I beg to move amendment No. 13, in page 7, line 7, leave out subsection (2).

Through the amendment we once again query why the Assembly should be able to provide financial assistance only to services or facilities that would not exist without help. This is similar to our debate this morning. Especially in the case of air services, it would be more productive to subsidise commercially viable enterprises than to give financial assistance to schemes that will have to be run at a loss. There are clearly huge financial implications: granting the Assembly power of financial assistance for air transport with no transferral of funds means that support will have to be found within the Assembly budget. It looks as though significant amounts of Welsh taxpayers’ money, which might be better spent elsewhere, will be spent on the additional costs arising from the provisions of the Bill. Of course, the development of Wales’ transport and economy is of the utmost importance.

It is also important to remember that the commercial viability of flights within Wales is questionable. As Bus Users UK has stated:

“required financial support is likely to be vastly out of proportion to the benefits that may accrue.”

The need for subsidies to start air transport services in the first place—pump-priming—raised the issue of whether services would be workable in the long term. Although there is no definite evidence that proves an unmet demand for flights within Wales, there is a strong argument that must be considered that air transport should be developed on a commercial basis only, and should not involve public funds. We must also consider any effect on rail services if passengers   were to move from rail to air transport. We would see weakened economic viability and threats to the economic growth of Welsh rail companies.

On Second Reading, the hon. Member for Leominster said that he kept an open mind about the viability and attractiveness of a regional air network in Wales. It seems that he has made up his mind and that he is so in favour of a regional air network that he is willing to allow the Assembly to give financial assistance to services and facilities related to such a network, even if those services and facilities would exist without financial assistance. I may have misunderstood what the hon. Gentleman is attempting to do by proposing to delete the subsection, and I would value it if he could clarify that. As far as I can see, cutting subsection (2) would make it easier for the Assembly to provide financial assistance to profit-making services.

The hon. Gentleman has an unusual style; he is particularly obtuse about this matter. We had a discussion about whether financial assistance should or could be given within certain parameters. He will recall that the Government have particular hang-ups about giving financially successful companies subsidies. I share that view, incidentally, but I do not agree that the wording in the Bill is the best way to proceed. He will know that there are not huge numbers of viable airlines flying between north Wales and anywhere else. The majority of people, particularly in the north, leave Wales to catch aeroplanes. Viability is the question. The amendment would give the Assembly more leeway to encourage those air services, if it deems it a wise move to do so.

I find the hon. Gentleman’s intervention helpful. It clarifies things and I am encouraged by the line of debate.

Hon. Members will note that I am supportive of a small-scale regional air network to connect the various parts of Wales for the small number of people who need to get from one end of Wales to another quickly. I also recognise that we are not talking about A380 Airbuses going from Anglesey to Cardiff but about small aircraft, probably in many cases twin-engine propeller aircraft, which may accommodate as few as eight people. The debate on Second Reading gave me the impression that the hon. Member for Leominster was sceptical about that.

I recognise that the hon. Gentleman has fought his case on his scepticism about the idea, but I am encouraged by the fact—I am not trying to score points—that it would seem that he has made up his mind, to some extent. Had he come to the view that it was a bad idea to provide the option of financial support for a regional air network and associated services, he would have proposed the deletion of clause 11. As it is, he has decided that he wants to delete a subsection of the clause.

The hon. Gentleman is also right to say that we had an extensive debate on a similar amendment earlier. I found that amendment curious. Will the Minister clarify his interpretation of the implications of the   amendment were it to be passed? I have laid out what I think it would do, and will be interested to know what the Government think it would do.

The hon. Member for Leominster suggested that we are moving towards achieving a degree of common interest in having the good sense to allow the Welsh Assembly to make judgments about the viability and desirability of air networks. We covered the environmental considerations in some depth on Second Reading, so it is not appropriate to reopen that debate.

There are two important considerations in relation to the implementation of the clause that I shall address. It might surprise hon. Members to hear that there is already a thriving aviation network in Wales, albeit a small-scale one, which generally operates on a charter basis. The one that I know best derives from Mid Wales airport, in Welshpool, and uses aircraft such as the eight-seater Piper Navajo to transport people in and out of Wales on a charter basis. That growing business depends on there being reasonable facilities at Welshpool, and would benefit from further investment in the infrastructure of the airport. Some of that will happen because of the industry and the investment of the existing operator, Bob Jones, and some of it will come from the constructive partnership approach to investment that has been taken by Powys county council and the Welsh Development Agency.

Clause 11 would entitle Bob Jones to seek further funding for investment that he cannot afford and probably could not obtain purely from private funding, but which would necessarily increase the attractiveness of Welshpool as a business airport from which to base charter operations, and as an airport to charter flights to and from. That would clearly be in the interests of the population and businesses in the area.

The clause is useful because it does not exonerate airport operators from having to prove the business benefit of investments, and because it provides the Welsh Assembly with the opportunity to make such investments if it thinks that they are in the strategic interests of the locality or region.

The hon. Gentleman might be aware that there is already a low level of charter activity transporting people in and out of Wales and between north and south Wales. Indeed, various politicians have availed themselves of that facility, particularly during the general election. Although passenger numbers are not high, there is an ongoing demand for such a facility. I hope that in reading this Committee’s proceedings, the Welsh Assembly will recognise that all parties keep open minds about the viability of such investment.

The second consideration is not directly connected to investment in air transport in Wales, but, without getting too technical, there are other threats that could directly affect services in Wales. I refer to Eurocontrol—the European Organisation for the Safety of Air Navigation—and navigation charges for general and light aviation.

I do not expect the Minister to respond today, but will he get his team to investigate the potential consequences of passing navigation charges, which are primarily paid by large airlines operating large aircraft, on to small operators? The cut-off point is aircraft with a gross weight of more than 2,000 kg, as those with a lower gross weight are exempt from certain navigation charges, but there is a threat that those charges will be imposed, and the drivers for doing that seem to be the large airlines. Such a move will make it difficult for the services that clause 11 is designed to support, because a number of charter operations will use aircraft weighing less than 2 tonnes.

I stress again that I do not expect the Minister to be an expert on the regulations and the proposed changes, but given their potential impact on what the Bill is designed to do and on what we might be able to achieve in the Welsh aviation charter field, I hope that he will ask the right questions and perhaps be willing to indulge in a dialogue outside Committee.

I shall be interested to hear the closing comments of the hon. Member for Leominster on this issue. I take heart from the fact that we have made some progress. Notwithstanding his scepticism about air transport in Wales, it seems that the Conservatives are willing at least to give the Welsh Assembly an opportunity to make a reasoned judgment on the future of air transport in Wales. That is to be welcomed.

Clause 11 empowers the Assembly to provide financial assistance for air transport services and airport facilities. It does not have that power currently and feels that it would be in its interests to have it. However, amendment No. 13 would remove the restriction imposed by clause 11(2) and allow the Assembly to provide financial support even if the service or facility would be provided without that subsidy. We have had this debate before, as the hon. Members for Leominster and for Montgomeryshire said. As the need for the Assembly to make a case for any expenditure on air transport serving Wales was rightly raised by several hon. Members on Second Reading, I am surprised at the amendment. I am sure that the Committee will agree with those comments and, like me, finds it hard to imagine the Assembly wanting to provide financial support for services and facilities that would otherwise be provided on a commercial basis.

The Assembly is of the firm opinion that airports and air services have a vital role to play for Wales in improving accessibility, opening up new markets and encouraging inward investment. However, it would want to provide funding for such services and facilities only if that were necessary to secure their provision. It may help the Committee if I refer to the public service obligation, because some of these issues relate to European state aid.

A PSO may be introduced by a member state under EC law to ensure that there is adequate provision of air services on a particular route. However, those services must fulfil certain requirements in order for a PSO to be introduced. First, the service must be to a “peripheral region”, a “development region” or on a

“thin route to any regional airport”.

I am not quite sure what a thin route is, but I imagine that it is one that is not well served.

It is one that is not thick.

That is right.

Secondly, the service must be

“vital to the economic development of a region”.

Thirdly, the imposition of a PSO must be necessary to ensure the “adequate” provision of scheduled services. Currently in the UK, PSO routes are provided only in the Scottish highlands and islands.

So there is a process that must be gone through. The Assembly cannot decide willy-nilly to start supporting a particular air route or it will be contravening the PSO rules and the state aid provisions to which I have referred. I assure the Committee that the Assembly will not be able suddenly to start funding routes that are commercially viable. We have been through that debate before. Why on earth would the Assembly support a commercially viable route? Requirements under European state aid rules would prevent the Assembly from subsidising unnecessarily a route that existed or was to be established. With those comments, I urge the hon. Member for Leominster to withdraw the amendment.

The Minister has very helpfully read out various pieces of existing legislation. The amendment seeks to give the Assembly more powers, which it should have, so my immediate reaction might not be as hostile as one might assume.

The hon. Member for Montgomeryshire asked whether I had changed my mind. I should point out that I would have voted against the Bill on Second Reading if I had felt that the Assembly should not have been able to engage in such a discussion. We have always kept an open mind. It is up to the Assembly to decide how it spends its money. If that is what the Assembly wants to do, the amendment would have given it more freedom to do so. If it is not allowed to do that anyway, it does not matter whether or not it is in the Bill.

There is therefore no great harm in the amendment. Leaving out the subsection would make no difference whatever, because the Assembly would not be able to subsidise services in any case. So I am not going to get hot under the collar about this amendment either, but it is always interesting to hear why the Assembly should not have further powers. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 11 ordered to stand part of the Bill.

Clauses 12 to 14 ordered to stand part of the Bill.