HC Deb 24 January 1994 vol 236 cc3-4
2. Mr. Colvin

To ask the Secretary of State for Transport when he last met the United States Transport Secretary; and what aviation matters were discussed.

The Secretary of State for Transport (Mr. John MacGregor)

I last met the United States Transportation Secretary on 14 September last year in Washington. We discussed the progress of the liberalisation negotiations and how we saw the way ahead. Since then, there have been many contacts between our officials and I have also spoken to Secretary Peña.

Mr. Colvin

Does my right hon. Friend agree that American and British airlines share one common characteristic: they are free-enterprise rather than state-owned airlines? Does not that mean that we share an interest in confronting the massive Government subsidies that are paid to nationalised airlines, particularly by European Union countries? Those subsidies not only distort competition, but mean that liberalisation is far from creating free competition, even across the north Atlantic, and that air fares are still too high? Was that matter discussed in the recent talks on the general agreement on tariffs and trade and will it be on the agenda for the next meeting of the Council of Transport Ministers?

Mr. MacGregor

I do not think that those specific matters were discussed in the GATT talks, but I agree with everything that my hon. Friend has said. He is right to say that we have highly effective and competitive airlines in the private sector, which does not apply in most of the European Union. He is also right to say that state aids provide an unfair subsidy. He will know that we have fought extremely hard in the European Councils to ensure that state aids are given only in specific circumstances; we will continue to fight for that. It is one of the major matters that I take up on every possible occasion. The issue may arise in the report that the Commission has requested from its "wise men", which will be discussed, although not specifically, at the informal Council at the beginning of next month. I assure my hon. Friend, however, that I am very alert to those issues, which we frequently take up.

Mr. Olner

The Minister will be aware of the representations about the opening of transatlantic routes that have been made to him by Birmingham international airport. I accept that the Secretary of State has had talks on the matter, but that is all that appears to have happened. The attempts of Birmingham airport to obtain transatlantic routes have gone backwards. Those routes are vital to the economy of the west midlands. The infrastructure is in place and the airport is ready to take those airlines. When will the Government act to make the routes open to competition from Manchester and, in particular, Birmingham airports?

Mr. MacGregor

It takes two to reach an agreement and we have put forward proposals for the liberalisation of air services on transatlantic routes to all our regional airports, including Luton and Stansted. That is one of the first items that should be carried through as a result of the current liberalisation agreements. In one or two other cases, smaller arrangements have been made on liberalisation before reaching a full agreement, which the American Administration have refused to accept. So far, therefore, we have not been able to reach agreement on that issue. The Americans are focusing particularly on Heathrow airport, but there are considerable capacity constraints there that I am drawing to their attention. I assure the hon. Gentleman that early liberalisation of services to our regional airports is very much our target.

Mr. Mans

When my right hon. Friend next negotiates the various agreements with his counterpart in Washington, will he make the point strongly that the United States should honour the existing law on code sharing and on minority shares in their own airlines? Does my right hon. Friend agree that he should decide whether he reaches various future agreements with the United States on the basis of how they operate their existing system? Until the United States honour present agreements, will it not be difficult to reach an agreement over code sharing and other matters in the future?

Mr. MacGregor

I think that the two things are separate. We clearly want to reach agreement on the wider liberalisation, but we also think it important that existing agreements should be honoured. To some extent, failure to achieve the second colours success on the first. I know that my hon. Friend is referring to the American Administration's decision to allow, as part of the BA/US Air deal, the code sharing with US Air to take place, not for 12 months, as should happen under existing agreements, but for a shorter period. We have made our protests known to the American Secretary of State about that, because we believe that it is important to honour existing agreements. I hope that, in March, the United States Administration will do so when they come to consider their next decision.