AIR TRANSPORT LICENSING ACT 1960 (AMENDMENT) (Hansard, 18 February 1969)

§ Mr. Kenneth Lewis (Rutland and Stamford)

I beg to move, That leave be given to bring in a Bill to place an obligation on the Air Transport Licensing Board to inquire into the financial standing of any company seeking to organise package tours and hire aircraft for this purpose and to take financial backing into account when considering whether or not to grant a licence. My proposed Bill puts forward a simple amendment of the law which, I believe, will have a useful effect. Although I have an interest in the travel business, I wish to make it clear that I have no interest in the side of the business referred to in the Bill. However, had I such an interest, I should still feel inclined to put forward my Motion.

The Amendment to the 1960 Act which I propose seeks to provide increased stability and confidence in what has become a mammoth and worthy enterprise—package tour holidays. Nothing but praise should be given to those who started this enterprise after the war and who have developed it since, for they have opened a new window on the world for many people who previously could not have afforded to travel abroad.

Under the Civil Aviation Licensing Act, the Air Transport Licensing Board can demand to be assured of the financial stability of any airline making application to use aircraft for what the Act calls "trade or business". But it cannot ask to be assured of the financial status of a tour operator acting with an airline. That is the gap that I wish to close. That is this further assurance that I wish to provide for the public.

It is fair to say that the right of the Air Transport Licensing Board to demand financial stability of airlines has helped to avoid the financial failure of airlines, at any rate at the beginning or in the middle of the season—that is, soon after the licence has been granted. Failures in the middle of the season are calamitous for the travelling public. My Bill would place on the board the additional obligation to consider the financial position of the airline and tour operators working together. This could well give assurance 216 of the financial credibility of both the airline and the tour operators, particularly for that year, and after that year they would apply again.

Charter holidays run by tour operators is now very big business. In fact, 1£ million people travelled abroad in this way last year, and the number is growing every year. Aircraft worth millions of pounds are used in these operations. This is no business for the inadequately financed, the under-capitalised, or, if I may use the phrase in a non-holiday sense, the fly-by-night operator.

Perhaps I shall be excused for stating what may appear to be the obvious, but if a person buys a car or television set or any other goods or equipment, and if the firm making what he buys goes into liquidation, the consumer retains the goods if he has paid for them. However, if a tour company goes "bust" before a person has completed his holiday, that person can lose his money, his holiday or be in trouble in the middle of the holiday or in getting home—any of those things.

This was recognised some years ago by the Association of British Travel Agents, which set up a fund, to which the large companies and a great many small companies contribute voluntarily each year, to safeguard holidaymakers from disasters. This fund was a rescue operation. It was called, and is called, "Operation Stabiliser".

The recent salvage operation of Wrights Holidays, Birmingham, cost the association, through its fund and other tour companies contributing, over £30,000. However, the action saved about 1,000 winter holidays and 4,000 summer holidays, all of which have been rebooked. In fairness to Wrights, I may say that their difficulties have arisen partly from what happened to British Eagle, partly through devaluation, partly through the £50 restriction, and through trouble in the Middle East and in Greece. It could be asked, however, why these difficulties were not discovered earlier, since some of them go back some time. It is fair to ask whether the Air Transport Licensing Board would have discovered these difficulties if it had been able to inquire about financial status.

As a result of the failure of Wrights, the fund of the Association of British Travel 217 Agents bas received a very severe mauling. It must be clear that if two or three of such disturbances one upon another were to occur within a very short time, the situation would become impossible and the fund would be "bust". Because I believe that further action is now required, I ask for leave to bring in the Bill.

For some time, discussions have been taking place between the tour operators and A.B.T.A. to secure financial guarantees or bonding. Nothing has arisen so far from these talks; the position is deadlocked. I therefore seek to obligate the Air Transport Licensing Board, first, to request financial information of tour companies and, secondly, if necessary, to look at the possibility of demanding financial guarantees or bonding. It is true that at the moment the board asks tour operators voluntarily to submit full financial information. Most of the companies give this information. However, some resist. It would be better if the Board were given full statutory rights, as it is given in respect of airlines. I get the clear impression from the Air Transport Licensing Board's annual reports that the board would like to have these powers.

Guarantees of stability are best secured when air licences are sought and granted, as is already done with the airlines. The cost of bonding cannot be an issue, because the tour companies have already said that their tours could be cheaper were it not for the restrictions placed on them by Provision I of the International Air Transport Association, which 218 I will not go into, but which means that they have to sell their holidays at a higher price to the public than they might otherwise do. There is, therefore, full scope to accept the expense of providing a bond or financial guarantee.

A seat on an aircraft, a room in an hotel, or the two taken together, a package holiday, has as much right to be a bird in the hand to any consumer as any other piece of equipment which may be bought—a television set, motor car, or anything else. There should be no doubt about encouraging competition on the price and quality of a holiday. But once a holiday has been paid for, it should be made available. I hope that the House will grant me leave to bring in this modest Bill.