§ 1. Mr. SteenTo ask the Secretary of State for Transport if he will take further steps to increase competition between airlines on European routes out of Heathrow and Gatwick airports; and if he will make a statement.
§ The Secretary of State for Transport (Mr. Paul Channon)Implementation of the European Community aviation liberalisation package is the most important step that we could take at this stage to increase competition in Europe. We shall be looking for its formal adoption at the Council of Ministers on 7 December. My right hon. and learned Friend the Foreign Secretary and I will be holding talks this Wednesday with the Spanish Foreign and Transport Ministers with the aim of reaching agreement about use of Gibraltar airport and ending Spanish opposition to adoption of the package.
§ Mr. SteenIs it correct that my right hon. Friend is powerless to vary the undertakings given by British Airways to the Monopolies and Mergers Commission, which allow the commission to give the green light to the British Airways-British Caledonian deal? Does my right hon. Friend agree that the undertakings by British Airways are meaningless, have no force of law and cannot be enforced by him or by the courts? Does he accept that it will be a serious blow to competition in the airline industry if the merger goes ahead?
§ Mr. ChannonI assure my hon. Friend that what British Airways promised to the Monopolies and Mergers Commission can be enforced. The Civil Aviation Authority, my right hon. and noble Friend the Secretary of State for Trade and Industry and I have, in various 588 ways, the power to make British Airways stick to the promises that it gave to the Monopolies and Mergers Commission. As my hon. Friend knows, the Secretary of State decided—indeed, he had no alternative—to accept the report of the Monopolies and Mergers Commission that a merger between British Airways and British Caledonian would not operate against the public interest. The Director General of Fair Trading has powers to investigate anti-competitive practices. In addition, I have already asked the CAA to investigate and report to me one year after the merger, if it goes ahead.
§ Mr. SteelThe Secretary of State must be aware of the growing concern among hon. Members of all parties, and especially among consumers outside the House, that the prospective merger between British Airways and British Caledonian would result in a 93 per cent. monopoly of British air traffic. Will the right hon. Gentleman therefore, give an undertaking that he, on behalf of the Government, will do nothing to interpose in the commercial discussions that are currently taking place between British Airways and SAS, or Air Europe, and that the Government will give the talks a fair wind with a view to providing Britain with an effective second-force airline?
§ Mr. ChannonI have not been approached, except informally, by anyone regarding any other merger. I am anxious to encourage fair competition between British airlines and to ensure that they can compete aggressively against foreign carriers. Any link, whether between British Caledonian and British Airways, British Caledonian and SAS, or British Caledonian and anyone else, should be considered against those criteria.
§ Mr. HaselhurstDoes my right hon. Friend agree that a grievous handicap to the policy of creating greater competition between British airlines out of Heathrow and Gatwick is the lack of runway capacity at those airports? Is my right hon. Friend preparing to grasp that prickly nettle?
§ Mr. ChannonNot today, Sir. Indeed, that is largely a matter for the British Airports Authority and the CAA, at least in the initial stages. However, I am well aware of my hon. Friend's views.
§ Mr. Barry JonesDoes the Secretary of State know that the wings of the airbus are made in my constituency at the famous Broughton factory and that British Caledonian has ordered the airbus? What would he say today to assure my constituents that their work, helping Britain to sell abroad, will continue?
§ Mr. ChannonThe hon. Gentleman should take up that matter with British Caledonian, but I am well aware of those facts. At present, many commercial discussions are going on and I should not enter into them, no matter how persuasive the hon. Gentleman is.
§ Mr. AdleyIn view of what my right hon. Friend said about talks between the British and Spanish Governments next week, will he bring to the attention of the Foreign Secretary that the view of millions of Europeans on the Gibraltar question will not be enhanced in favour of Gibraltarians if they refuse to allow the reasonable compromise that the British and Spanish Governments could reach in the general interests of passengers in Europe on low air fares?
§ Mr. ChannonI hope that on Wednesday a solution will be reached that is acceptable to all parties and that the package will be adopted on 7 December.
Mr. Robert HughesOn the proposition that SAS and British Caledonian might come together, has the Secretary of State noticed Lord Young's statement that such a merger need not go to the Monopolies and Mergers Commission? Does he agree with that? Does he have any policy on the foreign ownership of British airlines? Is it not ironic that the Secretary of State seems now to rely on a 50 per cent. state-owned airline to rescue a British private company?
§ Mr. ChannonA reference to the MMC is entirely for my noble Friend. It has nothing to do with me. As normal, he will undoubtedly receive the advice of the Director General of Fair Trading. It is the CAA's duty to advise me when a British airline is no longer United Kingdom-controlled. I cannot speculate on how I might or might not use powers to direct the revocation of British Caledonian's licences.