HL Deb 20 December 1973 vol 348 cc521-5

2.6 p.m.

LORD DRUMALBYN

My Lords, I beg to move, that the Draft Air Corporations Dissolution Order 1973, laid before the House on November 29, be approved. This Order, providing for the dissolution of B.O.A.C. and B.E.A., marks a turning point in the history of British civil aviation. It is the culmination of the policy on the reorganisation of the nationalised airlines pursued both by this Government and by our predecessors since the Edwards Committee on Civil Air Transport was set up in 1967—the policy which my honourable friend the Minister of Aerospace and Shipping described as "evolving but consistent".

I do not think the House would wish me to go into the detail of this matter to any great extent. I should just like to say that good progress has been made towards the merger of B.O.A.C. and B.E.A., and that the Board have been able to win the general acceptance of employees of the two Corporations on the formation of British Airways. The unanimous report produced by their Cargo Working Party, made up of equal numbers of management and staff representatives, is evidence that the employees do accept the merger. Your Lordships will be glad to know that the British Airways Board, with union support, intends that similar working parties be set up to examine the scope for achieving greater productivity in other major parts of the group. It is only by seizing every opportunity to make more efficient use of the group's activities that British Airways will be able to hold and strengthen its leading place in the fiercely competitive world of civil aviation. It is perhaps worth emphasising that it is a fiercely competitive world in view of the debate we have just had.

May I very briefly refer to the Order's main feature. The most important provisions are contained in Articles 2 and 3, which have the effect of dissolving B.O.A.C. and B.E.A. on April 1, 1974, and simultaneously transferring to the British Airways Board all the outstanding property rights and liabilities of the two Corporations Your Lordships may well ask why this Order is being introduced now if the dissolution is not to take place until April 1. The answer is because of the mass of detailed legal formalities which have to be completed round the world before the two Corporations can be dissolved. For example, traffic rights now held by B.E.A. and B.O.A.C have been transferred to the British Airways Board, but the overseas property rights and liabilities of the two Corporations are not so simply or so quickly transferred to, and vested in, the British Airways Board as they are in the United Kingdom. In some countries the British Airways Board have found that the authorities there are reluctant to conclude matters before final Parliamentary approval for the dissolution of the Corporations has been obtained. It is for this reason that the British Airways Board have asked that the Order should be presented for Parliamentary approval at this stage so that they will have the early months of next year to bring all their negotiations to a satisfactory conclusion.

I should perhaps explain the background to Article 5 of the Order which refers to certain overseas territories. Civil aviation licensing regulations in United Kingdom Colonies and other dependent territories do not apply to B.O.A.C. and B.E.A. in respect of journeys and routes specified by the Governor of the territory concerned. The Order will continue exemptions in the listed territories by substituting references to "the British Airways Board" for references to the two separate Corporations in the appropriate regulations. This substitution of course involves no issue of policy. It simply ensures that the status quo will remain unaltered when the B.A.B. takes over responsibility for the air services from the two Corporations.

I began by saying that this Order marked a turning point in British civil aviation, and before I finish I should like to echo the sincere tribute which my noble friend the Minister for Aerospace and Shipping made in another place to all those who have, by their hard work over the years, helped to win for B.O.A.C. and B.E.A. their leading positions among the airlines of the world As he said, few industries can rival the growth record of the airlines over the past quarter of a century. The contribution which the two Corporations have made to the development of British economy is quite incalculable. I know your Lordships will join me in wishing the British Airways Board even greater success in the next 25 years than it has achieved so far. My Lords, I beg to move.

Moved, That the Draft Air Corporations Dissolution Order 1973, laid before the House on November 29, be approved. —(Lord Drumalbyn.)

2.12 p.m.

LORD WINTERBOTTOM

My Lords, I understand that this business is really formal. Nevertheless, it would be improper to kiss B.O.A.C. and B.E.A. goodbye without saying "Thank you" to these two organisations and the people who make them up, as we, I will not say sign their death warrant, but sign their marriage documents. I have the sort of affection for "le BEA", as it is known in Europe, as I had for the Great Western Railway. It has transported me to many parts of the world most agreeably. I think your Lordships would wish this House to say "Thank you" to these two great companies as they marry and come together to create what may be an even more important and more effective organisation. The forecasts, as your Lordships probably know, are that because of this merger the profits will rise by £100 million in the first five years of the merger, which is about £20 million a year, and £40 million a year thereafter. This will be achieved only if the right form of organisation is applied to the merger.

From what I have read it does seem that intelligence is being applied to create what is really a super-Corporation. The fact that the Joint Manpower Committee has agreed upon two very important moves towards rationalisation—and, as I understand from the noble Lord, Lord Drumalbyn, the techniques applied by the Joint Manpower Committee are going, to be applied in other aspects of the Corporation's work—makes me hope that a correct administrative structure will be provided for the new super-Corporation. All that I can do at this point is to give a blessing from this side of the House to the creation of the new Corporation; to say "Thank you" to B.O.A.C. and to B.E.A. and to wish the new British national airline every success in a competitive world—where, if I may underline what was said by the noble Lord, Lord Drumalbyn, British airlines have been extremely successful. When many major companies lost money B.O.A.C. and B.E.A. seem to have achieved the important element of making a profit. May the new Corporation long continue to do that!

THE EARL OF KINNOULL

My Lords, during the debate on the previous Motion before the House British Airways received a little rough treatment. I should like to pay my tribute to the overall picture of British Airways and pay also a tribute to B.O.A.C. and to B.E.A. as they disappear as separate Corporations. May I add my tribute to the staff of both those Corporations, and indeed to the staff of the new Corporation, for the splendid service they provide throughout the world and for the high reputation they enjoy for safety and for the provision of good service. At the present time British Airways face a very difficult period along with many other British airlines. There is a fuel shortage and a cutback in services and these create acute difficulties.

I should like to ask one question of my noble friend. It has been asked of me by a number of British airlines why the Government should not treat airlines as public transport, and why airlines should have been singled out as the only means of public transport to suffer a cut in fuel supplies. My noble friend will appreciate that in Europe only Italy has cut the fuel consumption of its airline, and therefore our competitors are enabled to increase their share of a market which the British airlines have retained and kept to the fore. It would be a tragedy if a loss of passengers to British airlines occurred. Once passengers or routes have been lost to an airline it may take months or indeed years to recover them. I hope that my noble friend will be able to say something helpful on this issue.

2.18 p.m.

LORD DRUMALBYN

My Lords, I am grateful for the tributes which have been paid by noble Lords on both sides of the House to the achievements of the British European Airways and the British Overseas Airways Corporations and also for the good wishes expressed for the success of the Airways Corporation of the future. As to the question asked of me by my noble friend Lord Kinnoull, it is not for me to comment on the position adopted by other European Governments. The British Government did not consider that it was right or feasible to exempt the British airlines completely from the fuel economies which are being asked for from other sections of the community. It should be remembered that aviation fuel, kerosene, may be used for other purposes than flying aircraft. The Government believe that some rationalisation of services could be made without creating inconvenience to passengers, given that there have recently been a large number of empty seats on scheduled flights. This has proved possible. My noble friend will have seen the comments in the Press this morning on putting back some of these services.

May I also say to my noble friend that I do not think his fears about losing traffic to foreign airlines are justified, for the very good reason that other countries are as anxious as we are to economise in fuel and not to run light loaded, although this may not be so over the Christmas period, and we appreciate that problem. But it follows that it has been possible to negotiate with other airlines for the mutual reduction of services. So I do not think that my noble friend's fears on this account are justified, and I hope that he will accept that we have had regard to the needs of the travelling public at the present time.

On Question, Motion agreed to.