.This section provides the process the CAA must follow for modifying conditions of a licence or the area for which the licence is granted. “Modifying” a licence condition is defined in section 72 and comprises adding, removing or altering a licence condition.
100.The process requires the CAA to publish a notice that specifies the proposed modification, give reasons for and state the effect of the proposed modification and consider any representations received during the period specified in the notice (subsections (2) to (4)).
101.If after doing so the CAA decides not to make the modification it must publish its reasons (subsection (5)).
102.If, following consideration of representations, the CAA wishes to make significant changes to the proposed licence modification then the process described in subsections (2) to (4) will need to be repeated in respect of the amended proposal (subsection (7)).
103.If the CAA decides to make the proposed modification to a licence condition, it will take effect from the date specified by the CAA in the notice it publishes under subsection (6). This must be at least six weeks after the day on which this notice is published (subsection (9)). The notice must also state how the CAA took into account representations received and the reasons for the modification (including the reasons for any differences from the proposed modification) and its effect (see subsection (8)).
104.An application for a direction to suspend a licence condition may be made under paragraph 12 of Schedule 2 where an application for permission to appeal under section 25 has been made.
105.Paragraph 13 of Schedule 2 states that if an application for a direction to suspend the modification of a licence condition is made in the six week period (referred to in subsection (9)), the modification does not come into effect for ten weeks from the date the decision on the modification was published. This extension is to give the Competition Commission at least four weeks to consider the application for a direction to suspend the modification of the licence condition before it would otherwise come into effect. The grounds upon which such a direction may be given are set out at paragraph 14(2) and the effects of such a direction are set out at paragraph 14(3).
106.The area for which the licence is granted is not appealable and a proposal to modify that area is also not appealable. As a result the effect of these decisions cannot be suspended and hence the six week delay in coming into force is not required for such decisions.
Section 23: Restriction on power to modify
107.Section 23 provides a restriction on the CAA’s powers to modify licence conditions. It applies where a licence condition contains an exception (“derogation”) relating to or operating by reference to financial arrangements entered into before section 3 of the Act comes into force. This may occur, for example, where a ring-fencing licence condition is subject to a derogation to prevent it cutting across financial arrangements entered into by the licence holder or a person connected to the licence holder before section 3 comes into force.
108.In these circumstances, the CAA cannot modify the licence by removing or restricting the derogation unless it has determined that: (i) there has been a material change in circumstances since the derogation was granted; and (ii) the benefits of modifying the derogation are likely to outweigh its adverse effects to users of air transport services. The CAA must publish its determination on or before giving notice of its proposal to make a licence modification.
109.For example, a typical ring-fencing licence condition found in other regulated sectors is a prohibition on the granting of security over assets of the regulated business. Where an operator of an airport area (or a person connected to the operator) has existing lending in place at the time that section 3 comes into force, which is secured on the assets of the regulated company, the regulator may choose to include such a condition in the licence but with a derogation in respect of the existing lending. In these circumstances the CAA would not be able to remove or restrict this derogation until the dual test had been satisfied.