Airline Industry

Part of the debate – in Westminster Hall at 10:48 am on 14th November 2001.

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Photo of Mr David Jamieson Mr David Jamieson Parliamentary Under-Secretary, Department for Transport, Local Government and the Regions 10:48 am, 14th November 2001

I congratulate Mr. Wilshire on securing this debate, and on the measured and largely consensual way in which he conducted it. Mr. Clifton-Brown said that he cut short his speech, but he took longer than the allotted 10 minutes. Dr. Cable is smiling, but he took even longer. It seems that those who ask the questions in debates such as this have considerably more time than those who must reply to them, which I shall now attempt to do.

The hon. Member for Spelthorne rightly pointed out that the airline industry is of fundamental importance to our economy, and the Government fully recognise that fact. I agree entirely that the recent events that we are debating have in some cases resulted in personal family tragedies. I also want to reinforce the view that air travel is safe. During all our debates, we should bear in mind that the number of air travel-related casualties, injuries and accidents is very low compared with other forms of transport. I realise how important those issues are to the hon. Gentleman's constituency and to those of other hon. Members, and we are mindful of the jobs and associated industries involved.

I noticed that two Conservative Members talked, with some affection, of Government involvement in private industry, resonating yesterday's Railtrack debate. We are interested to see a gradual movement in policy by those hon. Gentlemen.

I shall deal with specific matters because there is little time to talk in generalities. First, the Government recognise the importance of the T5 announcement. Alas, I cannot give the hon. Gentleman a decision today—he will have to contain his disappointment for a while longer, but he may not have to wait long. I noted his comments about the planning system and the time that it has taken to be resolved. I am sure that he welcomes the Government's new approach to planning.

The hon. Gentleman referred to the issue of aid from the United States Government to the airline industry across the Atlantic. We agree on the need to prevent competitive distortion with the United States and I assure him that we are carefully watching that. The European Commission is considering drawing up a code of conduct with the US Government to prevent anti-competitive behaviour, and we are mindful of the importance of that.

The hon. Gentleman also referred to the number of jobs concerned with Boeing. I thought that I had a figure for the amount of exports from this country to Boeing but it is not precise so I shall only say that it is substantial. I met Boeing on that subject last week. He is right to say that a substantial number of jobs rely on Boeing. In response to his question on indemnities to airports for war risk, the Government have given indemnity to them and other service providers, including NATS. I hope that that satisfies him.

I know that the European Union is a somewhat sensitive point for Conservative Members. The hon. Gentleman is right to say that the solutions to the problems of the airline industry in the United Kingdom must be found in this country, but we must also find agreement in the European Union. We cannot tackle such matters alone. If we did, we might find even the 15 countries in the European Union having to compete against one another, which would offer no benefit or advantage. I take his point on not bailing out failing airlines, but sometimes our national interests are closely interwoven with those of the European Union.

National Air Traffic Services has been clearly affected by what has unfolded during the past two months because its revenue comes from airline movements, which have been substantially depleted. It now faces an extraordinary and totally unexpected situation. It asked us for a pause in the building of the new centre at Prestwick, and we sanctioned that, but we remain totally committed to the two-centre strategy. We have received no financial request from it, but are keeping the situation under close review.

I am aware of the concern about the situation in the airline industry. The hon. Gentleman referred to last week's debate, which was fortunately extended owing to House business. A number of hon. Members whose constituencies surround the Heathrow area spoke with passion then about the issues raised today. I emphasise that the Government recognise the great importance of the aviation industry to the United Kingdom, and are paying close attention to its problems.

As pointed out—I am grateful for the comments of the hon. Member for Cotswold—we reacted quickly to the events of 11 September to counteract the failure in the aviation insurance market and enhance security measures at all United Kingdom airports. We are actively considering payment of emergency aid to airlines for the four days that United States' airspace was closed, but any decision will be in accordance with European Commission guidelines.

In addition to those measures, we are doing what we can to restore confidence in air travel. Much of the difficulty lies with that intangible thing called confidence. The airlines need not only state aid, which may help them for a while, but a return of their customer base and confidence. A fortnight ago, I made a trip to some British regional airports to encourage confidence in air travel and boost morale. Heathrow is holding up well at present, but it is important that all concerned should be in a position to react quickly to a deterioration in the situation. The job transition service is engaging with employers to ensure that those employees adversely affected by recent events have access to the fullest advice. I think that that was discussed with my right hon. Friend the Minister for Transport when he visited recently.

Despite the Government's long-standing policy not to intervene in the aviation market, the exceptional circumstances warrant Government action. As I have already said, we took immediate steps to counteract the failure in the insurance market: within a few days, and before the imminent withdrawal of cover grounded the entire UK fleet, we made the necessary third party war risks cover available to our airlines and related industry. We were so quick off the mark, and our remedy so effective, that our lead has been widely followed throughout the world. Initially, the cover was for one month, but it has recently been extended until 23 November and we are examining that almost on a daily basis.

Despite a few deplorable lapses that have been reported recently, pre-existing standards of security in the United Kingdom are among the highest in the world. None the less, we have enhanced security measures at all UK airports, and for airlines leaving this country. We are also carrying out a fundamental review of aviation security to make air travel as safe from terrorist attacks as we can, while balancing that with freedom to travel. I am sure that the hon. Members will welcome the fact that BAA estimates that it will need something like 150 extra security staff at Heathrow—it expects a good response to job adverts in the local press.

With one eye on United States Government support for its airline industry, some are calling for more generous aid for United Kingdom airlines. I stress that that is a matter for the European Community, which has exclusive competence for monitoring state aid that could distort or threaten competition in so far as it affects trade between member states. The European Commission acted quickly to address the repercussions of the terrorist attacks for the air transport industry and issued a communication reiterating that member states must not depart from Community rules on state aid and set out how the Commission will interpret the rules in the current situation. We will monitor how that is done with great care. The extra costs of security, together with the losses directly attributable to the closure of US airspace and the provisions of insurance cover by Governments are identified as areas where state aid would be justifiable. The Government are considering whether further aid to UK airlines should be made available, taking relevant guidelines into account.

This debate has been useful and many matters have been aired again. I have had little time to cover the enormous number of points raised by hon. Members, but they are welcome to drop me a line about anything that I have not covered, and I will endeavour to send them a full, written response.