HL Deb 10 February 2000 vol 609 cc770-3

3.20 p.m.

Lord Brabazon of Tara

asked Her Majesty's Government:

Whether they propose to take any action following the decision of the American cargo airline FedEx to cancel flights to Prestwick.

The Minister of State, Department of the Environment, Transport and the Regions (Lord Macdonald of Tradeston)

My Lords, the decision of FedEx to cancel its daily Memphis-Prestwick-Paris service within a year of its inauguration will have disappointed all those who had believed that the airline was making a genuine commitment to Scotland. However, although it is not for the Government to question the logic of the company's decision, I am confident that Prestwick will commend itself to competing cargo carriers intent on developing the market.

Lord Brabazon of Tara

My Lords, I am grateful to the Minister for that reply and I am as disappointed as he is that FedEx has decided to pull out. Is it not embarrassing for the Government, having given a unilateral gift to the Americans, for which our airlines received nothing in exchange, that FedEx should have pulled out so soon after commencing the service? Perhaps I can quote the Minister who said that that was, a gesture of goodwill which will see FedEx on our side in their attempts to try and woo the American position because our main priority as we have stressed is still to get the rights for British carriers in the United States". Can the Minister say precisely what progress was made a couple of weeks ago in talks with the United States Government on aviation rights? How long did those talks last? What can we hope to achieve from them?

Lord Macdonald of Tradeston

My Lords, the rationale behind the Government's original decision was eminently sensible. FedEx's decision to invest in the service promised to deliver benefits to the airport and to Scotland. The decision calls into question not only the regional economic benefits that would have come from the service, but also FedEx's commitment to Prestwick, given that the prize that FedEx really sought was fifth freedom rights from Stansted. I believe that we are now entitled to speculate on whether they would have closed their Prestwick operations in any event if and when rights at Stansted were granted. Certainly the company's tenuous commitment to Prestwick tends to support that pessimistic speculation.

In terms of what influence the company brought to bear on the United States Government, it had offered, as others have done, to use its best endeavours to try to bring the Government round to seeing that our policy of liberalisation was preferable to the policy of "open skies" advocated by the Americans. In conducting any negotiations I was always mindful that I had been warned by the noble Lord, Lord Brabazon, that the phrase "open skies" means one thing to us and something different to the Americans. As far as the noble Lord was concerned, it would mean that ownership and control, cabotage, wet leasing, the instruction for American state employees to "fly America" and so forth would all be taken into account in any dealings that we had. Indeed, that was never far from our minds.

We believe that we have shown a flexibility and willingness to help the Americans to solve their problems. However, they still deny our carriers the rights that they demand for theirs.

Lord Clarke of Hampstead

My Lords, given the disappointing news about the FedEx decision to withdraw from Prestwick, will the Minister comment on the general strength of our aviation relationship with the United States? In particular, can he tell the House whether he believes that the Americans are behaving as unreasonably as they appear to be?

Lord Macdonald of Tradeston

My Lords, since the early 1990s the United Kingdom has promoted full liberalisation in transatlantic aviation. We have been willing to help the United States to solve their problems with flights from Pittsburgh to London. Over a number of years, compared with the United States, we have been far more willing to act; for instance, to enable Virgin to operate a service to Las Vegas we have made a number of proposals that would allow it to operate a Pittsburgh-London service—only to be castigated for intransigence and unhelpfulness. However, we remain willing to work for a balanced deal.

Viscount Waverley

My Lords, in future will the Minister enter into only reciprocal agreements, combined with long-term commitments? What success was there in gaining wet lease access by UK carriers into the US market?

Lord Macdonald of Tradeston

My Lords, we had a limited response to the suggestion that our carriers may be allowed the same kind of freedoms that the Americans have in the United Kingdom and in Europe. A suggestion was made that our carriers should be able to fly into America under wet leasing arrangements, but after arriving their hire would be restricted. That was not an attractive proposition for us. We believe that we must show flexibility and willingness, but we must also assume that any deal must be a balanced deal.

Baroness Thomas of Walliswood

My Lords, will the Minister accept that his last comment about showing flexibility merely suggests to some noble Lords that once more he will go down the path of giving a concession without getting one in return, and that that applies as much to the important aspects of freight carriage as it does to passenger transport? On a wider matter, will he agree that it is time to start talking to the Americans, who have the largest airline market in the world, on a Europe-to-America basis rather than on a UK-to-US basis which always puts us at a disadvantage as we are a much smaller operator?

Lord Macdonald of Tradeston

My Lords, our belief is that we should not give any concessions to the United States unless there is a balanced deal. We shall weigh the merits of any proposed deal to ensure that the interests of the United Kingdom aviation industry, its consumers and the UK economy are taken fully into account.

On the point of giving the Commission a mandate to negotiate with the United States, the Transport Council of the European Union remains to be persuaded that it should grant the Commission a mandate to negotiate with the United States. In the United Kingdom, our position has not changed. We do not believe that effective bilateral negotiations could proceed simultaneously with community-level talks. Our priority has been, and still is, bilateral negotiations with the United States.

Lord Crickhowell

My Lords, has the Minister any information on whether reports that American officials are seeking to ban British Airways Concorde flights across the Atlantic are true? If they are true, what attitude are the British Government taking in the face of that threat?

Lord Macdonald of Tradeston

My Lords, the Government view any threat to abrogate treaty obligations as a potentially serious development. Of course, it would be possible to take proportionate retaliatory action. I hope that the United States Government will recognise that such action would be bad for consumers on both sides of the Atlantic.

Lord Woolmer of Leeds

My Lords, did I detect at least a slight note of optimism in the Minister's reply to the noble Lord, Lord Brabazon of Tara, regarding prospects at Prestwick? Does he envisage the possibility that another cargo carrier may come into Prestwick?

Lord Macdonald of Tradeston

My Lords, the decision of any employer to suspend operations in a particular location is always bad news if that results in lost jobs. In this case the number of jobs that may be lost at Prestwick is 17. In the light of the growth that that airport has displayed recently, we are confident that in future the attractions of Prestwick will be shared by others in the industry. I am hopeful that other air freight carriers will take advantage in the near future of the fifth freedoms that are still extant at Prestwick.