HC Deb 09 February 2000 vol 344 cc49-68WH

Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Jamieson.]

9.30 am
Mr. Tony Lloyd (Manchester, Central)

May I begin by saying how pleased I am to see so many people here this morning, from across the party political divide? The issue of air transport is fundamental to consumer choice, which should be at the centre of any such debate, and to economic development. If I may speak slightly parochially, the statistics showing the importance of Manchester airport to the national economy as well as that of the north-west are a testimony to the tremendous importance of air travel. Manchester airport already delivers £500 million to the economy of the north-west and about £1.7 billion to the national economy. It provides 85,000 full-time equivalent jobs. It is important not only to the future of the north-west region, but to the whole of the north of England: indeed, it is not fanciful to say that it is one part of the infrastructure that is vital to the future of the national economy. It is in that context that I make my first point.

For far too long, Governments have shown a strange reluctance to recognise the importance of airports outside the south-east. Airport policy has been fixated on the development of Heathrow and Gatwick. Regional airports were considered as a bolt-on, viewed simply in terms of the way in which they affected the development of air transport into the south-east. Such an approach may have been understandable, but it is unacceptable in terms of regional development and, indeed, runs counter to the national interest.

In the past, air transportation initiatives have been driven by the need to protect the interests of BAA, the airport operator, or British Airways, rather than those of the consumer. That view was fundamentally mistaken. I restate that the central issue is how to develop consumer choice—how we give consumers the freedom to exercise the choice to fly from where they are best served.

In the non-south-east air travel system, BAA and British Airways have been at best uncertain friends. I pay tribute to the importance of British Airways to the development of Manchester airport and other non-London parts of the system. British Airways is, of course, the dominant United Kingdom carrier. Nevertheless, it has too frequently adopted what it believes is a reasonable, commercially sensitive approach, leading to withdrawal of services or the failure to develop services outside Heathrow and Gatwick. Most recently, British Airways withdrew its service from Manchester to Islamabad, justifying its decision on the preposterous ground of consumer choice. It is difficult to explain to people living in Macclesfield, for example, how their choice is increased when their travel to Pakistan involves them taking a detour through a London airport.

In the past, British Airways has responded to competitive pressure only when forced to by other airlines choosing to use Manchester. British Airways has then put on rival services. My critique of British Airways is not meant to be hostile—rather the opposite. It is a recognition that it is important to the development of regional air transport. However, it will always operate in its own commercial interests, which we understand.

In the same way, nothing that I say should be seen as a criticism of BAA. It is a matter of practicality that, for a long time to come, consumers in my city and region will have to look to the London airport system for many of their long-haul travel requirements. Flights to Africa, the far east and Latin America, for example, will involve routeing from Manchester through either Heathrow or Gatwick. Therefore, it does not serve the interests of Manchester or any other region outside London for air travel in and out of Heathrow or Gatwick to be restricted.

For every passenger who travels through Heathrow or Gatwick, two passengers travel from United Kingdom regions to European airports, such as Charles de Gaulle, Schiphol and Frankfurt and then go further. That is an astonishing statistic; it means that the use of United Kingdom resources is already being eroded as people are forced to make a different choice. This is not efficient for consumers either in terms of economics or in terms of choice. Consumers are best served if they can fly from an airport that can be conveniently reached from the place where their journey begins. That is best enhanced by the development of a strong regional airport framework. I include Manchester, of course—but everything I say about Manchester could equally be applied to Aberdeen, Glasgow, Prestwick, Newcastle, Leeds-Bradford or Birmingham. This is not simply an argument about Manchester; it is about maximising consumer choice across the nation.

Slots in the London airport system are being severely restricted. That is a fact of life. Slot reductions—or slot rationing, to be accurate—impact on what happens regionally. It takes place not just at Heathrow and Gatwick but more widely. I mentioned passengers travelling through European airports. Last spring, KLM began running a service from Sheffield to Amsterdam. Passengers from South Yorkshire could end their journeys there or—which was more likely—travel on from Schiphol to their final destination. However, KLM came across a slot problem at Schiphol and has now ceased operating that service. Only if services are developed directly from the point of departure such as Sheffield can we be certain that consumer choice will be maximised in the long term.

I hope that my hon. Friend the Minister will be able to give us some comfort on my central theme. We want this notion of fifth freedoms—rather an inelegant expression—maximised so that regional airports can benefit. By fifth freedoms, we mean the ability of airlines to fly into our regional airports from their country of origin and go on elsewhere. Where that happens, it is good for airlines and for the travelling public.

In a rare moment of weakness, I will admit that Manchester airport faces a problem that Heathrow and Gatwick do not have. Demand for services from Manchester is clearly not as strong as at the London airports. Any airline that get its hands on a slot at Heathrow will take it, so Manchester's argument for fifth freedoms does not necessarily parallel Heathrow's. Heathrow can fill slots simply by offering them. Manchester's position is different, as the airport is still developing and needs to encourage airlines to come in. The ability for an airline to fly from its point of departure, disembark and pick up passengers at Manchester, and fly on elsewhere would give that airline a strong guarantee that it would make more money than it would if the service were restricted to flying from its point of departure to Manchester and back again.

I ask the Minister to think radically about regional airports and fifth freedom rights. There once seemed to be a total ideological blockage on the concept of fifth freedom rights, but we have seen some movement. However, not all the changes have been helpful. For example, FedEx was granted the right to operate fifth freedoms from Prestwick airport for commercial services—freight. As a result, FedEx was able to fly from the United States to Prestwick and on to the far east. Polar Air, which had flown from Manchester, chose to relocate at Prestwick precisely because it could have fifth freedoms from Prestwick but not at Manchester. It is ludicrous that an airline should have to relocate for economically rational reasons because fifth freedoms are available at one airport and not another.

I warmly applaud the decision to grant Olympic Airways the right to fly from Athens to Manchester, and from Manchester to Boston. It is hoped that flights may go on to Toronto, although there are difficulties on the Canadian side. I hope that the Canadians will recognise that it is not in their national interest to restrict flights.

That decision displayed a welcome change of thinking in central Government, but I must temper such free public applause with some criticism by asking Ministers to liberate their thinking. Ideally, we would like unlimited fifth freedom access to regional airports. That idea receives much support from airports, including Manchester, that would welcome the ability to develop their own air services without restriction. The Department of the Environment, Transport and the Regions argues that a bargaining process must be maintained, and that the Government are the custodian of long-term development. It is suggested that short-term consumer satisfaction may not always be best in the long term, and I accept that argument.

However, any restrictions on development of air transportation and the ability of consumers to use air services should be imposed in a way that is consistent with consumer choice, and, therefore, with leisure patterns, family travel and business travel. Too often, agreements on Manchester have been tied to decisions affecting the interests of London airports or British Airways. In the case of Olympic Airways, for example the knock-on deal with Greece—welcome though it was—was that British Airways should have parallel rights in that country. I have no objection to our increasing the capability of a British carrier, but I would be concerned if such trade-offs might jeopardise development at Manchester.

Let me give two examples. First, Biman, the Bangladeshi airline, wanted to travel in and out of Britain. It was offered flights to Manchester, but it wanted flights to London and was not prepared to accept Manchester as a second-best option. The irony is that Biman would have accepted a deal if it had been told that it could fly into Manchester and fly on from there. Forced to enter into a bargaining process, Biman was not prepared to accept a deal. Manchester has been frustrated for no clear national gain.

The other example involves Singapore Airlines, which was offered the chance to fly from Singapore through Manchester to New York, but was not prepared to accept that as a second-best option to flying via London.

The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Chris Muffin)

Is my hon. Friend suggesting that we should unilaterally grant fifth freedom rights to countries in which our carriers are subject to restrictions that we would not tolerate?

Mr. Lloyd

No. I want the Minister, in any negotiation on regional airports—Manchester, of course, but also Birmingham, Sheffield and others—to bear in mind the development needs of those airports. It is, of course, necessary to put pressure on others to exercise the same freedoms and develop the same services that we have, but we must get away from thinking that development in Manchester must involve some deal for London airports or for British Airways as the national carrier. We want regional transport to develop for the sake of the regions, but also for the sake of the national airport system.

Air travel is growing enormously, and that will continue. There are also restrictions at Heathrow, Gatwick and other major international airports such as Charles de Gaulle and Schiphol. If British people from outside London are to enjoy maximum choice, we need strong development of regional airports and a strategy that sees them not as an add-on, but as a central part of national air travel.

If that development does not come, Heathrow and Gatwick will suffer. They are already at saturation point, and demand for development at Gatwick will be locally resisted on environmental grounds. There are restrictions on how many people can fly through Heathrow. Granting fifth freedom rights to regional airports is therefore strongly in the national interest.

I know that negotiations are taking place on that, particularly regarding Pakistan's PIA, which may fly into Manchester. The Minister may not be able to comment on the negotiations, which have taken place in recent days and even hours.

My appeal is that we should unblock the thinking that regional development must be conditioned by the view that the true national interest lies in the London airport system; it does not lie there, it never did and it certainly never will. Regional development is a national good. I look forward to a strong indication from the Minister that that old thinking is now a thing of the past, and that in future there will be a strong endorsement of flights into and beyond airports such as Manchester.

I realise that other Members want to speak and I hope that I have said enough to give the flavour of the matter. My hon. Friend the Member for Wythenshawe and Sale, East (Mr. Goggins) is in rather a difficult position as regards the debate, because he is a Parliamentary Private Secretary. I pay tribute to him because he provided the instigation for the debate, as the Member in whose constituency Manchester airport lies. He has played an important role in pushing for the developments to which I referred.

9.50 am
Mr. John M. Taylor (Solihull)

I am grateful for the opportunity to speak in this debate. I do so simply and solely as the Member of Parliament for Solihull.

International access to regional airports is of considerable importance to my local airport, Birmingham international, where only foreign airlines currently provide long-haul services to key business and leisure destinations. Indeed, a previous Conservative Administration first brought that about, by allowing American carriers to start services to regional airports from the United States without reciprocal rights for UK airlines. As a result, Birmingham now has two daily transatlantic scheduled services.

In the absence of UK airlines that are willing to serve regional airports such as Birmingham, the Government should encourage foreign carriers to do so instead, on a third or fourth freedom basis, but also on a fifth-freedom basis. UK airlines should not be able to prevent foreign airlines from doing that through the influence that they can exert over existing bilateral negotiations.

If foreign carriers were allowed to operate such services, the economic benefits to the regions would significantly outweigh any detrimental impact on UK airlines. It would also demonstrate that the Government were looking after the interests of UK consumers, who increasingly want to fly from their local airport, irrespective of the nationality of the airlines that operate there. That last category also includes me.

9.53 am
Mr. Peter L. Pike (Burnley)

I am glad to have the opportunity to say a few words in this important debate. I congratulate my hon. Friend the Member for Manchester, Central (Mr. Lloyd) on initiating the debate. Like him, my main purpose in speaking is to draw attention to the effects on services at Manchester airport. However, my remarks also apply to the other regional airports.

Manchester airport is not merely the airport for Manchester; it serves the whole north-west region and beyond—Yorkshire, for example. Without question, it is the most successful regional airport in England. That is because the former Manchester city council was always prepared to invest in it.

In the 1960s, in Manchester, I was a backroom boy, as a Labour party political organiser, when decisions were taken to develop the airport. People said, "It will not pay until 2000." Yet those developments of the 1960s have long since disappeared as air traffic has grown—terminals 2 and 3 and other developments make what was done at that time seem insignificant.

The difficulty is that we still expect people to travel into the country via London, and we should not do so. A few years ago, I was asked—as a representative of the House—to visit NATO in Brussels. I had to travel on a Monday morning and was told by the House authorities that I had to come down to London, because they expected me to travel from here. No one took into account the facts that the fare was dearer, that I had to come down to London on the Sunday before, or that a convenient flight from Manchester arrived in Brussels 10 minutes before the flight that I was expected to catch from London. None of that was included in the equation. It was only when I insisted that I would not go if I could not travel from Manchester, that it was conceded that I could do so. Even our own House authorities sometimes do not do all that they can to encourage the development of our regional airports.

My hon. Friend the Member for Manchester, Central referred to fifth freedoms; that is extremely important. We want more freedom to be opened up. However, I understand the difficulty to which my hon. Friend the Under-Secretary referred: such reciprocal arrangements can pose problems. Nevertheless, it is nonsense for a plane to touch down at an airport without being able to pick up passengers—it is not economic.

At times, all Members who have an interest in regional airports have received letters from various companies, such as Singapore Airlines, which want to fly into different airports but have not been given slots to do so. In many cases, they battle for several years before they are finally allowed to run flights into those airports. We want other airlines to be able to do that too.

I regret the decision of British Airways not to use Manchester airport for their flights to Islamabad. That is a retrograde step because many people in the north-west want to travel to Islamabad with BA. It is true that they can use another airline, but they should have been given the choice of using BA.

There is always too much concentration on bringing people to the south-east. How many tourists come into the country through London who would have found that the north-west, or even Scotland or other parts of the UK, have as much to offer? They could fly into those places and visit them, rather than having to travel into London and fight their way out of it to get to other parts of the nation. Instead of visiting Stratford-on-Avon and other parts of the country for a couple of days, they could base their holiday in those places and visit London from them.

I look forward to the Minister's response on these important issues, although I accept that they are difficult ones. We want our airports to be given more freedom to develop their traffic potential, so that airlines can use all the regional airports. We also want our airlines to have the same freedoms to pick up passengers in other countries. The point is to give passengers—the consumers—what they want. We do not want them to experience the difficulty of having to come to London and to travel from Heathrow or Gatwick when it is not necessary. That is a major problem.

My hon. Friend the Member for Manchester, Central has focused attention on these issues. As a Member representing a Lancashire constituency, I support his case, because the bounds of Manchester airport go well beyond Lancashire. We want Manchester airport—and others, such as Birmingham—to grow and flourish, and to give passengers freedom of choice.

10 am

Mr. Nicholas Winterton (Macclesfield)

I support fully the excellent case advanced by the hon. Member for Manchester, Central (Mr. Lloyd). Like the hon. Gentleman, I pay tribute to the hon. Member for Wythenshawe and Sale, East (Mr. Goggins), who I hope will catch your eye, Dr. Clark, in the debate. He plays an important role as the chairman of the all-party group that seeks to promote and represent the interests of Manchester international airport.

I speak as the Member for Macclesfield, an important constituency in the north-west. That area contributes substantially to the economy and to the viability of the region. The benefits that flow to my constituency from the locality and the existence of Manchester international airport are very great.

I hope that the Minister will understand from the number of Members present in Westminster Hall today the strong feelings that exist about the importance of regional airports. From my point of view, Manchester is important, but, as my hon. Friend the Member for Solihull (Mr. Taylor) pointed out, Birmingham international airport is, too. Regional airports play an important role not only in transport, but in the overall economy of the United Kingdom.

We hear that there are problems with overcrowded skies in the south-east. Why do the Government not direct their attention to those parts of the country, such as the north-west, that could take the pressure off the south-east? There is room in the sky and runway capacity in the north-west. Many of us will be more than aware that the second runway at Manchester airport will come on stream in the not-too-distant future. As the hon. Member for Manchester, Central said, Manchester is only too willing to accept additional flights and they will bring great benefits to the economy of the region.

The north-west economic strategy identifies the development of Manchester international airport and other airports in the area as very important to the future prosperity and development of the region. In particular, it identifies the system of international route licences operated by successive Governments as a continuing constraint on the growth of international scheduled flights which are the key to attracting new investment and supporting economic growth". The Government rightly state—successive Governments have done so—that they want continuing economic growth in the United Kingdom. A more realistic approach to regional airports could make a major contribution to support the growth that we all want to see.

The hon. Gentleman cited statistics on Manchester airport. He said that, in 1998, it had been estimated that the United Kingdom income impact of Manchester airport was £1.7 billion, of which £585 million was in the north-west. As I am sure we all agree, that is a dramatic statistic. The hon. Gentleman also referred to the impact on total United Kingdom employment, which was estimated to be 85,000 full-time equivalents with more than 15,400 jobs on the airport site itself. He did not add that the 1999 census on working population shows that 17,900 people are employed on the site at the airport, an increase of about 2,500 in 12 months, which is the equivalent to the creation of seven new jobs every day. Is that not something that we want to encourage and to continue?

Forecasts of traffic at Manchester suggest that the airport could be handling—this is an amazing figure—40.7 million passengers in 2015, with a UK income impact of £4 billion to £5 billion and an employment impact of between 137,000 and 177,000 full-time equivalents. The catalytic effects, such as those on tourism, are not included in those estimates. However, the passenger forecasts are underpinned by the assumption an increased range of destinations will be served, and frequencies offered in international scheduled services. The hon. Gentleman ably made that case. I emphasis to the Minister that regional economic impacts will not be achieved if further liberalisation of air services does not take place.

I stress that several Members from across the political divide are here today to highlight the importance of regional airports. My hon. Friend the Member for Solihull made an excellent case for Birmingham international airport. Before I represented Macclesfield, I lived close to what was then Elmdon airport in Birmingham. I know just how important the international airport is to that major industrial centre. Obviously, I claim that Manchester is the second capital of the United Kingdom and its industrial contribution to the country is substantial. In 2002, Manchester will host the Commonwealth games and, if many colleagues visit Manchester, they will see a city and a region that has been transformed in recent years.

As a Conservative, I am happy to pay tribute to the contribution that the Labour-controlled council has made over the years to the economic success of Manchester. Members from the north-west appreciate the role of Manchester and there is often cross-party support for many of the actions that are necessary to ensure that the city can continue to play a major role in the economy not only of the north-west, but of the United Kingdom as a whole.

There is full liberalisation of air services in the European Union and the Government have accepted that. It has resulted in many new services to regional airports throughout the United Kingdom. There is unilateral access to UK regional airports for United States carriers on what is known as the third and fourth freedom basis. That is a complicated term, but those who understand the subject know what it means. The Government have also accepted that, and it has resulted in additional services to Manchester and to Birmingham.

The transport White Paper identified a role for regional airports to maximise the contribution that they make to local and regional economies. In addition, as I have already said, they should reduce the pressure on congested south-east airports. I refer particularly to Heathrow and Gatwick, but I might also include in that equation Luton and Stansted because they contribute to the overcrowded skies in that part of the United Kingdom.

We need also further to minimise unnecessary surface journeys. Expanded scheduled services to Manchester, Birmingham and elsewhere in the regions can make a major contribution to that. The hon. Member for Manchester, Central has drawn attention to FedEx and the problems resulting from its development, which has contributed directly to an increase in lorry movements on our roads, which the Government say they want to reduce.

I say to the Minister that regional airports cannot fulfil the role that the Government and others want them to fulfil while they are subject to bilateral constraints that prevent services from operating where there is demand.

Airports are major economic engines in the areas that they serve. They create local jobs, on and off airport sites, offering the widest range of skills. As the hon. Member for Macclesfield, I know that they stimulate the local economy, and that is a prerequisite for social inclusion. The regional liberalisation deal has had only limited take-up, and further action is necessary. It is not the correct mechanism; it is flawed and misunderstood, and it has not maximised the potential contribution that regional airports can make.

I hope that the Minister will respond positively to the debate. The subject raised and initiated by the hon. Member for Manchester, Central has strong cross-party support. I hope that the Minister will try to get his Department and the Government to make changes that will bring immense benefits not only to Manchester international airport, which is so important to my constituency, but to other regional airports that can contribute to the improvement in the UK economy.

10.12 am
Mr. Paul Goggins (Wythenshawe and Sale, East)

I, too, congratulate my hon. Friend the Member for Manchester, Central (Mr. Lloyd) on securing this important debate, and thank him for his warm remarks about my role. I thank also the hon. Member for Macclesfield (Mr. Winterton) for his warm remarks, and I pay tribute to his role in articulating strong arguments in favour of Manchester airport in particular, and regional airports in general. It is important that different parties and regions are represented in the debate.

My starting point is as the Member of Parliament for Wythenshawe and Sale, East, which is home to Manchester airport. As we all know, there have been many debates about the development and growth of the airport, not least about the construction of the second runway. Opinion in my constituency and throughout the region is strongly in favour of the airport's development because 18,000 people have a job there and the possibility of future growth is a great cause for optimism in the local economy.

The regional development agency, local businesses and the local authorities that own the airport all agree that it is a major driver in the regional economy. It connects the people of the north-west with destinations throughout the world. Crucially, it is a gateway through which global companies come and invest in the north-west of England.

Clearly, there is no dispute that the Government acknowledge the role of regional airports in transport policy and economic development, and they said as much in the 1998 transport White Paper. In that White Paper the Government promised greater liberalisation and they have already delivered the open-skies policy for airports other than Heathrow and Gatwick, provided that there are reciprocal arrangements with other countries and carriers.

At about the same time as the White Paper was published, we had a report on regional air services from the Environment, Transport and Regional Affairs Committee. The report went further than the White Paper and made a strong recommendation for unilateral liberalisation of international access to regional airports, including fifth freedom rights, in addition to the limited liberalisation that has been announced. Clearly the Government have not so far heeded that advice, and no doubt the Minister will go to some lengths to explain why that is so. The debate gives us a good opportunity to take stock and assess the current position.

I want to suggest, as colleagues have done, ways in which the system of air agreements could be improved, but we have to set those recommendations against the success that has already been achieved in the UK's aviation industry. As a whole, it contributes some £10 billion to gross domestic product. UK airports are now handling around 160 million passengers a year, and it is predicted that by 2015 that number will almost have doubled.

Some 180,000 people are employed directly at airports, and a further 200,000 are employed in service industries that support the aviation industry. A figure that bears repeating is that for every extra 1 million passengers who are attracted to airports in this country, 1,000 jobs are created. The industry is therefore important and already very successful.

As we look to the future, we have to tackle a number of constraints. My hon. Friend the Member for Manchester, Central spoke eloquently about the first, which concerns not only a physical but a psychological and cultural barrier: the belief that one can only run an international airport from London—that regional airports are only there to offer holiday charter and low-cost flights and are served by low-cost carriers, and serious international flights must go to Heathrow or Gatwick.

Mr. Pike

On that point, should we not stop calling Manchester a regional airport? Is it not a national airport that happens to be in the north-west?

Mr. Goggins

Indeed, I generally refer to it as Manchester international airport, because that is not only the reality but reflects the airport's aspiration. Just over half the flights out of Manchester are chartered, and just under half are scheduled, and the majority of the scheduled flights are international. The aspiration is to increase not only the number of passengers travelling through Manchester airport, but the number of scheduled flights and the proportion of such flights with international destinations. Manchester airport is becoming more international, and that should be the aspiration of other regional airports.

If it is possible for Denmark, which has a GDP smaller than that of Manchester airport's catchment area, to have an airport such as Copenhagen, there is no reason why a regional airport such as Manchester should not also be an international hub. If Milan and Frankfurt, as regional capitals, have major international airports, why cannot some of our regional airports also be major international airports? The London-centred mindset must be fought on a number of fronts, but it is particularly important to overcome it in aviation.

The second constraint is economic development. Time will not stand still, and if we do not succeed in turning some of our regional airports into major hubs, business will simply pass us by and passengers and carriers will go to other European international airports. My hon. Friend quoted a figure that demonstrated that far too many people from the north-west have to travel internationally via London, but twice as many go to international airports in Europe, such as Paris and Amsterdam. If we do not act now, when Gatwick and Heathrow are full to bursting, passengers and carriers will go to other European hub airports, and we will miss the opportunity fully to develop our regional capacity.

The third issue is fifth freedoms—an inelegant phrase, as my hon. Friend the Member for Manchester, Central said, but essential to the development of long-haul services to our regional airports. Fifth freedoms have been essential to the development of Manchester airport's long-haul routes. Qantas Airways first developed its route from Melbourne to Manchester via Amsterdam, and other airlines did similarly—Emirates Airlines from Dubai via Zurich, and flights from Hong Kong via Amsterdam and Paris, and Pakistani International Airlines from Islamabad via Copenhagen.

The end result of the development of a fifth freedom may eventually be a direct route, but fifth freedoms are essential for carriers if they are to minimise risk, to develop passenger numbers, and to develop the market. As my hon. Friend said, the present negotiations on fifth freedoms are far too London-centred, and far too focused on the interests of Heathrow and Gatwick and the demand of international carriers for slots there. As a result, we are missing the opportunity to develop travel through our regional airports.

The fourth point to be confronted is a current issue. It seems that many of the partial liberalisations and mini deals are not working or are beginning to unravel. We all hoped that mini deals would lead to progress, but I fear that they are taking us in the wrong direction. Only last week, the possible mini deal between the UK and the United States appeared to have stalled. That has massive implications for Manchester and the north-west region.

Mr. Winterton

Has the hon. Gentleman received the letter that I have from British Midland, commenting on the failure of the talks between the UK Government and the United States, which could put under threat the 2,000 jobs that British Midland had hoped to create, many of them in the region? Does that not show how important it is that we get it right?

Mr. Goggins

I entirely agree. As I understand it, Mr. Deputy Speaker, some 600 jobs have been lost from Manchester as a result of the difficulties in negotiating that mini deal.

We heard earlier about the fifth freedoms granted to FedEx and Polar Air for daily flights to Prestwick, but we also heard the recent announcement from FedEx that it is suspending those flights. FedEx also wanted fifth freedoms to Stansted, and regards it as unprofitable to have fifth freedoms into Prestwick only.

Although the intention behind the partial liberalisations and mini deals is entirely honourable, they do not always work out as we hope. There is a strong argument for removing uncertainty by taking the politics out of the matter. We should leave it to the airports and carriers to work out the routes and services, making those decisions on the basis of their commercial assessments. I recognise, as the my hon. Friend the Minister pointed out in his intervention, that the protectionist attitude that exists in some other countries and among some carriers must be confronted, but if we do not move ahead, we will miss a huge opportunity to develop our regional airports.

Manchester airport will soon have a second runway. It is under construction as this debate takes place. The airport has the aspiration, and by 2015 will have the capacity, for 40 million passengers a year to travel through it. Gatwick and Heathrow are already approaching capacity, with little or no likelihood of further expansion in the near future.

We have a choice, Mr. Deputy Speaker. Either we create a level playing field which gives regional airports in this country a real opportunity to grow, or passengers will simply move elsewhere. They will travel via Paris, Frankfurt, Amsterdam or Copenhagen. The implications for jobs, growth and prosperity in our regions are immense.

Dr. Michael Clark (in the Chair)

Order. For the convenience of hon. Members, may I point out that there are four Deputy Speakers allocated to this Chamber. I am not one of them. I am a member of the Chairmen's Panel, standing in for a Deputy Speaker. Therefore it would be appropriate to address me by my name.

I call Mr. Harold Best, confident of the fact that he will accommodate me by bearing in mind that I have three Front-Bench speakers to call, starting at 10.30 am.

10.24 am
Mr. Harold Best (Leeds, North-West)

Thank you, Dr. Clark. I echo the observations made by previous speakers about the importance of international airports in various corners of the United Kingdom. It is difficult to overstate their importance to industry, commerce and people.

The idea of regional international airports is not new. We have heard references to cross-party support, and there is also trans-Pennine support for Manchester's airport. When I was a member of West Yorkshire county council, we joined others in trying to impress upon the Government of the day that such an international airport should be developed in the north of England.

Caroline Flint (Don Valley)

Is my hon. Friend aware that in my constituency there will, we hope, be Doncaster Finningley international airport, which will be the only airport in Yorkshire able to provide the long-haul services that our region desperately needs and the finance that Manchester currently enjoys?

Mr. Best

I am aware of those proposals, but my hon. Friend is not entirely right. The airport in my constituency, Leeds-Bradford, has that capacity now and for some years has been able to handle flights to anywhere in the world. Concorde is a regular visitor to the Yeadon site in my constituency—not always welcome, however, because of the noise that it makes and the pollution that it leaves behind.

The freedom to get goods, services and people in and out of a region is essential for the future of the northern part of the United Kingdom. That is why I find that intriguing phrase, "the fifth freedom", so attractive. However, there are problems, which it would be remiss not to mention.

There is resistance in my constituency to the further development of an intercontinental airport, because of the huge increase in the associated road traffic and the pollution that that might bring. With considerable foresight, the planners and developers of the international airport in Manchester supported the idea of a permanent rail link between that airport and Leeds city centre. It is now possible to travel freely in both directions, making use of a good service.

An important factor in the control of pollution and damage to the local environment is the simple, almost accidental fact that the railway track that serves Harrogate through Leeds passes within three quarters of a mile of the end of the airport runway at Yeadon. A study is under way to examine the feasibility of extending and developing a terminal for the railway service at Yeadon airport. That will not detract from other facilities, but will expand in an intelligent and environmentally friendly way the services essential to such an airport.

I am mindful of your injunctions, Dr. Clark.

In my constituency, we welcome the expansion of air transport. It is important that it should be seen to be fair and evenly distributed throughout the United Kingdom—"fair" not just in the sense that one should play the game fairly, like cricket, but fair in the sense of industrial, commercial and travel opportunity for the people of the United Kingdom.

Only those who have to face the certain knowledge of the nightmare journey from the north of England to Gatwick or Heathrow to catch a plane to other parts of the world understand the pain of travelling and the massive inconvenience that it causes to the commercial and industrial interests of the north.

It is difficult to resist the arguments that have been advanced for an expansion of the fifth freedom. I believe that we should have open skies, as far as that is possible and practicable, but we should do what is necessary in planning terms to protect the immediate environment and provide the transportation facilities to ease the burden on our existing road network.

10.30 am
Mr. Michael Moore (Tweeddale, Ettrick and Lauderdale)

We have had a useful and timely debate on an important subject. I congratulate the hon. Member for Manchester, Central (Mr. Lloyd) on choosing the subject and securing the debate.

Having listened to the debate for the past hour, it is incumbent on me to provide not only an element of political balance—hon. Members have stressed the consensus that exists—but a small amount of regional balance. The speakers have been predominantly from the north-west, especially Manchester. I pay tribute to Manchester airport, which has received a great deal of political support. It is a successful airport, which will develop this year through the second runway. However, to someone from north of the border, Manchester is to the rest of the regional network what the London airports, especially Heathrow and Gatwick, are to Manchester and other places. We are lured to Manchester to go on our holidays.

Caroline Flint

It took me more than two hours to get to Manchester airport by public transport last year. It also takes me two hours to get to London. A long-haul airport in the south of Yorkshire is important for my constituents and the other 4 million people who travel south to go abroad.

Mr. Moore

I welcome that intervention and I wish the hon. Lady every success in securing a regional airport for her area. It is important to strike a balance, not only between London and the rest of Britain, but within the regions.

The basic proposition that we have discussed is well understood. We all agree that strong regional airports are good for regional economies. Many hon. Members have referred to both Birmingham and Manchester international airports, as well as using the old names by which those airports were known 20 or 30 years ago. We know Edinburgh international airport as Turnhouse airport as much as by its modern, wholly appropriate name. That airport is being vastly expanded so that it can cope with the huge growth in demand that it, like many other airports throughout the United Kingdom, is experiencing.

Dealing with air service agreements and providing for the fairest and most open system possible are crucial to ensuring the development of the success that has been achieved so far, and making the most of it. There is a chicken-and-egg aspect to our considerations. Does a successful regional airport drive the local economy, or does a successful local economy drive the need for a regional airport? Many hon. Members in the Chamber are frequent fliers. I applied to become a member of two frequent-flier schemes, as I travel from Edinburgh to London. We are often stacked over Watford, and have to wait for a long time to land in London airports.

Our areas provide evidence of the development of regional airports and the importance of giving them the strength—through the extension of the fifth freedom deal, or other measures—to improve their contribution to their local economies. Airports contribute to the local economy directly through jobs and indirectly through the service suppliers to the industry. Several hon. Members have highlighted the direct leverage effect of increasing the number of passengers in specific airports. The growth in leisure travel and cargo is crucial to complementing the lucrative business markets with which many of us may be most familiar.

When we are considering the development of our regions, many of us focus on the importance of inward investment. Good regional airports, be they in Yorkshire, the north-west or Scotland, are important in attracting that inward investment. Until recently, I served on the Select Committee on Scottish Affairs. Last year, we carried out an important investigation into inward and outward investment. Time and again, we were told by officials, agencies such as Locate in Scotland, or companies, which described their motivations, that the infrastructure links, especially air links, were crucial to the decision to locate in an area. Tourism, which is vital to our regional economies, can be developed only if there are worthwhile and useful air links to promote it.

Airports are not much use if the business, leisure or cargo services are not available at them. I want to focus briefly on two issues that have been mentioned in passing this morning: the impact of disputes over transatlantic scheduled services, and cargo. Regional airports' efforts to develop transatlantic services will be stymied if we cannot make progress on the issues affecting Heathrow. The hon. Member for Macclesfield (Mr. Winterton) referred to the letter from British Midland. I also received a copy. As a keen supporter of that airline's role in increasing competition and providing consumer choice—another theme of this morning's discussions—it is important the such airlines can develop their services and participate in transatlantic flights. Clearly, the immediate focus is on Heathrow, but British Midland has suggested that it is keen to work with Manchester airport.

Many participants in the debate will have followed the recent transatlantic talks and watched as public expectation increased that a break-through would occur. The break-down of those talks is worrying and I hope that the Minister will be able to shed some light on it. It is widely suspected that the commercial interests of British Airways and Virgin may have been as influential as the American Government in curtailing the talks and causing them to fail.

Let us consider cargo. Many references have been made to Prestwick. The relaxation of fifth freedom rights for Prestwick was widely welcomed in Scotland. However, that welcome has been turned on its head by the disappointing news that FedEx will cease its service. Again, commercial negotiations, and the desire to fly in and out of Stansted, are clearly important. I agree with the hon. Member for Wythenshawe and Sale, East (Mr. Goggins) that piecemeal developments in fifth freedom rights are not the answer. However, they can be important in such areas as Prestwick, where airports have developed their businesses largely through their cargo facilities.

I echo the comments of the hon. Member for Leeds, North-West (Mr. Best). If we are to develop regional airports, which are key drivers of local economies, and if we are to gain the necessary freedoms to increase the flights and respond to consumer demand, we must consider the integrated nature of the available transport. It is a source of constant amazement that there is no rail link from Edinburgh airport, which is 200 yd above the main east-coast rail line to the north of Scotland, to the city. That story is repeated in many places around the country. Perhaps the Minister will comment on that in his reply.

There is cross-party consensus that liberalisation and responding to customer demand are important. The Government must knock heads together to ensure that we do not stymie important local developments.

10.39 am
Mr. Damian Green (Ashford)

The number of hon. Members who have spoken or who wished to speak, and the passionate advocacy of the various airports that we have discussed from Members representing all political viewpoints will have convinced the Minister that the negotiations in which the Government engage in pursuit of liberalisation of air services are vital not only to the industry, but to many people in the areas surrounding those airports. I take the point made by the hon. Member for Burnley (Mr. Pike) that we should perhaps not refer to them as regional; they are international airports that happen to be in the regions.

Conservative Members are entirely in favour of liberalisation. As the Minister and others will be aware, the previous, Conservative Government consistently negotiated hard and did an enormous amount to achieve a degree of liberalisation—although not enough—in Europe and elsewhere. The Minister will also be aware that that liberalisation must be balanced with the interests of airlines and airports and their right to maintain their business as best they can with the travelling public. We have discussed the development of various airports. Manchester has a number of advocates, but Birmingham international and Leeds-Bradford are equally important, as are other prospective international airports that hon. Members clearly desire for their regions. They have all done a lot to encourage economic growth in the areas surrounding them and to achieve regional development. That has been possible under the existing terms of air service agreements and much has been achieved through flights between United Kingdom regional airports and the United States.

Negotiations with the US are often at the heart of the problems that we face. The Bermuda 2 agreement is clearly not perfect, but it represents a step forward. We must be realistic and recognise that we have to build on what is in place. Despite the restrictions and imperfections of Bermuda 2, the UK aviation industry is a success story and has done much to encourage regional development. The link between successful airlines and successful airports is clear, as is the link between successful airports and regional development. The debate is about how we can best maximise the growth and continued success of the aviation industry and the associated benefits that that brings to the regions.

We must consider the negotiations and refer in particular to the FedEx and Prestwick case. I hope that the Minister can explain where he sees that going. I understand that FedEx was given fifth freedom rights at Prestwick with no reciprocity, which disadvantaged other airports around the regions. Also, there was no benefit for British carriers to the US, which was a double whammy on the downside. As we have all heard in the past few days, after that rather dubious agreement was reached, FedEx pulled out anyway, leaving Prestwick with no benefit and the disadvantage of hoped-for jobs not being created. That is a catalogue of disasters by any standard.

Mr. Moore

The hon. Gentleman should bear in mind the fact that FedEx represents 10 per cent. of cargo handling at Prestwick. He may be giving the impression that it represents cargo handling in its entirety.

Mr. Green

No, no. The hon. Gentleman is exactly right, but I am sure that he agrees that an enormous head of optimism built up on the back of the FedEx deal. Obviously, that has been deflated and I hope that the Minister will explain where he sees things going.

The problems over the FedEx deal bring home the importance of cargo issues. Most of the debate dealt with passenger services, but, as the hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Moore) said, cargo is equally important. Indeed, cargo is a key industry for some airports. For example, DHL has done much to bring investment to East Midlands airport and independent cargo airlines such as Channel Express have invested heavily in Bournemouth airport.

Caroline Flint

Is the hon. Gentleman aware that cargo and maintenance needs in Yorkshire are not being met by any of the Yorkshire airports? That niche could be filled by Finningley, especially if air services were liberalised.

Mr. Green

The hon. Lady is persistent in getting her message across, but I have no intention of engaging in what appears to be an intra-Yorkshire debate. I have learned in life and in the House that it is wise to steer clear of them.

The British Cargo Airlines Alliance estimates that access to the US market could create 4,000 UK jobs by 2005. Everyone would welcome that, but it depends on the Government achieving the best possible deal for UK carriers in the open skies negotiations with the US. I hope that the Minister reaffirms that they will continue to push for a slice of the American market for UK airlines. The direct impact on regional airports would be not only economic growth, but the environmental benefits of which he will be aware. For example, the more we spread the freight load being carried to different international destinations, the shorter lorry journeys will be. With the right infrastructure around airports and if more freight could be carried from different airports around the UK, heavy-lorry traffic would be minimised.

Several hon. Members mentioned the British Midland letter and expressed disappointment about the failure of the negotiations, but I was struck by how positive it is about using Manchester airport. The letter says that Manchester Airport has been supportive of our efforts to establish a new hub … this remains a key element of our … strategy. That will be welcomed by those who advocated the case of Manchester international so eloquently. Many such problems inevitably hit the logjam of the question whether the Government can negotiate successfully, with the Americans in particular, and there will be no progress without successful negotiations.

The underlying figures are slightly disturbing in respect of not only the individual competitiveness of our regions, but our national competitiveness. British business travellers can travel direct to only 10 US cities, but there are 18 direct services from Frankfurt for German business travellers. Greater diversity of services from this country is clearly necessary. For example, Manchester provides only 48 direct services a week—operated by the four UK-US airlines—to only five cities and no services to the US west coast, which is a vital and growing market. We would all like those services to be increased. Birmingham, which is at the heart of many of our industries, has only two airlines operating 14 services direct to only two US cities. Glasgow has only one direct service. Not only is that inadequate for the individual airports and cities concerned, but it puts the whole country at an economic disadvantage compared with some of our European partners and economic competitors.

The Minister will be aware that he and the Government have an important job to do in negotiating those various new services. We are all aware that Ministers face a difficult task and he will have heard this morning that, effectively, he is being urged to give unlimited fifth freedom access to many of our airports, even though that may not be in the interests of some of our carriers. I am also aware that "open skies" means something different in America from what it means here. The American definition seems to exclude cabotage, ownership and control, wet leasing, the fly-American policy and other arcana of the debate.

Perhaps the Minister could spend a few minutes explaining what the future negotiating stance will be after the recent failure of the talks. That stance will be important not just to airlines and to the various airports, but to the possibility of successful regeneration in many cities. I hope that the Minister will give us some information and comfort on that point.

10.50 am
The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Chris Mullin)

I thank my hon. Friend the Member for Manchester, Central (Mr. Lloyd) for initiating what proved to be an interesting debate in which, possibly with one exception, Members of all three main parties have spoken with one voice.

My hon. Friend made the central charge, which others echoed, that for too long airports policy has been fixated on London. I assure him that we recognise the importance of the regions. Indeed, I represent a seat in the north-east of England which has an expanding airport at Newcastle. I am sure that it would make the same arguments as my hon. Friend has made on behalf of Manchester airport.

We also recognise that, given the demand for air travel is increasing exponentially, it is inevitable—even if we did not want it to be the case, and we do—that there will have to be an expansion of air travel and services from regional airports. One of the great challenges facing this and any Government in the next 20 or 30 years is to reduce the 70 per cent. of air journeys that originate from the three London airports, and to spread the load more equally around the country—for environmental reasons as much as for any other. It is inevitable and desirable that greater development takes place in regional airports.

I concede that the policy may have centred too much on London and on carriers' interests. However, I think that that policy was beginning to change even before we were elected—the hon. Member for Ashford (Mr. Green) asked me to acknowledge that—and we intend to continue in that vein.

My hon. Friend the Member for Manchester, Central made a balanced speech. He was generous enough to concede that it was the Government's job to balance other interests, and the hon. Member for Ashford made the same point. We face the dilemma that I put to him in an intervention: do we concede freedom to countries that resolutely exclude or limit our carriers, or do we try to get something in return?

I should add that some foreign carriers are also fixated on London, and it does not follow that, were we unilaterally to grant the freedoms that some have called for, those carriers would necessarily all take advantage of services from regional airports. A number of airlines—my hon. Friend mentioned Biman, the Bangladeshi airline—have been offered freedoms from Manchester but have rather contemptuously declined them. I hope that, on reflection, they will realise that great value is to be gained from those freedoms.

Those are some of the problems that we must take into account. Several hon. Members have referred to environmental considerations. We should not have such a debate without recognising that neither regional nor national airports are entirely popular with some of our constituents, especially if they happen to live next door to them. One way of mitigating the great expansion of regional airports that will inevitably and desirably take place is to ensure that there are proper public transport links. My hon. Friend the Member for Leeds, North-West (Mr. Best) referred to the rail link at Leeds, which is very welcome, and the hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Moore) talked of the lack of such a facility at Edinburgh. The Government are trying to encourage all regional airports to develop proper access by public transport, and thereby reduce pollution and disruption.

In the short time allotted to me, I shall do my best to address some of the other points made by hon. Members. In 1998, the Government decided to make an offer to all states with which we have bilateral aviation relations and where services to the UK regions were not already liberalised. The offer was to open up all UK airports, other than Heathrow and Gatwick, to services by foreign airlines, without restrictions on capacity or frequency. The only condition was that UK airlines should have the same rights to fly from those UK airports to whichever airports in the relevant foreign state were available—often just the national capital, rather than regional airports.

Of the 74 states that we contacted with that offer, 17 have so far agreed to it and 25 have responded negatively. We continue to remind the others of our offer, and take every opportunity to raise the matter when we have air services discussions with them. So far, by our calculations, two new long-haul services to Manchester, two to Stansted and one to Birmingham have commenced as a direct result of that regional policy.

Many states realise that demand for services from their territory to UK regional airports does not exist. They are therefore simply not interested in the offer. Others are instinctively hostile to liberalisation and are not ready to follow the lead that we have taken. Because of those factors, the take-up rate of our regional access offer has been relatively low.

Some, including the Select Committee on the Environment, Transport and Regional Affairs, have urged us to make our offer on a unilateral basis. That point was made in the debate. They want us to offer to accept foreign airlines at UK regional airports without restriction, while UK airlines remain prevented from flying the same routes, or restricted to a certain frequency. The Government have been reluctant to do that. The granting of monopoly rights for a foreign carrier to serve a UK regional airport may, in itself, be an attraction to start services, but we do not believe that it is in the long-term interests of consumers to put foreign Governments in a position to keep UK carriers off specific routes and to leave development of a route entirely in the hands of a foreign carrier.

The Select Committee, Manchester airport and others have also argued that we should unilaterally concede fifth freedom rights from regional airports in the UK on the ground that such rights can help to swing a decision by a foreign airline in favour of commencing operations to a regional airport. Again, the Government have not been convinced that the merits of such a policy outweigh the drawbacks. Capacity increases, fifth freedom rights or more flexible tariff frameworks are frequently sought by UK carriers from foreign states, and it would weaken our ability to negotiate such rights for our own airlines if we unilaterally granted fifth freedom rights to others.

However, we have been prepared, on a case-by-case basis, to examine requests by foreign carriers for fifth freedom rights from UK regional airports. In each case, we ask the Civil Aviation Authority to conduct an evaluation of the benefits and disbenefits of such services for UK airports, for the regions in which they are situated and for UK carriers.

Following such an analysis, we have recently approved an application by Olympic Airways for fifth freedom rights from Manchester to Boston and Toronto. Those services are due to start in April. Singapore Airlines operates fifth freedom services from Manchester to Bombay. In addition, Emirates Airlines has in the past made use of the fifth freedom rights that it enjoys from Manchester to a number of European points, but no longer does so. We have also indicated to Emirates that we would be willing to consider fifth freedom rights from Manchester to New York, but it has preferred to concentrate its efforts on obtaining such rights from London. Similarly, Singapore Airlines has been offered transatlantic fifth freedom rights from all UK regional airports but rejected the offer because fifth freedoms from Heathrow were not available. My hon. Friend asked about Pakistan. We are having further talks with Pakistan regarding its service, and I am told that those talks are going well.

Several others points have been raised. I would have liked to say something about the difficulties that we are experiencing in talks with the United States, but time does not permit. I shall be happy to follow that up with my hon. Friend in correspondence if he so desires.

I reiterate the point that I made at the outset. We accept that past policy may have been tilted too far in the direction of London, but that will not be the case in the future. We recognise the desirability of expanding regional air services.

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