Airline Industry

Part of the debate – in Westminster Hall at 10:38 am on 14th November 2001.

Alert me about debates like this

Photo of Geoffrey Clifton-Brown Geoffrey Clifton-Brown Conservative, Cotswold 10:38 am, 14th November 2001

I am grateful to catch your eye, Mr. Cook, in this, the third debate on this subject in as many weeks in this Chamber. That reflects hon. Members' concern, and I congratulate my hon. Friend Mr. Wilshire on obtaining the debate. He made a thoughtful and analytical speech on a subject of critical importance to his constituents, and to the constituents of my hon. Friend Mr. Wilkinson and Dr. Cable. All three hon. Members made important points.

We must not say anything in this debate that would discourage people from continuing to travel by air. Air travel is one of the safest forms of transport in the world, despite the terrible crash of flight 587 in New York on Monday, which was a hammer blow to the American people after their experiences on 11 September. On behalf of the Opposition, I should like to send our deepest possible sympathy to those affected.

We must try to ensure that something positive comes out of recent events. We have already seen that the US Congress and Senate have stopped their bickering over the new security Bill, which they will pass in the shortest possible time. The Home Secretary has announced that the Anti-Terrorism, Crime and Security Bill will come before the House next Monday. We shall, of course, want to scrutinise that Bill, but it contains several important measures on nuclear security, aviation security and hoax calls. I hope that the Government will enable the Bill's speedy passage through the House, and where possible we will assist in that process.

It is particularly important to stress the need to update the Aviation Security Act 1982 in respect of access to our airports. Many of the constituents of my hon. Friend the Member for Spelthorne work at Heathrow. It is one of the safest airports in the world, and its workers have to be carefully screened. Given that the airline industry depends on north Atlantic trade, we must make it clear to the American people in particular that it is safe to travel to this country. The sooner we can return to normality, the better, and as my hon. Friend and my hon. Friend the Member for Ruislip-Northwood said, anything that we can do to engender confidence must be of benefit.

It has rightly been pointed out that the aviation industry was experiencing major problems before 11 September, and some restructuring was planned in any case. Given that we want to maintain competition where possible, I ask the Government to scrutinise carefully the proposed merger of British Airways and the American airlines. That merger would account for about 50 per cent. of all passengers on north Atlantic routes and some 85 per cent. of the market as a whole. It would lead to 100 per cent. dominance of 13 routes to the United States, and more than 50 per cent. dominance of five other routes. We therefore need to look at that issue critically.

The International Air Transport Association has predicted that, as a result of the events of 11 September, the industry as a whole will lose £7 billion this year. My hon. Friend the Member for Spelthorne pointed out that many businesses and industries in his constituency that are connected with Heathrow airport will suffer, but so will the wider economy. It is estimated that for every job that depends directly on the aviation industry, another three depend on it indirectly. Many other types of business have already been affected, from a creamery in Cornwall, which has lost half its business because there is no winter market for its products, to laundries and a host of other businesses. The economy will undoubtedly suffer, and anything that the Government can do in the short term would be welcome.

It is worth reiterating one or two points that I have made in previous debates. It is part of the Opposition's duty to give credit to the Government when they do things right, and I duly give them credit for stepping in commendably quickly as the insurer of last resort for a period of one month. However, as I said the other day, they should give the industry a great boost by making it clear that they are prepared to extend that period.

Having increased the airport passenger duty rate on taking office, the Government now raise more than £1 billion from it. There is a clear case for recycling some of that tax to pay for specific security measures at airports. It is unreasonable to expect individual airlines to bear the cost of increased security measures, and the Government need to consider that issue carefully.

Time is getting on, so I shall turn to one or two other key points. The T5 announcement, which is becoming a farce, has been mentioned. Everybody in the industry believes that the Government have made up their mind, so why can they not reveal their decision to the House? That would give the industry a huge boost in the light of the haemorrhaging of business elsewhere. Reference has been made to increased capacity at Charles de Gaulle airport. Since the T5 application was made in 1993, two more runways have been built at Schipol, and capacity at Frankfurt is also being increased. As my hon. Friend said, at the moment we are simply exporting jobs to other European centres.

The new terminal would provide a great boost, and would not necessarily lead to increased flights. An extra terminal is necessary to handle existing passenger numbers in greater comfort, and to provide more parking room for the larger aircraft to which the airline industry is turning. There are a host of issues that airlines must plan for, and the sooner the T5 announcement is made, the better.

I want to press the Government strongly on the question of the future of the National Air Traffic Services, which I have raised in recent debates. The NATS public-private partnership was predicated on the basis that £1 billion of private capital would be injected into the industry. On 26 October, the Minister for Transport, in a written answer to a question from Mrs. Dunwoody, said:

"NATS are reviewing their long-term investment plan to take account of the impact of the 11 September terrorist attacks on the aviation industry. They are due to report on the new Business Plan, which includes the long-term investment plan, in November 2001."—[Hansard, 26 October 2001; Vol. 373, c. 428W.]

Given that the plan and the entire future of air traffic control centres at Prestwick and in the south are predicated on the basis of private investment, the Government must make a clear statement on how matters will proceed. We cannot operate in a vacuum, and if the Minister cannot provide that information today, I should be grateful if he would write to me and make it available in the Library.

As time is short, and so that the Minister can respond to the many issues raised by my hon. Friend the Member for Spelthorne, I am prepared to curtail my speech. I conclude by pointing out that we need some positive proposals from the Minister today on how to build confidence in the industry. Perhaps the most important issues are competition and state aid. Some $5 billion has been made available immediately to American airlines, and a further $10 billion may be in the pipeline. I have already asked, in an intervention on my hon. Friend, about the precise nature of the Government's negotiations with European Union competition authorities. One thing is sure: if European flag carriers are subsidised, our airlines will face unfair competition. I am not necessarily saying that our own flag carriers should be subsidised, but it is incumbent on the Government to ensure that the competition that they face from Europe and from across the Atlantic is fair. Only the Government can do that.