The Secretary of State for Transport (Chris Grayling)
With your permission, Mr Speaker, I would like to make a statement about the steps the Government have been taking to support those affected by the collapse of Monarch Airlines, in particular the 110,000 passengers left abroad without a flight back to the UK and the almost 2,000 people who have lost their jobs.
This situation is highly regrettable and all parties considered options to avoid the collapse of the company. Ultimately, however, Monarch’s board took the decision to place it into administration and it ceased trading at around 4 am on Monday 2 October. The engineering arm of the group remains a viable business and continues to trade. Ahead of the collapse, my Department had been working closely with the Civil Aviation Authority and several Departments across Whitehall to prepare contingency plans, and the response since last week has been swift and substantial.
To put the situation into context, this operation is the largest of its kind ever undertaken. The CAA has essentially set up one of the UK’s largest airlines to conduct it. Let me give Members a sense of the scale. We have put arrangements in place to bring back 110,000 people to the UK, with 700 flights over a two-week period. We have had a maximum of 35 aircraft in operation at any one time. The CAA is working to secure planes from 27 different airlines. More than 200 CAA staff are working on the project with thousands more in partner organisations taking part. There are 40 airports involved in the UK, around the Mediterranean and beyond. That has required 267 coaches carrying more than 13,000 passengers, and so far there have been more than 39,000 calls to our customer service centres, all swiftly answered by more than 250 call centre staff. There have been more than 1 million unique visitors to a dedicated website— monarch.caa.co.uk—and 7 million page views. Furthermore, more than 1 million people have been reached through our Facebook promotion. Ten Government Departments and agencies have been involved, including the Foreign and Commonwealth Office in London and our extensive diplomatic and consular network in the affected countries.
I have seen at first hand the work being done across Government and the CAA to make this operation a success. I have spoken to some of the passengers who have returned to the UK on Government flights. I have been hugely impressed by what I have seen, and we have had a very strong, supportive response from the passengers affected, many of whom deservedly praised the CAA and all the Departments involved in this enormous operation.
Normally, the CAA’s responsibility for bringing passengers back would extend only to customers whose trips are covered by the air travel organisers’ licence scheme, but this is the largest airline failure in UK history and there would have been insufficient capacity in the commercial aviation market to enable passengers to get home on other airlines. The danger was that tens of thousands of passengers abroad would have no easy means of returning to the UK. That is why I instructed the CAA to ensure that all those abroad were offered an alternative flight home. As of last night, around 80,000 passengers had returned to the UK; that is almost three quarters of the total number who were abroad at the time of the collapse. We have had teams of Government officials at overseas airports providing advice and assistance to passengers.
Despite those robust plans and the smoothness of the operation so far, the situation is hugely distressing for all concerned. Obviously, it has been a priority to get people back to the UK, and our hearts go out to those who have lost bookings as a result of the collapse, but in addition to supporting passengers we have been focused on working to ensure that the almost 2,000 former Monarch employees receive the support they need. I am pleased to report that airlines have already directly appealed to those former employees. For example, Virgin Atlantic is offering a fast-track recruitment process for cabin crew and pilots, and easyJet has invited applications for 500 cabin crew vacancies. I and members of my team spoke to the airlines when it became clear what was happening to try to secure their help in getting those opportunities for staff, and I am pleased to see that coming to fruition. easyJet is also calling for direct-entry captains or first officers who meet captain qualifications.
All former Monarch employees will have received information from Jobcentre Plus outlining the support available to them. In total, Jobcentre Plus has pulled together a list of more than 6,300 vacancies across the major UK-based airlines—that is more than three times the number of people being made redundant—which I hope will help those former employees to remain in the airline business. The Minister with responsibility for aviation has been in contact with Members whose constituencies have been hardest hit by these job losses. They have our assurance that we will work with them and the industry to offer what support we can.
I am also aware of the Government’s duty to the taxpayer. Although affected passengers have been told they will not have to pay to be flown back to the UK, we have entered into discussions with several third parties with the aim of recovering the costs of the operation. The ATOL scheme of course provides financial cover for those with ATOL protection. We are currently engaged in constructive discussions with the relevant credit and debit card providers so that we can recoup from them some of the cost to taxpayers of the repatriation flights. We are having similar discussions with other travel providers through which passengers may have booked a Monarch holiday, and I thank all those with whom we have held discussions for their constructive and realistic approach.
The initial response to this unprecedented situation would not have been so successful without the support and co-operation of many players. I am sure we would all say that the loss of a major British brand that was close to celebrating its half-century is a really sad moment. However, it should not be seen as a reflection on the general health of the UK aviation sector, which continues to thrive. We have never had the collapse of an airline or holiday company on this scale before, and we have responded swiftly and decisively.
Of course, right now our efforts are rightly focused on getting employees into new jobs and getting passengers home. After that, our effort will turn to working through any reforms necessary to ensure that passengers do not find themselves in this position again. We need to look at all the options—not just ATOL, but whether it is possible to enable airlines to wind down in an orderly manner and look after their customers themselves, without the need for the Government to step in. We will be putting a lot of effort into that in the months ahead. Our prime task has been to get people home, and I am immensely grateful to all who have taken part in what has proved, so far, to be a smooth and successful operation.
Andy McDonald (Middlesbrough) (Lab)
I thank the Secretary of State for advance sight of his statement.
Britain’s fifth largest airline, Monarch, collapsed because of a litany of failures by the Government, the regulator and the company’s financial backers and advisers. Its demise must also be seen in the context of a ferociously competitive aviation sector, which is adjusting to major overcapacity problems and the loss of services because of terrorism. A further backdrop to the industry is the foggy skies of Brexit, and the total lack of certainty from this Government for the British aviation industry after March 2019.
The airline’s bankruptcy has left huge losses on the shoulders of the public, rather than of the parent company or the regulator. It is the staff, customers, the taxpayer and pensioners who will pay the price. Creditor bills include the £60 million paid by the Government to repatriate holidaymakers, not forgetting the £26 million paid last year when Monarch previously came close to collapse; the £7.5 million to the Pension Protection Fund; the 45 days’ pay owed to the 2,000 staff who were made redundant; and the ticket refunds for the 750,000 outstanding bookings at the time of the collapse.
Why did the Government not do more to support Monarch and ensure that the company was viable, if only for the short term? The German Government recently stepped in to assist Air Berlin and the Italian Government have supported Alitalia. At the very least, an orderly wind-down of the airline would have been preferable to sudden administration.
Monarch is reported to have had £50 million in the bank. Why was the airline not granted a short-term ATOL licence extension, which would have allowed it to continue trading and at least bring its passengers back? Who decided not to grant Monarch an ATOL licence extension? More time would have allowed Monarch to be sold in parts. For example, Monarch’s landing slots are reported to be worth £60 million. Such assets could have been realised in an orderly wind-down. Instead, moneys from the sale of these assets will go to the secured creditor and former owner Greybull Capital, while the public purse gets nothing.
The statutory role of the CAA is to provide choice and value for money for passengers. British consumers now have one less airline to choose from. On its watch, there has been a surge in the cost of UK air fares following Ryanair’s cancellation of flights last month. Monarch’s demise will only push up flight costs further. There is an estimated £200 million in the CAA-administered ATOL compensation fund, yet it only covers about one in 20 of Monarch’s customers. Why is the public purse paying while the outdated ATOL pot sits largely untouched? Monarch Airlines continued to sell flights until Sunday 1 October, even though the airline knew it was going into administration the following day. Why did the CAA not act to stop that?
Greybull Capital’s takeover of Monarch in 2014 was the beginning of the end for the airline. Greybull is a private investment firm that has already presided over the collapse of My Local convenience stores and Comet, among others. Serious questions must now be asked about the conduct of firms such as Greybull, the way they invest and their wider stewardship.
A report in yesterday’s edition of The Sunday Times suggested that the £165 million rescue package for Monarch last year was largely funded by Boeing, as part of a cut-price deal for an order of 737 aircraft. What is the Secretary of State’s assessment of the role of Boeing in the financial engineering of Monarch? The Prime Minister recently criticised the conduct of Boeing against Bombardier in Belfast, in support of her Democratic Unionist party allies. Why is there no criticism of Boeing’s role in the loss of 2,000 jobs in Luton?
The role of KPMG must also be called into question. The firm was appointed to seek buyers for Monarch’s short-haul business prior to its collapse. It was actively doing so. Why is the same firm now acting as Monarch’s administrator? Does the Secretary of State agree with me that that is a glaring conflict of interest?
Finally, the way in which Monarch met its demise should set alarm bells ringing, so will the Secretary of State confirm that there will be a full investigation into the concerns that have been raised?
Chris Grayling
I am sorry the hon. Gentleman did not have a good word to say for all the efforts put in place to bring people back. I would just remind him that, interestingly, in 2008—the last time we had an aviation failure in this country, Excel Airways—the Labour Government followed a very similar path to the one we have followed, with taxpayer-funded repatriation. They did the right thing then, and we are doing the right thing now. I am simply sorry that Labour Members have forgotten that they did the right thing in government, and cannot now say that our doing the right thing this time is indeed the right thing to do. [Interruption.] They did the right thing then, and we are doing the right thing now, and I am just sorry that he could not say a good word about those involved.
The hon. Gentleman talked about the reasons for the collapse. First, this is not an issue about Brexit. The airline had been struggling for three years, and the first concerns were raised about it long before the referendum was even held.
I had hoped that this summer, after the rescue package last year, the airline would see its way through. As its chief executive said, it has been a victim of the anxieties about tourism in the east Mediterranean for security reasons. Those have led to a concentration of business in the west Mediterranean and the traditional resorts of Spain and Portugal and a price war from which the company was ill equipped to recover. That is what has happened, no more no less.
The hon. Gentleman asked about the licence, and there was no issue about its renewal. What happened was never about the renewal of the licence—the business had simply reached the end of the road. Its board came to the conclusion that it could not carry on.
The hon. Gentleman asked why the company carried on selling tickets the day before. The reality is that any airline that runs into difficulties will carry on selling tickets until it can no longer do so. The moment it stops doing so, it collapses, and that is what happened. It would happen any time an airline ran into such difficulties. There is no other way to do it. The moment it stops selling tickets, it stops doing business, and that is precisely what happened.
The hon. Gentleman talked about competition, and other airlines are already stepping into the breach. Jet2, one of our fast-growing, emerging airlines, has already said that it will step in and run some of the routes. That is what a market does. If one business fails, others step in. The tragedy of the Labour party in the last few years is that it has moved away from understanding markets to being utterly hostile to markets and the private sector.
We have a thriving aviation sector with competition between airlines delivering a good deal for consumers, and occasionally—once under a Labour Government and once under ours—something has gone wrong. In both of those situations, the Government of the day stepped in to try to make sure that we looked after the travelling public. I have no doubt that if it ever happens again, someone will do the same.
We do have to learn the lessons. We have to understand whether we can make sensible changes to the laws to ensure that this does not happen again. We are already legislating to extend the ATOL scheme to provide better protection for people who book over the internet in a different way from how they have in the past. I am clear that the job of the Government is to look after the travelling public and step in when things go wrong. We have done that, and we are seeking to get back as much money as possible, as Labour did in 2008. Above all, our job is to do our best for the travelling public and the employees. That is what we are doing. I am proud of what we are doing, and I am just disappointed that the Opposition cannot even say well done to the people who have worked so hard in support.
Crispin Blunt (Reigate) (Con)
The chief executive of Monarch has attributed the principal reason for the demise of the airline to terrorism and the resulting flight bans to both Tunisia and Sharm El Sheikh. Can the Secretary of State give his assessment of the merits of that argument?
Chris Grayling
There is no doubt that that was a significant factor, and not only because of changes in consumer patterns. Many other airlines chose to concentrate their resources this summer in the traditional resorts of Spain and Portugal. Alicante airport and others were full of planes this summer, and Monarch got squeezed out in a price war for which it was not financially strong enough. Ironically, it carried more passengers than two years ago, but with far lower revenues, and that more than anything else is what has caused its demise. It is a consequence of the security situation and of people taking a cautious approach to their holidays.
Patricia Gibson (North Ayrshire and Arran) (SNP)
The sad fate of Monarch Airlines is a stark example of the realities of Brexit beginning to bite. There is no denying that the fall in the pound has led to significant increases in the operating costs for the airline over the past year. The weak pound has also affected consumers and led to a drop in bookings. Add to that the uncertainties over the future of British carriers in Europe that served as a significant deterrent for any potential buyer who might otherwise have been found, and Monarch’s fate was sealed. Does the Secretary of State agree that as long as uncertainties over Brexit continue there is a danger of similar high-profile collapses?
Can the Secretary of State say with certainty today that the rights of UK passengers will not be eroded or diluted after Brexit? Will he confirm that the Government will work with administrators and the unions to ensure that employee rights are fully respected during the process, and that—where applicable—compensation is made available in a timely manner, in view of the fact that the manner of the administration raises real concerns about employee rights?
Chris Grayling
I am really sorry the hon. Lady has taken that approach. Let me be absolutely clear: this airline did not fail because of Brexit; this airline failed because it had a business model that was not capable of dealing with a price war in the Mediterranean. That is the reality of the situation and that is what its chief executive said. The hon. Lady talks about Brexit causing a lack of investment, but in the past few weeks we have seen a big expansion. Jet2 has set up a new base at Stansted and there has been a huge investment in the UK by Norwegian, which is becoming a real player in the low-cost marketplace. The market is changing and sadly Monarch, a business that has been around for 50 years, was not able to adapt to those changes. I am afraid she is just doing a disservice to the economy of the United Kingdom when she claims that this was a consequence of Brexit. She talks about employees. The biggest favour we can do for the employees of Monarch is to work to ensure they get another job quickly, and that is what we are seeking to do.
Ms Esther McVey (Tatton) (Con)
Following on from the many letters I have received from constituents, will the Secretary of State join me in thanking and congratulating the staff of the CAA, the Department for Transport and my local airport, Manchester airport, on the work they have done on the biggest evacuation in peacetime?
Chris Grayling
I am very happy to do that. I pay tribute to the staff of Manchester airport—I met the first plane back at Manchester airport—who rowed in behind the challenge. They were notified only late on the previous day, but by Monday morning staff were out greeting passengers, telling them what had happened and sorting out all the issues arising from the administration. I owe a big debt of gratitude to the staff of Manchester airport, Gatwick airport, Birmingham airport, Luton airport and Leeds Bradford airport, all of whom rose to the occasion, and to all the other people and organisations involved in the exercise.
Lilian Greenwood (Nottingham South) (Lab)
In 2014, the CAA recognised the fragility of Monarch’s finances and insisted on ATOL protection of flight-only bookings, but that requirement was dropped in December 2016. Monarch’s administrators cite cost pressures and increasingly competitive market conditions as contributors to its collapse. Given that the fall in the value of the pound and the loss of tourism in Egypt and Tunisia predate that decision, passengers will rightly ask why the requirement for ATOL protection was removed. Will the Secretary of State explain the process for deciding to drop ATOL protection of flights, the Department’s part in that decision, and how much the decision will ultimately cost UK taxpayers?
Chris Grayling
The ATOL scheme counts as public expenditure whatever happens. The impact on public finances, whether or not this was covered entirely by the ATOL scheme, remains the same because of how Government accounting works. I take advice from the CAA on the steps we need to take. Last year, Monarch had a big injection of cash, and in the first part of this year it looked like things were back on the straight and narrow. What changed this summer was the price war, which undermined the company’s revenues and led to a position where its losses were mounting week by week. That was the real issue. I have no doubt that the hon. Lady and her Committee will want to deal with these matters in greater detail, and I look forward to talking to her. She has every right to scrutinise what we have done. We sought to do our best for the travelling public and to take the decisions we were advised to take at the right time.
Anna Soubry (Broxtowe) (Con)
As a former Business Minister before the EU referendum, and apparently as one of the chief “remoaners”, may I make it absolutely clear that the unfortunate demise of Monarch has absolutely nothing to do with Brexit? Those who seek to make it an issue based on Brexit do not do anybody any favours. I commend the Secretary of State not only for his statement but for his hard work and that of his Ministers in doing their utmost to bring everybody back to this country. Will he confirm that Transport Ministers and Business Ministers have been doing their absolute best for Monarch for years? Will he continue to work with Foreign and Commonwealth Office Ministers to look at how we can open up airports, such as Sharm El Sheik and those in Tunisia, to support the rest of our aviation industry?
Chris Grayling
I am very grateful to my right hon. Friend for her words. She is absolutely right. This is a sad tale of an airline that has been struggling for years. A lot of effort has been put in by many people to try to keep it afloat. It is a real disappointment that they were not able to succeed. She is absolutely right about the Brexit issue. If we want another example, it is only a few weeks since Air France and KLM spent hundreds of millions of pounds on a stake in Virgin Atlantic. Those are not the actions of commercial organisations that believe that Brexit is destroying the British aviation sector. Those who suggest it are simply talking down our country and that is not acceptable. I am therefore very grateful to her for what she says. She is absolutely right. I give her an assurance that the Government will do everything we can to support the sector, to support the people who lost out as a result of Monarch’s collapse, and to continue to ensure we have a strong sector for the future.
Kelvin Hopkins (Luton North) (Lab)
As the MP for Luton North, I represent many of those who have lost their jobs, and I have to say that, had the company been in public ownership—with proper transparency and accountability to Parliament—I suspect that this would not have happened. [Interruption.]
Kelvin Hopkins
My concern is that, when the company collapsed, the assets had almost all disappeared, so there was very little financial value in the assets of the company. Was this to benefit shareholders and owners, and how much money has the state effectively paid out that the owners and shareholders should have been accountable for?
Chris Grayling
The hon. Gentleman is right that the airline did not have the assets at the end—airlines today do not own their planes but lease them. One reason it is difficult to continue to operate an airline like this is that the planes are the property of the lease companies, which take them back immediately afterwards. We clearly have to look at whether there is a better way of doing things, but it is not easy.
It would be relatively easy for an airline abroad that is owed money simply to impound an airliner and make it impossible for us to get people back, so these are not straightforward issues. But is the hon. Gentleman really suggesting that we go back to a time when the state owned everything? Do we want the state to own British Airways, easyJet, Jet2 and Thomas Cook? It is nonsense. Even the most socialist Labour Government of the past would never have suggested that the state own every holiday airline. It is a sign of how extreme its policies have become that anybody on its Benches can seriously suggest it.
Nigel Huddleston (Mid Worcestershire) (Con)
I congratulate the Government on the speedy response to the Monarch situation and on highlighting the resilience of the UK aviation industry—in the private sector—but the Secretary of State will be aware that there has been confusion over who is ATOL protected. Does he agree that more could be done to communicate the benefits of ATOL membership?
Chris Grayling
This is definitely one area we need to look at again. We are already legislating to ensure that people who pay for a flight and hotel separately through an internet organisation can be covered through ATOL insurance. This is an area where we have to do more work. There is, however, a fundamental issue: if we were to put a levy on the cost of an air ticket, we would have to do it on every air ticket in the UK, but many of us on the Conservative Benches get regular representations from regional airports, for example, saying they want air passenger duty cut. This would increase APD, and that is why it is not a straightforward decision, but one we must consider very carefully.
Graham Stringer (Blackley and Broughton) (Lab)
I agree with the Secretary of State that in future situations like this one the Government should look for an orderly wind down, but is that not pie in the sky given the evidence of a conspiracy between Greybull and Boeing to protect their own capital interests against the pension rights of former employees and the people who bought tickets when it was already clear that the airline was bankrupt?
Chris Grayling
The hon. Gentleman should remember that the pension scheme was transferred to the Pension Protection Fund in 2014, when it was sold by the Swiss family that had owned the business since the 1960s, so it is not straightforward to talk about pension rights now. He should not second guess any details of how, why or where the financing package was secured a year ago. It is a matter of record that it involved rescheduling or reorganising the leasing of the aircraft, but had it been able to secure the future of the airline, as we all hoped at the time, we would all be grateful it had happened. It is tragic that that was not the case.
Mary Robinson (Cheadle) (Con)
Almost 500 Monarch staff are based at Manchester airport, and many are my constituents, so I am grateful to hear the assurances that the Government will work with the industry to support staff back into work. Will the Secretary of State outline what more support will be given to our regional jobcentres to assist my constituents who have lost their Monarch jobs?
Chris Grayling
Before it became clear that the collapse was happening, we had pre-meetings across Whitehall between the Departments that needed to be involved, including the Department for Work and Pensions, and Jobcentre Plus has been working with all those affected. That work will continue where necessary. I am glad that if such terribly difficult circumstances had to arise, they arose in a thriving sector with lots of job opportunities. The fact that Jobcentre Plus was able quickly to identify more than 6,000 vacancies for 1,700 people looking for jobs is a good step in the right direction and a tribute to the success of that sector, off the back of what has been a successful economy in recent years.
Ian Austin (Dudley North) (Lab)
Four hundred employees, including skilled engineering workers, are set to lose their jobs at Birmingham airport,. The region can ill afford to lose those skills and the contribution that they make to the regional economy. Will the Secretary of State ensure that his Department redoubles its efforts, and does everything possible to ensure that those people can find equally skilled work elsewhere in the region as soon as possible?
Chris Grayling
I absolutely give the hon. Gentleman that assurance. Securing strong futures for those people has been, is and will remain a priority for us, along with getting the passengers back. As I have said, however, I am encouraged by the number of other airlines that are actively seeking to recruit. As slots become vacant at Birmingham, Luton, Gatwick, Leeds and Manchester, other airlines are already seeking to move in and take those slots, and they will need staff to work on the business as they arrive.
Bim Afolami (Hitchin and Harpenden) (Con)
Will the Secretary of State give further details of what the Government are doing to assist former employees of Monarch Airlines who have lost their jobs as a result of the airline’s collapse?
Chris Grayling
We have had a very early promise on a lot of things. A few hours before the administration came into effect, I spoke to the chief executive of easyJet, who was very helpful. I should express thanks to easyJet for helping us with some problematic routes; for instance, only specialised pilots can fly into or out of Funchal airport.
The chief executive gave me an assurance, and easyJet has given us assurances subsequently, that the airline will hire a substantial proportion of those staff. It is likely to hire 500 very quickly to meet its future demands, because its business is growing rapidly, and I know that other airlines plan to step in and do the same. Jobcentre Plus has already been holding job fairs and airlines have already been going through recruitment exercises, so it is my hope that all those affected will find jobs quickly.
Laura Smith (Crewe and Nantwich) (Lab)
The Secretary of State emphasised that Monarch passengers abroad would be covered until 15 October, but constituents of mine who are due to return on 16 October are worried because there is no information available online. Will the Secretary of State please let me know where they can obtain information, and whether their return is protected or not?
Chris Grayling
The full repatriation exercise lasts for two weeks, and at the end of that time there will be a very small number of people left abroad. We know that, at that point, the sector as a whole will be able to absorb those passengers; it could not have done so a week ago, given the numbers involved. The Civil Aviation Authority will be contacting those people this week and keep its helpline available for a considerable time after the repatriation effort has been completed, and we will work to ensure that they can return home straightforwardly. They will be entitled to refunds through credit cards, through the ATOL scheme, and so forth. The crucial difference is that when the company went into administration the sector could not have coped with the number of people involved, but by next week absorbing the small number of passengers who remain will not be a problem.
Mims Davies (Eastleigh) (Con)
Jobs and opportunities that come from access to regional airports and flights mean a lot to Members in all parts of the House, and, indeed, to my constituents who can access Southampton airport. Will the Secretary of State thank Barclays for supporting my constituents and their families? Members of the Hamble Aquatics Swim Team who were due to go to Lanzarote were reimbursed more than £9,000 so that they could train for county, national and regional championships. Their head coach, Amy Rodger, ensured that more than 20 swimmers and their coaches were able to get over there by working with local television stations and Barclays. Will the Secretary of State also thank the many other companies that have done so much to help our constituents?
Chris Grayling
My hon. Friend’s words speak for themselves. I am very grateful to Barclays for providing that help, and I know that a number of other businesses have done the same. The credit card companies in particular have been very constructive in their dialogue about sharing the cost of the repatriation with us, and Lloyds was especially good at getting out of the traps and working with us. I think that this was a moment when corporate Britain behaved in the right way, and worked alongside us to do the right thing.
Luke Pollard (Plymouth, Sutton and Devonport) (Lab/Co-op)
Having spent five years working for the Association of British Travel Agents and lobbying for greater holiday protection, may I extend my thanks to the people working hard for that and ask the Secretary of State to extend it to travel agents and tour operators? What hit does he expect the Air Travel Trust fund to take as a result of Monarch’s collapse, and can he give an assurance that the ATOL protection contribution will not go up, which would mean holidaymakers having to pay more in future?
Chris Grayling
We will not know exactly how much until we have gone through the numbers in detail with the administrator. We do know that only a relatively small proportion of Monarch customers were ATOL protected, because the nature of the business was mostly flight-only. I will happily inform the House once we have gone through all the details, which will take a bit of time, but it will not be a substantial proportion of the total, because of the small proportion of customers who are covered.
Henry Smith (Crawley) (Con)
Will my right hon. Friend join me in paying tribute to Gatwick-based airlines such as easyJet and Virgin Atlantic for stepping up and offering alternative employment to Monarch employees who now find themselves out of work?
Chris Grayling
I am very grateful to the airlines for the way they have responded, and they have done so in a variety of ways. It was a real team effort at Gatwick, with airline staff, airport staff and others coming together to deal with the immediate issues for passengers, and then really working to get Monarch employees sorted out as quickly as possible. I am very grateful to the staff at Gatwick, as I am to those at all the five airports affected.
Diana Johnson (Kingston upon Hull North) (Lab)
The Secretary of State said in his statement that the collapse of Monarch Airlines was deeply regrettable, so I wonder whether he will support the call by the pilots’ union for a probe into what exactly happened around the collapse.
Chris Grayling
I suspect that there will be exactly such a probe, but I also suspect that it will be led by the hon. Member for Nottingham South (Lilian Greenwood) and her Transport Committee. I do not want to gainsay what the Committee will do, but I would expect a rigorous inquiry, and my Department and the CAA will be very happy to co-operate with it.
Mr Speaker
That was a very speedy recovery from the intoxicating effects of conversation with the right hon. Member for North Shropshire (Mr Paterson), and a very useful guide to new Members on how to perform at a moment’s notice in the way that the hon. Gentleman has done. He did signal earlier that he wished to be called, so I was not picking on him.
Chris Grayling
Of all those involved, I feel most deeply for those who made bookings but have now lost trips and holidays. I very much hope that we can get Monarch staff into employment quickly. I hope that we can get all the passengers back safely and well. For those who have lost bookings, it is a deeply traumatic time, and we heard some very sad stories last week. Anyone who booked with ATOL protection or who booked using a credit or debit card will be able to get a refund. My advice to anyone in that position is always to ensure that they have at least one of those cover options available in case something like this happens again—let us keep our fingers crossed that it does not for a very long time.
Liz McInnes (Heywood and Middleton) (Lab)
Monarch has failed to consult its 1,800 employees on redundancy. What estimate has the Secretary of State made of the costs of compensation for those affected workers?
Chris Grayling
As the hon. Lady will know, there are statutory provisions for when businesses go into administration, because they tend not to be able to consult employees about redundancy. It falls to us to try to sort them out, and that is what we will seek to do. There are statutory provisions for compensation for people in these circumstances, but my hope is that the financial impact on them will be limited, given the number of companies looking to recruit as quickly as possible.
James Cleverly (Braintree) (Con)
Although the distance between Stansted, my local regional airport, and Luton, which is Monarch’s home airport, is relatively small, some people will be displaced much further afield. What plans has the Department put in place to ensure that those who are displaced during the recovery phase can get back to their most local home airport?
Chris Grayling
That will become a particular issue this week. We have brought 80,000 people back, but there are still about 30,000 left. We have emptier planes this week and greater consolidation of planes. We have 747s operating, and clearly a 747 replacing a short-haul Monarch aircraft leaves a gap for seats, so we are bringing flights together and more people will arrive back at a different airport. There will be a coach waiting for them that will take them straight back to their original airport, and the airports are making special arrangements on carpark access and fees to ensure that people do not lose out as a result. The CAA is managing a big bus operation and those people will get back to the place where they started.
Stephen Timms (East Ham) (Lab)
Actually, the fall in the value of the pound was a factor in the collapse, although I agree with the Secretary of State that another factor was the UK ban on flights to Sharm el-Sheikh. Since that ban was introduced, the Egyptian authorities, with UK support, have gone to enormous lengths to improve security at that airport. I believe that every other western country has now lifted its ban. Could we now lift ours before even more people lose their jobs?
Chris Grayling
The right hon. Gentleman will know from his experience in Government that we take security issues very seriously. We have looked exhaustively at the issues around Sharm el-Sheikh. We have not yet taken the decision to resume flying there. I would love us to be able to take it, but we have to be mindful of the security concerns and the risks to the travelling public of the United Kingdom. I assure the right hon. Gentleman that as soon as we feel that we can take that step, we will. We hold back only for good security reasons.
Victoria Atkins (Louth and Horncastle) (Con)
This has been a massive exercise in repatriating citizens and our thanks should go to the Civil Aviation Authority and others that made it happen. Will the Secretary of State please confirm the cost of the repatriation exercise? Are insurers, credit card companies and banks playing their part in reimbursing the taxpayer?
Chris Grayling
We expect the total gross costs of the repatriation to be around £60 million. We will recover money from all those different groups, and I will in due course be able to tell the House exactly how much the taxpayer has contributed. However, my hon. Friend can be reassured that we are very focused on making sure that there is clear burden sharing, and that it is not only the taxpayer who pays.
Stephen Lloyd (Eastbourne) (LD)
I applaud the Government’s efforts in bringing back passengers who were not protected by ATOL. In the modern era of mass travel by air, would it not be sensible to look at legislation around ATOL and cover both hotels and air fares in case something similar happens in future?
Chris Grayling
That will clearly be debated again and has been considered before. The issue is that we would have to apply a levy to every single air fare sold in the UK, whether for a UK airline or otherwise. We could not simply apply a charge to a UK-based airline for which we were responsible—we would have to charge Ryanair, Air France and Emirates passengers as well. Effectively, we would be putting up air passenger duty. I am not saying that we should not do that, but if we were to we would need to use great thought and care beforehand.
Rachel Maclean (Redditch) (Con)
My constituents in Redditch are incredibly hard working—thanks, no doubt, to the Government’s amazing record of job creation. However, they look forward to their well-deserved holidays, and price competition has contributed to their being able to take those breaks. Will the Secretary of State confirm that he sees no risks in the airline market that he ought to be considering?
Chris Grayling
That concern has been raised by the Opposition as well. The first thing to say is that our aviation sector is very strong. If people visit our airports, as I do, they will find that virtually every one will say that this has been a record year in terms of the number of passengers carried and that there have been record days in their history. Passengers are not stopping flying—more and more passengers are flying, and I am confident that that will continue.
I am also confident that we have good airlines that are growing fast: look at the success of easyJet and Jet2. Tour operators are also doing well. I am confident that the sector will grow and develop; there is demand for slots and runway space and there are acquisitions and new investments in new centres such as Jet2’s investment in Stansted. We should be confident about the sector. We can never rule out problems in the future or be certain that no airline will ever run into difficulties again. That is why we have to think through whether we need to take steps to make sure that there is proper protection for consumers. But we should be confident in our sector.
Huw Merriman (Bexhill and Battle) (Con)
I thank my right hon. Friend, his Department and the CAA for delivering the largest ever peacetime repatriation. As he will be aware, the UK insolvency framework does not allow insolvent airlines to continue flying, unlike what happened with Alitalia in Italy and Air Berlin in Germany. Will my right hon. Friend consider looking at the insolvency framework again in that light?
Chris Grayling
We will certainly give some thought to that. It is very noticeable that other airlines have been able to carry on flying in administration. The risk, of course, is that an aircraft could easily be impounded by an international airline. One of the reasons we sought to hire our own fleet was to remove that risk. If we had used the Monarch planes, there was a danger that, if they arrived at an airport and a local creditor decided to take action, the plane might have been unable to return. That is something we always need to weigh in the balance. We need to look at what happened with Air Berlin and Alitalia and see whether there are lessons to be learned, but first and foremost our task should always be to protect passengers whose journeys might otherwise be at risk.
Ms Nusrat Ghani (Wealden) (Con)
Price wars, stiff competition and a change in travel habits all contributed to Monarch’s failure. My constituents in Wealden have been in touch about their holidays and business trips being ruined. Can the Secretary of State confirm that he and his ministerial colleagues have visited returning passengers at UK airports and say what feedback he has received?
Chris Grayling
I met the first flight back at Manchester airport last Monday and my noble Friend Lord Callanan visited Leeds Bradford airport on the same day to meet people coming back. I have had a lot of letters from people who were able to travel back on the repatriation flights saying how grateful they were and how smooth it had been. There are bound to be some hiccups on the way—we had weather problems in Funchal, which led to some cancellations—but in overall terms this has been a very smooth effort and a great tribute to a team of people in the CAA who are not airline specialists, but who have come together to run an airline in a way that was, frankly, enormously impressive.
Andrew Bridgen
Thank you, Mr Speaker. Does the Secretary of State agree that, although every lost job is a human tragedy, the British aviation industry remains robust and resilient? I am reminded of 2012, when British Midland International collapsed, with the loss of 1,200 jobs at East Midlands airport in my constituency. These are very highly skilled people who are quickly absorbed back into the economy. Unemployment in North West Leicestershire remains at a record low of 1%.
Chris Grayling
My hon. Friend is absolutely right. I am delighted that we have a thriving sector, with more than 6,000 vacancies, for which the 1,800 people who have lost their jobs can apply. I am also delighted by the fact that easyJet is saying, “We want to hire 500 of them straightaway. They’re good people; we want them.” I am very confident for their future. All the support they need in the short term is being provided, but I am pretty clear that in a thriving sector those people will have a strong future.
Wendy Morton (Aldridge-Brownhills) (Con)
Quite clearly this has been a huge repatriation and logistical task. Can the Secretary of State confirm, though, what entitlement passengers who have not yet travelled—I am sure most of us have them in our constituencies—have to a refund?
Chris Grayling
We will be continuing to give advice and guidance to those people for some considerable time. We will also be contacting people this week to see who wants and has a need to return, as part of the repatriation exercise. All those who have booked through credit card companies or who have ATOL protection, regardless of how long they are out there for—I am sure a small number will be out there for an extended period—will be able to secure a refund when the time comes.
Iain Stewart (Milton Keynes South) (Con)
As well as reviewing the effectiveness of the ATOL scheme in the light of this incident, will the Secretary of State take the opportunity to look at the providers of travel insurance? Many people travelling thought that they were covered for the collapse of an airline under their travel insurance policy, only to find that they were not.
Chris Grayling
This is something that I will want to take up with the insurance industry. It does seem unfortunate that cover should not include something that happens once in 10 years. This is one area where there is a case for change. It would have made life a lot easier had that been the case.
Kevin Foster (Torbay) (Con)
I welcome the statement and the detail of what the Government have been doing, in particular the fact that 80,000 of 110,000 people abroad are now back in the UK. Can the Secretary of State confirm, though, that we will apply the lessons learned to the legislation currently going through the House to reform the ATOL scheme?
Chris Grayling
We have the advantage of having legislation before Parliament at the moment. If there are short-term measures that we could take, we would certainly be open to doing that, but I do not want us to rush into doing something without doing the ground work properly. We need to look carefully at what has happened, learn the lessons and make any modifications necessary. I assure the House that that is what we will do.
Mr Philip Hollobone (Kettering) (Con)
We should give credit where credit is due; it has been a simply remarkable achievement to repatriate such a large number of passengers in such a short period, and I congratulate my right hon. Friend the Secretary of State, his Department and the CAA on putting this together. Here we are on the first Monday back after the conference recess, and we could have been faced with having 110,000 British citizens stranded overseas. Instead, thanks to his actions, 80% of them are already back and the rest can be confident of coming back on time.
Chris Grayling
I am grateful to my hon. Friend for those kind words. They are a tribute to the work done by people right across Whitehall—nine different Departments and organisations were involved—by those who have gone out to man the departure lounges at airports around Europe and by the people operating the airline. This has been a fantastic effort, they have done a brilliant job for all of us and I am very grateful to them.
Tom Pursglove (Corby) (Con)
What steps is my right hon. Friend taking to make sure that there is no loss in capacity and that excess slots that have now emerged are allocated as quickly as possible?
Chris Grayling
The fact that there is now some debate over the value of the slots as they are taken up by other airlines shows that there is a queue of operators waiting to move in where Monarch has been. We have already heard from Jet2 that it is looking to pick up some of the slack that Monarch has left behind, and I have no doubt that we will see others moving in very quickly as well. Our sector is thriving, those gaps will be filled and there will be lots of flight opportunities in future.