§ Mr. Peter Snape (West Bromwich, East) (by private notice)
asked the Secretary of State for Transport if he will make a statement on the Government's policy in the light of the latest developments in the negotiations between British Caledonian Airways and SAS.
§ The Secretary of State for Transport (Mr. Paul Channon)
The Government's policy remains as set out in the 1984 airline competition policy White Paper.
§ Mr. Snape
I am sure that the House will be grateful to the right hon. Gentleman for that detailed answer. Could I ask him, if the matter of shareholding in British Caledonian is the problem, what percentage of SAS shareholding he would find acceptable—20 per cent., 25 per cent, or any other figure up to 30 per cent.? What percentage of British Airways shares were sold on foreign stock exchanges at the time the airline was unwisely privatised? What percentage of BA shares are currently held by non-British individuals and institutions?
Finally, can the right hon. Gentleman assure the House that any final decision on this matter will be made in the interests of air travellers and those employed in the industry, and will not be based on the apparently endless ambition and influence of Lord King, or the rambling xenophobia of his right hon. Friend the Member for Chingford (Mr. Tebbit)?
§ Mr. Channon
It is not for me to say what the position is in relation to an exact shareholding. The Civil Aviation Authority has certain duties under the Civil Aviation Act 1982 to inform me that, in its view, an airline is no longer under effective United Kingdom control. It cannot do that until a proposition has been made, but it can give informal guidance. It has given informal guidance that, in its view, a proposal that has so far been put forward between SAS and BCal would amount to the airline no longer being under United Kingdom control. Under the circumstances, if the CAA makes such a recommendation, I have the power under the Act to revoke or to fail to revoke licences that may exist. I cannot take a final decision about that matter; I can only say — it is strongly in the public interest that I should do so—what I am minded to do. I have said that, in view of the CAA pronouncement, I would be minded to revoke the licences should a merger take place on those terms.
§ Mr. Norman Tebbit (Chingford)
Is my right hon. Friend aware that there will be a very wide welcome for the way in which this matter has been handled? It will be particularly welcome that there has not been a further reference to the Monopolies and Mergers Commission, which would cause a further month's delay and uncertainty that BCal could not withstand. Equally, there will be a wide welcome for the fact that my right hon. Friend has made it clear that we would not tolerate ownership or control by a foreign airline of a British flag carrier. Has my right hon. Friend been told whether the Opposition are in favour of the nationalisation by the Scandinavians of a British private enterprise airline?
§ Mr. Channon
It is extremely difficult to discover what, if anything, the Opposition policy is on this matter. The only indication that I can give my right hon. Friend is that at Question Time on Monday, the official Opposition 1104 spokesman seemed on the whole to be criticising us for allowing the talks between BCal and SAS to go on. I am extremely grateful to my right hon. Friend for his question. It is a serious matter if a British scheduled airline passes under foreign control. One of the reasons why it would be serious is that it would be open to foreign Governments who were not satisfied that substantial ownership of an airline was in British hands to refuse to accept its designation for the services covered by agreements. That would have widespread repercussions.
§ Mr. David Steel (Tweeddale, Ettrick and Lauderdale)
Would the Secretary of State clarify two points? Will he make it clear that there is a difference between control of a British airline and a minority stake in it, which is what is proposed by SAS? Will he confirm, contrary to what the right hon. Member for Chingford (Mr. Tebbit) says, that SAS is not wholly owned by the three Governments in Scandinavia, but is a private-public mixed enterprise in the same way that BP used to be in this country? Will he accept that the right hon. Member for Chingford is being totally consistent in attacking his successor at the Department of Trade and Industry because it was the right hon. Gentleman in 1984 who removed the doctrine of the public interest as the basis of merger policy and who now, in talking about pillage by the Vikings, is missing out only the accusation of rape?
§ Mr. Channon
I do not agree with any of the right hon. Gentleman's points about the definition, or with his reference to my right hon. Friend attacking his successor. As one of my right hon. Friend's successors, I can say that he has never attacked me yet—[Laughter.]—and I hope that he will not. I intend to take good care that he does not. The right hon. Gentleman raised the serious matter of control of a United Kingdom airline and asked about the definition of effective control. That is not a matter for me; it is a matter for the CAA. I have no powers to act unless the CAA reports to me that in its view effective control of a United Kingdom airline has passed out of United Kingdom hands. Then and only then do I have power to act. The points raised by the right hon. Gentleman about the definition of control are entirely matters for the CAA and not for me.
§ Mr. Nicholas Soames (Crawley)
Will my right hon. Friend accept my congratulations on the excellent way in which his Department and the CAA have handled this very difficult matter? Will he confirm that it would be a very serious matter for British aviation if certain air service agreements were to be lost because British Caledonian had lost its United Kingdom interests?
§ Mr. Channon
I am extremely grateful to my hon. Friend. Of course the hypothetical situation in which a merger involving BCal took place and in which it was decided that effective control had passed out of British hands, could well be to the detriment of British civil aviation interests. The Government could well be obliged to designate another airline in BCal's place or to make concessions that would not have been necessary if the question of foreign control had not arisen. It is fair to make that clear.
§ Mr. Tam Dalyell (Linlithgow)
What advice should I give to constituents who are employed by British Caledonian in the Edinburgh area about their employment prospects? What is the percentage of foreign ownership in 1105 British Airways? In answer to my hon. Friend the Member for West Bromwich, East (Mr. Snape), are we sure that the Secretary of State for Transport was also representing the views of his right hon. Friend in the other place, the Secretary of State for Trade and Industry?
§ Mr. Channon
On the latter point, I can give the hon. Gentleman a categorical assurance that that is indeed the case. My right hon. Friend's powers and my powers are entirely different. He acts under certain powers; I act under the powers in the Civil Aviation Act 1982. As to the employment prospects or, indeed, any of the other very important considerations that the parties concerned in this affair have to decide, it is for the CAA to make the best judgment of those matters rather than for me to comment at this stage.
§ Sir Peter Tapsell (East Lindsey)
May I fully endorse the observations of my right hon. Friend the Member for Chingford (Mr. Tebbit) and also express the hope that the philosophy underlying them will in future be applied by my right hon. Friend's Department to many other aspects of British commercial life?
§ Mr. Barry Jones (Alyn and Deeside)
In all this will the Secretary of State bear in mind that the wings of the Airbus are made in my constituency by 4,000 British Aerospace workers? In any merger, what will be the fate of the order for Airbus by British Caledonian?
§ Mr. Channon
It must be a matter for British Caledonian. It is not one that I can answer this afternoon, nor do I know what the outcome of the eventual negotiations will be. If a situation arose — this is hypothetical—in which a large British scheduled airline fell under the control of people who were not British nationals, and if the services then came into question, that would have serious consequences for employment as well.
§ Mr. Roger Moate (Faversham)
Can my right hon. Friend not make it clear that, as I understand it, it is Government policy to try to maintain a competitive second force airline in the United Kingdom? Is it not also clear that, under the proposed partnership with SAS, effective management and control could remain within the United Kingdom, at the same time retaining an effective competition? Is that not the crucial point? Can my right hon. Friend use his good offices to ensure that the shareholders can make a decision free of prejudice and free of the possibility of losing any vital routes?
§ Mr. Channon
As I tried to explain to the House, it is for the CAA at this stage only to give an informal 1106 indication, as it was asked to do — it cannot make a decision — as to whether or not a proposed merger would result in effective control passing out of British hands. It was the CAA's view that effective control would pass out of United Kingdom hands. Under the circumstances, I had to consider what I would do. Therefore, I told the airline and the House that I would be minded to direct revocation of the licences. I have no locus in deciding whether or not effective control passes. That is for the CAA, which will have to consider arty representations made to it.
As to the whole question of airline competition policy, obviously we are anxious to encourage a competitive multi-airline industry with a variety of airlines serving the needs of travellers, to ensure adequate safeguards against anti-competitive behaviour by airlines and to ensure that British airlines Can compete effectively against foreign competitors.
§ Mr. Dennis Skinner (Bolsover)
; Will the Minister give a guarantee that in any newly constructed company there will be safeguards against Tory MPs becoming directors, despite any bullying that might come from the direction of the right hon. Member for Chingford (Mr. Tebbit)?
§ Mr. John Wilkinson (Ruislip-Northwood)
Will my right hon. Friend bear in mind that civil air transport policy in Europe has for far too long been anticompetitive, too protective, illiberal and nationalistic? Does he agree that it would be good to get transnational mergers to break up some of the cosy cartels which have been so prejudicial to the interests of the travelling public?
§ Mr. Channon
I entirely agree with my hon. Friend that a great deal needs to be done to improve airline competition in Europe and, indeed, in the world in general. We may take some modest steps on that early next week at the Community Transport Council when I hope that we will adopt the aviation package that will be before us. In this case I had to decide whether I should give an indication about my powers when the CAA itself had given such an indication. I am sure that I was right to do so.
§ Mr. Speaker
No, the hon. Gentleman knows that I do not take points of order until the proper time.