Manchester International Airport (Hansard, 14 December 1988)

§ Sir Fergus Montgomery (Altrincham and Sale)

One lesson that I have learned is never to have an Adjournment debate after Scottish business.

I am most grateful for the opportunity to raise this important issue on the Adjournment, because Manchester airport is the biggest single employer in my constituency. More of my constituents work for Manchester airport than for any other single employer. The Government have often stated their intention to develop Manchester airport as an international gateway outside London to complement Heathrow and Gatwick and thus provide the necessary route infrastructure for British industry, commerce and leisure.

For some time we have been told of the congestion in the south-east, so I should think that anything that would take traffic from the south-east to the north would be welcomed. We are anxious that people flying to other continents do not have to take the shuttle to London, change planes and fly on from there. We want to increase the number of intercontinental flights in and out of Manchester. In that regard I am grateful to the Government for the enormous progress that has been made since 1979. However, like Oliver Twist, I am never satisfied.

On 28 and 29 November negotiations took place in Washington to consider outstanding licence applications by United States carriers to serve routes between Manchester and points in the United States and the reciprocal benefits that will be available for British airlines as part of a negotiated agreement between the United Kingdom and United States Governments. Hopes were high that the negotiations would be successful and that we would have new routes across the Atlantic using Manchester airport. Those routes would bring substantial benefits to the tourist industry outside London and to the northern business traveller crossing the atlantic. They would mean improved services and time saving and a boost to the regional economy.

Recently the university of Salford made a study to show a stimulus to the north-west in the order of an additional £40 million a year and the creation of about 3,000 permanent new jobs merely as the consequence of the three new routes across the Atlantic that have been applied for by United States carriers. Those are not idle requests. About a year ago, discussions between the Department of Transport and Manchester airport regarding the potential for new routes between the United States and Manchester led to a visit by a top-level team from Manchester airport to several United States airlines. Subsequently, three airlines—Pan Am, American Airlines and Northwest—all made applications to the United States Department of Transport to serve Manchester. These are three highly respected airlines with astute route-planning procedures which have identified the Manchester market as being a prime area of interest and which see an attractive commercial return.

More United States airlines are trying to get into Manchester airport than any other airport in the world. The reason is not hard to find. It is because demand so clearly exists. That demand is frustrated to the tune of 1 1060 million passengers a year who cannot, on the availability of current services, travel directly from Manchester airport. That is wholly unacceptable when one considers that within two hours' drive of Manchester we have 60 per cent. of United Kingdom manufacturing industry and over 20 million people. As we see improvements in the national economy moving further and further north, as they are, through the manufacturing sector and the new vibrant financial and high-tech centres based in the north-west, we can anticipate a significant increase in trans-atlantic travel.

In the north-west we have been fighting the battle for Manchester airport for some years and we were hopeful that the negotiations in Washington would bear fruit. I am told that a great deal of creative thinking by the British Government was evident and a major exercise was mounted to achieve an appropriate settlement which would allow increased United States' access to Manchester airport. In return the Government rightly sought significant opportunities for British airlines from London airports as a balancing effect.

I am saddened that at this stage British airlines do not seem keen to pursue the opportunities which are already open to them for flights across the Atlantic from Manchester and that the focus of their attention should be on new services from London. That is a matter for regret, but I have to acknowledge and accept that the commercial decisions of the British airlines are affected by their specific equipment and crew resource levels. However. what should be recognised is that Manchester airport's successful foray to engender interest by United States airlines in services to Manchester presents a rare opportunity for British airlines to derive some advantage from a round of negotiations.

This opportunity must not be squandered. The national interest would be well served by the development of new routes into Manchester because of the enormous net economic benefit to the whole of the United Kingdom. The further benefits which can be achieved for British airlines from an agreement operating out of London is an added bonus. The British negotiating team—I confess that I was delighted to hear that the marketing director of Manchester airport was included in the Washington talks for the first time—must be given the full support of the Government to achieve a successful conclusion with a realistic balance of aviation rights and major economic benefits for this country.

I am told that the talks will resume on 4 January 1989 in London and it is essential that the settlement be completed to allow the airlines to start operating in the summer of 1989. Failure to reach an agreement could mean that the Americans would lose interest and not come back for a third time to seek rights into Manchester. I think the Minister will agree that it would be a considerable loss to the United Kingdom if United States carriers are forced to look elsewhere. For example, there are other countries that are only too happy to welcome United States airlines with open arms.

We need a settlement urgently which allows for growth in the services out of Manchester across the Atlantic with consequential benefits to British aviation. 1 believe that the will is there on all sides and the potential benefits are enormous. I ask my hon. Friend to tell the negotiators to do all they can to reach an agreement on this occasion to the benefit of all. 1061 Other major opportunities await Manchester airport. Singapore Airlines has applied for a daily service into Manchester—at the moment, it is restricted to only two services a week. This year, my wife and I went to the Commonwealth Parliamentary Association conference in Australia. We decided that the best way to get there was to fly by Singapore Airlines from Manchester direct to Singapore. On 6 July, I went to book seats on the Manchester-Singapore flight for Saturday 10 September, and we were wait-listed. That should prove the popularity of the route.

Hong Kong, which is served by British Airways, is seen by Cathay Pacific as a possible route, and it has applied for rights to fly from Manchester to Hong Kong. This application has also run into difficulty, and no progress has been made, even though the Hong Kong Department of Aviation approved traffic rights two years ago.

It is known throughout the aviation world that the Manchester case is an extremely good one. The level of interest engendered in Manchester airport in the past 12 months presents an opportunity that must not be lost. If the negotiations with the United States are successful and if Hong Kong and Singapore should reach similar conclusions—with benefits for British aviation and the economy—it will mean an enormous boost for the United Kingdom and particularly the north. Some 20 million people have high hopes and high expectations of getting equal treatment with those who live in the south-east. I hope that my hon. Friend will show the Government's wholehearted commitment to the north and Manchester airport in particular.

§ The Minister for Public Transport (Mr. Michael Portillo)

I warmly congratulate my hon. Friend the Member for Altrincham and Sale (Sir F. Montgomery) on having obtained this Adjournment debate. He has pursued this subject with tremendous commitment and has shown a deep understanding of the problem, which demonstrates his true interest in the subject and his genuine concern for the airport, for the region in which it is situated and for the United Kingdom as a whole. The quality of his speech was all the more striking because it was the first sensible speech that we had heard for a couple of hours, and that was welcome. I am grateful to my hon. Friend for providing me with this opportunity to remind the House of the Government's considerable successes in its policy of expanding services from the regional airports, and also to explain the reasons why progress on increasing United States services to Manchester has not been as speedy as we would all have liked.

In 1985 the Government published their White Paper on airports policy. This confirmed unequivocally our commitment to encourage the use and development of our regional airports so that they can meet the maximum demand they can attract. Such developments benefit passengers to and from the regions by offering them more convenient services. Better use is made of the existing infrastructure as our regional airports, and the road networks providing access to them, are generally less congested than those in the south-east. Thriving regional airports also provide direct and indirect employment in their local area. 1062 Of course, for airports to expand, it is crucial to attract the airlines. Airports such as Manchester have been doing a very valuable job in encouraging airlines to recognise that there is a market that they can serve successfully at Manchester. Where traffic rights do not exist, airports should make it clear to airlines, and through them to foreign Governments, that such rights are worth negotiating.

The Government take the lead in negotiating air traffic rights for United Kingdom airlines to fly to international destinations, and for foreign airlines to fly to United Kingdom airports. As set out in the airports White Paper, we are committed to the creation of wider opportunities for airlines when conditions of competition are fair and British interests are not prejudiced. We have taken the lead in the move towards liberalisation of air services in Europe and we have successfully negotiated a liberal air services agreement with Canada. As a result, both Canadian and United Kingdom-designated airlines are completely free to operate services between any airport in either country's territory. That has already resulted in a significant increase in intercontinental services from our regional airports.

During 1988, Birmingham, Leeds/Bradford, Cardiff and Newcastle have all offered regular scheduled services to Toronto. Manchester has also offered services to other Canadian destinations, such as Calgary, Edmonton, Vancouver and Halifax.

Over the last decade, traffic at regional airports has grown by 92 per cent. compared with only 59 per cent. at the British Airport Authority's London airports. Growth at Manchester has been more than 150 per cent., and that airport now operates scheduled services to more than 60 foreign destinations. That includes services to eight points in North America and the Caribbean, and to another eight intercontinental destinations in Australia, India, the middle east and the far east.

The possibility to which my hon. Friend alluded, of introducing more liberal air service arrangements in respect of Singapore, is currently being examined at Government level. There will be a further meeting between United Kingdom and Singapore aeronautical authorities early next year.

Nevertheless, there are examples where, despite our endeavours, we have been unable so far to negotiate wider opportunities for airlines to serve our regional airports. The main example, of course, is the subject of tonight's Adjournment debate—access by United States airlines to Manchester airport. We must recognise that our aviation relations with the United States of America are very different from those with, say, Canada. We were able to persuade the Canadian authorities that a liberal air services agreement was in all our interests. However, the United States authorities take a far more protectionist attitude towards access to the major American market. The air services agreement between the United States and the United Kingdom is founded on the principle that there is a broad balance of opportunities for each country's airlines. If the Americans are given new rights at Manchester, balancing concessions are needed for United Kingdom carriers in the United States.

In 1986, as a gesture of goodwill, we gave American Airlines a temporary permit to operate services between Chiacgo and Manchester—a valuable new right, for which we still have received nothing in return. That gesture is not 1063 something we can repeat if we are to retain the strong United Kingdom aviation industry of which we are rightly proud.

For a considerable time, the United States Government showed no interest in coming to the negotiating table to discuss further access to Manchester. They claimed that their airlines had no interest in such services. But Manchester airport successfully persuaded some United States carriers that Manchester and the north-west offered their own substantial market for additional United States services, and the American Government were finally persuaded to the negotiating table in March of this year.

At those talks, we offered the United States a very reasonable package, taking account of the benefits that will accrue to Manchester and the north-west from additional United States services. We were prepared to agree to the immediate commencement, in the summer 1988 season, of a daily direct Manchester to Boston service and daily one-stop Manchester to New York service, as well as putting the Manchester to Chicago service on a permanent footing.

However, the American team insisted that any package must permit the immediate commencement of all the services it sought, including two separate daily New York to Manchester services operated by two large United States carriers. That would have seriously jeopardised British Airways' daily service on that route—and Manchester airport, which was consulted frequently during the course of the negotiations, advised that the retention of BA's service was its top priority.

The United States Government then made it clear that they were not interested in further talks before 1989. Eventually, we persuaded them back to the negotiating table in late November, in Washington. We were disappointed that a final agreement did not emerge at those talks, but not, I must say, surprised—bearing in mind the fact that the United States authorities had clearly indicated that they would not be prepared to reach agreement in a single round of consultations.

However, those negotiations were of value. There was a useful exchange of views, and the two sides explored a number of new ideas for developing an appropriate package as the basis for agreement. A Manchester airport representative was included in the United Kingdom delegation throughout. At the conclusion of the talks, we agreed to meet again as soon as mutually possible. We proposed dates in December and early January, and 4 and 5 January was recently agreed, as my hon. Friend said. Meanwhile, both sides are further examining each other's ideas, and the Government hope very much that a satisfactory settlement will soon be reached.

There is, however, a very important point to bear in 1064 mind. The United States Government must be in no doubt that if agreement is to be reached, they must be prepared to pay a reasonable price. Our demands will not be excessive. We recognise the advantages for Manchester and the north-west and we shall take them fully into account. But there must also be advantages for United Kingdom airlines. The United States negotiators watched very closely the reactions of Manchester airport and its supporters to the breakdown of talks in March. They will also be monitoring this debate tonight. No doubt they are still hoping that the Government will acquiesce in the face of domestic pressure, and give them traffic rights to Manchester for little or nothing in return. If so, they are mistaken. There must be mutual benefits.

My hon. Friend is concerned that unless we reach a satisfactory settlement in January, the United States airlines will lose interest in Manchester and look elsewhere. The Government are equally concerned that there should be a successful outcome to the January negotiations. But if there is not, and if the United States airlines have a genuine interest in serving Manchester, they will no doubt press their Government to continue the negotiations. Looking elsewhere in Europe to mount services is unlikely to be an attractive alternative. The vast majority of countries demand reciprocal benefits for their airlines in exchange for wider access for foreign carriers. The British Government are far from being alone in pursuing that policy in their negotiations with foreign Governments.

Our policy reflects careful consideration and extensive consultations. We are not about to set it aside and ignore the interests of United Kingdom airlines in the very difficult and demanding United States aviation environment. Allowing access to Manchester for nothing in return would not be in anyone's long-term interest.

Of course the Government wish to increase traffic to the regional airports, of which Manchester is the leading candidate, but the interests of the nation as a whole and, ultimately, of the regional airports too, demand that we have a strong aviation industry. The agreement reached over Manchester must not ignore the interests of the United Kingdom aviation industry.

I hope that this short debate has been an opportunity for me to reassert to my hon. Friend the considerable importance that we attach to Manchester airport, the great pleasure we have derived from seeing it thrive and prosper and the great pleasure it would give us to be able to conclude an agreement that brought more services to Manchester, if that could be attained on terms that were of mutual benefit to the two countries involved.