HC Deb 07 July 1980 vol 988 cc114-82

In section 24(6) of the 1971 Act (which deals with regulations governing appeals) there shall be substituted for paragraph (a) the following paragraph—

and there shall be inserted in paragraph (d) after the words "paragraph (b) of this subsection" the words "accept a finding of fact made by the Authority" and there shall be deleted the words "have regard in particular to the duties imposed on the Authority by section 3 of this Act" and substituted therefor the following "be required to act in a manner consistent with the objectives imposed on the Authority by this Act as amended. Provided that where the Secretary of State does not accept an earlier finding of the Authority he shall not reverse or vary the decision in question without first requiring the Authority to publish its opinion of the effect of the reversal or variation proposed by the Secretary of State, which opinion shall be formed only after a rehearing by the Authority in accordance with procedures to be established by regulation.". —[Mr. John Smith.]

Brought up, and read the First time.

Mr. John Smith (Lanarkshire, North)

I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker

With this it will be convenient to take the following amendments.

No. 30, in clause 11, page 11, line 37, leave out subsection (2).

Government amendment No. 35.

Amendment No. 36, in page 12, line 28, after 'efficient', insert ', reliable '.

Government amendment No. 63, in page 12, leave out from beginning of line 30 to end of line 45 on page 13 and insert:

20 provide under the licence, and in any case where those existing services are similar (in terms of route) to the proposed new services or where two or more applicants have applied for licences under which each proposes to provide similar services, the Authority shall have regard in particular to any benefits which may arise from enabling two or more airlines to provide the services in question.
(3) Subject to section 3 of this Act and to subsections (1) and (2) of this section, it shall be the duty of the Authority in performing its air transport licensing functions to have regard to the need to minimise so far as reasonably practicable—
(a) any adverse effects on the environment; and
25 (b) any disturbance to the public; from noise, vibration, atmospheric pollution or any other cause attributable to the use of aircraft for the purpose of civil aviation.
30 (4) In addition to the duties with respect to particular matters imposed on the Authority by the preceding provisions of this section, it shall be the duty of the Authority to perform its air transport licensing functions in the manner which it considers is best calculated to impose on the civil air transport industry of the United Kingdom and on the services it provides for users of air transport services the minimum restrictions consistent with the performance by the Authority of its duties under sections 3, 22 and 23 of this Act and the preceding provisions of this section.
35 (5) In this section—
(a) references to the air transport licensing functions of the Authority are references to its functions under sections 21 to 23 of this Act and any functions conferred on it by regulations made under subsection (1) of section 24 of this Act; and
40 (b)' British airline ' has the same meaning as in section 3(1) of this Act.".
(6) in section 24 of the Act of 1971—
(a) subsection (2) (which contains provisions relating to guidance given by the Secretary of State under section 3) shall cease to have effect; and
45 (b) at the end of subsection (6) (duties of the Authority to which the Secretary of State is to have regard determining appeals) after the words "section 3" there shall be inserted the words"and section 23A ".
50 (7) This section, and the repeal of section 24(2) of the Act of 1971 provided for in Schedule 3 to this Act, shall come into force on such day as the Secretary of State may by order made by statutory instrument appoint; but the day appointed under this section must be later than the date of publication of the first statement of the policies of the Civil Aviation Authority under section 12 of this Act.'.

Sub-amendment (a) to amendment No. 63, in line 6, leave out ', also have regard' and insert' (a) accept the'.

Sub-amendment (b) to amendment No. 63, in line 7, leave out '(a) to any'.

Sub-amendment (c) to amendment No. 63, in line 11, after '(b)' insert shall have regard '.

Sub-amendment (d) to amendment No. 63, in line 16. leave out from 'licence' to end of line 20 and insert— '(3) In section 23(2) of the Act of 1971 (which provides the Authority with powers to revoke, suspend and vary air transport licences) there shall be inserted at the end the words "but only if it is satisfied that the holder of the licence consistently failed to provide an efficient and adequate service in accordance with the terms of the licence.".'.

Sub-amendment (e) to amendment No. 63, in line 19, after benefits', insert and disadvantages '.

No. 37, in page 12, line 37, after 'that', insert — 'taking account of economic considerations and international agreements'.

No. 38, in page 13, line 7, leave out also have regard, in assessing that effect, to any' and insert: 'accept the'.

No. 68, in page 13, line 45, at end insert: '(7) In section 5 of the Act of 1971, in subsection (1) at the end shall be added the words "provided that it shall be not less than three.".'.

Govenment amendments Nos. 65 and 51.

Mr. John Smith

This group of new clauses and amendments offers the House an opportunity to debate the changes in air traffic licensing policy that the Bill introduces—or perhaps does not introduce, because there is such a confusion of thought at the moment as to what the Bill means and how it is to be interpreted that I think I am entitled to put that gentle qualification at the beginning of my remarks.

The new clause is an attempt to provide a better method of dealing with appeals. It arises directly out of the decision of the Secretary of State on the licensing of the Hong Kong to London route. It is an attempt to provide a better method of deciding these matters. In particular it draws a clearer distinction between what might be regarded as political grounds for making a decision and the more ordinary grounds on which the Civil Aviation Authority might arrive at a decision.

The main purpose of the debate will be to consider the whole question of air traffic licensing. Many people thought that we had a satisfactory method of dealing with it before the Bill was thought of, but along came the Government with the Bill. They said "We intend to make a change, not a very dramatic change but an important change. We shall remove from the Secretary of State and from Parliament the power to give guidance to the Civil Aviation Authority as to how it carries out the administration of the policy."

We objected to that. We have argued about whether the Government or Parliament have the right to dictate principles on which civil aviation licensing is carried out and leaving to the CAA the difficult job of administering it. The Government said that they disagreed with our view, and from time to time the Under-Secretary said in Committee that it would be unfortunate to leave these things to politicians. I wonder whether he has thought about that since, in the light of the decision that the Secretary of State took recently. No doubt the Under-Secretary has had to think about it since then.

But whatever the merits or demerits of the policy advocated in either side, the Government's position was that the making of licensing policy, as well as its administration, should be left to the Civil Aviation Authority. In a sense, they were building up the Civil Aviation Authority and giving it a wider role—some of it at the expense of the Government and of Parliament. Or so it all seemed.

We were sailing along with a Bill which proposed this wider, greater and more effective power for the Civil Aviation Authority. There was uncertainty as to what it would mean and there was a certain amount of concern among airline operators as to what new policy the CAA would devise. To meet that concern, the CAA published some guidelines indicating what it thought would be its policy. It turned out to be not all that different from the policy that it had been operating under the terms of the guidance that had been given to the CAA by the previous Government and Parliament. Some people said "Plus ça change, plus ćest la même chose. Very little will change in practice as a result of the Bill.

Mr. Tebbit

I should like to prevent the right hon. Gentleman from going down a wrong track. That guidance and consultative statement was based on existing, not new, law. The CAA will shortly begin to consult on the basis of the new law when it knows what it is likely to be.

Mr. Smith

The Under-Secretary has drawn the attention of the House to the monumental task facing the CAA in issuing new guidelines. First, it will have to find out what the law is. It seems that the Government and Parliament do not really know what the law is. Therefore, I do not know who will help the CAA in that task. I shall move on to that point shortly.

I had taken the House to that stage in the present drama where the Government had indicated that the CAA was to be given a wider role. But suddenly out of the blue the Secretary of State made a decision on the Hong Kong-London route which seemed to controvert the whole system of civil aviation licensing in this country and certainly the policy that the Government were enunciating until that time. In one swift blow. as it were, he changed the whole situation. It was perhaps a matter of accident that the Bill had not got to this stage before that decision was reached and it therefore gave us an opportunity to consider it in greater depth.

No hint was given by the Government in Committee that they were moving towards a policy of greater competition, if that is what they are moving towards. No doubt the Under-Secretary will tell us what they are moving towards when he replies.

Certainly, as the Under-Secretary pointed out at various times in Committee, one could not draw parallels between this Bill and the deregulation which was being carried out in the United States of America. After all, as the Under-Secretary pointed out—this is column 813 of the Committee report—the way in which things had been done in the United States was for a deregulation Bill to be passed and then for the Civil Aeronautics Board to carry out the policy that Congress had enunicated. He was implying that if we were to move to a policy of deregulation or greater competition, Parliament should say that was to be the policy and should put it in the Bill so that the CAA would know what to do. There was and is no reference in the Bill to any policy. The position was not that the Government wanted to change policy but that they wanted to leave policy-making to the CAA.

What happened about the Hong Kong-London route? The Civil Aviation Authority, after considering applications from British Caledonian, Cathay Pacific and Laker Airways, reached the conclusion that only British Caledonian should be licensed on the route in addition to British Airways. In its decision and reasons it set out clearly why it had reached that conclusion. It was operating under the criteria of the existing legislation, although I think it is clear that it would have reached the same decision if the Bill were now law.

The reason why the Civil Aviation Authority declines applications by Cathay Pacific and Laker Airways is not that there is any prejudice against those airlines—indeed, it made it clear that for most of the purposes of the Act all the applicants qualified—but that it did not think there was enough room on the route for more than one operator.

One would have thought that was the type of assessment that the CAA was well qualified to make. It listened to the evidence submitted by all the applicants. The only argument for the route being able to take a larger number of carriers was that put forward by Laker Airways. That argument rested on assertions made by Laker about what was called the "forgotten man" at the bottom end of the market. Presumably some parallel was being drawn with the North Atlantic situation. That was gone into in detail by the CAA, and it reached the conclusion that there was no significant charter market for which scheduled services might develop as they had developed in the North Atlantic. The CAA said: The Authority must regretfully regard the forgotten man as a myth. There is certainly no evidence that he is waiting hopefully for the opportunity to travel between London and Hong Kong. Having gone into the matter carefully, the CAA rejected the Laker contention, which one would have thought was crucial to the Laker application. The CAA considered the evidence of the other parties; and British Caledonian and Cathay Pacific, in addition to British Airways which already held the licence for the route, argued that there was a limit on the capacity of this route. As that was the view of everyone apart from Laker Airways, it is no surprise that the CAA reached the view that there was some limitation on the range of demand. Indeed, it regarded it as part of its duty not to create excess capacity on the route from the start.

7.15 pm

In its decision, the CAA said: The evidence of British Airways, B Cal and Cathay was that the route would not support three carriers although B Cal were willing to live with the presence of two other carriers if this were decided for wider reasons. The Authority agrees with the evidence. Since there is no foreign competition on the route, the Authority has considered whether it should experiment by licensing both B Cal and Cathay and leaving them together with BA to tailor the capacity to experienced demand. However, there must be a possibility that if the Authority were to choose this course, excess capacity would be provided from the outset, the regime would be unstable and one or two carriers would pull off the route. Given the importance of this route to Hong Kong the Authority does not feel able to take this risk. It must be in the interests of Hong Kong that the future regime should be sufficiently stable to secure for it an adequate and reliable service. The CAA then goes on to say that the evidence suggests that the licensing of both a second and third carrier on the route would at best result in a suboptimal outcome. On that basis, neither of the new operators on the route would have a sensible operation, and the needs of the consumer would be poorly met.

That is talking about a situation without Laker Airways coming on to the scene. That is the situation with British Airways, British Caledonian and Cathay Pacific. It is clear from what I have quoted that the CAA went into this matter with some care, reached definite conclusions on the evidence and, assessing it with the experience that it brought to bear upon it, reached a clear view on how the application should be determined.

The CAA having made the decision, that was that. But the other parties appealed. The Secretary of State's decision might just have been understood if he had introduced one other carrier on to the route, but he introduced yet another—Laker Airways—and said to Parliament that he was operating on the same evidence as the CAA—I have just referred to some of the evidence—and that in his opinion the CAA had reached the wrong decision and that both Cathay Pacific and Laker Airways should be allowed on to the route.

Purporting to act on the same evidence as the CAA had used in reaching its decision, the Secretary of State reached a different conclusion and completely overturned the CAA's decision. I should make it clear that he was not giving the CAA a political direction, which he has power to do if some international air service complication or general foreign policy consideration were involved. He could have given a direction to the CAA and used his powers in that way, but he chose not to do so. He professed to have a better understanding of the evidence than the CAA and therefore felt justified in reaching a different conclusion.

That was a surprising conclusion for the Secretary of State to reach. It was not one that could have been predicted on the basis of what had been said by the Government since taking office and certainly not from the terms of the Bill up until that time.

The important question is: where do we stand now? An optimist in the Department of Trade issued a press briefing which stated: It has been suggested that the Bill as drafted would not in future allow a decision similar to that taken by the Secretary of State for Trade in respect of appeals about licences for the London-Hong Kong route. The Government believes this to be an erroneous view "— one would have thought that if the Government believed that to be an erroneous view, they could have let matters lie and that would be all right— but has decided to clarify the position and put beyond doubt the factors which have to be taken into account when considering application for licences. That is why we have amendment No. 63, which introduces more criteria to be used by the CAA. It is not, of course, that there is any need for it, one should understand, according to the briefing from the Department of Trade. If the House were in an impish mood tonight, I should have thought that it could take the Department at its face value and refuse to give it these extra powers, on the simple view that they are not necessary and that we should not be taking up the time of Parliament with them. Perhaps the Under-Secretary will endorse the view which these optimists in his Department have been putting about the place and, in particular, suggesting to the press.

But where do we stand? This is a very serious matter. I think that civil aviation licensing is the most important function of the CAA. It is a matter of very great importance not just to airline operators but to the travelling public. Do the Government have a policy on the matter? The previous Government had a policy on it. The Conservative Government before them had a policy, I think. Both Governments were both operating under the guidance which the Secretary of State could give to the CAA, and Parliament was consulted as well. When the present Government came into office, we thought that the only change that would take place would be that they would give the policymaking role to the CAA.

As I say, we did not particularly approve of that, but at least that was explicable—that the Government did not want to make the policy so they would give that role to the CAA. But that appears not to be the case, because from time to time it appears as though the present Secretary of State for Trade wants to be thought of as an open skies Minister, as a man who has opened up this closed world of civil aviation licensing and let the people in, dressed as Mr. Laker. That appears to be what he wants people to think of him. He has been benefiting from editorials in some of the more popular newspapers saying what a bold, ingenious and determined Minister he is, cutting through all the red tape and all the claptrap and allowing cheaper fares to operate on international aviation markets.

I have not seen the Secretary of State rushing to deny any of these plaudits, or turning them away and saying "It is unfair so to describe me". He seems to be quite enjoying it. I am not so sure that his Under-Secretary enjoys the Secretary of State getting that kind of credit. That might be a rather more complicated matter to investigate. Certainly, from time to time the Under-Secretary must feel very like a monkey when the organ is grinding out a different tune and he has to come to Parliament and offer us his little thoughts on the matter.

I know that the Secretary of State is presently in Nigeria. I wish him every success there. He told me that he would be there for this stage of the Bill, and I take no objection to his not being present tonight. However, occasionally it would be an advantage if he were to come to the House and tell us what his aviation policy is. It would be an advantage to us, and I dare say that it might be of some advantage to the Under-Secretary as well, because we do not know what the policy is. We have some idea at the beginning. We have absolutely none now.

Are the Government in favour of more competition? Is that what it is about? Are they in favour of an open skies policy or of a sort of moderate open skies policy—a wider skies policy, or some such phrase? I do not know what it is they have in mind. They should tell us. They should certainly tell the airlines of this country what kind of policy it is that they want followed. They might even be decent enough to drop a hint to the CAA, which has the responsibility, as to what kind of policy the Government think it ought to be following.

If we were to take the Hong Kong decision as being an example of the Government's policy in operation, that would be an all-comers policy: "If you want to put in for a licence, put in for it. Make as many assertions as you like about what a route can bear. Everyone should be allowed to compete. Let all the applicants get a licence. Do not worry too much if you fail at the first hurdle, because that is only the first stage of a two-stage rocket. You nip round to the Department of Trade as soon as the ink is dry on the CAA licensing decision and get it change by a very obliging chap called Nott, who sits along at the Department of Trade but who does not have much time for the CAA decisions. He is the chap to put it right. Just write a nice letter to him. If you cannot see him, see the other chap there. He is not known to be so keen on the policy, but he can pass it on to his boss, and perhaps you will get there quite easily and quite quickly."

I wonder if that really is the Government's policy. Do they want to encourage more competition? Do they believe that one should not have regard to the capacity of the route but should let everyone run on it? I suppose that that is the policy. If the Government believe it, they should state it. If they have recently come to that view, they should state the time of their conversion and tell us what it was that led them to that view. It is difficult for us to understand why they now hold that view, because they have kept so silent about it at all stages until now.

Parliament needs to know before the Bill becomes law, because there are severe dangers, to put it no higher. If the Government now believe in the policy of deregulation, they have been seriously misleading the House up until this stage, and they have got the approval of the House for this Bill, as it has been given so far, on a false prospectus. Therefore, we need to know, the airlines need to know, the travelling public and the whole travel and leisure industry need to know, what is the Government's policy.

If the CAA, to which the policy-making role has been given, is not allowed to exercise it but is to be cut down on appeal after appeal, is it not time that the Government reversed the whole idea of giving the CAA this responsibility? If they have no faith in the CAA's capacity to devise policy, there is little point in giving it that policy-making role. Will the Under-Secretary address himself to this matter. I am sure that he will have a very wide and interested audience.

Secondly, what are the implications of this Hong Kong decision? Is it one aberration, something that stands on its own, sui generis, something which can be explained in its own facts and almost entirely in its own circumstances? Or is it the harbinger of things to come? Is it the sort of decision that the Secretary of State would like to see the CAA taking without him having to be bothered about an appeal? Is it, as I say, peculiar to the circumstances, an aberration from the norm, or is it something which will characterise the way in which the Secretary of State handles future applications?

Mr. Clinton Davis (Hackney, Central)

An aberration from Norm is absolutely right.

Mr. Smith

Yes—an aberration from Norm, if not an aberration from the norm. I think it was probably an aberration from dear old Norm as well.

The other very important matter about which the Under-Secretary should tell us is where we stand now about applications to the CAA. I think that this is the first time for a very long time, if not the first time ever, that a Secretary of State has overruled a CAA decision in such an all-embracing and cavalier manner. It is not just a difference of interpretation; it is a totally different approach, allegedly on the same facts. I take leave to doubt whether it was on the same facts. I know why the Secretary of State said that to Parliament, though. If he had said to Parliament that he had taken a decision on something other than the same facts, he would have had a case brought against him by some of the disappointed applicants. All that he was doing in Parliament was proofing it against legal challenge rather than telling Parliament the truth. That was just a legal device.

Looking at the same evidence, no one could have reached such totally opposite views about it. It is not open to any reasonable man to believe that explanation. So the Secretary of State had his tongue firmly in his cheek and half way down his throat when making that statement.

Mr. Tebbit

That is difficult.

Mr. Smith

It is very difficult. It is almost as difficult as it is to explain the Secretary of State's policy. That will give the Under-Secretary some idea of the challenge that he has to face.

What does it mean? Does it mean that the Secretary of State will just take his own view on the evidence and all future applications? What will the future policy on appeals be? Can anyone ever again have faith that he will get a hearing from the CAA and that some respect will be given to the decision that has been arrived at there?

As I have said, what comes out with crystal clarity from this particular case is not just a slight difference of view or a feeling that the Secretary of State had that perhaps the CAA had not given sufficient weight to one particular piece of evidence. It is such a totally different approach. I suspect that it is as simple as this. The Secretary of State decided that he was in favour of Mr. Laker being allowed on this route and was determined to let him in on this route whatever the state of the evidence was and whatever the view of the CAA. I think that I am not very far from the truth. That was a totally political personal decision arrived at without any consideration of the normal method whereby these things are done, without any regard for the machinery or the rights of the parties, and something which was just brought in and covered with sufficiently careful words when he spoke to Parliament to stop there being any legal challenge of it. That is the present situation.

Under the new clause we suggest that there is a way of dealing with this matter which is a little better. Parliament ought to consider this, if Secretaries of State continue to behave in this way. It would have been much fairer for the Secretary of State to refer the matter back to the CAA. If he really felt that it had been unfair to Laker, why did he not refer the matter back to the CAA and say "I think that you did not give enough weight to what Mr. Laker said and you should listen to his evidence again." That would have allowed B Cal, Cathay and the other parties, and British Airways, to look into the matter carefully and offer some critique, even a more developed critique, of what had been offered in evidence by Mr. Laker, and the CAA could have had another look at it. If it had reported back and said "Secretary of State, we have reconsidered the issue and we have reached the view that we were right in the first place"—no doubt it would have come to that decision—it would have been crystal clear that the Secretary of State was acting on political prejudice or favouritism, or on some basis of political choice and not a proper evaluation of the evidence.

7.30 pm
Mr. Cranky Onslow (Woking)

The right hon. Gentleman seems to be getting rather obsessive about the Laker angle to the Hong Kong hearing and the decision that emerged. What does he say about the fact that Cathay was originally denied a licence and about the decision of the Secretary of State? Is he to brush that totally aside?

Mr. Smith

I am dealing with what I think is the most surprising part of the Secretary of State's decision. I think that even the hon. Member for Woking (Mr. Onslow) will concede that it is pretty surprising to subvert the evidence. As the hon. Gentleman knows, Cathay was not asking for such a result. The nature of the Cathay application was that only it in addition to British Airways should be licensed on the route. As I understand it, it was not asking for an openskies policy. I did not want Laker to get a licence; nor did it want British Caledonian to be licensed. Cathay wanted Cathay to be the only competitor. As I understand it, that was the way in which it made its application to the Civil Aviation Authority.

I can understand more clearly the Secretary of State intervening to allow in Cathay. The market will be less stretched if another one is allowed in than if another two are given licences. That must be so. The hon. Member for Woking has a great capacity for shaking his head in apparent incomprehension. He may not understand what I am saying, but surely it is fairly obvious. If a market is stretched by two operators it will be a damned sight more stretched if there are four operators.

If the Secretary of State had doubts about any of these matters, he should have referred the issue back for further consideration. That would have allowed the other parties the opportunity of further comment. They had no idea that the Secretary of State was about to reach such a decision. Some of them took action upon the granting of the licence, For example, I think that British Caledonian acquired other aircraft in anticipation of its being able to run the route on the terms on which the authority had granted it a licence.

As a result of the Government's having made a botch-up of this licensing application we must now wonder whether they have seriously misled Parliament and the industry on the authority's civil aviation licensing policy. Secondly, they have created total uncertainty about that policy. The Under-Secretary of State will have to try to straighten it out and tell us what the policy is. Thirdly, they have upset any confidence that there might have been. There was a considerable amount of confidence in the developing expertise of the authority as a fairminded arbiter.

I am surprised that the Under-Secretary of State chuckles. After all, he was advertising that the authority was good at carrying out policy and that it should be given responsibility for devising it. He knows that there were difficulties between the authority and the previous Labour Government. However, that Government never over-turned the authority in such a cavalier manner as the present Government have done.

Mr. Tebbit

I am amused, because I recollect the long hours of debate in Committee when I was saying constantly to the right hon. Gentleman that he should not continue to imply that the authority consisted of a bunch of nutters who would go around tearing everything up by the roots and throwing it about the place. I said that in the event that it got it wrong from time to time, the Secretary of State would have the opportunity to put matters right on appeal.

Mr. Smith

I do not think that I ever described the authority as a bunch of nutters. On reflection, I am sorry that I did not describe the Secretary of State as a nutter. That would have been not only apt but an accurate prediction of how he would behave. The hon. Gentleman knows that there was no dispute in Committee about the competence of the authority to handle applications or about the expertise that it had developed. The issue in dispute was whether it was right in terms of parliamentary democracy to give it responsibility for making policy. I can understand that the hon. Gentleman wants to return to the old arguments, but he must realise that they are now behind us. It appears that those issues do not divide us. The division represents our inability to understand the policy that the Government are proposing. No doubt the Under-Secretary of State will rise to tell us what the present civil aviation policy is if he can explain it in a word.

It is hard to understand how a greater botch-up could have been made of anything than the Government have made of something that is not inherently difficult —namely, the devising of a sensible civil aviation policy and ensuring that it is carried out with sense and discretion. Surely that is one of the minor tasks that any Government have to face. However, the Government proposed a change of policy. They had everyone walking down one garden path and then promptly introduced an abrupt change of policy that led to general confusion and bewilderment. It would have been hard to have made a greater mess of civil aviation policy.

I suggest that the Government take these issues away and think about them rather more clearly. There was no need to put these changes into the Bill. There is no especial relationship between civil aviation licensing and other parts of the Bill. It would have been better if in the first instance the Government had issued a White Paper or a Green Paper and had set out what changes, if any, they wished to make in civil aviation licensing policy. They should have canvassed opinion widely and perhaps had a consultative debate in Parliament. With the wisdom culled from those different sources—there would have been a fair amount of wisdom from hon. Members—the Government could have proceeded with a more intelligible civil aviation licensing policy.

It is still not too late for the Government to adopt that approach. The only way in which they can effectively recompense those concerned for the total shambles that they have created is to adopt such an approach. That would involve their not proceeding with amendment No. 63 and giving these issues much further consideration.

Mr. Robert McCrindle (Brentwood and Ongar)

I welcome the fact that new clause 15 has been grouped with a number of additional amendments. That grouping enables me to make one speech instead of the four that I had planned. The bad news is that I shall probably detain the House a little longer on this occasion than I had originally expected.

I start by directing my attention to the appeals procedure in the new clause. There is no doubt that questions have been asked about the value of the appeals procedure in the new circumstances of air traffic licensing that the Bill under- pins. If there are to be no guidelines from the Government to the CAA, and if that body is to be left to create its own guidelines, an appeal will lead only to a reversal of a CAA decision. If the Secretary of State is prepared, in effect, to overthrow the guidelines that he is requiring the CAA to issue, I fear that the appeal procedure will amount to nothing more than going through the motions. I fear that it will have no real value and will certainly be unlikely to lead to a frequent reversal of CAA decisions. If that is not so, the value of the CAA, on which the Government are placing so much faith, will be undermined.

That had been my understanding as the Bill passed through Committee. However, we now have the experience of the Hong Kong decision. Whatever else one may say about it, it is not tinkering with a CAA decision; it is positively overthrowing a CAA decision.

I understand the considerable pressures that must have been brought to bear on the Secretary of State for Trade to reverse the decision of the CAA on the Hong Kong route. However, in the light of the confusion that now seems to prevail in several quarters about what the appeals procedure is to contain there is a duty upon the Government to spell it out and to clarify it as we come to the concluding stages of our consideration of the Bill.

It is on record that I said that the Hong Kong decision was not right. I take that view for several reasons. It is correct that two additional carriers may just have survived on the London-Hong Kong route. However, the addition of Laker Airways will mean a scramble for travellers, particularly at the lower end of the fare scale. I hope that the Minister will forgive me for saying that no one —not even the Secretary of State—has convinced me that that additional number of travellers to Hong Kong exists. Even if those travellers were to exist, I would respectfully question whether sufficient hotel accommodation exists in Hong Kong to attract additional visitors. I would question whether there is a reasonable possibility of such accommodation being provided in the near future. That is my first practical reason for questioning whether the Secretary of State has made the right decision.

My second reason for questioning the Secretary of State's decision is more fundamental. I do not accept that market forces alone should be the deciding factor. If one of the airlines now authorised to fly the route, namely, British Caledonian, were to go out of business as a result of the decision, there would be wide ramifications. The argument in favour of market forces is good up to a point, but market forces should be qualified and should take account of such ramifications.

Thirdly, I note the crazy fares. There is no other way of describing the fares now offered competitively by all four carriers. Such fares cannot be sustained for long. If British Airways set their mind to it, they can undercut the other three carriers, because they have the necessary muscle. That cannot be of advantage to British Caledonian, Laker Airways, or Cathay Pacific. For those three reasons, I question the appeals procedure contained in the Bill.

I respectfully suggest that the CAA is also dismayed by the Hong Kong decision. That is hardly surprising. It thought that it was required, under present and prospective procedure, to assess the economics of running a particular route. It thought that it was required to consider the traffic potential. However, it appears from the decision that the Secretary of State has opted not to take account of such considerations. The CAA also felt that appeals to the Secretary of State would, at the very least, lead to a further approach to the CAA before a basic decision was overthrown. However, the Hong Kong decision has shown that under existing procedure that is not so.

In the interests of all, the policy should be more clearly spelt out. On the positive side, appeal may involve the prospect of changing a CAA decision. That should not be entirely dismissed. In such circumstances, what price delegating the creation of the guidelines to the CAA? Why not allow the Department of Trade to retain control over setting up the guidelines and restore the understanding of appeals endorsed by the Secretary of State's decision on Hong Kong?

New clause 15 does not meet my questions about the appeals procedure. I am therefore unlikely to support it as it stands. However, I hope that it will lead to a clearer statement of Government policy on appeals.

7.45 pm

I shall consider amendment No. 30 in conjunction with new clause 15. The amendment deals with the guidelines. Either the Department of Trade issues guidelines and there is a worthwhile appeals procedure to the Secretary of State along the lines that I have described or the CAA issues its own guidelines—as proposed in the Bill—and an appeal against those guidelines becomes almost a matter of form. A third option—which I believe we are being given—is that the CAA issues its own guidelines, with a full-blown appeals system in operation at the same time. That would undermine the CAA, in which the Government place so much reliance. In such circumstances everybody will wish to test the CAA line. Government intervention will become greater, not less.

One of the assumptions behind the Bill is that Government intervention should decrease. However, if my assumptions are correct, Government intervention will do no such thing. Everybody will feel that there is reason to appeal against a CAA decision. I hope that the Under-Secretary of State will reconsider the Government's position on appeals, and their intention to concede to the CAA the right to create its own guidelines.

I understand the arguments in favour of non-intervention. I do not suggest that the CAA is unsuited to the task that the Government wishes to give it, but international agreements will oblige the Government to become involved. Government success in international negotiation will force intervention in CAA licensing policy. I admire my hon. Friend the Under-Secretary of State's softly, softly, step-by-step, approach to negotiations with European Governments with a view to opening up aviation in Europe. However, if he succeeds, he will be unable to restrain himself from intervening in the creation of guidelines. At its heart, the Bill intends to hand that power over to another body. We should be better advised to leave the issue of loose guidelines in the hands of the Department of Trade and to firm up the appeals procedure in the process.

I turn to Government amendment No. 35 and amendment No. 36, which stands in my name. I have always believed that aviation policy—no matter which Government are in power—should be based on a combination of competition and stability. I accept that we should open up air routes to "measured competition." However, we should not do so to such an extent that it leads to day-to-day uncertainty about whether an airline will retain its licence. Efficiency and reliability are fundamentally important. Competition should help to achieve that. Uncertainty and a lack of day-to-day knowledge whether an airline will be allowed to continue serving a route will prove damaging. The Government should remove such uncertainty.

Every carrier needs to apply forward planning. An airline should be able to order new equipment with some assurance that, provided it continues to serve the route adequately, it will not be pushed off that route unceremoniously. Instability will lead to a poorer service for the passenger. The airlines will live virtually from day to day, going only as far as competition requires them to go in introducing an upgrading of their services.

The subsection that it is the intention of Government amendment No. 35 to remove is in the Bill in the first place because I joined the Opposition in voting along those lines in Committee. I am unrepentant about having taken that step, because I believe firmly that competition is splendid but that it must run hand in hand with some stability for the airlines.

I seek in amendment No. 36 to add the word "reliable" to make clear my intention in voting with the Opposition in Committee to insert this subsection.

It is astonishing how widespread has been the support that I have had in being a party to the introduction of the subsection. I have had indications from three very different sources that they are in favour of retaining the subsection that the Government would have us remove. I have had an indication, for example, from British Airways that it is their wish that the subsection remain. Their reason is understandable. They wish to retain the routes that they have at present if they can prove that they are serving them well.

One would have thought that almost inevitably that would lead to the oppo- site position being taken by such airlines as British Caledonian and Laker. That is not the case. I have had indications from both those independent airlines that they also support the retention of the subsection. They believe that if it remains in the Bill it will give them a chance to break in competitively to routes which at the moment are served exclusively by British Airways. That surely is a demonstration that the subsection reflects an opportunity to compete but at the same time provides some protection against unfair competition and instability.

It is all too easy to offer massive improvements either in fares or in frequencies in order to get in on routes and then to find it impossible to provide those improvements. It is no good then our turning to the former airline to revive the routes that it previously served. Either it will be no longer there or it will be no longer interested.

I contend that my approach represents the most balanced one that it is possible to achieve. It would encourage competition. At the same time, it would keep an eye on the instability with which airlines cannot live.

I understand that the CAA is opposed to the inclusion of the subsection, and presumably it has helped to persuade my hon. Friend that he should move to take it out. If the CAA takes that line because it is worried about the definition of vague terms in the subsection, let us help it. Let us say that we are prepared to meet its objections. But let us, in rejecting the subsection, be careful that we are not creating dangerous instability such as that which I believe will emerge if we are seen to be engaging in overmuch deregulation.

I turn finally to Government amendment No. 63 and to my own amendments Nos. 37 and 68. The amendments are all about opening up routes and reducing fares through competition.

I have no hesitation in placing myself foursquare behind the idea that competition should be permitted and that, as a result, fares should be allowed to fall. But I believe sometimes that we are deluding people by pretending that there is some vast opportunity, almost overnight, to reduce fares between London and European destinations. There is, no doubt, an opportunity to make reductions, but it will arise principally at off-peak periods. I am not saying that that is bad. I am not opposed to it. I should like to place on record my warm support for such initiatives as British Caledonian's mini-prix approach. I wish it well. I hope that the Government, in their discussions with other European Governments, will give British Caledonan's approach any boost that they can.

Although there are opportunities for reducing fares in Europe, reductions can be achieved only if we persuade other countries in Europe to do likewise. No matter what the Secretary of State may feel, I am certain that the Under-Secretary, who has been at the sharp end of these negotiations, will realise that such negotiations are neither easy nor quick.

I turn, then, to Government amendment No. 63. It calls for an opening up of routes to competition by other carriers. I have no difficulty in agreeing with that. However, it asks the CAA to license two or more carriers in a route where "benefits may arise". That is singularly lacking in precision. Benefits to whom? Obviously the intention is that the benefits should be to the traveller. But will the long-term benefits to the traveller still be as easy to sustain if our action leads to a major dilution of the profitability of the airline?

I appreciate that the purpose of the amendment is to clarify the Government's competition policy. This was touched on by the right hon. Member for Lanarkshire, North (Mr. Smith). I am very much in favour of opening up these routes to competition. But I hope that the Minister will forgive me when I say that I am not sure that the amendment takes us as much further along the way to clarification of the Government's policy as it should.

I repeat my theme, which whatever else hon. Members may say against the position that I take I hope that they will concede has been my consistent approach over a long period. The service to the passenger over the long term as well as the short term is extremely important. Anyone can cut fares at a stroke. It is the difficulty of maintaining over a lengthy period the lower fares that competition is alleged to bring about that leads me to put a few question marks around the policy proposed by my hon. Friend.

I am convinced more than anything by the American experience over the last few years that too much competition, plus rising oil prices and unrealistically low fares, will result only in plunging profitability. That in turn equals potential disaster, which, in turn, means fewer and not more benefits to the passengers. I think that we should know the yardstick by which the benefit described in amendment No. 63 will be judged and whether the medium term and the long term will have any part to play in its assessment.

I turn briefly to my amendment No. 68. The simple point that I wish to make is that if the CAA is to be given power to create policy and to lay down guidelines a balancing curb is needed to avoid the numerous appeals to which I have referred. I cannot believe that if the CAA obtains the guidelines and operates under them—in fact, creates its own guidelines—there will be a reduction in the number of appeals. On the contrary, I believe that the number will increase.

I take this opportunity to say that the CAA has performed very well since it was created. It is no disrespect to it to say that the industry fears that one CAA member sitting in judgment on an application for a route licence is not sufficient. Eminent aviation lawyers Peter Martin and Denis Henry, QC, have both supported that line strongly. Under the present set-up the CAA is given discretion about how many people should form a quorum. The simple basis of my amendment No. 68 is that it should continue to be given discretion but that the minimum number should be three. I would be surprised if the CAA took major exception to this modest proposal.

I hope that I have said sufficient to make the Government realise that while I continue to be a firm supporter of competition policy I am at least as firm a supporter of the stability of the aviation industry. It is in that spirit that I propound the amendment.

8 pm

Mr. Tebbit

It might be for the convenience of the House if I intervene at this stage. Perhaps, if the House is kind enough, I can add a few words towards the end of the debate to tie up some of the ends. We are discussing in this package a large number of amendments which, to a large extent, are interrelated.

The right hon. Member for Lanarkshire, North (Mr. Smith) was a little unkind to me. He tried unjustly, to dissociate me from the plaudits offered to the Secretary of State. Like the Secretary of State, I enjoy a plaudit or two myself. It was most unkind of the right hon. Gentleman to imply that there was some difference between the two of us which meant that I was not worthy to receive the plaudits that the Secretary of State received.

Mr. Clinton Davis

The Under-Secretary is very much a reformed character. There was a time when he seemed to yearn only for a standing aversion.

Mr. Tebbit

It is nice of the hon. Gentleman to say I have reformed. He should not necessarily believe it.

We are not taking civil aviation policy away from the House of Commons. How could we? We are debating it this evening. This is the appropriate way to debate it and to legislate upon it. The problems of the guidance route taken by the Conservative Government in 1971 came to light during the period of the previous Labour Government. I remind the House that this is the only legislation on the statute book that uses the technique or device of offering guidance under the main Act to an authority such as the Civil Aviation Authority.

It was not surprising that the technique was adopted when the 1971 Act was first passed by the House. After all, the whole concept of the Civil Aviation Authority as a licensing authority was new. Not unnaturally, the House and the Government of the day felt that some guidance of that sort, outside the statute, was desirable, but the problem that arose was that guidance, if it is to go further than what we have referred to in the industry, in shorthand terms, as the motherhood clauses, telling the CAA "Do not forget to be kind to the customer; do not forget to be nice about the environment; do not forget to behave rather well," suffers inherently from the danger of being in conflict with the Act.

If guidance is important but is not in conflict with the Act, it is not necessary. If it is important and conflicts with the Act in any way, it will be ruled by the court to be ultra vires. That was the fate of the guidance issued by the previous Labour Government. The pre- vious Government had a pretty rough time in many ways over that issue. They were not trying to be wicked in the way that they framed their guidance. They simply hit the rock upon which guidance is likely to founder unless it founders in the opposite direction by meaning nothing except a few nice phrases.

I was surprised by the right hon. Member for Lanarkshire, North, who should have had at the back of his mind all the time that he was talking about Hong Kong the case of Laker—the remarks made in the past about Laker and the general idea of the lower fare concept and greater competition. His right hon. Friend the Member for Stepney and Poplar (Mr. Shore), who was then Secretary of State for Trade, said of Skytrain: Moreover, having regard to the existing facilities that are available for cheap travel, it would confer no really worthwhile benefits to the consumer."—[Official Report, 11 February 1976; Vol. 905, c. 443–44.] That was the basis of the policy towards civil aviation that the right hon. Gentleman's Government pursued. They believed that Skytrain would offer no worthwhile benefits to the consumer. What has the consumer said since that time? He has taken a very different view, and so has the whole civil aviation industry. I was not surprised at the attitude taken by the Labour Government. When the then Secretary of State made his statement that day on the general principle of his aviation policy —he put it time and again in debate—the one person that he never mentioned was the passenger. If this Government's policy on civil aviation can be encapsulated shortly and sharply, it is that they believe that the industry exists for the passenger, not that the passenger exists for the industry.

The right hon. Gentleman asked about the Hong Kong case. He talked of the matter as though it was deregulation. Of course, it is not deregulation. The right hon. Gentleman should know that. Deregulation exists when it is not necessary to apply for a licence and when one is able to operate freely without any licensing restrictions. That is not the case in this instance. To talk of this as deregulation, whether or not one is in favour of deregulation, is not correct.

Mr. Clinton Davis

It would help if the hon. Gentleman would clarify the point that he seeks to make. While it is true that there had to be a licensing procedure, is it not right, in relation to fares, that on the Hong Kong route there is a free-for-all? There is no licensing procedure in relation to the assessment of the fares.

Mr. Tebbit

If the hon. Gentleman is asking whether the Government exist to keep the level of fares higher than the airlines would otherwise offer, the answer is that they do not. The Government allow the airlines to offer the fares which they, in their judgment, think appropriate to the circumstances. The fares are not regulated, but entry to the route is regulated. What is known as deregulation in the United States means that there is no regulation of entry on to the routes. That is the key point. The right hon. Gentleman was talking not so much about fares as about which carriers were allowed on the route.

Mr. John Smith

Does the Minister expect the House to appreciate that there is much difference between what has happened over Hong Kong and what happens under a deregulated system, namely, four carriers, without restriction on fares, operating on one fairly thin route?

Mr. Tebbit

The right hon. Gentleman still misses the point. If six carriers had turned up, it does not mean that six would have been licensed. If two more carriers asked to go on the route tomorrow, there is a licensing procedure and they would have to make their case. They would either be accepted or turned down. That is the whole concept—

Mr. Smith

Or get it on appeal.

Mr. Tebbit

Or get it on appeal. That is the whole concept of a licensing procedure. No carrier can operate on the route without a licence. It is not deregulated.

The right hon. Gentleman also affected not to know quite how the Secretary of State had managed to decide on the appeal in the way that he did. If he looks at Hansard of 17 June—not that this is really necessary, because he was present while I, unhappily, was in the United States and not able to enjoy the day at first hand—he will see exactly what the Secretary of State said: In particular, I was convinced by Sir Freddie Laker's contention that there is a large untapped market for this route if fares are pitched at the right level… I also felt that the authority had placed too much emphasis on the economics of the proposed additional services in the short term, and too little on the benefits to the development of the United Kingdom civil aviation industry generally of choice of service and competition on a route such as this—in particular, competition with other non-British airlines."—[Official Report. 17 June 1980; Vol. 896, c. 1359.]

Mr. Smith

This is all blarney.

Mr. Tebbit

The right hon. Gentle-many may say that it is all blarney, but that is the basis on which my right hon. Friend made his decision. The right hon. Gentleman asked whether it should be taken from this that in all future cases where there was a multiplicity of airlines applying for a route, they would be given the rights. I have to remind him that Hong Kong is a cabotage route, but not like other cabotage routes. It is not like London to Manchester or any such route. It is much longer and it is a thicker route. Nor is it like other international routes.

The rules of the international route game do not apply, because in many cases on international routes a restriction is imposed by the other country—seldom by ourselves—that the traffic should be split 50:50 between the two national carriers, or that if we put on two carriers, our 50 per cent. share must be split between them.

It is therefore unwise to think that this Hong Kong route decision can be read across in every respect to other decisions that will come before the CAA—or, indeed, will come before the Secretary of State on appeal. It would therefore be helpful if I mentioned a couple of difficulties that I see in the way of accepting the new clause.

First, the new clause is framed—I do not know whether the right hon. Gentleman intended this; perhaps he did not—in such a way that there will be no appeal to the Secretary of State on a point of law. That means, not that the Secretary of State cannot interfere, but that the unfortunate applicant cannot appeal to the Secretary of State, even if he thinks that the CAA has made an error on a point of law. He has to drag the matter all the way through the courts to achieve his end, when he could achieve it much more simply, expeditiously and cheaply by an appeal to the Secretary of State.

Mr. Clinton Davis

Again, it would be helpful if the Minister could clarify the matter. Is it not the case that at present if an aggrieved party considers that the CAA has erred in law he might have a right to go to the courts, but, at all events, if he believes that the Secretary of State has erred in law, he might consider that he has a right to go to the courts? Perhaps the Minister could explain the position.

Mr. Tebbit

Of course the hon. Gentleman is right, but the point is that the new clause would remove the right of appeal to the Secretary of State on a point of law—needlessly so, I believe.

Secondly, the new clause would require the Secretary of State to accept findings of fact by the CAA. What is a finding of fact? Is a traffic forecast a fact? What exactly is a fact in this sense? As soon as we use such an expression, the question whether something is a fact becomes disputed and once again the matter would have to be dragged through the courts, not for the substance of the appeal, but on whether an appeal could be made.

Mr. John Smith

The hon. Gentleman may be unaware of it, but the phrase "findings of fact" is used constantly by lawyers, especially in relation to appeal proceedings. If he rests such importance on the meanings of words, he must be careful. If he asks "What is a fact?" some of us may ask him "What is a benefit, and to whom?"

8.15 pm
Mr. Tebbit

Yes, but a benefit is adjudged by the CAA. If it judges that there is a benefit but others dispute it, that is a matter that can be appealed. The question whether something was a fact would not be capable of appeal.

Is the right hon. Gentleman saying that the CAA is incapable of error and that if it says that something is a fact it is a fact? That is the implication of the new clause. I can see the most appalling number of legal wrangles over points of law, points of fact, which were which, whether one had a right of appeal to the Secretary of State and so on. It would be much better not to abridge the rights of applicants to go to appeal, as the new clause would do.

A further defect is that the new clause would change the duty imposed on the Secretary of State by the 1971 Act when considering whether to give directions as a result of an appeal from a duty to have regard in particular to the duties imposed on the authority by section 3 of the Act to a duty to act in a manner consistent with the objectives imposed on the authority by the Act as amended.

I think that the intention must be to strengthen the obligation placed on the Secretary of State, but that is unnecessary. The point will be covered by clause 11(6)(b), as amended by Government amendment No. 63. That inserts at the end of section 24(6) a reference to the new section 23A which is inserted by amendment No. 63. It would therefore be appropriate if I dealt briefly with amendment No. 63.

This amendment arises partly because of an excellent point made by the right hon. Gentleman in Committee. He said: Instead of making amendments to section 3 of the Civil Aviation Act, the simple thing would be to repeal the whole section and rewrite the provisions in the new Bill."— [Official Report, Standing Committee B; 22 February 1980; c. 665]. He said that if one kept "popping in and out" with bits and pieces the legislation would be much more difficult to read. [Interruption.] Yes, indeed. I am not trying to put words into the right hon. Gentleman's mouth, but I agree with him that it was extremely difficult to read in the way that it was originally drafted. Whatever view one takes of the substance of the amendment, at least the provision will now be clearer to read.

I took the view that the Bill as drafted should have made it reasonably clear to all those concerned which way it was pointing the CAA. However, the removal of section 3(1)(b) from the 1971 Act—the section which provided that there should be opportunities for competition with British Airways by at least one other British carrier—has led in some people's minds to the belief that our amendments were steering the CAA in a direction which would virtually prohibit dual designation.

I did not take the view that the Bill as drafted did that, but I think that it is better for the elimination of doubt, so far as that is possible in these matters, to make the position clear. The new section 23A(2), which is the substance of amendment No. 63, sets out the matters anew. The only substantial change appears at the end of the subsection, where it refers to the CAA giving consideration to the benefits that may come from competition. That does no more than put the CAA on notice, in the same way that section 3(1) (b) of the 1971 Act did that there should be the opportunity for competition.

Section 3(1) (b) was wrong in that it referred only to other British airlines having the right to compete with British Airways. Why should competition be allowed on British Airways' routes and not on those of British Caledonian or Laker? Why should we assume that there should be competition for British Airways by another British carrier between, for example, London and Johannesburg? Even if that was not hinted at strongly, it would have been possible, yet there was nothing in the Act about the desirability of competition for Laker from other British carriers on the London to Los Angeles route. The objective was to make matters fair between all British carriers and to make it plain that, under all circumstances, whoever the carrier on the route, the CAA should consider whether competition would bring benefits.

Mr. Neville Trotter (Tynemouth)

Will the CAA also take into account the argument that fragmentation could be disadvantageous to civil aviation? That argument may have been advanced too often, but it sometimes has validity.

Mr. Tebbit

The argument would have to be set against any benefits from competition, and also the snags that would inevitably occur.

Mr. Clinton Davis

The new clause specifically refers to benefits. The Minister is arguing that the CAA is entitled to take account of the snags and disadvantages. Why did he not include the words "disbenefit" and "disadvantage" following the word "benefit" when drafting the Bill? That would have made the position clear beyond peradventure. It is the subject matter of an Opposition amendment.

Mr. Tebbit

It was not necessary to do so. We have not removed from section 3 of the 1971 Act the matters relating to the concern of the CAA for the economic well-being of the industry. The only snag that is likely to arise from competition is that it might be so intensive among British carriers from a share of the market that was artificially restricted by another Government's legislation or policies as to damage the health of the industry.

The British public do not object to competition in a choice of carriers, or that fares are low, or to anything of that nature. It is appropriate that a reference should be made to the benefits of competition in that context in the way that, in section 3(1)(b) of the Act, there is an implied benefit that might come from competition to British Airways from another British carrier.

Mr. Davis

Does the position that the Minister is currently adumbrating mean that the CAA, without any amendment being required, is entitled to take, into account snags and disadvantages that relate to other matters—for example, the unavailability of hotel accommodation or the saturation of an airport at the other end of the route? Can the CAA take those matters into account under the current legislation? If not, how does the potential legislation deal with it?

Mr. Tebbit

Those matters would not be taken into account directly, although it is not for me to say which matters the CAA should take into account. Clearly, if there were insufficient accommodation it is likely that the traffic would not flow. That would be one of the matters that the CAA would take into account when considering the amount of traffic on the route. It might influence the answer that it gave to the appeal.

The hon. Member for Hackney, Central (Mr. Davis) mentioned hotels, as did my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle). The "hotels in Hong Kong" argument can easily be overstated. Will all the traffic between London and Hong Kong, or even much of it, want to stay in hotels? Nobody has discovered that. Will it be what is called "visiting friends and relations" traffic? A great deal of it will be and will not require hotel accommodation. Will some of it be drawn by Cathay Pacific from other places in the Far East? Will Laker draw traffic back through London from Europe to Hong Kong? How quickly can Hong Kong build hotels?

Mr. John Smith

Very quickly.

Mr. Tebbit

The right hon. Gentleman says "Very quickly". A hotel could be built in Hong Kong during the time that it takes the CAA to make a major route application, for it to go through appeal, and for a couple of arguments in the House during Adjournment debates. We should not underestimate the ability of Hong Kong in that sense.

Mr. Barry Sheerman (Huddersfield, East)

The Minister is wriggling rather visibly on this matter. Is he not avoiding the issue? All the experts and authorities have suggested that the route will be overcrowded by full carriers. He has not, and neither has the Secretary of State, brought forward any evidence that that is not the case.

Mr. Tebbit

The Secretary of State said in the House that he gave more weight to the Laker forecast of traffic than to the other forecasts.

Mr. Sheerman

That is a lot of expertise.

Mr. Tebbit

It is a lot of expertise. Who was right about Skytrain to New York, and who was wrong? Sir Freddie Laker was right and the Labour Government were wrong. Who was right about Skytrain to Los Angeles? Sir Freddie Laker was right. He is operating that service successfully. If I were asked to choose between the expertise in air transport matters of the hon. Member for Huddersfield, East (Mr. Sheerman) and, with the greatest respect, the right hon. Member for Lanarkshire, North and Sir Freddie Laker, I would think that Sir Freddie knew as much about it as either the right hon. or the hon. Gentleman.

Mr. John Smith

It is not my expertise, that of my hon. Friend the Member for Huddersfield, East (Mr. Sheerman) or that of any other hon. Member that is in question. The Minister knows that the CAA examined that argument closely and came to the conclusion that Hong Kong was in an entirely different position from the North Atlantic. It gave specific reasons for reaching that decision. The hon. Gentleman must perceive that there is some expertise on the economic policy side of the CAA. What is wrong with the authority's argument on the facts given to it? Where did it go so badly wrong?

8.30 pm
Mr. Tebbit

In the opinion of my right hon. Friend the Secretary of State and myself, the CAA put too much emphasis on one forecast rather than another. It is not unusual for a Minister to differ from the CAA and to act accordingly. Let me remind the right hon. Gentleman of what the Labour Secretary of State said about the Skytrain licence: The CAA…would prefer the licence and designation to be kept in being and, more generally, that wider discretion should be left to the licensing system in the control of long-haul scheduled services. However, I see considerable disadvantage in prolonging the present uncertainty and have accordingly told Laker Airways that its designation will be withdrawn."—[Official Report, 11 February 1976: Vol. 905, c 444.] The then Secretary of State was in headlong dispute with the CAA and its experts.

Mr. Clinton Davis

But the Labour Government made a political decision that dual designation on that sort of route should disappear. If the present Government had announced a different sort of policy and said that they believed in a form of dual designation and in the market philosophy prevailing and had produced a White Paper to explain their policy and what should guide the CAA, that would have been a fair assessment of the position. But they have left the whole area in considerable doubt.

Mr. Tebbit

The hon. Gentleman objects to the fact that we have overturned a judgment of the CAA that the Opposition like because it looked after British Caledonian, though the Opposition have never before shown much friendship to that airline. The Opposition must reflect on the fact that the previous Labour Government contradicted the CAA over Laker and they must not be surprised if we look at the evidence and come to a different view from the CAA.

Mr. John Smith

The hon. Gentleman has referred to the evidence that Laker produced. May I refer him to the CAA decision which said that Laker put forward proposals without any convincing evidence? What was the evidence on which the Secretary of State relied?

Mr. Tebbit

It was the evidence that the CAA did not find convincing. The right hon. Gentleman's predecessor as Secretary of State in the Labour Government did not find Sir Freddie Laker's evidence convincing. Nor did he find the CAA's evidence convincing when it supported Sir Freddie Laker.

Mr. Sheerman

Will the hon. Gentleman give way?

Mr. Tebbit

I hope that the hon. Gentleman will forgive me, but I think that I should abuse the procedures of the House if I went on for too long. It would be better for the hon. Gentleman to make his speech later. Perhaps I may have the opportunity to comment on it.

I cannot accept amendment No. 30 in the name of my hon. Friend the Member for Brentwood and Ongar. It would once again reinstate guidelines. I explained that guidelines did not prove to be a success, and they landed the previous Government in an embarrassing legal tangle which created great uncertainty. It is better that we put clearly in the Act the obligations laid upon the CAA.

In referring to his amendments Nos. 35 and 36 my hon. Friend said that British Airways, Laker and British Caledonian all liked his amendments but must have done so because they believed that they meant different things. I suggest that that is a good reason why we should get rid of that sort of dubious expression.

Mr. McCrindle

Is that any different from all the varying interpretations that are placed on the word "benefit" in Government amendment No. 63?

Mr. Tebbit

It is, in the sense that those who object to our amendment and those who praise it are rather more predictable than the group that my hon. Friend found were all in favour of his stand. I am sure that my hon. Friend agrees that they could not all have read his amendment in the same way. He will have a great deal of trouble persuading me that I should agree with it.

Amendment No. 37 is not necessary. It seeks to impose on the CAA, when it is performing air transport licensing functions in the manner that it considers best calculated to ensure that British airlines compete as effectively as possible with other airlines in providing air transport services on international routes, a duty to take account of economic considerations and international agreements. They are already covered. I think that that issue of economic considerations is adequately covered in section 3(1)(a) of the 1971 Act. I believe that it is certain that in order to achieve those objectives the authority must take into account economic considerations.

So far as concerns the duty to take account of international agreements I think that the intention of this part of the amendment is precisely met by the provisions of the new section 23A(1) (a), which is to be inserted into the 1971 Act by Government amendment No. 64. I hope, therefore, that my hon. Friend will feel able to withdraw that.

I would also resist amendment No. 38. First, it has been dislocated by the changes in clause 11 effected by Government amendment No. 63, if the House accepts it. The purpose is clear enough. It is intended to secure that the CAA should accept, rather than have regard to, advice given by the Secretary of State with respect to the likely outcome of international negotiations for the purpose of securing rights required for a British airline to operate on an international route.

I think that that is unreasonable. The amendment is based on the false premise that the CAA might wilfully ignore the advice given by the Secretary of State. I do not believe that that is so. I think that that amendment springs from former criticisms by Opposition Members that the CAA is liable to act in a capricious manner. I do not believe that that is likely and I do not think that this amendment is necessary or desirable.

Mr. Clinton Davis

This is quite an important issue. If it becomes clear, as for example it did in relation to the Scandinavian air services agreement, that the Minister is of the view that a certain outcome will result from those negotiations, why should it not be incumbent upon the Civil Aviation Authority to accept that advice? What difficulties would arise as far as the Minister can see? What the Minister is arguing is that the CAA would not act capriciously in that context. But why not make the matter clear beyond peradventure, since in relation to the Scandinavian air services agreement the CAA sought to avoid, as far as I can recall, the advice of the Secretary of State.

Mr. Tebbit

Yes, indeed, and I think that, perhaps, the hon. Gentleman is still a bit sore about that particular occasion. However, he will recollect that the Secretary of State had his way in the end over that matter, which had been fully and thoroughly ventilated. I think that it was for the benefit of the industry generally that it was so ventilated. I do not think that the CAA was capricious. It may have been a little obstinate in making its point. It may even have thought that the Secretary of State's advice was advice that it should take note of and have regard to rather than accept in its absolute entirety straight away at the first shot. I recollect that we had a long debate on that matter in Committee. I remain of the opinion that we should leave the position as it has been for the past nine years or so.

My hon. Friend also referred to amendment No. 68, which concerns the quorum of members of the board for licensing applications. Briefly, I do not think the House should legislate to provide that the quorum should be not less than three. If we did that it would require that there should be a quorum of not less than three members in relation to a wide range of the authority's responsibilities covering not only air transport licensing but such functions as the registration of aircraft, certification of operators of aircraft and the licensing of pilots. That would impose an unnecessary and severe burden which would, probably, be unworkable. But I assume that it was not the intention of my hon. Friend to go as wide as that and that he really wishes to relate it to a quorum for air transport licensing functions only.

The present position is that under regulation No. 6 of the Civil Aviation Authority regulations of 1972 an unopposed application to grant, revoke or vary a licence may be granted on behalf of the authority by one board member or even by an employee. I think that that is reasonable where there is no objection. Where there is an objection, or where the authority refuses the application or grant in terms other than those requested, section 5(1) of the 1971 Act applies, and regulation 6(1) provides that the quorum shall be one board member.

We are not unsympathetic to the thought in my hon. Friend's mind, but there are two points that I should like to make. The first is the one that I have already mentioned, that it goes too far, even in respect of air transport licensing, and the second is that it need not be done in this way.

I share what I assume is the belief that in general it is undesirable to have CAA hearings conducted by one board member sitting alone, and that is a view which is shared by the authority itself. The evidence is that in the great majority of instances, the more important and difficult cases have been heard by more than one board member. The occasions when a member has sat alone have been rare and at times of particular difficulty, and are not expected to reoccur frequently.

The authority is limited to a maximum of 12 board members and it has a wide range of functions to perform. Therefore, in practice, only about half the board membership can be involved in licence hearings. The proposal that there should always be three board members would be a distinct departure from the practice which has been normal, and in many cases I do not think that it would be justified.

We could make a change to the size of the quorum by an amendment to section 6(1) of the CAA regulations of 1972, and those regulations are under review at the moment. The Government are certainly ready to look sympathetically at the possibility of increasing the quorum from one to two, but I do not think that a quorum of three would be practicable, nor would it be desirable to impose it on all occasions. In those circumstances, and knowing what is in my mind on these matters, I hope that my hon. Friend will feel able not to press that amendment.

Mr. Onslow

Can my hon. Friend also confirm that before any change is made it will be desirable that the opinion of the Council on Tribunals should be sought? Since some comments were made by that body following the criticisms to which my hon. Friend referred, I understand that the CAA has been in touch with the council, and it is desirable that its opinion should guide whatever changes may be made.

Mr. Tebbit

My hon. Friend is right We shall certainly take note of the opinions which are expressed by the council. I hope that the Council on Tribunals will be satisfied with the changes which I have it in mind to make.

Having dealt as best I can with the purpose of some of the amendments and set them in context, it may be for the convenience of the House if I now sit down and allow the debate to go on unimpeded to some extent by the cross talk between the right hon. Gentleman and myself.

Mr. George Foulkes (South Ayrshire)

I am beginning to understand the frustrations of the airline pilot, as I have been sitting here ready for take-off for about 45 minutes and have been delayed for what are called "technical reasons". I am sure that the House will appreciate the helpful comments made by the Under-Secretary. I was sorry not to have been present for the previous part of this Report stage. Appropriately enough, for most of the time I was up in the air—literally, not figuratively, which some of my colleagues seem to think I am from time to time.

I am sorry in one respect that we have not had the excitement that we had in Committee. There we had an exciting time, with allusions to polecats, blue herrings and grandfather rights, which took us into all sorts of flights of fancy. Now that we are on Report, and given that we must take account of the Hong Kong decision, it is perhaps appropriate that we should be more serious.

8.45 pm

It is pleasant and reassuring that, as in Committee, we have here the independent and individual thought of the hon. Member for Brentwood and Ongar (Mr. McCrindle). That brings me to amendment No. 35, which recalls an historic occasion in Committee when the Opposition won—not a frequent occurrence but one that is always pleasant when it occurs. That historic occurrence was brought about by the wisdom and bravery of the hon. Member for Brentwood and Ongar, who joined the Opposition in defeating the Government. I understand that the Government's ire is raised —their having lost in Committee—whether they are lobbied by the Civil Aviation Authority or whatever.

In Committee I learnt a lot, as did my hon. Friend the Member for Perth and East Perthshire (Mr. Walker). It became clear that an air transport licence was more valuable to an airline than real estate. Air transport licences should not be given and taken casually and frivolously. It also became clear that if an airline does not use a route that it has been granted it will not have any grounds for complaint if the route is withdrawn. But, as the hon. Member for Brentwood and Ongar said, where airlines have large investment programmes, financed either by Government or by private investment, it is important for people who support that investment to know the prospects of the airline. In that context the routes that they operate are their most valuable asset. Therefore, after careful consideration the Committee reached the conclusion that this clause should be included.

I hope that there are 50 friends of the hon. Member for Brentwood and Ongar present, who are equally wise and brave and who will follow him through the Division Lobby with the Opposition, and repeat what we achieved in Committee or the Floor of the House. However, I am not optimistic that that will happen. Perhaps that is a flight of fancy.

This discussion is more important now because of the Government's decision on the Hong Kong route. I support new clause 15. In Committee my right hon. Friend the Member for Lanarkshire, North (Mr. Smith) said that there was a lack of thought and lack of preparedness and consultation on this matter. I support the argument that the Bill should be held over for further discussion and consultation.

I should also like to raise one or two points that my right hon. Friend the Member for Lanarkshire, North did not raise in Committee. Unusually, I quote the Under-Secretary of State in support of my arguments. In Committee he said: If the Civil Aviation Authority were collectively to go out of its mind, presumably there could be scope for abuse. On the other hand, if that were to happen there is an appeals procedure which would come into effect if suddenly, contrary to what we have required here, the Civil Aviation Authority began to act in an arbitrary manner,". He then gave a good and helpful example, He said: If, say, the authority licensed four British carriers on a route where there was clearly only traffic for one, that would not be in the best interests of the industry." [Official Report, Standing Committee B, 26 February 1980; c. 682.] We have British Airways saying that there is not room for four, we have British Caledonian saying that there is not room for four, we have the Civil Aviation Authority saying that there is not room for four, and we have Cathay Pacific saying that there is not room for four. It is not, with respect, the Civil Aviation Authority that is going collectively out of its mind; it is the Government, and perhaps, individually, the Secretary of State.

Mr. Michael Colvin (Bristol, North-West)

Surely the hon. Gentleman is not saying that all four carriers will be forced to operate. It is up to them to decide for how many there is room, once the licences are granted. If all four want to operate, good luck to them, but if one of them says, "Four will be too many", let that airline back down.

Mr. Foulkes

I am talking about the position described by the Under-Secretary of State. He was not saying that the CAA would force them. He said that licences would be granted. I shall ask the Under-Secretary a question in relation to that. I understand that one airline has announced its intention to start. I shall come to that in a moment.

The Under-Secretary says that the Secretary of State put great store on the evidence presented by Sir Freddie Laker. I hope that the Under-Secretary will tell us when Laker Airways is to start on the Hong Kong route. When is it to put its money where its mouth is? When is it to put its aircraft where its mouth is? I shall be very interested to see.

Mr. Tebbit

It is not for me to say when Laker will start his services. It is not for me to say whether he should start his services. It is only for the Government to say that, if he so wishes, alongside the other carriers he has the right to start his services.

The hon. Gentleman found a passage that I thought somebody might find—and suitably misinterpret—because, of course, the point is that I referred to a route where there was enough traffic for only one carrier. The Civil Aviation Authority found that there was traffic for two. Both Cathay and British Caledonian gave evidence in Hong Kong that there was traffic for three. We found that there was enough for four.

Mr. Foulkes

I think that the Under-Secretary's intervention helps my argument. I agree with him; it is up to Laker. But since the Secretary of State said—and the Under-Secretary repeated today—that in overruling the Civil Aviation Authority the evidence that he took account of above all else was that of Sir Freddie Laker, I shall be interested to see when he will start operating that route. The Minister made light of the problem of hotels, which was mentioned by the hon. Member for Brentwood and Ongar, and said that they could be put up in a few weeks. Perhaps they can. Perhaps we have a new phrase for "jerry-built"; perhaps we should say "Hong Kong-built" if they are to be constructed that hurriedly.

We are talking about the possibility of four jumbo jets coming in daily to Hong Kong, which is already overcrowded. I estimate that that means about 1,800 people coming every day just from London. That is the kind of quantity that we are talking about.

I turn now to other aspects of the Hong Kong decision. I was particularly disturbed by one small aspect of it. I refer to the announcement regarding the Hong Kong route. I was present in the House when it was made, at about 4.30 pm. The next day, when I opened my copy of The Times, I found on page 3 not what is to be found on page 3 of some other newspapers but a full-page advertisement for that flight that Cathay Pacific is running to Hong Kong.

I may not know a great deal about the airline industry, but I know enough about the newspaper industry to be able to say that it is quite impossible to plan, to organise and to have inserted a full-page advertisement in The Times as quickly as that. I should like to know when Cathay Pacific was informed of the decision, when it was intimated that it would be successful, and how, as a result, it was able to get that carefully planned advertisement with all the details in The Times. I do not know a great deal about breach of privilege, but it seems to border on it.

Mr. Tebbit

As the hon. Gentleman knows, I was not in London when the decision was announced. However, I can assure him that any intimation to any of the carriers was given, at the earliest, in confidence only immediately before the House heard it. I doubt whether Cathay Pacific heard it before the House. It would have been possible for it to have had alternative copy available—either a protest advertisement or the advertisement saying that it was about to start.

Mr. Foulkes

I accept that assurance without qualification, but it seemed strange to me and to some of my colleagues. So, also, was the fact that the announcement was made on the day that the Secretary of State was guest at the Hong Kong Association dinner. However, I am sure that that also was fortuitous.

I should like to raise another point on the Hong Kong decision, namely its effect on Caledonian Airmotive and jobs in Ayr, the constituency of the Secretary of State for Scotland, and in my constituency and that of my hon. Friend the Member for Central Ayrshire (Mr. Lambie), who is present.

After the announcement on 17 June the right hon. Member for Western Isles (Mr. Stewart) asked the Secretary of State what effect it would have on the Caledonian Airmotive operation at Prestwick. The Secretary of State said: I do not believe that the right hon. Gentleman's latter statement is correct. I have read a statement made by Mr. Kelvin Kellaway, the managing director of the plant in Scotland to which the right hon. Gentlemn referred. I believe it to be an accourate report. On Friday he was alleged to have dismissed the fear that the right hon. Gentleman hs enunciated. He said that: 'the plant had been planned before British Caledonian was awarded the Hong Kong licence. The possible loss of work—about 6 per cent. of the total expected business—was easily within the business fluctuations fore-case.' That is what he is reported to have said. I have no reason to believe that that is an inaccurate report of his views."—[Official Report, 17 June 1980; Vol. 986, c. 1363.] It may not have been. That was Kelvin Kellaway, who runs that operation, but he does not understand the overall finances of British Caledonian, and particularly Caledonian Airmotive, as was made clear on Thursday. Adam Thomson, who is in charge of Caledonian Airmotive as part of his responsibility to British Caledonian is reported in The Scotsman of last Thursday as follows: The Government's decision to allocate the London-Hong Kong route to four airlines rather than two as expected will delay the creation of jobs at the new Caledonian Air-motive factory at Prestwick, according to Mr. Adam Thomson, chairman of Caledonian Airways.' It will delay jobs. This chap knows what he is talking about. He is in overall charge. The decision will delay the provision of jobs in an area where unemployment is already far too high.

A number of us who are concerned about the airline industry recently spoke to a staff member of IATA. He gave us an account of the effects of deregulation in the United States. The Under-Secretary of State contended earlier, and no doubt will contend again, that this is not deregulation. But it is effective deregulation. As my right hon. Friend the Member for Lanarkshire, North said, it has the same effect as deregulation. The effect of deregulation in the United States has been that hundreds of routes have been lost. Many remote areas of the United States previously served by airlines are now no longer served. Those of us who represent peripheral areas out-with the main centres of population should be particularly concerned about this matter.

Another effect, contrary to what was expected, is that the profitability of the airlines, which it was thought would increase by concentrating and competing on particular routes, has decreased. The airlines' experience would be against deregulation and against this kind of effective deregulation.

I have gone on for longer than I had intended, mainly because of the comments that have been added to what I have been saying. As I have said, what the Government are suggesting is indica- tive of the fact that on this issue, just as on many others, they are guilty of what they accuse the CAA of being guilty of—going collectively out of their mind.

9 pm

Mr. Onslow

In Committee, the hon. Member for South Ayrshire (Mr. Foulkes) picked up a few things as he went along, and we have got to know his style. He has been fairly characteristic tonight, particularly in his peroration. However, I was particularly interested to hear his moving appeal to the House to support the amendment made to the Bill by my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle)—who is not in the Chamber at present. I have to say to the hon. Member for South Ayrshire that I regret not having been in the Committee when that was discussed. Unfortunately, I was abroad at the time. I hope that if I had been there I would have been able to persuade him, if not my hon. Friend, that if one has an amendment which gets the support of British Airways, British Caledonian and Laker Airways, there must be something rather imprecise about it, because it is impossible for them all to support an amendment of this kind if they all think that it means the same thing.

Quite clearly, from my conversations not everyone whose support my hon. Friend prayed in aid thinks that the amendment means the same thing. When we have a piece of proposed legislation which is capable of interpretation in two such wholly different ways, I think that it is quite a good idea to remove it from the Bill. I believe that that would be the right course for us to take.

However, I agree with one thing that my hon. Friend said. That was when he made an appeal for a clearly spelt out policy. I welcome Government amendment No. 63 for precisely that reason. It gives us a clearly spelt out policy. I believe that when the Bill came before the House first and when the Bill was going through the Committee, most of us knew very well what we were trying to do. That was to create a situation that was more satisfactory than the one which the previous Act left. How, in heaven's name, the right hon. Member for Lanarkshire, North (Mr. Smith) can describe that situation as satisfactory I do not know.

We wanted to get a more satisfactory situation. Broadly, we wanted to get less intervention and more competition. Thank goodness that the Hong Kong appeal came along, because that had the effect of concentrating everyone's mind and, I think, of making many people understand that the legislation itself needed clarification of the kind it has now got. I mean no criticism of my own Front Bench when I say that, but in my experience of several Civil Aviation Bills, they tend to get better as they go through Parliament, and this one will clearly not be an exception.

I welcome the Government's amendments, and with one particular thought in mind. That is a saying coined by an old friend of mine—who my hon. Friend the Under-Secretary will also know—Citizen Tony Lucking, a great expert on air travel, who maintains through thick and thin that airlines are for passengers. It is probably just as well to start from that proposition when we consider any civil aviation legislation. Airlines are not for airline operators or aircraft manufacturers. They are not for employees of either. They actually exist to serve passengers. If they are not doing that properly, they are not fulfilling their proper function.

I do not make any apology for repeating that or for saying that Government amendment No. 63 now sets out in a systematic and ordered way the various duties which the House will want the CAA to observe when it comes to consider how it allocates licences. I do not believe that it is the CAA's function to ration capacity. I do not believe that it is the CAA's function to try to outguess the airlines. It is unfortunate that from time to time the CAA has appeared to do that. But certainly there will be no reason and no excuse for its doing so in the future.

Mr. Michael Neubert (Romford)

Will my hon. Friend give way?

Mr. Onslow

I shall not give way. I am sorry. I want to be brief. Others wish to speak. I hope that my hon. Friend will excuse me.

The situation that we were in danger of having, and a situation which the right hon. Member for Lanarkshire, North appeared to regard as satisfactory, is one in which the CAA really knew best. It decided how much capacity there should be. It decided precisely how airlines should be making money. The more one examines that, the less satisfactory it becomes.

Objections concerning Hong Kong hotels have attracted a certain amount of attention this evening. Those objections fall to the ground when we consider that an airline that wants to set itself up with hotel capacity in Hong Kong is hardly likely to do so before it is given a licence. It is much more likely to do so if it thinks that it will be able to fly passengers to Hong Kong.

It is wrong for the CAA or for anyone else to say "The hotels are not there. Therefore, they never will be there. Therefore, there never will be anywhere for passengers to stay when the service comes into operation." These are not judgments that we are competent to be making or should be making. In the original Edwards report, which I am sure everyone has read from cover to cover, great emphasis was placed on one feature of civil aviation operations that we do not hear much about now—namely, the connection that was supposed to exist between financial stability and operational safety. It was widely accepted in the Edwards thinking that that was so. There is no reason why it should be so or should be allowed to remain so.

The prime function of a licensing authority should be to license safe airlines. The way in which the CAA tackles the problem should not be based on examining the accounts of an airline. It should ensure by physical inspections that its operations, equipment and crew standards are all that they can be. That is a development that we should recognise and welcome.

As airlines are for passengers, it is only reasonable that competition should be in the interests of passengers. There are those who talk about measured competition. The measuring is to be done by whom? It should not be done by the CAA. Competition should be measured by the fair system that allows an airline operator to apply for a certain route if he thinks that he is able to offer a reasonable operation. If he satisfies the licensing authority, he should be able to obtain the route. It is up to him to justify that judgment. As my hon. Friend the Mem- ber for Bristol, North-West (Mr. Colvin) said, an operator does not have to operate any route. The fact that licences have been issued for the Hong Kong route does not make it compulsory for anyone to fly it. That should be recognised.

I think that we have made progress tonight. I do not wish to appear to patronise my hon. Friend the Under-Secretary of State. The Bill will be much better if the Government's new clause and amendments are accepted. I hope that the response of the aviation industry will cease to be as inward looking and pessimistic as some have suggested it should be.

The way in which independent airlines and British Airways have risen to the challenge does them credit. I have no doubt that they will continue to adopt that approach. I should much rather hear about British Caledonian renewing its application for lower fares to Europe than hear others dwelling upon the possible unemployment consequences if British Caledonian cannot use the aircraft that it has bought.

Surely the right response is to go out and win more business, to serve passengers and to blast the Secretary of State into doing something to obtain lower fares from Britain to Europe—namely, to make it possible to fly from London to Glasgow or Paris more cheaply and more conveniently. That is what the industry is for and that should be the prime purpose of a licensing system.

Those who have discussed these matters with the airlines—especially with the CAA—will, I am sure, have found no mood of despair as a result of the Hong Kong decision or the changes in the Bill that are now proposed. I believe that the CAA welcomes the amendments. It is prepared to live with them and it regards them as a positive and unqualified step in the direction of more competition. It welcomes them on those grounds. We are not likely to be told by anybody that that is a mistaken view.

We have made progress in introducing the amendments, clearing our minds and clarifying Government policy. By achieving less intervention and more competition passengers will benefit. The airlines that serve them best will benefit, and that is as it should be.

Mr. Sheerman

My remarks will be brief. However, as a member of the Standing Committee, I could not let the opportunity pass without commenting on new clause 15 and on some of the Under-Secretary's responses. Members of the Committee were puzzled by the amount of time that elapsed between the conclusion of Committee proceedings—an occasion for great celebration by hon. Members of all parties—and discussion of the Bill on the Floor of the House. When we heard the Hong Kong decision and witnessed the remarkable Government amendments on Report, we understood more clearly what had been going on. Reading between the lines, it seems that the Government embarked on a Bill of whose purpose they had no idea. Having got two-thirds of the way through the Committee stage, they suddenly realised that the direction that the Bill was taking was not one that they had intended. Perhaps it was the brilliance of Opposition Members—although I am too bashful to suggest that—or the brilliance of one or two Conservative Back Benchers that led the Government to understand the nature of the Bill.

The Government were, and still are, suffering from a central dilemma. They do not understand the Bill's implications for civil aviation. The new clause brings home the schizophrenic nature of the Government's thinking. The root of the problem is that two philosophies run through the Government's thinking. The Bill represents a microcosm of the Government's policies. Running through the Bill is a desire to import free market competition, with its ensuing thrusting, fighting and competing, in order to reduce fares to the consumer. Perhaps the Secretary of State holds that desire more dear than does the Under-Secretary of State.

The idea that the free market is the end runs throughout the Bill. In Committee we heard another voice that desired a well-regulated and Governmentfree—even politic-free—CAA to administer that industry. It appeared that the Government could not decide whether they wanted to import free market forces, or whether they wanted regulation by a CAA that was free from political interference and ministerial dabbling, and that could administer the industry without hindrance.

When we heard the Hong Kong decision, we realised that one voice that had spoken loudly in Committee had been taken over by another. Perhaps the Secretary of State suddenly realised that part II of the Bill would not produce the effect that he desired. Perhaps he saw the implication for the decision on the routes to Hong Kong.

As a consequence, we saw a massive Government rethink, and it has been embarrassing for the Under-Secretary of State to hear the comments and the revelations which Opposition Members have made. My hon. Friend the Member for South Ayrshire (Mr. Foulkes) pointed out how, without thinking, the Minister had given the exact example where such a decision would have been nonsense. It was exactly that kind of nonsense that the Government announced at the time of the Hong Kong route decision.

9.15 pm

The overturning of the CAA ruling makes nonsense of much of the Bill, which tries to give strength to the CAA and to make it a more powerful and independent body for the regulation of civil aviation.

Again, it is a confusion of models with which the Government get into trouble. I mentioned earlier when we discussed British Airways that the confusion was between having or not having a British Petroleum model. In the area that we are discussing at the moment, it is a confusion about what competition means in the aviation industry.

We are put into an unhappy position if we deal with an industry that by its very nature cannot have the free market model applied to it. Government supporters know that that is precisely at the root of their problems. The hon. Member for Brentwood and Ongar (Mr. McCrindle) knows only too well when he talks about the aims of the aviation industry that any realist knows that its success must lie in the pursuit of competition and stability.

Perhaps I may bore the House for a moment by using that rather clumsy terminology which economists have been known to employ from time to time. The problem facing the Government is that this is an industry which by its very nature, in the interests of the consumer, in its own interests and in the interests of all concerned in it must be an oligopoly. It must be made up of a few large carriers. The great danger is that if too much competition is injected into it, the oligopoly will be destabilised. At the moment, it is working well in the consumers' and in the airline operators' interests. But if there is destabilisation, there will be a brief period of intense competition. It may last for six months or even for three years, and it may be very good for the consumer to travel cheaply to Hong Kong, Los Angeles or New York. But, if the oligopoly is destabilised, after a short period there will be a reversion to what no one wanted in the first place, which is total monopoly. That is what many of us on both sides of the Committee argued, and we will continue to argue it.

The Government must have the intellectual ability to understand that the airline industry is an oligopoly and that that oligopoly is a very delicate balance to maintain. I suggest that that danger becomes very real if these amendments are accepted. The delicate balance will be upset.

There is no virtue in trying to be the Freddie Laker of the House of Commons. It is no use saying "I am the Secretary of State for Trade. Fly me." Hon. Members say glibly that they are in favour of the passenger. Do they really believe that any Opposition Member is not in favour of the passenger? The passenger is the person whom we represent. My own interest is in one aspect that is not mentioned in the Bill. I am concerned with passenger safety, and I hope that the Minister will find time to pay a little more attention to that aspect.

We are all in favour of the interests of the passenger being accorded high priority. But the passenger will not thank the Minister or the Government who intervene in this delicate balance, finishing up, after a few heady days of tripping here and there, with a monopoly that can charge what it likes, when it likes, leaving the consumer with no choice at all. The consumer would prefer a choice of regulated competition between a few main carriers to having to travel with one carrier and having to pay its price.

World aviation is in an unstable period. The Government should recognise that fact. It is an unstable period not only due to events beyond this Government's control but also because of actions by the Government in the last 14 months. The Government's decision on the Hong Kong route, together with elements of the Bill, have made international aviation more unstable. The taxpayers have a stake in British Airways. Yet, at a time when stability is at a premium, the Government are making the base of British Airways more unstable. The consumer will be diddled by a Bill that undermines the value of his investment in British Airways. I urge all hon. Members to give serious consideration to the Opposition's amendment and to vote for it.

Mr. Bill Walker (Perth and East Perthshire)

I am delighted to have the opportunity to speak on this part of the Bill. I was interested in the comments of the hon. Member for South Ayrshire (Mr. Foulkes). The hon. Gentleman and I were learning as the Committee stage proceeded. I hope that one is always learning. I remind the hon. Gentleman that I have a long and lasting interest in Prestwick. There have been three loves in my life—politics, aviation in all forms, and the third I leave the hon. Gentleman to decide.

There are sound reasons for not accepting new clause 15. It states: Provided that where the Secretary of State does not accept an earlier finding of the Authority he shall not reverse or vary the decision in question without first requiring the Authority to publish its opinion of the effect of the reversal or variation proposed by the Secretary of State, which opinion shall be formed only after a rehearing by the Authority in accordance with procedures to be established by regulation. When that is linked to what the same new clause says about inserting the words accept a finding of fact made by the Authority I suggest that this is not the way to look after the best commercial interests of airlines and the best interests of potential passengers or the Government. They cannot be catered for in this way. It is a lawyers' charter, providing more work for lawyers.

In contrast, I welcome Government amendment No. 63, which lays down the clear rules we have been seeking. The amendment says in performing those functions the Authority shall also have regard—

  1. (a) to any advice received from the Secretary of State with respect to the likely outcome of negotiations with the government of any other country or territory for 167 the purpose of securing any right required for the operation by a British airline of any air transport services outside the United Kingdom; and
  2. (b) to the need to secure the most effective use of airports within the United Kingdom."
My mind always turns to Prestwick when I read paragraph (b). It is important to makes the best possible use of our fine airports, many of which are under-used.

In his definition of "oligopoly" the hon. Member for Huddersfield, East (Mr. Sheerman) must have included the Cooperative Society, since it required stability and a protected market share to survive. Look what has happened. Because it was inefficient and lacked the management and marketing skills of the other High Street stores, it has watched its share of the consumer purse go down year by year. It is not in the consumer's best interests to protect any part of the market.

Because aviation licensing is important, I am glad that the Government have shown how they feel about it by the way in which they have dealt with the Hong Kong run. They have shown that they are prepared to allow real and meaningful competition, instead of the protected and sham competition that we have seen in civil aviation for far too long, with the interests of the passengers the last to be considered when framing future airline policy.

I hope that the experience gained in the operation of the Hong Kong run, of a number of airlines offering a competitive service, will be a guide to the CAA and the airlines in their future deliberations and decisions. I believe that it will also provide a guide to all who consider appeals in future.

Airlines and potential passengers can obtain considerable benefits from increased competition and from the more effective use of British civil air transport and airfields without damaging the economic viability of the competing airlines. It is not in any of our interests that that viability should be damaged. I do not believe that it will be, provided that the airlines are prepared to meet the competition.

Who can deny that the presence of Laker Airways on the North Atlantic route has had a dramatic effect on fares? That has been good for the airlines and for the consumers. Who can deny that the potential presence of Laker Airways on the Hong Kong route has already influenced pricing policy on that route? No one can deny it. I therefore welcome the Government's attitude to route licensing and particularly amendment No. 63.

Mr. Trotter

It is almost incontrovertible that the change proposed by the Government to allow more than one British operator on a route has come about as a result of decisions by the Civil Aviation Authority since the Bill was published. I accept what the Minister said about the new provision reading better than the old. However, there is an important change in this guidance—that is how we must see it—to the CAA that in future it should have regard to the possibility of more than one British operator on a route.

The Secretary of State has taken a bold decision on Hong Kong. I believe that, for the reasons hinted at by the Minister. This is a cabotage route. The opportunities for the development of the flow of passengers are enormous as a result. I do not think that 1,800 passengers a day between Europe and the Far East is a large number. That is what we are talking about—the two gateways to and from the Far East.

Not long after the fares to Hong Kong come down we shall see a substantial distortion of the traffic in our favour—for instance, if passengers from Amsterdam to Manila find it much more economical to travel via London and Hong Kong than to go direct. The opportunities for the number of passengers are great, and all four airlines will be able to make a success of the route initially. I say "initially" because we shall see in the Far East what happened in the North Atlantic after the introduction of Skytrain. We shall see the other services between Europe and the Far East inevitably introduce lower fares. There will be an initial rush of traffic, but there will be difficulty in maintaining it in the following period.

9.30 pm

I looked up the fare for flights over the Atlantic. It is a confusing picture. More than 60 fares between London and New York are quoted in the ABC. It is not easy to see who offers the best value, because there are many different conditions attached to the various fares. There is no doubt, however, that the initial reduction has set a pattern not only between London and New York but between Europe and North America. I think that we shall see the same happening in Hong Kong and there will be a permanent benefit to passengers.

I turn to the decision of the CAA about a number of applications for European routes. I wonder whether the Government have also had in mind the decisions of the CAA in that respect. Some of those routes are under appeal to the Minister, and he may not be able to say a great deal tonight because of the sub judice aspect. The British Caledonian application for mini-prix would have provided a standby fare of 80 per cent. less than the normal fare, at £15.50 from London to Paris, London to Brussels or London to Amsterdam. That is the sort of fare that I and other hon. Members want to see. That is aviation for the man in the street.

Mr. McCrindle

I endorse my hon. Friend's remarks. However, for the sake of accuracy, will he concede that the only way in which one could travel between London and those centres at the price that he mentioned is by travelling off-peak? I am not complaining. I wish, for the sake of accuracy, to record that that would be a necessary condition.

Mr. Trotter

My hon. Friend is absolutely right. It would be at limited times, and perhaps even on limited days. But it gives people the opportunity to fly to Paris who would not otherwise be able to do so.

Mr. Michael Brown (Brigg and Scunthorpe)

Is my hon. Friend aware that only last week I travelled from London to Brussels at off-peak times, on both the outward and return journeys? There was no opportunity for a reduced rate. I paid the full fare of £113.

Mr. Trotter

I am obliged to my hon. Friend for his intervention. From time to time I go to talk to the EEC Commission. It is an expensive business for those of us who have no way of reclaiming the fare. I would be prepared to plan my journey to go on a limited basis such as the mini-prix standby.

Laker applied for a Skytrain-type service to many places in Europe. Britannia Airways put forward an interesting suggestion that, as the scheduled operators were able to take charter passengers for half the load on their planes, there was no reason why charter operators should not be able to take scheduled passengers for half the load on their charter planes. I come from a regional centre, and I can affirm that that suggestion would be of particular benefit to the regional airports, which could not expect a scheduled regular service to many destinations. Air UK also applied for services to a number of places on the Continent. The four airlines applied for routes to the Continent. British Caledonian obtained a small proportion of the number of routes for which it applied, but nobody else obtained any. I wonder whether that decision by the CAA was taken into account by the Minister in deciding to change the new clause and insert the requirement for competition to be taken into account in future.

I have mentioned a number of airlines by name. However, it is important that in the House we should not argue for any particular airline because it has a certain personality at its head, or because the pretty stewardesses wear an attractive uniform, or because its engines are maintained in one part of the country or another. We should argue on behalf of the passengers. That is the only way that we should approach the question of who flies where on British airlines. Who gives the best value for the passenger?

It is interesting to note that British Airways have introduced a £99 fare to Hong Kong, which goes by the appropriate name of "Firecracker". That is different from the fare to Newcastle. Before I rose to speak I extracted from my wallet a single ticket to Newcastle, which cost £42.50. That is not a Firecracker fare. I am not sure what would be the appropriate description.

Mr. Michael Brown

A damp squib.

Mr. Trotter

That would be more accurate, but I do not think that the airline would get far by advertising a fare with that name. On the basis of the fare to Newcastle, the Hong Kong fare should be about £1,000, not £99.

I wish to concentrate on fares to Europe. The fare to Zurich is £99 single, for 480 miles. According to the ABC, the cheapest return fare is £100. Therefore, at the cheapest it is £50 each way to Zurich—a distance of 480 miles—while £99 is the cheapest fare for the 6,525 miles to Hong Kong. In other words, £1 buys 10 miles of travel on the Zurich route but 65 miles on the Hong Kong route. A great deal of improvement could be made in lowering fares to passengers in Europe. That is where our efforts should go in the immediate future. The BCal mini-prix suggested a standby fare of £21.50 to Zurich.

There have been references on both sides of the House to safety. It is right that that should be the first requirement of any authority dealing with civil aviation. The trade and industry Sub-Committee of the Expenditure Committee in the previous Parliament started to look into fares on domestic services. The inquiry was frustrated by the election, but I asked the first question of the chairman of the CAA at the first session. I asked whether there was any correlation between safety and fares. The answer was categorical, to the effect that there was none whatsoever, and that the licensing of the safety side of airlines was quite independent of the economic side. That was the answer that I expected, but I was pleased to have the confirmation. Safety is a red herring when we are talking about fares.

I must refer to the attitude of foreign Governments. We can press my hon. Friend the Under-Secretary for changes on what happens between London and Newcastle. Changes in the fares are within the power of the CAA, but that is not the case on routes between London and Zurich, Paris, Amsterdam or other destinations on the Continent. There must then be agreement with the foreign Government as well as with our own.

Earlier this year I spoke to a number of foreign airlines and foreign Governments. It was interesting to see the contrast with our own situation in Britain. European countries have only one airline each—Holland has KLM, Germany has Lufthansa and Switzerland has Swissair. The relationship between each airline and its Government is very close, and when talking to the airlines and the Governments one almost gets the impression that one is talking to the same people. We have a great problem in persuading a foreign Government to bring fares down as we wish unless their airline also wishes it.

One comes away from such meetings with an impression of the strength of the British industry in a number of directions. Germany, Holland and Scandinavia have no problem about who flies scheduled services. They each have only one carrier. We have the same problem as do their Governments of getting the right to fly into a foreign country, but we then have the additional problem of having to decide whether it is to be Laker, British Caledonian, Air UK, British Airways or one of the other operators that exist as a result of the strength of the British aviation industry and the initiative shown by its operators.

Mr. Gerry Draper, the commercial director of British Airways, said in evidence to another place: The principal frustration of British Airways lies in the field of persuading other Governments and airlines to recognise that change has taken place in the needs of the consumer. It is wholly to the credit of British Airways that they are taking the lead among the major national European airlines in seeking to bring about a reduction in fares. It is a pity that their "Channel hopper"—a £20 fare to Paris—was not approved by the French Government. Presumably Air France did not approve and therefore the French Government did not approve.

I hope that British Airways will continue to press, not just in Europe but elsewhere, for the reduction of air fares. In this context I mention Australia. That is a place where fare reductions are also badly needed. I believe that the best way for British Airways to preserve their present network is to take a lead—as, to their credit, they are doing—in seeking a reduction of fares and in persuading their long-established partners in other national airlines that such reductions are necessary.

The factors taken into account by European Governments are extremely complex. In Germany, for instance, I was told that their railways were an important factor, because there was a great deal of political support for German railways and that if there were a fare reduction on short flights into neighbouring countries it would spill over into pressure for low fares on internal air services in Germany. So the railways there are an obstacle to lower fares. I was also told that in Germany they did not need a Laker. I doubt whether that is a correct assumption, but it is an assumption against which one must start to discuss the issues with them.

The problem at the moment is that ever-increasing fuel costs make it more difficult for fares to be reduced in the way that we are seeking. At the same time one cannot help commenting on Government charges for navigation and airport security. I was told recently by a British operator that of its operating costs for a one-hour flight 25 per cent. was taken up by security charges before the plane got into the air. That is a problem. All those factors work against low fares.

There is a definite need to ensure maximum competition, which must be our aim. In evidence given in the other place the CAA said that it did not believe that we would see lower normal fares until there was more competition. I do not think that the CAA has always been courageous enough in seeking that competition and I believe that my hon. Friends the Ministers are right in persuading the authority that it must do so. There must be a united approach by Government and the CAA. I welcome the revelation in the evidence given by the CAA in the other place that there is to be an exchange of letters between the Government and the CAA about their roles once this Bill becomes an Act. Perhaps my hon. Friend will expound a little on that tonight.

We have an outdated system of air fares in Europe. There is a need for experimentation, and I believe that my hon. Friends will see to it that that experimentation is carried out through the implementation of the Bill.

Mr. Michael Colvin (Bristol, North-West)

It is a pleasure to follow my hon. Friend the Member for Tynemouth (Mr. Trotter), who has successfully shot at least two of my foxes. That will enable me to be comparatively brief.

The debate on new clause 15, Government amendment No. 63 and the amendments grouped with it provides the opportunity to invite my hon. Friend the Under-Secretary to say a word or two about the general lines for air transport policy, which my right hon. Friend the Secretary of State will attempt to pursue on appeal. I welcome what my hon. Friend has already said. No doubt he will be saying more later.

I would like to ask my hon. Friend one particular question about aircraft type. I wonder whether aircraft type will be taken into consideration when dealing with appeals and also when licence applications are made the CAA applies the provisions in the Bill concerning the need to minimise, as far as is reasonably practicable, any adverse effects on the environment and any disturbance to the public arising from the use of aircraft as specified in subsection (3).

If aircraft type is taken into account, there are important implications for the European Airbus since that aircraft is probably the quietest and environmentally the most acceptable wide-bodied jet presently on the market and is a project in which this country has an important stake. The Secretary of State has just made a decision about the London-Hong Kong route. Some people would describe that judgment as Delphic. I would call it Solomonic. Others have been less flattering, but the air traveller is, I am sure, absolutely delighted. It remains to be seen how the route works, but it is certainly a solution which is well worth trying.

Opposition Members have said that that decision has left the industry wondering where it stands. I think that it stands like a bird let out of the cage of over-regulation. The big question now is: will the bird fly or has it forgotten how to fly?

An open skies policy may be all right for flights to a Crown colony, but is it applicable to other routes? If only we had more Crown colonies today. If only there was as much of the map of the world still coloured pink as there was when I was doing my geography lessons at school, the licensing of airlines, from the British point of view anyway, would certainly be a great deal easier. Alas, those good—or perhaps bad—old days are gone. Now, the twin hurdles of nationalism and protectionism must be overcome, and we must recognise that the various world markets which could open up for British airlines vary tremendously.

9.45 pm

A policy for the North Atlantic may be quite wrong for Africa, and a policy for the Far East would probably be wrong for South America. That is why I think that the Secretary of State is quite right not to lock himself into specific guidance to the CAA.

I should like to look briefly at one specific market which probably offers Britain greater opportunities than any other—Europe. We have just seen the excellent report by the House of Lords Select Committee on the European Communities entitled "European Air Fares". That showed that air fares in Europe are much higher than in the United States, in some cases more than twice the cost for single fares. That is not entirely because fuel is cheaper in the United States or that some of the charges, such as en route navigation facilities, are carried by the Federal taxpayer. Nevertheless, the difference is significant and the absence of true competition in Europe must be an important factor in this high air fare market.

In Europe, most countries have nationally-owned airlines, and take steps to protect them from competition. Surely that is against the competition provisions of the Treaty of Rome. Therefore, a major task for the EEC is to achieve as soon as possible a market environment in which fair competition can flourish, at least among member States. I am sure that the House welcomes the work done towards that objective by my hon. Friend the Under-Secretary, who is doing his best to ensure that the Europeans match their words with actions.

We heard what the EEC had to say about the development of European air transport services when the Commission published its official memorandum on this subject in July 1979. That contained four very important objectives. It called for a total network of air services unhampered by national barriers, financial soundness for the airlines with lower costs and higher productivity, the safeguarding of the interests of airline workers and an improvement in conditions of life for the general public. The memorandum concluded that: The Community should follow an evolutionary method in tacking these issues and avoid changes which would not leave sufficient time for adjustment. It is debatable whether evolution or revolution is the right method for change in the civil aviation industry. Laker on the North Atlantic was certainly revolutionary, but perhaps we must tread more softly in respect of Europe.

In accepting those broad parameters, it should be possible to aim for a Europe-wide network of services which were regular, reliable, free of discrimination or artificial restrictions and at a price which everyone could afford. I would have preferred the EEC objectives to have said more about the needs of airline passengers, but, alas, they did not.

There need now be no barriers at all to such services if the will to achieve them exists. That must come from the operators and the Government involved. In their report on European air fares, their Lordships said: It is frustrating to see proposals by airlines for cheap and advantageous fares and services being refused by the civil aviation administrations of Member States of the Community". It almost seems as if some national Governments and their civil aviation administrations are doing their best to prevent progress. Far too often, the interests of the consumer seem to be second to national prestige. Surely the Community should be promoting competition in the area of civil aviation, as it does in other areas, in order to enable airlines to satisfy the demand which is known to exist.

I am sure that the House will applaud the Government's determination to lead the way in Europe, and the efforts or our airlines to blaze a trail with enterprising schemes that will widen markets and increase efficiency. The application by British Caledonian to start its mini-prix services between the United Kingdom and 23 cities in Continental Europe should be followed by other airlines.

The aeroplane is said to be fulfilling the same role in the twentieth century as the railway did in the nineteenth century. The aeroplane has transformed our way of life. Travel enriches the mind, and surely scheduled, cheap, air travel should be available to all. It should no longer be the prerogative of the rich or the business man. In Europe, more travel will lead to a greater understanding between members of the Community, and we should all welcome that.

I applaud the determination of our Government and our industry to lead the way. That is why I support wholeheartedly the Government's free enterprise attitude to civil aviation, as exemplified in the amendment that we are now debating.

Mr. Clinton Davis

Rarely can the perambulations of the hon. Member for Wells (Mr. Boscawen) have produced such insignificant results. The debate ended on a curious note. The hon. Member for Bristol, North-West (Mr. Colvin) referred to birds in cages. I suspect that he was referring to the fact that the Government have laid an egg. We are dealing with a capricious decision that was taken by the Government—a whimsical decision. I suppose that the Secretary of State was trying to show that he has a whim of iron, but he has shown a scant regard for the Civil Aviation Authority, and for its ability to assess evidence.

Of course the right hon. Gentleman has asserted that his decision was nonpolitical. He is left with no recourse. If he were to say that he made a political decision and that he did not invoke the appropriate parts of the Civil Aviation Act to justify that, he would be opening himself up to a severe rebuke. So the Government camouflaged it all, and they deny it. That is to be expected.

In this instance the Secretary of State has asserted that he has performed his quasi-judicial role. I do not believe it. It was more quasi than judicial. Effectively, he is saying that the evidence that was carefully scrutinised by the Civil Aviation Authority does not conform to his taste, and, therefore, it can be forgotten.

Tonight the Minister has not begun to assert that there is any real evidence in favour of Laker upon which he is able to rely. He has completely overlooked the assertion of the Civil Aviation Authority that there was no convincing evidence about the size of the bottom end of the market. He is not criticising politicians. He is criticising people whose objectives are to assess the evidence before them. The Minister went on to pray in aid the great results that have been achieved on the North Atlantic routes. It is as well to consider what the Civil Aviation Authority said about that: On the North Atlantic it seems that Sky-train caters mainly for those passengers who previously travelled on charter flights. The rate of traffic growth on the North Atlantic does not suggest generation of any significant growth of traffic. The rate of growth in the period after the introduction of Skytrain was consistent with that of the two previous years, taking schedule and charter together. There was no dramatic increase. The authority says that in relation to Hong Kong there is no significant charter market from which scheduled services can divert traffic, and that the forgotten man must regretfully be regarded as a myth.

By his decision the Secretary of State has left British civil aviation in turmoil. He has declined to indicate—it would have been open to the Government to do so in a White Paper—what is the civil aviation policy of the Government. He has declined to indicate that tonight. He has preferred to enunciate a policy of some kind in a decision on appeal, inconsistent in many ways with the policy adumbrated by the Under-Secretary of State. The Under-Secretary of State, in contrast to the great fanfare of trumpets from the Secretary of State, regards it as a gentle, persuasive policy of liberalisation. Indeed, he said, in relation to an intervention from the hon. Member for Brentwood and Ongar (Mr. McCrindle): I certainly agree that there is still continuing today almost de facto a spheres of interest policy. I say 'almost'; I choose my words wisely. That may well continue in some areas for the reasons which I have set out. But it is for the Civil Aviation Authority to decide."—[Official Report, Standing Committee B, 6 March 1980; c. 840.] Is it for the CAA to decide or is it to be for the Minister to decide on appeal? I suppose that we can expect the next major announcement on civil aviation policy at the 1981 Dragon Boat dinner in the Secretary of State's reply to the toast to the visitors, but it is scarcely a satisfactory way of announcing the Government's policy in this regard. I believe that the Secretary of State has treated the Civil Aviation Authority with a derision that it does not deserve.

We are entitled to ask—we have not had a response from the Minister—where the authority stands now. Are we back to the old days, when we had the Air Transport Licensing Board hearings, representing a sort of pantomime, with virtually every case going to appeal? That was where the effective decisions were made.

That is the risk that we are facing at the present time because of the curious and eccentric way in which the Minister has approached the matter. As my right hon. Friend said at the beginning of the debate, by his actions the Minister has overturned the logic of his own Bill. We were told that he wanted to give the Civil Aviation Authority extraordinarily wide powers—powers that rendered it unaccountable to Parliament. He has now gone to the other extreme by making it almost an irrelevance, or a creature of the Secretary of State. Perhaps he hopes, as a result of this decision, to cause the authority in its future pronouncements to fall in line with the general philosophy that the Secretary of State has expressed, without being under any duty to follow a pattern that is set out in an Act of Parliament or that is referred to in an Act of Parliament—because that is the right way in which the authority should approach these matters.

I do not deny that new clause 15 is unsatisfactory in many ways. It has enabled us to debate the issue, but it has also enabled us to focus attention on the fact that the Secretary of State acted in a political sense. The way in which appeals are at present conducted is very unsatisfactory if that is to be the case.

I entirely agree with the observation made by my right hon. Friend that the Secretary of State should have remitted that part of the decision affecting the Laker issue to the Civil Aviation Authority for adjudication so that it could have been tested and so that the other parties in the case could have represented their views and cross-examined as necessary.

Why has amendment No. 63 been introduced at so late a stage? It is not just a difference of nuance; it is a material change in the policy of the Government. We should have had an opportunity to consider it in detail in Committee, but the Government chose not to do that. In many ways it was a very unsatisfactory Committee stage, because there were so many things that we were debarred from considering because of the way in which the Bill was drafted in the first place.

The Minister claims that there is a lack of precision in the new clause. He cannot allege that and at the same time say that the wording of amendment No. 63 is full of precision.

How can the issue of benefits be properly defined? There is a wide area of argument there. I fear that the result will be that many appeals will come before the Minister. What I fear then is that there will be no certainty—

It being Ten o'clock, the debate stood adjourned.

Ordered, That, at this day's sitting, the Civil Aviation Bill may be proceeded with, though opposed, until any hour.—[Mr. Boscawen.]

Question again proposed, That the clause be read a Second time.

Mr. Clinton Davis

There will be no certainty, no stability. That point was made with great emphasis by the hon. Member for Brentwood and Ongar in a fine analytical speech.

What is the Government's aviation policy? What consistency is there between the statements made by the Secretary of State and the Under-Secretary? Can this policy vary from day to day? Has the "spheres of interest policy" ended? Is the Civil Aviation Authority to be invested with greater powers or is the real decision eventually to be made by the Secretary of State?

We have had no answer to these questions. I fear that the Minister will not provide them in the latter part of the debate.

I have listened carefully to the Under-Secretary's attempts to justify the policy, but I am not very impressed. It is incumbent upon the hon. Gentleman to offer an assurance that the Government will lay a White Paper before the House of Commons in the near future so that the airline industry, the House, passengers and, above all, the CAA may know about the Government's aviation policy.

In the circumstances, I invite the House to reject Government amendments Nos. 35 and 63, because the Government's stance has been so irresponsible and unsatisfactory.

Mr. Tebbit

With the permission of the House, I should like to reply briefly to some of the points that have been made.

I have been in touch with the Civil Aviation Authority since the Hong Kong decision. Far from feeling derided, it seemed to me to be in very good heart. There will not be a White Paper on these matters. There is no need for a White Paper. I am sorry if the hon. Member for Hackney, Central (Mr. Davis) and his colleagues do not understand the policy. It has been made clear to them. It is described in essence in amendment No. 63. It is set out clearly for all to see, with the implication that I have always made clear, namely, that the Government favour competition and the customer rather more than the entrenched interests of the operators.

I should tell my hon. Friend the Member for Tynemouth (Mr. Trotter) that we have supported a number of low fare proposals by British airlines to European destinations, and we shall continue to do so. The problem is to persuade European countries to accept our proposals. Many European countries are still as backward in these matters as are some Opposition Members. The struggle goes on, but we are making progress.

If my hon. Friend the Member for Bristol, North-West (Mr. Colvin) looks at amendment No. 63, he will find in subsection 3(a) that the CAA is free to take account of environmental factors in hearing licensing applications.

The hon. Member for South Ayrshire (Mr. Foulkes) and others talked at length about jobs in Scotland and the effect of my right hon. Friend's decision on British Caledonian as though my right hon. Friend had taken British Caledonian off the route, but he has not. Hon. Gentlemen should consider how fortunate they are that I am the Under-Secretary of State and my right hon. Friend is the Secretary of State—

Mr. Foulkes

And not the other way around.

Mr. Tebbit

—and indeed, that it is not, for example, the hon. Member for Nuneaton (Mr. Huckfield), who is a Front Bench Opposition industry spokesman, who has any say in these matters, because he said on 11 February 1976: Surely, if British Caledonian cannot survive after this lot, it should not be allowed to do so."—[Official Report, 11 February 1976; Vol. 905. c. 449.] That was the Labour Party's attitude, and that is the attitude of one of its Front Bench industry spokesmen.

The hon. Gentleman also said, on 15 October 1975: I opposed the formation of British Caledonian although its way was paved by a Labour Government. I still believe that we should have only one airline, namely, British Airways.[Official Report, 15 October 1975; Vol. 897, c. 1097.] That is the authentic view of the Opposition today. If anyone in British Caledonian thinks that he would get a moment's consideration if that hon. Gentleman had any part in any considerations of aviation policy, let alone industrial policy, if the Labour Party ever came to power, he had better think again.

I commend the Government amendments to the House and I implore the House to reject new clause 15, which is unworkable, irrational and poorly thought out.

Question, That the clause be read a Second time, put and negatived.

Clause 11