Regional Air Services

HC Deb 31 October 2001 vol 373 cc273-94WH

11 am

Mr. David Stewart (Inverness, East, Nairn and Lochaber)

I welcome this opportunity to speak on the very important subject of regional air services. I also thank the many hon. Members present for the interest that they have shown in today's debate.

I want to touch on a number of issues. I want to define regional air services, to look at current issues and problems, to consider the debate held by the former Select Committee on the Environment, Transport and Regional Affairs, to analyse the role of Government not just here, but in the United States and in France, and in particular to examine the prospects for Government intervention. In my conclusion, I shall call for the ring fencing of vulnerable routes.

What are regional air services? They could be defined as routes from London in its broadest sense—Gatwick, Heathrow, Luton, London City and Stansted—to domestic UK airports such as Inverness, Aberdeen, Newquay, Belfast, Plymouth, Dundee, Glasgow, Edinburgh and those on the Channel Islands. Of course, the two primary hubs in London are Gatwick and Heathrow. Journeys tend to be of two types: point-to-point or "interlined", by which I mean domestic flights that continue to international destinations. Heathrow is undoubtedly top of the interlining league, Gatwick is mid-table, and unfortunately, Stansted and City, to continue the football analogy, are very much in the relegation zone.

What current trends and problems are evident in UK regional services? Mr. Laurie Price, from Aviation and Travel Consultancy Ltd., analysed daily services from Heathrow to regional airports between 1986 and 2001. In 1986, 19 regional UK airports had direct flights to Heathrow, with an average of 106 flights daily. However, in the summer of this year only eight regional airports had direct flights to Heathrow, and the daily average of flights had fallen to 88. In 1986, 15 airports had direct flights to Gatwick and by 2001 that figure had fallen to 11. To be fair, Gatwick's daily flight average is now slightly higher, in part because of the transfer of domestic flights from Heathrow, including my own route. In 1997, we in Inverness lost our direct service to Heathrow.

Which airports have lost out? Heathrow services were slashed from Inverness and from Plymouth—which includes the constituency of my hon. Friend the Minister—in 1997, from Dundee and Carlisle in 1987, from Liverpool and East Midlands in 1992, from Birmingham in 1993, and from Norwich in 1990.

Why do such cuts occur? Air services in the UK are a free market, and in simplistic terms the profit per mile per passenger is better for intermediate and long-haul flights than for domestic UK routes. In effect, commercially viable daytime slots—take-off and landing times that are advertised by carriers and published in their schedules—at Heathrow and Gatwick are full. For example, this summer there was a 20 per cent. excess demand for slots at Gatwick. On a typical summer's day in August, demand exceeded capacity by as much as 22 per cent. every minute between 6 am and 8 pm. That, of course, is reflected at Heathrow as well.

Aviation has been badly affected by the tragic events of 11 September in Washington and New York. Airline costs have risen, there has been reduced growth and traffic has been down by 15 per cent. However, that traffic will return, and the Minister's Department predicts a 4.25 per cent. growth in passenger numbers every year. In London, there is no new capacity to take that growth. The last substantial runway built in the United Kingdom was in Manchester in the previous decade. In the competition for slots, therefore, regional air services will always lose out to their older and bigger brothers: international and transatlantic flights.

In 1998, the Select Committee on the Environment, Transport and Regional Affairs undertook an inquiry into regional air services because of a reduction in direct flights from regional airports to London, including the loss of my direct route from Inverness to Heathrow in 1997. The Committee made several recommendations to the Government. It argued for different categories of slots—domestic, intermediate and long-haul—so that swapping of slots could be controlled, as in the United States. It also suggested that, in the allocation of slots at domestic airports, priority be given to airlines bidding to operate domestic regional services. That would be similar to the US essential air service programme. The Committee recommended an end to airlines' own companies allocating slots at airports, as they do at Heathrow and Gatwick. It also argued for the development of public service obligations PSOs—at Heathrow for a specified minimum level of air services.

The current European slot allocation rules—European regulation EC 95/93—have been due for revision for some time, but we will not have a complete revision before 2002. They must be adapted to allow greater protection for vulnerable regional air routes. Otherwise, we will continue to see trade-offs between domestic routes and more lucrative international routes.

What role can the Government play? What examples of best practice can we see throughout the world? Under European regulation EC 95/93, member states can preserve slots in two situations: first, on a route to an airport serving a peripheral or development region, if that route is considered vital for the economic development of that region; secondly, on routes where the Government have imposed PSOs to maintain a service that would not otherwise exist.

There are demanding conditions for the first option. The slots concerned must have been used on that route when the regulations came into force in 1993. Only one carrier must operate the route, and the route must be unable to he covered substantially by any other mode of transport. The reservation ceases once a second carrier covers the service with the same frequency.

Only in France has the first option been used, at Paris, Orly airport. It is now using the second option of imposing PSOs, and I believe that some 30 per cent. of services at Orly airport have PSOs at the moment. I am not aware of any PSOs operating from London, but they have a long track record in Scotland, especially in island services—in areas such as the Western Isles. By and large, those are subsidy PSOs. I am not calling for subsidy PSOs today; they are not needed where routes are commercially viable.

In the United States, the essential air service programme has operated since deregulation in 1978, and was the price that Congress demanded for passing deregulation. Congress now spends $50 million per year on that very important programme, which services 75 cities. Most are in remote areas such as Alaska. At very congested airports, the United States Department of Transportation can demand that EAS status be given to certain routes. The Government have a strong power of intervention, in a country that is arguably the most unregulated in the industrial world. We should examine that closely, and perhaps copy it.

What are the prospects for Government intervention here? The bulk of the witnesses before the Select Committee inquiry to which I have referred argued that there was a case for public sector intervention to protect key vulnerable regional air services.

In my constituency, Highland council, the enterprise agency, the Scottish Council for Development and Industry, the Inverness chamber of commerce and 90 per cent. of local businesses that I have surveyed during the past few weeks all argue strongly for a public service obligation on the Inverness to Gatwick route, which I use. The Minister may want to comment on the letter that his Department received from Sarah Boyack, Minister for Transport and the Environment in the Scottish Parliament, who proposed a draft PSO for his Department's consideration.

The Minister's Department stated in paragraph 93 of the evidence to the Select Committee that the United Kingdom would have a chance during revision of the European slot regulations to suggest amendments: Particularly if the Commission does seek to restrict the ability to ring-fence slots, one possibility might be to propose balancing that by giving greater priority to regional services in the…allocation of available slots. British Midland criticised the new entrant rule in slot allocation and used the example of Heathrow, which has had 53 new entrants since 1991. There have been too many low-frequency long-haul services, which have frustrated prospects for domestic air services.

It is often said that politics is the art of the possible, but it is the art of the practical within a range of competing priorities. A simple solution to the problem is to build more runway capacity at Gatwick and Heathrow. However, that is not a suggestion that will win me much favour with my right hon. and hon. Friends who represent London seats. The lead-in time for planning, if Manchester airport is anything to judge by, would be at least 10 years because of the large number of likely objections.

There are technical solutions. The Cranford agreement covering Heathrow could be varied. It governs the speed and direction of take-off and landing times, and they could be varied to create more slots for regional air services. There are also creative solutions. Laurie Price, the aviation consultant to whom I referred earlier, argues that as 70 per cent. of aircraft using Heathrow and Gatwick use an 1,800 m runway, RAF Northolt, which has an 1,800 in runway, could be adapted as an overflow airport for Heathrow, and perhaps Redhill aerodrome, which is not too far from Gatwick, could be adapted for the same purpose.

The basic issue is to decide whether we want a regional policy. Transport is crucial for development of the regions, social inclusion, the economy, tourism and inward investment. The Government, Europe, the airlines, economic agencies, the Scottish Parliament and the Welsh Assembly all have a role to play. We need to protect vulnerable peripheral routes by ring-fencing slots and routes. We need a published route development plan for Gatwick and Heathrow that takes account of the need for regional air travel and national priorities for airports. We need to create more London hub capacity, build more runways, adapt peripheral airports for increasing demand and approve terminal 5 at Heathrow, which has been long in the waiting.

We must encourage airlines that want to run domestic links to bid for more local services. We need to divide slots into domestic, intermediate and long-haul to stop the trading-off of Belfast with Bonn, Aberdeen with Athens and Plymouth with Paris. We need to create a regional policy for aviation that recognises the legitimate need of domestic airports such as Inverness to have access to at least one of the two primary hubs in London.

I call on the Minister to support a public service obligation on my own route. Regional services are not just for a day out in London. They play a crucial role in the development of peripheral areas. They are a lifeline for tourism, business and inward investment. I remember an old Lochaber crofter in my constituency who quoted from the Old Testament at every public meeting he attended. He used to say: old men shall dream dreams, and … young men shall see visions". I look to the Minister to have the vision to transform aviation, to protect regional air services and, perhaps, bring a smile to the face of the old Lochaber crofter.

Several hon. Members

rose—

Mr. Frank Cook (in the Chair)

Order. The hon. Gentleman has been creditably brief when introducing his topic. I thank him for that. I am concerned because I can spot six hon. Members who wish to catch my eye. It is conventional to commence the concluding Front-Bench speeches 30 minutes before the termination of time. Therefore, hon. Members will understand why I appeal for brief and concise speeches that are clear and to the point.

11.15 am

Mr. Peter Atkinson (Hexham)

I heard what you said, Mr. Cook, and I will try to be as succinct as possible.

I congratulate the hon. Member for Inverness, East, Nairn and Lochaber (Mr. Stewart) on securing the debate. The matter is as crucial in his part of Scotland as it is in my area of Newcastle and the north-east. Both regions suffer from being peripheral, and air services, rail services and all transport links are essential for developing our economies. I agree with his comment that Heathrow airport's congestion problems are central to the matter.

Capacity lies at the heart of the argument. We require extra capacity at Heathrow airport no matter how that is brokered. In Newcastle, British Airways predominantly provides our routes to London, although I am glad that the cut-price airline Go has recently started services to London. That is welcome.

Sixty per cent. of passengers who fly from Newcastle to London will travel on to other international destinations, so the hubs—Gatwick and Heathrow— are crucial. People who, like me, fly regularly from Newcastle to London know the awful frustrations that are caused by delays at the terminals. If one has an onward plane to catch and suffers a delay of an hour or half an hour, that can cause chaos in travel plans. Air traffic control congestion and congestion on the ground at Heathrow airport cause that problem.

The solution to the problem is terminal 5. I am told that we can expect the announcement about terminal 5 in two or three weeks. If I were a betting man—which I am—I would say that it is bound to be approved. Terminal 5 was always going to be approved. It is a scandal of the planning process that such an important infrastructure project takes so long to plan. Even now, it will take years to complete. Without the terminal, congestion on the ground will get worse and passengers will experience more severe delays.

The hon. Gentleman mentioned a further runway for Heathrow airport. Today is a good day to start a campaign for the third runway. Everyone has been quiet about that because we want terminal 5. However, in reality, a third runway is essential.

The most important factor for the UK is to have a successful and major airline. That airline will, inevitably, be British Airways. In future years, there will be a substantial move by world airlines into larger groups. We must ensure that British Airways can prosper. If it has its base at Heathrow and the airport becomes less efficient, it will be damaged when competing against global airlines and global airline alliances that have already been formed.

In Newcastle, there has been a substantial and rapid growth in the number of passengers who travel directly from the city to Amsterdam or Paris for onward connections. That is a welcome alternative for many people, but one sees the problem faced by British Airways. Charles de Gaulle airport appears to have unlimited expansion potential, as does Amsterdam. Frankfurt airport has had a third runway since the United States air force moved away. Gatwick has one runway and Heathrow has two. We must bite the bullet and campaign for a third runway in the area. I hope that if that happens we shall not experience the same protracted planning applications as we experienced with Manchester. In our fast moving world, to which transport is the key, we cannot have a planning infrastructure system that plods at the rate that it did for terminal 5.

Mr. Geoffrey Clifton-Brown (Cotswold)

Is my hon. Friend aware that an extra runway has recently been added at Schipol and that Charles de Gaulle is constructing another runway? Does that not add to his point that if we do not increase capacity in the United Kingdom, we shall lose international air traffic to those centres?

Mr. Atkinson

My hon. Friend has a detailed knowledge of the matter, and he is right. In the competitive world of international airlines, Air France, KLM and other airlines will all benefit from having a much more efficient hub than British Airways has with Heathrow.

Bearing in mind your strictures to be brief, Mr. Cook, I thank the hon. Member for Inverness, East, Nairn and Lochaber for introducing the debate, reiterate the vital importance of regional air services to his constituents and mine, and urge that the debate about extra capacity at Heathrow begin soon and in earnest.

11.20 am

Mr. Tony Lloyd (Manchester, Central)

I congratulate my hon. Friend the Member for Inverness, East, Nairn and Lochaber (Mr. Stewart) on introducing the debate. I have enormous sympathy with his points about the need for his area to be able to access properly both the national airline service and, through that, international airlines, and his point that air traffic in the modern world is not simply a mode of transport but relates to how communities develop and connect with the outside world, and to regional economic viability. The debate is central to the sort of nation that we aspire to be. The role of Manchester airport has been fundamental in the city's economic success in recent years.

I gently suggest to the hon. Member for Hexham (Mr. Atkinson) that his preoccupation with one airline and one regional set of airports is not healthy for the development of air transport throughout the country. I hope to persuade him that there are alternatives to the preoccupation with Heathrow and, to a lesser extent, Gatwick.

In a country of more than 50 million people, the development of alternative hubs to the London airport system can be envisaged. I do not wish to sound excessively parochial. Of course Heathrow is the dominant airport in the United Kingdom and will be indefinitely, and Gatwick is the second. However, Manchester is already a regional hub in its own right. Some 100 airlines fly in and out of Manchester to and from 175 destinations around the world. It makes sense economically and environmentally for services from places such as Inverness to use an airport such as Manchester. I would not want to persuade my hon. Friend the Member for Inverness, East, Nairn and Lochaber that Manchester is the only choice that Inverness should have. I entirely agree with him that the concept of public service should determine slots at Heathrow, and the Minister should respond to that point this morning.

I make a plea to wean ourselves off the view that all Governments have had in the past that only Heathrow and only British Airways matter. That is simply not so. My constituents and people from the north-west, the north of England and a wider area are in some cases better served through Schipol, Frankfurt or Paris. That will always be so. Some services simply do not allow people from the north of England to access the London airport system easily. I therefore insist that we take a broader view of the development of air transport, which is about not the protection of airlines or, airports but the development of communities and the economy, which is a broader issue. In the European context, we must examine the role of national carriers, on some of which enormous pressure is already being placed. In the European framework, rationalisation may be necessary.

As a result of events following 11 September, air transport faces greater uncertainty than at any time in the recent past. Many of us assumed almost blithely that the industry would grow for ever. However, there will almost certainly be a period of retrenchment and contraction. Airlines such as British Airways, Virgin and British Midland are cutting jobs and services, which will have an impact on an airport such as Manchester. I recognise that the international carrier that goes first into Heathrow or Gatwick and then Manchester will withdraw the Manchester service before the Heathrow service. That is inevitable in economic terms. If the Government are tempted to look at support for the airline industry, whether in terms of security costs or, more generally, airport duty, I hope that they will recognise that the regional distribution of air services is vital. Support for airlines may be legitimate, but support for airports and the communities that depend on those airports is also important.

My hon. Friend raised the issue of slots. Under the present system, slots are determined by negotiation between the airlines and the slot controller, which allows carriers to dominate. The public interest goes beyond that of the airlines, and a slot allocation system must be developed that recognises the wider economic and social interest. We must at least recognise the role of airports for the wider community. In an airport such as Manchester, slots are available 24 hours, but some slots are much more commercially desirable. Under the present slot allocation process, enormous power is given to the new carrier to drive in, at the expense of services that may be more socially and economically desirable.

The Civil Aviation Authority will report on the regulatory framework for airports this week. Will the Minister make sure that the charges imposed on regulated airports are consistent with the increased demand for security in air transport? We cannot be locked into the economic bubble of decision making that applied before 11 September—the world has changed since then, at least in that aspect. I also urge the Minister to look carefully and sympathetically at the powers of local authority airports, which is an important issue for Manchester and other airports. I know that his Department has made sympathetic noises about that recently, and I urge him to consider carefully what direction to take.

Air transport is far too important to be seen as an issue for a particular industry. It matters enormously to communities, in social and economic terms. We should not be preoccupied with London; we should look across the board at the needs of the nation as a whole. Different parts of the nation will be served by different policies on open skies, liberalisation and regulation. If the Minister will reflect on that, and develop an airports and airlines policy that genuinely serves communities and regions, he will have moved this country a long way forward.

11.29 am

John Thurso (Caithness, Sutherland and Easter Ross)

I congratulate the hon. Member for Inverness, East, Nairn and Lochaber (Mr. Stewart) on having secured the debate. I shall concentrate my remarks on one of the issues that he introduced—the public service obligation for the Inverness to Gatwick link.

The constituencies of the hon. Member for Inverness, East, Nairn and Lochaber, myself and my right hon. Friend the Member for Ross, Skye and Inverness, West (Mr. Kennedy) cover about 11,000 square miles. That area of the highlands is served principally by Inverness, but also by Wick airport. The hon. Gentleman mentioned the application that the Scottish Executive have made to the Minister through Sarah Boyack for a public service obligation, and I urge him to support it as much as possible.

Transport is vital to successful commerce in any area, but particularly in peripheral areas like the highlands that are far from the centre. For many years, the highland economy was in a steady, slow decline, with depopulation and job losses. Over the past decade, that trend has been successfully reversed. In the past three years, 4,000 new jobs have come to the highlands. Transport links—in particular, the air transport link—have contributed greatly to the steady increase in jobs and prosperity. If we consider my constituency, especially the northern part, we find that inward investment has flowed steadily into Thurso and Wick. People who want to invest in the area have studied infrastructure such as schools and hospitals, but, first and foremost, they have considered the ability to travel to and from the area. Without transport links, we would have no investment and no development in the region, but the reverse—a return to steady decline.

We currently have an air service from Inverness, which British Airways provides through a subsidiary. BA has given assurances of its commitment to the route. However, when there is pressure for slots in the south, it is all too easy for operators to give away a slot for what is perceived to be a less lucrative route so that it can be used for more lucrative international destinations. Conditions will inevitably change back, that pressure will return and the Inverness slot will once again be vulnerable to cancellation or change. There is no such pressure now, and it is the right time to ensure that a public service obligation is placed on the route so that we can secure a vital transport link without which the highlands would not be a net contributor to the United Kingdom economy.

11.32 am

John Mann (Bassetlaw)

I thank my hon. Friend the Member for Inverness, East, Nairn and Lochaber (Mr. Stewart) for raising this issue. On the face of it, the interests of the north midlands and the north of Scotland in such a debate do not appear to be the same, but they are.

The case has been clearly made as regards the congestion and capacity problems at London airports, and I will not repeat what has been said. The case on growth in demand has been made less succinctly. I am not one of those who believe that the current dip in demand will be permanent. There is an unseemly haste among many in the aircraft and airline industries to cut jobs as they chase tomorrow's share prices, rather than take a more rational view of the coming years. There has been a blip in capacity requirements this year, but I confidently expect the year-on-year growth that we have seen in the industry to continue from next year. The rationale for Government decision making should take account of demand and capacity needs.

We in the north midlands understand the economic case that has been made for Inverness and, indeed, for all of Scotland and elsewhere in the United Kingdom. We have, or should have, one United Kingdom economy, not two or three. In examining the business case for a new airport, which is what we are doing through the current public inquiry on Finningley airport, the question of the balance between regional and international air services is fundamental to consideration of future demand.

The constant opposition to expansion in London—the fifth terminal and any proposed third runway—creates a peculiar impression, when the second largest runway in Britain is readily available to take some of the excess capacity and create more landing slots in London. We can take both long-haul and freight away from London and our airport is ready and waiting, subject to the public inquiry. I look forward to support from the Government after the inquiry, so that we can continue a development of regional airports, as part of the development of the overall United Kingdom economy. That is a fundamental issue.

On Finningley, I think that I shall break my embargo with respect to my local newspaper, the Worksop Guardian, for Friday, and mention that my opinion poll of people living immediately around the airport, in the direct flight path, was concluded today. I have surveyed everyone and have a response rate equivalent to general election voting rates, with 95 per cent. in favour and only 5 per cent. against. That shows demand, not just support, from people who are saying, to use a phrase I employed once before in the House, "Yes, in my backyard; we would like a regional airport as a contribution to growth."

I shall listen with interest to the Minister's response on how the Government intervene, but the principle is absolute. We need expansion of the regional airport network. We need expanded and strengthened regional airports as part of the long-term growth of this country.

11.36 am

Mr. Iain Luke (Dundee, East)

I want to contribute to the debate on regional aviation because it is crucial to the area that I represent. Aviation and airports in the United Kingdom face two contrasting sets of circumstances. In the more populous areas, especially south-east England, strong growth and excess demand are causing capacity problems and raising environmental issues. Yet at the periphery of the United Kingdom, in parts of Scotland, Northern Ireland, Wales and the west country, the problem is the opposite. Their economies are handicapped by limited communications and for most of those regions, rail transport is not an option for business travel. They depend on air travel to provide day-return business travel to the main business centres of the UK, particularly London.

In the context of the overheated economy of southeast England, the Government need competitive economies throughout the regions of the UK to take development pressure away from the south-east. However, business location decisions are taken by executives who will not knowingly locate in regions that they perceive to be isolated. Thus, it is a fundamental requirement for a competitive regional economy to have direct access to a popular London airport at credible times, for day-return business travel.

Many regional economies can sustain viable air services, albeit often using modest-sized regional airliners. However, issues arise about the way in which services in peripheral areas of Britain, and elsewhere in Europe, are penalised by taxes and charges that were created to deal with congestion that occurs only in southern Britain and in the European core.

The biggest problems for aviation in the peripheral parts of the United Kingdom relate first to access to London, and secondly to the supply of regional airlines. The supply of runway capacity in the London area is seriously inadequate for growing demand from all parts of the world. As a result, services in small aircraft coming from the peripheral parts of the United Kingdom turn out to be competing for slots against the demands of major carriers operating much larger aircraft over longer distances. The bigger carriers almost always possess the ability to outbid any small regional carrier if airport slots and landing charges are subject to market pricing. The consequence is that the smaller regional services have been completely excluded from the main London airports and are even struggling to maintain peak period slots at the smaller London airports such as London City.

Dundee, which is more than six hours by train from London, has an air service to London City airport, with four flights a day. That service has done well, but its full potential has been suppressed by not having access to London City airport in morning or evening peak periods. To get a business-oriented morning flight, the first flight is obliged to leave Dundee at 6.15 am and arrive in London by 7.30 am. There appears to be no prospect of a slot becoming available between then and mid-morning. In the evening, northward departure slots are equally hard to obtain.

Such is the need for the service that it succeeds despite those timing penalties. However, it is equally evident that it would do a much better job for the economies of Dundee, Tayside and north Fife and be more financially robust if it was able to serve the capital at the frequencies and timings that business travellers would like. I am sure that that experience is mirrored by other regional services into London.

As the London airports have become private sector companies, their duty to their shareholders is to maximise profit. They will always take the high income available from the major airlines rather than the more modest income available from the small regional air services. Air travel from the periphery of the UK is essential for the integrity of the nation. All parts of the UK should have a right to easy and good access to the nation's capital. That is not happening, and the situation is bound to worsen if things are not done.

The Government must act to increase runway capacity in the south-east. The peripheral regions would probably welcome the creation of small airports in the south-east, based on the London City model, but perhaps not with quite such severe operating constraints as apply to that airport. City airports have the advantage of not being on a large site and of being more environmentally friendly than larger airports. Another advantage from the viewpoint of protecting air access from the periphery of the UK is that city airports are fair less vulnerable to predatory slot bidding by major airlines. City airports can be created on independent sites, but the Government should also consider adding short regional runways to the existing major London airports, restricted to regional air traffic.

If a substantial increase in runway capacity is not to be provided in the London area—and provided sooner rather than later—the Government must act to guarantee the quality and price of dedicated slots in London for the smaller, regional operators. If that is not done, the economies of the regions will be seriously damaged.

The second main problem for the development of air services in peripheral areas is the ever decreasing availability of airlines serving the regional sector. That has largely been due to the major airlines acquiring the regional carriers with a view to configuring them as feeder carriers for their global networks. It will not come as a surprise that servicing the remoter parts of the UK in modest-sized aircraft does not come within the strategic priorities of major airlines. The supply of "footloose" airlines has fallen sharply at the smaller end of the regional sector.

The Government should examine the ownership and control of regional airlines and the possibility of creating more favourable financial circumstances for airlines serving peripheral Britain. Financial encouragement for such service providers would greatly assist regional economies. Indeed, in some cases it might have the effect of reducing the need for public sector obligation payments for essential services to remote areas.

In summary, the viability of the peripheral parts of the UK must be sustained in the face of a limited supply of regional airlines, a serious dearth of airport capacity in London and the overwhelming commercial pressure to drive domestic regional aviation out of London. Those issues must be tackled to ensure that regional aviation has a viable future.

11.44 am

Angus Robertson (Moray)

I commend the hon. Member for Inverness, East, Nairn and Lochaber (Mr. Stewart) for initiating this morning's valuable discussions. They build on his work, on that of my predecessor Margaret Ewing, and of other hon. Members from neighbouring seats in the north of Scotland who have shown a great interest, particularly in the Inverness air route. I echo much that has been said by them, and also agree with the hon. Member for Bassetlaw (John Mann) about demand. Demand affects not only the north of Scotland but many other parts of the United Kingdom. Similarly, the Inverness air link is a pressing issue not only for my constituents but the rest of the UK.

The reasons for a change in regional airline services are clear, particularly the threat of a world economic downturn, and the downturn in tourism, which was described by a prominent Moray hotelier as being worse than at the height of the foot and mouth crisis. In my constituency and other parts of northern Scotland, that must be balanced with the fact that Inverness has city status, a growing population and some of the finest tourism potential in Europe. We have many leading industries; some 50 per cent. of Scotland's whisky distilleries are in Moray. They depend on first-class air services to bring in buyers and distributors to promote that vital industry. Such services are also of supreme importance to the many thousands of Royal Air Force personnel who are based at RAF Kinross and RAF Lossiemouth—two of the largest RAF bases in the UK—many of whom come from the south of England and have to travel back and forth regularly.

There seems to be a lack of vision and ambition. It is unfortunate that we need even to discuss maintaining and securing slots for Inverness. I echo the point made by the hon. Member for Inverness, East, Nairn and Lochaber and I thank him and other hon. Members for signing my early-day motion, which called for a public service obligation order on the route between Inverness and Gatwick. I read the Hansard report of a 1997 Adjournment debate, and we seem to be going over ground that has been covered already. It is unfortunate that there has been so little progress to date. The level of global competition makes that situation particularly pressing. That applies especially to tourism. It is ironic that the north of Scotland is such an attractive tourist location yet has such an inadequate service. That must be seen in the context of competition, particularly from our closest neighbour, Ireland.

Ireland has made great strides in tourism with Bord Failte, and low-cost carriers have opened much of that country. In the past few days, a study outlined the growth in low-cost carriers in Ireland and the extent to which that had affected positively the tourism sector and flights in Ireland. That was compared and contrasted with the situation in Scotland. The study was compiled for the shadow tourism Minister in the Scottish Parliament, Kenny MacAskill, and I commend it to the Minister and would be happy to forward it to him.

In comparison with Inverness, low-cost carriers have flown into Prestwick, and it has seen a 550 per cent. increase in visitor numbers arriving by air. During the same period in Inverness, the increase was only 29 per cent. Efforts must be made to make it possible for low-cost carriers to improve services to Inverness. We should have more ambition and vision for Inverness airport, rather than seeing it as purely a regional airport. It should be a hub, a national airport for the north of Scotland, because it serves so many important and peripheral areas, and will continue to do so owing to the growth of the city.

Aviation policy is by and large a reserved matter. Therefore, much of my case impinges on the Government in Westminster. I have a query about a Department for Transport, Local Government and the Regions study, which is a review of the access to regional airports. I have not seen it, and I do not know whether there is an intention to publish any of the review material. It is blindingly obvious when the train passes that there is no stop at Inverness airport. It is almost impossible to catch a bus from Inverness airport to the town. It is almost impossible to catch a bus from Inverness airport to the town. If there were more low-cost carriers, people would spend more on taxi fares to town than on their flight ticket to Inverness.

I echo the calls for a PSO to guarantee the slots, but even if that were granted, it would secure only the higher-cost airline routes, and that is not enough. Gatwick's future is uncertain in some repects, and we must have the ambition to increase flights to many airports. I appeal to the Westminster Government, the Scottish Executive and the European Commission to do all that they can to improve the situation.

11.50 am

Tom Brake (Carshalton and Wallington)

I welcome the opportunity to debate this matter, which the events of 11 September have made topical. The hon. Member for Inverness, East, Nairn and Lochaber (Mr. Stewart) and my hon. Friend the Member for Caithness, Sutherland and Easter Ross (John Thurso) have clearly and eloquently explained why a PSO—public services obligation—would be appropriate. I do not intend to rehearse those arguments since both hon. Gentlemen are probably better informed than I am on the route from Inverness to London, but we must widen the debate to include more than that route.

I contacted, at random, Plymouth airport and spoke to its director, John Humphrey, to give him an opportunity to set out the concerns of regional air services and airports. I thank him for his input. Access to Heathrow airport is a major concern; Plymouth airport used to have access to Heathrow, but has been switched to Gatwick. That causes Plymouth anxiety, because many United States and Japanese companies are based in Plymouth and use the service, but they want connections from Plymouth airport to London and on to other destinations, such as the far east.

The switch to Gatwick is of serious concern because 70 per cent. of Plymouth airport's passengers board another flight from London. The problem will be further exacerbated if, as has been suggested, British Airways downsizes long-haul operations from Gatwick. What discussions has the Minister had with British Airways on the subject? Is BA considering downsizing, and has he opposed such proposals? Can the Minister confirm the likely time scale for the consideration of the PSO for Inverness? Could we use article 87(2) of the European Union treaty to supplement the PSO, and if so, in what way?

The director of Plymouth airport thinks that the way to secure regional air services is to provide guaranteed or ring-fenced slots. BAA plc should charge a suitable landing fee; the director of Plymouth airport was worried that landing fees might be inflated because smaller aircraft do not make as much money for BAA. We must also find an airline prepared to run regional services, although the hon. Member for Inverness, East, Nairn and Lochaber did not think that that was an issue.

A final factor is the police cover that is being provided. Plymouth airport has police cover 24 hours a day, and there is concern that those costs might, at some point, be passed on to it and other regional airports in a way that would significantly affect their operation. Costs could also be passed on to airlines and would have a significant impact. Will the Minister say whether those policing arrangements will continue without charge for the foreseeable future, or whether, at some point, regional airports or airlines will have to pick up the cost?

I had a discussion with representatives of one of the major regional airlines and, again, the lack of access to Heathrow airport is a major irritant. At this difficult time, can the Minister reassure regional airlines that access to Heathrow will be improved? Alternatively, will he reassure them—as the Select Committee on the Environment, Transport and Regional Affairs recommended in 1997–98—that better access can be provided by improving significantly the links between Gatwick and Heathrow? The Select Committee's report included options such as a helicopter service or other transport measures. If Heathrow is to have no more slots for regional airports, a good, fast and reliable transport link between Gatwick and Heathrow could provide the relevant connections and ensure that efficient interlining from Gatwick is possible.

The regional airline representatives raised the issue of insurance. The Government made the welcome announcement that they would underwrite—or provide for—third-party insurance for war and terrorism for a 30-day period that began on 22 September, or thereabouts. The Select Committee's report said that the Government were at the point of charging commercial rates for that service. There are some blank looks from the Minister and his advisers. Will the Minister confirm that the process has moved on? If it has not moved on, and the Government are now charging commercial rates for the service, what feedback has the Minister received about those rates? Can he confirm that, although the rates that are being charged are commercial, the intention behind them is not to seek to profit from—or to exploit—what happened on 11 September?

I am sure that the Minister is aware of a newsletter that was leaked by the Association of Lloyd's Members, which said that the 11 September attacks were: an historic opportunity to make money". That newsletter was circulated to Lloyd's names—the individuals who pledge their wealth to back insurance risks—and said that premiums: had shot up to a level where very large profits are possible".

Mr. Peter Atkinson

The hon. Gentleman is probably wrong about that, as most Lloyd's names have had demands for huge sums of money since 11 September. That event has not been welcomed at all.

Tom Brake

All I can say is that if I am wrong, the BBC news is wrong. I am sure that that is not the case, so I stand by my information. However, I will give the Minister an opportunity to confirm that the arrangements are working, and that the airlines consider them to be commercial but financially acceptable.

The final issue raised by the regional airline was decent, inter-modal access to Heathrow. Regional airlines are willing to see short-haul flights replaced by rail links, if those links are decent. If the travelling times by rail are three hours or less, it makes more sense from an environmental point of view for those journeys to be completed by rail. That would free up slots for flights coming from places further afield, such as Scotland and Northern Ireland. When does the Minister expect all major conurbations within 300 miles of Heathrow or Gatwick to have rail journey times of three hours or less to those airports, which would make rail a viable option and thereby greatly reduce the demand for internal short-haul flights?

A discussion of regional air services cannot take place without touching on the subject of terminal 5, which many hon. Members have already mentioned. Will the Minister confirm that we can expect a statement in the House on that subject? What assessment has been made of the impact of terminal 5, should it proceed, on regional air services? Would it improve or harm the prospects for regional air services? Terminal 5 is almost a self-fulfilling prophecy: one builds terminal 5; one attracts more international flights into that airport; all the airlines want to fly into there; nobody wants to fly into Gatwick; nobody wants to fly into other regional airports. What thought has gone into ensuring that that self-fulfilling prophecy does not come about? The current South East and East of England Regional Air Services study is dependent on the terminal 5 announcement. When does the Minister expect it to be published?

My comments have been brief because the Minister complained about the length at which I spoke yesterday, and in anticipation that he will be able to use the time that is left to respond to hon. Members' questions before launching into his prepared speech. I look forward to his response.

12.1 pm

Mr. Geoffrey Clifton-Brown (Cotswold)

I congratulate the hon. Member for Inverness, East, Nairn and Lochaber (Mr. Stewart) on securing this timely and topical debate. There were some commendably brief speeches this morning, which allowed many hon. Members to contribute. That is an eminently sensible example of how this Chamber might operate.

I was particularly interested to hear the remarks of my hon. Friend the Member for Hexham (Mr. Atkinson), but there were interesting speeches from the hon. Members for Manchester, Central (Mr. Lloyd), for Caithness, Sutherland and Easter Ross (John Thurso), for Bassetlaw (John Mann), for Dundee, East (Mr. Luke) and for Moray (Angus Robertson). They all made the sensible point, in which they are right, that business development depends on the efficiency of regional airports. They all said that we must use the total capacity of the London airports to better effect, an issue to which I shall return later in my speech.

The UK aviation industry is one of Britain's great success stories. It is one of the most competitive and deregulated industries in the world. Today, Britain, as an aviation nation, is second only to the USA, and is pre-eminent in Europe. Aviation is also an industry with an unrivalled safety record. There is a great deal of potential, but if growth is to continue, the Government must resolve some key issues. This morning, many hon. Members have mentioned terminal 5. We are, of course, awaiting an announcement, which we expect shortly. As my hon. Friend the Member for Hexham made clear, however, it will take several years before it is built.

It may be worth examining the figures. In 1998, 160 million passengers travelled on aircraft. That figure is set to double in the next 10 to 12 years, and may, on some predictions, reach 500 million by 2030. That is a huge number of passengers, and we welcome that increase as part of the nation's development. As I made clear to my hon. Friend the Member for Hexham, that figure is related to international competition. Unless we maintain efficient and well run airports in London and elsewhere, we shall start to lose capacity to other centres such as Charles de Gaulle and Schipol. It is disturbing that in Milan, for example, Alitalia is still given slot preference to other airlines, which have been told to use an airport 40 miles away.

We need a general increase in liberalisation throughout Europe. What does the Minister propose to do about the EU policy relating to slot ownership and distribution? The Government seem determined to allow the European Community to negotiate a policy, rather than to maintain a national one. I would also be interested to know what he proposes to do about international bilateral agreements, in which the EU seems to take an increasing interest. Is it true that the French have, in the past few days, concluded a bilateral agreement with the United States? For many years, we have tried for a bilateral agreement with the United States—even the Prime Minister intervened on the matter—and yet the parties have not been able to arrange one.

Before you call me to order, Mr. Winterton, to tell me that I am talking about international air policy, may I explain that that and slot capacity at Heathrow are integrally linked with the issues under debate? Every time an aircraft flies into Heathrow or Gatwick, it takes a slot that could be used by an international airline.

I want to return to the relationship between the London and regional airports. As it happens, I travelled a lot by air this summer—for example, I travelled to the airport in the constituency of the hon. Member for Inverness, East, Nairn and Lochaber. I have been travelling to Scotland for many years and recently the intervention of airlines such as Go and easyJet has transformed the situation. The price of £55 for a ticket from Inverness to Luton has enabled air travel to reach people in many hon. Members' constituencies where air travel would never have been conceived previously.

We need to think about how air travel from regional airports impacts on London. As has been said many times this morning, Heathrow and Gatwick are effectively full for daily commercial flights. However, other airports in London, such as Luton and Stansted, need to be considered. Bearing in mind the environmental constraints, and the need to maintain everybody's way of life, we should examine how all London airports can be used to better effect.

Hon. Members have already mentioned Northolt and Redhill. Given the environmental constraints on those airports, it would be interesting to know what the proposals are for increasing their capacity and effectiveness. There seems to be a vacuum in Government thinking. We are still awaiting a White Paper on the matter—I would like to know when and if it will be published. As the hon. Member for Carshalton and Wallington (Tom Brake) said, we need to consider the transport infrastructure between all the main airports in London.

It would be more acceptable to my hon. Friend the Member for Hexham to fly from Newcastle to Luton, if Luton had a better infrastructure connecting it to the centre of London—the Thameslink train, which I used from Blackfriars to Luton, is pretty slow, unclean and inefficient. There should be a better link between Luton and the centre of London, and Luton and other major London airports. To get from Luton to Heathrow is virtually impossible: one has to use the Thameslink train or a bus into central London to get back out again to Heathrow. That makes no sense in a modern economy.

Mr. Lloyd

I understand the hon. Gentleman's point about the need to improve interlinking between the different parts of the south-east airport system. However, environmental and economic issues also exist. Developing other potential hub airports—Manchester is already a hub, but other places can develop them—would be in the interests of the travelling public and the environment, and would do something about the excessive congestion in the south-east.

Mr. Clifton-Brown

I listened carefully to what the hon. Gentleman said, and I shall return to it when I have finished my point.

The Government must seriously consider the transport infrastructure between London's main airports. It might then be easier for people to use regional airports such as Luton and Stansted, to the greater satisfaction of those who want to take international flights out of Heathrow and Gatwick. That involves the issue of motorway capacity, including bus lanes on the M25.

When I took my family on holiday to Spain this year, I flew out of Birmingham airport, which was very efficient. Travel operators must be encouraged to think increasingly about using the regional hubs for holidays, both for tourists leaving the country and for those coming in. In 1998, the Government allowed airports that were trading successfully to increase their borrowing. How effective has that relaxation been, and how has it affected the regional hubs? It is important to develop the role of local authorities and private companies that own the regional hubs.

Mr. Lloyd

This is not a matter of parochial pride, although that comes into it. We should not think of airports such as Manchester and the bigger Scottish airports simply as places where holiday carriers can fly from. Manchester already has a huge range of regular international services, which are fundamental to the development of the regional economy. I hope that the hon. Gentleman will wean himself off the idea that they are merely a bolt-on for when we wear our holiday hats and go off to Spain. They are about travelling for all manner of reasons all around the world.

Mr. Clifton-Brown

Of course the hon. Gentleman is right, but he is picking holes in my argument. My example was intended to show how we can use the regional hubs to better effect, thereby reducing the number of flights out of Heathrow and Gatwick. We must use every method at our disposal. The Government should develop a holistic policy for the whole air travel sector that considers how to use the regional hubs, the London airports and the smaller local airports to better effect, thus benefiting both the travelling public and the development of the country's infrastructure.

Caroline Flint (Don Valley)

Will the hon. Gentleman give way?

Mr. Clifton-Brown

I shall, although the hon. Lady has not been present and we are short of time.

Caroline Flint

I apologise for arriving late. I gave notice that I was interested in the debate, but I have been speaking at a conference.

The hon. Gentleman is asking the Minister to produce a holistic plan. Is he suggesting that the development of regional airports should not continue as it is? For example, Finningley in my constituency, from which four out of five people in Yorkshire fly, could provide international long-haul services that are not currently provided anywhere in the county.

Mr. Clifton-Brown

I am delighted to welcome the hon. Lady to the debate, even at this late hour—I accept that she had to be somewhere else. She is picking holes in what I said. I made it clear that the purpose of a holistic policy is to determine how we can make better use not only of London's airports, but of regional hubs and small local airports.

I was interested to hear what the hon. Member for Bassetlaw said about his public survey of attitudes to an extra regional airport at Finningley. The fact that 90 per cent. of people were in favour is contrary to what one might expect. One of the problems in developing an airport strategy for London is how to take account of environmental issues, especially airport noise at antisocial times of the morning. When the Minister makes his decision about terminal 5, one of the matters that he will have to grapple with is the times at which to limit aircraft flying in and out of Heathrow. When Gatwick's second terminal was built, severe restrictions were imposed on the times of day that aircraft could fly in and out, and they have already been breached. The Minister will have to grapple with such issues if he is to come up with a sensible air policy for the United Kingdom.

I end where I began. We all want to improve the efficiency of airports, be they London, regional or smaller local airports. I have mentioned the need for regional airports to improve links with London through better infrastructure, and we also need better and more efficient checking in and baggage transfer. The speed link from Paddington to Heathrow offers an ideal example, but no such system links central London with, say, Luton. The hon. Member for Carshalton and Wallington rightly alluded to the lack of an efficient transfer system from Gatwick to Heathrow. Those matters can be improved.

If the United Kingdom is to remain at the forefront of world travel, we must address those significant issues. Many hon. Members have called for the public service agreement for Inverness to he invoked to ensure that services are maintained. British Airways has briefed us that such an arrangement can work only if the Government are prepared to subsidise it. We must look at the issue in the round, and ensure that this tiny island's existing air capacity is used in the best way for all concerned. The Minister should tell us how he intends to meet that huge challenge.

12.16 pm

The Parliamentary Under-Secretary of State for Transport, Local Government and the Regions (Mr. David Jamieson)

I, too, congratulate my hon. Friend the Member for Inverness, East, Nairn and Lochaber (Mr. Stewart) on securing this important debate. I congratulate him on arguing the case, not only for Inverness but for Scotland, well and with brevity. He is always persuasive. He has a quiet and compelling manner that makes one listen to him more than to those who speak loudly and boldly, and I assure him that I have indeed listened carefully to his comments. He has articulated a strong case for protecting air services in his region.

My hon. Friend asked me to support the public service obligation. The Minister for Transport, my right hon. Friend the Member for Warley (Mr. Spellar), has written to Sarah Boyack, the Minister for Transport in Scotland. He said that the Department will now consider the request for the PSO against the criteria in European legislation. Officials of the Department for Transport, Local Government and the Regions are meeting members of the Scottish Executive tomorrow to discuss that important matter. I hope that that helps my hon. Friend and the other hon. Members present who represent Scottish constituencies.

I should draw the Chamber's attention to today's statement from British Airways: British Airways fully intends to continue services between Inverness and Gatwick. It remains a viable route and there are no plans to withdraw flights. We have also no plans to change or reduce services from Gatwick to Plymouth and Newquay. It is clear from his speech that the hon. Member for Carshalton and Wallington (Tom Brake) takes a huge interest in Plymouth. I have heard the points that he made before—when I visited Plymouth airport some three or four weeks ago. We will be looking carefully at the British Airways statement, and will keep under review its commitment to those services.

I shall deal with a couple of important points made by the hon. Member for Cotswold (Mr. Clifton-Brown). He complained about EU involvement in slot allocation, but I should remind him that it was his party that agreed to such involvement, in 1993. It is true that France and the United States have signed a bilateral agreement on open skies, but we will sign a bilateral agreement only in the interests of the United Kingdom's airlines, not in the interests of the US aviation industry. That is perhaps another matter on which we differ from Conservative Members.

Mr. Clifton-Brown

Will the Minister give way?

Mr. Jamieson

No. The hon. Gentleman had long enough and I want to respond to the points that others have made.

I have listened to those points with great care. It has been a good debate, with contributions from many hon. Members of different parties: the hon. Member for Hexham (Mr. Atkinson); my hon. Friend the Member for Manchester, Central (Mr. Lloyd), who made compelling points in favour of regional airports; the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) who made a brief, sensible contribution, of which the hon. Member for Carshalton and Wallington should perhaps take note, as it was very valuable; my hon. Friend the Member for Bassetlaw (John Mann), who made a very good contribution; my hon. Friend the Member for Dundee, East (Mr. Luke), who was watched very carefully by my hon. Friend the Member for Dundee, West (Mr. Ross), who takes enormous interest in such matters; my hon. Friend the Member for Don Valley (Caroline Flint), from whom we are always pleased to hear; and the hon. Member for Moray (Angus Robertson). I assure hon. Members that, although I may not have time to respond in detail to all points, I have listened to them carefully.

The Government recognise the significance of regional air services and their economic and social spin-offs, something referred to powerfully by my hon. Friend the Member for Manchester, Central. Good direct flights to the capital and interlining opportunities to international flights attract inward investment and encourage the development of business and tourism in the regions. Therefore, I understand concerns that current air links between regional airports and London should be maintained. That point has been widely made in the debate.

I also appreciate underlying concerns about the future of regional air services, and why those concerns have come to the surface. In recent years, many regional airports have seen Heathrow and Gatwick services reduced or moved. Inevitably, such changes cause concern. I am well aware that certain UK regions are worried that commercial pressures are threatening services between their airports and Heathrow and Gatwick because of pressure on airport slots.

Hon. Members are probably aware that European law—EC regulation 95/93—governs the common rules for the allocation of slots at community airports. That is probably what the Conservative Government signed up to about 10 years ago. The regulation's key provision is for slot allocation at fully co-ordinated airports to be carried out by a slot co-ordinator. In the United Kingdom, the co-ordinator is Airport Co-ordination Ltd. It allocates slots according to specified criteria on a neutral, transparent and non-discriminatory basis. ACL's decisions are binding, and the Government currently have no role in the process. If the hon. Member for Cotswold thinks that that should change, perhaps his party might be interested in coming forward with proposals.

Mr. Clifton-Brown

Will the Minister give way?

Mr. Jamieson

No.

The regulation is based on the key principle of historic precedence, also known as grandfather rights. That enables an air carrier that uses a slot in one season to have the first claim on it in the next, providing that it uses it for 80 per cent. of the time.

The scarcity of slots at Heathrow and, to a lesser extent, Gatwick encourages airlines to use slots to maximum commercial advantage. Hon. Members can appreciate that demand for slots increases pressure on slots used for less profitable routes. That is the thrust of what my hon. Friend the Member for Inverness, East, Nairn and Lochaber said. Some airlines have developed more long-haul services as air travel has expanded. However, I am sure that hon. Members welcome, as I do, the expansion of regional air services to Luton, Stansted and London City airport provided by low-cost airlines, and the benefits that such competition can provide to customers.

I shall now try to address as fully as I can some of the issues raised in the debate. We must recognise that an airline is going to use slots at a congested airport such as Heathrow or Gatwick in a way that will maximise profits. If an airline thinks that, even taking into account the contributory revenue from connecting passengers, it can make more profit by switching slots from a thin regional service operated by small aircraft to a long-haul service operated by wide-body aircraft, it will do so. Obviously, airlines will not be considering the wider economic benefits of domestic regional air services. I think that this is the nub of the concerns of people in Inverness and Scotland.

We are aware of the difficulties that may arise from the conflict between market forces affecting the use of airport slots and the Government's regional interest. The Government are listening to the argument that wider external benefits should be taken into account in certain circumstances—for example, when one airline is operating on a route and the alternative forms of transport are inadequate. We have heard about six-hour journeys from parts of Scotland and that also applies to parts of Cornwall.

The market is seriously constrained by the infrastructure. The fundamental problem behind the lack of access at Heathrow and Gatwick is lack of adequate infrastructure—Heathrow has only two runways and Gatwick has only one. Demand for take-off and landing slots greatly exceeds the capacity at Heathrow and, to a lesser extent, at Gatwick. Most regions would like Heathrow connections, for obvious reasons, but might settle for assurances of a London link.

Concern has been expressed during the debate and at other times that airlines are free to choose how they use their slots. I have been raising the matter for many years, sometimes with Liberal Democrat Members and others in the south-west, so the subject is not new to me. Airlines must make profits, so many withdraw from marginally profitable services to use slots for more profitable routes. Under European legislation, they are entitled to do that. Slot allocation is not generally route specific. When slots have been allocated to airlines, it is for individual airlines to choose how to use their slots according to their assessment of market conditions. It is definitely not for the Government to interfere with the commercial decisions of airlines.

It is important to our discussion to explain the circumstances in which the Government can intervene and the constraints on that.

Mr. Clifton-Brown

Will the Minister give way?

Mr. Jamieson

No. I want to respond to the points raised by my hon. Friend the Member for Inverness, East, Nairn and Lochaber, because they are important.

There are currently two mechanisms available for the Government to intervene to protect access for regional services. Under the current regulation, the Government's ability to reserve or ring-fence slots for regional services is narrowly defined. They are permitted to reserve slots without a public service obligation provided that the slots were being used for the route before 1993, there is only one carrier on the route and there are no adequate links by alternative modes of transport. The Government have not so far ring-fenced slots without a PSO. They may also reserve slots when a PSO has been imposed on a route. I hope that that clarifies the avenues down which we may go.

Any move towards protecting air services for one region would be met with demands for similar treatment from other regions, and those may include regions that do not currently have London connections. Hon. Members should be aware that protecting all existing service levels would tie up many slots. That would be to the detriment of consumers generally, as well as United Kingdom carriers that would have to continue to operate some marginally profitable services or surrender the slot. If airlines were expected to forego the opportunity to make best use of the slots they hold, there would be a cost to the airline and loss of benefit for consumers. We need to balance the benefits and disbenefits of various options.

My hon. Friend the Member for Inverness, East, Nairn and Lochaber referred to greater protection for regional air services through the other available mechanism—the public service obligation. The imposition of a public service obligation must be in accordance with EC regulation 2408/92, which is based on the presumption that the supply of air services should be left to a liberalised market to determine. It does, however, provide for the Government to intervene in certain circumstances. The regulation states that a member state may impose a public service obligation on a route to a peripheral or development region when the route is considered vital for the economic development of the region. It may do so to the extent necessary to ensure the adequate provision of scheduled air services satisfying fixed standards of continuity, regularity, capacity and pricing, which standard air carriers would not assume if they were solely considering their commercial interests". The Government have interpreted the regulation very tightly indeed.

I am grateful to have had the opportunity to respond to some of the points made by hon. Members. If I have not answered hon. Members' questions to their satisfaction, perhaps they will drop me a note and I shall endeavour to give them a full response.

Mr. Nicholas Winterton (in the Chair)

We are all grateful to the Minister for concluding within the time allotted for the debate.