Aviation

Julian Huppert Excerpts

Wednesday 4th July 2012 Westminster Hall

[Mark Reckless]

There are two problems: first, the treaty of Rome gives property rights in-slot to airlines that have traditionally had them, which prevents new airlines from coming in with marginal routes to new emerging market countries, due to the cost of buying out the monopolist. Only more and more fights to New York or Hong Kong make such routes work. Secondly, the previous Government protected the monopolistic BA with restrictive agreements that prevent Brazilian airlines from flying here, saying that there should be no more than 35 passenger services a week and allowing only 31 a week to China. If we want more flights to emerging markets, we should just let Brazilian and Chinese airlines fly to any UK airport they want, without insisting on reciprocal rights for BA. That is what is holding the country back; the interests of Britain are not the interests of BA.

The final section of my speech is about our other airports. In 2010, we rightly said no to an estuary airport and to extra runways at Gatwick, Stansted and Heathrow. That was the right policy for this Parliament. I do not know the Liberal Democrat position on when or if there should be future runway capacity in the south-east, but it is right that the Conservatives at least look at the case for new runways as and when demand requires. A lot can be done with existing capacity. Gatwick is expanding strongly and setting up point-to-point routes in new emerging markets, which I welcome. That would be helped if Gatwick were allowed to invest in the A380 facilities by charging more and coming to its own arrangements with new airlines to build those facilities without existing suppliers having a veto. I would support greater deregulation of Gatwick in that regard.

I understand that the option now being promoted by the Mayor of London is Stansted. Since the previous White Paper and the Labour Government’s view, usage at Stansted has fallen off significantly and intercontinental flights there have stopped. The Mayor says that we should expand Crossrail to Stansted, and I am keen to discuss that. He may have ideas that I have not appreciated fully, and that are certainly a lot more constructive than his pie in the sky proposals for a Thames estuary airport.

[Dr Julian Huppert (Cambridge) (LD)]

I congratulate the hon. Gentleman on securing the debate. When I spoke to those at Stansted recently, they made it clear that, given that the airport was at only 50% capacity, they want no more discussion of a second runway—that just messes up their relationship with the local community. Stansted wants a better rail service. I hope that he will support that.

[Mark Reckless]

That is certainly the position in the short-term. I am keen to see better surface travel into Gatwick. The deterioration in the train service there is most unfortunate. Investment is strongly in the national interest.

The British Chambers of Commerce initially proposed a “Heathwick” arrangement. There are some issues with the economics of it, but the existing system is the reason why it could be attractive. If we allowed Gatwick to invest £5 billion in a super-fast railway to Heathrow—by the way, BA, it would take 15 minutes airside, rather than an hour to connect them—it would be regulated capital and would lead to higher slot prices at Gatwick, which is a good thing anyway. Our problem with aviation in this country has been that we have held down the cost of landing fees at Heathrow and Gatwick, which means that they are operating at near capacity with all the problems mentioned. If we allowed landing fees to rise and entirely deregulated Gatwick and Heathrow, there would be a big transfer of economic value from the airlines to BAA.

Another way to do it would be differential APD, particularly on short-haul flights at Heathrow. Because we could get the cost back from higher landing charges at Gatwick, Heathwick, although not ideal, might make sense within the existing system; it would press out some of the leisure point-to-point flights from Gatwick and allow intercontinental flights to come there.

From Heathrow’s promoters, we hear that it is a great hub, that we need just one hub and that Paris Charles de Gaulle has more destinations than us, but those destinations are in French west Africa—Mali, Bangoui and Ouagadougou. I do not think that there is any suggestion that that should happen from Heathrow. Most demand is leisure, not business. Heathrow still flies more people and planes than other airports, even those with four or six runways.

We do not necessarily need a hub that is ideal for those who happen to operate that hub. There is a suggestion that a dual-hub is not ideal. That is true, but it is an awful lot better than no expansion and forcing more and more people to use European airports. According to the constrained Department for Transport forecast, which I find questionable in a number of ways, if we do not allow expansion in the south-east, 25 million rather than 4 million people will fly from Belfast by 2050 and 12 million people rather than 700,000 will fly from Exeter by 2030.

I question the plausibility of those forecasts, but if we deregulate air travel and allow a second runway at Gatwick in due course, after the agreement runs out in 2019—I agree with the hon. Member for Cambridge (Dr Huppert) that it should not be immediately—it will make it more attractive for the airline to expand in the airport. At some point, the Liberal Democrats may think that we will need at least one runway in the south-east. The strongest demand from the vested interests is for that to be at Heathrow, but there is a strong argument for the country as a whole for it to be at Gatwick. It would benefit from being there because we would then have competing hubs, with potentially another airline alliance based at Gatwick. It would drive down prices, serve more destinations and operate for the benefit of UK consumers as a whole, rather than just those who happen to have the strongest vested interests and shout loudest in current consultations.

--- Later in debate ---

[Dr Julian Huppert (Cambridge) (LD)]

I congratulate the hon. Member for Rochester and Strood (Mark Reckless) on securing the debate.

We are world leaders in the aviation industry. London is the best connected city in the world, with seven runways operating at six airports, and Birmingham, Manchester and Edinburgh all pose formidable regional challenges to the dominance of the south-east. Gatwick is opening new routes to China, Vietnam and South Korea. British Airways has global alliances for massive hub operations. Airlines are competing to make use of the capacity we have, particularly since the BAA monopoly was broken.

However, there are constraints. By 2050, the UK must cut its carbon emissions by 80%. That is an important and challenging task, and if we allowed unconstrained expansion of aviation, as has been suggested by some Members, I believe that it would be all but impossible to achieve it. Given the environmental constraints, what kind of growth can we manage to have?

In 2009, the independent Committee on Climate Change said that if we are to meet our 2050 target, the aviation industry must not emit more than around 37.5 million tonnes of carbon dioxide a year by 2050. Allowing for increased plane loads, new technology and fuel improvements, that allows for a 60% increase on current passenger numbers to around 368 million passengers per annum. That is the carbon budget that we can have.

What is the capacity constraint? We have enough spare capacity in this country already. We can get to the limit imposed by our environmental obligations without any new runways anywhere: not at Heathrow, not at Gatwick, and not at Stansted. That is why the Liberal Democrats oppose the expansion of the airports in the south-east. We have spare capacity, and if we were to build more capacity and make use of all of it we would do irreparable damage to our global environment.

It is very hard to forecast demand, as the old “predict and provide” approach of the previous Government tried to do. Even in the US, the Federal Aviation Administration says that it is not possible to make reliable forecasts beyond 2030, so I simply do not understand how any Government think they can forecast demand to 2050. That is particularly true given that, with the possible exception of the Secretary of State for Business, Innovation and Skills, people are very bad at forecasting recessions and other economic changes.

We also have local environmental problems that make a huge difference to our nation’s well-being. One in four of all those in Europe who are affected by aviation noise live under the Heathrow flight path. I find it astonishing that so little has been done about that, and that the previous Labour Government were so keen to keep blindly increasing Heathrow. Now Labour are completely and utterly unclear as to what their policy on Heathrow expansion is; if the hon. Member for Poplar and Limehouse (Jim Fitzpatrick), the shadow Minister, wants to try to say what it is, I would be delighted to hear from him. No?

Aviation planning has categorically failed to take account of the north-south divide, and how we can ensure that we provide decent air quality and access to decent public transport. About half of all emissions from aviation are actually caused by the ground access to the airport rather than by the planes themselves. Rail access, which is being called for by so many airports now, is critical in reducing those emissions.

This is a very abbreviated speech so I cannot go through all the detail. What is the way forward? I have been very clear about Heathrow, Gatwick and Stansted; I say a big “no,” and I am delighted that that is what the coalition agreement says. I have also been very clear about what we need to do to control UK aviation policy. We need to get the greatest hubbing potential that we can and achieve the greatest economic benefit possible, given all the constraints.

We should support growth, such as we are seeing at Gatwick; a fifth of Gatwick’s capacity is still free. Gatwick is doing well and it wants a new rail service. Stansted is half-full; its big call is for a new rail service, not a new runway. Birmingham is looking to expand and Manchester already has two runways. We need to provide the rail links to make those airports work.

We also need to reform air passenger duty. It is poorly designed, has a number of anomalies and favours short flights for which there are overground alternatives. We should be moving towards a per-plane duty. We should introduce new noise limits in population centres to incentivise quieter planes, and tough requirements for low-emission surface access, to reduce the overall impact. We also need to support the European Union’s emissions trading scheme, to promote the “polluter pays” principle.

What about the hub? Although the Government have done well to rule out proposals for a third runway and other expansion, we should also put an end to talk of mixed-mode operations at Heathrow. They cause damage to the air and through the noise they create; they are a non-starter and provide very little benefit. Heathrow is badly located, and mixed-mode operations would give all the pain with little of the gain. We need to move point-to-point flights elsewhere, as has been discussed, reform the EU allocation rules and perhaps consider a departure tax. Heathrow is not the place for a hub airport, but as Members have said, Boris island is certainly not right either, for a whole range of reasons; it is expensive, there is a higher risk of bird strike and it does not serve the north.

Our consideration of where to have a new hub needs to be subject to some serious constraints: a strategy for removing excess capacity above the climate change cap outside the airport; no net increase in the number of UK runways, so that we would have to close some to make up for new openings; greater recognition of the need to serve both north and south; and significantly lower noise impacts than at Heathrow. We could have something that is better both economically and environmentally, and I hope that the Government will consider the matter very carefully.

--- Later in debate ---

[Jim Fitzpatrick]

I assure the Minister that if I finish what I have to say by 10.47 or 10.48 am, I will give way to her, but I want to get my points on the record.

The hon. Member for Orpington (Joseph Johnson), who is no longer present, gave a couple of quotes from the Mayor of London’s briefing. To save time, I will not repeat what he said, but he did not cite two points—although others have mentioned this—relating to the loss of visitors to the UK. The Mayor’s briefing states:

“While France and Germany each managed to attract between 500,000 and 700,000 visitors from China in 2010, the UK had only 127,000. In total, France earns £1.3bn per year from Chinese tourist spending on visits in the country, compared to the UK’s Chinese tourist spending receipts of £115m.”

It also notes:

“France’s hub airport, Paris Charles de Gaulle (56 departures per week), has better connections to Brazil than Heathrow (27 departures per week). In 2009, inward investment from Brazil totalled $800m in France, and only $1.7m in the UK.”

The Mayor has a strong argument on those figures.

The Government seem to accept that there is a capacity issue. In the Budget statement, the Chancellor referred to south-east capacity, as did the Prime Minister in response to a question from the hon. Member for Richmond Park (Zac Goldsmith) during Prime Minister’s questions. As I have said, we are waiting for the Government’s consultation document to indicate their likely direction of travel. Constraints on aviation, whether from a lack of capacity or lack of investment, will not stop flights happening—or increasing. As Members have said, those constraints will simply displace flights from the UK to Schiphol, Charles de Gaulle or elsewhere.

The hon. Member for Rochester and Strood effectively articulated the arguments against the proposed estuary airport. He made some interesting points about EU competition law, and I will consider them carefully.

My hon. Friend the Member for Blackley and Broughton (Graham Stringer) spoke with great authority on the issue, as he always does. He mentioned in passing other factors that affect aviation, such as air passenger duty, which was also mentioned by other colleagues. Nobody developed the argument, but APD is a huge factor in whether people decide to go to the UK or elsewhere in Europe. Given that it brings in between £2 billion and £3 billion for the Treasury, it will not surrender APD, but that is a factor and it needs to be looked at.

Another big issue that affects our economic performance is visas and the obstacles we place in the way of people who want to come to the UK, particularly from China. Moreover, as we discussed at length during deliberations in the Civil Aviation Bill Committee, the performance of the UK Border Agency—I accept that it is not the Minister’s responsibility—is harming the way that potential tourists and business visitors perceive the UK, because of what they read and hear in the media.

Lack of time meant that we did not have the opportunity to hear a lecture by the hon. Member for Blackpool North and Cleveleys (Paul Maynard) on hub dynamics. I would be interested to read it, so perhaps he could send me a copy. He made the point about the decline in our aviation industry and the rise of Schiphol and Charles de Gaulle.

The hon. Member for Strangford (Jim Shannon) reinforced the points about connectivity and regional access, and the hon. Member for Cambridge (Dr Huppert) raised the issue of emissions. That issue has to be addressed, and we were addressing it when we were in government. The industry was confident that it could meet the levels set, but it meant using the emissions trading scheme, with the expectation that emissions would rise and that the industry would have to offset them elsewhere within the industry.

[Dr Huppert]

Will the hon. Gentleman give way?

[Jim Fitzpatrick]

I assure the hon. Gentleman that I have nearly finished—I have three minutes left—and will give way to him when I have done so.

As I was saying, the industry was confident that it could meet the levels set, but the bottom line is that Lib Dem policy on aviation is the obstacle to the Government having any policy at all, certainly before 2015.

The hon. Member for Poole (Mr Syms) mentioned the need for more capacity and made the case for Stansted, and the hon. Member for Amber Valley (Nigel Mills) asked how we can give more support to regional airports and proposed deregulation.

The aviation industry and Britain’s wider business community came together last week to call for a cross-party consensus on aviation that lasts beyond the term of one Parliament. For several months, the shadow Secretary of State, my hon. Friend the Member for Garston and Halewood (Maria Eagle), has repeatedly offered to take the politics out of aviation, put party differences aside and work together on a joint aviation strategy for the good of the nation. It is a clear, unambiguous offer, with no catch. Aviation matters to the country, the economy and businesses and families throughout the country. It is an industry that needs stability in the long term and a long-term plan that straddles Parliaments and Governments. We must not repeat the party political wrangling that turned the proposed third runway at Heathrow into a political football, and we must agree to stick to the agreed strategy, whatever the outcome at the next election.

[Jim Fitzpatrick]

The Minister knows that we had a game plan in place, but we lost the election. Then, as a gesture, to try to achieve national consensus on this important issue, we said that we would drop support for the third runway so that we could have cross-party talks. We have not even had the courtesy of a reply from the Secretary of State for Transport about engaging in talks. Until the Government introduce their consultation—it is they, not the Opposition, who are responsible for creating aviation policy—it is a bit rich of the Minister to ask me about policy.

[Dr Huppert]

The hon. Gentleman said that the Labour party dropped its support for the third runway as a gesture. Will he be clear on what his party’s policy is now? Is it against a third runway, or is it merely in favour of having a blank page that can be filled with anything in future?

[Jim Fitzpatrick]

The hon. Gentleman tempts me to respond but, given that I fully explained our policy during a five-minute discussion only two days ago, I think that he knows what it is, and that he is just playing games to try to throw me off. He knows that we are in the throes of devising our aviation policy, and I assure him that it is likely to be formulated way before the coalition reveals its policy, which we do not think will be published until 2014, or even 2015.

Finally, I have the following questions for the Minister. What is it that the Government will publish? How long have we been waiting for the documents? What exactly will they consult on in the documents and—the most important question of all—when will we see them?