HC Deb 25 November 1964 vol 702 cc1287-91
The Minister of Aviation (Mr. Roy Jenkins)

I will, with permission, make a statement about the arrangements for allocating trooping work among civil airline operators.

In the past, the Air Corporations have been excluded from tendering for long-term contracts. The Government has now decided that they shall be allowed to tender competitively for these contracts as opportunities arise from 1965 onwards. It will be for the Corporations to decide as a matter of commercial policy the extent to which they then seek to participate. The amount of work which future contracts will cover will, of course, depend upon future commitments overseas, as well as upon the growing capacity of Transport Command.

The Corporations are already allowed to tender for ad hoc charters of whole aircraft, and they will continue to be free to do this.

The Corporations have also asked that they may be allowed to compete for ad hoc trooping movements at reduced fares on appropriate scheduled services when the seats would otherwise be empty. This could offer economies all round. I have informed the Chairman of the Air Transport Licensing Board, and I am prepared to give the Corporations the necessary authority to offer this reduced fare. The Corporations and the Air Force Department are now exploring the scope for such arrangements. I should be prepared to give similar authority to independent operators of appropriate scheduled services.

These new arrangements will give the Ministry of Defence more flexibility to carry out their trooping commitments on the best economic terms, and will also offer the Air Corporations greater scope for securing a sound and competitive basis for their future operations.

Mr. Maude

May I ask the right hon. Gentleman three questions? First, could he tell us whether this involves the termination of any existing contracts or whether existing contracts will be allowed to run out to completion before the new conditions begin to operate?

Secondly, is he satisfied that Her Majesty's Government have secured sufficiently good foreign rights for independent long haul operators to assure them of sufficient business on the scheduled routes to compensate for the loss of this monopoly?

Finally, may I ask him whether he realises how desirable it is to reassure the independent operators that this is not the first move in a campaign to get them out of the business altogether, and can he, therefore, give two undertakings: first, that the Corporations' trooping tenders will be genuine commercial tenders, and, secondly, that he will try to make sure that to compensate for the loss of their trooping monopoly, they are able to secure in future a reasonable share of the growth in traffic on scheduled routes?

Mr. Jenkins

The hon. Gentleman said that he would ask three questions. I think that I distinguished five. He asked about existing contracts. These will be allowed to run down. The first expires late in 1965 and the rest early in 1966. They will then fall due for negotiation—the earliest ones quite soon.

The international rights of the independents mostly fell to be negotiated by my predecessor, but in the case of B.U.A. and the South American route I have done what I could to assist the company. I think that the independent operators are fairly well provided for.

In any event, however, I do not think that it is right to place the Corporations under a special and, to my mind, unfair disability in tendering for these contracts. At the same time, I assure the House that there is no question of putting the independents out of business. My understanding with the Corporations is that they will tender on commercial terms. That is the right course and I am convinced they should have the freedom to do it.

Mr. Albu

Is my right hon. Friend aware that his statement is entirely in accordance with the spirit of the Report of the all-party Select Committee on the Nationalised Industries which sat in the last Parliament and reported on the finances and activities of B.O.A.C.?

Mr. Jenkins

I am aware of that, and I trust that it will lead to this decision receiving all-party support.

Mr. Lubbock

Can the right hon. Gentleman confirm that there is no statutory bar on the Corporations tendering for trooping work and that their exclusion has rested on an undertaking which the then Minister of Civil Aviation gouged out of the chairmen of the Corporations in 1951? Can the right hon. Gentleman also say whether the date 1965 applies to the filling up of empty seats on scheduled services, mentioned in the second part of his statement?

Mr. Jenkins

Whatever the position has been, the Corporations have now been set free to tender. The date 1965 was specifically mentioned in the earlier part of my statement, referring to long-term contracts, because none of these falls due for review until then. As for the filling-up arrangements, the Corporations will be free to make arrangements here as soon as they can, but as this will involve negotiation with the Air Force Department I do not expect that, in practice, very much will be done before the beginning of 1965. The negotiations will proceed immediately.

Mr. Hunter

I congratulate my right hon. Friend on his statement. Is he aware that it will please the pilots and staff of B.O.A.C. who, for many years, have complained to me of the discriminatory way in which the previous Government acted against B.O.A.C.?

Mr. Jenkins

I note what my hon. Friend says and I am grateful to him.

Sir A. V. Harvey

Will the right hon. Gentleman bear in mind the pooling arrangements between the two Corporations and foreign airlines, which virtually bring about a monopoly situation? Will he undertake to ensure that, because of these arrangements, during peak periods foreign airlines do not benefit at the expense of our independents, who might be asked to carry traffic at such times.

Mr. Jenkins

I will bear that point in mind. This concession is confined to carriage in British aircraft. In the case of B.O.A.C. the pooling arrangements are irrelevant, since B.O.A.C. would retain the whole of the additional revenue. In the case of B.E.A., however, circumstances may differ in that B.E.A. will now, I think, naturally wish to examine, with its partners, the pooling arrangements they have. We will bear this aspect very carefully in mind.

Mr. Mikardo

Is my right hon. Friend aware that the only people who will object to the announcement are those operators who believe passionately in the principle of free competition as long as their competitors are kept under lock and key?

Mr. Jenkins

I am glad to be able to extend the principle of free competition.

Sir R. Nugent

As Chairman of the Select Committee which reported on B.O.A.C. last summer, I have no recollection of any recommendation having been made by the Committee in the terms referred to by the hon. Member for Edmonton (Mr. Albu). We received some evidence on the subject, but because we did not take evidence from the independent airlines we did not express a view.

Is the Minister aware that I myself have some anxiety about his proposal because the Corporations have the advantage of a virtual monopoly on the scheduled routes? If they are allowed to compete on the trooping lines, this may put the independents into an unfair position.

Mr. Jenkins

The right hon. Gentleman may wish to discuss the Report of the Select Committee with my hon. Friend the Member for Edmonton (Mr. Albu). Let me make it clear now that I am putting forward this decision on my own responsibility and not on that of the Select Committee which was presided over by the right hon. Member for Guildford (Sir R. Nugent). I do not believe, on the other hand, that this decision gives an unfair advantage to the Corporations. Since 1960 they have not continued to enjoy such a monopoly and I think it is at least a balance for what has taken place since then that they should be set free to compete for trooping tenders.

Mr. Maude

Is the right hon. Gentleman aware that it was, as far as I know, never intended that the trooping monopoly should be removed from the independents until they had secured a reasonable grip on the scheduled routes and that the position is that their proportion of business on these routes is still very small and, in view of the difficulties of foreign rights, very precarious? Will the right hon. Gentleman watch this aspect?

Mr. Jenkins

I will certainly do so, but the hon. Gentleman might ask himself the question, "intended by whom?". Certainly, my view is that it is reasonable that the nation's airlines should compete on competitive terms for carrying the nation's troops.

Several Hon. Members rose

Mr. Deputy-Speaker (Dr. Horace King)

Order. We cannot debate this at length now. I imagine that there will be opportunities later.