HC Deb 09 April 1986 vol 95 cc222-41

It shall be the duty of every person who is:—

  1. (a) the successor company;
  2. (b) a public airport company for the purposes of Part II of this Act; or
  3. (c) the operator of an airport licensed for public use under an Air Navigation Order, to provide at each airport of 225 which he is the operator such services and facilities (not being air navigation services) as are in his opinion necessary or desirable for its operation having regard to the development of air transport and to the efficiency, safety and economy of operation.'.—[Mr. Steen.]

Brought up, and read the First time.

Mr. Steen

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

Mr. Deputy Speaker (Mr. Ernest Armstrong)

With this, it will be convenient to discuss the following: amendment (a) to new clause 7, in line 6, leave out 'in his opinion'.

New clause 9—Provision of new airport facilities

  1. '(1) In order to encourage provision of sufficient new airport facilities to meet demand, such facilities may be provided either by successor companies to the BAA or public airport companies as defined in Clause 15, or by other companies or organisations; and any such new facilities must have been approved in accordance with planning regulations and when necessary have received approval from the Secretary of State as suitable to provide necessary additional airport capacity in the national interest.
  2. (2) The airport operator must provide fair and reasonable access to the runways, taxi-ways, roads, lands, safety services and other essential ancillary services at an airport, from all terminals and airport facilities serving that airport at a reasonable cost.
  3. (3) In the event of a dispute between the airport operator and the provider of any such facility the Secretary of State will have the power to determine fair and reasonable access to the runways and other essential services.'.

Mr. Steen

We have already had a formidable debate on a matter of great public interest, but this issue is equally important. The new clause is designed to help the Government with a drafting difficulty that they are probably unaware of. It flows from the belief that if the Bill is left unamended, a new airport operator could build a housing estate there. A new operator could, indeed, sell off the land for agriculture or development, which is, I believe, inconsistent with running an airport. Clause 73(5) and part I of schedule 5 would revoke in its entirety the Airports Authority Act 1975. There is no provision in the Bill to replace the BAA's duty under section 2(2) of that Act to provide services and facilities for the airport's operation. In consequence, the successor company defined in clause 72(1) as being the company nominated for the purposes of section 2"— that is, the company in which the property, rights and liabilities of the BAA will vest—will be under no corresponding duty to provide services and facilities, and will be able to dispose of the land currently used for airports and runways for other, perhaps more lucrative, purposes.

I hope that the Government understand why we felt it our duty to prevent them being severely embarrassed upon finding that Heathrow or Gatwick had become private housing developments, hypermarkets, supermarkets or agricultural land. New clause 2 would impose on the successor company, on public airport companies to which municipal airports may be transferred, and on aerodromes licensed for public use under the air navigation order, an obligation to provide such services and facilities as are, in the opinion of the operator of the airport, necessary or desirable for its operation, having regard to the development of air transport, and to the efficiency, safety, and economy of operation. Those last few words are important. We are introducing criteria whereby that operation must be efficient, safe and economic. The important factor is that the airport operator is not obliged to apply for a licence for public use—that is, one that requires him to make the airport available, when it is in use, to all comers on equal terms—although if he does not do so, the CAA may refuse to grant him a licence for private use.

An aerodrome licence is required under the present Air Navigation Order 1985, part IX, Statutory Instrument No. 1643, for flights for the purpose of public transport—that is, for reward—or for instruction in flying. The concept of the licence for public use could be abolished by amending the air navigation order, subject to the negative resolution procedure.

The new clause is very interesting, and I am sure that my right hon. Friend the Secretary of State will be glad to have it in the Bill. He and his officials may not realise that the new airports authority—I know that my right hon. Friend will correct me if I am wrong—has said that, when Heathrow is privatised, it will buy up houses that are affected by noise. That is also true of Gatwick and other airports. Indeed, it is a credit to the Government that they have persuaded those people to be environmentally sensitive and to buy up houses that are adversely affected by noise. However, as a result of new stringent regulations and developments in air traffic noise, there is now, and will increasingly be, much less noise than years ago.

But once the airport authority has bought up the houses at a knockdown price because of the level of noise, it will have gone into the property market. It will buy houses around the airport, and if it is a good private concern, it will find that is is saddled with houses that are not commercially viable. Although it may sound far-fetched, as drafted, there is nothing in the Bill to prevent an airport authority deciding that the only way of dealing with a lot of loss-making houses on the outskirts of the airport and getting them back to a proper market value is by converting the whole or part of that airport into a private housing development, a supermarket or an office development. In that way, the houses would rise in value as the airport nuisance element receded.

I seek only to help the Government over a drafting deficiency. I hope that my right hon. Friend the Secretary of State will see it in that light. Of course, he may say that it is all very well dealing with hypotheses. Indeed, he may say that new clause 6 dealt with a hypothesis because airports are not yet full, and may never be. But the hypothesis in this case is that the power in the Bill would allow an authority to do something other than run an airport.

7.45 pm

My right hon. Friend the Secretary of State may say that there would have to be a planning appeal before there was any change of use from an airport to a housing estate. That may be true, but what would happen if the new airport owners decided that a housing development was more lucrative, went to the planning department of a local council and was granted planning permission? There is no right of appeal, unless the Secretary of State believes that he can call it in.

The new clause is designed to help my right hon. Friend to ensure that airports are run as such. Moreover, and more importantly, it ensures that they will not be run casually, but with the specific aim of being efficient, effective, safe and economic. I hope that my right hon. Friend the Secretary of State will find much to commend in the new clause. However, if it is not drafted to his liking, I hope that he will feel that there is some advantage in including something similar in the Bill.

Mr. Toby Jessel (Twickenham)

I hope that the House will decisively reject the new clause. It may be, as my hon. Friend the Member for South Hams (Mr. Steen) has suggested, that the housing point is uppermost in his mind, but it is not very likely that an airport authority would build a housing estate in the middle of an airport. However, the new clause could open the door to something far more sinister.

I invite the House to reconsider the text of new clause 7. It says: It shall be the duty of every person who is … (c) the operator of an airport licensed for public use … to provide at each airport … such services and facilities … as are in his opinion necessary or desirable for its operation having regard to the development of air transport". That would impose a duty on airport operators to meet the demand for unlimited expansion of an airport, or so it could be argued in a court of law. At Heathrow, that could, of course, include a fifth terminal. But I remind the House that, after a full debate on Monday 17 June 1985, the House voted decisively by 326 votes to 190 to endorse the decision of my right hon. Friend the Secretary of State for Transport and my right hon. Friend the Secretary of State for the Environment, which had been announced by my right hon. Friend the Secretary of State for Transport on 5 June, to allow for a modest expansion of Stansted while refusing planning permission for a fifth terminal at Heathrow. Therefore, if the House were to accept this clause it could potentially drive a coach and horses through the previous decision of the House. I hope the clause will be rejected decisively.

Mr. McCrindle

I wish to speak to my amendment (a) which proposes to delete the words "in his opinion" from new clause 7. I agree with the broad thrust of new clause 7. I listened with great care to the points made by my hon. Friend the Member for South Hams (Mr. Steen) in moving the new clause. My objection to the new clause is that it is altogether too prone to accept what effectively the British Airports Authority is prepared to dole out. I point out as strongly as I can that the aim of my amendment is to establish real consultation between the providers and users of the services at airports. At present, under the new clause, there seems to be a considerable element of imposition of services at whatever level and to whatever degree the airports believe to be necessary.

Surely the airlines must be concerned with the number, level and quality of services provided. Surely it is not asking too much that the airlines, as the users of the facilities at airports, must be invited to have an input concerning the level of services that they believe are required to enable them to develop air transport. It is not good enough for the airports to provide only those services that the airport authority has decided, without formal consultation, are adequate for the purpose.

Ideally, there should be a partnership between airports and airlines in deciding the appropriate level of services. That presupposes that the terms of the partnership are laid down. As I said earlier, I am concerned that new clause 7, as the basis of that partnership, tends to impose the requirements at the level the airports decide. Because the airlines are, frankly, suspicious of the new regime to which we are now moving, the time has arrived, and the Bill gives the opportunity, to ensure that there is no doubt in anyone's mind that meaningful consultation is being sought.

Briefly, my amendment seeks to achieve the formalising of the consultative procedure. When the Bill was before the House on Second Reading, I intervened during the speech of my right hon. Friend the Secretary of State to intimate my concern that the consultation process provided for was perhaps a little too informal. He may recall that he said then that it did not matter too much to him whether it was formal or informal. With the greatest respect, I think that it does matter, and my amendment provides the opportunity for a rather more formalised basis of consultation. I commend it to the House and to the Secretary of State for consideration.

Mr. Bill Walker

I will concentrate on new clause 9, which stands in my name and that of my hon. Friends and which deals with the provision of new airport facilities.

It is no secret that, once the British Airports Authority is in the private sector—and I heartily approve of that—it will no longer be under any statutory duty to meet demands. The first responsibility of the private airport owners will properly be to their shareholders, and I do not argue with that. In a private monopoly—that is what they will be—the shareholders' interests may best be served and the risk to shareholders' funds minimised, in the absence of any threat of competition, by not providing additional capacity until the demand clearly exceeds existing facilities; in other words, action will be delayed until it must be taken. The airport owners, by meeting the shareholders' interests—the interests of the consumers and the aircraft industry—might be compromised and the competitive position of the United Kingdom weakened.

On the matter of competition, I have been motivated by the thinking and writing of my right hon. Friend the Secretary of State. Therefore, on this subject, I would expect him to understand clearly what I am saying. If new clause 9 were accepted it would enable companies, other that the airport owner, to provide facilities to meet demand on conditions that allowed the companies fair and reasonable access to the essential facilities of airports, such as runways. The provision of terminal facilities, for example, other than by airport owners works well and efficiently in the United States, and this applies to the British Airways—owned and operated terminal at John F. Kennedy airport in New York.

My right hon. Friend will remember the morning when I was delayed in Washington and unfortunately was not able to hear what he said in relation to British Airways and its operations at its New York terminal. He will recollect that, on Tuesday 28 January, he said that British Airways had not particularly enjoyed having its own terminal at JFK in New York. My right hon. Friend will know that British Airways disputes that; it says that it places great value on having its own terminal at this major airport. It enables it to handle arrivals and departures flexibly. It helps it to provide a better service to customers.

The facilities have recently been modernised, and passengers are benefiting and staff enjoy working in them. The marketing of the British Airways product in the United States is in keeping with the refurbishing cost of $16 million. The terminal has assisted British Airways to get its message across in the United States. The main competitors of British Airways in New York are Pan American and Trans World Airways and they also operate services from their own terminals and extensively advertise the convenience that this affords.

My right hon. Friend will also be aware that at many other airports in the United States as well as John F. Kennedy there is a similar situation. It was suggested in Committee that the New York airport authority would, at this stage, not be happy about airlines having their own terminals. I was surprised when I read those comments. I was not present when they were made, so I checked the situation myself. There is no doubt that the present policy of the New York authority is to encourage airlines to finance the terminal facilities at its airports, which include all the airports covered by the New York authority. However, the present director of the authority may have personal views not in keeping with the policy that the authority is exercising.

Mr. Stephen Ross

As a member of the Select Committee, I went to all three of the airports in New York run by the authority. The impression given to the Select Committee was that the authority would not go down that path again.

Mr. Walker

I am not questioning that; I am saying that I have subsequently checked the statements made. The report I have from the New York authority is that its policy is to lease out terminals and terminal facilities. It has recently awarded new leases to airlines, one of which is the British Airports Authority, which has just had its lease renegotiated. That is the current policy of the airport authority. It also says that Pan Am did its own financing and TWA sub-leased back from Pan Am. In addition, British Airways, United Airlines, American Airlines, Eastern Airlines, and North West Orient all do their own financing. That happens at JFK airport. At La Guardia, which is also an airport authority airport, Delta Airlines has recently financed a new terminal. At Atlanta the same situation applies.

I will not bore the House with all the details, but I have them in relation to all the major airports in the United States, and the information shows clearly that in places such as Los Angeles, which I understand my hon. Friend the Under-Secretary visited, new terminals are operated by a consortium of international airlines. A United Airlines terminal is privately financed. Terminal 1 is financed by Lockheed. There is no question but that the major airports of the United States and the world's busiest airport—Chicago—have terminals run by private funds, most of which come from airlines. There are key examples of airlines being committed to managing their facilities and often providing their own finance. Their success can be seen by the fact that others have been encouraged to follow suit.

All the major airports in the United States do this. The benefits are there for everyone to see. The economies which are the natural result of private enterprise produce action. Government expense is reduced and operating efficiency is improved. No deterioration in airline access has occurred. In fact, the opposite has happened. There has been a proliferation of new airlines in the United States. I am sure that when the Select Committee was over there, it was impressed. Under deregulation, there has been an enormous expansion in new airlines and not one new carrier has failed to gain access to a suitable terminal at major airports.

Mr. Fry

Can my hon. Friend tell us how many British airlines have told him that they would like to build their own terminal?

8 pm

Mr. Walker

I cannot comment on these matters, as they may be regarded as confidential, but I can say that more than one has expressed an interest. I hope that my hon. Friend now realises that airlines are interested in being associated with and involved in the construction and running of airline terminals. I am not authorised by the airlines to say more. Airlines would wish to operate terminals if the facilities were not provided. They would build terminals, not for the sake of it, but only if it would help them run their businesses.

In Committee, there was some comment about British Airways not knowing how to run the terminal, and asking the British Airports Authority for advice. I am sure that my right hon. Friend will agree that that is not true. A senior member of British Airways invited British Airports Authority involvement in one aspect of the operation of the new terminal at John F. Kennedy airport. It is sensible to seek help from an expert.

On the matter of the 17 cargo sheds at Heathrow, it was suggested in Committee that British Airways had prevented others from having access to the sheds. British Airways had only one of the cargo sheds—all the others were leased by other airlines. There is no question of one airline adopting a dog-in-the-manger attitude. The British Airports Authority had to build another cargo shed, but that is no reason for rejecting the new clause. The airlines will build a terminal or other facility only if they believe they need it and can make it work cost-effectively and profitably. They do not build for the sake of it.

Additional facilities must be provided. We must consider whether the British Airports Authority, after it is privatised, feels that there is a need, particularly at Heathrow and Gatwick, where there will be enormous pressure. The easy option is to divert traffic to Stansted. If that happens, the new clause is necessary, so that airlines, or anyone else who wishes, can provide new facilities such as terminal facilities to meet demand. That would be helpful and would remove the present monopoly.

My right hon. Friend believes in competition and will, I am sure, see the advantages of new clause 9. It will galvanise the airport owner to provide sufficient capacity in time. As I have always argued when we debate air traffic navigation orders, there would have been proper consultation if the House had had the opportunity to pray against those orders. The right to pray against them would create the conditions in which consultations would be effective. Airport owners are required by statute to provide sufficient capacity, but, after privatisation, the Government will have no control over the new owner's capital spending. Without new clause 9, the Government's ability to influence capacity provision will be much reduced. I hope that my right hon. Friend will accept the new clause because it will help us to provide the necessary facilities in time.

Mr. Adley

My hon. Friend the Member for Tayside, North (Mr. Walker) has a slightly rosy view of the Bill. My right hon. Friend the Secretary of State believes in competition, but not if extra competition interferes with the maximisation of revenue for the Treasury from the privatisation of the BAA. That is one of the problems that lie at the heart of the Bill.

There are three views of the Bill, two of which are dogmatic. We have the Opposition's view that public ownership is the answer to everything, and we have my right hon. Friend's view that unrestrained private trading is the only solution for the nation's problems, provided of course that we do not allow too much competition, which would reduce the value of the product that we are selling off. The new clauses in this group tend to reflect the views of some of us who support the proposition, but worried about some of the details.

In the previous debate the hon. Member for West Bromwich, East (Mr. Snape) suggested to my hon. Friend the Member for Cannock and Burntwood (Mr. Howarth) that there was incompatibility between a legislative framework and a private sector company with public sector responsibilities created by such a framework. I utterly reject that view. Anyone who has read the history of the Great Western Railway knows that it is perfectly possible to have a company in the private sector which is heavily encompassed with public sector responsibilities laid on it by the House.

I shall support the new clauses, partly because of the duty-free shops at our airports. They seem to be virtually a licence to print money. When I go through Heathrow and buy perfumes for my wife, I find that the prices there are about the same as those at Fortnum and Mason.

Mr. Couchman

Does my hon. Friend shop there?

Mr. Adley


If my right hon. Friend is not willing to accept the new clauses or the amendment, I hope that he will consider sympathetically in another place the proposition that it is desirable to encourage a little more competition, even if we may have to accept a slightly lower price for the privatisation of the BAA.

Mr. James Hill (Southampton, Test)

We all know that poorly drafted legislation can create a bonus for the legal profession. It worries me that, if my right hon. Friend the Secretary of State accepts new clause 9, an impression, which the barristers would be only too pleased to argue from now to domesday, would be created. I do not fully understand the phrase airport capacity in the national interest. That will be a difficult concept to argue. The new clause states: The airport operator must provide fair and reasonable access. He is in the business of providing access to runways. As everyone who has been in the airline business will know, he probably provides more access to runways than he does to duty-free shops. The airport operator must not only provide fair and reasonable access to runways, but all these extra facilities must be provided at a reasonable cost. That may lead to a vast argument between the operators and the private owner of the airport.

The penultimate line shows that my right hon. Friend the Secretary of State will have the power to determine fair and reasonable access to the runways. That will be terribly difficult to define.

I hesitate not to support the new clause. My hon. Friend's heart is in the right place. He wants privatisation, but he wants it to be hedged with many minor regulations. The free port of Southampton is an example of how regulations can destroy almost anything. I shall be extremely interested to hear what my right hon. Friend the Secretary of State has to say, but the new clause is too woolly for the House—

Mr. Bill Walker

I trust that my hon. Friend has read the Bill carefully. He must realise that parts of the new clause are taken from the Bill. If it is too woolly and couched in the wrong language, something must be fundamentally wrong with the Bill. Had my hon. Friend followed our earlier debates and understood what was meant by reasonable access to runways and other essential facilities, he would know that we were talking about aircraft being told to taxi from new terminals over taxiways to runways. If we built a new terminal at Heathrow, there would be no guarantee of access to the taxiways and runways.

Mr. Hill

I sometimes listen to my hon. Friends with wonder. The development of terminal 4 at Heathrow has meant that crossing over to active runways will be one of the most hazardous activities for pilots. Fair and reasonable access to runways is not always provided. That is a matter for the operator of the airport. It is not for my right hon. Friend to provide an inspectorate to make daily checks on large firms to see whether they provide fair and reasonable access. In practical terms, that will not work.

Whatever one may say about "a reasonable cost", which my hon. Friend did not mention, I must point out that anyone's figure could be a reasonable figure of cost. The barristers will love new clause 9, if it is accepted, because they will argue for ever more about every decision that the Secretary of State or an airport operator makes.

Mr. Alan Haselhurst (Saffron Walden)

I wish to speak briefly, more in the spirit of my hon. Friend the Member for Christchurch (Mr. Adley) than in the narrow legalistic sense of my hon. Friend the Member for Southampton, Test (Mr. Hill). My hon. Friend the Member for Test was a little less than fair. We have been discussing the broad spirit of some principles of the Bill. Conservative Members are amateur draftsmen. Their amendments and new clauses are proposed as a vehicle for ideas which we commend to the Secretary of State. If the Secretary of State is impressed by those ideas, he may wish to put his draftsmen to work to ensure that they are properly encapsulated in the Bill.

My main point is that the Bill provides considerable powers for the British Airports Authority and it is not unreasonable that it should have duties placed upon it and that there should be every protection for people who may wish to have access to the facilities that we are delivering over to a private body—the British Airports Authority—after the Bill has reached the statute book.

Therefore, I do not dismiss entirely the importance of new clause 7, although I would not go as far as my hon. Friend the Member for South Hams (Mr. Steen) in supposing what could happen. It is reasonable to assume that the operators of Heathrow or Gatwick could, within present planning regulations, have the freedom to build two or three warehouses without their coming within the criteria for being called in, as the criteria have generally been operated until now. Of course, it may be fanciful to suggest that they would operate that freedom wildly and irresponsibly, but it is possible and we are here to ensure that there is proper protection. Therefore, it is reasonable to place a duty on the operators of the airports that we are handing over to the private sector to provide the services that are an essential part of an airport.

8.15 pm

On possible competition—this may cause my hon. Friend the Member for Twickenham (Mr. Jessel) to jump up and down in great excitement, but I say it purely illustratively—it is well known that a private consortium exists which would be interested in developing the Perry Oaks site at Heathrow. If that body were not the British Airports Authority, it could build a terminal without planning permission, but it would never obtain the agreement of the BAA, as the owner of Heathrow and its runways, to have access to those runways. It is reasonable to expect an opening to be retained in the statute should that happen, whether at Heathrow or anywhere else. It should be possible for a competitive operator of a terminal not to be squeezed out simply because the owner of the runways says, "I will not have you at my airport." I hope that my right hon. Friend will not cast that consideration aside. There must be no danger of excluding that possibility of competition.

Mr. Fry

My hon. Friend the Member for Tayside, North (Mr. Walker) quoted extensively from experience in the United States. The Select Committee discovered, when it visited the United States and investigated the matter, that much of the ownership of terminals is associated with the hub principle of American airlines. Large American airlines use specific cities. In Atlanta, for example, Eastern and Delta own the two terminals, and it is accepted as their territory. I am sure that, despite what he said, my hon. Friend would not deny the enormous advantage that that gives to the airlines which use that hub. That would be a major departure in Britain. I remind him that British Airways has not been given exclusive use of terminal 4 at Heathrow—

Mr. Dicks


Mr. Fry

That may be, but as a matter of policy that is the decision.

I have some sympathy with my hon. Friend the Member for Tayside, North when I consider Glasgow. Glasgow airport is interesting because it has no freight facilities. If Glasgow and Prestwick were not under the same ownership, one wonders whether Glasgow would continue to have no freight facilities. If it did, there might be an end to Prestwick. There is some merit in my hon. Friend's proposals and some points for my right hon. Friend the Secretary of State to consider.

After listening to some of the speeches of my hon. Friends, I begin to wonder how far they want to whittle down the value of the BAA before we sell it. My hon. Friend the member for Christchurch (Mr. Adley) said tht fewer duty-free articles should be sold. Does he realise how much of the revenue of the BAA comes from duty-free goods? If we abolished duty-free goods and made it difficult to make large profits from that source, the airlines would complain about increased landing charges.

Mr. Adley

They would be happier on safety grounds.

Mr. Fry

Perhaps, but there would be complaints.

There would be difficulties with foreign countries and airlines. We should not under-estimate the contributions that duty-free shops and other franchises make to the finances of the BAA.

Mr. Adley

If my hon. Friend talked to representatives of the airlines, he would find that they would be delighted to have the opportunity to fly without having to carry large quantities of highly explosive alcohol on board for their customers. As the Bill stands, without any seeming control there is the danger that what happens in my constituency could happen at BAA airports. For example, Hurn airport is operated by the airport management committee, without any regard to Christchurch council as the planning authority. In planning use terms, the committee allowed factories, which were previously owned by British Aerospace for the purpose of building aeroplanes, to be converted into warehouses for storing EEC grain. That change of use took place without any application to the planning authority. That is an example of the sort of thing that is worrying us.

Mr. Fry

If I read the wording of the new clause correctly, it would be necessary for planning approval to be given for someone to build a terminal. In such circumstances, can one imagine some local authorities being happy to give planning permission? I do not know whether that would be in the interests of the airport as a whole or of the airport users. I am commenting on the way in which the clause has been presented.

If we continue to whittle away the saleable value of the authority, we shall not realise anything like the amount that has been expected. I understand the worries of my hon. Friends, but the sum that will be realised is already somewhat lower than was expected originally. I believe that the Government are right to say that they want to offer to the public—to those who wish to buy shares—something of comparable value to what had been expected. If we continue to pass amendments or new clauses that reduce the value of the authority, we shall defeat one of our main purposes.

Mr. Haselhurst

Does my hon. Friend believe that our main objective should be to achieve the maximum value for the authority or to ensure that we create a regime that is in the interests of British civil aviation?

Mr. Fry

Naturally, I think that our priority should be the latter. One can go only so far in that direction. If we continue to bring up ideas, such as those which are canvassed in new clause 9, anyone who obtains planning permission will be able to do virtually anything and have automatic access to an airport.

Mr. Bill Walker

My hon. Friend is being unrealistic if he believes that there are people throughout the world who are determined to build terminals or any other facilities without being absolutely sure that they will obtain a return for their money. Those who will be interested are hard-nosed speculators and investors. We know that airlines are having some difficulty nowadays in making profits and there will be a wish to ensure that what they are doing is necessary and will provide a return. If I may say so, I find my hon. Friend's frivolous approach to serious matters rather disturbing.

Mr. Fry

On the contrary, my approach is not frivolous. Has my hon. Friend not seen large office blocks in our cities standing empty? Many of those blocks remain empty for a long time after erection. If it is assumed that there is a great deal of money to be made from the development of airports, some people will develop them. However, the developments will not necessarily be utilised immediately. I assure my hon. Friend that my approach is not frivolous.

Mr. Wilkinson

I should like to reinforce the arguments advanced by my hon. Friends the Members for Saffron Walden (Mr. Haselhurst) and for Tayside, North (Mr. Walker). The concern of many of my hon. Friends is that the long-term economic potential benefit which could accrue to Britain through the fullest use of its civil air transport infrastructure—airports and associated facilities—should not be diminished by its development for other purposes for short-term financial gain.

Mr. Fry

I do not deny that. I am saying that new clause 9 would not achieve what my hon. Friend wants. I think that I have spent more time responding to interventions than in proceeding with my speech.

I understand the concerns that have been expressed. The new clause has provided a vehicle for the expression of those concerns, and I hope that my right hon. Friend the Secretary of State will respond to them. However, I do not feel that I can support the new clauses. As I said in responding to the speech of my hon. Friend the Member for Twickenham (Mr. Jessel), I believe that amendment (a), tabled by my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle), would make matters worse. It would put an onus upon any airport owner to extend an airport if there were any demand for extra use. That would be an exceedingly dangerous line to follow.

I am aware that we are trying to create a framework for airports that is in the national interest, and we must decide who is the best custodian of the national interest. In the last resort, I believe that responsibility must lie with the Secretary of State. I cannot, therefore, support the new clause.

Mr. Robert Hughes

I hesitated before deciding to intervene in the debate. There has been a family argument among Conservative Members, and some of their interventions have been astonishing when one remembers that they all trooped into the Aye Lobby to support the Bill's Second Reading. They were enthusiastic in their support of a measure to privatise the BAA. Yet all that we have heard throughout the evening has been one Doubting Thomas after another describing the fragility of the entire exercise and arguing that a private company cannot be trusted to do the job which the Secretary of State seeks to allow it to do.

Mr. Dicks

With great respect, the hon. Gentleman's description of the debate is a travesty. On Second Reading many of us expressed concern and great doubt about the BAA's ability to do anything right. To suggest that Conservative Members who supported the principle of privatisation walked through the Aye Lobby on Second Reading while supporting the authority's activities is a travesty of what took place on that occasion.

Mr. Hughes

I absorb the hon. Gentleman's intervention. I absolve him from my general accusation that Tory Members walked through the Aye Lobby enthusiastically on Second Reading. I accept that he was dragged through the Lobby kicking and screaming by the Whips.

The principle of the privatisation of the BAA. as enshrined in the Bill, has been challenged by every hon. Member who has spoken in the many debates that have taken place this evening. The hon. Member for Tayside, North (Mr. Walker) has the greatest suspicion that the new owner—he was not speaking about the management and we do not know who the new owner will be—of the BAA will allow terminal capacity to drag against demand to such an extent that it will allow a competitor to move in and provide facilities. Other Conservative Members say that the problem is to ensure competition and that the operation must be directed to the maximising of profits while responding to the public interest.

Terminals make money because, while waiting to join their flights, passengers use the franchise shops and duty-free shops. No money is made merely by passengers passing through terminals in the course of joining their flights. No money is to be made merely by providing runways, taxiways and shelters for those boarding aircraft or disembarking from them. Conservative Members are realising more and more that the Bill is nonsense.

If the subsequent owners of the BAA airports or local authority airports are to maximise profits, they will do so only by concentrating on non-landing charges. They will provide terminals as and when there is perceived demand. They will not start to build a terminal with the unlikely prospect that in 10 years more people will be using the airport. They will look to capacity, demand and projections. If we go through the procedure of a public inquiry—no one suggests that the public inquiry procedure should be dropped—it will take about 15 years from deciding to build a new terminal to its being in operation. The time scale might be a little shorter.

Neither of the new clauses will make any difference to what will happen in the future. I accept that they have been put forward to float ideas. The ideas have been floated, and in my view they have sunk.

8.30 pm
Mr. Ridley

The two new clauses are slightly different in content and I shall discuss them separately. I should like to pick up the point made by my hon. Friend the Member for Southampton, Test (Mr. Hill) who, quite professionally, destroyed the drafting of new clause 9. My hon. Friend the Member for Saffron Walden (Mr. Haselhurst) quite correctly said that it is not the drafting we are worried about but the principle. That may be perfectly right in relation to new clause 9 but the drafting of new clause 7, which my hon. Friend the Member for Southampton, Test could also have dealt with, leaves more than detail to be cured by the skill of the draftsman. It exposes the very difficulties which my hon. Friend the Member for South Hams (Mr. Steen) is encountering. They are not drafting difficulties, but difficulties of substance. Although my hon. Friend the Member for South Hams makes a brave attempt to impose a duty on airport operators to provide capacity and adequate services, he has no means of saying how much capacity or how adequate the services should be. We cannot ride out of that difficulty on the skill of the draftsman.

Looking at the practicality of the duty which my hon. Friend the Member for South Hams wishes to put on airport operators, its fulfilment may not be within an airport operator's power. He may be unable to obtain planning permission for a development which he considers necessary, or he may be unable to obtain finance for a new facility which he considers necessary.

How is a breach of such a duty to be judged? There are no objective criteria for the courts to apply. What sanctions could be applied? One could not have a court requiring a certain extra terminal to be built as part of the judgment as to whether the law that my hon. Friend proposes has been complied with. I shall take the notorious example of Stansted. I happen to believe that a limited expansion at Stansted is necessary. My hon. Friend the Member for Saffron Walden has consistently and courageously fought the opposite case—that no development, or much less development, was needed at Stansted. Will the dispute between us be arbitrated by a court? It is not a proposition that my hon. Friend the Member for South Hams could believe to be correct.

Mr. Haselhurst

I cannot let that aside go without comment. I have always argued in favour of limited expansion at Stansted. The argument has been about the degree.

Mr. Ridley

I accept that. The question is how limited is limited. We have a different view of the word. I cite that only as an example of how difficult it is to decide what capacity is necessary and to show that this is not a justiciable matter.

The new clause contains the phrase "in his opinion"—that is, the opinion of the operator. If we are to rely on his opinion he will always say, "Yes, it is my opinion that I have provided enough capacity." If we accept the amendment to new clause 7 of my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle) so that we cut out the words "in his opinion", it makes it more difficult for the court to interpret. There will not then be anybody's opinion, so the court will simply have to interpret whether adequate capacity or services are provided in vacuo, and without any guidance.

Mr. Robert Hughes

Why does the Secretary of State take such objection to the words "in his opinion" when the Bill is littered with his own phrase "as he thinks fit"?

Mr. Ridley

The hon. Gentleman may or may not be a lawyer; I do not know. He must realise that if I am in a court of law, all I have to do is say, "In my opinion, I did not steal the hon. Gentleman's wallet," if the charge is that I have stolen the hon. Gentleman's wallet and it is accepted that it is a matter of opinion whether the wallet was stolen. It is a very easy defence to say, "In my opinion, I did not steal the wallet." That is why those words are important.

My hon. Friend the Member for South Hams was concerned not so much about the failure to provide sufficient capacity as about the extreme case of an airport operator who decided to convert the airport to other uses such as housing. The answer was in his own speech. A change of use would require planning permission and it is not enough to suggest that the planning authority could simply grant it, as happened in the case mentioned by my hon. Friend the Member for Christchurch (Mr. Adley). If it was proposed to convert an airport to housing or any other non-airport purpose, my right hon. Friend the Secretary of State for the Environment might wish to call in the planning application and consider it in relation to airline policy.

I am not saying that he would do so in all cases, because some airports are tiny and not used at all, or very little. Clearly in such cases it would be right for those airports to be put to other uses. However, in the case of any sizeable or major airport I have no doubt that that would be the defence that would ultimately be open to the Government. If an airline operator were to buy houses surrounding an airport and claim that the houses would increase in value if the noise was stopped, that would be a strange plea for planning permission and could certainly be the subject of a call-in in the way that I have described.

My hon. Friend the Member for Brentwood and Ongar returned to the point about the need for consultation. I think that the Bill is littered with instances where airport operators have to consult and I think that he will find one or two more in the amendments before us tonight. It is difficult to think of other places in the Bill where requirements to consult could be placed. I think that the debate on the scheduling committees illustrated the extent to which the airlines, even if they are not consulted, make their views absolutely clear and well known to the airport operators. Therefore, I hope that my hon. Friend will not feel that we have neglected that.

My hon. Friend the Member for Tayside, North (Mr. Walker) tabled new clause 9. The belief which expressed itself in the debate on new clause 7 came through in new clause 9—that it is possible that the BAA will not provide adequate capacity at some stage in some airport. New clause 9 seeks to allow airlines or others to provide extra terminal capacity, subject to them obtaining planning permission.

I promised to look at that again because I believe in competition as much as my hon. Friends have been kind enough to acknowledge. I wanted to ensure that we missed nothing. I said in Committee that I thought there was a one in a thousand million chance that it might be possible that an airport would be short of capacity, would refuse to build more and would seek to deny an airline or another developer the opportunity to provide that extra capacity. However, I do not believe that such an example of an airport deliberately starving itself of capacity is likely to occur. There are some reasons in the Bill for thinking that. I shall give one or two reasons why I do not believe that what is proposed would be the right solution, even if that were the case.

In clause 36 (2) there is a duty on the Civil Aviation Authority, while conducting its economic regulation, to encourage investment and make sure that the financing of investment is allowed for in price regulation. Secondly, it is very much in any airport operator's interest to seek to maximise traffic. If we are to get the profit motive into airports through the Bill at all, the way in which extra profits will be made, particularly with economic regulation, is partly through reduction of costs, but mainly through increase of throughput.

Every passenger who is contented, has enough space in the terminal, is not jostled, does not have to queue, and can sit down, will be likely to spend a little more in the shops. That is the way in which extra revenue will come to the airport operator. Therefore, deliberately to cramp, deny or restrict the space provided is deliberately to restrict one's own profits. For those reasons, it is almost unthinkable that anybody would deliberately produce less capacity than was humanly possible.

I must give my hon. Friend the Member for Tayside, North the reason why I wonder whether it is a proper solution to give powers to other airlines or consortia to build extra terminals in defiance of an airport operator's wish. I think that the whole House will agree with me that if an airline or another operator agreed with the airport operator that extra terminal capacity would be provided, not by the airport operator but by somebody else, that would be ideal. That is what has happened in New York, as my hon. Friend knows. As a policy, the port authority there has agreed with other airlines that they should build their own terminal capacity. That is excellent. I hope that it happens here. However, there is not so much space here for every airline to have its own terminal as there is in airports abroad.

For example, if—it is a big "if"—British Airways were to build terminal 5 at Heathrow, after the problem of the sludge works had been conquered, and it provided terminal capacity for 15 million passengers per annum, presumably it would move out of terminal 4, leaving it virtually empty, with just the Dutch airlines and Air Malta there. Even if other airlines moved into terminal 4, they would leave a gap wherever they moved from. Therefore, there would be an inefficient and uneconomic use of the scarce facilities at Heathrow, where there is a limitation on space. Half the space would be taken up by terminals that were not full.

I owe British Airways an apology about the cargo sheds. There are 17 cargo sheds. which were not, as I said in Committee, all taken by British Airways; they were taken by airlines of all sorts. The point remains valid, however, that when British Caledonian wished to have a cargo shed at Heathrow, although there was plenty of spare capacity in those 17 cargo sheds, not one airline was prepared to make the necessary arrangement to accommodate British Caledonian, so another cargo shed had to be built. That is an illustration, on the cargo side, of the same point that I was making about terminals.

Mr. Wilkinson

Will not my right hon. Friend reconsider his somewhat unnecessarily negative statement about terminal 5 and the Perry Oaks site? Is not the important aspect of the matter the fact that there should be no inhibition on the potential development by the airport operator of such a valuable site for terminal facilities that might be desired by the airlines? For commercial reasons, the airport operator could have other intentions for the site, such as a waterfowl park. Is not what my right hon. Friend said much too negative? The development of a fifth terminal at Heathrow could not become a commercial proposition until there was sufficient demand by the air transport operators, who would be able to move in and fully occupy those facilities.

8.45 pm
Mr. Ridley

I have the greatest respect for my hon. Friend, but for once he is not right. If British Airways moved into a new terminal 5 and filled it, it would leave an enormous vacuum in the other terminals. The airport operator would have to forgo the rent for them, so that it would lose a lot of money, or other airlines would have to be surcharged to cover the cost of the empty space at the other terminals. That would not be at all fair on the other airlines.

It is worse than that. Supposing that the constraint on capacity at Heathrow is the runways—as I have always said—not terminal capacity, and supposing suddenly capacity for an extra 15 million passengers was provided at terminal 5, British Airways would say: "I shall put more flights through my terminal 5 Will you please chuck some of these people out of the lifeboat because I have a terminal. I do not care about the others. I shall monopolise the runway capacity." Out of the lifeboat would go all my hon. Friends who support the small airlines, which I too support. Therefore, there is a real risk. I hope that no one will take offence, least of all British Airways, because I have used it as an example to illustrate my point. I am sure that BA would not behave like that.

The policy of allowing extra terminal capacity at the will of an airline could severely disadvantage other airlines. As we are seeking to make airports open for all, without discrimination or favour, I believe that there are some fairly strong reasons why it would be better not to do that.

Mr. Bill Walker

My right hon. Friend is touching on a fundamental and important point. Let us consider the very fact that the site at Perry Oaks exists and that there will be a need to redevelop the central area of Heathrow. At some time there will be inadequate terminal capacity because of the need to redevelop the central area. That is what we have in mind. My right hon. Friend has grasped many of the nettles. The problem has been that Governments have refused to face up to the problems of looking ahead, in aviation policy. I believe that the development of our prime airport is one of those things. That is why it is necessary for there to be at least an opportunity for private capital to help the development.

Mr. Ridley

My hon. Friend is absolutely right. It would be useful if an opportunity could be found to redevelop the central area of Heathrow.

Extra terminal capacity might be required while it was being done. It is within the capability of the BAA successor company, in conjunction with the airlines, and with private capital, to do that by agreement, but my hon. Friend is seeking to give the airlines a right to do it in the absence of agreement with the airport operator. That would lead to the evils that I have just described. I would encourage and welcome co-operation between all concerned in providing the capacity that is thought to be necessary, but there should not be conflict leading to discrimination or favour.

Mr. Dicks

The weight of my right hon. Friend's argument would be increased if most Conservative Members were not aware of the fact that the BAA is determined to see Stansted advanced, at whatever cost. Therefore, there would not be fairness and compromise over the decision on the development of terminal 5 at Perry Oaks. There would be a feeling among the airlines and many people that the BAA is biased, as perhaps my right hon. Friend is, with respect, in favour of Stansted. Does not my right hon. Friend agree that the role of the airport operator is to give the airlines the facilities at an airport so that they can provide a service for their customers?

Mr. Ridley

I agree entirely with my hon. Friend the Member for Hayes and Harlington (Mr. Dicks) on his second point, but I found his first point confusing. My hon. Friends have expressed concern that insufficient capacity will be provided and that something should be written into the Bill to force airport operators to provide as much capacity as is necessary. When the airport operators have tried to do so at Stansted the same hon. Friends have been extremely alarmed. My hon. Friends cannot have it both ways. They would like to decide where and when capacity is reached, but the British Airports Authority has been trying to provide the extra capacity that is needed. Yet my hon. Friends have sought to criticise the authority for not doing that.

Mr. Jessel

My right hon. Friend said that the main limiting factor at Heathrow is the limitation capacity on runways. I would also ask him to consider that the highway capacity on the approach roads could become increasingly relevant. Despite the tremendous benefits conferred around London by the M25, that motorway already shows signs of being highly congested at peak hours. The A4 out of central London is also congested. Therefore one cannot go on for ever expanding capacity at Heathrow.

Mr. Ridley

I congratulate my hon. Friend on getting in a well deserved plug for extra infrastructure at Heathrow during a Bill which deals with aeroplanes rather than other forms of transport. My hon. Friend will be aware that we are deep into a study on how to improve access to Heathrow, though the report is not yet ready.

I do not consider that these amendments are necessary, although I have much sympathy with both the new clauses. When one comes to try to devise a statute, which we are now making, which holds up to the type of examination that the House would like to expose it to, I think one would find the amendments would be difficult to incorporate in a way that would improve the Bill. I think we have got it right and I hope my hon. Friends will not feel that they wish to press the new clauses.

Mr. Steen

With the leave of the House.

I am always moved when I hear the Secretary of State, because he is extremely persuasive and he puts his case very nicely. I feel sure that new clause 7 will not go well in the Bill if my right hon. Friend says that it will not do so. We have disagreed only on where the Okehampton bypass should go. My right hon. Friend wanted it to go south, and I wanted it to go north. I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

Mr. Deputy Speaker (Sir Paul Dean)

Does the hon. Member for Tayside, North (Mr. Walker) wish to have a Division on new clause 9?

Mr. Bill Walker

With the leave of the House, I wish to—

Mr. Deputy Speaker

Order. The hon. Gentleman has had his say. If he wants a Division, he should move the new clause formally. If not, there is nothing more to be said.

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