Open Skies Agreement (Membership) Bill [HL]

Baroness Randerson Excerpts

2nd reading (Hansard): House of Lords
Friday 26th January 2018 Lords Chamber

Moved by

[Baroness Randerson]

That the Bill be now read a second time.

[Baroness Randerson (LD)]

My Lords, I thank noble Lords who have agreed to take part in this debate today. I embark on the Second Reading of this Bill in the absence of a government commitment to emphasise the importance of the United Kingdom’s retention of the open skies agreement following EU withdrawal. Open skies is one of a suite of aviation-related issues that the Government need urgently to address. Others include the European Aviation Safety Agency the need for the free movement of skilled staff into and out of mainland Europe and UK border arrangements, with potential delays for both passengers and goods.

Since 1994, any EU airline has been free to fly between any two points in Europe, fuelling the rise of low-cost airlines and drastically reducing prices along existing routes. The UK has been at the forefront of these changes, creating an integrated aviation market with Europe. It is important to emphasise that much of the UK’s market access beyond the EU is also dependent upon our EU membership. For instance, our open skies agreement with the USA is simply by virtue of being an EU member. Signed in 2007, the EU-US Air Transport Agreement allows flights from any EU country to any part of the USA. It introduced closer regulatory co-operation and provides equal market access for any EU carrier. In 2011, Norway and Iceland acceded to the agreement too. Indeed, it was the US airlines that first alerted me to the international concern that the UK might end up in a position where our planes cannot fly.

The USA is our biggest trading partner outside the EU, but the EU, and hence the UK, also has similar agreements with a number of other countries, including Canada, Israel, Jordan, Georgia, Moldova and Morocco. At present, the UK has the third-largest aviation network in the world, carrying 144 million passengers and 1 million tonnes of cargo in 2015 alone. It is worth £52 billion annually to our national income.

Aviation is an enabler of economic growth and a creator of jobs. People use airlines to get somewhere, to do something and to transport goods. Without daily flights, the economy would stall and the whole system would freeze. Commercial airlines have revolutionised the way in which we travel and how we view the rest of the world. This is a case of seeing the world not just as a market but as a community. When we emphasise the importance of aviation to business, we need to remember the significance of travel for leisure and to reunite families. Even at Heathrow, our premier business hub, 60% of flights are for leisure and family-and-friends travel.

Open skies agreements between countries eliminate the use of government restrictions on commercial air carrier services, such as controls on capacity and pricing, giving carriers the ability to provide convenient and affordable air services. They give airlines the right to fly across the world. Prior to this, each country enforced control over its territorial boundaries with air, land and sea defences. An aircraft could be apprehended or even shot down if it did not obtain prior consent to fly over an area. I am not anticipating a return to that situation, but that emphasises the importance of these arrangements—and, indeed, how far we have come.

Brexit threatens to throw the industry’s intricate arrangement of routes and ownership structures into chaos. The open skies agreement referred to in the Bill comprises two components: the intra-European arrangement between us and other member states and the agreement between the EU and the US. Almost all flights in and out of the UK are governed under one of those agreements. If the Government truly want Britain to be “open for business”, the industry needs now to be assured that it will not be disadvantaged by the impact of Brexit.

The low-cost, short-haul sector of the aviation industry, including the airlines Ryanair and easyJet, have repeatedly called on the Government for those assurances. The current agreements have been the catalyst for the successes of budget airlines over the past 20 years. easyJet, for instance, holds an operating licence in the UK but relies on intra-European flights for more than 40% of its revenue, and continues ambitiously to expand its network of routes connecting Europe.

Twice in July last year, the Prime Minister and her Transport Secretary stated in Parliament that they had held discussions with their US counterparts on the issue of open skies, but still no assurances were forthcoming. In this case, there is no fallback position, no safety net, no World Trade Organization rules. This issue will not go away, because aviation agreements stand outside EU rules on membership. On the contrary, it is the issue of greatest urgency, because so much of our economy rests on the shoulders of the aviation industry. If you cannot fly, you cannot trade. It has to be fixed first.

If work is taking place on this just a few hundred metres away in Whitehall, why not set our minds at ease? This week, the Secretary of State gave a speech to airline operators. I know that the Minister was there, as was I. He said that,

“discussions on replacing these arrangements have begun and are progressing well. We will be meeting US officials for a further round of talks in the coming weeks”.

I hope that the Minister will share some more detail with us on this today, and place on record exactly the Government’s intentions. I would also welcome information on progress in talks with other third countries, such as Canada.

A recent EU Commission document sets out the options for the future. It looks at both the transition phase and the long-term situation and provides options for deal or no deal. It spells out, in technical terms, a picture of the limited rights and muffled voice we will have on issues such as market access and safety if the current arrangements do not continue. Evidence to the EU sub-committee, of which I am a member, even suggested that we might have to fall back on the elderly Bermuda II agreement in the event of no deal.

If the UK is to go it alone successfully, we must seek to retain the aviation rights which we were awarded as a member of the EU. The clock is ticking. Tickets for package holidays are already being sold for spring 2019, on the assumption that a deal will be in place. Airlines sell tickets a year ahead; tour operators up to 18 months ahead. They need the public reassurance that only the Government can provide. The nearer we get to March 2019, the more their customers will want certainty about the product they are buying. If an agreement is not reached, even transitorily, there would obviously be huge economic disruption. These agreements are fundamental to the travel of millions of passengers and the movement of billions of pounds of freight, while keeping the cost of air travel affordable for ordinary people.

My intention is as succinct as the Bill itself: to gain a clear commitment from the Government that the UK’s membership of the open skies agreement will be maintained, or that a new agreement on the same terms will be reached prior to Brexit, not just with the US but with the remaining EU states and with other third countries with which we already have agreements. This would ensure the future prosperity of the aviation industry and the country. I beg to move.

--- Later in debate ---

[Baroness Randerson]

My Lords, I thank all noble Lords who have spoken in this debate. My noble friend Lord McNally, in his inimitable manner, evoked Peter Sellers. I certainly cannot apply what I am about to say to everyone who has spoken today, but I remember Peter Sellers and I also remember that in those days—prior to the open skies agreement—we had restrictive ownership and a very limited concept of international travel. It is difficult to imagine those days if you did not live through them. The noble Lord, Lord Snape, emphasised with his quotation about the price of travel to Tenerife exactly how prices have benefited consumers in between. We now take for granted a simple, cheap and straightforward system of international flights. It has transformed not just our holidays but the way in which we live.

My noble friend Lord Paddick talked about the Government’s chaotic approach. Every time I feel myself being reassured by soothing words from the Government, up pops the Foreign Secretary or one of his allies—a “friend” or “close acquaintance” of the Foreign Secretary—to remind us that the Government do not agree with themselves about where we are going on this issue, let alone agree with the EU or those of us in opposition parties. So, despite good intentions, aviation could easily be the victim of a problem at the last minute.

My noble friend Lord Purvis charted the phenomenal growth of the aviation market and pointed out that membership of EASA crosses the Government’s own red line. With the outline that the Minister has given of the Government’s intentions on EASA, at the very best we will go from a leading role to a walk-on part, and that is very regrettable.

The noble Baroness, Lady Hayter, emphasised the urgency of the problem very effectively. There is of course a huge issue with consumer rights and legislation from the EU on delays, which gives consumers rights that people take for granted now. The Minister answered with some detail, which I will read with great care. She is always helpful within the scope of what she is allowed to say on the Government’s position on these negotiations. But I say to her that representatives of the industry first talked to me about the urgency in late 2016, and that I raised it first here at that time. Minister, the urgency has become very urgent.

We appreciate the importance of continued agreements and the Government’s efforts to devise ways round this but the Minister has emphasised how long it would take, or how difficult it would be, to get agreement across 27 countries and other partners. That says a lot about the complexity of the Government’s situation and how easily things could fall apart. I will comment briefly that the Commission’s paper is actually technical. It is not a rhetorical paper but a technical paper. The deals I refer to in the Bill are particularly beneficial to areas outside London. If we were forced to fall back on the Bermuda agreements of 1946 and 1977—which is another world in aviation terms—we would have to accept a restricted number of airlines and flights into London only.

There are probably ways around this issue, but I am still not convinced that the Government have the key to finding them. They face so many pressing issues on the Brexit process that there is a real danger that one of the eggs will be dropped, and I do not want it to be aviation. It is a hugely important industry across Britain. We should aim to be part of the European common aviation area. Whatever happens, we need to remain as close as possible to the current situation. Whatever caused people to vote for Brexit, they certainly did not vote for more expensive flights or more restrictive rules on travel, so it is essential that the Government take the lead and develop a sense of true urgency. I ask the House to give this Bill a Second Reading.

Bill read a second time and committed to a Committee of the Whole House.