Open Skies Agreement (Membership) Bill [HL]

Baroness Hayter of Kentish Town Excerpts

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

[Baroness Hayter of Kentish Town (Lab)]

My Lords, I too thank the noble Baroness, Lady Randerson, for this imaginative way of focusing the Government’s attention on a vital and urgent issue. Quite simply, if we do not get this right, British carriers may not be able to fly domestically within the EU. As the EU’s ad hoc working party on Article 50’s internal discussion paper of 16 January states, as a “third country”, the,

“UK ceases to be part of fully liberalised EU aviation market”.

It is clear that in Brussels, work is moving apace on this, an area of great urgency since there is no fallback WTO position, as we heard from the noble Baroness, Lady Randerson. A decision is therefore critical. Airlines need to know within weeks whether they can continue current routes in 15 months’ time. Schedules and slots are decided early, with ticket prices, ticket sales and therefore the prices of package tours following soon after.

I am aware that talks are ongoing and will resume on Tuesday between the UK and US on new bilateral air services arrangements for after our exit or following any transition period. While we know that both sides want to protect current market access between the two countries, we need a reassurance from the Government that this will not come at the expense of our continued close relationship with or membership of the EU’s single aviation market—from which UK airlines and passengers have benefited, as we have heard today—along with the related agreements between the EU and third countries beyond the US, which again have benefited our travellers. Our participation in the single aviation market allowed the UK to develop the largest aviation network in Europe and the third largest in the world, providing significant economic benefits through inbound and outbound tourism, our trading links, investment in the infrastructure of airports and access to them, while providing British citizens with a wide variety of destinations.

Having mentioned the advantages to British citizens, I raise the issue of the future of important consumer rights if we fall out of the single aviation market: whether the EU’s flight delay regulation 261/2004 will continue to apply once we leave the EU. For example, regarding an EU airline flight from a third country to the UK, or a UK airline flight from a third country to an EU 27 member state, what protection will there be for consumers in any delay? As this issue obviously cannot be covered by the EU withdrawal Bill as it depends on reciprocity, and as we would no longer be a member state for the purposes of the current regulation, we will be highly dependent on the Government negotiating this compensation package, presumably in the withdrawal deal or, more likely, in the subsequent agreement. Alternatively, and definitely preferably, our association with or membership of the single aviation market could perhaps include retention of the EU’s flight delay regulation 261/2004. Would the Minister respond in writing, or today if she can, as to whether the Government are already pursuing such a possibility?

Looking more broadly at the value of this industry to our economy, according to the travel trade association ABTA, outbound tourism directly sustains more than 200,000 UK jobs and supports another 170,000 indirectly. While outbound tourism brings significant financial benefit to the destination countries in Europe, it also benefits the Exchequer, with UK travellers spending about £300 on goods and services in preparation for those foreign holidays before they have even taken off. Such outbound tourism is worth about £12 billion a year.

Meanwhile, the aviation industry is worth £52 billion to our national income and it contributes £8 billion in tax a year. It supports about 960,000 jobs, one-third of a million in the sector itself and perhaps another one-third of a million indirectly. Furthermore, UK cargo airlines handle millions of shipments every month —predominantly high-value and time-sensitive parcels —across the globe. These services play a crucial role in maintaining UK businesses’ global competitiveness and connectivity with the EU and other international partners. Any disruption to the UK’s connectivity would harm the growth of UK businesses globally. Given that UK tourism is worth about €37 billion a year to the EU 27, and that aviation and good air transport links are vital to the continuing success and growth of the UK economy, but also that of our EU counterparties, we hope the Government will be able to negotiate our continued participation in the single aviation market.

Indeed, what is needed is us being “very modestly apart”, as I believe the expression is—though the overnight squabbles between the Chancellor and No. 10, at the behest of Jacob Rees-Mogg, give little confidence that the Government are up to the task of negotiating the price of a second-hand car, let alone the future of our economy. Today’s papers are full of the row, with Iain Duncan Smith saying he is pleased that the Chancellor has been contradicted by No 10—did you hear that? He was pleased that our Chancellor of the Exchequer has been contradicted by the Prime Minister. In contrast, another Conservative MP said that the Chancellor was spot on and that the Prime Minister should support her Chancellor and not give in to an unrepresentative, ideologically driven minority. That was a Conservative; it was not even from this side. But seriously, the coverage, attention and energy that go into all this waste the chance to make a clear statement to the EU and more widely on how Britain sees its future after Brexit and on what sort of deal it wants with the EU 27.

The Minister will be well aware of what Airlines UK, which represents the airlines, needs after Brexit: most urgently, a transition phase based on current rules and regulation, open access and full participation of the European Aviation Safety Agency. However, the EU 27 could exclude us from the safety agency because that membership is contingent on accepting the jurisdiction of the ECJ. Without it, there would be increased certification costs for airlines, manufacturers and maintenance companies, while the CAA would have to take responsibility for ensuring that they all adhered to safety rules, raising questions about its capacity—as we have just heard from the noble Lord, Lord Purvis.

Given such urgency, it is vital that aviation is dealt with separately and in advance of the main negotiations with the EU and that priority is given to safeguarding EU, US and international market access for our aviation industry. If it means the Government quietly rubbing out a red line and accepting some ECJ role in aviation, then so be it. Is not the economy rather more important than red meat demanded by Conservative hard Eurosceptics?

The aviation industry will need many things that go well beyond this Bill, particularly being able to employ staff from across Europe and having no further restrictions on borders. We will press these issues on other occasions and in other Bills, but their importance to the Minister’s transport portfolio means that I would welcome some reassurance from her that her department’s representations to the Home Office and other departments are making clear the importance of such issues.

Aviation is unique within Brexit negotiations. There is no WTO fallback; there is an urgency replicated in few other sectors; it is an industry on which almost every other sector depends; it is important to tourism, and it is of mutual benefit to the UK and the EU 27. It is vital that we reach a comprehensive air transport agreement with the EU that maintains the current level of market access and traffic rights. I look forward to hearing the Minister’s reassurance on all the points raised today.

--- Later in debate ---

[Baroness Sugg]

I shall come to EASA, but that will not be included in the UK-US bilateral agreement that is being discussed; that will be a separate negotiation and conversation with the European Union. On the timing of ratification, I am afraid that I shall have to get back to the noble Lord, but the aim is that this will be in place well before we leave the European Union, to provide certainty.

The noble Lord, Lord Paddick, and the noble Baroness, Lady Hayter, asked about customer protection. The UK has always been a leader when it comes to providing protection for holidaymakers, and we want that to continue to be the case whether we are inside or outside the European Union. The consumer protections based within the EU will be retained through the European Union (Withdrawal) Bill, so that British consumers will be able to rely on the same rights as they have now after we leave the EU. The absolute aim is to provide consistency with what they currently have.

The noble Lord, Lord Purvis, raised EASA. We are working closely with industry on this and, of course, we are very aware of all its views and what is needed for the sector. Again, we desire a speedy agreement on this. We are representing those views very clearly in our conversation with the EU, and will continue to keep the sector updated as negotiations progress. There is a precedent for non-EU states to be part of EASA; Switzerland and Norway are, for example. We continue to examine the possibility and suitability of such an arrangement.

On the CJEU, the Government have been clear that the UK will no longer be subject to direct CJEU jurisdiction after we have left the EU. There are models—

[Baroness Hayter of Kentish Town]

Given that that is not quite the case, in that EU citizens will have some access to the ECJ for eight years, perhaps the Minister could accept that it has not been completely ruled out, as much as it had before.

[Baroness Sugg]

In the case of EASA and the CJEU, there is an example where non-EU countries are able to participate in EASA without the direct jurisdiction of the CJEU. It is a co-operative arrangement, and that is exactly what we are looking to replicate.

The noble Baroness, Lady Hayter, and others mentioned the Commission paper. I have seen the presentation, which looks like an opening position from the Commission, drafted with its own interpretation of the UK position. It is clearly designed to be thought provoking and to ensure that member states focus on aviation issues. The paper sets out a number of options but also makes it clear that, in the unlikely event of a no deal, there will be contingency measures to ensure traffic rights and safety. As many noble Lords acknowledged, we have no WTO fallback on aviation, so it is encouraging that aviation is one of only two sectors that have been considered by the Commission in such close detail. We are pleased that the EU considers aviation to be such a priority—we feel that, too—and we look forward to conversations progressing.

I agree with many points raised by noble Lords this afternoon. We all want to continue open and liberal access to our skies after we leave the European Union, and we have all explained why this access is so important. I hope that I have provided some assurance that that is exactly what we are working towards—although I imagine that the noble Lord, Lord McNally, would categorise it as vague promises of better things to come. I apologise if that is the case. We will ensure that we keep your Lordships updated as negotiations progress. I also confirm that I was in no way offended by the noble Lord reading back my own words to me—but I am very interested to know what his job was in the circus.

The noble Baroness, Lady Randerson, has helped to highlight the importance of the UK-US air services relationship and the vitality of the current market. This relationship and vitality are things that we intend to preserve and to build on. However, the Government believe that the Bill is not necessary. It requires us to do something that we are already doing: to have regard to the desirability of continuing to participate in the EU-US Air Transport Agreement. We do not believe that we need another law on the statute book in this respect.