§ Order for Second Reading read.
§ 4.15 p.m.
§ The Parliamentary Secretary to the Ministry of Aviation (Mr. Geoffrey Rippon)
I beg to move, That the Bill be now read a Second time.
The purpose of the Bill is to increase the borrowing powers of the Air Corporations and so to provide the means of enabling them to secure their full share of the rapidly expanding world air transport industry. This is a general object which I am sure will commend itself to the whole House. I propose to confine myself to explaining the purpose and scope of the Bill. If wider issues are raised in the debate, my right hon. Friend will deal with them, as far as possible, when he winds up.
As the House will recall, the Air Corporations Act, 1956, fixed the limit of the Air Corporations' borrowing powers at £160 million in the case of B.O.A.C. and £60 million in the case of B.E.A. Clause 1 (1) of the Bill proposes that B.O.A.C.'s borrowing limit shall be increased by £20 million, to £180 million, and that of B.E.A. by £35 million, to £95 million. These new limits are expected to cover the Corporations' borrowing requirements over the next four years—that is, up to the end of 1963–64.
It may assist the House if I explain, first, the basis of the present limits and then indicate the changes in the situation which have taken place over the last few years. When the present limits were fixed by the 1956 Act they were intended to cover, in the main, the payments for aircraft which the two Corporations then either had on order or under consideration. In the case of B.O.A.C., these were 33 Britannias, 20 Comets, 10 D.C.7Cs. and 15 Boeing 707s. In addition, it was proposed to acquire 14 Viscounts which were then on order 1266 for equipping the associate and subsidiary companies. Allowance was also made for the purchase of between 20 and 30 jet aircraft of British manufacture. No firm decision was taken then, but the type which was under consideration was the DH118.
On the 1956 estimate, it was envisaged that B.O.A.C.'s net borrowings would reach a peak of just under £160 million in 1960–61. In the event, there have been certain changes in the programme over a period of years. The most important change is that B.O.A.C. has ordered 35 Vickers VC10 jets for delivery from 1963 onwards. Although the total cost of these aircraft will be greater than the amount which was allowed in 1956 for the purchase of the DH118s by about £30 million, provision is not being made in the Bill to cover the full additional cost. That is partly because the whole of this expenditure is not expected to fall within the four-year period, by which time B.O.A.C. expects—or hopes—to be meeting an increasing proportion of its capital expenditure out of internal finance. I shall say a little more on the subject of internal finance later.
§ Mr. John Rankin (Glasgow, Govan)
If the Parliamentary Secretary cannot do so now, perhaps his right hon. Friend will refer to this matter. It will be seen from the last page of B.O.A.C.'s report that the contractual commitments, while understandable, show a remarkable increase, particularly with regard to the Vickers VC10, from 1957–58 to the present report. Does not the hon. Gentleman think that we should have the break up of those figures, in view of that very large increase in commitments?
§ Mr. Rippon
I think that the position is quite clear. In 1956, it was estimated that the total cost of 15 Boeing 707s and DH118s would be £100 million. It is now anticipated that the purchase of the VC10 jets will increase that amount by £30 million.
1267 I am dealing with the situation as it is at present and without going into too much detail about how the estimates have changed over the years. I am dealing only with the amount of money which the Corporations will require to borrow and not the total amount which presumably they will spend on capital expenditure, because the difference will be met from internal finance.
§ Mr. Rippon
I will come to that, though I am not sure what £89 million the hon. Member is talking about. The total asked for by B.E.A. is £95 million but so far they only plan to spent £89 million—the rest is headroom.
B.O.A.C., over this period, will have spent considerably more than was expected in 1956 on other items, including buildings, ground equipment, routine aircraft modifications, and on subsidiary companies. Another factor is that B.O.A.C. will have less money than expected from the sale of aircraft. The reason is well known to the House. It is because of the relative collapse of the market for second-hand piston-engined aircraft. The result of all this is that B.O.A.C. may well exceed its present borrowing limit fairly early in 1960–61, instead of, as anticipated, at the end of 1961.
Turning briefly to the position of B.E.A., the Corporation, in 1956, had on order 38 Viscount 800s and 20 Vanguards. It had also an option on a further 19 Viscount 840s. In addition, allowance was made for a few helicopters and what was described as a limited number of jet aircraft for longer routes. On the 1956 estimates. B.E.A.'s net borrowing was expected to reach about £55 million in 1960–61. The Corporation has ordered seven Comet IVBs, of which two have already been delivered, and also 24 DH121s for delivery from 1963 onwards. However, against that increased expenditure on new jet aircraft the Corporation has not taken up an option on the further 19 Viscount 840s. Therefore, the net result is that it expects net borrowings to exceed the present limit of £60 million some time during the summer of 1960 and to reach about £69 million by the end of 1960–61.
So much for the change that has taken place since the present limits were fixed 1268 in 1956. I turn now to the main items which the Corporations will have to pay for by the end of 1963–64, that is, during the four years which the new limits set out in the Bill are intended to cover. B.O.A.C. will be making payment mainly on the VC10s, but it will also have to spend a considerable amount on buildings and premises, on ground equipment and routine aircraft modifications. At the moment, it has in hand plans for work on the Victoria Air Terminal, the central aircrew training establishment at London Airport and the engineering component test house at London Airport. Besides these items, there is the continuous flow of minor work on various premises and installations.
B.E.A. will have to pay over the next three years for their Vanguards, the remainder of the Comet IVBs and the DH121s. There will also be some expenditure on helicopters. Like B.O.A.C., it, too, has regular expenditure on building work, ground equipment and modifications to aircraft—all matters which are the inescapable expenditure of an expanding and developing business. Thus, the Corporation is extending its engineering base at London Airport and it proposes to undertake further work at the London Air Terminal in Cromwell Road and to provide a training centre for air and ground crews at Heston.
While I feel it right to refer to the building and other work which the Corporations envisage, it should be understood that a very high percentage of expenditure is on aircraft. Over the four years covered by the Bill it will be 90 per cent. for B.O.A.C. and 80 per cent. for B.E.A., and the orders for the aircraft, except for the helicopters, are all firm and have been given ministerial approval.
I think that the House will agree that the cost of these jet aircraft is undoubtedly heavy and their introduction has certainly created difficulties in the way of disposal of surplus second-hand piston-engined aircraft. At the same time, there is every evidence that they are proving highly successful in inducing traffic. We have to face this expenditure because we have to keep abreast of the fundamental changes which are taking place in the pattern of world air traffic. In this as in other fields we have to pioneer or perish.
1269 In considering these costs, the House should appreciate the extent to which the Corporations intend to finance their programmes of capital expenditure out of their own internal resources. Over the years 1960–61–63–64 inclusive, B.O.A.C.'s capital expenditure will be about £83 million, of which £63 million will be found internally, mostly from depreciation provisions. That is the reason for the increase of £20 million in total borrowing powers. On the other hand, B.E.A.'s capital expenditure will be about £62½ million, of which it intends, as far as one can ever forecast these matters, to find £27½ million in the same way.
§ Mr. George Chetwynd (Stockton-on-Tees)
Have the Corporations been financing themselves hitherto out of their own internal finances?
§ Mr. Rippon
To quite a considerable extent. It was forecast in 1956 that B O.A.C., over the period, would provide £47 million out of its internal resources, and B.E.A. between £26 and £27 million. In the event, B.O.A.C. has found £6½ million less, primarily because of the position regarding piston-engined aircraft, and B E.A. £5 million less, because there has been no depreciation provision for the 19 Viscount 840s which have not been bought. Therefore, the Corporations have been making a really substantial contribution in that way.
Clause 1 (2) of the Bill is really a consequential provision designed to make clear that Section 1 (2) of the Air Corporations Act, 1956, shall refer to this new limit on B.O.A.C.'s borrowing powers. The House will recall that this provision was inserted in the 1956 Act for the avoidance of doubt and to give B.O.A.C. specific power to borrow from the International Bank for Reconstruction and Development or the Export-Import Bank of Washington. In fact, this power has not been used and it seems improbable that it ever will be. At the same time, it seems right that the legal position should be maintained. In any event, the power will not be used without the Government's specific consent.
The Bill does not confer upon the Corporations any absolute power to borrow up to the prescribed limits. Treasury consent is required for all individual borrowing and my right hon. Friend is responsible for advancing 1270 money under Section 42 of the Finance Act, 1956. That is explained in paragraph 3 of the Explanatory and Financial Memorandum to the Bill.
By passing the Bill, the House will make proper provision for the expansion of our national air transport industry by ensuring that it is equipped with the most up-to-date aircraft that can operate with speed, comfort, regularity and safety.
§ 4.30 p.m.
§ Mr. George Chetwynd (Stockton-on-Tees)
Before I come to the Bill, I think that my hon. Friends would wish me to make a reference to the fact that our colleague, Frank Beswick, is not with us on this Front Bench today owing to electoral misfortune. We shall miss him very much on this side of the House because for many years, both as a member of the Government and of the Opposition, he has spoken in every major civil aviation debate, and we shall miss his knowledge and long experience of these matters. I am sure that my hon. Friends will join with me in hoping that he will soon be back with us in the House of Commons.
I come now to the points raised by the Parliamentary Secretary, in his clear and detailed explanation of the purposes of the Bill. Coming fresh to his Department, I am sure that he will have been confronted with a mass of aeronautical jargon and what I can only call "initialese", though the hon. Gentleman did not worry us with any reference to that. I wonder, however, in looking at subsection (2) of Clause 1, whether by trying to clarify, confusion has not become more confounded, for this subsection reads:In subsection (2) of section one of the said Act of 1956 (which confers certain additional borrowing powers on the British Overseas Airways Corporation but provides that nothing in that subsection shall authorise that corporation to borrow in excess of the limit imposed by subsection (1) of the said section twelve as amended by subsection (1) of the said section one), for the reference to subsection (1) of the said section one there shall be substituted a reference to subsection (1) of this section.What on earth that means I do not know, but I should have thought that the Parliamentary draftsman could have given us something a little more straightforward.
As the Parliamentary Secretary said, the Air Corporations Act, 1956, increased 1271 the borrowing powers of B.O.A.C. from £80 million to £160 million. Now, under this Bill, they are to be increased again to £180 million. The borrowing powers of B.E.A. were increased from £35 million to £60 million and now, under this Bill, they are to be increased to £95 million. Again, instead of covering a period of five years, as the previous figures did, for the reasons given by the hon. Gentleman it is now anticipated that these will last for four years.
On this side of the House, we regard the Bill before us today as unavoidable if the Corporations are to expand their business, indeed if they are to survive, because in the business of air transport we cannot relax our efforts. We must go forward or else backward and then, ultimately, out of business. It is the duty of the House, as we see it, to scrutinise carefully the purposes for which the additional loans are to be sought, and the Bill gives us one further opportunity to exercise our Parliamentary control over the accountability of the airline Corporations. We welcome that because we think it is time that we had this debate.
On the amounts mentioned in the Bill, the only question I want to ask is whether these will be sufficient? The Parliamentary Secretary has spoken about the heavy and increasing cost of buying aircraft. My hon. Friend the Member for Glasgow, Govan (Mr. Rankin) referred to the accounts of B.O.A.C. I think this point was that these show that the VC10s were to cost £56 million, 1957–58, in 1958–59 the figure was £89.3 million, and the figure given by the Parliamentary Secretary for the final purchase was £95 million. My hon. Friend wanted to know whether that was an increase in the cost per plane or because the contracts let had increased.
§ Mr. Rippon
The figure now is approximately £90 million for the VC10s. I may have misled the House because the hon. Member for Glasgow, Govan (Mr. Rankin) referred to a figure of £89 million, whereas I spoke of the position as regards B.E.A., not B.O.A.C., where the total amount asked for is £95 million, but an expenditure of only £89 million is anticipated. So there is that measure of slack in the total borrowing powers. I picked up the wrong figure from the hon. Gentleman.
§ Mr. Chetwynd
But it is a fact that the cost per aircraft has increased since the orders were originally placed. This is something which any buyer of aircraft has to face, namely, that from the time the order is placed to the finished article there are natural increases for one reason or another.
§ Mr. Rankin
The point was that there has been a significant increase between the date of the report which we did not consider last year and the report which we are considering this year, particularly in the case of the VC10. The figure for that aircraft has risen from £56.6 million last year to £89.3 million. That is an enormous increase within one year. I was asking if we could have detailed information of this capital expenditure before the debate concludes.
§ Mr. Chetwynd
I expect that the Minister will be able to make some reference to that point when he winds up the debate.
The point is: will the Corporations now have enough to see them through the immediate period until 1964? Also, can we have information on whether the figures have been reached in consultation and with the agreement of the Corporations? In other words, do these figures really meet what they have asked for? Whilst on this point, can we have an estimate of the revenue which the Corporations hope this injection of further capital will bring in during the period? In the past, there have been criticisms that the rate of revenue in relation to the rate of capital investment has not been high enough.
Another point is that this seems to be a particularly difficult way for the Corporations to borrow money in order to repay existing loans in some cases. May I put it another way? It may be that B.O.A.C. is having to borrow some of this money not for capital expenditure but to repay previous loans, so could we also have some information on that point?
On this side of the House, we support the main purpose of the Bill. We believe that additional capital is justified on two grounds. First, it is justified to meet the future needs of the Corporations, which have been explained so clearly by the Parliamentary Secretary. Secondly, it is justified because of their 1273 past performance, which proves that they have the capacity to make good use of the money.
If we may look at the future needs of the Corporations for a moment, it is clear that in a rapidly expanding and highly competitive business of international air transport the Corporations must have the most modern and up-to-date aircraft if they are to keep their place amongst the world's leading airlines. World air transport traffic is expanding, it is vital that we should get an increased share of it for this country, and in the main that increased share will be earned by the two major Corporations.
I cannot overstress the intangible asset to the prestige of this country which results from running highly successful air Corporations. It is important to bear in mind that for the Corporations to be a success they must have the right aircraft at the right time. It is clear from the experience of B.O.A.C., particularly with the Britannia and the failure of the Comet I, that the fact that they had not got those aircraft when they wanted them has had a serious effect upon their economy during the last few years. But it seems to me that the pattern of aviation has been put right now and that B.O.A.C. are now well placed to move forward.
I understand that the Boeing 707 will be coming into service very soon. Over what period is it expected that the 15 Boeing 707s will be in operation and what will be the final cost? Can we have more information about the 35 VC1Os which are also coming into service later? I believe that the original cost was about £1 million each and I have now seen it estimated that the final cost will be £60 million. Can we have some enlightenment on that figure?
B.E.A. has been fortunate, by good management and by looking ahead, to base its requirements for the last few years on the Viscount. As we all know, the Viscount has had a tremendous success not only in this country, but throughout the world, and many operators have purchased it. As I understand, 20 Vanguards are due to operate about the middle of next year. The Comets are already flying on routes all over Europe—although without fare-paying passengers—and I understand 1274 that preliminary results are highly successful. Twenty-four DH121s arc supposed to come into service about the end of 1963–64. However, there is a problem with the Rotodyne, about which I shall have something to say later.
My right hon. and hon. Friends agree that it is a good thing that there should be a Minister of Aviation with an overall responsibility for the supply and general oversight of the aircraft industry. We believe that that will result in a much better industry and that the right hon. Gentleman will be in a strong position to assess the needs of the Corporations and the capacity of the industry to meet them.
That brings me to a topic which has been uppermost in my mind for some time. Is the Minister proposing any changes in the policy of ordering and paying for aircraft used by the Corporations? I understand that over the last few years the policy has been that civil aircraft must be a private venture of the companies concerned with whom the Corporations have had to make direct arrangements for the supply of aircraft, with no Government money as such going to the manufacturers.
In its Report last summer, the Select Committee on Nationalised Industries said that the cost of developing new aircraft made in Britain appeared to fall too heavily on the Corporations and that the Corporations were involved in very heavy expenditure on the development and proving of aircraft taken into their service. It was B.O.A.C.'s experience, particularly with the Britannia, that the teething troubles of new aircraft lasted for more than two years and needed considerable changes at great cost and inconvenience, as was the case with the electrical system on the Britannia.
Even the Viscount, splendid aircraft though it is, has had its troubles. After six years' service, B.E.A. spent more than £300,000 last year on putting new main spars into early Viscounts. B.E.A. calculates that the direct cost of introducing one new major type of aircraft over four years is about £400,000 a year. Next year, B.E.A. will be introducing two new types of aircraft at the same time, and the Comet will add another £100,000 a year to costs before B.E.A. gets a penny.
1275 What is being done to meet B.O.A.C.'s view that the Corporation should have some form of help and financial assistance for taking on what is, after all, development work, in other words, bringing an aircraft into proper operating condition, an expense which might otherwise have fallen on manufacturers? In its last report, B.O.A.C. says that £5 million of its expenditure was written off as due to pre-operational development which had to be undertaken before aircraft could be brought into service. I am not pressing the Minister for a full statement today, but he promised the House that he would soon make a statement on the reorganisation of the aircraft industry. I hope that he will be able to give us some assurance on this matter, since it affects the supply of aircraft to Corporations.
There have been Questions in the House and considerable Press comment about the Rotodyne. I want to deal with the story as it concerns B.E.A. It is a very sad story and calls for urgent consultation. On 7th January, 1959, B.E.A. sent the Fairey Aviation Company a letter of intent, indicating that the Corporation expected in due course to place an order for six Rotodynes, providing that the aircraft met B.E.A.'s requirements. B.E.A. wanted the aircraft for a city-to-city service with a range of 250 miles and a capacity of 60 passengers. I believe that it was intended to use the aircraft on the London—Paris run as soon as possible.
At the annual meeting of the Fairey Aviation Company, on 20th November, the chairman of the company told the shareholders that, after considerable delay, the company was within a few weeks of signature of a development contract for about £4 million of Government support. He said "within a few weeks", which was ominous because at one time we were told that we were within a few days of a Summit Conference and it may be that this decision has gone the same way. He warned the Government of the effect of two years' delay and stated that it was difficult in all the prevailing circumstances to decide whether they should go ahead without a clear and sufficiently large Government order.
The next stage in this history was the Government's decision to make avail- 1276 able to B.E.A. a development grant of £1,400,000 to help B.E.A. to bring into being a helicopter service between London, Paris, Brussels, and Amsterdam in 1963, based on the Fairey Rotodyne. Recently, the Minister announced to the House that the whole scheme had been more or less knocked on the head by the announcement by the Fairey Company that it had rejected the contract and wanted additional Government assistance on expenditure not yet specified. The Minister promised to make urgent representations about that and we would like to know what the present position is, since B.E.A.'s future helicopter services are affected by it. This seems to be a classic case of where, when Government money is involved in bringing a worth-while project to fruition, the Government should have a financial stake in the project and, if necessary, certain control and have some overall responsibility and not be restricted merely to writing out cheques.
What do the Government propose to do when this game of bluff, which is what it seems to be, is brought to an end, and when can we expect production of the Rotodyne to proceed? B.E.A. is virtually committed to the purchase of six Rotodynes. Much depends on whether noise factors, and so on, will permit B.E.A. to operate the helicopters into the middle of cities—there is a strong possibility that that will not be permitted. However, I am sure that B.E.A. would like to know whether it can go ahead with the purchase of these aircraft. If B.E.A. then finds that it cannot operate them, will the Government be prepared to take over these aircraft for Service purposes, particularly for the Army? Such a possibility would help B.E.A. in its assessment of the position.
May I now turn to what is perhaps the most important factor as it concerns the users of air transport, the cost of air travel. We can divide the users of air transport into two main classes, those who travel on an expense account and usually travel first-class, and those who travel and have to pay for it—those who now travel either in the tourist class, or, where it operates, on the economy flights. Most hon. Members will have to be included in the latter category.
1277 The all-important factor that we have to bear in mind to achieve expansion of air travel by the Corporations is the need to fill the new aircraft coming into service by tapping the large potential reservoir of air users. It can best be done by reducing fares. As far as we see it, there must be no slackening of effort to get the cost of running air lines down and to reduce fares. On this, both B.E.A. and B.O.A.C. have good records.
Throughout the country the Chancellor of the Exchequer has been making pious appeals to private industry to reduce its prices. From all accounts he has been meeting with some sticky resistance. It is a pity that he does not turn his attention to the nationalised Air Corporations. He could then quote them as an example to private industry of how a nationalised body has been going about its job successfully in very difficult conditions.
§ Mr. F. A. Burden (Gillingham)
It is very easy to talk about a nationalised industry doing a job successfully if it is allowed to have a deficit of £5 million for doing it.
§ Mr. Chetwynd
The hon. Gentleman knows that that £5 million had nothing to do with fares. B.O.A.C. is in the forefront of getting prices down because it realises that the lower the prices are the more people will travel and the greater will be the profitability.
§ Mr. Paul Williams (Sunderland, South)
A number of independent operators have reduced their fares over a long period. Their fares are much lower than the Corporation's fares.
§ Mr. Chetwynd
I am not disputing that. I welcome it in the sphere in which they operate. There are very good reasons why they do it. Instead of running down nationalised industries we must give credit where credit is due, and considerable credit is due to the Corporations for their past policies.
B.E.A. is faced with the difficult problem of smoothing out the peaks in air travel. It is seasonable; it is daily as against nightly; and it is affected by mid-week travel and by holidays. The solution is that for longer periods the use of aircraft it is operating must be increased to level out these peaks in traffic. To meet this the Corporation has introduced a policy of making greater use of differentials between the 1278 fares payable at different times of the day. at different times of the week, and at different times of the year.
The House will be familiar with the fact that, from 1st April next year, on more than 400 fares there will be considerable reductions, ranging from 15 per cent., on the average, to 25 per cent., and, in some cases, there are even greater reductions. In addition, B.E.A. is also entering in a big way into the inclusive tour market. By offering, in conjunction with the travel agencies, holiday excursions, it is hoped to get more economical use of the additional capacity coming into service.
B.O.A.C. has also been in the forefront in pressing for lower fares. The Corporation is committed to this heavy purchase of new aircraft running into millions of pounds. It is hoped that by the improved economies of the new aircraft, they can pass on to the general public savings in the form of cheaper fares.
What is happening about their applications to extend their cheap services to Africa, India, Australia and the Far East? We all know that on the North Atlantic run the new economy class has proved a great success. We regret that it was not possible, through the I.A.T.A. conference, to get this extended to other routes in the world. Because of the failure to do that we are left with the Corporations pressing the Government to allow them to permit lower fares on these routes to Colonial Territories in East and Central Africa, the Far East and the Caribbean.
I hope that the Minister will be able to make an anouncement about this today, and that he will be able to give favourable consideration to this unilateral action to reduce the fares on the cabotage routes. In default of that, would it be possible to call an emergency conference of the I.A.T.A. some time in the early spring, to go over this again? It is time that we applied some other criterion to the fixing of fares on the routes. If one goes by a slower plane that ought to be considered in fixing the fare. We ought not to be dependent on the meals, whether they are sandwich or otherwise, in deciding which service we use.
May I now deal with the position of the Corporations and the independents? 1279 The operation of the independent airlines obviously has a considerable bearing on the success or failure of the Corporations. There is some confusion about the position. The Minister has a duty to further the interests of the Corporations, though I recognise that by their election programme the Government are, at the same time, committed to giving greater opportunities to private enterprise to take part in air transport development without—and this is an important qualification—in any way impairing the competitive strength of our international air services.
The Labour Party has no doctrinnaire opposition to the independents. Indeed, it was a Labour Government who, in 1948, first accepted the policy of associate agreements between private enterprise and B.E.A. During the past seven years the independents have increased their share of the total British air traffic in terms of passenger miles from 12 per cent. in 1951–52 to 32 per cent. in 1957–58.
The Air Transport Advisory Council made some comments on this in its last annual report. It stated that in its opinion the operation of the independent companies had not to any material extent adversely affected the growth of the traffic of the two Corporations. That view was contested, at least as tar as the future was concerned, by both B.O.A.C. and B.E.A.
What is the Minister doing about the applications now before him by the independents for permission to operate services at very low fares to a number of colonial points throughout the world? His decision could have a considerable effect on both the independents and the Corporations.
The Corporations opposed these applications on the ground that such services would necessarily cause material divergence of traffic from themselves. Indeed, B.O.A.C. estimated that in the first full year of the operation of these services it would suffer a loss of £5½ million and that it would prejudice its planned programme of development.
B.E.A. also has had to meet opposition from the independents. In its last Annual Report the Corporation says:we do not adopt a dog-in-the-manger approach to the expansion of the independent airlines. But we must oppose developments which would adversely affect our traffic and necessary future expansion.1280 The independent airlines continue to enjoy a significant share of British traffic. Any extension of that into the scheduled services of the Corporations would impinge on the Corporations' activities and would have to be resisted. The Minister is now trying to come to a decision on this problem. I hope he will bear in mind that he has a responsibility to the Corporations and to their employees who feel somewhat unsettled and uncertain about their future.
Recently, some of my hon. Friends and I had talks with some of the employees of B.E.A. We were most impressed by the way in which they identified themselves with the success of the Corporations. They would be very upset indeed if there were any substantial inroads into the operations of the Corporations. There would seem to be ample scope for the development by the independents in their present sphere of chartering, trooping, inclusive tours and the scheduled routes which they now operate.
The second reason why we can agree to the provisions of the Bill is the success of the Corporations in their present and past activities. If we look a little more closely at the results of those activities I am sure that we can agree that any objective appraisal of their affairs would rebut the general charge—all too common at and before the election—that nationalisation has failed. During the election some people were very quiet about the achievements of the Corporations. They made a general charge, with very few facts to support it. Whatever we may think of nationalisation as a theory or philosophy, in actual practice we can see that it represents a success story for our airlines whatever tests we apply.
B.E.A. has been operating at a profit for the last six years, and it hopes to have the biggest-ever profit this year. Barring some unforeseen happening this winter, that profit should be about £2 million. This September, its traffic level is 20 per cent. up on September, 1958, and its revenue-load factor is almost 75 per cent., as against 64.4 per cent. a year ago. It is increasing rapidly in freight carrying; indeed, it is the biggest freight carrier operator in Europe. I am sure that this offers a much 1281 greater field for expansion by the Corporations, and I hope that that possibility will be seriously explored.
Another very important thing is that it is a direct dollar earner. Last year, over 6 million dollars were paid to it by the United States, in addition to the money which American tourists spent over here. In the six summer months of this year B.E.A. carried 20 per cent. more traffic, with only a 12 per cent. increase in capacity. It is now carrying over 3 million passengers a year, and is the largest passenger-carrying airline in the world, outside the United States.
All these facts must be borne in mind in judging whether it is a fit body to be entrusted with this additional money. In 1960. B.E.A. will increase its capacity by about 20 per cent. over 1959. It will be operating an all-British fleet to look after the increased traffic which it hopes to operate, and a major factor in filling this extra capacity will be the introduction of lower fares on selected routes. It is our view that B.E.A. has served the nation well and that, given the right opportunities, it will continue to do so.
B.O.A.C. also has a record of considerable achievement, in spite of many adverse factors. I do not want to slur over them, because some are considerable, and the 1958–59 Report reveals a grave financial loss. It was a bad year. But I believe that in regard to its planned programme of expansion it has now made up the ground that it lost as result of the misfortunes of the early 'fifties, caused by the disasters to the Comet I and the delay in the introduction of the Britannia.
It has reasserted its grip on the North American routes, and it is very soon to expand into South America once again. It has pursued a policy of Commonwealth co-operation—which I am sure will be commended by hon. Members on both sides of the House—by extending its partnership with Qantas to include a pool agreement linking B.O.A.C., Qantas and Air India. It has reached a pool agreement with Trans-Canada Airlines to cover the Trans-Atlantic service between Canada and this country. I am sure that these agreements will greatly benefit the travelling public, and will also he of inestimable service to the airlines and the aircraft industry of this country. Can the Minister tell us what 1282 are the prospects of a conference of Commonwealth air lines fairly soon, to work out a common aircraft policy as well as a common airlines policy?
B.O.A.C.'s maintenance position is a difficult one, but it has made considerable strides in the last year. Its engineering costs in 1958–59 were 9d. per ton-mile, and it hopes to reduce that to 7d. in 1959–60 and 5½d. in 1960–61. There is no room for complacency. When we look at its balance sheet we see that B.O.A.C.'s losses are still too great. We must examine its associate agreements in order to see whether the large losses, amounting to about £2½ million, are abnormal or are to be expected. I believe that they are abnormal and that the Corporation is now in a much better position to run profitably. B.O.A.C. has every prospect of breaking even in 1959–60, and we should be proud of that fact.
Many problems remain to be solved before we can decide what future faces the Air Corporations. The supersonic airliner is one, and the noise problem is another. A third is the question of reducing the time taken to travel from the London terminals to London Airport. I was glad to hear the Parliamentary Secretary say that something will be done to improve the Victoria terminal of B.O.A.C., which is rather depressing at present. I also hope that an underground escalator will be constructed from Gloucester Road tube station to the Cromwell Road air terminal. That would facilitate travel from London to the airport itself. My hon. Friend the Member for Feltham (Mr. Hunter) will have something to say about the noise problem which so distresses his constituents.
We must always bear in mind that the air transport business is a very marginal one. It depends upon political stability throughout the world and also upon an expanding world economy. I approve the appointment of the Minister, and, in particular, the present Minister, with clear responsibility and real power in regard to both the operational and constructional side of aviation. I should like to refer to something I read in a B.E.A. house journal, referring to initials. The Ministry of Aviation is now known as Moa, and the dictionary definition of that word is, "an extinct 1283 bird without wings which cannot fly". It is akin to the ostrich, which, as we all know, buries its head in the sands. Perhaps I can use the right hon. Gentleman's name and hope that that process will be reversed, and that "Sandys" will get his head into M.O.A. and that something will come of it.
We support the Bill, as we shall support anything which will lead to a greater air-mindedness on the part of the public. I look forward to the day when it will be as easy to make a journey by aeroplane as it is to travel now by bus or train. What the airlines want now, above anything else, is another ten years of the subsonic era, in order to pay off the vast sums which have been put into the aircraft which are now coming into service. I hope that they will get this, and I hope that their aim to make a large reduction in fares will lead to an increasing amount of air travel by all people.
§ 5.9 p.m.
§ Sir Arthur Vere Harvey (Macclesfield)
I am sure that hon. Members on both sides of the House will congratulate the hon. Member for Stockton-on-Tees (Mr. Chetwynd) on making his first speech from the Opposition Front Bench. He has certainly covered a lot of ground and has given much detail. I welcome his remarks, although I do not agree with many of them. In the concluding part of his speech, he hoped that soon it would be as easy to travel by air as it is to travel by bus or train. If he ever travels between Euston and Manchester, he will learn that it is never easy. It is much easier to travel by air from London to Ringway, except that one has to book one's seat three weeks in advance owing to the lack of frequency of service. I should like to see a service which was sufficiently frequent to enable me to catch a following plane if I missed the one I was intending to catch, without having to book a seat. Here is a great opportunity. There are only about two or three aeroplanes a day and one has to wait for about ten hours in between.
I was not going to refer to the independents, but the hon. Gentleman opposite mentioned them. Of course, it must be recognised that very little was done for the independents up till recently. They struggled along without any tenure 1284 at all. Admittedly they were given associate agreements, but that is not a very satisfactory way of doing business. When it comes to raising capital with which to buy expensive aircraft it is a difficult matter when it is known that the agreements may be cut off at a moment's notice.
The Conservative Party has a duty, without unduly upsetting the nationalised industries, to do something for the independents. The hon. Gentleman who complained that the Corporations have the sole task of developing new aircraft. Let me assure the hon. Gentleman opposite that, given the opportunity, some at any rate of the independents would be very glad to share that task with the Corporations.
The hon. Gentleman spoke about the staffs of the Corporations feeling unsettled. Let me tell him that the staffs of the independents are even more unsettled about their prospects and will continue to feel unsettled unless something is done for them. I do not think that what is done for them need be done to the detriment of either of the Corporations. The expansion of the aircraft operating industry is somewhere about 14 or 16 per cent. every year. I should think that the independents could quite well share in that expansion. The Americans are flying far more services across the North Atlantic than we are. I think that the British independent operators could share in that traffic.
§ Mr. G. R. Strauss (Vauxhall)
Would the hon. Gentleman agree that the Americans do not allow independents to interfere or compete with the schedule lines which cross the Atlantic?
§ Sir A. V. Harvey
There are several companies. One of them is Seaboard which operates more services across the Atlantic than do the schedule lines. I do not know how the right hon. Gentleman accounts for that.
I wish to congratulate B.E.A., its chairman and staff on their trading results. The hon. Gentleman opposite spoke about six years' profits by B.E.A., but he did not say anything about B.O.A.C.'s losses. He rather skated over that point, which is quite understandable. We all know the reasons for it. I would suggest that B.E.A. ought to do more to develop 1285 internal services. I am sure that in this compact island of 50 million inhabitants we could get people more air-minded regarding travel in Britain.
An old complaint is that when one goes to catch a 'plane at London Airport at 7 or 7.30 in the morning one cannot get a cup of coffee or refreshment of any sort on the aircraft. Such things add up and bring in revenue.
When my right hon. Friend replies I should like him to deal with the agreement between B.E.A. and Olympic Airways, the Greek airline. I asked my right hon. Friend a Question yesterday, and in his reply he stated that there was a ten-year agreement and that B.E.A. was selling Comet aircraft to Olympic Airways. I should like to know whether these aircraft are being bought for cash on delivery or if the payments are being spread over a period. I believe that we as custodians of the taxpayers' money have a right to know some details of the agreement between B.E.A. and Olympic Airways.
Regarding the Rotodyne—the hon. Gentleman opposite referred to that, of course—I think the whole House is anxious that this aircraft should make progress and that it should not be lost to Britain. I doubt very much whether all the blame for the delay can be placed entirely upon the manufacturers. I understand that B.E.A. asked for a different size Rotodyne, and, of course, the Corporation has laid down very definite specifications about noise. No doubt that matter will be dealt with satisfactorily, but it will take time. The noise problem of jets has taken several years to overcome. It has necessitated the designing of special manifolds and so on. The noise factor can be improved, but it is not something that can be dealt with in the immediate future. I hope that the Fairey Aviation Company will be able to get on more quickly and that my right hon. Friend will accelerate the negotiations and get the matter settled as soon as possible.
One thing which I think occurs to all of us is that, in view of the large investment made today in airlines all over the world and the tremendous efforts made in aviation and the risks put into it by highly skilled people, the return, generally speaking, is very small indeed. In 1286 fact, the whole operation is really done on a razor's edge.
If one compares the losses and profits of B.O.A.C. with those of other international operating companies one finds that the performance of that Corporation is not very good. If we take ton miles and the number of maintenance crews maintaining the same number of aircraft, B.O.A.C. comes out of it very badly indeed. I suggest that in talking to the chairman of B.O.A.C. my right hon. Friend should point out to him that there is tremendous scope in that direction.
The hon. Gentleman opposite referred to the question of reducing the number of maintenance men. We were told last year that a good proportion of the £5 million loss was due to a surplus of over 2,500 maintenance engineers. How on earth did such a situation build up? It must have been taking place over ten years in order to reach a surplus of nearly 3,000 engineers on maintenance alone.
Of course, unlike other nationalised industries—for instance, unlike the National Coal Board which is not subject to competition—the Air Corporations have to compete with foreign airlines. That is really the yardstick. It is quite right to reduce fares and to get more people into the aircraft so as to fill the vacant seats.
Can my right hon. Friend tell me what is the position today with regard to the Britannia aircraft? We have heard a lot about late deliveries. Are there any penalty clauses for late deliveries, and, if so, what do they amount to? Has the contract been concluded or when will it be concluded? When my right hon. Friend the present Minister of Pensions was Minister of Transport and Civil Aviation the then hon. Member for Stroud, Sir Robert Perkins, asked him:if he will now make a statement about the purchase of Britannia and Douglas aircraft by the British Overseas Airways Corporation.My right hon. Friend replied:Her Majesty's Government have authorised B.O.A.C. to order 10 DC7C aircraft. This is subject to the express condition that these aircraft shall be sold when the long-range Britannia comes into route service. The gross cost in dollars for the American aircraft and initial spares will be of the order of £13 million, but most, if not all, of this cost should be recovered on resale."—[OFFICIAL REPORT, 25th February, 1955; 537. c. 203.]1287 We all know the sad story of these aircraft. They are now being offered for sale for about £300,000. Personally, I do not think they will fetch that amount, or even half of it. I am not blaming anyone. No one foresaw jet aircraft coming into service so quickly. However, I think that offers should have been invited at the time and a contract made with a willing buyer for the purchase of those aircraft three or four years later.
Can my right hon. Friend tell me whether in purchasing Boeing aircraft arrangements are being made for their resale when the VC1O comes into servcie? We are dealing here with very large sums of money. It occurred to me this afternoon that we are putting millions into this industry. The House can spend these vast sums of money on the decision of twenty or thirty hon. Members. I am sure that the right hon. Member for Vauxhall (Mr. Strauss) will know that outside industry would find much greater difficulty in raising sums of that sort. I believe that the amount to be spent on Boeing aircraft is £43.4 million. Are those aircraft to be sold when the VC1O comes into service, or are we taking a chance and proposing to try to sell the aircraft at a convenient date in the future?
One word of warning to my right hon. Friend. It is that practically all the world air lines are committed. They have either ordered the Boeing 707 or the Douglas DC8. We hope that in the case of Trans-Canada Airlines that company will buy some VC1Os. It may not be able to sell these Boeings in four years' time. Small airlines like Swissair will operate DC8s. The Scandinavian airlines and airlines all over the world have ordered airliners which will cost £2 million each; and when the time comes it will not be possible to sell them. When we are dealing with such huge sums as £45 million, we ought to know a little more about what will happen in the future when the VC1O comes into service. Incidentally, I think it will be a better aircraft than the Boeing or the DC8. It will save the building of miles of concrete runway and it has shown a better performance.
I am told on good authority that the DC8 is 900 miles down on the range of its estimated performance. We do not 1288 hear much about these American tragedies when they happen, but it only needs something to happen to a British aircraft and it is headlined in all the newspapers. Here is the DC8 900 miles down on range and top speed, and many of the operators taking delivery of this aircraft could easily hand it back to the makers because it has not come up to its stated performance. But they do not do so because they would not have an aircraft with which to operate if they did. Here is a great opportunity for the VC1O. Do not let us become depressed about it. The Vickers organisation has set up a service for the Viscount which is equal to none and, on that basis, it should be able to put over something in that direction.
I wish to ask my right hon. Friend whether B.O.A.C. contemplates ordering any Britannic aircraft, the large freighter of the future. I ask that because, on the North Atlantic route today, the scheduled North Atlantic freight-ton miles flown by members of I.A.T.A. increased by 18.5 per cent. last year and non-scheduled freight-ton mileage increased by 67 per cent. There are five carriers which operate between North America and Europe. There is Seaboard and Western, to which I have already referred, Pan American, K.L.M., T.W.A. and Swissair. Where is Britain in this great freight race across the North Atlantic? Nowhere.
A few years ago Airwork made a brave attempt to initiate a British service, but that organisation received no help or co-operation at all. It was not allowed to carry the British mail which sometimes went in American aircraft. In fact, it faced opposition. I suggest to my right hon. Friend that the fact that Britain does not operate freight aircraft across the Atlantic is a tragedy. Here is a great opportunity to give the independent airlines a chance to rectify that position.
One pleasing feature is the news we read last week of the pooling agreement between Indian, British and Australian airlines. I consider that to be the most satisfying thing which has happened for a long time. I wish it had happened several years ago, in which case the story today might be different regarding the aircraft being operated.
I do not think we can take any of these things for granted, because air 1289 transport is a very difficult business. We cannot gloss over the enormous losses made by B.O.A.C.—I am not referring to B.E.A.—and there is something wrong somewhere with the management of that organisation. I think that the Corporation wants cleaning up. Morale is not good, which is a matter I suggest must be put right. We cannot go on indefinitely losing millions of pounds every year. There is no inefficiency in the air. It is a good service; there is nothing to touch it. It is a question of the ground organisation.
I wish every success to my right hon. Friend and my hon. Friend the Parliamentary Secretary in their new Ministry. I am sure that the co-ordination they will bring about will produce results which will prove beneficial to our country.
§ 5.24 p.m.
§ Mr. John Rankin (Glasgow, Govan)
I do not think any hon. Member on this side of the House would disagree with what has been said by the hon. Member for Macclesfield (Sir A. V. Harvey) about there being a prima facie case for a thorough overhaul of the management of B.O.A.C. Many of us are troubled not only by what is happening but by what has happened in recent months. However, I do not wish to pursue that point.
I desire to pay my personal tribute to the crews of the aircraft operated by B.E.A. and B.O.A.C., to the maintenance staff who service the machines, and to the transit staff who look after their passengers so well. When coming to this House from my constituency I travel by B.E.A. and return at the weekends by B.O.A.C., and so I experience the courtesy which is extended to all travellers on both services and know of the care which is taken of passengers.
There has been a comforting change in the B.O.A.C. arrangements for passengers. Not so long ago we used to fly from London Airport to Prestwick and there was seldom a cup of tea or coffee available. It had disappeared and one had to pay for anything one had. That, of course, hit me more than it did others—
§ Mr. Rankin
—but I am glad to say that those little extras have now reappeared, and they are particularly comforting on that journey. They were especially comforting a fortnight ago when my hon. Friend the Member for South Ayrshire (Mr. Emrys Hughes) and I took off on the 9 p.m. plane to Prestwick and New York. We reached Prestwick at 10.25 p.m. to hear words which I have often quoted in this House; that due to high cross winds at Prestwick exceeding 20 knots the aircraft would not land but would return to London. So at 12 o'clock midnight we returned to the spot from which we had embarked at 9 p.m. For a time there was a fear on the part of my hon. Friend that we might continue to New York. We were saved by the fact that the plane has to refuel at Prestwick in order to continue the journey. It had only enough fuel to bring us back to London. So we were habitated in a hotel in London for Friday night and returned home by B.E.A. on Saturday morning.
That is an aspect of the operation costs of the airline which I am sure the hon. Member for Macclesfield will bear in mind when he is criticising B.O.A.C. I was told by the driver who brought us to London that on some evenings the Corporation is faced with the task of accommodating 200 passengers who may be stranded, not all for the same reason, whom the Corporation must disperse all over London and its marginal areas, even as far as Croydon. That is a big task, but it must be undertaken, and it is a costly one in view of the fact that the price of bed and breakfast in many hotels is excessive. There we have a situation which is forced on B.O.A.C., not because of cross winds, but because the Government have continually refused to turn Prestwick into a second international airport, despite the fact that for years I and other hon. Members have asked for that to be done. B.O.A.C. have to pay for that lackadaisical attitude—not, I agree, on the part of the hon. and right hon. Gentlemen who have come new to this task—of their predecessors who refused to recognise that Prestwick should be treated in keeping with the designation which we in this House have conferred on it. In the year 1959 we still cannot land at Prestwick Airport big, heavy machines like the 1291 Britannia and others which cross the North Atlantic.
This grudging attitude of the Government towards Prestwick is deplorable. We are talking tonight about sums running into almost £100 million, yet the Government refuse to spend £6 million on the whole development of Prestwick—not just on the runways, which would cost much less. When they will be completed, I do not know. We have pressed this time and again, and the fact is once more borne in upon us that in certain conditions runway arrangements at Prestwick are still inadequate to deal with the operational needs of B.O.A.C.
I was pleased to hear the Minister say that the Government wanted to see this industry expanded. We all desire to see the industry expanded. He actually said that he wanted "to see the expansion f the nationalised aircraft industry." We welcome those words. No hon. Member on either side of the House would dissent from them, but what I want to emphasise is that, although I have heard that thought expressed frequently by various Ministers, it has been very slow in materialising at Prestwick Airport. When we express our wish for an expanding aircraft industry we must note what one of the great operators has to say about this. I refer to the B.E.A. Report, which says on page 27:The British independent airlines frequently draw attention to the restrictions and limitations on expansion from which they maintain they suffer. We do not think they have much ground for complaint.It goes on to point out that one-third of total British air transport is today carried by independent operators. I say this with respect to those who are interested in the independent operators. Any further expansion of their services runs the danger of preventing the full and complete expansion of our nationalised Corporations, which the Minister has stated he desires to see. In noting those sentences from the B.E.A. Report, we have also to notice the sentence on the same page in which the Corporation tells us:B.E.A.'s economy is balanced on a knife-edge.I agree that that may be common with a great many of the independent operators. The Minister of Aviation indicated to them recently at a gathering in the 1292 West End of London that he had the feeling there were too many of them and that perhaps they would have to think of doing something about reducing their numbers. The Minister evidently feels they can do something to help themselves and that should be the first step. This type of continuing pressure on the nationalised Corporations sometimes becomes very unfair competition. The Report also says:We are one of the few major airlines in the world which have to subsist on short-haul routes alone, and at the same time have still to meet a large deficit on Domestic Services.Which brings me to another point I want to develop. One of the domestic services is to the Scottish Highlands and Islands. Last year B.E.A. lost £335,000 on that service. In the previous year it lost £360,000; and in the year before that it lost £268,000 on carrying out what everyone says is an essential service. When we put an obligation on the Corporation to operate those services which are run at a loss and which no independent operator would dream of touching, it is very wrong of hon. Members opposite to criticise losses which they themselves by there attitude help to inflict on B.E.A. This arrangement has been challenged in the Report of the Select Committee on the Air Corporations. I do not want to quote much from that Report but to refer to the conclusion on page 29, which says:Your Committee recommend that provision for them …that is, the services to which I have referred—should cease to be absorbed in the accounts of B.E.A., but should be made in the annual Estimates of the appropriate Departments.The Minister has been considering this. It may be that before we conclude today's debate he will have something of interest to say to us about the view he takes of that recommendation of the Select Committee, which made a very careful inquiry into the finances of the nationalised Corporations.
In my view, the point becomes more pertinent because of the fact that at this moment we are putting through the House a Bill which deals with services by sea and road to the Western Isles. We are proposing, through the appropriate Government Department, to subsidise Messrs. MacBrayne, to the extent of £360,000 per year. We are also taking a much more important step. We 1293 are, if necessary, to build ships for the contractors, who in all probability will be Messrs. MacBrayne. The Secretary of State for Scotland is to become a shipowner. Under the provisions of the Bill, he may be a ship-breaker or ship repairer. This is a most interesting development.
In the course of the debates which have been proceeding on that Bill, it has been accepted that not only is there a "Road to the Isles" and a sea-way to the Isles, but there is also an airway to the Isles. Today, if we expect people to travel to and from the Western Isles, it order to give them some of the facilities which we have in the big cities—to travel to and fro easily and cheaply—we have to recognise that speed is now an essential feature in travel. Therefore, the aircraft becomes a mode of travel, as it is now, to and from the Western Isles.
If the Government are to provide a subsidy for road and sea traffic, as recommended in the Report of the Select Committee, why not for air traffic? In addition, this morning, when I was pressing this point on the Secretary of State for Scotland—perhaps now we should call him the "Lord of the Isles"—it was decided that a Hovercraft was a vessel and that, therefore, a Hovercraft will come under the subsidy.
I now pose to the Minister of Aviation the point which I posed to the Secretary of State for Scotland, which I hope he will bear in mind when he is considering the matter. If a vessel which moves an a relatively small cushion of air is to get a subsidy from the appropriate Government Department, how is the Minister of Aviation to refuse a subsidy for an aircraft which is buoyed up or airborne by a much larger body of air? It seems to me that he must very seriously consider this point. In view of what is happening to Messrs. MacBrayne, and in view of the extensions of the definition of the word "vessel," it is unfair that B.E.A. should go on being faced year in and year out with the task of providing from its own resources the costs of running a service which ought to be borne by the nation as a whole.
There are one or two other points which I should like to mention. The right hon. Gentleman and I have discussed across the Floor of the House 1294 various matters which are not always satisfactorily explored by means of Question and Answer. I am sure the right hon. Gentleman will feel glad that an increasing number of Members on both sides of the House are taking an interest in him and his work. I am certain that any Minister who wants his job to be an important one will feel, when he sees on the Order Paper 30 or 40 Questions directed to him, that he is a very important Minister indeed. At the moment, we usually have only 15 or 16 Questions on one day, but I promise the right hon. Gentleman that after we come back refreshed, I hope, from our Christmas Recess and perhaps a trip to the Western Isles, we shall display an even greater interest in some of the things about which we have been talking tonight.
I want briefly to turn to one point which I have explored by means of Questions on various occasions. Ever since we passed the legislation creating the Corporations, Ministers of both parties, in the Labour Government and in the successive Conservative Governments, have said that the guiding principle in flying aircraft is safety first, safety second and safety all the time. Therefore, the control of aircraft in flight becomes a vital matter, because in an aircraft accident the tragedy is its finality. There is practically no crash survivability in an aircraft. In a road accident or in a sea accident, there is some chance of survival, but when an aircraft crashes, the result is much the same as when one drops an egg. There is a splatter and everything has gone. Therefore, the control of the aircraft in flight is important, and we have been trying to impress upon the right hon. Gentleman the need for having a uniform and single control.
I want to put a point to him. I am not in any way doubting his knowledge, though I should like to ask him if he realises what happens when an aircraft is coming into London Airport from the North. When it reaches Watford, it is under the approach controller who operates from the tower at London Airport. At that point, he gives a direction to the aircraft, and if there is any other aircraft approaching each receives its height level and its route. Then, as the aircraft come in towards London, if one of the machines happens to be—as it can well be and actually was on a famous occasion—a military one, it comes under 1295 radar control at Heath Row, while the other machine comes under the control of London Airport.
Because I have used the terms London Airport and Heath Row in that way, some people have thought that I was wrong, because they considered that London Airport and Heath Row were just names for the same place. In fact, Heath Row is used to distinguish the military radar control from the London Airport civil radar control. So we have now passed from the approach controller to the two radar controls. Finally, the military machine will come under the Northolt military control before it lands at Northolt. Therefore, we have four different controls covering two machines coming into London or Northolt.
There is the danger that there could be confusion between Watford and London. That has happened many times. As a result, I have been suggesting to the Minister that there should be one form of air traffic control and that it should be under civilian authority. I hope that he is thinking very seriously about this. It is all right setting off, but we want to have a reasonable certainty of landing safely at the other end. I have set off weekly for nearly fifteen years and have always landed safely, and I hope that that luck will continue.
Nevertheless, I raise the point today because yesterday, in a Written Answer to me—the right hon. Gentleman was at the bottom of the list for Questions and we could not get at him—the Minister dealt with a Question about the situation which will be created when Nutts Corner and Aldergrove are amalgamated. Apparently it is the right hon. Gentleman's intention to put the amalgamated airport under the military air traffic controller. His reason is that it is more efficient and economical. I should like to know why. Hon. Members will see the Minister's reply to me in today's HANSARD. Is military control more efficient and more economical? Many people would dispute that suggestion. I was astonished by the Minister's Answer, because the developing trend in flying all over the world is to place the control of aircraft under a civilian authority. I hope that the Minister will say a few words about the control system and about the problems which I have 1296 outlined in respect of the Western Isles and Prestwick.
There are many things which we could talk about tonight, and we have plenty of time. I wanted to say a word about Prestwick, a word about the Western Isles and a word about safety. All these are important topics. Every hon. Member who sets out on a journey by air from London Airport ought to know that, whether he likes it or not, he may be landed at Prestwick. It often happens. That being so, we should make sure that all arrangements will be satisfactory and that we shall have a safe landing on a runway adequate for the purpose.
Reference has been made to the fact that B.E.A. and, on its operational side, B.O.A.C. are a great success story. On both sides of the House everyone who likes to advertise success will join with me in impressing upon the right hon. Gentleman, who also wants to publicise success, that we should make known this story all over the countryside—in London, Glasgow, Edinburgh, North and South, East and West—and repeat the slogan "Travel by B.E.A." It is a great success story. Why should not we advertise it? Why should not the Government tell the world what B.E.A. is doing? It is the greatest operator in Europe, and it is ours. Should we not tell that aloud to the world? This is a story of transporting people in comfort, at speed and in safety by B.E.A. at home and in Europe and by B.O.A.C. throughout the world. Why should we not sing that song to the world? Who better fitted to lead the singing than the Minister of Aviation?
§ 5.54 p.m.
§ Mr. F. A. Burden (Gillingham)
I hope that the hon. Member for Glasgow, Govan (Mr. Rankin) will not object if I do not follow him throughout his speech, but there are certain points which he made which I shall take up. At one point he said that it was wrong for us to criticise losses made by the Corporations. I beg to differ from him.
§ Mr. Rankin rose—
§ Mr. Burden
It may be that that is not what the hon. Member intended to say, but I took a careful note and that is in fact what he said. I suggest that it certainly is the duty of the House to criticise in these matters, for the purpose of the Bill is to increase the authorised 1297 borrowing powers of the B.O.A.C. from £160 million to £180 million and of B.E.A. from £60 million to £95 million.
§ Mr. Rankin
I am not disputing that that is what I said, but if the hon. Member looks at HANSARD tomorrow, he will see that the phrase was used in relation to the services to the Highlands and Islands. I feel it wrong to criticise losses when we were forcing the Corporation to bear the cost of this service.
§ Mr. Burden
With respect, I think that we must take the picture as a whole. We cannot pick out little bits of the Corporation's activities and say, "We must not talk about them because they show a deficit". We must not suggest that we can talk only about those operations which show a profit. I am sure that the hon. Member would not wish to suggest it. Moreover, it would do the House and the Corporations no good whatever. I submit that when the Corporations ask the House for considerable sums of public money to be made available to them, it is our duty to criticise if we feel so disposed and also to try to be constructive.
Some of us must readjust our attitude to the Corporations. The Labour Party must get away from the idea that nationalised Corporations can do no wrong in any circumstances and many of my hon. Friends must eradicate from their minds the attitude that nationalised industries can do no right in any circumstances. We must try to look at this matter objectively. My hon. Friend the Member for Macclesfield (Sir A. V. Harvey) put the matter in perspective when he said that we must always remember that these Corporations are in direct competition with similar services throughout the rest of the world. They therefore cannot be cushioned, as possibly other nationalised industries in this country can be cushioned.
There is also another aspect of which we are inclined to lose sight. Owing to the enormous borrowing powers of the nationalised Corporations and the fact that they can go on building up a colossal deficit, we somehow seem to regard them not only as sacrosanct but in some way frequently is if there is something virtuous in this and that no one else could do better.
1298 Many of the small independent companies are paying their way under extremely difficult circumstances—circumstances in which the nationalised Corporations are enabled to, and do, impose restrictive powers on the development of the independent companies. Despite all this, these companies manage not only to maintain useful services but to help the British aircraft manufacturing industry to give the public good service.
We must look at the whole matter on that basis. In the long run, it all comes down to the single fact that we in this island by some means or other must establish ourselves as supreme in the airways of today and tomorrow as we have been supreme in mercantile marine activity in past years. If we fail to do that, we shall certainly restrict our opportunities for development as a great trading nation, for so much of our future depends on our development in the air.
I will take up very shortly one other point made by the hon. Member for Govan about the advertising of the facilities of the Corporations throughout the country. That is being done. It is not the job of Members of Parliament anyhow. It is the job of the public relations departments of the Corporations. They are not only staffed with highly efficient personnel who are very well paid, but they do the job abroad as well as in this country. The Comet service to Scandinavia is due to open in the spring. Alongside that opening there will be a large display of British merchandise in one of the biggest stores in Scandinavia, together with the story which can be told of the carrying capacity and efficiency of B.E.A., with the suggestion that the Scandinavians should, and I hope will, make use of them.
§ Mr. Rankin rose—
§ Mr. Burden
I am willing to give way to the hon. Gentleman again, but I hope that these interruptions will not he frequent.
§ Mr. Rankin
I recognise and accept that it is the duty of the public relations departments. As the hon. Gentleman is supporting me, will he join with me in pressing the Minister not in any way to limit the activities of the public relations departments in that respect?
§ Mr. Burden
I do not know whether an association between the hon. Gentleman and myself would be very fruitful. Some might consider that it was a liaison between sin and the devil.
§ Mr. Burden
I am sorry that the hon. Gentleman had an unfortunate experience when his trip to his home airport was interrupted. He mentioned that to illustrate the enormous cost that can result from delays to flights. It applies to every aircraft company—to the independents, to B.O.A.C., to B.E.A. and to all the airlines throughout the world. There is nothing unusual in it and it must not be regarded as something which is particularly responsible for the failures of B.O.A.C. and B.E.A. to make both ends meet. On one occasion I was going to the Middle East and unfortunately the aircraft in which I was supposed to fly came down in Paris. Although the cost to the airline concerned was very considerable, I spent a very enjoyable weekend in Paris. I am only sorry that the hon. Gentleman's experience did not provide him with the same enjoyment.
We have noticed also that the Corporations are investing in very expensive new aircraft. We all hope that they will enable B.O.A.C. in particular to rectify its financial position in the future. The House will be interested to know that at the time that the Comet service was supposed to be operating after there had been a terrific build-up for it, the staff at B.O.A.C. decided to strike. We all know that that dragged on and the cost is estimated to have been about £1¼ million. For a long time there was a feeling abroad that all was not well between B.O.A.C. and its staff. In the last few months it has appeared that there is now a better basis of work and understanding between staff and management.
In a Corporation of this size, if there is not to be an absolutely tragic cut in services and profits, it is essential that relations between management and staff should be at the highest possible level. A situation should not be allowed to deteriorate so that a strike, which becomes a national calamity, develops without every possible avenue being explored before it becomes operative.
1300 The total deficit for last year was £5 million. If there is truth in the statement that the cost of the strike was about £1¼ million and the cost of the ancillary companies, particularly Middle East Airlines and British West Indian Airways Limited, are taken into consideration, the total loss on the year for B.O.A.C. proper would appear to be about £1 million.
If that is so, the Corporation must look very closely into the advisability of continuing to carry the heavy load inflicted upon it by the losses incurred by some of its ancillary companies. Here is a very fruitful avenue which my right hon. Friend might explore. I do not think that B.O.A.C. would wish to hang on to some of these companies if there is no possibility of their being able to pay their way in the near future. The Corporation might be told fairly bluntly that the House expects that it will very seriously consider the advisability of carrying so many ancillary companies in the future.
The nationalised Air Corporations are in an entirely different position from the other nationalised industries; yet we have an opportunity of discussing their affairs only once a year when these accounts are brought into the House. Then it is for half a day only, which is inadequate. In view of the changing world, external competition and the vast importance of air transport to this country, my right hon. Friend should explore the possibility of the House debating the whole question more frequently than we do now. We should do so not merely from the point of view of examining accounts, but of discussing all the problems as they affect the future.
Both my hon. Friend the Member for Macclesfield and the hon. Member for Govan spoke about freight. There is no doubt about the great expansion of trade between countries and the surge in consumer demand. Many of our exports are highly seasonal, and unless they arrive at their destination dead on time they are either cancelled, or no more orders for them are received. More and more of our manufacturers are buying time, and are able to buy time, by the use of the air freight service, and there is a very fruitful area of development for the Corporations in the expansion of those facilities.
My hon. Friend drew attention to the fact that Airwork, certainly the pioneer 1301 of the independents in air freighting across the Atlantic, did not get a square deal and was forced to close down that service. The Corporations made efforts to restrict Airwork's activities without due regard to the general welfare of our industry, and without keeping a proper eye on tomorrow.
There will be an enormous extension in this sort of freighting, not only between this country and North America but also, as a result of the recent convention, between this country and Scandinavia—the Free Trade Association. Now is the time for the British independent airlines and the Corporations to start planning to take advantage of the opportunities that will arise.
The hon. Member for Govan resists any encroachment by the independents on what has come to be looked on as the preserve of the nationalised industries—
§ Mr. Rankin rose—
§ Mr. Burden
I am sorry, but I cannot give way. The hon. Gentleman was able to make a very long speech without any interruption, and I have already given way to him twice.
There is plenty of room in the air transport business of tomorrow for both the Corporations and the independents. I very much regret any impression that may have been given by the Corporations that they would not co-operate in any way by giving the independents an opportunity to advance. They seem to think that it might in some way or other interfere with their opportunities, or with what seems to be looked upon as their preserve. This is an enormous field, and the Corporations alone will not be able to carry our flag in it as it should be carried.
We want to encourage lower fares, but the hon. Gentleman opposite said, on the one hand, that we must encourage that for the Corporations and, on the other hand, he criticised the independents for trying to do the very thing that he says would be desirable for the nationalised Corporations. He cannot have it both ways. If we believe in lower fares, let us welcome them. Even if the Corporations are not able to compete—and I know that they are well able to compete— they should not be cosseted and preserved. They themselves say 1302 that though the percentage of passengers carried diminished at one time, it has now started to rise. In page 9 of the B.O.A.C. Annual Report, it is stated:With a fleet of 10 Douglas DC7Cs and with long range Britannias and Comets becoming available for service in increasing numbers throughout the year, the Corporation at last had equipment that was fully competitive.In another part of the Report reference is made to fares on cabotage routes, and it is said:Considerable publicity has been attracted by certain applications made by a number of British Independent Companies to the Air Transport Advisory Council for permission to operate services at very low fares to a number of colonial points throughout the world. The Corporation has opposed these applications both before the Air Transport Advisory Council and before similar advisory bodies in the colonial territories concerned.
§ Mr. Rankin rose—
§ Mr. Burden
I am sorry. I cannot give way to the hon. Gentleman again.
If the Corporations say that they now have the equpiment that will enable them to compete with anybody in the world, they cannot turn round and say that they cannot compete with the independents, which are financed, not by Government loan, but by people wanting to make a profit.
I believe that the time has come when we have to give the independent airlines an opportunity to get the finance and the aircraft to fly the routes of the world much more broadly than they have been allowed to do in the past. That is in the interests of the country's trade generally. From every person whom we bring here, we not only get the money he or she spends on the air fare, but money from their purchases here.
For instance, every American visiting us can purchase and take back, free of duty and tax, about £300 worth of English merchandise. They also spend money in our hotels, and many of them, after a visit, are much more inclined to buy British merchandise when it appears in their shops in America than they were before. That means that we have a wonderful opportunity, not only to extend the power and scope of the Corporations and the independents—and improve their finances—but to see that their work plays an enormous part in ensuring that British merchandise shall flow more freely to 1303 every corner of the world, through increased consumer demand.
I realise, as do most hon. Members, that my right hon. Friend and his Parliamentary Secretary have a very big task, but those of us who have seen my right hon. Friend's work in the last ten years in this House realise that he will grapple with that task with determination and courage. We all wish him the very best of luck.
§ 6.19 p.m.
§ Mr. A. E. Hunter (Feltham)
I agree with the hon. Member for Gillingham (Mr. Burden) in two respects. First, we should debate this subject more often. We are not given enough time. Whether that is the fault of the Whips or of the Government I do not know, but we should have more time to debate the activities of the Air Corporations and of civil air aviation.
I also agree with the hon. Member about the importance of civil air transport to the country. Britain was, and still is, a great shipping Power, but times are changing. We are only in the early days of civil air transport. There will be great developments in the years ahead. It is more than possible that, in the next century, aircraft instead of ships will carry goods across the world. The whole industry is, therefore, vital to our country. Britain has been a great pioneer in the air, and many have been the British inventors and people who have given their time and energy so that British aircraft can today hold their own with any in the world.
I congratulate my hon. Friend the Member for Stockton-on-Tees (Mr. Chetwynd) on his first speech from the Front Bench. I know his interest in the subject. He has had several chats with hon. Members representing constituencies around London Airport, and I am confident that he will make a success of his job. I join him in the appreciation which he paid to the former hon. Member for Uxbridge, Mr. Frank Beswick, for the great work which he did in the House for civil air transport. Uxbridge, of course, is very close to my constituency, and I much appreciate the great help which Mr. Beswick has given me on this subject. I join with my hon. Friend in hoping that before long he will be back in the House.
1304 I imagine that the two Corporations employ over 20,000 people. British European Airways employs 12,000, and I imagine that the combined total for the two Corporations must be more than 20,000. I am pleased that industrial relations between the executives of the Corporations are now much better. I know many employees of both Corporations, and I know well that their wish is to see both Corporations successful. A real lead is wanted, and I am quite certain that, if the Minister gives that lead, the employees will respond.
The Parliamentary Secretary said very clearly that the Bill is to provide the Corporations with more capital. They want more capital for new jet aircraft. They want improvements in the buildings at London Airport and improvements in their training schools. I hope that hon. Members will visit the training schools of both B.E.A. and B.O.A.C., when they will have an opportunity to see the great pains taken by the staff in training crews and pilots and the great efforts made for air safety. The two training schools at London Airport are a model for any country in air training.
§ Mr. Burden indicated assent.
§ Mr. Hunter
I am very pleased to see that the hon. Member for Gillingham nods in agreement.
I and certain of my hon. Friends, including my hon. Friend the Member for Stockton-on-Tees, visited B.E.A. last week and met the board. If, therefore, I give the present position of B.E.A., this is not because I do not wish to mention B.O.A.C., but, as a result of meeting the board of B.E.A., I think we are in a position to know the latest figures for that corporation. I feel that B.E.A. is too modest. Indeed, I told the chairman so. B.E.A. has had a remarkable year, and it should advertise its successes so that people can take pride in the great progress which the Corporation has made.
For six years, B.E.A. has made a continuous profit. This summer it made £5 million. During the winter this figure will be reduced because B.E.A. has many aircraft which are not used in the winter but only during the summer holiday period. Even with the winter decline, I am confident that B.E.A. will this year make a profit of not less than £2 million. 1305 We can. I think, take satisfaction in the progress of that Corporation.
Eight years ago B.E.A. carried 1 million passengers. This year it carried 3 million. In eight years the air traffic of B.E.A. has increased 300 per cent. During the summer it carried more passengers than any airline in Europe. Its expansion this year was 18 per cent., while the net average expansion in Europe was 4½ per cent. Outside the United States airlines B.E.A. carried more Americans than any airline in the world. It earned 6 million dollars, roughly £2,500,000. The freight carried by B.E.A. was the largest in Europe.
Turning to B.O.A.C., the picture is not so bright. B.O.A.C. has had difficulties. The hon. Member for Gillingham referred to some of them. It has had trouble with aircraft and delays in the supply of aircraft. There have been delays with the Britannia. All these things have added to its difficulties. Also, on the North Atlantic route, B.O.A.C. meets great competition. The North Atlantic route is serviced by Pan-American Airways, a big competitor of B.O.A.C. I hope that the Minister and his Parliamentary Secretary will during the months ahead devote some of their time to B.O.A.C. so that this Corporation, too, may surmount its difficulties and show a profit as B.E.A. has done.
I wish to impress upon the Government the need for cheaper fares. Air travel should be used by all classes of the community. If we plan ahead with the idea of reducing fares, I am quite certain that the expansion of both Corporations will be greatly assisted.
I want now to touch on a subject which I and my hon. Friend the Member for Hayes and Harlington (Mr. Skeffington) have often raised, namely, the problem of noise. Around London Airport live hundreds of thousands of people. Many of them came before the airport. Others have come since. Annoyance from noise is a major problem and we must solve it. Complaints come not only from my constituency and the constituency of my hon. Friend. The hon. Member for Richmond, Surrey (Mr. A. Royle) has complained, and so has the hon. Member for Twickenham (Mr. Gresham Cooke). Very many people are involved.
1306 In reply to a Question by the hon. Member for Twickenham, the Minister said that he had taken a spot check on noise at Willesden. I should like him to take one at Cranford, Bedfont, Feltham, Hanworth, Hounslow and at Hayes and Harlington. Such a check would give the right hon. Gentleman an idea of the extent of the problem which faces us.
I believe that the final solution lies in the hands of the aircraft manufacturers. I want the Minister to be tough with the aircraft manufacturers. He was known for his toughness with the generals whilst Minister of Defence. Will he be tough with the aircraft manufacturers and insist that they embark upon research in engine development and aircraft construction in order to get rid of noise? I want him to be tough also with the operating companies which break regulations. He has set a height above which pilots should fly, and I hope he will see that the regulations are carried out.
The subject which we are discussing tonight is in its early days. I think that it is of great interest to the youngsters. In my constituency some of the young people seem to know all the aircraft. Everyone knows the Boeing because one cannot miss its noise and smoke. They also know the aircraft of other countries, such as the French, Russian and German, and most of them have models. Every weekend thousands of these youngsters go to London Airport to see aircraft landing and taking off. I feel that the young people are taking an enormous interest in civil aviation.
The Parliamentary Secretary stated that the intention of the Bill was to allow the Corporations to expand and to equip themselves with modern aircraft. On those grounds we are only too pleased to support the Second Reading. I feel that this industry is vital not only to my constituency, where so many of my constituents work for the Corporations and also for the independent airline operators, abut also to the country. We want to make the Corporations a great success, for they fly for Britain. B.E.A. is flying all British aircraft and I hope that in the years ahead B.O.A.C. will do the same. Let us make these Corporations a great 1307 success because they stand for Britain in the air.
§ 6.37 p.m.
§ Mr. William Shepherd (Cheadle)
The hon. Member for Feltham (Mr. Hunter) always talks with very great sincerity on the question of airlines and we always listen to him with interest. I think that we all sympathise with him on the problem of noise, about which he frequently addresses us. The noise of aircraft is perhaps one of the most pressing problems of the day. Yesterday, I was in a school in my constituency when a lesson had to be halted because of the passage of aircraft overhead.
I am afraid that we may perhaps mislead ourselves if we think that there is an easy scientific solution to the problem, and I am more and more convinced as I look into it that we shall have to come to some compromise with noise. We cannot, however, allow ourselves to be diverted from scientific progress because of our reluctance to bear noise. There must be a compromise, and I feel that it is wrong to assume that there is some easy way by which science can rid us of this penalty of noise. I am afraid that the penalty has to be paid, much as I personally regret having to pay it.
The hon. Gentleman the Member for Glasgow, Govan (Mr. Rankin) made a speech of very considerable length. Science now transports us with amazing swiftness over our journeys. The only journey that remains as long as ever is the journey through the speeches of the hon. Member for Govan. When I first heard him fifteen years ago, he was much speedier than he is today.
§ Mr. Rankin
On a point of order, Mr. Speaker. Is there any reason why, when I am speaking, the hon. Member should inflict himself on the Chamber?
§ Mr. Shepherd
The hon. Gentleman complained about the facilities of the aerodrome known as Prestwick. I should like to say something about the facilities of an aerodrome which is much more important—Ringway, Manchester. It is an international airport in its own 1308 right, yet it has no alternative runways that are any good at all. The hon. Gentleman talked about his difficulties in getting to Prestwick, but it is true to say that it is often impossible to land even a Viscount on the cross runways at Ringway. Only three weeks ago, I had to wait four-and-a-half hours at London Airport to take off for Manchester. In the end I had to take off in a Dakota because the Viscount could not land on the alternative runways at Ring-way. I say to my right hon. Friend that before money is wasted on Prestwick, it ought to be provided for the genuine, international airport of Ringway.
I should like to support the hon. Gentleman the Member for Govan in his plea that we should deal in a sensible and businesslike way with this question of services which are purely social. If our Air Corporations are expected to operate sensibly and efficiently, we ought not to burden them with social services which involve them in an inevitable loss. We should do as in the case of MacBrayne's. When we want it to run uneconomic services to the Islands, we give it a subsidy for so doing. We cannot judge the efficiency of our Air Corporations if we compel them to provide uneconomic services. I have suggested that each year there ought to be a negotiated amount of money provided by the Government to the Corporations for services which are purely social.
§ Mr. P. Williams
If there is a negotiation of that nature, why should the contract be reserved for the Corporations alone?
§ Mr. Shepherd
If the Corporations do not want to operate the services, let someone else operate them.
Let me draw the attention of the House to the very anomalous position of the London-Manchester service. B.E.A. has objected each time an operator has tried to provide a more frequent service between London and Manchester. If we were to say to B.E.A., "You take a subsidy for the uneconomic social services", we could take a much tougher attitude with B.E.A. if it objected to more frequent services between London and Manchester.
§ Mr. Charles Loughlin (Gloucestershire, West)
The hon. Member concedes, first, that there is a social value given by the organisations and therefore we should pay subsidies. He then says that we can take a tougher line in given circumstances. Does he propose to apply precisely the same principle to all the industries under private enterprise to which we give subsidies?
§ Mr. Shepherd
I do not want to enter into that at the moment. I can only say that if B.E.A. does not want to operate a more frequent service between London and Manchester and we deprive it of its argument that it has to provide a social service elsewhere and therefore cannot afford it, we should give the service to someone who is prepared to do it.
I am convinced that there is a bigger potential demand for the London-Manchester service than is now provided by B.E.A. The services are ridiculous. Yesterday, I had to get up at six in the morning to catch the first plane to Manchester. Not everyone wants to get up at six in the morning to catch the first plane to Manchester. The service is run not for the benefit of the people travelling between London and Manchester but for the convenience of B.E.A.'s feeder services, and there is no genuine service between London and Manchester designed to meet the needs of passengers. I think that it is time we put the Corporation in a position in which we could talk to it in serious terms and could get a service like the one between Washington and New York. Obviously, we could not get the loadings which the Americans get, but we could get nearer to them than we do now.
I welcome the Reports particularly where they show some sense of financial responsibility, in that pooling arrangements are to be entered into. It is a most remarkable feature that the aircraft operating industry has never been cost-conscious. It has always preferred to put pride, national pride, before obvious economies. I hope we have come to the end of the era in which national pride cost the taxpayer a great deal of money. I hope, further, that we shall see whether there cannot be more co-operation between our Corporations. I am convinced that had they been two private corporations, there would by now have 1310 been much more co-operation between B.E.A. and B.O.A.C. than exists at present. We all know the reason why there was not co-operation. B.E.A. feared the potential cannibal qualities of B.O.A.C. As, however, the monster no longer displays the same kind of teeth, I hope that we shall see a study made by an outside organisation of potential co-operation between B.E.A. and B.O.A.C. with a view to saving money.
My hon. Friend the Member for Macclesfield (Sir A. V. Harvey) said that it is remarkable that we vote many millions of pounds to the Corporations without very much of a murmur. I do not like the way in which we do it. I wish that these Corporations were in a position to go to the public and offer their own attractive issue and get their funds in that way. I hope the time will come when this is possible. I should like to see the Corporations much further away from Government control than they are now. If one criticises B.O.A.C., as one can and as I shall do presently, the Corporation can properly reply that in many instances it has been interfered with by Ministers and compelled to do things against its commercial judgment which have subsequently proved to be rather disastrous. I look forward to the time when these Corporations will be able to raise their money directly from the public and when they will be free from a lot of petty interference to which they are now subjected by Ministers.
A great danger in providing capital in this way is that people become unconscious of the need to conserve capital. One example is worth mentioning. I am told that the billing of the Corporations on travel agents is extraordinarily lax and that travel agents have in their possession relatively large sums of money which is the property of the Corporations. A private concern struggling for capital would ensure that its billing arrangements were such that these travel agencies did not have money which they could put into building societies for a short time before they paid it over. A private concern would be after the money to save the high cost of capital. I hope that my right hon. Friend will see what can be done to make these Corporations more conscious of the need to save capital. It is surprising how easily capital can be wasted 1311 when it is obtainable as easily as it is by the Corporations.
I want to conclude by making a few words of reference to B.O.A.C. Let me say at once that I have no prejudice against the Corporation or against any of the directors or officers who serve it. Over the years, the Corporation has established a high reputation for British aviation. It has continued with distinction the rôle of Imperial Airways and British Airways and no one can deny that it has added lustre to the name. At the same time, it would be wrong of us in this House not to voice our most serious concern at the position of B.O.A.C. today.
In saying that, I do not refer merely to the large loss which the Corporation sustained last year and which it may make again next year. Losses are sometimes inevitable in a business, and there is no doubt that certain circumstances arising from the business of B.O.A.C. made last year an extremely difficult one for the Corporation; and those difficulties continue in some measure this year. What matters in a big corporation is the morale. I am sorry to say that the morale in B.O.A.C. falls below the level which should obtain in a corporation of its size and standing.
In my experience, B.O.A.C. is nobly served by its staff. It has an excellent staff. It has men and women who are keen upon the service, and the failure of morale in B.O.A.C. is in no way due to any shortcomings of the staff. The failure of B.O.A.C. is the failure of leadership. It is the duty of this House, voting an enormous sum of money, to see that proper leadership is given to the Corporation.
I am not criticising any individual director of B.O.A.C. If we were to go through the qualifications of those gentlemen, particularly the hierarchy of the board, we would see men of excellent character and ability. The truth is that the board as at present constituted does not give the Corporation the leadership, the direction and the drive that it ought to have. There may be personal reasons why the board is less successful than it ought to be. I do not propose to go into any suggestions of that kind. It is nevertheless true, despite the undoubted ability of the individual members of the board and those occupying senior offices, 1312 that the board does not as a whole fulfil the function of giving the leadership that is needed for a great corporation of this kind.
We have tolerated this situation in silence for quite a long time. The time is now overdue for my right hon. Friend to deal with this situation. B.O.A.C. is a vast national asset. Its performance, in all parts of the world, is a matter of supreme importance to us. It is not at the moment as virile and as efficient an organisation as it could be or ought to be. I urge my right hon. Friend not to tolerate for any further protracted period a situation which is manifestly unfair to the taxpayer and certainly unfair to the large staff of B.O.A.C.
On that rather sombre note, I wish to conclude. I hope that those in the Corporations will appreciate that we in the House who take an interest in aviation matters, whether on the benches opposite or on this side, are always seeking to do what we can for the benefit of the Corporations. The fact that we on this side believe that a greater part should be played by the independents does not mean that we want to detract from the prestige and business of the Corporations. We believe that there is room for both and we wish both private and public enterprise in aviation the best of good will.
§ 6.49 p.m.
§ Mr. Paul Williams (Sunderland, South)
There were two remarks in the speech of my hon. Friend the Member for Cheadle (Mr. Shepherd) which I appreciated very much. Thst first was that we should cease to waste money at Prestwick and should waste it instead at Ringway. That is a point which, I gather, was taken generally by the whole House. Having landed at both these aerodromes, I am not sure where the balance of evil and advantage lies.
My hon Friend's second point, with which I also heartily agree and with which I intend to deal shortly, was his suggestion that the Corporations should be moved further away from Government control. This is indeed at the heart of the relationships between the Corporations and the independents. The thing which I believe the House must decide—and, perhaps, the Government in the near future—is the method by which this situation is to be achieved.
1313 At this stage, as it is the first time we have had an aviation debate in this Parliament, I should declare that I have an interest in this matter. I am not only a director of one of the independent companies, but I am also on the Council of the British Independent Air Transport Association. I hope that this does not make me too prejudiced, but that it gives a sufficient background of information to enable me to talk with some knowledge on this matter.
I now return to the point made by my hon. Friend. The relationship between the Corporations and the independents is a theme which has been running throughout the debate. I am pleased that the old and, frankly, rather tedious battles between the nationalised Corporations and the independents in that sense appear to have disappeared from our discussions, and that both sides of the House now seem to be trying to find a reasonable and equitable distribution of future expansion to satisfy the honour and glory of the Corporations on the one hand and the comfort and, perhaps, tie profitability of the independents on tie other.
During the last two years, I think that we in this House, particularly those of us who take an interest in aviation matters, have seen an appreciable change on both Front Benches about the method by which we may be able to achieve this slight but nevertheless important change. I believe that a great task lies before the Minister of Aviation and his Parliamentary Secretary in carving out a new charter for British civil aviation which will free the enterprise both of the Corporations—for they have enterprise—and of industry as well.
There is a simple proposition, which has been already discussed in this House and elsewhere, for dealing with this matter. Instead of going through the present rigmarole of applications, the Government, perhaps through the introduction of a Bill in the not-too-distant future, should establish a new licensing authority divorced from political considerations, which bases its judgments on economic policy and nothing else. For too long have we taken decisions for or against the Corporation and for or against the independents against the background of political—the word 1314 "prejudice" is perhaps too controversial a word—opinion.
What is needed now is the establishment of a licensing authority with two vital but entirely separate functions. The first function, I suggest, should be to grant operating licences to an operator wishing to ply for hire. We know, because we debated the matter towards the end of July, the safety standards which obtain in civil aviation. All reputable operators wish to see stricter standards applied by the Ministry, and I believe that the Ministry itself would be willing to admit that there are many loopholes in the regulations which allow operators to start operating on far too shallow a foundation. I suggest to my right hon. Friend that the first function of any new licensing authority such as I suggest should be to grant operating licences. It should be founded on the background, experience, financial buildup and staff make-up and maintenance ability of any company.
The second task which is equally fundamental and important is the granting of route licences. I suggest that these two functions should be entirely separate. If my right hon. Friend will set his hand to the task of establishing a new licensing authority, separated from political consideration, which bases its judgment on economic and operating efficiency, he will be doing what I suggested was his task, namely, establishing in this Parliament a new charter for British civil aviation.
§ 6.55 p.m.
§ Mr. Richard Collard (Norfolk, Central)
If I do not follow my hon. Friends the Members for Cheadle (Mr. Shepherd) and Sunderland, South (Mr. P. Williams) it is because I am not sure how much time is available and because I particularly wish to make two points which I believe are extremely relevant to the finances of the two Corporations. At the outset, I should declare an interest in the aviation industry, although it is not on the operating side.
My two points refer mainly to B.O.A.C. I do not propose to urge my right hon. Friend in any particular direction on these two points but merely to expose two difficulties connected with the finances of B.O.A.C., both of which, I think, are important and certainly 1315 involve expenditure of a great deal of money.
The first is a point which was made rather strongly in the B.O.A.C. Report by the chairman. He spoke of the exceptional burden of expense and responsibility which has fallen on the Corporation in introducing new types of British aircraft into service. Three views can be taken of that problem. The first is that any self-respecting airline of any size and prestige should, from time to time, be capable of introducing new types and of footing the bill. That job is frequently undertaken by the major American airlines. There are arguments on both sides but that is one view that might be taken.
The second view which might be taken is this. It is true that the full development of an aircraft includes probably its first year in airline service. A manufacturer is not able to claim that his aircraft is fully developed until that has happened. It is therefore incumbent on manufacturers either to take a share in the introductory costs or to provide something in the nature of a design guarantee—which is something from which any manufacturer would run very fast—to cover this introductory period.
The third view which might be taken is that in practically no country except, possibly, America can a Government keep out of aviation financially. In almost every country State airlines are being subsidised and assisted by the taxpayer and Government in some way or another. B.E.A. certainly agrees with B.O.A.C. in the matter of introductory costs. I know that the chairman of B.E.A. recently delivered a lecture almost entirely devoted to this subject. Therefore, since subsidy is inevitable, and as it is to some extent a matter of prestige, why should not the Government help?
There are the three approaches to this matter. I would not say that I do not think that the chairman of B.O.A.C. is not guilty of a little special pleading here. There is something to be said for all three points. I wonder whether my right hon. Friend is able to say whether he has come to a conclusion on this matter and perhaps can say that all three entities involved—the Corporations, the manufacturers and the Government—will to some extent shoulder this burden. 1316 However, I do not think we can get away from the fact that any self-respecting airline in the world should be prepared from time to time to introduce new types, thereby getting the benefit which will accrue from new traffic, and, at the same time, pay the bill.
Finally on that point, it will be impossible, of course, for either the manufacturers or the Government to come in on these charges unless they are prepared to do the same for the independents. Therefore, if it is a matter of Government assistance it cannot be considered in isolation for the Corporations. It would have to apply to the independents in cases where they buy new British aircraft.
On the question of introductory costs, my hon. Friend the Member for Macclesfield (Sir A. V. Harvey) referred to the Britannia. I feel obliged also to refer to it since I am touching on this question. The Britannia is a fine, safe, well-built aircraft which was a bit unlucky in that it had a great deal of engine trouble early on, but not the kind of trouble which affected safety in any way. It was unlucky in that it had a great deal of minor unserviceability which caused delay but at no time brought its safety and reliability into question.
The B.O.A.C.'s attitude from the publicity point of view in the matter of the Britannia delays when first introduced was unbelievably clumsy, in my estimation. The Corporation seemed almost as if it wished to make the point that it was expensive to introduce new British aircraft. In order to make the point and to add weight to it, the Corporation seemed prepared to make the most of the delays which were attendant upon the introduction of the Britannia. I believe that it is capable of statistical proof that delays attendant on the introduction of the Constellation into American airlines and the Stratocruiser into both American airlines and B.O.A.C. were far more considerable and over a far longer period. But the Americans are clever at this sort of thing. The public relations which American airlines and manufacturers have in co-operation when they introduce new aircraft is much cleverer. If B.O.A.C. is to have assistance in the introduction of new British types I hope 1317 that it will look to the kind of publicity that it gives them in the early stages.
My second point refers to the subsidiary airlines of B.O.A.C. I think that I know most of them and I have flown in the aircraft of nearly all of them. I know that the operations of the subsidiaries account for three-fifths of the loss, which is serious. I am not quite sure, and I have never been quite sure, what exactly is the purpose of these subsidiaries. I do not believe that it is the same in all cases. I mean by that the purpose for which B.O.A.C. acquired its interest. Was it political or was it commercial? I suspect that, on the whole, it was both, so that it would generate traffic and concentrate it at the terminal points.
I note with pleasure that the B.O.A.C. Annual Report refers, albeit in inverted commas, to the term "branch line". I make claim, probably without justification, and I would be quite unable to substantiate it, that I originally coined that phrase as applied to airlines. It is the branch lines which generate traffic and concentrate it. The acquisition of branch lines will concentrate traffic for the main airlines and by acquiring an interest or operating or managing an airline overseas the Corporation is perhaps able to safeguard its local flying rights and its airfield rights, and so on.
I suspect, therefore, that the reasons, partly political and partly commercial, are not in principle to be criticised. But in detail one knows that the main losses in the subsidiaries are on the two subsidiaries which have been re-equipped with new types, that is British West Indian Airways and Middle East Airways. Both of recent years were reequipped with Viscounts, and it is interesting and depressing to note that it is precisely those two that have had heavy losses whilst Aden Airways and the Gulf Aviation Company, two airlines admittedly having a monopoly but at the same time owning old types of aircraft, are precisely the only subsidiaries to make an appreciable profit.
I am afraid that B.O.A.C. will be scared off buying new aircraft for its subsidiaries by this circumstance. I suspect that it has already been scared off. Nevertheless, it should take a slightly longer view, because if one takes Aden Airways I very much doubt 1318 whether future Governments of Aden with their airline owned or operated by B.O.A.C. would favour their being equipped with old aircraft. I hope that B.O.A.C. will not be scared off by that unfortunate experience of getting new aircraft for subsidiaries. There was a reason in each case for the heavy loss. I hope, therefore, that in future the Corporation will not say that it does not want to acquire new aircraft for the associates for in the long run both the Corporation and the subsidiaries would suffer if that were so.
I should like to look very quickly at some of the subsidiaries and their fortunes in the past year as set out in the B.O.A.C. Report. Aden Airways showed a profit of £30,000, a very tolerable record considering the difficulties with which the airline is faced but remembering however that it is a monopoly and that it has had no new aircraft to amortise and introduce. The Report on Arab Airways (Jerusalem) Ltd. shows that B.O.A.C.'s interest is to be terminated. That seems not one of the more successful of the Corporation's efforts. It seems to me that there is neither political nor commercial justification for its having taken an interest there and that the Corporation is probably wise to get out.
I have already mentioned the British West Indian Airways. I suspect that it is not just a question of competition in the Caribbean, although that exists, or the American recession, though that occurred, but I wonder whether the standard of efficiency there is as high as it might be. I know that Air Commodore Powell has been appointed to investigate its management. Everyone who knows him knows that the job will be done very vigorously.
The Gulf Aviation Company is one of the few subsidiaries making a profit. It is a very reasonable profit for a small airline of that kind, which I believe is doing a good job with aircraft that could not by any stretch of the imagination be called very modern. As to Malaya, it is only natural that there should be a B.O.A.C. interest there, but since the B.O.A.C. interest in Malayan Airways Limited is shared with Qantas Empire Airways one can only hope that Qantas's tendency to buy American air- 1319 craft will not be reflected in the aircraft with which Malayan Airways will eventually be equipped.
As to Middle East Airlines, the other of the subsidiaries which was reequipped and yet lost a lot of money, I think that it was shrewd judgment on the part of B.O.A.C. to move its Middle East headquarters from Cairo to Beirut and shrewd of the Lebanon to build a good airport. It has benefited from it. It was shrewd judgment, but the company had bad luck because if there is any part of the Middle East where one could reasonably look for stability, peace and quiet it is the Lebanon. Yet it was the recent riots and disturbances there that, more than anything else, brought about this heavy loss.
In Beirut also is the Mid-East Aircraft Servicing Company, in which I suspect that B.O.A.C. is disappointed since it wanted much more than a servicing organisation. It was hoping to introduce a chartering organisation and have a much bigger affair than this company has become. It is showing a loss, I suspect it will continue to do so, and I should be interested to know whether B.O.A.C. really thinks it is worth while going on with it.
As to B.E.A., one can only applaud the modest profit it has made and can only welcome its efforts for cheaper fares. It must be remembered, however, that these are to be introduced on good routes with high load factors. If this were attempted on, for instance, the routes to the Western Isles, it would be more difficult. When there is the traffic it is bold and right to reduce fares. What is difficult and risky is to try to generate new traffic in this way.
I have read in the Press that a strike of the Comet pilots has been narrowly averted. Having passed my life in aviation, I cannot help regretting that airline pilots should consider striking or withdrawing their labour. I know this occurs elsewhere in the world and no doubt it is the right of everybody to withhold his labour. However, I put forward as my firm opinion that airline captains should not do so.
It would be wrong to leave this subject without recognising that in the case of both the Corporations there is a high 1320 standard of operational efficiency, of aircrew skill and a fine record of safety.
§ 7.12 p.m.
§ Mr. Farey-Jones (Watford)
As this is the first aviation debate in this House since my right hon. Friend became Minister of Aviation, I am glad to have the opportunity to say to him and to his Parliamentary Secretary that we wish them success in the Department. There was never a time in the history of flying when things were quite as difficult as they are at present. Equally, there was never a time of such fantastic opportunity as there will be in the years ahead.
The Minister can, and undoubtedly will, become the architect of a set-up in which aviation will finally come into its own. Many speakers, and half the magazine writers in the world, talk about air transport as if it had reached saturation point. There have been difficulties at London Airport, at Idlewild Airport, in fact, at all world airports, and yet the aircraft of 25 or 50 years from now will not require runways and, therefore, the problem we are now facing will disappear. One invention I am thinking about especially is the utilisation of the Hovercraft in the icy wastes of the world. At present it is in its infancy, but it possesses over ice one of the most remarkable inventive promises of the future.
I shall speak for only a few minutes about something which has not yet happened. I notice that the Bill gives the Corporation additional borrowing and spending powers. As far back as 1934, I took part in what I believed was the first operational survey of the South Atlantic. At that time, we and our Dutch counterparts believed that the Eldorado of air transport was not the North Atlantic. I know that wonderful pioneer, Albert Plesman, believed this. In other words, it is not between London and New York but in Latin America.
So I am delighted to draw the attention of the House to the fact that at last a British airline has got the right type of aircraft and will, within a few weeks from now, commence to operate a service all round Latin America. I am referring to the B.O.A.C. service project, which will operate Comets all round South America. In the early days of 1934, 1935 and 1936, I remember meeting Juan Trippe at Lima in Peru 1321 when we were trying to use Fokker F.7 B's for carrying mining machinery from Santiago up to the mountains. He said that by 1965, when South America would come into its own, there would be so much raw material exported from that country that the traffic between North and South America and Europe would be fantastic. This is the very first time that a British line has had the right type of equipment, and on or about 20th January there will commence the first British regular air service in those countries.
I ask the Minister to use his maximum efforts to ensure that hon. Members from both sides of the House will share this historic flight around Latin America, because only those who see with their own eyes the terrific potential of traffic in that country can possibly believe the market which is available for tapping. Also, I hope the Minister will impress upon B.O.A.C. that it will not be enough merely to run the service around Latin America. There must be a reception department here in London manned by airline operatives who understand the people who will come from Chile, Peru, Brazil, Buenos Aires and Venezuela.
We have spoken in this House recently about the traffic problems of London, but if hon. Members could see cities like Caracas, they would realise how fantastically these have developed in the last fifteen years. The imagination almost boggles at the development and I am sure that within five years, with an efficient service to South America, B.O.A.C. will have struck a real Eldorado in passenger carrying.
I know it is easy to criticise the Corporation, but in B.O.A.C. there are enthusiastic and exceedingly efficient people. One of them happens to live in my division, and I have noticed how keen he is on building up inter-continental traffic. Up to now this House, year after year, has either argued that there should be publicly-owned corporations and no private operators or that there should be one vast corporation. Yet it would be impossible to use all the modern scientific inventions without a multiplicity of people in certain spheres given certain actions to perform in the developments of the next twenty-five years.
1322 As I do not wish to take up the time of the House any longer, I will conclude by saying that I hope the Minister will realise that trade follows the flag. We have in the Comet the most peerless aircraft in the world, and at present the psychological attitude throughout Latin America is switching away from Pan-Americanism and is largely anglophile. So the opportunity is there, I wish the Minister well, and I also wish B.O.A.C. well in the urgent task which is facing it.
§ 7.20 p.m.
§ Mr. G. R. Strauss (Vauxhall)
Every hon. Member is prepared to give full support to the Bill. We all want the Corporations to flourish and none of us wants to restrict them by lack of funds. We also welcome the Bill for another reason, which is that it affords us an opportunity to discuss the present position and the future of the Air Corporations and possibly to hear something of the Minister's attitude to some of the problems confronting them.
It is timely to have a discussion on the Corporations as we did not debate their Annual Reports. Everyone will agree that it is desirable that these should be regularly reviewed and criticised by Parliament. It is also advantageous to have this discussion today, as the Minister has now been in office for more than two months. We know him to be a hard worker, however much we may disagree with the conclusions at which he sometimes arrives, and we hope that he has now had time to consider some of the problems affecting the Air Corporations and that he will be able to tell us his conclusions on many of them. We hope that they will be more solid than the half-digested, random thoughts put before us by the Minister of Transport last week on some of his problems.
In considering the finances of the Corporations, we must appreciate the background to the aviation industry. It is an extraordinary phenomenon that this world-wide industry, new and growing by leaps and bounds, attracting more customers year by year, is nevertheless losing money, and losing it substantially.
The International Civil Aviation Organisation has published estimates showing that the income of all the airline operators in 1958 was £4 million less than their expenditure and that, taken together, 1323 they lost £57 million. That is a surprising state of affairs in view of the popularity of this great industry and its rapid development, but it is a fact which we have to bear in mind, and appreciate all the more, that in that same year B.E.A. was one of the very few international airlines to make a profit.
That is a good thing, but, knowing the attitude of hon. Members opposite and of the Minister himself, it alarms me a little, as I know that when they see a nationalised industry making a profit, they cast covetous eyes on it and immediately feel that it provides them with an opportunity for part or all of the industry to be transferred to private ownership.
§ Mr. Strauss
But hon. Members opposite take it when they do, and it was the right hon. Gentleman himself who took it with both hands in the case of the steel industry some years ago.
We all realise that the main factor which makes air transport an unremunerative industry at the moment is the rapid and uneconomic introduction of new types of aircraft long before the old types have had an economic life. That means that the old types must be sold at a heavy capital loss and that large sums of money must be paid out in developing and introducing the new types.
The cause of this rapid introduction of new aircraft arises from the desire of air passengers always to fly by the fastest aircraft. If they find that there is one plane which travels between London and Paris five minutes faster than another, they will flock to the airline giving that more rapid service, deserting the one with the slower service. It is extraordinary how passengers disregard the half-hour and hour waits at airports and the delays in getting from city centres to airports, if only their air journey is five minutes faster.
I wonder whether in his general consideration of the problems of aviation the Minister can hold out any hope, from what he has so far been able to assimilate, that during the coming five or ten years this frantic rush to incorporate new aeroplanes every few years is likely to end. Until it ends, there will continue to be instability in the aviation industry, and it will not be profitable.
1324 Our Corporations have a special handicap to which attention is drawn in their Annual Reports, but which has not been mentioned today. I now draw the Minister's attention to it and ask him whether anything can be done about it. I know that it is something which cannot easily be rectified, and it is a problem which affects all our publicly-owned industries. There is this remark in page 8 of B.O.A.C.'s Report:… the fact that the Corporation has to remunerate all its capital at fixed rates of interest, quite regardless of the trading results achieved, places it in an unfavourable light in comparison with a limited liability company, or those other airlines part or all of whose capital falls to be remunerated only out of profits.We know that this is so and that it puts B.O.A.C. and B.E.A. in a particularly unfavourable position.
It is an unfortunate and ridiculous situation and I hope that, when he has had a little more leisure to consider some of the broader aspects of aviation, the right hon. Gentleman will consider whether it is not desirable to transform the heavy loan capital of the Corporations into equity shares, held wholly by the Government, on which dividends will be paid when profits are made but which would not mulct the Corporations of substantial sums of money, which appear as losses in their accounts, when the Corporations are unable to earn profits.
Such a change would remove from the Corporations the burden of interest payments which no other world airline has to bear, at least to the same extent. I put that forward as one suggestion by which the Corporations could be relieved of burdens which they alone among the big international operators have to bear. If they can be relieved of such burdens they plainly should be.
My next question to the right hon. Gentleman is to ask whether he can throw some light on the problems of B.O.A.C.'s associated companies. According to the Report, these companies lost about £3 million last year, a very large sum. That loss may have been inevitable and there may have been good reason for investing in those companies, and it may be that the risk could not have been avoided. However, B.O.A.C. says that it is making a special reappraisal of the situation to consider what should be 1325 done—and I believe that the Ministry of Transport, which was then responsible for B.O.A.C., was brought into it. Has that reappraisal been completed? What are its conclusions? The whole House would be grateful if the Minister could tell us something about this.
Much has been said this afternoon about the low fares policy, to which both Corporations are committed with the full backing of the Government. We all think that that policy is right. B.O.A.C. has purchased planes for the sole purpose of carrying large numbers of people at fares which are well below the existing rates, and B.E.A. is to start a low fares policy on 1st April. Many difficulties have arisen about the introduction of this low fares policy and the House knows something about them. There was the discussion at the I.A.T.A. Conference in Honolulu. The position is now confused to the layman and I should be grateful if the Minister could throw some light on it.
We know that the Minister is able to authorise B.O.A.C to make fare reductions on cabotage routes, that is, routes to our overseas Colonies and Territories. We are told that B.O.A.C. has asked for a reduction of about 20 per cent. on existing fares. Can the Minister confirm that that is so? Does he propose to grant it? If he does, what happens next? Will there be a new I.A.T.A. Conference to consider the situation? What may be the effect on routes to other parts of the world? If we reduce the fares to Nigeria, what about the fares to Ghana? There are all sorts of consequential problems that arise from the introduction of this low fares policy. We should all be grateful if the Minister would give us some information on this subject.
Our Corporations are also suffering unfair damage compared with most other international operators through having to bear, sometimes fully, the development costs of new aeroplanes. Both B.O.A.C. and B.E.A. have said that that is wrong and that the situation today is such that all or a great part of the heavy development costs should be borne by the Government. B.O.A.C. had to write off about £5 million on the development costs of the Britannia and the Comet IV. In practice the American airlines often pay no development costs, because they buy 1326 aeroplanes which have been ordered by the Government for military purposes.
§ Sir A. V. Harvey
While not disagreeing with what the right hon. Gentleman says, I would point out that United Airlines, which is probably the largest operator in the world, accepts DC8s as they are without the assumption that they have any military life. I assume that that company is in exactly the same position as the Corporation.
§ Mr. Strauss
I think the hon. Gentleman will agree that that company is an exception. Normally, operators in the United States buy planes the development costs of which have been paid for by the Government. In this country the full development costs must be borne by the operator. That puts a burden on our operators which their competitors do not have to meet. There are very few operators in the world who have to bear that burden. Only seven out of the word's 200 airlines sponsor the development costs of aeroplanes they buy. B.O.A.C. and B.E.A. are among the seven.
That puts the Corporations at a great disadvantage compared with their competitors. There is a strong case for reconsidering the position, particularly in view of American competition. America's position in air transport is very strong today because during the war America developed transport planes while we did not. That gave them a great initial advantage. The result is that today America has 35 per cent. of the international air traffic compared with our 14 per cent. The Corporations are now facing a further disadvantage by having to bear the development costs of new aircraft which their competitors do not bear.
§ Mr. Burden
Unfortunately, this has been the established practice ever since the end of the war. When the right hon. Gentleman's Government were in power they ordered two prototypes. That practice has continued. The Americans order eighteen prototypes and get the "bugs" sorted out before they go into service with the armed forces.
§ Mr. Strauss
I do not think that the hon. Gentleman is right. In this country the Government have been responsible until recently for aircraft development, and now they are putting the burden 1327 more and more on to the Corporations. In the past development was often paid for indirectly by the Government.
In support of the contention I am making I want to quote, not my views, but those of the Select Committee on the Nationalised Industries. Paragraph 68 of its Report says:Your Committee emphasise that the cost of developing new aircraft at present appears to fall too heavily on the Corporations, and places them at a disadvantage compared with their foreign competitors who use American aircraft.I hope that the Government will consider this. It does not matter whether this is a new policy or an old policy. The Minister has no doubt considered the Report of the Select Committee very carefully and it may be that he will now be able to give us his decision about whether he is prepared to carry out this recommendation or suggestion.
Many hon. Members have asked about the domestic routes flown by B.E.A. and which cost the Corporation substantial sums of money—about £300,000 a year. I disagree with the recommendation of the Select Committee on this point. It is perfectly proper that B.E.A., in running European services, should bear the burden of running this domestic service. I do not think that there is any case for suggesting that this service should be subsidised. Indeed, B.E.A. agrees it should not be. B.E.A. is prepared to carry the service itself out of the profits that it hopes to make in running the European service as a whole. Where there is a transport service, which runs on many profitable routes, the operating company should bear the cost of running unprofitable routes where there is a public need for those routes to be run.
Any suggestion that domestic routes should be run by somebody other than B.E.A. would be disastrous. It would do enormous damage to B.E.A. It gets 25 per cent. of its revenue from these domestic routes and it would inflict severe damage on B.E.A. if the routes were run by private companies on a subsidy basis or anything of that kind. The present position should continue.
1328 There is, however, a strong case for paying a subsidy on another service to which the Select Committee draws attention. That is the investment by B.O.A.C. in the Kuwait Airlines. At the express request of the Government, this Corporation was asked to invest money in this company, which involved it in a loss of £150,000 last year. The Select Committee was absolutely right in saying that if a nationalised industry which is statutorily required to pay its way is to be used as an instrument of foreign policy it should not be required to bear consequential losses as a result. I invite the Minister to tell us that he agrees firmly with that common-sense recommendation and that the Corporations will be recompensed when they make losses doing something which they are requested to do in pursuance of foreign policy.
I come now to the vexed and contentious question of the independent airlines. No one questions the fact that these operators have played and are playing an important part in the British civil air transport industry. No one doubts that they have shown great initiative in the past, and that they provide a valuable service to the public. On the whole they are doing very well. They are increasing their customers. B.E.A. reports that in 1958 their expansion rate was two and a half times that of the Corporations, and it also reports that if troopings are included the independent companies take about one-third of the total of British air transport, in terms of passenger-miles.
So it is wrong to say that these people are having a raw deal. It is wrong to accept the view of the hon. Member for Macclesfield (Sir A. V. Harvey) that they are being squeezed out or kept in a static position. That was the impression he gave.
§ Sir A. V. Harvey
The right hon. Gentleman could not have been listening very clearly to what I said. I pointed out that the main complaint was that the independent companies had no security. They were working an associate agreement which could be cut off at short notice. I said that if they are to invest in new equipment they must be allowed a period of time to enable them to depreciate that equipment.
§ Mr. Burden
I was the guilty party, to the extent that I said that they were offered no security at all.
§ Mr. Strauss
They are able to flourish remarkably well in this position of insecurity in which it is alleged they exist. I do not agree that they are in an insecure position. They know that, given ordinary good behaviour, they will continue to flourish. If they do not know that, they are extraordinarily stupid. If they want any further certainty in the matter they have a right to appeal to the Government to assure them that, if they are doing a decent job, within the confines permitted to them, they will be allowed to continue to operate. In fact, they know this quite well. If that were not so they would not be developing their airlines.
These companies have no complaint. They are doing well, and are profitably expanding. I am very glad to see it. They are giving a good service. Nevertheless, they are always demanding fresh rights and submitting to the Government proposals which, although at first sight appearing attractive, would in practice hamper the Corporations' activities and undermine their viability. In the past the Government have given a sympathetic ear to the requests of these private operators, and now we want to know to what extent the present Minister's bias—if he has any—will lead him to favour the demands of the independent companies when these will clearly damage the Corporations.
§ Mr. P. Williams
I think that the right hon. Gentleman is referring to a point I made about the establishment of a licensing authority. If a licensing authority of the kind to which I referred were set up there could be no guarantee that the independents would get any traffic at all; it would be for the licensing authority to decide.
§ Mr. Strauss
I was not referring to the question of a licensing authority. We are told that we are to have one. Whether that is a good or bad thing will depend upon the terms of reference under which it will work, and we do not yet know what they are; we are waiting for the Minister's Bill.
1330 But we all know that the independent companies are demanding to be allowed to fly on new routes at much lower fares than the Corporations' present ones. If such demands are acceded to the independent companies will derive much benefit, whereas grave damage will be done to the Corporations. It is always easy for an operator, whether in air transport or anything else, to charge cheap fares and to have its vehicles 100 per cent. filled if it runs an irregular service. It can always take traffic away from the scheduled transport company, which has to run regular services.
That is what happened with the pirate buses in London, many years ago. Those buses were able to charge fares much lower than those fixed by the London General Omnibus Company, so creaming off many passengers who would otherwise have travelled on the Company's buses. Similar action attempted by the independents should be resisted, as it would result in harming the Corporations, and making them less able to meet the intense world competition they always have to face.
An hon. Gentleman opposite said that we all agree that in this problem of the Corporations v. the private operators it is not now a question of one against the other, but of co-operation between them, in seeing how best they can fit in with each other. Where such co-operation is possible it should be given, and a great deal is given already. Nevertheless, there is an inherent conflict which has always existed and which is evidenced by the present request of the private operators to fly lines at cheap fares on scheduled routes. The problem is not really one of public enterprise v. private enterprise; it is one of common sense. In the United States, where all the airlines are privately owned and profit-making, or rather profit-seeking, the air traffic control vigorously resists any fare-cutting application by one operator which may undermine the soundness of the chosen operator for any route. All we ask is that the Minister should be equally firm and sensible. We hope that he will be.
If he takes that line the independents will have nothing to complain of. They already have some advantages not possessed by the Corporations. For instance, 1331 they are allowed to do trooping and the Corporations are not. [Laughter.] I do not know why that remark should be met with hilarity. It was a concession to private companies which we thought was wholly wrong.
Can the Minister give us some confirmation that he will strongly resist all concessions to private operators which are likely to lead to a weakening of the position and to an undermining of the viability of the Corporations? I hope he will be able to do that categorically today. The Minister must realise, as we all do, that on the welfare of the Corporations there also depends, to an increasing degree, now that the provision of military planes is running down, the welfare of the aircraft industry. This industry, with exports of £150 million a year, earns three times more in foreign currency than do the two Corporations. It is, therefore, in the highest national interest that the Government should do everything in their power to protect the Corporations, whose record is one of remarkable enterprise and initiative, from all attempts—whether emanating from abroad or at home—to undermine their prosperity.
The Government should indeed give them all the positive assistance available to them in securing, maintaining and increasing their position in world aviation. We hope that the Minister will be able to assure us today that this is in fact the policy he intends to pursue, in deeds as well as in words.
§ 7.52 p.m.
§ The Minister of Aviation (Mr. Duncan Sandys)
We have listened to a number of speeches by hon. Members who can speak with considerable authority on aviation matters and who obviously care deeply about the success and future of British aviation, both the Corporations and the independents.
I wish to congratulate the hon. Member for Stockton-on-Tees (Mr. Chetwynd) on the way in which he made his opening at the Opposition Dispatch Box on the subject of aviation. I think we all felt that he brought to it an objective and constructive mind, which is very welcome in debates of this kind. It is also with pleasure that I find the right hon. Member for Vauxhall (Mr. Strauss) as my opposite number once again. He 1332 referred a moment ago to the fact that we had an agreeable time a few years ago discussing the denationalisation of the steel industry. Although we were not 100 per cent. in agreement on all points, nevertheless we got on very amicably. I hope it will be the same in our debates on aviation.
This debate, although probably few people in the Galleries will have suspected it, is concerned with borrowing powers for B.O.A.C. and B.E.A. I agree with my hon. Friend the Member for Cheadle (Mr. Shepherd) that it would be much better if the Airways Corporations could raise their own loans from the public on the market. But I am afraid that that time has not yet come, although it is not impossible that we shall get to that point at some time in the future. The Parliamentary Secretary gave the House very full explanations of the precise purpose and scope of the Bill, and I do not propose to go over that again. Hon. Members have raised a wide variety of questions, and I hope they will allow me the necessary time to answer as many of those as I can.
The debate centred upon the finances of the Corporations. I felt that the hon. Member for Stockton-on-Tees rather assigned himself the rôle of defending counsel for the Corporations, but I do not think he need adopt that line. We all want to look at this quite objectively. We all want the Corporations to succeed, if for no other reason than because so much public money has been invested in them and because the prestige and reputation of British aviation and our airlines are dependent on the success and reputation of the Corporations as flag carriers of British aircraft. I suggest we are all on the same side in this debate and facing these issues.
Many hon. Members, naturally, referred to the £5 million loss on its operating account incurred by B.O.A.C., as shown in its last Report. That loss was incurred after paying interest of £3½ million on its borrowed capital and after having set aside £6 million to cover depreciation in value of aircraft and other assets. The right hon. Member for Vauxhall suggested—I know he was quoting views expressed elsewhere—that some part of the loan capital should be turned into equity shares and, he added, held wholly by the Government.
1333 There might be something in the suggestion if the equity shares were not wholly held by the Government and were sold to the public. If the equity shares were to be held wholly by the Government, it does not seem to me that there would be very much difference in the situation. If a dividend is passed to the Government and a little more is borrowed from the Treasury, it does not seem that the Corporation would be very much better off. From the point of view of the Corporations presentationally, it would be more attractive not to show a deficit and to pass the dividend. But, from the point of view of the House of Commons, it is much better that any losses which occur should be brought out clearly before the House so that we can see where we stand.
B.O.A.C., like other international airlines, was hit by the general slowing down in the expansion of air traffic in 1957 and 1958. In addition to that general trend, there were a number of special reasons for the exceptional losses incurred by B.O.A.C. last year. The Corporation's £5 million loss included a loss of more than £3 million made by the associated companies. A number of hon. Members have referred to that. In particular, my hon. Friend the Member for Norfolk, Central (Mr. Collard) made a number of interesting remarks about the associated companies.
Of the £3 million losses by the associated companies, £1.7 million was incurred by the Middle East airlines. I think it quite fair to attribute that in very large measure to the revolution and other disturbances which took place in the Lebanon and the generally disturbed situation in that area In addition, the British West Indian Airways, a subsidiary company of B.O.A.C., lost more than £500,000. Another serious item on the debit side, to which no allusion was made in the debate today, was the unfortunate strike of B.O.A.C. engineers at London Airport last year, which cost the Corporation over £1 million. In addition to the £5 million loss above the line, the B.O.A.C. accounts for 1958–59 show a deficit for the year below the line of £6½ million. I do not think anybody referred to that during the course of the debate, but it is worth mentioning. Most of this sum is attributable to the 1334 extra cost of introducing the Britannias and the Comet IVs into service.
My hon. Friend the Member for Macclesfield (Sir A. V. Harvey) asked whether there was a penalty clause in the Britannia contract, and this is the information which I should like to give him on that point. The B.O.A.C. contract with the Bristol Aeroplane Company did include provision for damages for deficiencies found in the aircraft or if the aircraft were late in delivery. These provisions were enforced, and a substantial sum was paid by the Bristol Company, but did not fully compensate B.O.A.C. for the loss which it had incurred. That is the position.
The right hon. Member for Vauxhall and his hon. Friend were right to remind the House that the Select Committee on the Nationalised Industries in its recent Report expressed the view that the cost of introducing these new aircraft appeared to fall too heavily on the Corporations; and the Committee thereby raised the question whether the Government should relieve the Corporations of some part of this burden. I am not yet in a position to state what are the Government's reactions to this section of the Select Committee's Report, but I can assure the House that we are giving the matter very careful consideration.
The hon. Member for Stockton-on-Tees said that in order for an air line to be profitable it must have the right aircraft at the right time, and I think we can all agree with him on that. Undoubtedly, in this respect, B.O.A.C. has been unfortunate. In the first place, there were the fearful Comet I disasters. But let us be quite clear about this: without those disasters, B.O.A.C. would have been well ahead of the rest of the world. Later, the Corporation suffered again from the late deliveries of the Britannias, about which I have just spoken. These, together with the general recession in air traffic, account to a very large extent for B.O.A.C.'s failure to increase its revenue at the rate which was forecast when the last Borrowing Powers Bill was introduced in 1956. Nevertheless, the present position of the Corporation is much healthier. The Britannias are now in full service, and the Comet IVs have been delivered 1335 ahead of time. They have earned an enviable reputation throughout the world for reliability.
As the right hon. Member for Vauxhall said, one of the most serious financial worries of all long-distance airlines today is the rate at which they are having to re-equip themselves with new types of aircraft. This has been forced upon them by the keenness of competition. The right hon. Gentleman referred to the fact that passengers liked to travel by the fastest plane, even if it was only five minutes faster than another. I think that is quite true, but I would emphasise that it is not only the faster plane which is impelling airlines to make these changes. It is the fact that jet aircraft are cheaper to operate. They are more economical to run, and it is very difficult to compete with other airlines if one's operating costs are heavier than theirs.
On the other hand, the price of the change-over from one aircraft to another is very serious indeed. The result of this is that piston-engined aircraft have become to a large extent obsolete for long haul routes. All the leading air lines are being obliged by economic pressure, as well as the preference of passengers, to get rid of their piston-engined aircraft long before their useful life is exhausted. I have discussed this matter with those concerned, and I think that they have very little option if they are not to lose their position in relation to their competitors. The only way out that I can see is that there should be an international agreement not to bring into operation new types of aircraft, but I do not see how that can be done. We might do something about fares, but about aircraft I should not have thought that it was possible.
Another effect of these developments is that the price which can be obtained for the sale of the older types has fallen well below that which had previously been allowed for in the depreciation arrangements. That adds further to the financial problem.
I was asked specifically about the resale of the D.C.7C.s. B.O.A.C. bought D.C.7C.s as a stop-gap, and intended selling them when the Boeing became available in 1960 and 1961. In view of 1336 the dramatic fall in the value of piston-engined aircraft, which all airlines misjudged, it might conceivably—I am not announcing any decision—be better to continue to use some of these aircraft for a longer period in subsidiary rôles. All possibilities will naturally have to be considered by the Corporations and by the Government.
In this connection, my hon. Friend the Member for Macclesfield asked whether B.O.A.C. was contemplating ordering the Britannic freighter aircraft. The Corporation is not at present planning to order freighter aircraft. One of the reasons is that the capacity for freight in passenger carrying aircraft is increasing all the time. It will increase greatly when we have got the Vanguards and the V.C.10s.
The hon. Member for Stockton-on-Tees asked me to say something about the future prospects of B.O.A.C., about which he said a good deal himself. If I can add anything to that, I will. As the House may have noticed, in the various jobs which I have had, I have always been very chary about making rosy predictions about the future, except perhaps in one instance, in regard to voluntary recruiting, when I felt that the creation of an atmosphere of confidence was essential to success. Therefore, I am a little hesitant about prophesying for B.O.A.C. sunshine round the corner. Nevertheless, I think it would not be fair to B.O.A.C. if I were to say nothing about the more favourable trends which have undoubtedly been developing during this year.
The Corporation has informed me that the traffic carried between March and November was 25 per cent. greater than during the same months of last year. Perhaps one of the most encouraging signs is that during 1959 B.O.A.C. has increased its share of the important North Atlantic traffic. In fact, for the first time, it has outstripped Trans-World Airways, and is now second only to Pan-American. As a result, B.O.A.C.'s own services during the last seven months made an operating profit of nearly £1 million after charging interest on capital.
My hon. Friends the Members for Gillingham (Mr. Burden) and Norfolk. Central criticised the losses of the associate companies of B.O.A.C. The 1337 Corporation is, of course, very much alive to this problem, and has been taking active steps to improve the financial position of the associate companies. A programme of retrenchment and reorganisation has been put in hand, the object of which is to get British West Indies Airways on to a profitable basis within a period of three years. The improved political situation in the Middle East during recent months has made it possible for Middle East Air Lines to operate in more normal conditions; and in consequence an improvement in its financial results can reasonably be expected. For these and other reasons, B.O.A.C. hopes during the current year that the losses of the associate companies will be reduced to about £500,000, compared with £3 million last ear. These figures were given to me by the Corporation. All of us want to see the associate companies show a balance on the right side; and every effort must be made to achieve that.
The right hon. Member for Vauxhall implied that the Corporations were being obliged to carry on uneconomic services through their associate companies at the request of the Government for political purposes, and he thought that the Government should help them in that. I do not want to go into detail, but there may be one case in which it might be argued that that situation has arisen. Broadly, if that situation should arise again, the Government will be prepared to consider the position. I want to emphasise that the Corporations are convinced that, if a small loss is unavoidable on these subsidiary services, it is worth accepting it economically in view of the volume of traffic which they feed into the B.O.A.C. trunk lines and which might otherwise go to their competitors.
§ Mr. Sandys
That was the service which I had in mind.
My hon. and gallant Friend the Member for Macclesfield referred to B.O.A.C.'s high engineering costs. This is one of the important factors which have contributed to the Corporation's disappointing financial results. No doubt compared with other airlines, B.O.A.C. 1338 has for some time been seriously overstaffed on the engineering side.
The Corporation is well aware of the problem and has been taking steps to deal with it. It has substantially reorganised its engineering base at London Airport so that it can be run efficiently with an appreciably smaller staff. Reductions in personnel have to be effected gradually if great friction and difficulties are to be avoided. As the hon. Member for Stockton-on-Tees pointed out, the engineering staff of B.O.A.C. has been reduced during the past two years from about 8,000 to 6,500 and by 1961 the Corporation hopes to cut it down to 5,500. This has been reflected in the Corporation's engineering costs. In 1957, these costs were 10½d. per capacity-ton-mile. In 1958, they fell to 9d., and in the current year they are expected to drop to 7d. The Corporation aims to bring them down next year to 5½d., which would compare well with the corresponding costs of its leading competitors.
As my hon. Friend the Member for Cheadle said, B.O.A.C. has established a fine reputation among the travelling public throughout the world. I think that I have said enough to show that there are good and solid reasons for expecting that, when the current year ends, the Corporation's financial results will show an appreciable improvement.
My hon. Friend the Member for Watford (Mr. Farey-Jones) stressed the importance of the services to South America. I am looking forward to going on the inaugural flight of B.O.A.C. to South America at the end of January.
I have dealt at some length with the position of B.O.A.C. Naturally, concern was expressed primarily about B.O.A.C. because of its financial position, but I should like to say a few words about B.E.A., where the financial picture is very different. B.E.A. has declared a small profit for a number of years and has begun in a small way to build up reserves from revenue. Last year its profit amounted to about £200,000, which was quite creditable considering the world-wide recession in air traffic and also considering that B.E.A. is providing a number of uneconomic services.
The hon. Member for Glasgow, Govan (Mr. Rankin) referred to this and particularly to the services to the Scottish 1339 Highlands and Islands. The service to the Isle of Man comes into the same category. He asked whether it was right for there to be a subsidy for the sea service to the Scottish Islands and no subsidy for the air service. The sea subsidy is intended to be confined to the shipping concerns which provide only services to the Islands. In other words, these are concerns which have no opportunity of making good their losses on other routes. A subsidy to B.E.A., on the other hand, would imply giving a subsidy to a Corporation which is able to offset these losses on its other routes.
§ Mr. Sandys
I was thinking of the sea service. I think that the hon. Member had that in mind.
The fact remains that these services to the Scottish Highlands and Islands and to the Isle of Man, whether we like it or not, are being subsidised. We have to be clear about that. While I am not pronouncing any view on the subject today, I think there is something to be said for bringing subsidies out into the open. That is what the Select Committee undoubtedly had in mind. I therefore assure the House that we shall consider most carefully the Select Committee's observations on this point.
In the first half of the current financial year, which included the favourable summer months, B.E.A. increased its traffic by about 15 per cent. and managed to fill its aircraft—this is perhaps the most encouraging feature—up to 73 per cent. of capacity, compared with 65 per cent. last year. As a result, during the period B.E.A. has made a profit of about £4½ million. This will undoubtedly be reduced by losses during the slack winter months; but I shall be surprised if the Corporation is not able to show an appreciable increase in its profits for the year as a whole. I am glad that my hon. and gallant Friend the Member for Macclesfield congratulated B.E.A., for we can be well pleased with the progress of B.E.A. and its financial results, which compare well with those of any other major airlines.
The right hon. Member for Vauxhall and others asked about the Government's policy on fares. I have referred to the 1340 improving prospects for both Corporations, but we must not underrate the formidable problems which face them both in the near future. Most of the new aircraft which will come into service in the next two or three years will carry about 50 per cent. more passengers. The Vanguard, which B.E.A. is introducing next summer, carries 120 passengers compared with 60 in the largest Viscount. The new planes are also faster and, consequently, capable of doing more flights in a given time. In order to make economic use of this greatly increased carrying capacity, a large increase in air traffic is essential.
I am convinced that the only way to achieve this is by boldly cutting fares. Experience has shown that a reduction in fares quickly attracts new passengers. For example, on the North Atlantic route the introduction of the economy fares has increased traffic by as much as 25 per cent.
The hon. Member for Stockton-on-Tees asked about the international deadlock over fares. The recent annual conference of the International Air Transport Association—I.A.T.A.—in Honolulu settled next year's fares for services in Europe, between Europe and South America, and between North and South America. These included a number of reduced fares in Europe asked for by B.E.A. However, the conference separated without reaching agreement on fares for the rest of the world. This was due, largely, to B.O.A.C.'s very proper insistence on the introduction of economy fares.
Before the conference we gave warning that, if international agreement could not be obtained on the introduction of economy fares generally, we would have to consider introducing them separately on the cabotage routes between Britain and British overseas territories, for which international agreement is not required. After carefully considering the whole matter, I have decided to authorise B.O.A.C. to introduce economy fares on the cabotage routes to the West Indies, Africa and the Far East. These fares will vary between 10 and 20 per cent. below existing tourist fares.
I am consulting the colonial authorities and other airlines concerned about the exact level of fares to be charged on each of these routes and on the timing 1341 of their introduction. Before reaching this decision, I discussed the matter with the independent airlines principally interested, namely those operating on routes to East and Central Africa; and I am taking steps to ensure that the reduction in B.O.A.C.'s fares shall not unfairly affect the colonial coach routes which these independent companies have so successfully opened up.
The hon. Member for Stockton-on-Tees asked about the very low fares which some independent companies would like to introduce. This is quite distinct from the economy fares about which I have spoken. Proposals for very low fares, below economy rates, naturally affect the interests of the Corporations. I am, therefore, examining the problem with the independents and the Corporations together; and I hope that we shall be able to work out solutions which will give some reasonable satisfaction to both parties.
Since the Bill is concerned solely with the Airways Corporations, the debate has naturally centred upon their affairs, though a number of hon. Gentlemen have referred to the position of the independent companies. The independents have, I consider, shown great initiative and, as my hon. Friend the Member for Gillingham rightly said, have been prepared to bear considerable financial risks. They have, in their special way, played a most valuable part in expanding the market for air travel, in pioneering new routes and in developing cheap fare services. They form a most useful element in the pattern of British aviation, and I assure the House that I shall do all I can reasonably to encourage their further development.
My hon. Friend the Member for Sunderland, South (Mr. P. Williams) referred to the new licensing authority which we propose to set up. This will, I hope, help to settle dispassionately differences which may arise between the Corporations and the independents. Naturally, it is not my intention to do anything which will undermine the position of 1342 B.O.A.C. or B.E.A., in which so much public money has been invested. They must continue to be Britain's principal flag carriers on the main air routes of the world, but there is scope also for the independents to expand. I believe that there is an honourable place in our system for the Corporations and the independents; and I am confident that together they can win for British aviation a worthy share of the expanding air traffic of the world.
§ Question put and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Committee of the whole House.—[Mr. Legh.]
§ Committee To-morrow.