HC Deb 03 August 1978 vol 955 cc1026-35

4.0 p.m.

Mr. Arthur Palmer (Bristol, North-East)

The title which I chose for this debate—certainly the penultimate debate of this Session, or, for all I know, perhaps the penultimate debate of this Parliament—may surprise some, since I deliberately used the phrase "The success of Concorde" as the title of the issue which I wished to raise. I realise that there are opponents of Concorde, and to them I simply say that if they wish to put their own inverted commas round the word "success", that is entirely for their discretion and taste.

I contend that Concorde is proving a success, in spite of the prophets of doom at home and its jealous enemies abroad. I am sure that my hon. Friend the Under-Secretary of State will not dispute the fact that on the London-New York run figures show that there is 80 per cent. to 90 per cent. passenger loading, and would-be travellers are often turned away unless they are prepared to wait quite a long time.

It is now obvious that the New York run would carry more aeroplanes if British Airways could or would bring in the extra supersonic craft needed. At present, I understand that there are 10 flights each way per week on the New York run. There are two services on Tuesdays, Thursdays and Saturdays and one service a day on Mondays, Wednesdays, Fridays and Sundays, making 10 altogether. On the Washington route, of course, the bookings are lower than those for New York, but even here they are well up to the general average for subsonic travel.

No one should seriously suggest that Concorde's popularity on the Atlantic runs is due to novelty—that people are there just for the ride. That may have been the case early on when there were very few flights, but it is not so now. A passenger survey in my possession shows that most Concorde passengers are there on business, and many state that it is now the explicit policy of their companies to use Concorde because of its greater speed over other aircraft.

I have other interesting figures about typical Concorde passengers. For instance, over half of them are Americans, which fact is now giving concern to some of the American airlines, notably to Pan American and TWA. They are looking to their laurels and to their receipts. Undoubtedly, the Atlantic routes are operating with financial gain. I have no exact figures here, but there is every indication that millions of pounds of revenue has come to British Airways which it would not have received without Concorde.

As we know, the figures are very different for the Gulf run to Bahrein. In this case both use and financial return are disappointing, but this is largely due to British Airways, rightly or wrongly, maintaining this route as an opening to Singapore, presumably in the hope that the Malaysian Government will be able one day to relax their present opposition.

This brings me almost immediately to an interesting point, on which I should like my hon. Friend's opinion. Why did Sir Frank McFadzean, the chairman of British Airways, seem to go out of his way to decry Concorde when he presented the British Airways annual report on 27th July? He has it within his power to drop the Bahrein service, if he wishes, and transfer the planes to the lucrative Atlantic route.

I made some inquiries, because Sir Frank's views startled me. I have been told that his remarks were not in his brief but were given off the cuff in answer to a question, presumably by a reporter. Had that not been so, it would have seemed to me curious that a man of his great commercial and industrial experience, now the head of a major national enterprise, should apparently go out of his way to belittle his own wares.

At any rate, by his chance remarks on 27th July Sir Frank achieved newspaper reports which said little if anything about the £33 million profit made by British Airways on the total working of its enterprise. There were headlines such as Concorde never likely to make profit" and Concorde setback for British Airways". Those headlines overshadowed the fine encouraging account that Sir Frank was able to give on the general working of the airline.

We are all human, and I make full allowance for Sir Frank's being caught off his guard. If that were not so, his remarks would be very small thanks to the aeronautical designers, engineers and craftsmen who were responsible for Britain's achieving perhaps the greatest technological advance in the more recent history of aviation.

Is that the way to encourage the morale of Concorde operating staff, who find—I have a report to this effect and have seen the survey—that their passengers are very enthusiastic about Concorde, its performance and the kind of service they receive on it?

I know that these days there is a great vogue for open government, to which we all subscribe in one way or another. But I still doubt whether it is necessary for the chairman of British Airways to carry on a public dialogue with Ministers about who is to pay for what when a letter, a conversation or a telephone call could achieve the same purpose.

I wish to make a further point, not about Sir Frank's remarks but about the general relationship between British Airways and Concorde. Time is short, but before coming to some specific questions that I want to put to my hon. Friend the Under-Secretary I want to say something about the British Airways annual report and accounts for 1977–78. I have studied this glossy production. I do not complain about its being glossy. I am all for nationalised industries advertising and letting us know what they are doing. They get enough criticism.

As I say, I do not complain about the style of the report, which has a Union Jack on the cover, the tail of a TriStar just inside and, perhaps most pleasant of all, a striking picture of a stewardess on page 3—I found that the best part of the pictures. But one would think that in a year when Concorde came into full service it would have been protrayed more prominently than is the case in the annual report. There is a small picture, of its under-belly, I think. It is a minor complaint, but I hope that it is not symptomatic of the attitude of British Airways towards Concorde. Perhaps the Minister will reassure me on that point.

I see the hon. Member for Gloucestershire, South (Mr. Cope) in his place. The Filton works are in his constituency. This issue is of great interest to all Bristol Members because many of our constituents work at Filton. I am concerned with Concorde—apart from a deep belief in the future of supersonic travel and pride in British technical achievement—because I represent a Bristol constituency.

This autumn, the last of the line of British-assembled Concordes—there are also of course French-assembled Concordes—will be wheeled out of its hangar at Bristol, Filton. Concorde work has kept Filton occupied for well over a decade but at present there are no further Concorde orders in sight. The last two machines are being parked in a state in which they are technically known as "white tail aircraft"—that is, they have no line markings on them as yet. As it happens, a fair amount of other aircraft work has, fortunately, come to Filton. The factory is busy but it could be busier. Nothing would give more heart to British Aerospace management and workers generally than orders for a new batch of this now famous Concorde flying machine.

I have a number of questions for my hon. Friend the Minister. Although the Secretary of State for Industry is not the sponsoring Minister of British Airways, may I ask my hon. Friend whether the Government consider that the airline is operating Concordes to the best advantage? Secondly, why cannot more Concordes be operated on the profitable Atlantic routes? There has been some small increase since the start. That is all. Is there a difficulty over landing facilities? Is there a lack of trained staff, including pilots? It will be interesting to know. Perhaps I am not as well informed as I might be. I do not know the depths of the question.

Thirdly, should not the Bahrein route to the Gulf be dropped for the time being if it is unprofitable? Alternatively, if it is necessary to retain that route to assist further negotiations with the Malaysian Government over the extension to Singapore and to pay some respect to the feelings of the Governments of the Gulf States who have been most helpful towards Concorde and British Airways, could we be told how matters stand in this respect? What are the prospects of the Malaysians agreeing to allow overflying of their territory? It was accepted and then it was stopped. How do things stand now?

There has been, we are told—it is more than a rumour—information to the effect that Pan American is making inquiries about the possibility of running a Concorde of its own. There is no form of flattery more sincere than imitation. I am sure that we should all welcome a competitor of this kind, including British Airways. It would be a great tribute to the success of Concorde, in spite of all the forebodings. One of the problems about the Pan American inquiry, I am told, is that if the company had only one or two planes it would not be justified in bringing in a complete maintenance staff. That would be a difficulty. Perhaps in the circumstances, with friendly competitors, the work could be sub-contracted to British Airways. Many of us, certainly in Bristol and elsewhere in the country, who are much concerned for the success of Concorde and its future would like to know what the prospects are now of Pan American taking on a Concorde for itself.

I am glad to have had this opportunity to raise these important questions, and I hope that my hon. Friend will be able to give some replies to the points that I have made in all sincerity.

4.15 p.m.

Mr. John Cope (Gloucestershire, South)

I am grateful to the hon. Member for Bristol, North-East (Mr. Palmer) and to the Under-Secretary of State for allowing me to insert a word or two, as it were with a fish-slice, between their speeches, in order to support my neighbour, the hon. Member for Bristol, North-East, in his contentions about the success of Concorde.

When the recent British Airways report was published, considerable attention was drawn to the £17 million loss stated there as having flowed from Concorde. The size of that loss partly reflects the short life expectancy expected as the basis for the depreciation charge in the accounts, which is roughly half the average depreciation of the rest of the British Airways fleet used in its accountancy practices. Perhaps it should be different, but that is a very large discrepancy.

In respect of Concorde, it seems to me that the most significant figures in the report are the average hours flown per aircraft. For Concorde this was 782 hours per year as compared with over 4,000 hours for the Boeing 747s and the other aircraft—all of them, therefore, flying at about three times the amount that Concorde flew.

The reason for that is not technical but the lack of routes. The hon. Gentleman referred quite properly to that aspect. We should be particularly keen to know today whether there are any developments as far as Malaysia is concerned, or whether any improvements can be made on the Atlantic routes. The question of an increase in the routes is, of course, very much in the Government's court as well as in British Airways' court.

The future of the aircraft industry is much under discussion, and will be discussed a great deal before we meet again. In Bristol and the surrounding areas we expect to see, whatever decisions are made, that the tremendous investment in skill and money that has been made to get us where we are in supersonic travel is used to buy us a place in the next developments of supersonic travel. That is one of the aspects of the aircraft industry decisions at which we shall be looking very closely.

4.19 p.m.

The Under-Secretary of State for Industry (Mr. Les Huckfield)

I am grateful to my hon. Friend the Member for Bristol, North-East (Mr. Palmer) for initiating this debate, for the title that he has given it, and for the manner in which he presented his case. I also thank the hon. Member for Gloucestershire, South (Mr. Cope) for his complementary remarks.

The Concorde has now carried more than 100,000 passengers, so it is not only a reality but an established reality, with a wide network of scheduled services connecting London and Paris with overseas destinations. British Airways is now operating 10 return flights a week between London and New York, and three a week to Washington. Additionally, there are two British Airways services a week to Bahrain. Air France has seven services a week to New York, four to Rio, three to Washington and two to Caracas. That is indeed an established network of supersonic services.

Both airlines have early plans for expanding their Concorde network—British Airways westwards from Washington to Dallas/Fort Worth, both on its own account and through its interchange agreement with Braniff, and eastward from Bahrain to Singapore in conjunction with Singapore Airlines, and Air France from Washington to Mexico City as an Air France operation, and from Washington to Dallas/Fort Worth under the inter, change agreement with Braniff. In both cases other destinations are expected to be added later, and frequencies increased on those already served. I shall come later to the specific point raised concerning Singapore and Malaysia.

In a few months British Aerospace and their French partners will have completed the 16 aircraft whose production was confirmed by the then Prime Minister and the French President in July 1974. This confirmation was without further commitment, and neither Government have any current plans for the production of additional aircraft. My hon. Friend will recall that, for our part, we have made clear that the question of authorising further production can be considered only if all five unsold aircraft—the white-tailed aircraft to which my hon. Friend referred—have been sold, and if it would not increase the overall loss to the two Governments.

But equally I want to stress that we have retained the capability to produce further Concordes should these be required. The jigs and tools, although they are now being removed in Britain and France to make way for other work, are being carefully stored. In a recent communication to the United States State Department on the subject of the new United States noise regulations for supersonic aircraft, both the British and French Governments have explicitly reserved their rights to operate on the same terms as the Administration have applied to the 16 aircraft any further Concordes that might be produced.

On the possibility of a successor to Concorde, our position—and this is, of course, the position also of British Aerospace—remains as described by my right hon. Friend the Minister of State for Industry, following the ministerial meeting of 2nd November 1976, namely, that British priorities, we feel, lie in subsonic aircraft; that the manufacturers' proposals for a Concorde derivative aircraft for the 1980s should not be proceeded with; and that, as regards an advanced supersonic transport for the 1990s, we should consolidate the knowledge and experience gained on Concorde.

Mr. Palmer

Is there not a danger, if that policy is followed too far, that all our knowledge and experience will be lost to some other country?

Mr. Huckfield

I fully recognise that point. That is why it has been very carefully taken into consideration. But I am sure that my hon. Friend will recognise that the major purchase and procurement decisions which are about to be taken by airlines are, in fact, subsonic ones. But we have other airlines interested, as my hon. Friend has said, and the decision last year of Singapore Airlines to go into partnership with British Airways on the London-Singapore Concorde route was a tangible expression of confidence in the aircraft. Now that the Malaysian general elections have been held, we look forward to the resumption as soon as possible of discussion between our two Governments of recommencing the services which were interrupted last December.

With the promulgation of the American noise rule and the expected early United States type-certification of Concorde, we shall also look forward to the implementation of the interchange agreements which British Airways and Air France respectively have concluded with Braniff, for a Braniff Concorde service between Washington and Dallas/Fort Worth. A number of problems remain to be sorted out following the demise of the Milford Bill. This would have allowed United States carriers to operate foreign-registered aircraft. Nevertheless, it is significant that Braniff feels sufficient confidence about the outcome of these deliberations to have committed recently a number of its aircrew for early training to learn to operate Concorde. Since this is currently the subject of consideration by the CAA, I cannot, of course, comment on British Airways' application to continue, as a British Airways operation, its present London-Wash- ington service on to Dallas/Fort Worth, except to say that this is complementary to, and does not supplant, the airline's interchange agreement with Braniff.

My hon. Friend also mentioned Pan Am. As has been indicated recently in another place, the Government welcome this expression of interest by the airline, and the manufacturers have been asked to report on the nature and extent of the airline's interest in Concorde and how it might best be met.

I can tell my hon. Friend that discussions with Pan Am continue. Of course, these matters are commercially confidential as between the parties concerned, including British Airways which will be invited to undertake the maintenance of the aircraft. That is a factor to which my hon. Friend alluded. Neither hon. Member, of course, expects me to disclose the details today, because they are confidential. But what is clear is that Pan Am has found that it is losing a significant number of first-class passengers to British Airways and Air France Concorde services. As to Pan Am, Braniff and Singapore Airlines and their financiers, it has to be said that they are not being attracted to Concorde for reasons of national interest or prestige but are being attracted by Concorde for reasons of hard-headed commercial considerations.

Both hon. Members made reference to expenditure. Of course, on 8th May my right hon. Friend the Minister of State for Industry referred to the fact that British expenditures on Concorde development are now estimated at £575 million, and on production to the end of 1978 at £352 million, the latter being offset by receipts of £139 million. But in real terms the net expenditures reached a peak several years, ago and have since fallen away sharply. That must be borne in mind in relation to the remarks which both the hon. Gentleman and my hon. Friend made about the British Airways annual report. It also has to be said that for British Airways, supersonically and subsonically, 1977–78 had its problems. There was a shortage of Concorde crews and there were the suspension of the Singapore service and the subsequent redeployment of air crews. But now that all of these considerations have been gone through, I feel that the airline is now able to seize the opportunities presented by the opening up of the access to New York and by its ability to match Air France's daily frequency.

Although the hon Member for Gloucestershire, South referred to the fact that Concorde flew an average of only 782 hours per aircraft last year, despite all this the airline came within £2 million of achieving a positive cash flow on Concorde. The New York service has already gone up to 10 frequencies a week, and up until mid-July British Airways, despite having to charge fares 20 per cent. above first-class levels, had achieved load factors of 73 per cent. on the New York route and 63 per cent. on the Washington service. The Air France figures were slightly lower but also satisfactory.

I believe that it is figures such as those which represent the context in which we must see Concorde today. It is a future such as that against which we must set some of the remarks in British Airways annual report. Figures such as that bode well for the future, and I am happy today to reaffirm to both hon. Members and their constituents the Government's continued commitment to doing what they can to ensure that Concorde goes from strength to strength in airline service.

I can assure the House that well to the forefront of our collective thinking on this, as on other matters for which the Government have a Concorde responsibility, will be the theme of my hon. Friend's debate, namely, the theme of "the success of Concorde".