Airports (Amendment) Bill [HL]

Lord Berkeley Excerpts

Friday 9th November 2012 Lords Chamber

[Lord Berkeley]

My Lords, I am grateful for the opportunity to speak in the gap. I apologise for not putting my name down. I did not think that I could be here. I find this a very interesting Bill, not least because it focuses on the issues of hub and spoke. As the noble Earl, Lord Caithness, suggested, there is more than one hub in the UK. He listed Gatwick, Stansted, Luton and Heathrow, but I suggest that Birmingham is an equally important hub of the future. It certainly seems to have intentions to become one. Once the sale of Stansted by BAA is complete, we will have five different airports in five different ownerships.

It seems to me that the objective of this—if there is an objective from the Government—is for the Government to do nothing about it and let the market decide, which is a good idea. Certainly, we have seen press comments that several of these airports are looking to be a so-called hub in their own right. I believe that there is a problem of suggesting that the only hub in this country is Heathrow. I think that the Government might get into trouble if they start designating slots in Heathrow but not in some other airports.

That moves me on to the designation of slots. I wonder whether that is right to do unless there is market failure. The noble Earl, Lord Attlee, recently gave me a Written Answer in connection with transport to the Isle of Scilly, which is the other end of the spectrum from Northern Ireland. It has rather less population but is a similar distance from the mainland and I would suggest that it has an even worse transport system. For me, surely a market failure means no or too few services, high prices, probably a monopoly supplier and not servicing the population as they would expect—although perhaps they expect too much. If there is a market failure, there needs to be an argument for saying that the subsidy is necessary to keep a service going, which certainly in Scotland is called a lifeline service.

I am aware that there are quite a few offshore islands and regions in the European Union where lifeline services are provided, which I think are all subsidised. Certainly, some of them are subsidised in Scotland. Mostly they are ferries but a few air services are subsidised. They are allowed under EU law on the basis that the subsidising authority goes out to tender in the usual way.

However, I question whether Northern Ireland is an offshore island in the same definition as some of the Scottish islands or the Isles of Scilly. If there was a subsidised service to Northern Ireland to a hub, which hub would it go to? If I was running an airport in one of the five airports around the south-east and the subsidised service went to another one, I would probably reach for the Competition Commission and ask whether it was fair. It is a case that would have to be made. There are quite serious problems about allocating slots at a particular airport for these services without it being a subsidised service and going through the whole process of justification for it, and whether there is any other way. I shall be very interested to hear what the Minister says when he responds.