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United Airlines

Question for Urgent Oral Answer – in the Northern Ireland Assembly at 3:30 pm on 7th November 2016.

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Photo of Robin Newton Robin Newton Speaker 3:30 pm, 7th November 2016

Ms Sinéad Bradley has given notice of a question for urgent oral answer to the Minister for the Economy. I remind Members that, if they wish to ask a supplementary question, they should continually rise from their place. The Member who tabled the question will be called automatically for a supplementary.

Photo of Sinéad Bradley Sinéad Bradley Social Democratic and Labour Party

Ms S Bradley asked the Minister for the Economy to outline all conversations and communications he has had with the European Commission regarding the legality of the bailout of the United Airlines Belfast to Newark route prior to and after issuing ministerial direction.

Photo of Simon Hamilton Simon Hamilton DUP

It is important to recognise that we were not obliged in this case to notify the European Commission of the support to United Airlines, as it was our view that the agreement did not meet the criteria to be considered as state aid and therefore did not require Commission approval. At the request of United, the agreement with it required engagement with the Commission to confirm the position on state aid. We had indicated to the Commission back in August that we would engage on the agreement, and, in September, my Department provided a paper that had been agreed with United setting out, for the purpose of getting certainty on the position, the case for support.

Members will also recognise the tight deadline set by United to agree support for the route. When United indicated to us during the summer that it was considering reallocating the plane, we had to act quickly to put in place an agreement to sustain the route, and that was achieved in mid August. Given the deadline for putting the support in place, there was no opportunity during that period to engage with the Commission before then.

We recognised from the outset that the agreement would be of interest to the Commission and other airlines, and therefore the value of meeting the Commission. The meeting took place on 27 October and involved officials from my Department and representatives of United. At the meeting, my Department was informed for the first time that a complaint had been received by the Commission. The Commission also indicated that it was under a duty to investigate the complaint and that its initial assessment, although not a formal legal position, was that state aid was present. In the light of the Commission's viewpoint on the support, United decided to terminate the agreement at the end of last week and returned in full the one payment that had been made.

Photo of Sinéad Bradley Sinéad Bradley Social Democratic and Labour Party

I thank the Minister for his answer. If I am right, he has told us that no conversation happened before the ministerial direction, which I find quite disturbing. I put it to the Minister that this is our only direct air route from Northern Ireland to the United States. There was no room for a blunder, and yet a blunder there was. Can the Minister advise on what urgent action he has taken, along with the Executive, to address the issue and ensure that we have a direct route to the United States as soon as possible?

Photo of Simon Hamilton Simon Hamilton DUP

I share the Member's regret at losing the flight, but she cannot have it both ways. She cannot argue, on the one hand, that it is important that I, in my role, and the Executive as a whole step in and take action to try to maintain the route — the Member acknowledged the importance of seeking to maintain a daily direct transatlantic route — and, on the other hand, with the set of circumstances that we faced back in the summer, which was effectively an ultimatum from United Airlines, that we should not have moved to take the requisite action. Ultimately, it did not work out on this occasion, but, faced with the same set of circumstances again, I would do the same thing. The reason for that is that I am charged in my job to stand up and fight for Northern Ireland. Faced with the circumstances that we were in over the summer, I put in place a package of support in conjunction with the International Airport, which we work with very closely. On this occasion, it did not pass muster with the European Commission, for which, of course, the Member and her party are great cheerleaders. By the indication that it gave during the meeting on 27 October, it effectively scuppered our one and only direct transatlantic flight. I am sure that the Member will reflect on that point.

The Member has issued statements over the past couple of days indicating that we were reckless with public money. I hope that she and her party will recognise that, because we knew that the agreement would be of interest to the Commission and given that United wanted to take a view from the Commission — this is why we were not reckless and did not do the wrong thing — we put in place very clear criteria to ensure that, if the Commission said that there was state aid present, the Executive would get all the money paid back with interest.

Therefore, the one payment of $1 million that has been made to United Airlines is, I understand, coming back to us with interest today. The Member should reflect on that when she talks about the Executive and me being reckless on the issue.

Photo of Steve Aiken Steve Aiken UUP

I thank the Minister for his comments. I am sure that the Minister, with me, would be considerably concerned about the impact that this is having on the airport and Northern Ireland's reputation. My specific question is around who raised the issue with the EU Commission. Going forward, one of the things that we have considerable concern about is what is increasingly being seen to be a Dublin Airport Authority cartel and the attempts to stifle Northern Ireland air traffic. Does the Minister agree with me that what we need to be looking at doing as part of a revised strategy is the removal of air passenger duty, improving the communication links to the airport and doing something about that unfair competition?

Photo of Simon Hamilton Simon Hamilton DUP

I thank the Member for his comments and regret about losing the flight. As I pointed out in my original answer and in statements issued at the end of last week, we did not believe that this was an issue of state aid. The Member will know that state aid is built upon unfair competition. We did not believe that a situation where we have only one daily flight — seven flights a week — to the States was in any way unfair competition with an airport in Dublin where there is, I think, 155 flights a week. Clearly, no other airports in Northern Ireland — the City of Derry Airport or Belfast City Airport — provide flights to North America. Therefore, we did not think that there was an issue around state aid and competition. That was the no-aid argument that was put to the European Commission at the insistence of United Airlines. It wished to go to the Commission to confirm that. That was the basis on which we engaged with the European Commission, culminating in the meeting on 27 October that I have outlined, where the indication was given by the Commission that this package of support was non-compliant with state aid.

The Member mentioned air passenger duty. It is worth noting again that this flight benefited from having no air passenger duty. I cannot remember when the legislation passed through the House. I think that it was about 2011 or 2012. I think that sometimes the issue of air passenger duty in respect of long haul, given that we have not secured any other direct long-haul flights, is overstated. It was important in trying to keep this flight, and we did keep it for a lot longer, but clearly it has not worked to attract other flights. In respect of short-haul flights, the Member will be aware, given that the International Airport is in his constituency, that over the last while, through the efforts of the International Airport, there has been attraction of a significant number of additional flights which are affected by APD. Obviously those airlines are not being put off.

I think that we all have concerns about the impact that Dublin Airport is having. We need to start seeing it less as our direct competition. It is an airport that has, I think, 30 million passengers going through it annually versus roughly 10 million passengers going through Northern Ireland airports combined, although that has been on the rise. What we need to do, and what I will seek to do in this post, is try to get the airports — I know that they see themselves as being in competition, and they are, in many respects — to work more closely together, treat them all collectively as strategic assets for the Northern Ireland economy and get them all to work for what is best for Northern Ireland without always looking over our shoulder at our perceived competition in Dublin.

Photo of Stewart Dickson Stewart Dickson Alliance

Thank you, Minister. Is the reality of the situation that you raised unrealistic expectations with both Belfast International Airport and United Airlines by your action in taking the ministerial direction? Is the reality of the situation that what we actually need is a clear economic strategy for Northern Ireland that will deliver jobs and businesses, which will drive businesses to want to have air connectivity to the United States and beyond? A clear economic strategy is what will deliver sustainable airlines to us in Northern Ireland.

Photo of Simon Hamilton Simon Hamilton DUP

I do not accept the argument that we raised unrealistic expectations with anyone, not least the International Airport or United Airlines. I hope that the Member appreciates from what I have said already that we worked very closely in conjunction with the International Airport. We spent many hours face to face and on the telephone working with the International Airport to develop the support package, which I think has been, unfairly for the International Airport, characterised as an Executive support package and misses the point that a substantial part, one third, of the support package was coming from the International Airport itself. It was very committed to this. It wanted to do this. It saw it, as I did, as incredibly important for Northern Ireland. That is why we worked very closely together. We will continue to work closely together, even in spite of the setback, to try to improve Northern Ireland's air connectivity. I did not raise unfair or unrealistic expectations with the International Airport, which we work very closely with. United, the Executive and my Department came to the same conclusion around a no-aid argument. It was at United's insistence that we double-checked this with the European Commission. Unfortunately, that is where it went awry; bureaucrats in Brussels have, effectively, put the dead hand on it.

Separating the economic strategy point out a little, I absolutely agree that we need an economic strategy. We have one in place, and we are in the process of refreshing and renewing it. I look forward to it being published in the not-too-distant future and to the Member's wholehearted support for the refreshed and renewed strategy. The Member is right, in a sense. If we want to do lots of things in our economy, not least improve our air connectivity, those will be helped by a growth in our economy. Our economy has grown in recent times. I am very pleased with the growth that we have had in our economy; it has grown by 1·6% in the last year. The Member is right: we need to, in some ways, change the profile of our economy and support strong and emerging sectors that will improve it as a whole and act as a bit of a magnet for more direct air connectivity not just to North America but to a range of important airports around the world.

Photo of Trevor Clarke Trevor Clarke DUP

I am sure that it is not lost on the Minister that the first two Members to ask questions would, only some months ago, have supported the faceless bureaucrats and dictators of Europe who interfered in the good decision that the Minister and his Department made to secure that airline. Given that they interfered and made that decision, how hopeful is the Minister that something can be done to restore that route or encourage some other airline to operate in and out of Belfast International Airport and restore that route back to Northern Ireland?

Photo of Simon Hamilton Simon Hamilton DUP

The Member makes a fair point. Some have extolled the virtues of the European Commission in the Chamber in recent days. When they are next thinking of doing that, they should bear this in mind as it is perhaps the perfect example of the heavy hand of Brussels coming in and impacting negatively on Northern Ireland. We are told that Europe is a friend of Northern Ireland, but here we have our only direct transatlantic link being, in effect, scuppered by the intervention of Brussels bureaucrats.

The Member asks a perfectly natural question in the circumstances: how can we seek to replace the route? It will be challenging to replace the exact same route, but that does not mean that we are not working very hard to try to find similar replacements. I have had conversations even in the last week with the airport about other airlines that may be interested in doing direct transatlantic flights from Belfast. I will continue to follow those up over the coming days to try to secure them. It would be good news and a boost for Northern Ireland if we were able to do that. It is challenging and difficult, but one of the things that the package of support that we put in place for United did was to show many airlines around the world that Northern Ireland is open for business and is looking to attract more direct air routes to all parts of the world. There are more new airlines coming forward. Whilst this is clearly bad news and a setback for the International Airport and Northern Ireland as a whole, it has at least had the benefit of raising our profile in the airlines sector. Many airlines are approaching different airports in Northern Ireland to see whether they can come into Northern Ireland and what sort of assistance we, as an Executive, might be able to give them.

Photo of Caoimhe Archibald Caoimhe Archibald Sinn Féin

I thank the Minister for his answers so far. What will the impact of the loss of that direct flight be in the short term?

Photo of Simon Hamilton Simon Hamilton DUP

In the very short term, the route continues until, I think, 9 January. It has been a very beneficial route for Northern Ireland. We have been able to use it to promote Northern Ireland's reputation as being open for business. Many of our inward investors have used it on some of their trips here. I have had the opportunity in this job to speak to many existing investors and some potential investors who have come to Northern Ireland to look at what we have to offer. There is a mixture as to where those businesses fly in to.

Whilst this is a blow — I would not stand here for a second and try to suggest to anyone in the House that it is not a blow or a setback for Northern Ireland — we have to acknowledge that it was not used by every inward investor, every company in an inward or an outward trade mission, or by every tourist. If it was, we would not be losing the route; it would have been much more viable than it was. Yes, it does have an impact; it is certainly the case that it has an impact. As I said to Mr Clarke in response to his question, we will work very hard to make sure that any impact is mitigated as quickly as possible by trying to attract other routes to North America and indeed to other key hubs around the world.

Photo of Jim Allister Jim Allister Traditional Unionist Voice

The Minister said that this went to Brussels because United wanted clarification. Did you also say that, separate to that, there was a complaint? If so, who was the complainant? With regard to the airport as a whole, has there not been a failure for many years both before and, sadly, since the return of devolution? There has been an absence of a strategic holistic approach to the development of the International Airport with regard to its communication and rail links — nothing. Its roads are as they were 10 or 20 years ago. Has there not been a holistic failure to develop the airport and that, in part, is a contribution to its dwindling prospects?

Photo of Simon Hamilton Simon Hamilton DUP

The Member asked several questions. First, we went to the Commission at the insistence of United. We both believed, and we strongly believed, that it was a no-aid argument, but they wanted to clarify that point, and that is why we went to the Commission. Otherwise, as the Member will know with his familiarity with the European Commission, there would have been no requirement for us to go to the Commission, but it was their insistence that we did that, and we obliged.

I did say that, as the Commission confirmed in its statement on Friday evening, there was also a complaint separate to that process. We are not privy to who the complainant is. Another one of the oddities of the European Commission's process is that we, who have put the package of support in place, are not allowed to know who our accuser is. We could surmise and suggest who it might be. It could possibly be another airport; more likely, in my view, it was another airline. My conclusion is that no matter who it was, they are no friend of Northern Ireland. We may not find out who it is. I would be very interested in finding out who it is, but we may not, given that the Commission confirmed on Friday evening that, because of United's action in withdrawing the flight, the case is now closed. If I learn differently, I may inform the House.

With regard to the overall position and the development of the airport, I am not going to point fingers backwards or sideways, but I think that the Member's point is right, even though I do not necessarily agree with the way in which he made it. I tried to say, in response to Mr Aiken, and indeed in response to Mr Aiken's questions on the issue some weeks ago, that perhaps in the past because we have three airports in Northern Ireland we left them to their own devices somewhat. I do not think that that is right. We have a stake, as an Executive, in all those airports performing to the best of their abilities, and we should support them in doing that. Within the remit and responsibilities of my Department, my view is that we should treat the airport as a strategic asset for Northern Ireland. The Member will appreciate that it is not a simple matter of going in and addressing all those issues in one go, but I would like to see many of those issues dealt with. I am seeking to work much more closely with them, but also collectively, to develop all the airports in Northern Ireland so that they can reach their full potential and benefit the whole of the Northern Ireland economy.

Photo of Steven Agnew Steven Agnew Green

The benefits of this flight have been repeated over and over again in the House. What hard evidence do you have that there were direct benefits of the flight? What was the magnitude of that direct benefit, and what cost-benefit analysis was done when he and the Executive agreed to this extra subsidy over and above the existing air passenger duty subsidy? If you are seeking to attract other flights, will you open such business cases up for public scrutiny? If you want us to conclude that you have not been reckless with public money, surely we need to see that detail. Otherwise, the suspicion is that not only is Northern Ireland open for business, but it is wide open.

Photo of Robin Newton Robin Newton Speaker

I ask the Member to come to a question.

Photo of Simon Hamilton Simon Hamilton DUP

We may have found the complainant in the far corner. It is hard to take criticism from the Member, who is part of the political movement that rates air travel as the lowest priority of any mode of transport. The Member would probably have us tootling about on bikes everywhere and not going in cars, buses, trains or planes at all. The Member's criticism does not rest easy.

The Member talks about reckless use of public money, but we were foresighted enough — even though we believed that it was a no-aid issue, with United asking that we go to the Commission — to ensure that there was a clause in the contract specifying that if it fell awry and United Airlines pulled out, we would get all of our money back, which is what we are getting back, with interest. By any definition, that would not be considered a reckless use of public money. In my view, it was a good use of public money, because of the importance of having the route. The evidence of its importance is evident in the House today, in that everybody, with the exception of the Member and maybe one other, thinks it is a good thing to have the route, and a good thing to have more direct routes to North America and elsewhere.

Clearly, it had a benefit in three ways, through inward investment, inbound tourism and keeping trade links in place. I am very much focused, in this job, on expanding Northern Ireland's trade opportunities. I am not sure whether the Member is supportive of expanding and improving Northern Ireland's sales outside of this region, but if he was, he would appreciate that better air connectivity is very much part of doing so. That is why — as I said to other Members — I am going to work with the airports to develop new policies and interventions that can step in and try to attract more routes to key hubs and key markets around the world.

Photo of Gordon Lyons Gordon Lyons DUP

The vast majority of Members across the Chamber understand the importance of having a direct air route to the United States, so I commend the Minister and the Executive for the work that they have done so far, because I am sure there would been an awful lot of complaining and yapping from that end of the Chamber if the work had not been carried out during the summer.

Further to the response that the Minister gave to Mr Clarke, can he assure us that he will put energy and effort into securing a replacement for this route? If it is not possible to get a route from Belfast to Newark, perhaps we can cast the net a little to some of the other hub airports in the United States, such as Boston or Atlanta, Dulles or Philly?

Photo of Simon Hamilton Simon Hamilton DUP

I thank the Member for his comments. To the list that he put on record, I add my thanks to the International Airport for all of its efforts both in lobbying and, ultimately, putting its money where its mouth was. The Member is right: Members will understandably want to come to the House and ask questions about why it did not work out or why it did not work on this occasion, but they would have done a lot more complaining — justifiably so — if we had not stepped in during the summer to put in place a package of support that ultimately kept the route for longer than it might have been there; we had hope of keeping it for a three-year period.

In respect of attracting more, I was remiss in not saying this to Mr Clarke, but the Member will be aware that I recently indicated my intention to establish an air routes task force, although it is not set up yet, to look at, develop and devise new policies, new strategies, new interventions and new measures of support that we can put in place to attract new air routes to Northern Ireland, regardless of the airports, so that we can improve our air connectivity. I look at other airports around the world, including the United Kingdom and Ireland, that are able to attract routes even though their markets are smaller than ours. That is not on the basis of us having some sort of smaller or inferior economy, as Mr Dickson suggested; it is because of the support provided to them. We need to be cleverer, we need to be smarter and we need to devise new policies and interventions that will secure those sorts of routes, embed them in Northern Ireland and benefit our economy, tourism and trade as a result.

Photo of Mark Durkan Mark Durkan Social Democratic and Labour Party

Can the Minister tell the House how much funding has been received for our airports over the years from those faceless bureaucrats in Europe, through various structural and transportation funding programmes?

Photo of Simon Hamilton Simon Hamilton DUP

I do not have that information with me, but I am happy to write to the Member and provide him with information about how much of our own money we were getting back from Brussels via that route.

Photo of Pam Cameron Pam Cameron DUP

I thank the Minister for his answers so far. I commend him and the Executive for standing up for Northern Ireland and trying to save this key route. I am glad that he has put on record his thanks to the airport and, in particular, to the management. I was in touch with the managing director over the weekend, and management is devastated by the loss.

The Minister mentioned the air routes task force and the efforts to create new routes. Will he give us an update on the efforts that have been made to open other routes to Northern Ireland from places such as China and the Middle East?

Photo of Simon Hamilton Simon Hamilton DUP

Understandably, given the news last week, there has been a focus and emphasis on ensuring that we develop new routes into the US, which is an incredibly important trade destination; in the last year, exports to the US increased by 74%. It is by far our biggest inward investor; some 185 US companies have invested here. It is understandable, given the loss of the Newark flight, that people will want to see how quickly we can replace that or have a similar flight.

The Member is right: other markets around the world are key to growth in the global economy. She mentioned China: the Minister of Agriculture, Environment and Rural Affairs is in China this week trying to open up China for pork exports from Northern Ireland. That area is clearly worth our consideration as to whether there is availability for a route. The Member also mentioned the Middle East. That part of the world, in spite of recent setbacks with oil prices, still has a booming economy that is growing very fast, and it is keen to have a post-Brexit free trade agreement with the United Kingdom. I visited the Middle East a few weeks ago, and part of the conversation was on air connectivity. There are lots of fast-growing airlines in that part of the world that are looking for bases in this part of the world to fly on to North America and elsewhere. It is not just about America; it is about places like Canada, the Middle East, China and elsewhere. It is about getting Northern Ireland better connected to key and, in particular, growing markets around the world.

Photo of Robin Newton Robin Newton Speaker

Members, that concludes this item of business. I ask the House to take its ease while we change the top Table.