Examination of Witnesses (Questions 320
WEDNESDAY 9 JANUARY 2002
JAMIESON MP, MR
320. Thank you. That was the information I was
seeking. Did you consult with them as to the kind of assistance
you intended to offer to British companies?
(Mr Griffins) Not to my knowledge, Chairman.
321. Have you received any questions from the
Americans as to the type of assistance that you were being asked
to come forth with from the point of view of British companies?
(Mr Griffins) Not to my knowledge.
322. Could I follow up the point you made about
the role of the Government covering the insurance factors. When
the insurance companies declined to cover the BAA and the industry,
were there any negotiations or discussions with the Government
and insurance companies?
(Mr Jamieson) No. I think there were no discussions
with us and to my knowledge I think there were very little discussions
between the insurance companies and those people who they were
insuring. It was a measure that was taken very rapidly and very
quickly and I am not aware of any discussions that were held between
insurance companies and ourselves.
323. We understand that there was no discussions,
the insurance companies just withdrew their cover?
(Mr Jamieson) Indeed, I think that was the case.
324. Was there no request from the Government
as to this situation and the fact that it left the industry without
(Mr Jamieson) The reaction we had to take, Chairman,
was to react to the immediate circumstance. The reduction of the
amount of cover that the airlines have would have invalidated
totally the leasing arrangements they have to operate and in fact
the whole of the system would have closed down. We had to act
very quickly to step in to the role and that is precisely what
we did. We have reviewed the issue on a week by week, month by
month basis. I have to say as well that we were the very first
country to react and many of the other countries now have emulated
the scheme that we have put in place.
325. There is no indication that the insurance
companies or the insurance market is ready to reinstate that cover
so how does the Government intend to ensure that early re-entry
into the insurance market for aviation is going to take place?
(Mr Jamieson) Well, certainly it is not our ambition
to become an insurance company for the airline industry but, however,
you will understand that we had to act in these particular very
special circumstances. As I say, we are reviewing this on a week
by week, month by month basis and, of course, we are working with
our European Union colleagues as well, it is most important that
we do that. We believe that there is movement now within the insurance
market and we hope this month we will start to see some movement
in the commercial arrangements. Certainly it is not our ambition
to have a long term engagement in underwriting the insurance of
326. What gives you confidence that there could
be re-entry in the next 12 weeks or so?
(Mr Jamieson) We believe that if discussions are taking
place, which they should be, between those who are insured and
those doing the insuring, we are hopeful now that the commercial
market will reinstate itself.
327. Is there any proposal by the Government
to assist airports and airlines with the costs of additional security?
Surely that would help the insurance companies to re-consider?
(Mr Jamieson) For airlines, as you will know, we have
announced a package just before Christmas of £40 million
worth of assistance in terms of compensation for the close down
of London, Israeli and US airspace, so there is a compensation
package which is in place for that. Before we had that in place
we had discussions with the airlines as to what would be appropriate
and we have had discussions with others as well. We have given
them until the middle of this month when they can come forward
and put forward a request for funding from that fund. That is
specifically for airlines and it is specifically focused on the
loss of business resulting from the closure of airspace. The airports
of course is an entirely different matter. At the moment there
is no package in place that would cover extra security for the
328. When did the Government offer the package
to the airlines?
(Mr Jamieson) We made the package available in the
middle of last month. After discussions with the airlines which
went on for some weeks, we then made the offer of £40 million
on 13 December, and we have asked the airlines to come forward
in the next week or so with their proposals for any claim they
want to make on that particular fund. I have to stress that it
is only the airlines that can access that fund; it is not the
airports. Other than the advice we have givenand there
is an enormous amount of advice and intangible assistance which
has been given to airports and other people offering securitythe
only other arrangement at the moment is that some of the police
forces certainly after 11 September did offer assistance in quite
large numbers in some areas, and it is has yet not been decided
as to whether or not that will be reclaimed but that is a matter,
of course, between the local constabulary and the airport and
it is not a matter which we have any say in.
Chairman: There are some good rows to come.
329. I appreciate the Minister being here after
his arduous day on the adjournment debate. Can I start with the
Open Skies discussions. Has there been an impact as a result of
11 September on the Open Skies discussions with the US?
(Mr Griffins) The answer is no, curiously enough,
for events of this magnitude. Indeed, the negotiating relationship
in the talks between ourselves and the United States has continued
and has continued constructively.
Andrew Bennett: Constructively?
330. From our point of view it has been constructive.
Is that what you are saying?
(Mr Griffins) The impact of 11 September has not been
constructive. I think relative to some occasions over the long
period that we have had talks with the United States, now would
be a moment when I would describe our relationship with them as
"constructive". I cannot feel anybody behind me hitting
me in the back at the moment suggesting that I am wrong.
331. The reason I ask that is because you are
obviously aware that the European Court is due to rule on the
whole legality of Open Skies agreements and the role of the Commission
in such matters. Is there any likelihood of the UK and the US
completing an agreement before that Court judgment is made?
(Mr Griffins) Yes.
Chairman: Are you going to tell us even if it
332. He said yes.
(Mr Griffins) I said yes there is a likelihood.
Chairman: There is a likelihood?
333. My understanding is that the first views
from the Court are likely to be made known within the next couple
of months. Are you suggesting that there is a possibility that
an Open Skies agreement will be concluded during the next couple
(Mr Griffins) It is getting very difficult now to
forecast. I think your word was "possibility" and I
must say yes to possibility.
334. It is nice to know that you are back on
(Mr Griffins) It is nice to be here!
Chris Grayling: Given that possibility, we heard
earlier from Mr Tarry of Commerzbank his view that the Open Skies
agreement that took place between Germany and the United States
and between France and the United States should perhaps have required
those countries' national carrier airlines to give up slots at
their principal airports. Is the Government confident that an
agreement which required British Airways to give up slots at Heathrow
would not create an adverse competitive position for BA in comparison
with its principal European rivals?
335. Discuss in 15 seconds. Mr Griffins?
(Mr Griffins) I think this is a matter primarily for
the competition authorities and I am sitting here as an official
from the Department for Transport, Local Government and the Regions
with a Minister from the same Department. I do not think we have
a locus in that.
336. But you will have a view that you will
undoubtedly make known to them as part of the whole process?
(Mr Griffins) I do not think that is the case. This
is a matter between the competition authorities and the carriers
Chairman: Give up while the going is good!
337. Can I ask you to talk briefly about the
situation with regard to the cargo market, both your impressions
on the consequences of 11 September on the cargo market-place
and the consequences of reaching an Open Skies agreement for the
cargo industry in this country?
(Mr Griffins) I could not speak to you with any authority
on that. Given that I would want to help the Committee, if the
Committee would like us to send a note on that, I am very happy
to do that.
Chairman: I think we should be delighted to
receive a note on that.
Chris Grayling: That would be helpful.
338. To follow on from Mr Grayling's questions
about the discussions and negotiations which are taking place
on bilaterals, it was reported in a press cutting here in The
Sunday Times business section of January 2002 that "British
Airways' plans for a speedy conclusion of its planned alliance
with American Airlines"which is all tied up with this
very complicated issue"received a fresh set-back yesterday
with the publication of a critical report from the General Accounting
Office, the audit arm of the US Congress that `the alliance would
dominate markets between America and London.'" Firstly, Minister,
have you seen that report and, secondly, what assessment would
you make of it?
(Mr Jamieson) No, I have not seen that report.
Mr Stevenson: I see, fine. Just on the slots
339. But you have asked for a copy of it because
the General Audit Office make all of their papers public and indeed
have given evidence to this Committee.
(Mr Jamieson) Indeed.