§ 4.45 p.m.
§ Baroness BURTON of COVENTRY rose to ask Her Majesty's Government whether they will take the interests of users fully into account before settling their future policy on overbooking by airlines operating in this country. The noble Baroness said: My Lords, overbooking on airlines is not new. Due to its operation, unsuspecting passengers have been off-loaded because their seats have been sold to someone else. I say "their" seats had been sold because that is what they had applied and paid for, and for which they had received confirmation by way of the relevant flight ticket. At this stage, perhaps I might repeat what I have said before in this House and elsewhere. I know of no other commodity which one buys, for which one receives a receipt—in this case a flight ticket—and which subsequently is sold to someone else. I should have thought such a course of action was indefensible on grounds of principle alone.
§ As the House is aware, the Civil Aviation Authority, in its report on overbooking published on 8th January, has made a recommendation that this practice, being too difficult, too costly, too widespread to stop, should continue, with the proviso that some financial compensation should be paid to the passengers offloaded. At this stage, I want to say merely that I do not accept such a viewpoint. I do not accept its reasoning, which is a matter of opinion; I do not accept that it is advantageous for passengers that it continues—they have not been consulted—and I do not accept that it is a solution. Passengers do not want compensation; they want their ticket, as was 1258 stated by my noble friend Lady Wootton of Abinger on 20th January last.
§ As an introduction, may I show how ridiculous the argument has become by taking what seems to be the main point of those who wish to retain overbooking, a point which they hope by constant repetition will come to be accepted? Air travellers, it is said, would prefer to take a chance of being off-loaded rather than have an increase in fares. First, my Lords, it has not been proved that any increase would arise. Secondly, the travellers have not been asked. Thirdly, anyone who has been off-loaded would take a very different view.
§ Fourthly, actual numbers are beside the point, although airlines prefer to give an apparent minimal percentage rather than an actual number, which can be considerable in terms of people. They are beside the point for the very reason that the Prime Minister gave the other day when speaking of unemployment. Mr. Wilson said that while the actual percentage of unemployment was 6 per cent., it was no use saying that to someone who had lost his job. To him it was 100 per cent. I am not, of course, equating unemployment with overbooking but the point made is valid in both cases. Fifthly, we had the most ridiculous argument of all: scheduled air fares in Europe are so high that we must continue overbooking for fear that these rise higher. I tried to get these high fares in Europe looked at as long ago as February 1971 by means of a debate in this House, but I was not successful.
§ Why has this whole matter suddenly surfaced? This brings us to the now famous case of British Airways Board (Respondents) v.Taylor (Inspector of Trading Standards, Manchester) (Appellant) on appeal from a Divisional Court of the Queen's Bench Division which was concluded on 5th November last and on which judgment was given on 10th December. Legal aspects are involved and it is with some apprehension that I offer the précis of a layman. The case concerned one of alleged overbooking by BOAC in 1973, and it was referred to the Appellate Committee of this House as being a matter of general public importance. The House of Lords (in its Appellate Committee) held unanimously that BOAC was guilty of an offence under Section 14(1) of the Trade Descriptions 1259 Act 1968 when, on 14th August 1973, while operating the international "overbooking" policy, they wrote to a passenger confirming his reservation on a return flight to Bermuda on a specified flight at a specified time. Their Lordships held that the statement was false to the knowledge of BOAC.
§ But whatever might be the merits of the case, there was no legal argument to support the British Airways Board being prosecuted for an offence committed by BOAC. The fact was that BOAC could have been proceeded against before 1st April 1974, but not after that date. Therefore, the appeal had to be dismissed. That I realise and understand. Stated very generally, in the hope of clearing up any confusion, this arose because BOAC, dissolved on 1st April 1974, became part of the British Airways Board. In layman's language, the judgment was that once an airline had confirmed a passenger's reservation on a specified flight, knowing its policy of overbooking might stop the passenger catching the 'plane, it was guilty of an offence under the Trade Descriptions Act 1968.
§ My Lords, this ruling has far-reaching consequences for airlines and, I hope, for travellers. What has happened since? Well, we have had the report on overbooking by the Civil Aviation Authority. We have had my contention that the Civil Aviation Authority is airline-orientated and that airline users are not considered adequately. The answer given in this House on 20th January last was provided by the Civil Aviation Authority. It seems impossible for the consumer, the actual user, to obtain a fair hearing. That is why I am grateful to the noble Lord the Leader of the House for giving us this debate today and, even more, for dealing with the reply himself. In our House we have agreed that no further remarks are permitted after a Minister has replied to an Unstarred Question. Therefore, I should just like to say this to the Lord Privy Seal because I shall not have the opportunity of saying anything after he has made his reply. I was glad that he did not wish to know in advance what arguments I intended to bring forward. I am hoping that this means he will be replying according to the case made and not by decision taken in advance. The latter would mean that 1260 the case for the user, or consumer, had indeed once more gone by default.
§ I have taken considerable trouble—as, of course, one should—to present the case for the airline user; to represent not only why a certain course of action should be taken but the procedure by which this could be done. Included in his reply I would ask the noble Lord the Leader of the House to comment on this suggested procedure and to answer the relatively few questions asked of the Government.
§ I propose to divide my remarks into three sections. (1) Why does overbooking take place: what are the reasons put forward by airlines for acting in this way? (2) What could be done to make such a practice unnecessary? (3) Are such suggestions feasible? That, I think, is the best way to proceed and I will do my best to be clear and unequivocal. I am, of course, dealing with scheduled flights only.
Why does overbooking take place and what are the alleged reasons for it? Quoting from the report of the Civil Aviation Authority,
Airlines overbook as a matter of policy, and the reason for this is the problem of no shows', that is, passengers with reservations who fail to report for their flight".
Airlines say that they cannot afford to risk empty seats—hence the acceptance, knowingly, as a matter of policy, of more passengers than could be accommodated on the relevant 'plane. A contributory factor here is the number of people who book on several flights intending to take the one most convenient to them when the time comes and who do not cancel the other requested, but subsequently unwanted, reservations.
§ Coming to my second section—what could be done to make overbooking unnecessary?—I think the best way of dealing with this is to say, in narrative form, what I have been discussing in correspondence with the highest level in British airways. That keeps the matter impersonal and all the correspondence is available here if the noble Lord the Leader of the House would care to see it before making his reply.
§ Last July, British Airways told me that they were concerned to reduce, so far as they could, any inequity that might arise between one passenger and another. Virtually all their passengers paid in 1261 advance and it was not possible to discriminate in favour of those who have rather than those who have not. I was told that the system operating in the United States requires preference to be given according to the order of booking—a sort of "first in, last out"—and, although this might be difficult to operate on all their flights, they think it, or something like it, might be applied more widely.
§ On 30th July last I watched a discussion on Nationwide between Mr. Marking of British Airways and Mr. Laker of Laker Airways on the latter's proposed Skytrain service. Mr. Marking said that one of the advantages British Airways had over Skytrain was that their seats were guaranteed. This is correct. ABC (Advance Booking Charter) fares and APEX (Advance Purchase Excursion) fares carry guaranteed seats on British Airways scheduled flights. Why is it possible to guarantee these tickets and not others? I am told that it is part of the bargain that some or all of the fare is forfeited unless the travel is undertaken at a specified time; that on the whole people realise that these flights are analogous to charter flights and that if the flight leaves without them they suffer the consequences. Accordingly, so say British Airways, there are few "no-shows" for these flights and the need to overbook is correspondingly less. I am sure the House will take the point.
§ We all know that when we check in for a flight the computerised list is the actual check, and the airline receptionist uses it to make sure that all is in order. I find this talk of what computers can and cannot do rather confusing. The House will recollect that when we were discussing increases in rates for night storage heaters it was stated that while computers could progress the increases and add these to our bills, it was just not possible to progress the rebates due to consumers. I do not accept this. Computers will give answers to the questions asked of them. Indeed, if computers are programmed for consumers and not the other way round, I do not understand why it is deemed impossible to devise a programme showing (a) which customers have paid in advance and (b) as this is most of British Airways customers, why one showing the order of booking cannot be applied. Anyway, 1262 arising from this point, how does the system in the United States give preference to the order of booking?
§ Given a computer programme listing the travellers on flights, as used at present, I suggest this shows the order of booking and puts a mark against those who have paid in advance. When a flight is fully booked, and paid for, any further reservations should be on a stand-by basis. If we were dealing solely with those who had paid in advance and if there were to be a final date for cancellation, fares would either have to be forfeit for a "no-show" or a considerable proportion paid. Under such a system, I do not see how an airline could suffer a deficit. The last-minute allocation of stand-by passengers would take care of that. That is what I put forward to abolish the necessity of overbooking. It would, of course, end the practice of one person booking on several flights, unless all those were paid for in advance. But I do not see why such a practice should continue, with the result that passengers with only one reservation are turned away. A final date for cancellation would be fair to everyone.
§ And so to my third section: Are these suggestions feasible? Yes; they arc feasible if airlines are prepared to work out proposals. As a matter of fact, they do not wish to do so. The argument is that all airlines overbook; any that did not do so would suffer economically. In other words, the customer is to he treated unfairly because everyone does it, and because the customer cannot obtain an equally powerful hearing the customer loses every time. I think this is every bit as much a matter for the Secretary of State dealing with consumer protection as for the Secretary of State for Trade—that is, if the consumer really is to matter in 1976.
§ My Lords, I trust the Government will look every carefully at what is proposed by the Civil Aviation Authority and the airlines. I am sure that will be done. But even if we leave aside ethical matters and what is right, how does all this stand today? As I understand the position, the Civil Aviation Authority accepts the arguments of the airlines, does not see overbooking being abolished, and does not ask for this to be considered. Instead, it recommends some financial compensation for the passengers off-loaded. But 1263 the House of Lords ruled that airlines which knowingly issue more tickets than there are seats on an aircraft are guilty of an offence under the Trade Descriptions Act 1968. BOAC had been guilty of sending a letter to a passenger confirming his reservation, and subsequently having him off-loaded. A time-lag prevented BOAC from being prosecuted. But what do British Airways propose for the future? Will they say they will issue no more letters of confirmation? But surely we passengers have tickets made out for a specific flight. Does this not carry commitment? Is it proposed that some small print be added saying that any such imagined commitment is worthless? I am informed, reliably, that one leading counsel of experience suggests that this be done, or attempted. Are we, and are the Government, going to stand for this?
Additionally to the Government, because I assume that they intend to allow no such thing, we consumers have a further aid. In the judgment given by the House of Lords and reported in The Times on 11th December last, there was a statement by the chairman of the Appellate Committee, the noble and learned Lord, Lord Wilberforce, who said:
Indeed it was an essential feature of the Act that, when considering whether descriptions or statements were misleading, it was the meaning they were likely to bear to the persons to whom they were addressed that mattered—not the meaning which they might, on analysis, bear to a trained legal mind.
In other words, what counts in law is the meaning that conditions imposed by airlines bear to the average traveller.
§ My Lords, on 20th January this year the noble and learned Lord, Lord Hailsham, asked whether or not foreign airlines were covered by the Trade Descriptions Act. He was told—as indeed, I was on 24th June last—that a review of the Trade Descriptions Act is taking place, and that this is one of the questions that will be considered in the course of that review. Presumably, the Government are unlikely to pronounce finally on a matter under review until the interdepartmental Committee, under the Chairmanship of the Director General of Fair Trading, reports. Doubtless, the Lord Privy Seal in his reply will enlighten us on that aspect.1264
§ Finally, an international agreement between all the major international airlines is possible if the will is there. At the moment, it is not; not if the airlines can get away with their refusal to take action on the "no shows" problem. Yet, as the Financial Times said on 12th January last, compensation is not the answer to the airlines' predicament. Compensation does not avoid the statement of a firm booking being false and thus falling foul of the Trade Descriptions Act.
§ There has to be a change in policy. To bring this about requires size, influence and muscle. British Airways have all of these. As recently as 29th December they told me that, in looking at this matter of overbooking, they are bearing in mind the principle I underlined, that the passenger is entitled to have that for which he has paid. I hope that British Airways will decide to recommend that the policy of overbooking is subject to immediate review, with the aim of bringing it to an end, and that they will use their strength to demand such a review in the immediate future.
§ 5.6 p.m.
My Lords, first of all, I should like to pay tribute to the noble Baroness, Lady Burton of Coventry, for pressing so persistently for a change in the system of overbooking on airlines which, to me, has always seemed indefensible. I can never quite see why the Government as shown in Answers to recent Questions, appear all too ready to accept a principle which is so patently unjust. Some noble Lords, and some people in the country, may think that this really affects only a few people, and that it is so easy to exaggerate a case like this. They feel, "Well, it can't happen to me". I am quite sure that it does not happen to a Minister, so I hope that that will not mean that the noble Lord, Lord Shepherd, will be less than sympathetic when he comes to reply.
But it is very difficult, when a person who has booked a place on an aircraft, arrives at the airport and finds that he or she has no place. The other day I came across a particularly bad case, of someone very close to me. It happened to he my sister, who has for a number of years been living and working in South Africa, and who was returning from leave. She was in our flat in 1265 London, and I was present in the room when she telephoned to the airline to confirm that her place on the aircraft on the following day was in order. She was told that it was. I am not mentioning the name of the airline, because one is just as bad as another. But I have mentioned it to the noble Baroness, Lady Burton of Coventry, and I have written to the airline concerned, and I am willing to tell the name to any noble Lord after the debate. On arrival at London Airport next day, in plenty of time, my sister was told there was no place. There were ten others in the same position, making eleven in all, and some had booked a long time ahead. I cannot see why we should go on tolerating this sort of thing.
There must be more than one solution. A solution I should like to suggest is that the Government and the airlines should have a look at the system employed by British Railways when sleeping car berths are booked. Many of us book sleeping berths nearly every weekend, and many times over in the year. Usually, there is no reservation until something is paid, very often the full fee, and there is a return of money on cancellation, which is a larger return if the cancellation is some days ahead, and a very small one if the cancellation is only in the last 24 hours. The whole sum is lost if the person does not in fact turn up. I cannot see why a system like that, or a variation of it, cannot be employed by the airlines; and I cannot see why we should continue to suffer this patent injustice just because it happens to be widespread and convenient.
§ 5.9 p.m.
§ Baroness WOOTTON of ABINGER
My Lords, I have only a few words to say. I do not know whether I ought to declare an interest, because I have been overbooked, but it was not on a British airline; it was an East African airline. The problem was resolved in a simple way, although one which I do not really recommend to your Lordships. Two of the passengers already seated firmly in their places decided that one would sit upon the knee of the other, and a sufficient number of suitcases, to add up to the supposed weight of the extra passengers, were taken off the plane and were to be sent by the next aeroplane to follow. I suppose that is a possible solution, but it is not one, I would 1266 repeat, to be recommended to your Lordships.
I do not entirely follow the very elaborate calculations; I am not as conversant with the ways of computers as my noble friend Lady Burton is. I think what I would suggest is really the same thing in a rather more elementary way. That is that everybody who books should pay, not necessarily the full fare immediately, but should do what you do when you buy any package tour, when you invariably have to pay a deposit. The deposit may be fairly substantial; it is a percentage of the fare. If you cancel, you lose the deposit or part of the deposit, according to the period at which you cancel.
The other point I want to make is, what is the good of offering monetary compensation? You have a very important conference to attend in Geneva or Brussels or Rome; that conference is held at a particular time and the time is not altered because you cannot get there. If you are simply given a sum of money, that is very nice; if it is enough to buy your passage on another airline, that is also quite nice. But it is not by any means certain that another airline will have a plane going at the time to get you there for the conference. There is no solution except that a booking should be a booking, and when a plane is full it should be full and remain full. One could then have one's name on a waiting list, as I have my name on two waiting lists at the moment for package tours.
§ 5.12 p.m.
§ Baroness SEEAR
My Lords, there is extremely little to add to the comprehensive and, I should have thought, totally convincing speech made by the noble Baroness, Lady Burton. I think before saying the very little I have to say I ought to declare an interest. As it happens, at the moment I have a small assignment for British Airways, but I assure your Lordships that it has nothing whatever to do with booking or non-booking of passengers. All I would say from these Benches in confirmation and support of what has already been said is that the airlines surely exist to serve the passengers, not the other way round; that this is an outstanding consumer interest and should be seen as such. I would very much like to support the 1267 point made by Lady Burton, that this is a matter for the Department for Consumer Protection as well as the Department of Trade.
It is quite plainly and basically the problem of the "no-shows", but what I think should be repudiated beyond any doubt is the idea, which was put forward in answer to a question when this matter was previously raised in your Lordships' House, that in some extraordinary way the faults of the "no-shows" should be compensated for by the people who are off-loaded. That was put forward as an argument, unbelievable though it may seem. It is one that one would not normally bother to repudiate, it is so poor an argument. Obviously, however the problem of the "no-shows'' is to be handled, it is totally wrong that it should be dealt with by other passengers having to pay what is in effect the price for the "no-shows".
Everyone, no doubt, has their own particular idea as to how the "no-show" problem can be dealt with. I can see certain difficulties, with sums as large as have to be paid for airline tickets, if people are to lose the amounts they pay for what may well in the first instance be bona fide reasons. People get caught in traffic jams and miss planes, or fall ill at the last moment. It would be a very considerable hardship if they had to pay a large sum because this had happened. I do not know the exact situation, but I understand that what is in fact the real cause of a great deal of the problem is that some organisations, or indeed individuals, habitually make excess numbers of bookings or book in advance on the off-chance that they may need to go. I wonder if it is possible to discover who the repeated offenders are; after all, the airlines have the names of all these people. There seems to me to be a very considerable difference between the person who for good reason fails to show up and the person who is a chronic "no-show" Could they not be identified? In those cases they should stand to lose very considerably. That practice is surely one that should be stopped—excess booking as a habit by certain groups of people and organisations to be sure that if by chance they happen to want a seat, a seat will be there. I think a distinction should be 1268 made between those two different kinds of passenger.
As to the people who have genuinely booked and been told that there is a seat for them, I am not as familiar as I ought to be with the working of computers but from what I do know of them I find it extremely difficult to believe that they cannot provide the kind of information which is needed. One wonders why we keep the things if they cannot provide information of this kind. When a plane is full, when all the bookings have been taken, it must be known that that moment has arrived. Why cannot people who book after that either be told quite plainly that the plane is full and that they run the risk of not being able to get on, or be offered a seat at a reduced price to take the risk that they may have to stand off? If the price reduction was a reasonable one, this is a risk that quite a lot of people might take. We have seen the figures. The "no-shows'' greatly exceed the people who are laid off. It may well be that if you are told in advance that the plane is full but that statistically the chances are that you will get a seat, and you could have a seat at slightly less expense than for a certain seat, this might be a way of dealing with the situation.
We are told that it needs international agreement to get this arrangement. I know the workings of IATA are quite complicated, but we are dealing with a very small number of people. Surely it is not beyond the wit of British Airways to find some way in which people who have been told that they have got a seat know either that it is a certainty or that it is very likely a seat will be there—they know the risk they are taking. Then one can turn up absolutely confident of flying on the plane that one has booked. As the noble Baroness, Lady Wootton, said, it really is not much compensation to be offered a seat on a plane several hours after the meeting you are to attend has taken place, and even monetary compensation, pleasant though it is, is no real satisfaction in those circumstances.
§ 5.18 p.m.
§ Lord TREFGARNE
My Lords, with your Lordships' permission, I would intervene at this time. I am sorry I failed to put my name down at the right time, but I will keep my remarks as 1269 short as possible. The difficulties with which the airlines, and, of course, their passengers, are faced in this matter may not be so simple of solution as the noble Baroness and others have suggested. I think we accept from what has been said this evening, that it is impossible, or at least impracticable, effectively to eliminate the "no-show'' situation, and therefore we have to consider what alternative booking arrangements we can make to prevent this from happening. There are only two possibilities: either we prohibit the overbooking, or else we impose such penalties as effectively prohibit the overbooking by making airlines pay massive compensation. I suggest that both these proposals lead only to one result, which is an increase in an airline's costs. Thus, if we follow either of those courses, it will lead inevitably to higher fares.
The noble Baroness, Lady Burton, has frequently asked for lower fares, particularly in Europe. But if we follow her arguments today to the logical conclusion it is higher fares, not lower fares, that we shall achieve. If the Civil Aviation Authority have it in mind to eliminate overbooking by one method or another, how do they propose to do it? I understand that it is intended that the conditions attached to the licences of scheduled carriers will be varied so that they are either prohibited from overbooking or have to pay massive compensation. But I wonder whether in fact the Authority, if they decide to do that, have the power to do it under the existing provisions of the 1971 Act. While, of course, the Authority have power to grant a licence in any terms they choose, they do not, if my memory serves me rightly, have power to initiate the variation of a licence. I suppose, therefore, that they propose to wait for the expiry of all existing licences and to issue new licences as and when they are applied for in new terms to meet the new policy, but in some cases that will be five or ten years away. If I am wrong there will be a massive number of variations which will be initiated soon, and there will be a massive amount for the Authority to collect in new fees for variations.
There is another matter which I should like to touch on. It is, I understand, the present policy of Her Majesty's Government—and indeed. I believe it has been 1270 the policy of previous Governments—to use scheduled services for movement of Ministers and other important people, sometimes at short notice. Clearly the Government need to have that power. For example, it might be necessary for a Minister to travel to the United Nations to address them at short notice, and it is also clearly equally important that the Minister should travel on British Airways, and should do so on the flight of his choice. Is it the Government's intention that they should retain this power, and do they intend to pay, or to make provision for this to happen, and for the possible consequential non-carriage of another fare-paying passenger? I know of course that Ministers can sometimes travel in RAF aeroplanes, but naturally that is not always possible and not economic when only one or two people are involved. Do the Government propose to pay the compensation themselves, or propose to provide that no compensation will be payable to a passenger who is debarred from travelling because a Minister wanted to travel? Further, would the airline be guilty of a breach of its new licence condition if it carried a Minister at the expense of another passenger?
In short, I think that we ought to pause and consider carefully the results, and the likely results, of any significant change in the present arrangements. The only possible short-term solution that I can suggest would be to require the airlines to publish the number of passengers who, on the one hand, do not show up for their booking and, on the other hand, who are off-loaded because of an overbooking situation. I think that that in itself would b a substantial deterrent both to "no-show" passengers and to the airlines' booking arrangements, and I hope that idea may find some favour.
§ 5.24 p.m.
§ Lord STRATHCONA and MOUNT ROYAL
My Lords, if I had to cite an illustration of the effectiveness of Parliament in general and of this House in particular, I believe that I should select the noble Baroness, Lady Burton of Coventry, as my prime example. Whether or not one agrees with her, she does a magnificent job in presenting the interests of the consumer as she sees them, and particularly when she suspects insensitive treatment from large organisations and 1271 the juggernauts of nationalised industry. I hope that she will not think it presumptuous of me if I congratulate her on the way she presented the case this afternoon. In particular, I shall be interested to hear what the Government have to say about her suggestion, based on these mysterious computers, of the "first in last off" principle, which is clearly attractive.
I am glad that my noble friend Lord Trefgarne intervened as he did, because I think the other point of view needs to be taken into account. It seems to me that we are here dealing to some extent with the sins of the many being visited on the few. This point was made by the noble Baroness, Lady Seear. The Civil Aviation Authority marshalls the arguments on the other side extremely well, and it makes the point that the airlines are anxious, as I think the consumer would wish them to be, to keep the system as flexible as possible. Certainly in the case of businessmen there is no doubt that there is a great advantage if you can make decisions at short notice.
I accept that this gives rise to multiple booking, and the first point I want to make is that this is an anti-social practice which imposes extra costs on other people, and certainly we want to stop it if we can. I remember an example in Canada at the time of Expo in 1967 when I was talking to one of the airline officials. He said that they had had the most remarkable example that day, in that a flight on which I travelled had been overbooked by exactly 100 per cent. and gone out with four empty seats. That is the kind of problem they are obviously up against, and it is incumbent on us to recognise this.
It is all very well for the noble Baroness to ask what other article one pays for which then gets sold to somebody else. But let us look at the other side for one moment. Are there many services which you book and then decide not to use, and yet do not expect to receive at least a rather cross letter from your dentist, for example, if you do not attend? Of, if you summon the doctor to your house and then decide that you have recovered, I do not think you can complain if you get a bill. I am not citing tremendously impressive examples, 1272 but there are many cases where, if you order something and you fail to take it up, you must expect to incur a penalty. So we are, as usual, looking at the balance of interest, and the interest, as set out in the CAA Bulletin, is the balance of probability against passenger convenience. It is put very well at the end of the first paragraph. It talks about seeking a way of protecting the best interests of airline users, and proposes a solution to the dilemma arising from a conflict between their short- and long-term interests.
Clearly everybody wants to see the airlines profitable in the interest of the fares not going up, as my noble friend Lord Trefgarne pointed out. This is underlined in the case of our own airlines, which are nationalised and which belong to the people of this country. Furthermore, there is the question of international competitiveness. It is clear that we do not wish to impose special obligations upon our own airlines which might put them at a disadvantage compared to the others. It is interesting to observe in this report that it points out that under the IATA regulations now there is in fact an option to impose a penalty of 25 per cent. of the single fare. But it is quite clear that in practice this is practically never invoked by the airlines.
We can all imagine the number of ways in which "no-show" passengers could be checked and could be penalised in some way. I suspect that most of those procedures would tend to cost money, and possibly more money than it would cost to pay the compensation which is being suggested. Furthermore, there is one point of fact where I think the report is slightly at variance with something said by the noble Baroness. I think she claimed that British Airways say that all the tickets are paid for in advance, but I notice that the report says:It was pointed out for some carriers between 32 and 51 per cent. of sales were by credit card, giving rise to billing and collection problems where 'no-show' penalties are applicable.
§ Baroness BURTON of COVENTRY
My Lords, may I just clear that up? I said that, in discussing this at the highest level with British Airways, they told me: "Virtually all our passengers pay in advance".
§ Lord STRATHCONA and MOUNT ROYAL
My Lords, I am grateful to the noble Baroness and I am not sure that these two statements are totally irreconcilable, but certainty to me they put a slightly different emphasis on the situation. Clearly the argument is between the BAA and the CAA rather than between the noble Baroness and myself. The only way of avoiding the possibility of seats being unavailable to those who have been told that they will be available has been mentioned this evening. Again may I disagree, and I think it was merely a slip of the tongue, but the noble Baroness said that what the passenger wants is a ticket, and not the money. With respect, it is not the ticket they want but their seat and the actual journey. I am sure that is what she intended to imply.
§ Baroness BURTON of COVENTRY
My Lords. I think the noble Lord will find I said that what they want is their seat and not compensation.
§ Lord STRATHCONA and MOUNT ROYAL
My Lords, I am sure we agree as to what the noble Baroness meant. If they are to maintain surplus capacity, we must accept that this will mean lower load factors and higher cost. There is really no alternative to that and I am not sure that the British Railways sleeper reservation system, with which most of us are familiar, is comparable. I think the problem there is of a completely different order and I suggest it is also of a rather different time-scale, attractive though it may be to resort to that.
I should like to repeat a question that was asked by the noble Lord, Lord Trefgarne. I see the problem, and it is something I have often wondered about. What is the arrangement in the event that the Government, for some important Minister (perhaps the Lord Privy Seal), require a large number of bookings at very short notice? I presume the airline will put passengers off the aircraft for those people—no doubt without admitting why they are doing it—and, if we start this compensation obligation, this will be a question we shall need to answer; that is, who is to meet the cost of compensation in such cases? I should be interested to know what the procedure is and how often, in practice, it is thought to happen.
1274 I am not as bothered as is the noble Baroness about the Trade Descriptions Act. I have been bludgeoned for years now by the small print on the back of various tickets. I am sorry to say I am probably used to the fact that the guarantees are often meaningless, and made so by some little statement at the bottom, so I am not deeply shocked, although perhaps I should be.
§ Lord ROBBINS
My Lords, may I ask the noble Lord whether he himself would be prepared to authorise in his name a guarantee which in certain circumstances he would not be able to honour? Supposing that he were, let us say, a distinguished surgeon and he made an arrangement with a patient that he should operate on a certain day, would he regard it as very moral if, because occasionally patients failed to turn up, the surgeon were to make a double booking in that respect?
§ Lord STRATHCONA and MOUNT ROYAL
No, my Lords; I certainly would not. I was going on to say that, although I have been bludgeoned in this way by guarantees and by overbooking, which most of us have experienced, it seems to me to be important that we should make it perfectly clear if we are getting out of these guarantees. If confirmation means "confirmation subject to certain doubts", I am all in favour of the ticket saying so, because that is not what is generally understood by the meaning of the word. If the word is going to mean "confirmation if in fact we can carry you", then we go back to the possibility of having this mysterious animal we used to have, a "bookable seat". This was a technical term used inside this country for what looked to me very much like a first-class seat before the days of the shuttle between London and Glasgow. I suppose we could reintroduce those bookable seats with a premium, which would then obviously impose a total obligation on the airline to supply a seat at that time.
I was impressed by the positive suggestions put forward by the noble Baroness. I should be interested to hear what the Government say in answer to those questions, but, having read the CAA Report, I came back to the feeling that the compensation road was probably 1275 the only one available to us. What exactly is meant by "full compensation" is a good question. It is not just a question of being refunded a fare for a ticket which one has not been able to use; it is the consequential loss of various kinds, and, in some cases, it is a financial consequential loss. So it seems to me that, particularly so long as the proportion of people who will be invoking this clause remains small, the compensation should be generous and I should have thought that this was not necessarily unacceptable to the airlines. It would impose a certain discipline upon them which would not do them any harm. Furthermore, let us remember that at the end of the day the airlines themselves have an interest in not creating a situation where they have to off-load people. I am perfectly certain that they are the first to recognise the enormous fury which this creates in any passenger who is subjected to this kind of treatment. They spend many millions of pounds in trying to burnish their image of being the people who look after you, and I cannot seriously believe that they would want to incur this kind of attitude among their passengers.
§ 5.38 p.m.
§ Lord SHEPHERD
My Lords, the noble Lord, Lord Inglewood, asked me to approach this matter with sympathy, and I can assure him that I have done so because on two occasions I have been very angry when I have sought to confirm my booking which I thought was firm, and which was certainly OK'd on my ticket, only to be told that I was wait-listed. I agree that nothing is more infuriating than that to any passenger. I also have to plead guilty that I have been a "no-show'' on one occasion, but that was solely as a consequence of heavy traffic congestion outside Bangkok which made me late to join the aircraft.
My noble friend Lady Burton of Coventry asked me to listen to the debate; not to give a prepared speech, but to seek to reply to the debate. I will try to do so. As I have said, I have looked into this matter with a good deal of sympathy. It seems to me that two matters have to be borne in mind. It is a question of judgment and of balancing the problems of the people who are "bumped" and the question of the profit- 1276 ability of the airlines. If there is anything to be done in this field on the lines suggested by my noble friend, I am quite convinced that it can be done only when all the major airlines are prepared to agree and then to be absolutely scrupulous in the way in which they operate. Airline business is very competitive. The noble Lord opposite mentioned the very large sums which airlines spend to attract passengers. They have all forms of gimmicks. So no airline—certainly not British Airways—would wish to adopt policies which would affect its image with its customers.
Why have we this problem of overbooking and the consequences that arise? The number of "no-shows" is fairly substantial. So far as British Airways Overseas Division is concerned, the percentage is about 13.5 per cent. of their bookings. That is a very substantial proportion if it is viewed in terms of an aircraft flying with that number of seats empty solely because passengers have failed to turn up. I believe that the percentage is even greater in the United States.
What is to be done about it? My noble friend and others have suggested that there should be some financial penalty to be imposed. Until 1963 such a penalty was compulsory under the IATA rules but it is now optional. The ruling was changed because the airlines were not fulfilling their undertakings under the IATA agreements. As I shall try to explain, they found great difficulty in carrying out their policy. As I said, this is a very competitive business and once one airline has broken ranks all the others will very quickly follow. We can only consider the position of British Airways, Supposing British Airways was required to impose a penalty on those who did not show up at the airport. I can tell your Lordships that one certainty would be that nearly every businessman would immediately fly Lufthansa or some other foreign airline because he would not be prepared to accept the penalties attaching to "no-show". I suspect that many other people, who neither deliberately overbook nor have a multiplicity of over-bookings, would say that it was too big a risk to book with BA. They would say to themselves, I could well be a 'no-show' because of the traffic getting to the airport or for other reasons; I am not prepared to run that risk and I shall 1277 fly in foreign aircraft." So, if this were to be adopted, it could only be done by general agreement. I repeat that there was such a rule up to 1963 and that it was not complied with.
I should also like to say to my noble Friend that this question of "no-shows" and of penalties was looked into with great care in the United States. There, they came to the conclusion that it was not administratively possible to impose penalties. One of the difficulties is that people fly on tickets which have been issued by different airlines. For instance, not long ago I flew on a ticket which had been issued by BOAC, but before I returned I had been on five different airlines. None of those airlines would have had my address, so how can an airline chase a "no-show"? I suppose that it could be done with the agreement of all the airlines but, as the United States inquiry showed, one would have to have a very large number of additional administrative staff in order to deal with it.
So there are major difficulties here. The matter is not as simple as some people believe it to be. If one were to forbid overbooking, aircraft would fly at about 13 per cent. to 15 per cent. short of a full load. That would be bound to bring an increase in air fares which I am certain everybody wishes to avoid. That is one problem. Let us now look at the other side. The number of people who were off-loaded by British Airways last year was 0.01 per cent. of all the passengers flown by the airline. The actual number of persons who were off-loaded as a consequence of the policy of overbooking was 148. It is true that others are off-loaded as a result of errors that may be made by the airline and the booking agent. There are some agents who may sell a ticket without telling the airline. So, when one is considering the problem, it is not only a question of the way in which the airline itself fulfils its responsibilities, but also of the way in which it can command and organise its multiplicity of ticket selling agencies.
So the number of people concerned is small, though, by saying that, I do not wish to imply that the consequences of this policy are not very severe. However, I have been advised that in the vast majority of cases the passengers are got away on an alternative airline or on a 1278 later aircraft, and that it is only on very rare occasions that passengers are delayed for any appreciable period.
What should one do about the problem? My noble friend has a solution. Should one set up a system which would no doubt require considerable administrative effort and cost in order to deal with a problem affecting 148 people? I have looked into this and I feel that the recommendation of the Civil Aviation Authority—which is very similar to the decision taken by the Civil Aviation Bureau in the United States—is the right one. I may say to my noble friend and to the House that this is a solution which has been endorsed by the Airline Users' Committee of which my noble friend is a most distinguished member. It is that some form of compensation should be paid to any of those affected. I have been informed that the Authority intends to exercise its powers, as the licensing authority, to include a mandatory condition to this effect in the licence granted to British airlines. The procedure in respect of air transport licensing involves consultation and the Authority is, as part of the process of consultation, putting certain proposals to the airlines. In view of the quasi-judicial way in which the Authority operates in respect of air transport licensing, it would be wrong for the Authority to finalise its plans until the consultation and the licensing procedures have been completed. However, the Authority informs me that it hopes that these procedures will be completed and the system of compensation in operation during the coming summer.
In regard to foreign airlines, my right honourable friend the Secretary of State will watch the situation closely, and it may well be the case that with British airlines operating a system of compensation, foreign airlines, in a competitive situation, will be forced to take similiar action. Although this procedure is within the responsibilities given by Parliament to the Civil Aviation Authority under the Civil Aviation Act 1971, I should like to say that I myself, as a regular air passenger, think that the Authority is dealing with this in the best possible way.
My Lords, a number of questions were asked me about Ministers; whether, in order for Ministers to get as urgently as 1279 possible from one place to another, passengers are off-loaded. The Prime Minister flies in the main with the Royal Air Force, for security reasons. With regard to Ministers going to (shall we say?) Washington or New York, in most cases, if not in almost every case, their flights would have been foreseen and bookings made well in advance. I can only say to both noble Lords that I, having travelled a good deal as a Minister, have never at any stage been aware of any passenger being off-loaded for a Minister.
In fact, the reality of this situation is that the number of passengers that are off-loaded is very small indeed. Therefore, I should have thought that what we should see, and what we should be pressing upon the Civil Aviation Authority, is that the compensation should be generous—certainly more than adequate—and that there should be a recognition of the hardship that has been created as a consequence of policy decisions taken by the airlines—
§ Lord ROBBINS
My Lords, the noble Lord drew the veil on the statistics of the matter and gave an extremely interesting figure relating to the number of people off-loaded by British Airways during a 12 month period. Could he follow that up by telling us by what fraction of 1 per cent. the costs of British Airways would have been raised if it had been forced to pay compensation for that number of people?
§ Lord SHEPHERD
It depends, my Lords, on what the compensation is, and this is still a matter which the Civil Aviation Authority will be negotiating. But the significant point that I wish to make to the noble Lord, Lord Robbins, is not what might be the cost to the airlines if they paid compensation, but the very significant costs if 13 to 15 per cent. of the seats are empty because passengers fail to arrive. These are matters which we all ought to take into account—
§ Lord PLATT
My Lords, may I ask the noble Lord about another statistical point? He spoke about 13 per cent. of empty seats if the conditions were altered, but if the conditions were so altered that it no longer paid people to "no-show'' the percentage of empty seats would immediately be very much less.
§ Lord SHEPHERD
My Lords, I am not personally opposed to a penalty being charged of those who deliberately overbook and create difficulties. But "no-shows" are made up by very many people due to very many different circumstances, and there would have to be what was almost a judicial system in order to decide who was a justified "no-show'' and who was not; who failed to catch his aircraft flight because of genuine difficulties, such as illness, or many other reasons which one could give, as opposed to those who deliberately overbook or who, for that matter, double-book and sometimes treble-book. As I mentioned a few minutes ago, I undertook a flight on one ticket with five different foreign airlines. How could a passenger be traced in such circumstances, bearing in mind that the majority of such bookings are not done by correspondence, but on the telephone, or through a booking agency?
§ Baroness BURTON of COVENTRY
My Lords, I should like to ask my noble friend a question in case he ends his reply without mentioning the point I have in mind. He keeps mentioning this 13 to 15 per cent. of seats that might be empty. But he has not made any answer to the suggestion that I made, that the computer will know perfectly well when a plane is full and when it has been paid for; and that I would suggest there is a date of cancellation, and other bookings are on a standby basis. He has not mentioned the Trade Descriptions Act.
§ Lord SHEPHERD
My Lords, I must point out to my noble friend that not everyone pays cash for tickets. In fact, I was surprised that my noble friend said that in the case of British Airways it has received cash for the bulk of its tickets. I should be very surprised, because if one books through Thomas Cook that firm does not immediately transfer the money to British Airways; it runs an account. I have myself used American Express—and there are other credit cards—and this is normal practice in the United States. In fact one might say that in the United States it is more difficult to pay cash for anything than it is to use a credit card. Thus it is not an easy problem. In regard to the question of the Trade Descriptions Act —
My Lords, will the noble Lord forgive me for interrupting? I should like to ask him a question before he leaves that point. Will he make some comment on my suggestion that some variation of the railways system of booking sleeper berths might be found applicable? Unless one books through some privileged office, such as Thomas Cook or this building, cash has to pass before the berth is booked.
§ Lord SHEPHERD
Yes, my Lords; but may I come back to that? This is a very complicated matter. Here am I with BOAC tickets. One of the tickets (shall we say?) allows me to fly from Singapore to Hong Kong.
§ Lord SHEPHERD
Yes, my Lords, but the point is that I may have a reservation for that flight. It may be reserved on my air ticket. But it could well be that the information has not been transmitted to (shall we say?) the Singapore Airlines, who may not run a computer. This is a difficulty of communications. So, my Lords, the idea of the railway line is an easy one, because one needs only to put on an extra coach to deal with the numbers. I would certainly say, as to the matter that was raised by, I think it was, my noble friend Lady Wootton, about someone being allowed to sit with somebody else on their lap, that if I were to see that, that would be the first airline with which I would never fly again, because that is a definite breach of air safety regulations.
Now, my noble friend asked about the Act.
§ Baroness SEEAR
My Lords, I am sorry to interrupt the noble Lord again, but there was the point that I was trying to raise. What is needed, surely, is that the airline has the right to charge these people. It does not mean that they have got to do this on every occasion; and it may well be that people like the noble Lord, with tickets for five airlines, would escape a charge. But is it not the case that the airline knows that there are these organisations which habitually multi-book? They must know who they are; and, if they do this, they reserve the right to charge them for doing it. You do not then have to be able to track down every 1282 single person; but you have got the weapon. That is what is required, surely.
§ Lord SHEPHERD
My Lords, the airlines have got the weapon. As I said earlier in reply to the debate, under the IATA rules—it is optional at the moment, although in the past it was mandatory—the airlines have the power to impose a penalty. Again, if my memory serves me aright, it is up to 25 per cent. of the ticket or £29.20, whichever may be the less; but the power does exist. It is a question of whether the airlines are willing to exercise it. At the present moment they are not because they cannot do it on a basis of equity.
My Lords, may I now try to answer my noble friend in regard to the Act? I cannot disagree with the way my noble friend described the judgment of your Lordships' House. It was not a judgment on the question of whether overbooking was illegal: it was whether the letter which was sent to the customer was an infringement of the Act. I have no doubt that the airlines, both British and foreign—because the law of this land applies not only to British companies but also to foreign companies operating in this country—will be seeking to change their terms. I would hope that the Civil Aviation Authority will see that if these terms are changed the small print will not be one of the accusations lodged against the airlines, and that any changes or conditions that might apply to the tickets in future, on the basis of which tickets are issued, will be fully drawn to the attention of the customer.
My Lords, I have done my best on a difficult wicket. It is a very involved subject. I would hope that my noble friend, as a member of the Airline Users' Council, will keep a very careful watch on what the Civil Aviation Authority eventually negotiates with the airlines. I also hope that what has been said in this debate today will show that, while it is a difficult problem, and while it may be very hard on a very small number of people, the fact that they are small in number does not mean that Parliament is not interested in them, nor that the airlines and the Authority are not interested; but I have no doubt that if the Civil Aviation Authority is not able to deal with this matter adequately we shall very quickly be hearing from my noble friend.