HL Deb 22 October 2001 vol 627 cc811-3

3 p.m.

Lord Berkeley asked Her Majesty's Government:

Whether government support offered to United Kingdom registered airlines following the hijacks in the United States on 11th September complies with European and United Kingdom competition policy.

The Minister of State, Department for Transport, Local Government and the Regions (Lord Falconer of Thoroton)

My Lords, the Government have made no decisions about financial support for UK airlines, apart from underwriting on a temporary basis third party war risk insurance. Control of state aid falls to the European Commission, which would determine the compatibility with the treaty of any assistance offered. The Commission set out guidelines on emergency aid in its 16th October communication to the Transport Council on the repercussions of atrocities in the United States on the air transport industry.

Lord Berkeley

My Lords, I am grateful to my noble and learned friend for that full Answer. Does he agree that market forces caused British Airways to cancel its Belfast flights when it was charging £162 per person compared with the low cost airlines which charge about £27? Does he further agree that that should be replicated throughout Europe and that he should therefore encourage a rationalisation of the airlines in Europe and possibly the removal of ownership restrictions both in Europe and in the United States?

Lord Falconer of Thoroton

My Lords, I cannot comment on the reason for the cancellation of a particular flight. There is plainly scope for a rationalisation of airlines throughout Europe and that should be done on a sensible market basis. At the Transport Council meeting on 16th October, to which I referred in my Answer, my right honourable friend the Secretary of State put before it a paper about rationalisation. It is a proposal which we support, but on a sensible basis.

Lord Razzall

My Lords, will the noble and learned Lord accept that even if direct financial subsidy to our UK airlines proves not to be possible, other actions might be appropriate? Does he agree that it has long been a scandal that UK planes run by British Airways, Virgin and the other carriers cannot land in one American city and pick up passengers to take them to another? Does he accept that if we are making the SAS available to fly to Afghanistan via Pakistan, Uzbekistan or other places, now is the moment for the Government to press President Bush to allow British Airways to land at New York and take passengers on to Chicago?

Lord Falconer of Thoroton

My Lords, we are actively pursuing bilateral negotiations with the United States. A balanced liberal agreement with the US would be good for passengers in the UK and in the European Union more widely.

Lord Clinton-Davis

My Lords, I begin by declaring my interest as president of BALPA. Will the noble and learned Lord tell the House why a clear advantage is enjoyed by the United States' airlines which none of the European airlines can emulate? Is not the matter being taken before the European Commission and how are the British Government assisting in that?

Lord Falconer of Thoroton

My Lords, the British Government are engaged in bilateral discussions with the United States in relation to these airline issues. There are issues which also have a European dimension but at the present time the right course is for Britain to continue those discussions with the US.

Lord Skelmersdale

My Lords, is it true that as reported in the press the European Commission is breaking its own rules and is in the process of allowing national subsidies for other national airlines within Europe?

Lord Falconer of Thoroton

My Lords, I am not sure to what the question was directed. It is for the European Union, in particular the Commission, to state the provisions in relation to state aid in the current situation. That is what it has done. They apply to all EU countries and I understand that they are being applied in all EU countries.

Viscount Astor

My Lords, does the Minister agree that the UK airlines have not asked for any state handouts? Does he also agree that it is important to negotiate a bilateral air services agreement with the United States because next year the UK will lose its mandate for bilateral air service agreements to the European Commission?

Lord Falconer of Thoroton

My Lords, it is right that we continue the negotiations with the United States because we need to sort out many of the problems which have been mentioned. As regards the UK airlines' approach to handouts, there have been constructive and sensible discussions between them and the Government.

Lord Elton

My Lords, the noble and learned Lord did not answer the final part of my noble friend's question, which relates to the right to bilateral negotiations. Will he address that?

Lord Falconer of Thoroton

My Lords, they are presently with the UK and the US. At the end of the year a decision must be made about how they are proceeded with.

Lord Garel-Jones

My Lords, does the noble and learned Lord agree that the reason it has been so easy for the United States to pick off and cherry-pick European nation states is because we have not yet been able to negotiate on a European basis?

Lord Falconer of Thoroton

My Lords, in some respects, we have in our hand particular cards which make our position strong in those negotiations.

Back to