Transatlantic Air Routes

Part of the debate – in the House of Commons at 3:48 pm on 11 March 1991.

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Photo of Malcolm Rifkind Malcolm Rifkind The Secretary of State for Transport 3:48, 11 March 1991

No, I do not agree with the hon. Gentleman's interpretation. The limits on the new airlines that are to replace Pan Am and TWA are capped to the level of activity that those two airlines were planning for this summer. Thereafter, for the next three years, the two new airlines will be limited to a maximum growth equivalent to the services being provided by British airlines —whereas, under the existing Bermuda 2 agreement, their predecessors could have increased their operations to 150 per cent. of those of United Kingdom airlines.

The second designated British carrier is likely to be Virgin Atlantic Airways, because it is currently the only applicant.

Not only British Airways but other airlines were involved with our negotiating team, and were consulted during the long weeks of negotiations as to the kind of package that would, at the end of the day, be acceptable in terms of the interests of British airlines. I am grateful not only to British Airways but to the other airlines that have adopted the same position.

Of course the hon. Gentleman is right in saying that British Airways will see the matter purely in terms of the impact on the company itself; but I believe that, even when seen in that perspective, the agreement presents exciting new opportunities. [HON. MEMBERS: "Where?"] I am referring especially to the seventh freedom rights, which will allow British Airways in particular the opportunity, for the first time, to fly from continental locations across the Atlantic to the United States.

In its discussions with us, British Airways identified that as one of the most important objectives that it hoped the negotiation would achieve. I am delighted that such opportunities have been agreed in the United Kingdom —almost for the first time anywhere in the world—and it is important that British Airways will be able to benefit.

The hon. Gentleman is also correct in saying that the discussions on cabotage and inward investment could lead to liberalisation only with the approval of the United States Congress, as well as that of the Administration. It is precisely for those reasons that we did not consider statements on intent by the United States Administration on those issues sufficient to form a crucial part of the existing package.