§ 10.30 a.m.
§ The Minister of State, Board of Trade (Mr. J. P. W. Mallalieu)
I beg to move,That the Carriage by Air Acts (Application of Provisions) Order 1967, a draft of which was laid before this House on 7th December, be approved.Hon. Members on both sides of the House have pressed for the ratification of the Hague Protocol of 1955, which amended the Warsaw Convention of 1929. This was made possible by Section 1 of the Carriage by Air Act, 1961, which gives effect in the United Kingdom to the Warsaw Convention as amended by the Protocol, but for a variety of reasons that Section has not yet been brought into force and the Protocol has not yet been ratified. It is the Government's view that this should now be done and that the United Kingdom should join the 49 countries which have already ratified.
It will, perhaps, be convenient if I remind the House of the purpose of the Warsaw Convention, which is probably the most widely ratified of international Conventions in the field of private law, and of the existing legislation relevant to it. The Convention ensures a measure of international uniformity in the law governing international carriage by air, thereby eliminating difficult and potentially expensive litigation as to which country's law applies. It also confers on passengers and their dependants, and on the shippers of cargo, the reversal of the burden of proving the carrier's negligence, in exchange for which the carrier enjoys a uniform limit of liability, which facilitates the arrangement of insurance. In the absence of wilful misconduct on the part of the carrier, his servants or agents, this limit is at present equivalent to some £3,000 per passenger.
The Carriage by Air Act, 1932, gave effect in the United Kingdom to this Convention and the Carriage by Air (Non-international Carriage) (United Kingdom) Order, 1952, made under the provisions of that Act, applied the same limit of liability to domestic and other carriage not covered by the Convention. Under the Act and the Order, therefore, the same limit is applied to all carriage, whatever the point of departure and 1570 destination or the nationality of the passenger or shipper, and it makes no difference where the accident occurs or which airline is involved.
I come to the Hague Protocol of 1955, which made a number of amendments to the Warsaw Convention and, in particular, raised the limit of liability from £6,000 per passenger. With the passing of the years, that in turn has come to be regarded as on the low side, and international discussions have begun under the auspices of the International Civil Aviation Organisation with a view to the further amendment of the Hague-Warsaw system and, in particular, a further possible increase. It is the Government's hope that these discussions will be successful, but we recognize that several years are likely to pass before a new Convention or Protocol is drawn up, signed and ratified by a sufficient number of States.
§ Mr. David Webster (Weston-super-Mare)
How many States would the hon. Gentleman consider to be "sufficient number"?
§ Mr. Mallalieu
I should have thought that 49 would be a sufficient number.
We think, therefore, as I have said, that we should, without more ado, proceed to ratification of the Hague Protocol and are planning to lodge the instrument of ratification with the Polish Government on 3rd March, 1967. Allowing for the 90 days that mast elapse before it becomes effective, the Protocol will then he in force for the United Kingdom as from 1st June next.
On the same day the Carriage by Air Act, 1932, which gave effect to the provisions of the original Warsaw Convention, will be repealed by virtue of Section 1(3) of the 1961 Act and the Carriage by Air (Non-international Carriage) Order, 1952 made under it will accordingly cease to have effect. It is proposed that that Order, which, as I have said, applied the Warsaw provisions, with some exceptions and adaptations, to domestic and other carriage not governed by the Convention, should be replaced by the draft Carriage by Air Acts (Application of Provisions) Order, 1967, which is proposed to be made under Section 10 of the Act of 1961, and which is now 1571 before the House. The draft Order will, of course, apply, as does the parent Act, to all forms of commercial air service; that is, to charter and inclusive tour flights as well as to scheduled services.
§ Mr. Eric Lubbock (Orpington)
The hon. Gentleman is entitled under paragraph 8 of the Order to…exempt any carriage or class of carriage…from any of the requirements imposed by this Order".Does the Department have any intention of exercising that power in regard to any class of carriage?
§ Mr. Webster
Are we today trying to get in line with an existing Convention or are we stepping out of line in the hope that other countries will follow suit?
§ Mr. Mallalieu
We are today getting in line with the Hague Protocol to the Warsaw Convention.
As I was saying, the main provisions of the Order are, first, that it applies the principles of the amended Convention to domestic and other carriage which is not governed by either the unamended or amended Warsaw Convention. As permitted by Section 10, however, a number of "exceptions, adaptations and modifications" are made; for example, the omission of the requirements as to documentation and of the restriction of the courts in which actions may be brought.
A matter of more general interest, and one which will be particularly welcomed by the House, is that the draft Order raises the carrier's limit of liability in respect of domestic carriage and other types of carriage to which it applies to some £21,000 per passenger instead of the £6,000 which is the limit in the Hague Protocol.
§ Mr. Kenneth Lewis (Rutland and Stamford)
In view of the difference in liability that there will be and, therefore, the difference in advantage to the public between an international journey and a domestic one, would the hon. Gentleman confirm that, in the event of a catastrophe, difficulty will be created? For example, if someone is travelling on an international journey from, say, Manchester, that person will simply be 1572 covered by the airline's £6,000 liability, while someone else travelling on an international journey, but going first from Manchester to London and then picking up the international flight, will get double cover.
§ Mr. Mallalieu
That would depend on where the passenger had booked for. If he had booked from Glasgow to London, the passenger would be covered by one form of cover. If he had booked for an international route he would be covered by another form of cover. However, I am afraid to tell the hon. Gentleman that there is yet a further complication due to an agreement between airlines and the United States for this £21,000 cover to be extended to journeys across the Atlantic.
§ Mr. Cranley Onslow (Woking)
Would the hon. Gentleman confirm that it will be perfectly possible for there to be, in the same aeroplane, four people with different tickets proceeding to different destinations and going on different types of journey and that all will be entitled under the Order to entirely different limits of compensation in the event of an accident?
§ Mr. Mallalieu
I do not think that that would necessarily occur if they were all travelling in the same aeroplane, since the same liability would appear to apply, but I will look into that point.
Secondly, this applies the principles of the amended Convention to the carriage of airmail, with similar exceptions, adaptations and modifications. Thirdly, as a transitional provision it applies, with the necessary modifications, those principles to the diminishing amount of carriage still governed by the unamended Warsaw Convention to which the United Kingdom remains a party. Further, it applies the Warsaw-Hague system to gratuitous carriage by the Crown, carriage by the Crown for reward already being covered by that system. Last, as permitted by Section 10(3), it gives the Board of Trade power to exempt any class of carriage from the requirements imposed by the Order.
If the draft Order is approved, and it and the Hague Protocol come into effect in this country on 1st June, 1967, there will then be three classes of carriage governed by their provisions: first, carriage governed by neither the 1573 amended nor the unamended Convention where the £21,000 limit will apply—for example, London to Glasgow, London to Gibraltar non-stop and London to Istanbul non-stop, since Turkey is not yet a party to either the Protocol or the unamended Warsaw Convention; secondly, carriage governed by the Warsaw Convention as amended by the Hague Protocol where the £6,000 limit of liability will apply. An example of that would be carriage between London and Paris, since both the United Kingdom and France will then be parties to the Protocol.
Thirdly, there is the residual and diminishing amount of carriage still governed by the unamended Warsaw Convention where the £3,000 limit will apply. An example of that would be London to Delhi until such time as India also ratifies the Protocol, although the return journey London—Delhi—London will be governed by the Protocol. In practice, however, a great deal of this carriage, namely carriage involving a stop in the U.S.A., will be governed by arrangements under which the major airlines have voluntarily agreed to a limit of £21,000 as an interim measure pending the further revision of the Convention.
It is unfortunate, as hon. Members very well sense, that there must be these variations in the limits, but uniformity is not something that we can achieve by ourselves in advance of a satisfactory outcome of the international discussion, which I have mentioned. Nevertheless, our proposals do, I believe, represent a valuable advance on the existing situation where both international and non-international carriage is subject to the same limit of £3,000 and, having regard to the interests of the ever-growing number of the public who travel by air, I am sure that the House will wish to approve the Order.
§ 10.42 a.m.
§ Mr. Anthony Grant (Harrow, Central)
While I do not oppose this Order in principle as such, I wish to raise a rather technical but nonetheless important matter arising out of a certain decision in America on airline liability. It is of profound importance to the airlines and, therefore, to the travelling public. First, I express my apologies to the Minister for probably having to leave before any 1574 reply is made to this debate because I have another meeting to attend. I trust that he will acquit me of any seeming discourtesy.
The position, I understand, is that the Warsaw Convention imposes an absolute liability upon airline carriers in exchange for which they can put a limit on the damages and the compensation which they pay. In this sense it has worked out to the advantage of carriers throughout the world. I understand that last May the United States nearly left the Convention, but was persuaded not to do so. If it had left, the position would have been that in the event of injury being suffered in America the passenger would have had the onus put on him to prove ordinary airline negligence.
If he could succeed in that respect, his damages might well be unlimited. The provisions of this Convention, to which the United States is still a party, provide that a carrier must deliver a passenger ticket which contains certain particulars one of which is:a statement that the carriage is subject to the rules relating to liability established by the Warsaw Convention".The Order says on page 10:The absence, irregularity or loss at the passenger ticket does not affect the existence or the validity of the contract of carriage, which shall none the less be subject to the rules of this Schedule. Nevertheless, if the carrier accepts a passenger without a passenger ticket having been delivered he shall not be entitled to avail himself of those provisions of this Schedule which exclude or limit his liability".In April, 1966, a case was heard in the United States courts called Lisi v. Alitalia Airlines. In that case Mr. Lisi's executors sought damages from Alitalia Airlines in respect of a crash at Shannon in Ireland. The decision of the court was that Alitalia had failed to comply with the provisions of the Convention in that the notice put on the ticket delivered to Mr. Lisi and others was in such microscopic type that it was impossible to say, according to the court, that he had had sufficient notice of the excluded provisions on liability.
The case came to appeal before the Appeal Court in America last December. As a result of that appeal, great confusion now arises in the minds of those concerned with air carriage. The appeal decision said in effect that a carrier has 1575 a duty of conveying the actual notice of the exclusion of liability to a passenger "in such time"—those are the relevant words—as the passenger can take self-protective measures against such exclusion of liability. Examples of that would be that the passenger could take out certain insurance, could come to a decision whether to travel or not knowing that this exclusion of liability existed, or have an opportunity to enter a special contract.
The practical position is that all over the world tickets are delivered very often only a few moments or a few hours, or perhaps a day or so, before actual departure. From an administrative point of view I am informed that it is entirely impracticable for airlines to give greater notice than they do now. Often it is a day or even hours or minutes before a plane departs. There is no certainty what the words "in such time" mean. If it is suggested that this should be a matter of weeks or perhaps a month to enable the passenger to consider all the ramifications of a separate contract and whether to travel or not, this would place an intolerable burden on the whole business of air travel.
If the case is upheld—and I under—stand that there is a possibility of it going to the Supreme Court in America—it would have the effect that a British airline which crashed or caused injury to a passenger in America would get the worst of both worlds. It would have the onus of absolute liability and the onus would not be on the passenger. It would be subject to the Convention in that respect, but the airline would not be entitled to limit the damages.
On this basis I am advised that it would be better if the United States were out of the Convention. Then, although an airline would have unlimited damages to pay, the onus of preventing negligence would be on the passenger. For that reason the Government should be aware of the very great increase in costs which might arise if this decision before the Supreme Court were upheld. The first question which I put to the Government on this Order is whether they are aware of the litigation and decision in the Lisi v. Alitalia case. Do the Government realise that, if the decision is unreversed by the Supreme Court, it will lead to an enormous increase in airline claim costs 1576 in the United States? If the decision is unreversed, will the Government give consideration even to withdrawal from the Warsaw Convention on these grounds? What steps are being taken to reverse the effect of this decision?
In addition, a meeting has just taken place—I believe that it has been adjourned—of an international panel of experts in Montreal which has been looking into the whole question of amendment to the Convention. Could the Government delay their decision until the experts have had a chance of considering the ramifications of this case? Is it possible that the United Kingdom could postpone the ratification of the Hague Protocol in order to see whether it is worth staying in the Warsaw Convention if the Lisi case remains part of the law of the United States?
I appreciate that the Government might well say that it is vital that we get on with this Order in order to comply with the requirements of the Hague Protocol. If that is so, they should be alerted to the fact that, although we do not oppose the Order in principle. there are a number of imperfections—this is a very profound and important one—and they should seriously consider the possibility of producing an amending Order later when the result of this very vital decision is known.
§ 10.51 a.m.
§ Mr. R. J. Maxwell-Hyslop (Tiverton)
It would be extremely ungenerous of me to do anything other than welcome this very timely Order. Hon. Members will remember that on the Report stage of the 1961 Act I proposed an Amendment upon which this Order actually improves. My Amendment was lost by one vote. Therefore, I cannot do other than welcome an Order which on many domestic flights—that is, those which are not subject to the exemption procedure—raises the limit of damages to £21,000.
I must state, however, that the Order still leaves the slight anomaly, which was brought out in 1961 that if someone is killed in a railway train the limit of damages is £24,000 but if someone is killed travelling by air the limit is £21,000. I should have been happier if the figure had been consolidated at £24,000 so that the limit was the same by air on domestic flights as it is for rail accidents. However, I repeat that it 1577 would be extremely ungenerous of me not to welcome the very considerable improvement to £21,000.
In the 1961 debate it was immediately apparent from the reaction of hon. Members that nobody understood the import of the statements on an airline ticket about the limit of liability. Article 8 of the Order reads:The Board of Trade may, subject to such conditions as they think fit, exempt any carriage or class of carriage or any person or class of person from any of the requirements imposed by this Order.So far, so good, but it is very important that anybody flying on a domestic flight should know whether his carriage on that flight is or is not exempted; and, if it is exempted, what the effect of the exemption is.
I must apologise to the Minister of State, Board of Trade for the fact that, as I was due at a meeting of B.E.A. earlier this morning than now, I shall probably have to leave before he commences his winding-up speech. However, I should be very grateful if he could put on the record in that speech what his own guidelines within his Department will be for operating Article 8, so that the public at large can know in what circumstances flights are likely to be exempted, what notice will be given to people that they are exempted, and what the result of such exemption will be.
My hon. Friend the Member for Woking (Mr. Onslow) stated that there are four different classes of potential passenger from the point of view of limitation of liability. My count makes it at least six. There are domestic flights which will be subject to the Order—that is, with a limit of £21,000. There will be domestic flights exempted from the Order under Article 8. There will be domestic flights which do not fall within the provisions anyway, because they are subject to concession—for instance, an airline employee travelling under concession on that airline. Then there are international flights subject to the Order. There will be international flights subject to the Guadalajara Convention. There will be international flights which are not subject to the amended procedures—Turkey being one. Those are six different classes of passenger. I do not claim that it is an exhaustive list.
1578 I ask specifically not only that the Minister should give the House the guidelines for the rules he makes but that in making those rules there should be a prominent notice, not just a fine print statement, on all tickets issued under the exemption provisions of Article 8, drawing effectively to the attention of the would-be passenger the fact that it is exempted. Sometimes a ticket contains an announcement that the flight is subject to certain exemptions or conditions, the details of which can be obtained from the ticket office. This notice appears, for instance, on a railway ticket. If the intending passenger asks the booking clerk for a copy of the conditions under which the ticket is issued, he is told that he must go either to Paddington station or somewhere equally remote to obtain the copy. Therefore, to issue, for example at a flying club, a ticket having on it a notice stating that the flight is subject to exemption from the provisions of the Order, without also having prominently displayed a statement of the effect of the exemption, is what I call a lawyer's notice rather than a reasonable person's notice.
§ Mr. Maxwell-Hyslop
That is true, but lawyers have to be employed before they draw attention to it. Reverting to the subject of notice, it is particularly important that it should be comprehensible.
Where there are such exemptions, which are exemptions from a reasonable limit, it is relevant to rehearse again why it is just and desirable that there should be different limits on domestic flights from those which apply to international flights. The reasons are basically these. It is not only difficult and expensive, but also sometimes impossible, to prove negligence, even in a British court, because so much of the evidence of the cause of the accident is destroyed in the accident.
It is difficult enough to prove negligence in the case of air accidents in a British court—in the cost of which, incidentally, if people are impecunious they may be assisted through the Legal 1579 Aid Fund. It is very much more difficult to prove negligence in a court thousands of miles away where the standards of justice and the court procedures are, to put it mildly, not entirely consistent with our own. The advantage which passengers or their dependants receive under the Warsaw Convention, the Hague Protocol, and the Guadalajara Convention, is that it is no longer necessary to prove the negligence of the airline concerned. It is necessary only to demonstrate that the damage or death resulted from the accident and there is then an automatic entitlement.
I remark in passing that the limit of damages does not apply when wilful misconduct can be proved against the pilot or aircrew. But this also is extremely difficult to prove when all the people concerned are dead and there is just wreckage left on the ground. Therefore, one may say that, to all intents and purposes, the limit applies and the balance of advantage lies with Measures of this kind.
On domestic carriage, this is not so to the same extent because people have access to the British courts and they are not debarred for financial reasons. Nevertheless, one must bear in mind that a substantial proportion of the traffic on domestic flights is business traffic rather than holiday traffic. It is fair to say that people who use internal air routes in the course of their profession or occupation are most unlikely to be earning less than £1,000 a year. Capitalising that at, say, 6 per cent., it comes to more than £21,000. I am not a lawyer, but I understand that the normal basis of compensation is to capitalise the income which the dead person was receiving.
I say that merely to show that £21,000 is not an over-generous figure. I hope that the Minister, whoever he may be and whoever the Government may be, will not feel that, now that this excellent Measure has been brought in, it must necessarily run for the next 10 or 15 years unamended. As the level of incomes rises so does the damage suffered by someone incapacitated or by the dependants of a person killed on a flight.
I welcome the Order, therefore, though without prejudice to pressure for increases in the limit of liability in the future pro rata with the fall in the value of money and the rise in average earnings.
§ Mr. Kenneth Lewis
Will not my hon. Friend agree that the increase in the limit of compensation now to be available for the domestic passenger will create an anomaly in relation to someone travelling, for instance, from the United Kingdom and flying in the United States? It will be an international flight, but the flight across the United States will be a domestic flight. There is a great difference between a domestic trip within the United States, which can be as long as a journey from the United States to the United Kingdom, and a domestic trip within the United Kingdom. Is there not an anomalous distinction here created by the difference between compensation paid for an international flight and compensation paid for a domestic trip?
§ Mr. Maxwell-Hyslop
With respect, no greater anomaly is created than is already the case in travel by surface transport in a foreign country, which is subject to the domestic law of the country concerned. I say, in passing that, as I read the present law as amended by the Order, if one is making a journey from one British territory to another without calling at an airport in the United States, it is immaterial whether one overflies the United States or not. It is certainly true that there are many different classes of carriage, but what my hon. Friend says applies whether one travels by ground transport or by air transport. What we are endeavouring to do is to reduce the restriction on damages in so far as we are able to do so, and this Order undoubtedly does that.
I mention one further matter en passant. Many people take out insurance to cover themselves in excess of the limit of liability imposed. It is all the more important that this insurance cover should be available when Article 8 of the Order is invoked and there is exemption by Ministerial licence. The normal way of obtaining this further cover is by putting a coin into a slot machine with a time-stamping device inside. Out comes a ticket selling the cover, beginning at the time stamped on it by the clock.
It is common knowledge that the times of greatest risk are on landing and takeoff. It is particularly important, therefore, that the clocks stamping the time are not fast. If a clock is fast it can have the result of marking a time for beginning the insurance cover after the 1581 person has taken off in the aircraft. This is not hypothetical. Twice I have been to an airport in the United Kingdom at which the clock was as much as 15 minutes fast. If someone purchased insurance cover immediately before boarding the aircraft and the aircraft then crashed on take-off, the insurance company would not, except ex gratia, be at risk although the passenger believed that he had covered himself. I do not know how far it is possible to deal with this, but it is one of the considerations which the Minister would do well to bear in mind in issuing an exemption under Article 8.
I end as I began, by welcoming the Order. I wish that it had been brought in much earlier. A long time has elapsed since the passage of the Carriage by Air Act, 1961, and I have badgered successive Ministers of successive Governments to be more expeditious in the matter. We shall all be grateful for the Order, and the fewer the exemptions granted by the Minister the more certain will the law be in the knowledge of the average passenger.
§ 11.8 a.m.
§ Mr. John Rankin (Glasgow, Govan)
I am sorry, though the House may be glad, that my remarks must on this occasion be very brief. I am serving on a Standing Committee in which there are liable to be Divisions, and I may be called suddenly. That control is an unfortunate control, but I feel that I must at least say "Thank you" to my hon. Friend the Minister, as did the hon. Member for Tiverton (Mr. Maxwell-Hyslop). The hon. Gentleman and I five years ago emphasised to the Minister at that time the need to amend the provisions covering carriage by air, and now, like him, I rejoice in the raising of the limit. I endorse every word the hon. Gentleman said. I hope that the Minister will remember that it is not a final sum. We recognise that travel by air is getting safer every day and is now much safer than it was even five years ago. Those of us who use air transport realise that. But the result of an accident in the air is so comprehensive and final as compared with an accident in almost any other medium of travel that the compensation must bear relationship not only to the falling value of money but to that finality. That must be a factor in estimating the compensation.
§ Mr. Onslow
I have been trying to follow the hon. Gentleman's argument. Is he saying that there is a particular quality about death in an aircraft accident which means that the liability limit should be higher than for death in a car or train accident?
§ Mr. Rankin
I may not have expressed myself very well. I believe that travelling by air involves the possibility of finality in an accident, but that an accident is not so liable to occur as in travel by sea or road. In the event of an aircraft accident, the number of survivors is generally very small, if any. It is merely a matter of observance, and from my knowledge of accidents in the air I have no reason to change what I have said. There is certainly always the chance of finality in a railway or bus accident, and so on, but the risk is not so great as it is by air, and therefore I believe that that should affect the figure of damages when an accident occurs.
I notice that liability starts at the terminal, according to Article 18(3) of the Convention. If I read that accurately, the passenger is regarded as being covered by the liability for compensation from the moment he leaves the terminal.
I am glad that my hon. Friend has brought forward this improvement in the Carriage by Air Acts, but I feel that the Explanatory Note might have been more comprehensive. I hope that when there is an amendment of the Order the Explanatory Note will tell us exactly what it means and will be fuller than the rather brief comment that this Explanatory Note gives.
§ 11.15 a.m.
§ Mr. Eric Lubbock (Orpington)
I must disagree strongly with the hon. Member for Glasgow, Govan (Mr. Rankin) over the implied suggestion in his speech that travel by air is more dangerous than travel on the roads. If he looks at the statistics he will find that the number of people killed on our roads every year is many times larger than the number of people killed in air travel in the whole world.
§ Mr. Rankin
I did not say anything of the kind. I did not say that travel by air was more dangerous. I said that in the event of an accident the outcome was more certain.
§ Mr. Lubbock
That is indeed what the hon. Gentleman said. I disagree with him on that as well, because many minor accidents take place on the airlines which do not result in either the injury or death of a passenger. Perhaps they are not given the same prominence as accidents in which the whole aircraft is lost with all the passengers, but if the hon. Gentleman looks at the tables published periodically in Flight and other aviation magazines, he will see that quite a number of accidents occur in which there is no injury to any of the passengers or crew. It would be misleading the public if we suggested that in the event of an accident on an aircraft their chances of being killed were very much higher than in other means of transport. That will not help what both the hon. Gentleman and I wish, which is to encourage more people to travel by air.
§ Mr. Rankin
I am sure that the hon. Gentleman does not seek to expand what I said beyond what was contained in the words I used.
§ Mr. Lubbock
I hope that I was not doing that, but I think that the hon. Member for Govan may have given that impression during some of his remarks.
The hon. Member raised the interesting question whether one is covered in transit from the terminal to the airport. As I read Article 18 (3), cover applies only in cases where the contract for carriage from the terminal to the airport is part of the contract for carriage by air from the airport onwards. I understand that one's contract in respect of the bus from the London Air Terminal to Heathrow is separate from the contract one enters into with the airline for a flight from Heathrow to Glasgow, for example.
It would be of great importance if the Minister could clarify this in his reply, because my impression is that the journey along the M4 in one of the buses is a great deal more dangerous than the journey from Heathrow to Glasgow. A great many passengers would like to know if they were covered on the bus journey as well.
I hope that my main point will not be a discordant note in the general welcome expressed for the Order. It is the question of the effect of the increased 1584 limits on the domestic air fares. I shall not argue with the principle of the Order, because I agree with the hon. Member for Tiverton (Mr. Maxwell-Hyslop) that higher limits are necessary and are inevitable in the end. But the Minister might consider delaying the application of the increases to a date after 1st June for domestic airlines. I take it that he has power to do that under paragraph 8, although he said in reply to an intervention from me that that paragraph was intended to apply only to the flying clubs.
I have made some inquiries of experts, who have given me figures relating to various airlines, of the likely effect of the increased premiums on their domestic fares. Airline "A" says that the increased premiums would amount to £50,000 to £60,000 annually, and would mean a demand for a further increase of 3 to 4 per cent. in its fares. I shall not quote them all. Airline "C" says that the cost of increased premiums would be between £50,000 and £70,000, which amounts to about 5s. on each ticket issued.
No doubt, the hon. Gentleman will have made some inquiries of the airlines about the financial effects of the Order and will have considered the possibility that they may apply to the Air Transport Licensing Board for increases in the domestic air tariff as a result of the Order coming into operation on 1st June.
There might be a possible conflict with the Government's policy for prices and incomes, which was referred to in the last Report of the Air Transport Licensing Board. After reviewing a number of applications for domestic fare increases which had been submitted during the year, the Board concluded, in paragraph 77, that…on the basis of the White Paper criteria there was only limited justification for the increases proposed. But the White Paper does not consider the case of an enterprise that has for some time been operating at a loss, and is likely even with the utmost managerial exertions to continue making losses throughout the foreseeable future unless additional revenue is obtained. In such circumstances the enterprise must choose between increasing prices or going out of existence and it is under conditions such as these that the greater part of British domestic air services have been operating.Has the Minister taken into account this situation in the domestic market and 1585 what is the likely effect on fares if operators now go to the Board and ask for increases to cover the cost of these premiums? Such applications would be allowable within the terms of the White Paper on the Prices and Incomes Standstill and Period of Severe Restraint, paragraph 10 of which says that increases in costs which are the direct result of Government action may be recovered by persons offering goods or services. Therefore, the Board would be quite likely to approve applications for fare increases by the operators. But this is a longwinded process. First, a notice has to be published in the Civil Aviation Licensing Notices. Then time is allowed for objections. Finally, there may be a public hearing and an appeal from the Board's decision to the Minister. I doubt whether airlines operating on domestic routes could take steps to recover the difference between now and 1st June when the Order comes into operation. There will, therefore, be a temptation when they bring applications up not only to recover the full amount of additional premiums but also the difference in the premiums they have had to pay pending their applications being heard by the Board.
There might be a conflict with the prices and incomes policy during the period of severe restraint, which operates in the first half of 1967, and possibly with any further developments of the policy which may be agreed by Ministers for the second half of 1967. I know that it would be out of order to go into that in detail, but most of us can already see that some form of restraint on prices and incomes will be necessary for a much longer period than the first half of 1967 and this will apply to domestic air fares just as to any other commodity.
I want some indication from the Minister that these factors have been taken into consideration and that he has in mind the possibility of using the powers conferred on the Board of Trade by paragraph 8 of the Order or of deferring the increase in the limit for domestic traffic at least some time beyond the period of the ending of severe restraint, until a definite announcement is made of Government policy for prices and incomes in the second half of the year.
§ 11.25 a.m.
§ Mr. Cranley Onslow (Woking)
Many of my hon. Friends who might otherwise have wished to take part in the debate because of their interest in aviation are unavoidably absent. They are fulfilling an engagement which was fixed before today's business was announced. That other engagement will enable them to keep themselves informed on important matters in aviation. I mention this because it is an additional example of the disruption and hindrance to the ability of right hon. and hon. Members to deal with other business that the morning sittings have caused.
I have attended all three morning sittings, and I begin to understand, as I hope the Leader of the House has begun to understand, what a severe strain this must be imposing on the House's servants, inside and outside the Chamber, by no means least on Mr. Speaker. I should be glad to know in any case that this is a matter to which the Leader of the House is devoting particular care and attention.
I have a number of points I want to put that my hon. Friends would have wished to have examined. My intervention may not therefore be as short as I might otherwise have wished in the circumstances. In so far as the Order represents a move to apply the principles of the Hague Protocol to domestic and non-international carriage, it is a welcome move. It follows, of course, the decision to apply the £6,000 Hague Protocol limit of liability to international carriage by United Kingdom ratification of the Protocol and there is no doubt that the old Warsaw limit of £3,000 had long been outdated.
The Order also has the effect of raising the limit of liability for domestic and non-international carriage from £3,000 to £21,000. On this and on a number of other general and particular points, I should like to put some questions to the Minister, and I hope that he will be able to answer them at the end of the debate.
First, what prior consultation did the Department have with the airline operators, both nationalised and independent, before tabling this Order? The hon. Gentleman will be aware that there has been some criticism in the aviation Press of the fact that the Order was brought 1587 before Parliament without adequate consultation with or warning of the operators. This way of proceeding is not exactly improving the confidence of airline operators in the sort of treatment they are to expect from the Board of Trade now that it has taken over responsibility for civil aviation matters. Can the hon. Gentleman explain why he has chosen this point of time to raise the non-Convention limit—the limit for domestic and non-international carriage—to £21,000? I recognise that B.E.A. has to some extent forced the pace by—and I quote the word—"voluntarily" agreeing to the terms of the Montreal Agreement of 1966 for all its international services. But I am by no means sure that the introduction of the new £21,000 limit under this Order and at this point in time will help to simplify or clarify matters.
It may be the Minister's view that the £21,000 limit should come to be accepted by all British domestic carriers. But does he feel that he has increased the chances of this by his timing of the Order? Has the Department any powers over British air operators to oblige them to conform in this respect? If so, is it the intention to use such powers? Will he consult the operators before doing so? If he has not got powers to do that, has he any intention of seeking them?
§ Mr. Onslow
I hope that the Minister will take up these points because I am not sure that the hon. Member for Orpington (Mr. Lubbock) is right in saying that he has these powers.
Is the Minister aware, further, of the effect of the introduction of the £21,000 limit upon the costs of airline operators? This was mentioned by the hon. Member for Orpington, and it seems—and I have had access to the same sort of figures—that this will cause an increase in insurance premiums which cannot in many cases be absorbed. The remarks of the Board in its report about obligation are open to question but they have some relevance in the present context. It is clear that many operators are up against severe pressure for fare increases and this is likely to be greatest, possibly, in the case of operators whose route pattern is shortest—in other words, which have the least revenue per flight and upon which 1588 the cost of the increased premiums will represent the greatest percentage increase in costs.
The Minister must recognise that the existing licensing processes would prevent the operators from introducing higher fares until the end of this year, even if they were authorised to do so. This must make it very questionable whether this was the right time or the right way to introduce a new domestic limit. There are some other reasons to which I shall return.
I ask the Minister to clarify the use to which he envisages putting Article 8, which provides for exemptions. Has he any intention of using this to postpone the application of the Order to domestic services for a transitional period, say, until January, 1968, by which time operators might have been able to adjust their tariffs to the increased premium costs? If so, what procedure does he propose to apply for granting exemptions, and for advertising exemptions when granted?
If it is not his intention to use this Article for that purpose, then for what purpose is it intended? I understand that the Order applies to gratuitous carriage, as well as to carriage for reward, but in the past exemptions have been made in the provisions of existing Acts in favour of bona fide flying clubs.
In principle, this clearly makes sense, but the making of exemptions can lead to difficulty if the exemptions are not known. Will the Minister undertake to arrange to publish, in some prominent and accessible place, the details of any exemptions which he may make under Article 8? This is a point which was made forcibly by my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop).
There are two other points of detail in the Order. First, can the Minister tell us how the provisions in the Order relating to air mail are to be applied in practice? Clause 4(b) of Schedule 1 of the Order applies to the carriage of mail or postal packets, and Articles 24 and 30 of the Schedule appear to restrict the rights of action to the consignor or consignee of cargo, as airmail has to be treated. Who, in this context, are the consignor or consignee? Is the consignor the member of the public who sends something by air mail? If so, evidently 1589 some consequential amendments to the Post Office Acts will be needed. Or is the consignor and the consignee the Post Office in each case? If so, then in this respect the Order seems to be useless to the general public, and, indeed, it could have the effect of enabling the Post Office to be entitled, in the case of loss, to recover more in damages from the airline than they would be obliged to pay out under the very limited international compensation scheme for the senders of air mail. There seems to be the need for clearer drafting. Certainly a definition of who is to be regarded as consignor and consignee would help to reduce the future danger of unnecessary litigation.
On another point of clarity and definition, can the Minister explain some of the terminology which is used on page 12 of the Order under Part B of Schedule 2? Here we have the terms "The amended Convention", "The amended Warsaw Convention", and "The unamended Warsaw Convention", all appearing within the space of five lines, and all apparently intended to mean much the same thing. This seems to be quite unnecessarily confusing. It should surely have been possible to tighten up the draftsmanship and to eliminate this kind of terminological imprecision.
Regarding the overall effect of the Order, the Minister is presumably aware that it will not greatly reduce the number of anomalies which already exist in the limits of liability in individual cases. Different passengers sitting next to each other in the same aircraft may be eligible for quite different limits, depending on the type of their ticket, their point of departure, and their ultimate destination. I hope the Minister will take up this point. I put to him the case of a B.K.S. Airlines flight from Leeds to London. There might be a Mrs. X, a Leeds housewife, on a day trip to London. She would be entitled to a limit of £21,000. A Mr. Y, on a weekend trip to Paris, would be entitled to a limit of £6,000, and Herr Z, returning to Vienna, would be entitled to a limit of £3,000 If, however, he flies on from London via B.E.A., he would then find that his limit goes up again to £21,000.
This seems to be a confusing situation, and it certainly emphasises the importance of securing greater international 1590 standardisation, as well as domestic standardisation. Does not this in itself make it premature for the United Kingdom to have introduced the £21,000 limit domestically and for non-Convention carriage in advance of international agreement?
Can we possibly support a lower limit of liability internationally, and, if not, does this not make it difficult to enable us to enter into any future diplomatic conference with any room for manoeuvre? Will not our commitment to the £21,000 limit make it difficult to persuade other nations to accept the existing Conventions and Protocol? There are still over 30 nations involved in international air transport which are parties to none of these agreements.
Why did the Government decide to introduce this Order before the meeting of the I.C.A.O. panel of experts in Montreal, and what instructions were given to the British member of that panel? I should probably be out of order if I were to probe too far into the Government's ideas for future progress towards a long-term solution of the problem of keeping the Warsaw Convention up to date, but what is it in the idea of a new convention which so attracts the Minister? Would it not have been possible and better to proceed by way of modification of the existing inter-carrier agreements such as that of May, 1966?
No doubt the Minister will be aware of the complications which may arise from the case of Lisi v. Alitalia, mentioned by my hon. Friend the Member for Harrow, Central (Mr. Grant). I hope the Minister will be particularly careful to say what action he sees as being necessary if that case is not reversed on appeal.
Finally, in the timing of the Order, and in what I regard as the premature commitment to the £21,000 limit, there seems to be a strong suggestion that the Government are meekly following the lead of the United States. It was the threat of unilateral action by the American Government, almost amounting to an ultimatum, which forced airlines to accept last year's Montreal agreement. It seems to some people that we are again capitulating without protest to pressure from across the Atlantic. We know that that pressure may well be renewed in future. While there may well be arguments for working in an orderly and sensible way 1591 towards a domestic limit for carriage by air liability which corresponds to the railways limit, as the hon. Member for Tiverton pointed out—and which domestic carriers might ultimately accept if they were properly consulted—I hope that the Minister will assure us that he sees his Department's functions in this respect as being to promote international order rather than, as it appears in some respects at this moment, international chaos.
§ 11.39 a.m.
§ Mr. J. P. W. Mallalieu
On the last point which the hon. Gentleman the Member for Woking (Mr. Onslow) made, we are most anxious to try to get international order. I agree with him that some of the immediate results of this Order will be to increase the anomalies. We are doing all we can to get a full international agreement, and we shall continue to press for that in the hope of ironing out some of the anomalies which still exist.
The hon. Gentleman, as well, as his hon. Friend, the Member for Harrow, Central (Mr. Grant), raised the highly technical, but very important, point about the law case Lisi v. Alitalia. I understand that there is a likelihood of an appeal to the United States Supreme Court against the decision of the lower court. The fact that there is dubiety about this is no reason for not proceeding with the Hague Protocol, because a decision in this particular case, as and when it comes, will not affect very large numbers of the routes which the Hague Protocol covers. This Lisi case is being watched by the British Government and the experts of the International Civil Aviation Organisation are watching it with the greatest care. Depending on what the final decision is, we shall have to decide then what action we can take. I am grateful to hon. Members for raising this matter which is clearly of great importance.
The hon. Member for Tiverton (Mr. Maxwell-Hyslop), the hon. Member for Woking, the hon. Member for Orpington (Mr. Lubbock) and others were concerned about Article 8 and the exemptions which we might be considering. We have no intention whatever of giving widespread exemptions under this Article. All commercial flying, both scheduled and nonscheduled, will be subject to the provi- 1592 sions of the Order. As I said earlier, the exemptions which we have in mind are for bona fide flying clubs and the movement of troops. The ordinary business of the airlines will not be exempted in any way.
The hon. Member for Tiverton made an interesting comment about clocks in the insurance slot machines showing the wrong time. That is obviously important, but it is something which is not covered by the Order. However, I shall make a point of calling the attention of the various airport authorities to it to make sure that these clocks are kept up to time.
The hon. Member for Orpington asked whether the Order covered passengers on their way from a terminal to an airport. I am advised that it does not. It deals with accidents in the plane, or when actually loading or unloading the plane, but not in the bus. I should imagine that that would be a matter for a separate contract.
The Government have recognised, as they must, that insurance costs will go up and that applications for increases in domestic fares may result. This will be considered by the Air Transport Licensing Board which has some obligation to consider increases in the light of the Government's prices and incomes policy. I do not myself want to make any pronouncement on that, because, I understand, I might be called upon to make a final decision on such applications and it would be altogether wrong for me to pre-judge them.
§ Mr. Onslow
The hon. Gentleman says that he regards the A.T.L.B. as having some obligation to have regard to the Government's prices and incomes policy. Does it have any statutory duty to do so?
§ Mr. Mallalieu
I understand that it does.
There were several consultations between the Board of Trade and the operators, B.O.A.C., B.E.A., B.I.A.T.A. and insurance interests. I cannot pretend that there was absolutely unanimous agreement, for there was not. It was agreed that the limit should be raised, but there was disagreement about the exact figure. We tried to pick what we thought was the most sensible figure and that most likely to be adopted internationally.
1593 We have no present power to compel British operators to conform to the £21,000 limit and beyond this Order we are not proposing to seek such power at present. We intend to wait until the international negotiations are complete. A number of fairly detailed questions have been asked and I will make a point of writing to the hon. Members concerned.
In general, the House has given a welcome to the Order and I in turn give the assurance that this is not just a once-and-for-all settlement of the matter. It must be kept continually under review in view of the law cases and possible changes in the value of money and so on. We give an assurance that that will be done and in the light of that assurance I hope that the House will now agree to accept the Order.
§ Question put and agreed to.
That the Carriage by Air Acts (Application of Provisions) Order 1967, a draft of which was laid before this House on 7th December, be approved.