HC Deb 26 October 1984 vol 65 cc979-86

Motion made, and Question proposed, That this House do not adjourn.—[Mr. Archie Hamilton.]

2.30 pm
Mr. Tom Sackville (Bolton, West)

During the 19th century manufacturing industry blossomed in the north of England for a number of reasons, but the availability of coal and water power ranked high among them. These days many firms are unfortunately favouring the south-east, partly because of the convenience of access to Heathrow airport. They are ignoring grants and all sorts of regional attractions designed to lure them elsewhere.

I am sure that the Government understand the social and economic dangers of this growing north-south divide, but I cannot help wondering, looking at the past five years, whether they have properly perceived the connection between airport and regional policy and whether they have recognised the contribution that they can make by creating a major second centre of air transportation in the north of England. That contribution could be as significant as any other form of regional aid.

In the 1978 White Paper, Manchester was rightly seen as the obvious candidate on which the second hub should be built and was designated as a category A gateway airport. However, the White Paper stated that development of regional airports would need Government help in the form of positive licensing policy. It stated: The grouping of airports will not of itself provide the rationalisation of airport facilities which the Government believes to be necessary, particularly outside the South East of England. This will require the implementation of policies on a range of air transport and related matters". Later it states: the Government will take account of airports policy in issuing permits for scheduled and charter services by overseas operators. That advice is currently not being followed in the case of Manchester.

Mr. Fergus Montgomery (Altrincham and Sale)

I remind my hon. Friend of the way in which Manchester airport is being discriminated against on licensing. I hope that when my hon. Friend the Minister replies he will say why Gatwick is so favoured compared with Manchester. Will he bear in mind that Singapore Airlines desperately wants to fly into Manchester? It has made an application, but the Government have rejected it. When he replies, will my hon. Friend say where the Government get their advice from?

Mr. Sackville

I thank my hon. Friend.

What should the Government do? At least they should recognise that enough passengers fly out of Heathrow or other European gateways having just connected from Manchester to justify some seven weekly services to New York, a similar number to the Gulf, and two each to Los Angeles and Miami, to name just a few destinations.

Those estimates do not take into account the even greater number of passengers who travel from the north by road or rail to south-east airports, or indeed the increase in demand created by greater accessibility of direct services.

Of course, the Government cannot force airlines to operate from Manchester or anywhere else. However, it will undoubtedly soon be necessary to impose limitations on movements at Heathrow as the present limits are now well in sight. If carried out in a sensible way that will have the beneficial effect, at a stroke, of encouraging transfers to Manchester and other airports, improving service to business and private consumers in the north and easing the pressure at Heathrow. There would also be the knock-on effect of a substantial reduction in demand in the shuttle services and, in particular, the shuttle back-up services. It is estimated that 65 per cent, of Manchester shuttle passengers are connecting on international flights at London. However, I must stress that the plan to limit domestic routes only, as suggested in the past few days by the British Airports Authority, would be directly in conflict with the aims and interests of regional airports, as well as of the northern traveller. I should like to hear the Minister's comments on that.

Transatlantic routes are of great importance. Let us talk about inward tourism. It is reckoned that about 2.5 million Americans visited Britain this year and that they spent about £1 billion when they got here. Many of them arrive in United States charters at Stansted airport, operators naturally being attracted to Stansted by the low charges there. However, it must be said that such charges, which are over 50 per cent, lower than those at Manchester, are the result of cross-subsidisation by the BAA from profits at Gatwick and Heathrow. The result is that the north-west sees much less of the lucrative United States tourist trade than it would if more charters could fly to Manchester.

Speaking of charters, I believe that we must not take for granted the British holiday trade, which is vital to Manchester and other regional airports and was developed mainly as a result of the pioneering enterprise of the independents, such as Britannia. The growth of that market is very welcome to Manchester, but I should like to issue a word of warning. The Office of Fair Trading should keep a careful watch on competition, and particularly the position of British Airways. Switching spare capacity to charter operation at weekends is one thing, but any cross-subsidisation in favour of British Airtours in efforts to exercise undue control of the market is quite another.

With regard to scheduled transatlantic services, it cannot be stressed too much that Manchester is not written into the Bermuda agreement between the United States and the United Kingdom. The reasons for that omission are not clear, but the effect is to make a mockery of Manchester's designation as a category A gateway. I should be grateful for the Parliamentary Under-Secretary's assurance that he will open negotiations at the earliest opportunity with the United States Government to rectify that anomaly. United States and British operators would like to fly these routes, but they are debarred from doing so. I need hardly add that many consumers in the north would like to take advantage of such routes, but cannot do so.

Looking at the wider intercontinental picture, I should like to take the example to which my hon. Friend the Member for Altrincham and Sale (Mr. Montgomery) referred—the application by Singapore Airlines. It already operates successfully into London, and it wants more British services, not in the south-east but in the north. It has recently applied for a service to Manchester three times a week. That application was refused. Let us analyse what that means. We have a major international carrier presenting itself as a provider of exactly what Manchester needs—direct intercontinental services. This seems, on the face of it, to be a perfect opportunity for the Government to demonstrate their sincerity about the development of Manchester airport by entering into negotiations with Singapore, tearing up the bilateral agreement and allowing the application to go ahead.

We must ask who would oppose such a move. Certainly not the northern business community—it has no wish to prolong the tedium of travel to the far east by an unnecessary change of aircraft in London—and certainly not the people living in the north who wish to travel to the far east for any other reason, such as tourism. Having listened to Lord King's many recent public affirmations of his support for the principle of airline competition and his enthusiasm for the future development of Manchester airport, I believe that British Airways is the last quarter from which to expect opposition. Today I wrote to Lord King asking for his confirmation of that.

Nor, for that matter, would I expect any opposition in principle from the Secretary of State. Praise has been heaped on him from every quarter, including the EEC, for his pioneering deregulation efforts, particularly on the London-Amsterdam route. It is understood that he hopes to extend this new free market regime—over which I am sure he is keenly supported by the Parliamentary Under-Secretary—to other European countries. That is a very good start, and I say, "Well done, Secretary of State." But why not extend the principle to Singapore and elsewhere? What about the other far east carriers, such as Malaysian Airlines and Pakistan International Airlines, which would be extremely interested in flying direct to Manchester?

Must we conclude that the opposition comes from within the Department and that therein lurks some strange hostility towards Singapore Airlines which is not felt towards older friends such as KLM and Lufthansa? Or is there perhaps still a fond nostalgia for the days when licensing meant protecting British airline interests rather than the British consumer?

I suggest that Britain's national carrier is not only "the world's favourite airline", but perhaps the strongest, best-managed and most efficient major airline that the world has ever seen. I cannot believe that there has ever been an airline so little in need of protection from politicians or civil servants as the British Airways of today.

I welcome my hon. Friend the Under-Secretary to his new post. I understand that he is making only his second appearance at the Dispatch Box, and I hope that he will not find his job to be a bed of nails. I also hope that this exchange will be the first of many. I wish to address three requests to him.

First, I hope that my hon Friend will recognise that much of his Department's traditional policy on civil aviation involves some blatent protectionism and distortion of free market operations. If he tried to apply the same policies as he applies to aviation services, to trade in manufactured goods, he would not get away with it.

Secondly, I ask my hon. Friend to realise that, when Manchester airport loses as a result of such policies, it is not only the northern consumer who suffers. The economic future and employment prospects of the region also suffer. Airport policy and regional economic policy can no longer be treated in isolation. They arc two sides of the same coin.

Thirdly, I ask my hon. Friend to remember in his deliberations over the next few months and years that, whatever he hears to the contrary, British aviation is not the preserve of the south-east of England and should not be administered solely for the benefit of the major nationalised concerns involved. It is vital to the social and economic well-being of every part of Great Britain.

Mr. Alan Haselhurst (Saffron Walden)


Mr. Deputy Speaker (Mr. Paul Dean)

Order. I understand that the hon. Member for Saffron Walden (Mr. Haselhurst), has agreement to intervene from the hon. Member for Bolton, West (Mr. Sackville) and from the Minister.

2.42 pm
Mr. Haselhurst

From a different point of the compass, I wish to complement the remarks of my hon. Friend the Member for Bolton, West (Mr. Sackville).

The situation at Manchester is bedevilled by the fact that the British Airports Authority has a disproportionate influence with Ministers and officials. The trouble is that the BAA is not a truly British authority. It represents only three airports in the south-east and four in Scotland and is statutorily prevented from adopting policies that are likely to benefit Manchester, Birmingham or anywhere else at the expense of business at its own airports. However, I suspect that because the BAA is the largest element in airports policy it carries great weight with the Department.

It is clearly part of the authority's purpose in its plans for the development of Stansted to bring people to the airport from the midlands and the north-west. That was spelt out in a pamphlet circulated to every household in my constituency at the start of the BAA's compaign to develop Stansted. It is an absurd idea.

British Rail is already extremely worried about how it will convey passengers from Stansted to Birmingham and the north-west if the airport is developed. Manchester wants more business at its airport and there is resistance in my part of the world to the unnecessary expansion of Stansted to cater for people from outside the area. Therefore, it is absurd that the BAA's policy should be allowed to stand.

It is important in the national interest, which is what government is about, to develop Manchester as a major gateway in every legitimate way. Why should not there be as much bias as possible towards Manchester, bearing in mind that more tourism in Manchester, spreading to the Peak district, the Welsh hills, the Lake district and the Yorkshire moors, will produce more jobs in that region, where they are desperately needed?

According to the latest statistics, unemployment in my constituency stands at 6.3 per cent. Although we want jobs for our unemployed people we do not, in all fairness, need the creation of 30,000 jobs in the south-east to satisfy customers who could fly from the airport of the northwest. I hope that my hon. Friend the Minister, who is in a quasi-judicial position as regards Stansted, will ensure that every effort is made to expand the amount of business at Manchester and other regional airports and see to it that that in no way affects the discussions on Stansted.

2.45 pm
The Parliamentary Under-Secretary of State for Transport (Mr. Michael Spicer)

First, I congratulate my hon. Friend the Member for Bolton, West (Mr. Sackville) on making a first-class speech on behalf of what we both agree is a first-class airport. Time permitting, I shall certainly try to respond to the interventions of my hon. Friends the Members for Altrincham and Sale (Mr. Montgomery) and for Saffron Walden (Mr. Haselhurst).

Recently, I had a most constructive meeting with the chairman and the chief executive of the Manchester airport authority, and I have happily accepted an invitation to visit the airport on 14 November to be present at the topping-out ceremony for the new operations control tower.

Manchester airport is the gateway airport for the north of England and, in answer to one of the questions of my hon. Friend the Member for Bolton, West, it is designated as such under Bermuda 2. During the past 10 years its passenger traffic has more than doubled, to a figure of more than 5 million in 1983. Since 1979 it has grown at an average rate of 9.5 per cent. That compares with a growth rate of 1 per cent, per annum for London area airports over the same period, and rather less than 1 per cent, for other airports outside London.

In the first eight months of 1984, traffic at Manchester international has been 16 per cent, higher than in the same period a year earlier, and for this year it should not fall far short of 6 million passengers. That is a tremendous achievement, expecially when it is remembered that more than one third of Manchester's passengers travel on scheduled flights, which usually comprise a high proportion of business travellers. Clearly, in this role alone the airport contributes greately—as my hon. Friend the Member for Bolton, West would wish it to do—to the prosperty of the region and its industry, trade and employment. I offer my warmest congratulations to all those who are, and have been involved in the development of what I must stress is a most successful enterprise.

My hon. Friend has raised the question of the Government's policy towards regional airports in general and the development of Manchester international in particular. Our policy is unequivocal. The Government are anxious to encourage the development of regional airports, of which Manchester is the prime example, whenever this is justified by demand and expected rate of return on the capital invested. As my hon. Friend has said, regional airports not only provide services convenient to local populations but help to relieve the increasing pressure on the south-east airports—a point raised by my hon. Friend the Member for Saffron Walden—and the more crowded airways of the south. In parenthesis, I should point out that 80 per cent, of all air passenger traffic using London airports starts and ends in the south-east.

There is ample evidence of Government action to support this policy of encouraging regional airports. In the past three or four years the Government have supported Manchester international by according it special capital expenditure allocations for a number of developments, which have been specified by us as projects of national or regional importance. Those projects have included the runway extension, new aircraft stands and taxiway, and numerous improvements to the terminal buildings. I can announce today, to my hon. Friend that I have decided to approve a further capital expenditure allocation to enable Manchester international to continue with the construction of a cargo terminal—a development which, I might add, is being funded in close co-operation with the private sector.

These special allocations, supplementary to the usual block capital expenditure allocations accorded to the local authorities, have been of considerable value to Manchester international in encouraging it to develop its facilities to gateway standards—a fact which the airport authority has freely and generously acknowledged. But our encouragement of regional airports has not been confined to capital expenditure allocations. We have been active in the European Community in seeking to liberalise interregional air travel. We have had a measure of success at regional airports, though as yet limited to medium-sized aircraft.

We shall continue to press our European colleagues on this, as the White Paper "Airline Competition Policy" made clear. We are anxious to encourage airlines to develop new international air services from Manchester and other regional airports. The real problem lies in persuading airlines that such services will be economic. It is true that in a few cases international traffic rights might present a problem. Experience over recent years, however, has shown that we can obtain the necessary traffic rights from our European partners if there is the business.

We recognise that development costs are a problem for a small airline wishing to develop a new route. British Airways' offer of financial assistance towards such costs on a limited number of routes from regional airports will be of some help. As my hon. Friend will, I am sure, know, BA's offer is to the tune of £450,000 spread over 15 routes to Europe—a total of £6¾ million. It is too early to forecast where new services are likely to spring as a result of BA's support which is for new routes as well as those on which BA is itself operating.

Airlines must first obtain the necessary licences from the CAA. But I am confident that Manchester, with its attractions as an airport and its large hinterland will enjoy its fair share. Such new services can only enhance Manchester's standing.

I now turn to the question raised by my hon. Friend of the application by Singapore Airlines to fly to Manchester. My hon. Friend the Member for Altrincham and Sale also raised the matter. My hon. Friend has raised this as a specific example of the general point he makes that air service agreements should be modified to take account of airport policy. I should say straight away that I have a prejudice towards encouraging as many long haul international operators as possible—especially if they are British—to operate from Manchester. I agree with my hon. Friend that further to encourage international traffic into Manchester must be good for Manchester, as well as being good for the relief of congestion in the south.

I also agree with my hon. Friend about seeking to liberalise international air services—I am grateful for his comments about the Secretary of State. This was indeed an important theme of our recent White Paper. As my hon. Friend acknowledged we said there that

The long term goal must be to liberalise services wherever possible—where foreign competition is fair and Britain's interests are not prejudiced". As my hon. Friend knows, these air service agreements are negotiated bilaterally between Governments to regulate the operations of the airlines. They set out the routes which must be served by the airlines of individual countries and generally provide that the capacity which may be deployed by an airline over the particular route should be related chiefly to the number of passengers who wish to travel on the route to and from the country of the airline concerned. Such an agreement was signed between the Governments of the United Kingdom and Singapore in January 1971 and has since been amended in 1976, 1978 and 1980.

The agreement allows Singapore to designate one or more airlines to operate scheduled services between Singapore and London on the trunk route and between Singapore and Hong Kong and beyond on the regional route. We have similar rights to designate British—including Hong Kong—airlines to operate on trunk and regional routes. Article 7 of this agreement requires the services to bear a close relationship to the demand for travel on the routes.

I am advised that Singapore International Airways has sought to put more capacity on its routes than is justified by the number of passengers travelling between this country and Singapore. What is more, SIA operates its Singapore, United Kingdom and Australasia services back to back and is already carrying an unduly high number of United Kingdom/Australasia passengers, who in many cases remain on the aircraft throughout the journey.

That heavy use of so-called sixth freedom rights has not only a serious impact on British Airways' United Kingdom/Australasia operations—and before my hon. Friend shakes his head too fast—it also incidentally affects those of Quantas which, and this is an important point, already has two flights a week from Manchester via Singapore to Australasia, which includes New Zealand. We have, therefore, told the Singapore Government that the present capacity is excessive and that we will not accept any increase.

A new service between Singapore and Manchester would not, we believe, significantly increase the number of passengers travelling between Britain and Singapore. It would, however, enable SIA further to increase its capacity to eat into the United Kingdom/Australasian market. We have told the Singapore Government that we would welcome an SIA service to Manchester if SIA reduced the frequency of its London services so that the total frequency to the United Kingdom did not increase. That offer remains open.

I can assure my hon. Friend that we will be prepared to review that arrangement in the light of the changing demand for travel to and from Singapore. As soon as that justifies an increase in the present level of services we will see whether an agreement can be reached for SIA to fly into Manchester. I am bound to say, however, that we do not see the necessary passenger demand emerging in the very near future.

Finally, my hon. Friend has implied that there is a bias in the Government's airports policy towards the south of England, and my two other hon. Friends agree with him. As I have already explained, the Government's policy has been to maximise the potential of regional airports so that passengers can fly from their local airport if they wish to do so, thus relieving the burden on London's crowded airports.

Mr. Mark Carlisle (Warrington, South)

If that is the Government's view, does my hon. Friend agree that no decision should be taken on Stansted before there is a debate in the House to argue the case for greater use of regional airports?

Mr. Spicer

I cannot comment on that because of the quasi-judicial role of my right hon. Friend. However, my right hon. and learned Friend will appreciate that that is not the usual practice as the decision is usually announced with the planning publication.

Far from favouring the south, during the six years to 1984–85, the Government approved unprecedented levels of capital expenditure for regional airports, which must be accepted by my hon. Friends. The growth of London's airports is complementary to, and not a substitute for, growth in the regions. There is no way that we can move against the tide when 80 per cent, of passenger destinations are within the south-east of England.

Airports do not stimulate growth just by being there—that is the function of the markets they serve and of the airlines which merely respond to the demand of those markets. The Government can help airports develop their facilities, but they cannot force airlines to operate routes which, judged commercially, would not be profitable. Although the Government have negotiated a possible 1,500 scheduled international services from the regions, fewer that 100 have been taken up. To argue that it is a question of licensing policy flies in the face of the facts. It is much more to do with something that we on the Conservative Benches understand—the market place.

There really is no substance in the implication of bias. Manchester international, in particular, really has had a very fair crack of the whip. It is our intention to ensure that it will continue to do so that the many opportunities now presenting themselves for Manchester international to serve as the gateway airport for the north of England are undiminished. What I have learnt of Manchester international so far, not least through my hon. Friend's excellent intervention today, convinces me that it will not be slow to grasp the opportunities that we shall place before it.

Question put and agreed to.

Adjourned accordingly at one minute to Three o'clock.