British Airlines: Cutbacks (Hansard, 25 October 2001)

§ The Minister of State, Department for Transport, Local Government and the Regions (Lord Falconer of Thoroton)
My Lords, it is too early to assess the consequences of the recently announced cuts and 1098 reductions in services by British airlines. British Airways' new timetable, for example, comes into force on 28th October. The Government would welcome representations on these changes. Operational changes must remain a matter for the commercial judgment of the operators. September 11th has had a significant impact on airlines, which need to be able to match their operations to demand.

§ Lord Dubs
My Lords, while accepting the difficulties of airlines and their need to make cutbacks to avoid losing money, does my noble and learned friend agree that it is particularly disappointing at the present time that British Airways has used the events of 11th September as a reason to cut back its services between Heathrow and Belfast, which represents a vote of no confidence in the Northern Ireland economy? Will the Minister consider making representations to British Airways that it should reverse its decision, given that it is difficult to believe that demand for services between London and Belfast has been affected by the events of 11th September?

§ Lord Falconer of Thoroton
My Lords, the Government very much recognise the importance of the air links between Belfast and London. It is not for the Government to get involved in the commercial decisions of airlines, and I cannot comment on the precise reasons for the withdrawal by British Airways of its flights between Belfast International and London Heathrow. Up until 28th October 2001 the number of flights between Belfast International and Belfast City to any London airport, including Stansted, Luton and City, is 34. When the new timetables come into force after that date the total will be 31, which is a net loss of three. The reason why the total loss is not the same number of flights that British Airways has removed is that British Midland has increased its flights from Belfast City to Gatwick.

§ Lord Clinton-Davis
My Lords, does my noble and learned friend agree, first, that the air passenger duty which is unique to British airlines should be deferred for the time being? Secondly, does the Minister agree that the Atlantic carriers should also be compensated and he should take up that matter with the transport directorate of the European Commission? Thirdly, does my noble and learned friend agree that the extra costs of security should be borne by the Government rather than the airlines?

§ Lord Falconer of Thoroton
My Lords, the question of aid to British airlines, including the deferment of any tax, is a matter for the EU Commission. The Commission has indicated the categories of aid: insurance, the direct consequences of airspace having been closed for four days and the direct cost of security as a result of the events of 11th September. At the moment the British Government are considering how to proceed in the light of that decision by the European 1099 Commission. I believe that the right course is for those discussions to continue and for the UK to operate in line with the rest of Europe.

§ Viscount Goschen
My Lords, what prospect does the noble and learned Lord hold out for progress on liberalisation of the air service agreement between the United Kingdom and the United States? Furthermore, what discussions have the Government had with the European Commission on this issue?

§ Lord Falconer of Thoroton
My Lords, as I pointed out on Monday, discussions continue between the US Government and the British Government on the air service agreement between them. That is a matter between Britain and the USA. The role of the European Commission and Europe generally in relation to that is the subject of a court case before the ECJ. I cannot tell the noble Viscount when that court case will be decided. I do not believe that it is appropriate for me to comment on how the discussions between the UK and US are proceeding.

§ Lord Rogan
My Lords, will the Minister ensure that the slots freed up at Heathrow as a result of British Airways giving up the Belfast-Heathrow route are offered to other potential carriers between Heathrow and Belfast and are not used for UK non-domestic routes?

§ Lord Falconer of Thoroton
My Lords, I am afraid that British Airways is free to put those slots to a different use and it is not a matter in which the Government can intervene. If BA does not use the slots normally they will be returned to the Heathrow pool for the following season. Although I have tried to find out, at the moment I do not know the intention of British Airways in relation to those slots.

§ Lord Razzall
My Lords, does the Minister accept that the prevailing view is that if the present economic circumstances continue, European airlines will be reduced to only three major carriers, of which British Airways is assumed to be one? If so, does the noble and learned Lord regard that as a desirable outcome, or will the British Government simply leave that to market forces?

§ Lord Falconer of Thoroton
My Lords, I do not want to comment on the economic prospects, which I leave to others. The Government have said over a period of time that they regard the restructuring of the EU airline industry as important. At a meeting of Transport Ministers on 16th October my right honourable friend the Secretary of State for Transport circulated a paper calling for member states and the Commission to try to prevent the ownership and control clauses in bilateral air service agreements becoming an obstacle to airline consolidation. Therefore, we are in favour of a process of consolidation.

§ Viscount Astor
My Lords, will the noble and learned Lord examine carefully the large subsidies that have been paid to American airlines by the US Government so as to ensure that British airlines that cross the Atlantic are not disadvantaged?

§ Lord Falconer of Thoroton
My Lords, my own examination of these subsidies may be altogether beside the point, but as to the issues involved they are matters in discussion between the two countries.

§ Lord Corbett of Castle Vale
My Lords, the Minister will be aware that every forecast about air traffic in the immediate future shows a very severe downturn which is due to a combination of the events of 11th September and the recession. Can my noble and learned friend give the House an assurance that the Government will not rush into an early announcement about the future of a possible fifth terminal at London Heathrow and will use the intervening time to do even more to build up the use of regional airports, especially those such as Birmingham International?

§ Lord Falconer of Thoroton
My Lords, I congratulate my noble friend on getting in his question at the fourth attempt. As far as concerns the decision about the fifth terminal, the Government will take the decision and announce it when the time is right. I agree with my noble friend that regional airports have a very important part to play and their future should be encouraged.