Headwinds ahead for airlines? The UK Civil Aviation Bill explained

The UK Civil Aviation (Consumer Protection and Regulatory Reform) Bill (the Bill), which has passed through the House of Lords and has now been tabled in the House of Commons, aims to strengthen consumer protection and modernise aspects of the UK's aviation regulatory framework. The Bill would give the Civil Aviation Authority (CAA) new direct enforcement powers and create the legislative foundations for future reforms to passenger rights, airspace modernisation, safety regulation and airport slot allocation. 

The Bill represents one of the most significant expansions of the CAA's consumer enforcement powers in recent years. While many of the detailed passenger rights reforms will be developed through secondary legislation and consultation, the direction of travel appears clear: stronger consumer protection, increased regulatory scrutiny and potentially significant financial penalties for non-compliance. For airlines, the proposed reforms are likely to be felt most acutely through the expansion of the CAA's enforcement toolkit and the potential for further passenger rights reforms to follow.

What key changes does the Bill make? 

1. Expanded CAA enforcement powers

Perhaps the most significant change for airlines is the substantial expansion of the CAA's consumer enforcement powers. The Bill would designate the CAA as a direct enforcement authority for aviation consumer protection legislation, bringing it more closely into line with regulators such as the Competition and Markets Authority (CMA).

The proposed powers include:

• the ability to require the production of information and documents;
• formal investigative powers, including entry to business premises;
• powers to interview individuals and gather evidence; and
• the ability to impose substantial financial penalties.

For serious breaches, penalties could reach the greater of £300,000 or 10% of annual worldwide turnover. The CAA would also have the ability to impose fines for non-compliance with any requests for information or documents. 

The Bill also enhances the CAA's ability to enforce certain consumer transparency requirements, including obligations on airlines to inform passengers which carrier will operate their flight, and requirements relating to the publication of a list of air carriers prohibited from operating in the UK. For airlines, the practical significance of these changes is less the creation of new substantive obligations and more the CAA's ability to investigate alleged breaches and impose very significant administrative and financial penalties without needing to rely on court proceedings.

The Bill also contains a number of related regulatory measures, including additional powers for the CAA to make and enforce aviation safety rules, together with measures intended to support airspace modernisation and wider aviation system reforms. Taken together with the proposed consumer enforcement reforms, these provisions further strengthen the CAA's role as the UK's primary aviation regulator.

2. Passenger rights reform

The Bill confers broad powers on the Secretary of State to make regulations relating to passenger rights and consumer protection across the aviation sector. While much of the detail will be developed through secondary legislation and consultation, the Bill signals a clear policy intention to strengthen protections for air passengers. 

The Government will be required to consult on future reforms, including in relation to:

• flight disruption compensation;
• baggage claims and airline liability;
• pricing transparency;
• complaints handling procedures;
• protections for passengers with allergies and other medical conditions; and
• accessibility and assistance for disabled passengers.

Accessibility is a notable feature of the proposed reforms, with the Bill requiring consultation on a range of accessibility-related issues and requiring Ministers to have regard to the desirability of strengthening passenger rights when exercising the new regulation-making powers.

Reflecting that focus, the Bill would also remove existing compensation limits for the loss, damage or destruction of wheelchairs, mobility aids and other assistive devices on domestic UK flights.

3. Mandatory ADR

The Bill also enables the introduction of mandatory consumer redress measures, including requirements for airlines to participate in approved alternative dispute resolution (ADR) schemes. This would provide passengers with a more accessible route to resolving complaints without court proceedings and may require changes to existing complaints-handling processes.

While many airlines already participate in ADR schemes such as those operated by AviationADR and CEDR on a voluntary basis, by moving to a mandatory regime the proposed reforms would create a statutory framework for broader participation and reflect a wider policy objective of improving consumer access to redress.

4. Airspace modernisation and future slot reform

The Bill supports the Government's ongoing programme of airspace modernisation and seeks to facilitate the implementation of approved airspace changes. It also expands the powers available to support delivery of the UK's broader airspace strategy.

In particular, it:

• supports the operation of the UK Airspace Design Service (UKADS);
• provides additional flexibility in relation to the funding and charging of airspace redesign activities; and
• strengthens powers to direct airports and airlines to implement approved airspace changes where necessary to support the UK's airspace strategy.

Taken together, these measures are intended to reduce barriers to implementing approved airspace modernisation initiatives and accelerate delivery of the UK's airspace strategy.

The Bill also gives the Secretary of State broad powers to make regulations governing airport slot allocation and schedule coordination, creating a basis for potential future reform of the UK's slot regime. Areas that could be addressed through future regulations include slot allocation, access for new entrants, slot transfers and exchanges, slot withdrawal and slot utilisation requirements.

Although the immediate impact of these provisions is likely to be limited, airlines operating at capacity-constrained airports should monitor developments closely. The Bill does not itself change the rules governing slot allocation, transfer or utilisation, but it creates a mechanism through which more substantive reforms could be introduced in future through secondary legislation.

The Bill also requires the Government to review the impact of airport drop-off charges on airport users. While not a headline reform for airlines, the requirement reflects the Bill's broader focus on consumer issues across the aviation sector.

Commentary

While much attention is likely to focus on future passenger rights reforms, the most significant feature of the Bill may be the transformation of the CAA's consumer enforcement toolkit. The Bill would move the CAA closer to regulators such as the CMA, equipping it with powers to investigate potential breaches directly, compel the production of information and impose substantial financial penalties. How actively the CAA chooses to deploy these powers remains to be seen, but airlines should expect increased regulatory scrutiny and a greater focus on consumer compliance.

The proposed reforms also reflect a broader trend within UK consumer regulation towards stronger regulator-led enforcement. The CAA's proposed powers sit alongside the enhanced consumer enforcement regime introduced under the Digital Markets, Competition and Consumers Act 2024 (DMCCA), which significantly expanded the CMA's ability to enforce consumer protection law directly and to impose substantial financial penalties without involving the courts. Against that backdrop, the Bill can be seen as part of a wider shift towards more proactive regulatory oversight and enforcement across regulated sectors.

The Bill should also be viewed in the context of wider developments in passenger rights regulation internationally. In the European Union, policymakers have continued to review and reform the EU261 compensation regime, including proposals to amend passenger compensation and assistance rights in cases of delay or cancellation. Although the UK is no longer bound by future EU aviation legislation, many airlines operate across both jurisdictions and will need to monitor the potential for regulatory divergence as the UK develops its own approach to passenger rights reform.

The focus of the Bill on accessibility is also notable. In particular, the proposed removal of compensation limits for the loss, damage or destruction of wheelchairs and mobility aids on domestic UK flights reflects a broader policy focus on strengthening protections for passengers with disabilities and reduced mobility. While the reforms are limited in scope, they may indicate a willingness by policymakers to move beyond traditional liability frameworks in areas considered particularly important to consumers.

What happens next?

The Bill has now completed its passage through the House of Lords and will next be considered by the House of Commons, with its first reading scheduled for 1 September 2026. Airlines should continue to monitor its progress closely as further amendments remain possible.

Taken together, the reforms signal a clear direction of travel towards enhanced consumer protection and stronger regulatory oversight. While many of the headline passenger rights reforms will require further consultation and secondary legislation before taking effect, airlines may wish to begin considering how expanded CAA enforcement powers, mandatory ADR and future passenger rights reforms will affect their compliance frameworks, complaints handling procedures, consumer-facing policies and operational processes.

If you would like any further information or advice on how the proposed changes may affect your organisation, please contact Chloe Challinor and Patrick Bettle in Burges Salmon’s aviation team. 

The authors would like to thank Zac Bourne for his assistance in preparing this article.