Examination of Witnesses (Questions 340
WEDNESDAY 9 JANUARY 2002
JAMIESON MP, MR
340. Again, one of the main concerns of this
Committee in the past has been the whole issue during the bilateral
negotiations on Bermuda II of access to the American market. Are
you able to give us any indication of what, if any, progress has
been made on that rather thorny issue?
(Mr Griffins) From the last time I was before the
Committee on this issueand I can put this either wayI
am sorry to say that there has been little development in our
policy but, on the other hand, I could also say that our policy
has remained consistent and it remains that which was broadly
endorsed by the Committee at the time.
341. I share your view about the quality of
this evidence, I must admit. Could we be reminded of what is Her
Majesty's Government's policy on the whole issue of access to
the American market?
(Mr Griffins) What we want is a full and fair liberalised
market between us and the United States. If it was possible to
persuade the US Government to open their market totally, either/or
with both cabotagethat is to say foreign airlines serving
within the US marketsand/or waving their controls over
ownership and control of US carriers, that would be excellent.
342. It would be a miracle.
(Mr Griffins) It is worth aiming at eventually.
343. What happens if your aim, which is generated
by Government policy, (a) does not strike its target, (b) is not
within a million miles of it targets, in other words you make
no progress whatsoever on the critical issues of cabotage, wet
leasing and ownership? Can you give us any indication, Mr Griffins,
of progress which could be made that might satisfy the UK Government
as distinct fromI think what has been suggestedthe
US Government totally agreeing which is not going to happen we
know? Can you give us some idea of what you are looking for as
a reasonable compromise before you would agree to changes to the
(Mr Jamieson) If I can say in a broad brush way, the
scenario that you painted, where the Americans would not concede
to anything, clearly would not lead to any agreement being made.
We have to strike an agreement and all these things are negotiations
where we have to give and take. We would have to strike an agreement
which was of some advantage to the United Kingdom. Any bilateral
agreement could not be wholly to the advantage of the other party.
We would have to be getting considerable advantages out of it
before we would sign up to it.
344. Those considerable advantages, Minister,
would include some progress on cabotage, ownership, wet leasing,
(Mr Jamieson) They could do. There would be a package
of things which would have to be to our advantage and some of
those things could be component parts of it.
345. Just getting back to Mr Griffins' point
about slots, is not the reality the capacity constraints at Heathrow
and Gatwick mean that the practical effects of any agreement are
going to be somewhat limited?
(Mr Griffins) I can answer that point while picking
up the last point too. Pending nirvana, that is to say the fully
liberalised market which the Committee's common sense tells it
will be a long time coming, the pragmatic approach is to find
another way pro tem. The other way is to get access for our carriers
to the US hinterland through alliances. Alliances, however, have
to be acceptable to the competition authorities and such remedies
as the competition authorities requireand you have heard
different arguments as to whether there should be anyneed
to be accepted by the carriers involved. Given that that happens,
and it is a big given, the quid pro quo for that would be access
to Heathrow. Slots we are told, and the carriers make this point,
are available and can be made available. It is not for this part
of Her Majesty's Government to opine on what might flow from the
competition authorities' consideration, that is to say our own
competition authorities and the Department of Transportationthere
is an important point therein the United States. Were that
also to release slots clearly there are more slots available there,
were that to happen.
Mr Stevenson: So any pragmatic agreement based
on access through alliances would be in the Government's own pro
346. Awaiting nirvana.
(Mr Griffins) Yes, we would prefer nirvana.
Chairman: I imagined you were defining the third
347. Very last question. Given that we are told
that even in the current situation Heathrow is up to capacity
on slots, if not over, and you have said, Mr Griffins, that the
quid pro quo would leave slot availability in Heathrow, and you
are told that slots could be made available, where in your opinion
would those slots emerge from?
(Mr Griffins) I think I said the quid pro quo would
be access to Heathrow.
348. There would not be any slots to back it
up but they would have the right to look for them if there were?
(Mr Griffins) Yes.
Andrew Bennett: There would not be the slots
to Manchester and Teesside and places like that.
349. You see I think what we are really saying
to you, Mr Griffins, is that if you look at the summary of slots
requested and allocated at major UK airports, whilst we are quite
sure that you mean well when you tell us that these are the slots
that are being requested, the slots requested, summer 2001, 335,419
at Heathrow, 206,419 at Gatwick, slots allocated, ones available
in other words, 282 and 174. So it does rather look as if your
slots are not there. What you are really saying to us is one of
the suggestions of the third way is that people would have the
right of access but unfortunately what they would not have would
be access, or do I misrepresent you?
(Mr Griffins) May I answer?
(Mr Jamieson) Yes.
(Mr Griffins) I do not want to monopolise the answering
350. No, you have had long enough to think now,
(Mr Griffins) What I think is on offer is not guaranteed
slots with access.
351. Yes. Careful, you are almost getting round
to answering my question.
(Mr Griffins) There are slots there. There is movement
in the slot market. We, the UK, would like to see greater movement
in the slot markets. We are pressing in Europe to shift the regulation
which does control this. We are pushing to get variations in that
regulation in a number of ways to facilitate a market in slots
and, as I think I said last time, to give Member States a greater
flexibility in how they can control the slots vis a vis their
own regional services. That flexibility, which was referred to
earlier this afternoon, is exceedingly limited as it stands at
352. Would it not mean that inevitably if the
deal was done along the lines we have discussed over the last
few minutes, and given the demand for slots at Heathrow is not
matched by the capacity, that is clearly the case, historically
that is the case, that the pressure on airlines, such as British
Airways, to curtail their regional services and allocate those
slots to the alliance, would that not be almost inevitable, it
would be inevitable that would happen, in that circumstance, what
would be the position of the UK Government?
(Mr Jamieson) Perhaps if I could take that. Firstly
in terms of the negotiated agreement. The negotiated agreement
could give access to Heathrow but I think what Mr Griffins is
saying is it would then depend on the availability, just as any
other airline has to depend on the availability of those slots
before they can get access in reality. At the moment they do not
have the access at all but to get that access they would have
to trade those slots in some way. I fully understand your feeling
about regional airlines. The argument often put up by British
Airways is that the slots that they use for their regional services
interline and feed in to their international services. So the
argument they usually put up is that is the reason they keep them.
I think if we found ourselves in a circumstance where there was
severe pressure on regional slots we would probably then get in
requests for public service orders and protection of those slots
from various parts of the country. At the moment, of course, that
is not happening, we have only got one request in at the moment,
but we would obviously have to react to that changed circumstance
as it came along.
Chairman: I want to go as quickly as I can.
353. On the final point you made on public service
obligation orders, if you can anticipate the situation developing
further, should you not be making preparations now?
(Mr Jamieson) I do not think so, no, because at the
moment particularly into Gatwick where many of the services go,
there is no real pressure on their slots and slots are becoming
available. We were under pressure for a while over BA coming out
of Belfast, and we could have made all sorts of preparations,
but what we found was that in fact another airline stepped in
and I think the evidence you had before you at your last oral
session was that British Airways said that they were losing on
that particular line but another airline stepped in and said it
was the best line that they had. I am not sure that we can prepare
for that circumstance. We will have to see what happens. We would
listen very carefully, as we have in the case of Inverness who
has made an approach to us, and we have listened very, very carefully
to the argument they have put forward for protecting their slots
from Inverness to Gatwick.
354. Do you have a concern about withdrawal
of regional links in terms of the impact?
(Mr Jamieson) The simple answer to that is yes. Regional
links are absolutely vital and the more peripheral the areas are
in the country the more important those links are, particularly
for inward investment, and I am thinking of some of the more far
flung parts of the country, Scotland and Cornwall come immediately
to mind, as areas where there is still fairly low inward investment
and still some economic development to be made, and strong arguments
will be put forward in those areas. So the simple answer to your
question is, yes, we would have concerns.
355. Do you have any proposals to support the
Air Travel Trust Fund to assist travellers who have been let down?
(Mr Jamieson) We do support it already, as you know.
We have underwritten somewhere in the region of £10 million
of overdraft on that particular fund when pressure was put on
it some years ago. The bonding arrangements have worked successfully
up to now. If there were further pressure on that fund then we
would have to act appropriately. To take that matter further,
we would actually need primary legislation. If there were the
pressure on that fund and if the circumstance arose, then of course
we would come to Parliament and bring that legislation forward
if the circumstances arose.
356. But are you preparing that legislation
because requests have been made over a number years?
(Mr Jamieson) I think the answer to that is simply
357. Have the Department offered the Airline
Group of NATS additional funding?
(Mr Jamieson) NATS have made an approach to the Government
for additional funding.
358. Can you tell us how much that is?
(Mr Jamieson) There is no actual figure that we have
been asked for but they have come to us as a shareholder not as
the Government. As a shareholder they have approached us, they
have also approached the Airline Group. Our response to that is
obviously we are looking at that and negotiating with NATS. We
have obviously got to make an assessment of how the cash flow
improves over the next few weeks and monthsand that is
very uncertain at the momentand on the basis of that we
will make our reaction as a responsible shareholder in the company.
We are still the largest shareholder, 49 per cent, and we will
react as any responsible shareholder would.
359. Given that the Government had adopted at
the time of the transfer, the two-centre strategy as part of the
Bill and the Act, would it not be sensible if you are giving them
money to ring-fence that money in order to make damn sure that
Prestwick continues in its investment programme?
(Mr Jamieson) NATS are still completely committed
to the Scottish sector and so is the Government. We were asked
by NATS after 11 September if there could be a pause in the building
programme there and we acceded to that because of the massive
reduction of income they had at that particular time. We are still
totally committed to the centre but it will, of course, depend
on how the industry picks up in the next weeks and month. I said
earlier some of the indications are fairly optimistic that it
will pick up, but we will have to gauge that on a month-by-month
basis as we go on but the commitment is still very strongly there.