HC Deb 15 March 1976 vol 907 cc930-2
20. Mr. Warren

asked the Secretary of State for Trade what agreements have been made between United Kingdom airlines and United States airlines on the capacity to be offered on the North Atlantic from March 1976 onwards; and if he will make a statement.

25. Mr. Tebbit

asked the Secretary of State for Trade if he will detail the North Atlantic air traffic capacity limitations which he took into account in the considerations which led to his decision to overrule the Civil Aviation Authority's issue of a licence to Laker Airways for the Skytrain service.

Mr. Clinton Davis

Agreements to limit capacity on the North Atlantic routes were first negotiated in the autumn of 1974. They proved very successful in cutting out wasteful excess capacity and substantially improved British Airways' financial results. They were renewed in April 1975 and the present agreements run to 31st March 1976. I am publishing the details in the Official Report. Discussions about the levels of capacity for the summer of 1976 are still in progress.

Mr. Warren

Pending the opportunity of seeing the details that will be published in the Official Report, may I draw to the Minister's attention the statement made by British Airways that the limitations that will be imposed on the London-Miami route will give a greater chance for the airline's staff to fly in the empty aeroplanes at a 90 per cent. discount? Is that in line with his policy?

Mr. Davis

I have not seen the statement which the hon. Gentleman attributes to British Airways. It is important to deal not with the minutiae but with the principle. The principle of capacity agreements has been established beyond all reasonable doubt.

Mr. Neubert

If the Minister believes that the agreement to reduce excess capacity on this route has been a success, are there plans to make similar agreements on other routes?

Mr. Davis

The North Atlantic routes are the most important. There can be no doubt about the success of the agreement and its continuing necessity. The fact that last year there were on the North Atlantic routes to Europe 15.3 million seats on 20 airlines, only 8.8 million of which were sold—an improvement on the previous year—speaks for itself.

Mr. Tebbit

The Minister says that the system of capacity agreements has been approved, but it has never been approved by the House. If no capacity agreements were signed for the forthcoming year, how was he able to make estimates, based on capacity agreements, of the effect of the introduction of Skytrain had it come into operation this summer?

Mr. Davis

This is not a matter that falls to be dealt with by legislation of the House. What I said was that the value of these agreements had been established. There can be little doubt about that. When considering Skytrain we had to formulate a judgment based on what, in our view—and this was supported by the House—would be the likely situation in the year ahead. If no agreement is formulated between the British airline and the American airlines we shall have to consider the position carefully, and in the last resort we may have to impose restrictions pursuant to the Bermuda Agreement.

Following is the information:

UNITED KINGDOM/UNITED STATES CITY PAIRS CAPACITY
Maximum weekly frequencies in each direction
Summer Winter Summer
1975 1975–76 1976
London—
Washington WB 14 10 14
Chicago WB 14 10 14
Detroit WB 14 5 10
NB — 7 —
Los Angeles WB 14 14 14
Miami WB 14 10 12
New York WB 42 21 42
NB 21 21 21
Boston WB 21 — 15
NB — 21 —

Notes:

(1) "WB" = wide-bodied aircraft (DC10s, B747s and L1011s).

(2) "NB" = narrow-bodied aircraft (B707s, VC10s, DC8s and Concordes).

(3) In 1976, at the airline's discretion, two narrow-bodied frequencies may be substituted for one wide-bodied frequency at New York and Washington; and seven narrow-bodied frequencies may be substituted for five wide-bodied frequencies at Boston.

(4) There is provision for adjusting the regular capacity up or down, at reasonable notice, if the traffic proves greater or less than is forecast.

(5) Additional flights are operated as necessary to meet peak traffic demands.

(6) On the London-New York sector, one B747 is operated with a seating restriction, as if it were a narrow-bodied aircraft.