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Flybe - Statement

– in the House of Lords at 3:10 pm on 14th January 2020.

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Photo of Baroness Vere of Norbiton Baroness Vere of Norbiton Parliamentary Under-Secretary (Department for Transport) 3:10 pm, 14th January 2020

My Lords, with the leave of the House, I shall now repeat in the form of a Statement the Answer to an Urgent Question given earlier today in the other place by my honourable friend the Parliamentary Under-Secretary of State for Transport. The Statement is as follows:

“Thank you, Mr Speaker. I thank my right honourable friend for raising this issue. I know she is a strong advocate for her own local airport.

Let me stress that Flybe remains a going concern. Flights continue as scheduled, and passengers should continue to go to the airport as usual. I must also emphasise that regional air carriers and airports are of vital importance to the Government, playing a key role in providing connectivity between communities, regions and nations across the United Kingdom.

The speculation surrounding Flybe relates to commercial matters. The Government do not comment on the financial affairs of, or speculation surrounding, private companies. We are working very hard, but there are limits commercially to what a Government can do to rescue any particular firm.

Be in no doubt, however, that we understand the important role Flybe plays in delivering connectivity across the whole of the United Kingdom. This Government are committed to ensuring the country has the regional connectivity that it needs. That is part of an agenda of uniting and levelling up across the whole country. We do not have good enough infrastructure in many areas, and people do not feel they have a chance to get to the opportunity areas with high-skill and high-paid jobs. That is what this Government are addressing now.

I hope the House will appreciate that I regret that I am not able to go into further detail at this stage, but I will update the House further when it is appropriate to do so.”

Photo of Lord Tunnicliffe Lord Tunnicliffe Opposition Deputy Chief Whip (Lords), Shadow Spokesperson (Defence), Shadow Spokesperson (Treasury), Shadow Minister (Transport) 3:11 pm, 14th January 2020

My Lords, Flybe is an important regional airline which provides vital support to communities and regional economies across the UK. The airline operates more than half of the domestic flights outside London and is one of only a handful of airlines to offer flights to Northern Ireland, with 68% of passengers from Belfast City Airport travelling with Flybe.

We need to protect passengers, staff and critical routes. What engagement have the Government had with the unions Unite and BALPA? Will the Minister ensure that those unions are fully engaged in the process going forward?

The climate change committee has said that the UK is currently “way off track” in meeting its climate change targets. Cutting air passenger duty across the board is not the right way forward. What are the Government doing to protect critical routes in a more targeted way and that also promotes sustainability?

After the collapse of both Thomas Cook and Monarch, what lessons have the Government learned, moving forward, to support Flybe?

Photo of Baroness Vere of Norbiton Baroness Vere of Norbiton Parliamentary Under-Secretary (Department for Transport)

I thank the noble Lord, Lord Tunnicliffe, for his questions. He did a good job of outlining how important Flybe is to regional connectivity. The Government are aware of this, and I assure noble Lords that for certain routes public service obligations will be in place. These are put in place to make sure that regional connectivity continues. I can reassure noble Lords that there is a mechanism by which local authorities can select a new provider for seven months and then retender that particular route. However, I stress that Flybe continues to operate as normal and that passengers should arrive at the airport for their flights as planned

On air passenger duty, as with all taxes the Government keep it under review. On the issue of sustainability in the future, we are carefully considering the climate change advice we received recently. We will set a clear ambition for the aviation sector. We plan to update both Houses shortly on the Government’s position and we will have proposals for consultation.

Photo of Baroness Randerson Baroness Randerson Liberal Democrat Lords Spokesperson (Transport)

My Lords, there is clearly regrettable instability in the aviation industry at the moment and a new approach is required. Can the Minister tell us when we can expect the aviation insolvency Bill to come to this House, because it is obviously urgently required?

It is important to note that Flybe is of much greater significance than Monarch, for example, to our country because it is about much more than interrupted holidays. It provides that vital link with some of the most isolated and distant parts of the UK. The answer to the problem should not include a general reduction in APD. If the Government are to have any credibility on climate change issues, they should not go down that path. Will the Government commit to investigating the domestic routes involving Flybe to sort those which are genuinely socially necessary from those which are economically viable? Will they look at increasing subsidy to those socially necessary routes in isolated areas where there is no viable rail alternative? Where there is a railway, will the Government commit to reintroducing good reliable services to the most distant parts of this country?

Photo of Baroness Vere of Norbiton Baroness Vere of Norbiton Parliamentary Under-Secretary (Department for Transport)

The noble Baroness, Lady Randerson, has made some very helpful suggestions, should they ever be needed in due course, about looking at which domestic routes would benefit from support. I reiterate that this airline continues to operate as normal and therefore at the moment the Government have no plans to kick off that work.

On the airline insolvency review, it follows from the important work which was done for the department by Peter Bucks. He looked at airline insolvency. As I am sure the noble Baroness knows, it is incredibly complicated. When he published his report, he said that there is no silver bullet. The noble Baroness will also know that we announced legislation in this area in the Queen’s Speech, and I expect it to come to the House in due course.

Photo of Baroness McIntosh of Pickering Baroness McIntosh of Pickering Conservative

My Lords, I entirely endorse the commercial strictures that my noble friend set out, but will she take this opportunity to explain to the House the Government’s policy towards regional airlines so that they will have a vibrant future going forward and, in particular, the possibility of regional airlines delivering on public service obligations?

Photo of Baroness Vere of Norbiton Baroness Vere of Norbiton Parliamentary Under-Secretary (Department for Transport)

My Lords, my noble friend is quite right. I reiterate that regional connectivity is critical in aviation and across all modes. We will do whatever we can to ensure excellent regional connectivity going forward. Public service obligations can be incredibly important for social, medical and economic reasons. At the moment, we can add PSOs only on existing routes to London where they are in danger of being lost. However, we will look at all options for expanding the scope of our PSO policy in future.

Photo of Lord Kilclooney Lord Kilclooney Crossbench

My Lords, since Northern Ireland has no bridge or tunnel connections with the rest of the United Kingdom, and since some 90% of the flights from Belfast City Airport are by Flybe going to the regions of Scotland, Wales and England, will the Government take into account the future viability of Belfast City Airport as they consider Flybe?

Photo of Baroness Vere of Norbiton Baroness Vere of Norbiton Parliamentary Under-Secretary (Department for Transport)

I thank the noble Lord for his question. It is the case that, should Flybe at some point in future not be operating, there would be a significant impact on certain airports, and I know that Belfast is one of them. I believe there is already one PSO in operation in Belfast, but I will have to check and I will come back to the noble Lord if I am wrong on that. The Government will look at all routes. Regional connectivity is critical to us, so where we need new PSOs, we will put them in place.

Photo of Baroness Jones of Moulsecoomb Baroness Jones of Moulsecoomb Green

My Lords, the Minister must know that aviation is the fastest-growing source of dangerous carbon emissions. If we are to get to net-zero by 2050, we will have to cut flying in some way. At the moment, aviation is subsidised by being exempt from a tax on its fuel. Will the Government consider lifting that exemption and imposing a tax that reflects the true cost of flying?

Photo of Baroness Vere of Norbiton Baroness Vere of Norbiton Parliamentary Under-Secretary (Department for Transport)

I am sure that the noble Baroness is well aware of the reason that aviation fuel has no tax on it. The International Civil Aviation Organization is absolutely critical in getting the global aviation industry to work as a whole in many areas, including counterterrorism and climate change. If we are to reduce carbon emissions, we will need the members of ICAO to work together to achieve it. Under the Chicago convention, which set up ICAO, no nation can put tax on aviation fuel.

Photo of Lord Shipley Lord Shipley Liberal Democrat

My Lords, the Minister said that the Government would look at all the options. Perhaps I may suggest that they take a look at the landing charges at large airports for smaller commercial airlines. They might be subject to PSOs, but the overall issue of the cost base of small commercial airlines is particularly relevant.

Photo of Baroness Vere of Norbiton Baroness Vere of Norbiton Parliamentary Under-Secretary (Department for Transport)

The noble Lord makes a very important point, but of course landing charges are set on a commercial basis.

Photo of Baroness Armstrong of Hill Top Baroness Armstrong of Hill Top Labour

My Lords, regional connectivity is very important, and I am pleased that the Government keep repeating that phrase. However, if you come from the north-east, there is the threat of the Flybe difficulties; LNER is now telling people not to travel north on two weekends out of the next six because of engineering works and disruptions; and there is now real uncertainty over the future of HS2 because of the Government’s announcements post the election. Does the Minister understand that regional connectivity is absolutely critical to the survival of the manufacturing industries of places such as the north-east when so many other things are against them? All these issues coming together spell really bad news for the north-east.

Photo of Baroness Vere of Norbiton Baroness Vere of Norbiton Parliamentary Under-Secretary (Department for Transport)

This Government are absolutely aware of all the issues that the noble Baroness has raised. We are taking a new look at regional connectivity to make sure that we are able to get people to where they want to be across all modes. She mentioned that the train service is sometimes out of service at weekends. Of course, that disruption is simply a function of the amount of money that we are putting in for maintenance and for enhancements.