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The Government recognise the great importance of the aviation industry to the United Kingdom economy and are therefore paying close attention to the industry's current problems, as so well articulated by my hon. Friend the Member for Hayes and Harlington. We acted quickly in response to the events of 11 September to counteract the failure in the aviation insurance industry market and to enhance security measures at all UK airports. We are actively considering the payment of emergency aid to airlines for the four days when United States airspace was closed, in accordance with European Commission guidelines.
In addition to those practical measures, we are doing what we can to restore confidence in air travel. For example, last week I undertook a programme of visits to UK airportsI went to Gatwick, Edinburgh, Birmingham and Bristol, and a few weeks earlier I had visited Plymouth airportto help boost morale and encourage consumer confidence in air travel. I pay tribute to people who in recent weeks have worked extremely hard in many of our airports to ensure that they are even safer than before. I know that many of those people have worked under enormous stress and pressure in recent weeks. I give credit to them, especially my hon. Friend's constituents.
Some 180,000 people in the United Kingdom are employed in the aviation industryan industry with a gross domestic product similar to that of car manufacturingwith up to three times as many jobs supported indirectly. Moreover, the UK aerospace industry employs around 154,000 people, contributing almost 1 per cent. of GDP. Aviation is particularly important to local economies around major airports. As my hon. Friend said, Heathrow airport accounts directly for 68,000 jobs and is by far the biggest employer on a single site in London.
My hon. Friend talked about the task group of the airport's community partners that is being set up, and I was pleased to hear that. As he rightly says, there needs to be a programme for a co-ordinated approach. I certainly look forward to receiving the briefing paper from that group. I know that the Department for Education and Skills is involved and that the Employment Service will be actively involved. I assure my hon. Friend that Departments and particularly the Employment Service will be giving every support to people who may be facing redundancy. I suppose that one good point is that the economy is doing well, and we should be thankful for that, but that is probably small comfort to people who may be losing their jobs in the weeks ahead.
There can be no doubt that the aviation industry has suffered a body-blow as a result of the terrorist attacks of 11 September. Not only was air transport chosen as the instrument of terror in those attacks, but the industry has become the most prominent casualty in the subsequent economic fallout. The International Air Transport Association has predicted a collective industry loss of £7 billion for 2001. Many are saying that the effects will be worse than those experienced following the Gulf war. It is clearly too early to tell precisely how badly the effects will be or how long they will last, but traffic figures published by the Association of European Airlines for the five weeks up to 14 October showed that the north Atlantic market was down by about one third compared with the same period last year, while European traffic was down by about 10 per cent.
Mr. Clifton-Brown: The Minister will be aware that the American Government made available selective aid of $15 billion to their industry. Will he confirm that he is urgently talking to his European Commission counterparts to see what selective state aid either the EU or the British Government might be able to give to our airline industry?
Mr. Jamieson: I assure the hon. Gentlemanwe made this point the other day in a similar debate in Westminster Hallthat we are having, have had and are still having active discussions with our European Community partners. He will know that the matter is within European Union competence. We are certainly considering how we can ensure that our industry is not disadvantaged.
We must put the crisis into context. European and charter traffic has been less badly affectedI certainly found that when visiting airports around the countryand the low-cost sector continues to register very strong passenger growth. The wider economic picture is far from gloomy. My right hon. Friend the Chancellor has said that he is "cautiously optimistic" about the future, with UK
The current uncertainties inevitably translate into lost jobs throughout the aviation industry and in the service industries supporting it. Most of the main UK airlines have already announced redundancies. British Airways, for example, has announced that it will shed 7,000 jobs. I know that airlines are making every effort to achieve those cuts by voluntary means, but each lost job can be and will be a personal tragedy affecting families and communities in areas such as my hon. Friend's constituency.
It is important to point out that the aviation industry was, by common consensus, in trouble before the events of 11 September, which was due primarily to the economic downturn and high fuel costs. The European industry in particular has long been overdue for restructuring. For example, it cannot make sense for 17 European carriers to offer scheduled services across the Atlantic, against only seven US carriers. The problems experienced by many European flight carriers stem from long before 11 September, although clearly those events have compounded the problems.
Nevertheless, following the attacks in the United States, the industry has had to face new problems. Initially, US airspace was closed for four days. Then there was the decision by the insurance market to limit its exposure to future terrorist attacks by withdrawing third party war risks covera decision that threatened to ground the entire industry. Circumstances dictated that security measures needed to be tightened, and the response of a significant proportion of the travelling public was also predictablethey cancelled their reservations or simply declined to book.
Despite the Government's long-standing policy not to intervene in the aviation market, such exceptional circumstances clearly warranted Government action. The Government took immediate steps to counteract the failure in the insurance market. Within a few days and before the imminent withdrawal of cover had grounded the entire UK fleet, we made available to our airlines and related industry the necessary third party war risks cover. Indeed, so quick off the mark were we and so effective was the remedy that we devised that our lead has been widely followed throughout the world. Although initially for one month, the coverage has recently been extended to 23 November. We shall, of course, reconsider that during our discussions with the airlines, but it might be somewhat premature to extend coverage now in the way suggested by the hon. Member for Cotswold. The situation unfolds further daily and we have to consider our policies on the same basis.
Despite the few deplorable lapses that have been reported in the past few weeks, standards of security in the UK before 11 September were among the highest in the world. During my recent visits to airports, I have seen the extremely high standards of both pre-existing security measures and the enhanced measures implemented since 11 September. Nevertheless, we have enhanced security measures at all UK airports and for airlines leaving this country. In addition, we are carrying out a fundamental review of aviation security to ensure that air travel is as
Aid to airlines is controlled by the European Community, which has exclusive competence for monitoring state aid that distorts or threatens to distort competition in so far as it affects trade between member states. The European Commission acted quickly to address the repercussions of the terrorist attacks for the air transport industry. It issued a communication which reiterates that member states must not depart from Community rules on state aid, but sets out how the Commission will interpret the rules in the current situation. The extra costs of security, losses directly attributable to the closure of US airspace and the provision by Governments of insurance cover are identified as areas where state aid would be justifiable. The Government are currently considering whether further aid to UK airlines should be made available, taking those guidelines into account.
On 16 October, my right hon. Friends the Secretary of State for Transport, Local Government and the Regions and the Minister for Transport attended the Transport Council in Brussels. They strongly supported the Commission's view that it would not be in the industry's long-term interests to bail out individual airlines that are, by any objective measure, no longer viable. UK airlines have always performed well when they have been able to compete on fair terms in the marketplace. My right hon. Friends made clear our disapproval of proposals by some member states to distort the market by propping up their flag carriers with inappropriate state aid.
UK Ministers also took the opportunity to promote our views on restructuring the industry. We consider it vital that the repercussions of 11 September act as a spur rather than a brake to airline consolidation, but it is not for Governments to engineer consolidation. That is for the airlines, acting on their own commercial judgment, whereas it is our duty to ensure that the regulatory framework facilitates change. One of the obstacles to intra-European Union airline mergers is the attitude of prospective third-country bilateral partners. Strict adherence to outdated ownership and control restrictions on the part of other countries might seriously impede the consolidation that we in Europe need. Looking to the future, we have a successful base on which to build.