Select Committee on Transport, Local Government and the Regions Minutes of Evidence

Examination of Witnesses (Questions 320 - 339)



  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.

Mr O'Brien

  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 insurance cover?
  (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 the airlines.

  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 airports.

  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 given—and there is an enormous amount of advice and intangible assistance which has been given to airports and other people offering security—the 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. Mr Grayling?

Chris Grayling

  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.

Chris Grayling

  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 is —

Andrew Bennett

  332. He said yes.
  (Mr Griffins) I said yes there is a likelihood.

  Chairman: There is a likelihood?

Chris Grayling

  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 of months?
  (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 form!
  (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.

Chris Grayling

  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 concerned.

  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.

Mr Stevenson

  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.

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