HL Deb 20 May 1963 vol 250 cc6-10

2.15 p.m.


My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

[The Question was as follows:

To ask Her Majesty's Government whether they will make a Statement on the dispute over the Atlantic air fares.]


My Lords, your Lordships will be aware that my right honourable friend the Minister of Aviation spoke quite extensively on this matter last Monday in the course of his speech in a debate on civil aviation during Committee on Supply in another place. This dispute, which Her Majesty's Government greatly regret, arises from the disapproval by the Civil Aeronautics Board in the United States of a proposal to increase the ordinary return fares on transatlantic services by about 5 per cent. This proposal had been agreed unanimously by the airlines, including the United States airlines, at a Conference of the International Air Transport Association last September and October at Chandler, in the United States. It was part of a complicated package deal which included also the continuation of the North Atlantic and the extension to the rest of the world of cheap seasonal and other promotional fares. It thus reduces the cost of air travel in certain directions while raising it in others.

The Civil Aeronautics Board's disapproval of the increased return fares was announced on a provisional basis on February 12 and confirmed, despite representations made by airlines and other Governments, on March 18th—only two weeks before the new fares were due to come into force. This late action by the Civil Aeronautics Board threw a great part of the world's fare structure into disorder and caused confusion to airlines, travel agents and the public.

We tried to resolve the situation and took the initiative in arranging discussions in London at which the United States and Canadian authorities, as well as those of European countries, were present. We offered to restrict our approval of the agreed fares to a matter of months to enable Governments to consider the situation, and we expressed our readiness to take part in inter-Governmental discussions to consider how to improve the machinery for agreeing fares. The United States' representatives were unwilling to compromise on the fares, but agreed to the meeting in principle. Consequently, we and other European Governments informed the Americans that we must introduce the Chandler fares and require the United States airlines to apply them also.

The Americans said that in the circumstances they could not object to any action which the European countries might reasonably and legitimately take to safeguard their positions. But when, in company with the European countries, we formally required the American airlines to adopt the Chandler fares, the latter, acting on instructions from the Civil Aeronautics Board declined to comply and continued to operate at the lower fares, thus violating the conditions of their operating permits. Her Majesty's Government thereupon made diplomatic representations to the United States Government. This was on Monday of last week. On Tuesday the Civil Aeronautics Board modified the instructions given to the United States airlines and authorised them to charge the Chandler fares where they would otherwise be subject to penalties for violation of foreign countries' laws. The United States airlines are now complying with our requirements, as, we understand, they are with those of a number of other European countries. We now hope that it will be possible for arrangements to be made soon for the inter-Governmental conference, to which the United States authorities have agreed, to meet and discuss the whole question of I.A.T.A. and its relations to Governments.

I should like, on behalf of Her Majesty's Government to emphasise that in taking the action we felt to be necessary, it has been not because we favour higher fares as a policy, and not because we want to enforce them on unwilling American airlines. Nor are we in favour of rubber-stamping the airlines' decisions. Far from it. We have simply endeavoured to promote what we and most other Governments concerned felt to be the most practicable and reasonable interim arrangements, and to avoid unilateral decisions. We are fully prepared, and always have been, to enter into inter-Governmental discussions on these matters with an open mind and have urged the United States Government to convene a meeting for the purpose as soon as possible.


My Lords, I am grateful for the detailed statement which the noble Lord, Lord Chesham, has given the House, and I am bound to say that in my view the Government have been quite right in this matter. There will be a considerable wave of opinion in this country if the American C.A.B. can do this sort of thing when an agreement has been properly obtained in the particular international conference concerned. I do not think this need apply only to the C.A.B., but also to other matters of the kind. I am glad, on the whole, that in this matter, with all the necessary conditions that have to be met by promoters, whether national or private, on these routes, the Government are not always willing to give way, if they sometimes do, to what they call free competition.


My Lords, I am obliged for what the noble Earl has said. I think that our attitude is in the general interest of the travelling public and that, on the whole, they stand to gain from the proper operation of these arrangements. It is quite possible that the arrangements need a little improving, but I think the way to do that is by proper international agreement and conference and not by unilateral action.


My Lords, one of the incidental points worries me a little. The Government are agreeing with the United States Government, or seek to agree, that the international agreement shall apply in countries where the country concerned resists the United States' original intention. That is to say, if the country resists it, the international agreement applies. I gather that if they do not resist, if some country gives way, the United States can do what it likes. I agree with my noble friend Lord Alexander of Hillsborough that here is a case where the Government have not assented to free competition, which is contrary to their general philosophy; but if they see the light once, they are to be congratulated. But I cannot follow this point that if a country gives way, then the United States C.A.B. can do what it likes about reinforcing the provisions to which we, very rightly, I think, objected. The Government have been right to do this, but I am worried about that point.


My Lords, I am not absolutely certain that I have taken the noble Lord's point clearly. I took it to be that if any one country gave way on this matter, they would cut the whole thing loose, so to speak.


For that country.


For that particular country, my Lords, it may be so; because these things are also regulated by a series of bilateral agreements between the various countries supplementary to what is arranged through the International Air Transport Association. While it might happen in the case of that country, I do not think it is likely, because almost all other countries—certainly European countries—are of the same mind as we are.


My Lords, I do not quite understand that. I think my noble friend's point was that if one other country broke loose, then the American C.A.B. would feel they had the right to do what they liked.


Yes, my Lords, if that particular country gave in, so to speak, to the pressure—which we have no intention of doing. But it would not affect the position regarding the other countries.


My Lords, did the Minister say when the next Conference of either I.A.T.A. or the Governments would be held, because I think we can get into some difficulty? As noble Lords recognise, there is a difference of opinion about high rates for services and low rates for services. Can the noble Lord say that we are not in any way jeopardising our position in Europe where, I believe, B.E.A. are looking for lower rates in order to fill their aircraft, and that the dispute at present is merely with regard to the Atlantic services?


Yes, my Lords, because any question of prejudicing Europe or elsewhere does not arise, because it is part of a complicated "package deal" which I could not begin to explain at the moment.