IATA: AGENCY LICENCES (Hansard, 5 July 1976)

§ Earl AMHERST
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 are aware that the Agency Investigating Panel of IATA are circularising some of the smaller travel agencies to the effect that, if they do not produce ticket sales to a figure prescribed by the Panel, their licences will be in danger of being withdrawn and whether, in view of the fact that this step will tend to drive the travel industry into a monopoly by a few big agents, they will consider referring the matter to the Monopolies Commission for detailed monitoring.

Lord ORAM
My Lords, I understand that the International Air Transport Association has been taking action on the withdrawal of the appointments of travel agents whose turnover does not reach the minimum level prescribed by the Association. The Association's procedures are agreed by its member airlines, and include provision for arbitration in the event of dispute. It is not considered appropriate to refer this matter to the Monopolies and Mergers Commission.

§ Earl AMHERST
My Lords, while thanking the noble Lord for his reply, may I ask him whether he is aware that in this instance the IATA Panel seem to be acting as judge, jury and prosecutor; and that, while a complaining agent is invited to go to arbitration, arbitration is an expensive matter, probably beyond the financial reach of many small agents but of course well within the reach of IATA?

Lord ORAM
My Lords, I do not think more can be done than to lay down a 1018 reasonable arbitration procedure which is open to all who have any complaint. I do not think it is possible to go beyond that.

§ Baroness BURTON of COVENTRY
My Lords, is the Minister aware that what has been going on would seem to be quite disgraceful? Is he aware that, recently, 25 small travel agencies have had their licences withdrawn, all of them efficient agencies, offering personal service and making a profit? Is he further aware that the reason for the licences being withdrawn is because these agencies are small? Is he further aware that IATA has refused to disclose the names of the 25, so that they cannot band together to take legal action? Is he also aware that two firms, of which I have personal knowledge and the papers, who have been in existence for 44 and 42 years and have made a steady profit throughout, have had their licences withdrawn at five weeks' notice?

Lord ORAM
My Lords, I think it is reasonable that the Association should require a certain minimum size of operation by its appointed agencies.

Lord ORAM
I also think that this problem should be kept in proportion. It is true, as my noble friends says, that 26 agency locations have had their authority withdrawn; but this should be seen against the background that there are at present about 4,5000 travel agents in the United Kingdom, of whom 760 are approved by IATA, and who operate from over 1,500 locations.

§ Earl AMHERST
My Lords, is the noble Lord aware that, understandably, with rising costs of servicing agents, the airlines are anxious that costs should not overrun revenue benefits; but that in some cases the Panel have demanded that these agents increase their sales over the present period, in one case as much as almost double, or else?

Lord ORAM
My Lords, of course I would willingly look at any particular case that the noble Earl wishes to call to my attention, but I think due note should be taken of the arbitration machinery for dealing with any case which seems to be unjust.

§ Lord HAILSHAM of SAINT MARYLEBONE
My Lords, are not the views expressed by the noble Lord on behalf of the Government somewhat disquieting? Why should this body have a right to demand that a viable organisation should be of a minimum size to please this body; and why should this body withhold the names of those who are victimised in order to prevent them organising?

Lord ORAM
My Lords, I would point out to the noble and learned Lord that the procedures governing IATA's operations in these matters were approved by the Department of Trade and Industry in 1972. I will look into the last point raised by the noble and learned Lord. I was not aware of this failure to disclose names.

§ Lord HAILSHAM of SAINT MARYLEBONE
My Lords, when can we expect that the Government will stop trying to justify the sillier mistakes of the bureaucracy on the basis that they were made under their predecessors?

§ Lord BYERS
My Lords, is it not possible that some of the larger agencies started as small agencies? What is the justification for trying to kill off the small agency just because it is small?

Lord ORAM
My Lords, there is full opportunity for a small agency to start and to build up its operations, and all due consideration is given to the small agency at the beginning of its career. This kind of circularisation and action takes place only after the passage of a number of years, when the agency has failed to build up its operations to a reasonable size.

§ Baroness BURTON of COVENTRY
I am sorry, my Lords, but that really and truly is not true. I know the Minister believes it to be true, and I am sorry if somebody on my Front Bench does not like what I am saying, but I think these 25 firms have a right to some representation. Would the Minister not agree that this is the most blatant form of restrictive practice, and how much longer is it going on? Does he realise that these firms—and I am speaking only of the ones of which I have knowledge—have had a steady, efficient, prosperous practice for 40 years, and have made profits; that the 1020 figure which they have been given is one which is totally impossible of achievement, and that they have been given no opportunity to make representations? What is going to be done about it?

Lord ORAM
My Lords, there is an opportunity to make representations. I have repeated that three times.

§ Lord DERWENT
My Lords, I cannot understand the criteria here. A company which is small has been run properly and profitably for some years. What has that got to do with taking away its licence because it has not grown as fast as some of the others?

Lord ORAM
My Lords, it is not for the Government to enter into the question of particular sizes. It was for the previous Government and it is for this Government to agree or otherwise the procedures adopted. That is as far as the Government's responsibility goes.

§ Lord SLATER
My Lords, noble Lords opposite seem to have the idea that they can do anything they like; but there are other people in the House who have an interest in this matter. The supplementary question I would put to my noble friend is this. Do I take it that the conciliation machinery was set up by the previous Administration? If so, why, when it has been in being for all these years and now, when the conciliation machinery is brought into effect and these people are brought to arbitration, should they object? Is it not true that they have an opportunity of presenting their case and, if they have a good case, that they will be looking to success?

Lord ORAM
Yes, my Lords, the present version of the IATA resolution was approved by the Department of Trade and Industry in 1972—and included the provision for arbitration machinery.

§ Lord CARRINGTON
My Lords, would the noble Lord be prepared to agree that his replies have met with less than satisfaction in all quarters of the House? 1021 Would he be prepared to look at this again and to make a Statement to the House?

§ The LORD PRIVY SEAL (Lord SHEPHERD)
My Lords, in view of the time and of the intervention of the noble Lord, Lord Carrington, may I say that I will expect my noble friend to look into the system that has been adopted by legislation agreed by Parliament during the régime of which the noble Lord, Lord Carrington, and the noble and learned Lord were most distinguished Members. I would suspect that the best way of handling this would not be by Question and Answer but that, before the weight of business becomes too heavy, we might perhaps have the opportunity of discussing this matter by way of an Unstarred Question. That might be a better way than by Question and Answer.