HL Deb 15 March 1976 vol 369 cc11-89

2.56 p.m.

Lord WINTERBOTTOM rose to move. That the draft Civil Aviation Policy Guidance, be approved. The noble Lord said: My Lords, before launching into my speech, may I thank the noble Lord, Lord Strathcona and Mount Royal, for making it possible for us to discuss the whole question of (what shall I say?) the loading of airlines and the loading of their capacity in a single debate? I am certain this will enable us to have a much more valuable discussion of the problems facing the British civil aviation industry than if we had split the debate into two halves, as was originally discussed.

My Lords, this House has an active record of debate in civil aviation matters. We have in recent weeks debated the Question put down by the noble Earl, Lord Kinnoull, on the Government's policy regarding British Airways and British Caledonian Airways, which in many ways anticipated our debate this afternoon; and, of course, the House briefly discussed civil aviation policy when I repeated the Statement made in another place by my right honourable friend the Secretary of State for Trade on 11th February, when he published the Government's White Paper Future Civil Aviation Policy. The House will therefore be aware of the broad reasons underlying the Government's policy as embodied in the White Paper, and the proposed new Policy Guidance for which I am seeking the approval of your Lordships this afternoon.

I am sure that I scarcely need remind the House that prior to the oil crisis, which broke towards the end of 1973, the airline industry had enjoyed nearly a quarter of a century of rapid and sustained growth. Of course, some years were better than others; but nothing could have prepared the industry for the changes brought about by the rise by nearly three and a half times in the price of fuel, and the subsequent inflation which hit other costs as well. As a result fares rose sharply, and passenger traffic carried by United Kingdom airlines fell by more than 10 per cent. in 1974. There was some measure of recovery last year—the latest Civil Aviation Authority figures show that in terms of passenger miles international traffic carried by our airlines in 1975 was some 4 per cent. above the 1974 level—but 1976 will need to be a good year simply to restore traffic to the 1973 level; and there is nothing so far to suggest that growth of traffic in the remainder of the decade will approach the rates regarded as usual in the halcyon days before 1973.

Therefore, my Lords, the future facing our airlines remains uncertain for some years to come, and it would be quite wrong to pretend that we can turn back the clock. British airlines will need all their competitive strength to overcome the difficulties which lie ahead, and the framework within which they have to operate should be such as to reinforce their ability to meet these challenges.

A further factor which led my right honourable friend to establish his review of civil aviation policy, of which the White Paper is the result, was a growing awareness that the policy of double designation of British airlines, especially on long-haul routes, might not be the right basis for aviation policy in the light of the changes which I have described. This policy of double designation had its origins in the Edwards Committee's recommendations. Although the Edwards Committee concluded that there were few routes where double designation was likely to prove fruitful—and this, your Lordships will remember, at a time when the market was still growing rapidly—the 1971 Act and the 1972 Policy Guidance presupposed that double designation was desirable, and the Civil Aviation Authority was empowered to license more than one British airline to serve the same route wherever it was satisfied that certain conditions had been met. In the event, British Caledonian were licensed to serve Toronto, Boston and Singapore via Bahrain in addition to the licences they held already to operate to New York and Los Angeles; while Laker Airways was licensed to operate a Skytrain service to New York as well.

My Lords, the House will be familiar with the difficulties experienced by British Caledonian in operating services to New York, and Los Angeles, which culminated in their decision to cease scheduled operations on these routes in 1974. Certainly, these were difficult times to inaugurate a major undertaking of this nature on what always has been a highly competitive route. Nevertheless, British Caledonian's experience demonstrated just how difficult it is to establish a profitable share of a long-haul route in competition not only with other well-established international carriers but also with British Airways; and in the aftermath of the oil crisis it became more than ever difficult to introduce a second British carrier on a major route with any real expectation of achieving profitability for both carriers and an increase in the British share of the market. Furthermore, even where double designation is acceptable in principle—and I must stress this—to the other country concerned (as in marriage it takes two to kiss) this is likely to be only on conditions which fully protect the interests of that country's own carrier. In such circumstances it makes no sense to divide up a predetermined share of the market between two British carriers—it increases costs with little or no prospect of increasing revenues.

The Government have concluded that the policy of double designation on long-haul scheduled routes no longer makes sense in the present economic climate; and that the preference in favour of British Caledonian which accompanied it was unfair to British Airways with no commensurate advantages to British aviation as a whole. It seems clear to us that there will be no place for double designation of British airlines on long-haul services for very many years to come. That being so, the Government decided that it was right to move to a "spheres of interest" solution instead; that is spheres of interest rather than double designation. The general approval with which that conclusion has been greeted suggests that our decision was right.

I should say here that the Civil Aviation Authority would have preferred greater discretion to be left them over the question of dual designation on long-haul routes. Other than on this issue—which also covers the question of Sky-train which I shall come to later—the Authority was in complete accord with the Government over the proposed changes to the Guidance, and indeed were fully consulted over them. For the reasons I have stated, the Government felt that to continue with double designation would have perpetuated uncertainty and harmed British Airways' and British Caledonian's long-term planning. Therefore, double designation on long-haul routes will be permitted only in the very exceptional circumstances described in paragraph 8 of the proposed Guidance. However, the House will see that in the latter part of paragraph 7 the Civil Aviation Authority is given scope to license a new service by another airline in the British Airways or British Caledonian spheres of interest, subject to certain conditions being met. The Government believe that the Civil Aviation Authority should have this power to take action should it feel that the preferred airline is not doing all it should to develop its sphere.

My Lords, I should now like to deal with the specific changes which will arise from our decision to end double designation on long-haul routes. In proposing these changes, four objectives were uppermost in our minds. First, as I have said, was the aim of strengthening the industry so that its energies and resources were channelled away from unnecessary and damaging competition between British airlines towards the challenges posed by foreign carriers on the main international routes. Secondly, and particularly important in current economic circumstances, the Government wished to safeguard employment in the industry. Thirdly, we wished to find a solution fair not only to the private sector airlines but also to British Airways which was treated so arbitrarily by the previous Administration. Finally, we wanted a solution which would make sense in aviation terms, and which would be generally accepted as such, so as to provide the industry with the stability it clearly requires. A number of possible courses of action were considered during the course of the policy review, ranging from nationalising British Caledonian and making it part of British Airways, to allowing the situation to continue much as it was.

In the years since its creation, British Caledonian has made a significant contribution to United Kingdom aviation. It is the major operator of scheduled services from Gatwick, and as such will continue to make an important contribution as services are built up at Gatwick to complement the additional terminal and other facilities which are now being provided at the airport. It is a major employer in the Gatwick area, and it was clear that in any process of rationalisation the jobs of many workers would have been lost. British Caledonian's staff made clear wishes to remain a separate entity. The Secretary of State was also impressed by the views of regular users of British Caledonian's services—and your Lordships will remember the debate initiated by the noble Earl, Lord Kinnoull, on this matter—in both England and Scotland, who could testify not only to the fact that British Caledonian is a well-run and effective airline, but also to the value of having a choice, not only between different types of service, but also between London airports. For all these reasons, therefore, it seemed clear that the eventual solution should not only permit British Caledonian to continue in being as a separate entity, but also that it should provide scope for the airline's continued growth and development. After very careful consideration of the options the Secretary of State decided to establish separate long-haul spheres of interest for British Airways and British Caledonian in place of the policy of dual designation.

The Government believe that the spheres of interest that have been decided upon, supported by the limited exchange of routes envisaged, are fair and are likely to be of benefit to both airlines. Clearly, in trying to find a solution which met his four criteria the Secretary of State could not expect to satisfy everybody completely. But the reactions of the industry to my right honourable friend's statements last July, and in February, seem to indicate that he has achieved a considerable measure of success. I believe, and I am confident that the House will share this belief, that the new Policy Guidance we are debating today will provide a realistic and equitable framework within which our airlines can work and prosper.

It would be idle to pretend that either British Airways or British Caledonian achieved all that they wished from the discussions on their proposed spheres of interest. That is in the nature of negotiations. In the nature of these discussions this was inevitable. Nevertheless, in their public statements on the new policy both have made clear their belief that they can work within the proposed framework; and both have welcomed the end of the uncertainty which has dogged the industry for too long. The Government believe that both airlines will gain considerably from the proposed reorganisation of routes in Africa. This exchange should lead to lower costs and a more profitable use of resources for each of them.

I should now like to turn briefly to the role of the other independent airlines under the proposed new policy. On balance, their position remains broadly unchanged by the provisions in the new Guidance. The Government recognise the major contribution made by the independent operators to British aviation. Subject to the provisions of paragraph 10 of the proposed Guidance, the independents will be free to apply for licences to operate non-scheduled services throughout the world and, within the terms of paragraphs 7 and 9, for scheduled services also. We believe they have the opportunity to flourish in the future as they have done in the past and to continue to make their own varied and valuable contribution to British aviation.

I now come, finally, to the question of the Laker Skytrain service. My Lords, this issue has, I believe, tended to attract a quite disproportionate amount of attention when viewed in the context of the new civil aviation policy as a whole. I believe it is really completely illogical for this House to accept—as I am sure it does—that the policy of ending double designation on long-haul routes is the right policy in present conditions and at the same time to argue that the Government should reverse their decision on Skytrain.

The arguments against double designation are as strong on the London/New York route as on other long-haul routes. Noble Lords should appreciate that Sky-train would amount to double designation on a massive scale. It must be generally agreed that on this route overcapacity has already damaged the profitability of the existing carriers. We have had to take energetic action to hold capacity more closely to demand. It would be foolish now to undo all our achievements in rationalising capacity. Few would argue that Skytrain should begin at once; the only issue which divides us is whether the Skytrain licence and designation should be kept, as it were, on ice. We are trying to arrive at a policy which makes sense in aviation terms for several years to come and which is also fair to all the airlines concerned. It is clear that, at the present very slow rate of growth in traffic to New York, Skytrain could not be allowed to start.

To allow the Laker licence and designation to stand in the hope that conditions would have improved enough at some future date would not be fair. It would be unfair to British Caledonian who, as part of the policy, are being asked to give up their licences to serve New York as well as Los Angeles, Toronto and Singapore; it would be un fair to other British independent airlines who wish to develop charter services to New York; it would be particularly unfair to British Airways, our flag carrier on the North Atlantic, who already have to compete against all the foreign airlines flying scheduled services on the route.

My Lords, the essential argument that we must consider concerns Skytrain capacity. The total number of passengers carried between London and New York—on scheduled as well as charter services—is just over 1 million. The Laker Skytrain would add a further 250,000 seats a year to that number, a quarter of the present whole. It is the Government's assumption that Skytrain would be allowed to start—and I stress that—only if it were matched from the start by a competing American service; the allowance would not come from this Government but from the Civil Aviation Board in the States. The British and American Skytrains together would throw an extra half million seats on to the route—in fact, an additional 50 per cent. As paragraph 6 of the White Paper makes clear, the Government's policy is to maintain capacity agreements between the British and American airlines for the foreseeable future. These agreements have meant that British Airways and their competitors have been discouraged from providing excessive and wasteful capacity while providing a full public service. The introduction of Skytrain would put all these arrangements into jeopardy.

One can spend a great deal of time arguing about the different assumptions used in estimating the effects of Skytrain. The range of assumptions which we think have to be considered are shown in the paper which has been placed in the Library, which I hope noble Lords will have seen. I do not wish to go into these assumptions now, although I will try to deal with any points arising from the debate when I come to wind up. But the facts are clear. If Skytrain services were allowed to operate, the enormous increase in capacity could be filled only by large-scale diversion from existing scheduled and charter services, including those of British Airways. There is no evidence of such an enormous untapped market to fill both the British and American Skytrains, and there is no prospect in the foreseeable future of growth on the North Atlantic market to fill this new capacity without causing damaging diversion from existing carriers, in particular British Airways.

The Government do not believe that there is a large untapped market that will not use these and other promotional fares in order to travel cheaply between London and New York. By these I mean the promotional fares being introduced by British Airways and other flag carriers. This is not to say that there would be no market for another low fare available in the peak summer months without any advanced booking requirements. It is open to British Airways to submit such a proposal which would have to be considered in the usual way on its merits. But it is clear that the Skytrain service designed by Laker Airways, with a low fare year-round—although no lower than ABC fares for most of the year—and no advanced booking requirement, would simply divert passengers from British Airways and the British charter operators. It would of course also divert traffic from foreign carriers, but nobody believes that they would sit back and allow this to happen without acting to protect themselves.

Lastly, what are the prospects for Laker Airways without Skytrain? Mr. Laker has already made his airline one of the leaders in the North Atlantic charter market—making, incidentally, good use of the DC 10s he has bought. There is no reason why Laker Airways should not continue to flourish as a charter operator, especially if all their energies are channelled in that direction. The Government have provided, and will continue to provide, all our charter carriers with assistance in increasing their share of the North Atlantic market.

My Lords, I have outlined the main strands of the Government's thinking behind the future civil aviation policy outlined in the White Paper, and embodied in the proposed Policy Guidance for the Civil Aviation Authority for which I shall be seeking the approval of the House. As my right honourable friend the Secretary of State for Trade said in another place, what we are proposing is less a completely fresh start, more of a change of emphasis. I believe that we have the emphasis right. And within the framework we have proposed we believe the airline industry will continue to flourish and develop.

Moved, That the draft Civil Aviation Policy Guidance, be approved.—(Lord Winterbottom.)

3.19 p.m.

Lord STRATHCONA and MOUNT ROYAL had given Notice of his intention to move, That this House calls upon Her Majesty's Government to withdraw the instruction to the Civil Aviation Authority to revoke the Laker Airways "Skytrain" licence. The noble Lord said: My Lords, given that we have to be realists and accept with a certain amount of reluctance that airlines operate in a highly artificial international climate with inevitable Government intervention, we from these Benches would not want to oppose the guidelines order. At this point may I join with the noble Lord opposite in explaining the procedural point this afternoon concerning the Motion in my name on the Order Paper. It has been agreed through the usual channels that we should speak both to the order and to the other Motion in one debate. At the end, as I have said, it is not our intention to divide the House on the order, as my noble friend Lord Belstead will be explaining. But, for reasons which I will do my best to deal with as briefly as possible—and as noble Lords will undoubtedly be already aware it is rather a complicated situation—we shall invite the House to carry by Division the Motion in my name on the specific question of the Laker Skytrain licence. Judging from the speech which has just been made by the noble Lord, I think it is unlikely that we shall be able to persuade the Government to change their minds.

I think most of us accept that the industry now needs a period of stability. I almost said that we do not want to rock the boat—certainly we do not want to rock the aeroplanes—and in talking about the Skytrain I am in no sense intending to reopen the whole issue of double designation. However, I suggest that there is a very narrow division between stability—by which, I hope, we mean a stable political framework within which the airlines can do their business with a minimum of Government interference—and a situation of stagnation, rigidity and stifled initiative where the national flag carriers are looking for ever-increasing subsidies to meet ever-mounting deficits.

I do not intend to take a dig at British Airways. In my experience, British Airways are surely one of the airlines which give outstanding passenger service on international routes. But having said that, I cannot forbear to point out that in both the speech made in another place by Mr. Peter Shore and that made by the noble Lord this afternoon in which four objectives of these guidelines were mentioned, no mention has been made of service to passengers. Perhaps I might re-echo a question which was mentioned the other day and ask: Are the Government falling into the trap of thinking that passengers exist for airlines rather than that airlines exist for passengers? This omission is highly significant and I believe it is this apparent failure to understand the market which bedevils the whole of Government thinking on the Skytrain, judging from what they say and what they write.

I think most of us agree that cheap transAtlantic air fares are in themselves inherently desirable, and most of us probably that we want air travel with a minimum of fuss, formality and preparatory planning. This is, of course, the sector which the Laker Skytrain is designed to serve. As I understand it, the Government justify their decision to over-ride the Civil Aviation Authority and their instruction to rescind the licence because of an assessment of the damage which it was said would be done to other British scheduled carriers—which in practice means British Airways—and the consequent adverse effect upon the balance of payments. As the noble Lord said, the argument has been set out in a document which I can only describe as "special pleading". It seems to me to be specifically designed to obscure and confuse an admittedly complicated issue, and I feel that I must put to your Lordships some of the counter-arguments.

First, however, I should like to direct your Lordships' attention to the market and its history, because this has a bearing on some of the technical arguments. That there is a demand for cheap fares is surely demonstrated by the growth of the air charter business in the 1970s. Airlines are not in business for their health, so it is reasonable to assume that it is possible for them to carry passengers at a profit. The most important requirement in their operation is a high load factor, and in 1974 there were on offer over half a million charter seats across the North Atlantic.

I think it is common knowledge that charter flights have become something of a racket. No doubt other noble Lords will refer to this point during the course of the debate, but suffice it to say at the moment that the so-called "amenity group rules" about having to belong to an organisation not specifically set up to get the benefit of cheap travel have, in recent years, been honoured in the breach. The extent of this abuse is epitomised by the story of the 158 American priests who took an oath in front of a notary public, thoughtfully made available by the air line, to say that they had been members of the appropriate amenity group, and then proceeded to buy their tickets for that day's flight at the other end of the counter. This is the kind of way in which the regulations have been evaded and the kind of practice which, not unnaturally, IATA and the Civil Aviation Authority have decided to stop. I understand that cheap flights in this country are now available only where mysterious initials, such as ABC and APEX, are attached to them. They are surrounded by formidable restrictions such as booking through tour operators, return flights with a minimum stay of 60 days, or advance booking without a refund for cancellation. The noble Baroness, Lady Burton of Coventry, may take up this point later.

The Skytrain concept was intended to tap this market in an open way and to end a great deal of the hypocrisy. Operating costs are kept down by having no booking through agents. The seats are sold for cash at the airport up to six hours before the flight, and once all the seats are sold the flight is closed. This is where the Skytrain differs from the shuttle concept. Also, meals and in-flight entertainment are paid for as optional extras. This was the type of service for which Laker applied in 1971 and for which they were granted a licence in February 1972. As I understand it, under the so-called Bermuda Agreement, the American authorities were bound to reciprocate within a reasonable time—which I understand normally means about six months—by granting a parallel licence in the United States.

On the strength of this British licence, Laker took an option to buy two VC.10 aircraft which, with the Government's approval, were financed by borowing from the Japanese banks. The Government also gave further help by waiving import duty on these aircraft. The point is that the Government were aware of what was happening and approved it. However, we do not know to what extent the Government were using their best endeavours to urge their opposite numbers in the United States to live up to their obligations, once Laker had surmounted the various hearings and court actions in respect of challenges made as to their fitness to operate this service in the United States. However, we know that, quite suddenly in July of last year, it was announced that Skytrain was not to start. I understand that the announcement was particularly galling to Laker, since they had been trying for months to establish the figures upon which the argument was to be conducted. It was only the day before the announcement was made that Laker obtained the discussions they had been seeking, when clearly the decision had already been taken. I must say that when one reads the White Paper one cannot resist thinking that it was only as an after-thought that the Skytrain issue found its way into that document at all.

From what I have already said, one might assume that the Government had demonstrated an impeccable and pressing case for suddenly going back on a three-year-old decision for a ten-year licence which they had tacitly confirmed by other actions, but no convincing argument has been forthcoming. What in the Commons was called the Little Red Book—produced the day before the debate there, which did not give very much time to check the figures in it—seeks to show the damaging effects of diversion upon British Airways and the adverse effect on our balance of payments. I must be fair to Mr. Shore here. He said of these figures: I would not go to the stake on any particular figure—negative or positive—up to £10 million a year either way.

They do not sound to me like the words of a Minister who is conscious that he has a cast-iron case for breaking a Government commitment.

I think other noble Lords will have something to say about the 16 assumptions in this confused and rather misleading paper, which gives me the impression of having been written to justify decisions which had already been taken, other than on grounds of careful calculation. It confirms the rather curious contradictory position of the Government, who seem to be saying, "Well, the venture will be a financial disaster, but it will be so popular with the public that it will divert a high proportion of the passengers from the scheduled services." It seems to me a most extraordinary argument, but I should like to make one or two points on it.

Much play is made about the inevitability of at least one American Skytrain to match Laker. Yet the American Civil Aeronautics Board has recently confirmed that it has no intention of licensing supplemental airlines to run scheduled services, whether conventional or Skytrain. Also, the scheduled airlines are hardly likely to start Skytrains, which necessarily involve direct selling of tickets at airports, thus by-passing the travel agents who sell the tickets for their scheduled services. The airlines know very well that if they did that they would be boycotted by the travel agents who had been by-passed, and therefore they would have difficulty in selling the tickets for their scheduled services. It is hard to imagine an airline running a risk of that kind.

Then, again, there is inconsistency when the document says on page 7: …the passengers diverted from British Airways would represent something like one Boeing 747 load of passengers each day.

Then, later on, on page 11, it is agreed that the diversions of passengers which Skytrain caused would be spread across all the carriers—and there are other American scheduled airlines as well as British Airways, and the charter services. So is it not misleading to talk of the extra 250,000 seats when Laker is already carrying 70,000 passengers a year on his existing charter services?

Then, of course, there is the total inconsistency between some of the figures which the noble Lord, Lord Winter-bottom, produced today and some of the figures in the Laker document. The noble Lord suggested that this represents an enormous increase in capacity across the North Atlantic, and yet Laker Airways' document, headed "A National Scandal?", says on page 19: The Skytrain's annual licensed capacity is approximately 1.3 per cent. of the total seats available on the North Atlantic.

I just cannot square those two figures at all. I am sure everybody will admit that some of the Skytrain passengers will be people who would not otherwise travel at all—perhaps 50 per cent. of them—and, furthermore, that something like three-quarters of those passengers will be starting from the United States, a high proportion of whom will presumably have travelled on American airlines or on charter flights. So that they do not represent a diversion from British Airways. I am a Scot and cautious and, so far, I would give the Scottish verdict of "Not proven" on this part of the Government's case.

I hope other noble Lords may refer to the diversion which is represented by Concorde, if we have to go into questions of diversion and double designation. I may say there is a strong suspicion in the industry that some kind of a deal was done with the Americans, whereby permission for Concorde was traded off against the cancellation of Skytrain. If this is so, it has not so far proved a very clever deal and, as matters stand, it looks as though we may get neither.

Therefore, our case is in three parts. First, the Government are behaving immorally, and in a way which can only detract from the wilting credibility of the British Government, by revoking a licence which had a number of years to run. Secondly, the premises and commercial judgments upon which they seek to justify this sordid activity are dubious in the extreme, and they have deliberately attempted to obscure the argument. Thirdly, the effect will unquestionably be to stifle the one initiative which has shown any signs of breaking out of the stultifying strait-jacket in which the air transport industry in this country will otherwise be confined for the next 10 or 20 years.

Despite what the noble Lord, Lord Winterbottom, said, I still believe that it is not too late for the Government to change their minds and either delete one small paragraph—paragraph 15 on page 5—from the White Paper, or at least leave the Laker licence on the table for a period of two years. Otherwise, I suggest that the Government will be laying themselves open to an action for breach of contract and damages by Laker. Laker is not in business to make money out of suing the Government; it is in business to put people into aeroplanes. But Laker would be entitled to compensation for this revocation of licence, and it seems to me that this commits a public body to spend public money in paying damages. When that happened, I should have thought that the only honourable course for the Minister concerned would be resignation.

Those of us who support Laker believe that a good commercial case can be made out for a service which is clearly wanted by the public, which will not involve spending public money, and which indeed can make substantial revenue and earn a great deal of prestige for this country. I also believe that we shall go on having this argument until the concept has been put to the acid test of practical experiment. In doing that, we should be backing a brave and persistent entrepreneur, who has demonstrated a remarkable ability to operate an airline at a profit—and that is rare nowadays. My own family motto is "Perseverence". Perhaps I should have a word with Laker to see whether he should adopt the same one. But, above all, it seems to me that the Government have totally failed to make a convincing case for treating this firm with ill manners and great unfairness, which amounts to thoroughly bad faith, and which can only further undermine international belief in our Government's word.

So at the end of this debate after we have, as I hope, passed the Guidelines without argument, I hope that those noble Lords who agree with me will support the Motion which I now beg to move.

3.40 p.m.


My Lords, I rise to speak against the Motion moved by the noble Lord, Lord Strathcona and Mount Royal. I listened with attention to what the noble Lord had to say and I thought it was a pity that at the end of his speech he used rather frequently such words as "immorality". He introduced the insinuation of a deal over Concorde, and I do not like unfounded insinuations. I thought that to do that was a pity because I do not believe that this is a political issue at all. It is an economic issue of some importance.

The noble Lord, Lord Strathcona and Mount Royal, began his comments with the statement that he was not seeking to reopen the double designation issue; yet that is precisely what he is doing in suggesting that Laker should get his licence. It would be a double designation of British carriers across the North Atlantic on scheduled flights—and how! Not only that, but the probable later effect would be to produce similar claims from others which would result in a spread of double designation. I do not think I need argue the case against double designation because I take it the noble Lord has accepted that in current circumstances, with the growth of traffic very much less than it was expected to be and in the light of the existence of surplus capacity across the North Atlantic already, the general trend of the proposals by the Government is sound.

I should like to say something about the experience of private enterprise scheduled flights. My noble friend Lord Winterbottom happened to comment in passing that they had flourished as they had done in the past. I question whether that is so. I have noted with interest the collapse of Cambrian Airways, Channel Airways, British Eagle and, last year, Severn Airways—all running scheduled services—and I have noted the withdrawal of British Caledonian from the North Atlantic routes to New York and to California.

My first submission to the House is that if Laker were to get his licence one of two things would probably happen. Either Mr. Laker would get into very serious financial trouble or British Airways and their American counterparts would suffer serious loss. British Airways have estimated about £6 million a year. Who, in current circumstances, is going to pay that, when all these national and international operators are already working at a loss? The British public. So in thinking about the effect on the public we had better take that into account among other matters.

The argument is to some extent based on support of private enterprise. But what we have to realise in this debate is that the support of what one might call "internal competition", that is between British carriers, is often to the detriment of their effectiveness in competing with the real competition which this country suffers; namely, international competition from other operators. To the extent that BA and British Caledonian have had to compete on double designation routes it has done neither of them any good, and that is why I believe the Government policy on single designation to be a very good thing.

If we agree that, then the re-introduction of internal competition between Mr. Laker and BA across the Atlantic would be a very bad thing. If we get single designation those airlines which are competing with foreign airlines can exchange information and there might be growth of co-operation over many very expensive services. This would be a way of increasing the efficiency of our airlines and helping them to compete with foreign airlines. So the case against internal competition is, I believe, a very strong one indeed. I was in the Board of Trade for five years and I could see the effect of internal competition between British firms in many fields in attempting to compete with large overseas competitors. It was often disastrous.

The feelings behind the amendment which we are considering I believe stem from this euphoria shared by some Members of the opposite Benches about the maintenance of competition, but I beg of those who have been thinking of voting for this amendment to realise that in these international operations so long as we have one good carrier operating from this country he is subjected to more than enough competition from other national carriers and that the introduction of internal competition will not improve his attempt to serve the public better, but is much more likely to worsen it.

I now turn to some of the details of Skytrain. I ask the noble Lord, Lord Strathcona and Mount Royal, to accept that officials of the Department of Trade are not prone to trying to deceive this House with the figures that they provide, and that in the present circumstances across the North Atlantic the current number of seats available, including both scheduled and charter flights, is 1.2 million per annum. The proposals of Mr. Laker would add a potential of 250,000, although at 80 per cent. capacity it would probably amount to about 200,000; and the view of the officials, after the many discussions which have taken place between them and the civil aviation board in America, is that there will certainly be a claim from the Americans to provide some of their operators with a similar licence to that which Laker wish to hang on to.

Having seen the figures and the facts and having had discussions, I am in no doubt whatever that we are not considering an extension of seatage across the Atlantic of 250,000 potential, but one of 500,000. Does anybody in this House seriously believe that the American airlines will allow a British operator on scheduled services to gain an extra 250,000 passengers a year without asking for a quid pro quo? The idea that this might happen is, frankly, nonsensical.


My Lords, would that depend on whether or not they proved profitable?


My Lords, the first attempt would be to run it to see whether it was profitable, because I have no doubt that either they will render the existing scheduled services unprofitable, or, more likely, they will find it is unprofitable to carry on, and will cease the operation, with all the tragedies which ensue in terms of redundancy and lost capital. Mr. Laker is currently offering a two-way trip at £118. It is a fact that this is only cheaper to the travelling public during July and August each year. For the remaining 10 months of the year, the travelling public, through charter services, can fly at a cheaper rate, albeit they will have to give notice of their intention to fly.


My Lords, I do not want to indulge in a semantic argument with the noble Lord, Lord Brown, but let us get it absolutely right. Mr. Laker is offering a single fare at £59 each way, and it is an important distinction—or it could be.


My Lords, that I accept. I quoted the double figure to make it comparative with the other figures I have. But there is no guarantee whatever that this is the figure he will be allowed to operate at if his licence were renewed, because currently, as noble Lords probably are already aware, the existing national scheduled carriers are subject to the rules of the International Air Traffic Association. Under these rules they are not allowed to cut their fares below the present limit. Mr. Laker is not a member of the International Air Traffic Association, but the rate at which he would be able to fly these scheduled flights would have to be approved by the Civil Aviation Authority.

My Lords, it seems extremely doubtful to me, and to others with whom I have discussed this, that the Civil Aviation Authority would allow one British scheduled carrier to cut its rates when no other British or international carriers who were members of IATA would be allowed to do so. If this happened, there would be an instant demand, I take it, from the other scheduled flight operators to cut their fares, also. I cannot see that they could possibly allow one carrier to cut away the rates in that manner. It would be grossly unfair. Therefore, I would expect that Mr. Laker's figures will have to go up to the more regular figure offered by others.

The assumption that the public will be served is an extremely dubious one. I understand that Mr. Laker sought his licence because he believed he would create a very large volume of additional traffic. On his own "say so", this was to come from what has been referred to as the "foot loose and fancy free" American traveller who did not want to plan his vacation or his visit to Europe, and would be attracted by the fact that he could apply to fly on the same day on which the thought occurred to him. It seems to me a rather fanciful idea that you can get an extra 200,000 passengers on that route without affecting the loading of other carriers. Let us understand quite clearly that Mr. Laker is not offering a shuttle service. He is not offering a certain seat to anybody; he is offering a seat as long as the aircraft is not already full up. Let me say again, he is not offering during 10 months of the year cheaper seats than those already available under various schemes operated by some of the scheduled carriers, and by the solely charter companies. Most of the people—visitors visiting relatives, holidaymakers and others—have very little difficulty in booking forward, because these are not the sort of people who happen to make up their minds that they want to go next day to the United States. For them, this is an expensive holiday, carefully planned well in advance.

My plea is that, if this amendment to the Motion were passed, it reintroduces double designation. If Mr. Laker had his licence renewed, there are no grounds for doubt that the Americans would also apply for similar licences, and that, in the event of the Skytrain service being introduced, either the British public will have to sustain a further £6 million loss on the part of British Airways, or Mr. Laker will go bust with all the troubles that ensue from that, as have so many other private companies operating scheduled flights in the past few years.


My Lords, I am very grateful to the noble Lord, Lord Brown, for allowing me to interrupt him again. I am very surprised that he has said twice over that this would involve a loss to British Airways of £6 million. What he means, I think, is a loss of revenue, which is a very different thing from a loss.


My Lords, I accept that. A loss of revenue of £6 million; but in current circumstances, where all the North Atlantic scheduled flights are losing money, there is probably not much difference between a loss of revenue of £6 million, and something of the same order as an addition to the loss they are already making. It would be less than £6 million but, nevertheless, a substantial amount which the British public will have to pay.

Finally, may I stress the point that, if this proposal that Mr. Laker should be allowed to run his Skytrain is based on the usual euphoria which comes from the opposite Benches in support of private competition, private competition on scheduled services has not been very successful. No more competition is needed on international air traffic routes above that which already exists. I hope I have done something to persuade noble Lords opposite that this Motion would bring a period of stability not only to the North Atlantic routes but probably to other routes, and that the Government's policy in withdrawing this licence should be supported.

3.58 p.m.


My Lords, may I speak first about the resolution concerning civil aviation policy, which I strongly support, and later talk about Skytrain. For far too long our civil aviation has been bedevilled by changes in Government policy. It is badly in need of a period of stability. The proposal which the Government are now putting forward provides such a period, and sets out guidelines mainly for the conduct of our flag carriers on long-haul international routes. There is also reference to short-haul routes. In paragraph 18, the Government are reported as considering that these guidelines should remain substantially unchanged for a number of years. That is a long time. I do not know whether the noble Lord who is to reply could hazard a guess at the answer to the difficult question: how long is long? However, there is now a prospect of stability which should enable both British Airways and British Caledonian Airways to go about their respective businesses without Government let or hindrance.

My Lords, the policy stipulates single designation on the long-haul international routes, and the establishment of spheres of interest. This is a system long adopted by most countries of the world, with the notable exception of the United States. As instances, there are Air France, YTA, Air Canada and Canadian Pacific. As has been stated, we have heard many times the rather plaintive cries about the benefits to be won by competition. Its results are spelled out very clearly in paragraphs 4, 5 and 6 of the White Paper. The underlying principles of most inter-Governmental bilateral air agreements is that each side should have equal opportunity of getting the traffic offering. There still seem to be some people who think that double designation results in one side getting a greater share of the cake. If it did, the reciprocal operator would soon seek a readjustment through its Government by getting a modification of frequencies, which of course means capacity. Emphasising what the noble Lord, Lord Winterbottom, has already said, what really happens is that multiple designation merely divides a national opportunity between its two or more designated operators. It is surely a stupidity to compete with oneself. Our flag carriers have all the competition they want or can handle from the foreign reciprocal operators.

Again as the noble Lord, Lord Winter-bottom, has emphasised, the establishment of spheres of interest as between national flag carriers is clearly the sensible way of dealing with the problem. To this end, I understand, the Secretary of State has asked British Airways and British Caledonian Airways to get together to agree as to who should give up what. I gather that this potentially difficult exercise was conducted as reasonably and amicably as possible in the circumstances. Obviously, neither party got all that it wanted, but I think it is generally agreed that the end result represented a reasonable compromise. This is fully set out in paragraphs 8, 9 and 10.

I understand that British Caledonian Airways is very optimistic about what it can achieve in the West African sphere. By and large, South America has for some years been pestered by commercial bad behaviour, but given some sort of stability that Continent should provide a vast potential. The company has yet to operate the Houston and Atlanta routes, but both these cities should provide important catchment areas. No doubt British Caledonian will have a very hard struggle, and I think we should wish it good luck. I wonder whether the noble Lord who is to reply has any information on how the inevitable American reciprocal services from Houston and Atlanta will be operated. Is it intended that they should do so direct to London, or will they be thinking of intermediate stops at, say, Washington DC, New York or Boston, with pick-up and set-down rights as between any of those points and London? If that is so, it will have very serious effects on British Airways as well as British Caledonian.

The short-haul situation presents a different problem, especially as I understand Gatwick is to be developed as London, South, and Heathrow as London, North, with their distinct catchment areas. This is likely to result in bilateral agreements, having two routes from Greater London to the same point on the Continent, and it may well call for double designation. I gather that the whole question of the short-haul routes and double designation will be considered on its merits; this will also apply to the United Kingdom routes.

Paragraph 12 concludes by stating that the two airlines have agreed to continue discussions at management level with the object of exploring ways of co-operation. I believe British Airways has started exploring ways and means of taking care of the locally engaged staff of British Caledonian in East Africa and in the Seychelles who would otherwise become redundant, and, vice versa, British Caledonian is doing the same in West Africa. Can the noble Lord who is to reply tell us whether the Secretary of State has any further plans for such co-operation to suggest to the chairmen of the British Airways Corporation and British Caledonian?

If I understand it correctly, paragraph 13 means that any British operator who can buy or lease a Concorde aircraft, and has plans to operate, will not be restricted by these spheres of interest; but if in doing so he finds himself in competition with British Airways or British Caledonian he will have to seek a commercial agreement with either of those companies. Similarly, if British Airways wants to start a Concorde service, say, to South Africa, with an intermediate stop in British Caledonian's sphere of interest, it would have to seek a commercial agreement with British Caledonian, and vice versa.

Paragraph 26 refers to promotion and build-up of traffic at Gatwick. I understand that by the end of this year a very large sum of money will have been spent in improvements there. Can the noble Lord say, if there is any more such money coming from the Treasury, whether it will be spent on getting rid of some of the present shortcomings at Heathrow? There are still no travelators along the fingers of No. 1 building. The passenger is faced with an appallingly long walk, and if he or she is elderly and carrying anything heavier than a briefcase or a handbag the imposition is really disgracefully severe. I believe when the building was first mooted the then British European Airways asked for these travelators to be installed, but some character in the Ministry turned down that suggestion. I have been told, as an excuse, that the fingers are now too narrow to permit of a travelator being installed. Is this really so? Will passengers using the No. 1 building have to put up with this situation for the foreseeable future? No. 3 building is a good deal better; it has the travelators—that is when they work, which is not always the case. But there is still some very long and tiresome walking to be done.

With the number of trolleys provided by the Authority, of the kind passengers can put their baggage on and push themselves, of which there is ample evidence in the arrival halls, it seems incredible that there is never one to be found at the gate at which one disembarks and where one is faced with that wretched walk to the immigration and customs points. While realising that Heathrow is about bursting at the seams, and that the lack of cubic space for development is chronic, can nothing be done to alleviate the appalling traffic jams that build up at those wretched tunnels? Admittedly, some traffic will be drained off when the extension of the Piccadilly tube is made to the centre of the airport. But this can only deal with passengers with light briefcases and probably people employed at the airport. One has only to imagine a passenger with even one reasonably heavy suitcase negotiating the escalator and a crowded tube train at Piccadilly Circus in the rush hour to realise how impossible the situation will be. I would therefore say to the Minister that this tube does not really cater for the average air passenger.

Most air passengers these days seem to prefer to go to Heathrow in their own cars rather than using the buses from Cromwell Road or Victoria. The tunnels are likely to become even more congested. Is there any plan to widen or duplicate them, or indeed any other scheme? I think these are points which are of great interest to the Consumer Council, and I will wisely leave them in the admirably capable and determined hands of the noble Baroness, Lady Burton of Coventry, who will be speaking later.

I should like now to turn to the Sky-train. I think it is true to say that many people, including his competitors, greatly admire the panache and flair with which Mr. Laker has pursued his Skytrain project. It is perhaps bad luck that he has been overtaken by the present depressed state of air traffic across the North Atlantic. I am told that from April to December 1975 the average load factor carried by existing carriers fell as low as 64 per cent. and to date has not improved. I believe that Pan American and TWA in anticipation of this have filed application with the CAB for licences to operate reciprocal Skytrain services, as have four other major American carriers. In these circumstances, the capacity of these American reciprocal services added to the 250,000 seats Mr. Laker plans to put on annually between London and New York must pose a considerable threat to traffic carried by the existing carriers. I really do not believe that they can be expected to stand idly by and do nothing about it. Probably it will result in a price war in which everyone, including Mr. Laker, will lose a great deal of money.

Mr. Laker's original claim that his Skytrain will largely promote new business is a bold one, and I should have thought would require some proving. I am reliably told that it is calculated that the Skytrain will not generate more than about 25 per cent. of new business, the balance of 75 per cent. will be diverted from existing carriers; BA's share of the diversion being about 40 per cent., which it is calculated would involve our No. 1 flag carrier with an annual loss of revenue of something like £3 million. That, added to the traffic diverted by the Americans, might go up to anything like some £6 million. In these circumstances I think that the plan of Mr. Laker's Skytrain should be left in escrow, awaiting a more favourable traffic climate across the North Atlantic, Mr. Laker being left free to get on with his other activities, with which I am sure we wish him good luck. Therefore, I think that Lord Strathcona's Motion should be defeated.

4.12 p.m.


My Lords, I think that in this international world of civil aviation today single designation is the right policy, and I think that the Government have it about right as between British Airways and British Caledonian. I understand that neither party is entirely satisfied. That usually means that the bargain is fairly good and is fair for both. Great tribute should be paid to British Caledonian for their pioneering work in that we now have a public sector and a private sector, and there is no doubt at all that the comparative results of those two sectors can be seen from the results of each particular sector in relation to other international airlines working on the same routes in international competition. There is no doubt either that we should be able to see a comparison of efficiency between British Caledonian and British Airways in domestic matters. Balance sheets, statistics of manpower per aircraft required, and many other statistics can be produced which will expose inefficiency and at the same time laud efficiency.

There is one point I should like to make on this single designation with the public and private sectors (it is dealt with in paragraph 12) and that is the importance of collaboration. The noble Earl, Lord Amherst, asked the Minister if he would say what the Secretary of State was likely to do in that direction. With respect, it is not to the Secretary of State, I think it is to the Civil Aviation Authority that we must look as the responsible body for ensuring that collaboration takes place at every level, and I mean particularly at technical levels, accident investigation and accident procedures. British Airways has an efficient accident investigation department—it used to be a branch when I ran it—and British Caledonian has an efficient branch. But one small incident, hardly worth reporting, can be significant of the beginning of some weakness which may develop and possibly finally end in disaster. Therefore, the smallest incident occurring in either private or public sector should be interchanged so that each can get the benefit of the experience and learn the lessons of the other.

Having said that, I turn briefly to the question of Skytrain. I think that Mr. Laker has been badly treated by the inevitable passage of events, which has brought about the inevitable decision of Her Majesty's Government. Whether he pursues a suit, as one noble Lord suggested, against the Government or whether he does not is not for me to say, but if he does not I feel that he has been so badly treated that he has some moral claim for compensation. I understand that he has spent 76 million dollars on buying three aircraft in prospect of the Skytrain—aircraft which are not today earning their keep. I think that he should have some recompense somehow, but I regret to say that it should not be in the form of a Skytrain licence.

I cannot blame the Government for the decision. Mr. Laker, with great enterprise, pioneered this development in 1971 and obtained a licence in 1972, but since then the passage of time has altered the whole aspect of civil aviation. As the noble Lord who moved the Motion said, oil is three-and-a-half times the price it was, which has made a vast difference to the foundations of passenger carrying and passenger civil aviation operations. We remember the Edwards Committee figures of anticipation. We remember the enthusiasm for Maplin, now dead and buried, I trust. That is the past. Today we have the world not of 1971–72–73; we have the world of 1976 and 1977–78 coming. Therefore, we must look at this Skytrain in relation to today and for the years ahead.

The question to me is what effect will Skytrain have on the designated operators' viability on this particular route. Here we come to contradictory statistics. Like other noble Lords I have been flooded with statistics; statistics from British Airways, statistics from Laker, statistics from several other directions. They are very confusing but I think there is common ground in one or two of them. First, Britain's share on the North Atlantic is 34 per cent. and the American share is 60 per cent. Therefore, what one has to ask oneself is what effect would the Skytrain have on the traffic carried by our 34 per cent. British Airways reckons that if Skytrain operated, 75 per cent. of passengers carried would be a diversion from their existing passenger traffic. They reckon that 25 per cent. will be new traffic initiated. Mr. Laker disagrees with those figures. It is not for me to say which is right. I suggest to your Lordships that it is not for any Member of this House to say which is completely right because we do not know. Nobody knows. I do not think they know themselves. It is speculation.

For what it is worth, British Airways claims that it would lose £3 million in revenue. That would be in respect of one Skytrain, and if there was a reciprocal one, more than likely from America, there would be a loss of £6 million in revenue. That would be a very heavy burden to carry and, in this contradiction of statistics and contradiction as to the extent of the diversion of new traffic, I have no option but to accept the Government's figures. I do not think that our Civil Service administration "fixes" figures, so I accept them.

I feel, therefore, that the Motion of the noble Lord, Lord Strathcona, would put at risk the viability prospects on the North Atlantic route of our designated operator, which at present is sharing with other operators only a 64 per cent. load factor. I am not prepared to go into the Lobby to vote in favour of increasing a loss and prejudicing the viability of the designated carrier. No carrier is perfect and there is much room for improvement in British Airways, as there is, no doubt, in Caledonian, but at the same time we should look in a year or two, if Skytrain were there, at a large red figure of British Airways and know in our hearts that we had contributed very considerably to that loss. It is therefore with great regret that I cannot support my noble friend in the Lobby. Some noble Lords may support him and others may not, but I felt that I must give my reasons why I cannot.

4.22 p.m.


My Lords, I shall be brief and I intend to refer to Skytrain at the end of my remarks. I find myself in considerable sympathy with the noble Lord, Lord Balfour of Inchrye; I, too, take the view that Laker has been unfairly, even harshly treated. However, like the noble Lord. I have a "but". I overheard a noble friend say, "Could the Government have done anything else?" I will come to that later, too. First, I want to deal with a particular aspect about which I have informed my noble friend Lord Winterbottom. Being ever hopeful, I thought that, if I gave him the details, I might get a proper answer at the end of the debate, and I have even given him the paragraph numbers to which I intend to refer.

My first reaction on reading the White Paper was to go through it again in search of a missing word. I found it hard to believe that the word, "consumer" nowhere appeared. Perhaps "hard to believe" is not the most descriptive phrase, and I rather agreed with the noble Lord, Lord Strathcona, in what he implied this afternoon; rather than finding myself unable to believe it, I found myself dismayed. I was dismayed that any White Paper on civil aviation policy did not think it necessary to mention the word, "consumer". When the Statement on Future Civil Aviation Policy was read to the House on 11th February, both the noble Earl, Lord Kimberley, and the noble Lord, Lord Balfour, commented on the omission.

I am raising this issue today in the hope that we shall get a much more informative answer than Lord Winterbottom gave the two noble Lords opposite, because they were informed: On the question of the importance of the consumer, we had a valuable short debate in this House about a month ago and people said some very kind things about British Caledonian…" (Official Report, 11/2/76, col. 112.) With respect to Lord Winterbottom, that was no answer to the points that had been raised and I am hoping that we will not get a similar answer today. I should have thought that every noble Lord would have agreed that the whole area of consumer affairs is of vital importance in civil aviation and, as I have said, at least merits a mention.

In common with most noble Lords who are taking part in this debate, following the publication of the White Paper I re-read the reports of the debates which we had in this House en the Civil Aviation Act in July and August of 1971 and on the Civil Aviation Policy Guidance in March 1972. On the matter of consumer affairs I was not encouraged. In fact, I agreed with the sentiments of my noble friend Lord Donaldson of Kings-bridge who said that the Minister, …has said enough to reassure me that nothing has changed. Year after year we ask for consumer representation and year after year, by Governments of different complexions, we are told that everything is absolutely fine." (Official Report, 29/7/71, col. 726.) I feel and I daresay that the House will feel that Lord Donaldson always had just the right phrase, inoffensive but deadly. I always enjoyed them whether they were directed at me or anyone else. I felt that what he said on that occasion epitomised what everyone in the House felt. Of course, my noble friend Lord Winterbottom did not say that everything was absolutely fine and I hope I can remove that from the list of possible answers we might get today.

I am returning to this theme today because the recent Report from the Select Committee on Nationalised Industries said at paragraph 60: Any material change in the consumer machinery for civil aviation would require legislation and DT"— being the Department of Trade— the Department of Prices and Consumer Protection and CAA"— being the Civil Aviation Authority— would all be closely involved". I want to know why in the White Paper we are discussing today which is presented by the Secretary of State for Trade, the consumer side is not considered worthy of a mention particularly in view of the statement by the Select Committee. I want to know what the Department feels about the necessity of a change or otherwise in the present consumer machinery. We have made some progress since the comments of Lord Donaldson in 1971, but I think the House would agree with me that it remains a grading progress in the sphere of real influence. To return to the Report of the Select Committee at paragraph 58 dealing with consumer affairs it states: The AUC"— that being the Airline Users' Committee of which I am a member— is a consultative body with no teeth". Perhaps I might mention here that I am very conscious of the fact that the chairman of the AUC has to sit here but is not able to speak. I realise that I am a great thorn in his flesh and that I appreciate his fairness. As he cannot reply I should like to make that clear before I proceed. One of the conclusions or recommendations of the Select Committee was, in paragraph 94: We think it important that the AUC, or any comparable body, should have teeth of its own". I have a very short and simple question for the Minister: What does the Department of Trade think about this, or does it not have a view? At Question Time on 20th January the noble Lord, Lord Maybray-King, was kind enough—this is to be found at column 347 of the Official Report—was kind enough to enter the lists on my behalf. He spoke of the despair felt at my failure to make any impression en Her Majesty's Government on these matters. I was appreciative because it is due to the support given by all quarters of this House that we have got where we have on the matter of air travellers. I hope that one day air travellers will realise that, had it not been for this House and for everybody in it, they would not even have got thet AUC. In July 1973, when a Conservative Government was in power the AUC was set up because of pressure from this House. It was not wanted either by the Civil Aviation Authority or British Airways. However, our persistence made it impossible to ignore any further the fact that air travellers had no such organisation, contrary to other consumers in other areas.

As I said, paragraph 60 of the Select Committee Report said that in any material change in the consumer machinery for civil aviation three bodies would be involved—the Department of Trade, the Department of Prices and Consumer Protection and the Civil Aviation Authority. I yield to nobody in my admiration for what Mrs. Shirley Williams is trying to do. I have not asked her, but I am sure that she would agree with the recommendations of the Select Committee. Based on my own humble experience, I should imagine that she is having a hard battle, but we need not dwell on that.

I am equally sure that the Civil Aviation Authority would not agree with the recommendation, so that leaves the Department of Trade. Having given notice of this narrow point to the Minister, can we today have a definite reply? Does the Department support the recommendation that the Airline Users' Committee should have teeth of its own? If the answer is, Yes, will the Government support a move for early legislation? Or is the answer to be, "Yes, but not yet," as always seems to be the case?

Before I move on to deal with Skytrain, I should like to tell the noble Earl, Lord Amherst, how glad I was to hear him mention the tube train to Heathrow. It will be in the memory of all your Lordships—though I do not remember how long ago it was—that the noble Earl, Lord Kinnoull, and I saw London Transport about this service to Heathrow. We gave the House the benefit of our discussions and our views on what would happen, though I do not believe that the then Government were very appreciative. We thought that it would be quite impossible for people with 40 lbs. of luggage to get up the escalators at Piccadilly, Hyde Park or anywhere else and that this service would continue to be most beneficial to those people with no luggage or people who worked at Heathrow.

Turning to the question of Skytrain, I find myself rather regretfully forced to the conclusion that I shall today have to support something which I believe to be unfair because I believe that, economically speaking, nothing else can be done. That is why I am doing this and I am really back at the place where I came in with the noble Lord, Lord Balfour. However, I wonder whether the Minister can help me. I have some questions to which am sure I should know the answer but I do not, and it would be the greatest help if he could answer those questions for me. I apologise to the noble Lord who must sit through this, but can the Minister tell me whether the Civil Aviation Authority publicly dissents from the decision of the Secretary of State for Trade and Industry to cancel the Skytrain and to direct the Authority to revoke the licence? I rather thought from what my noble friend Lord Winterbottom said in opening that that was the position, but I should like to know the answer.

On the question of double designation, we have heard various points from British Airways and from Laker Airways. Some seem to be mutually contradictory and, on the matter of double designation and of reverting to single designation, is it correct to say that, under the new policy, single designation will apply only to the United Kingdom carriers on this route and not to the United States carriers? If so, that would seem voluntarily to restrict the British response. I should be grateful if the noble Lord can give an answer when he replies.

We have heard a good deal today about the fact that if Skytrain were allowed to operate there would be reciprocal Sky-trains, if I may so describe them, from the United States. There seem to have been contradictory statements from British Airways and Laker, because Mr. Laker says that no other airline, United Kingdom or foreign, has applied for a Skytrain-type licence across the North Atlantic since the Laker application in June 1971, whereas British Airways say that both Pan American and TWA testified to the American CAB that they would compete with Skytrain. Can we have that point cleared up because I believe that it is important?

Another point which I should like cleared up is whether Mr. Laker was granted a licence by the Civil Aviation Authority for ten years. I believe that he has a right to feel aggrieved if that was the case. Can my noble friend tell us whether it is the case that the licence was originally granted for ten years? I agree with the noble Lord, Lord Balfour: I should have said that Mr. Laker was not being unduly unwise in purchasing two DC 10's for use under a licence which he had been granted for ten years. I believe that should be admitted.

Finally, my noble friend Lord Brown was, I felt, a little heavy handed. My noble friend is not here, so I am free to say that. I do not believe that consumers—certainly not while I am about—should be trampled on in this way, and I should say just the same thing if my noble friend were sitting behind me, as indeed I thought he was when I began. When he said that he felt that the public should take notice of the likely effects—and he mentioned the £6 million loss by British Airways which was also referred to by the noble Lord, Lord Drumalbyn—I believe that there is another effect. Without saying that we could have Skytrain at the moment, I believe that there is a considerable section of the population—though I could not quantify it—who would like to go to America from this country but who are not in a position to book weeks or months beforehand. My experience on this is not wide, but I understand that if one wishes to get an ABC or Apex fare, though legally one needs to book only two months beforehand, if one does so there will be no places left. One has to book well in advance of that and money has to be put down within seven days of making the application. I want to suggest to my noble friend Lord Brown that it is not only "footloose and fancy free Americans"—I believe that those were the words he used—who want to take advantage of this service. I believe that if Skytrain is not licensed at present, that means that there will be a considerable section of air travellers who will not be able to go.

I hope that my noble friend Lord Winterbottom will give me specific answers to specific questions. I believe that Mr. Laker has been unfairly treated, though, in today's economic situation, I find myself unable to support the Amendment. That I regret.

4.38 p.m.


My Lords, I rise to support my noble friend Lord Strathcona and Mount Royal and, curiously, on the same occasion, the noble Lord, Lord Winterbottom. I should like first to make some observations about the performance of the CAA under the previous set of guidelines which we are today to replace. Since its inception four years ago, the Authority has, in my view, performed creditably in extremely difficult circumstances both for itself and for its customers. Ably and enthusiastically led by the noble Lord, Lord Boyd-Carpenter, it has established an enviable reputation throughout the world, particularly in the realm of technical expertise in relation to airworthiness and air safety. Of course those reputations were largely inherited from the bodies which merged to create the new Authority, but we should not decry its achievement for that. However, I have some criticisms which I should like to mention and I hope that they will not be out of place today.

First, I believe that the Authority has had too little regard for the interests of the smaller operators. I have made a similar point many times in your Lordships' House but I do not appear to have made much progress. Put in another way, I feel that the Authority tends to listen too readily to the views of the big battalions—the corporations—while the views of the less influential seem to carry very little weight with it. For example, the Authority introduced a scheme of flight times limitations a year or so ago. I raised the matter in your Lordships' House at the time, making roughly the same points, but I did not make much progress. Another committee was then set up. It was called the Flight Times Limitations Board and it was set up—no doubt at great cost—to administer the scheme, which appeared to be wanted by only the corporations, which in any event were largely following the recommendations of the Bader Committee which had led to the Authority's action at that time.

Smaller companies, which were much more adversely affected by the proposals were not really consulted. The Flight Times Limitations Board remains unrepresentative of the smaller operators, while British Airways and the pilots' union remain predominant on it. I believe that in that situation the smaller companies can expect little appreciation of their efforts. I hope that the Authority may even now consider this situation to be unsatisfactory, and that it will appoint to the Board one or more persons who will be able to look after the interests of the smaller independent companies, which at present, at least, have some difficulty in getting their views across.

More recently the Authority has substantially raised charges relating to professional air crew licences. I do not criticise the need to raise the charges; that is another matter. But I say that the effect of these increases has been applied unfairly to the various grades of air crew involved. For example, the fee for a professional pilot's licence has been increased to £50, a 2½-fold increase. That increase has been applied equally to, for example, a pilot earning £15,000 a year as a senior British Airways pilot, or to a flying instructor at a flying club who might earn only £1,500 a year. I cannot sec the equity in that. Both are examples of the Authority's failure to listen adequately to the views of the smaller people. I recognise the difficulties in, for instance, the case of the junior pilots, who do not have a very effective professional body, and no doubt it would be very difficult to ascertain their views with accuracy, but presumably not much inquiry was necessary in raising the charges as I have described.

My second criticism involves the area of costs. The Authority is quite rightly required to balance its books in due course. To achieve this it has necessarily had to raise its charges in almost all the fields of its activity. Few other countries require their regulatory authority to finance itself to the same extent, and British companies are thus at a significant disadvantage with their competitors overseas. In America, for instance, a great deal of aviation expenditure is met out of general taxation, both national and local.

In this situation the Authority clearly has a duty to minimise its expenditure. I should like to ask the noble Lord, Lord Winterbottom—and this is the matter which I raised with him in a starred Question a week or so ago—whether substantial economies could not be effected by doing away with the Civil Aviation Flying Unit at Stansted. While not for a moment decrying the skill and dedication of the people who work there, nor wishing to suggest that the functions they perform are not important, I believe that a great deal could be done by delegating some of those functions. Some other areas of activity, notably the calibration of radio navigation facilities, could be sub-contracted to commercial firms, thus saving, I believe, a substantial sum.

The Flying Unit is also involved in providing transport for Government VIPs and, I believe, Members of the European Parliament in Strasbourg. I should like to be satisfied that the full cost of those services is repaid either by fares charged to the European delegates or by payments from the Government to the Authority, and that the costs are fully covered—


My Lords, is the noble Lord aware that a combination is achieved in providing the VIP services, in that the time used for them is also used for technical purposes, such as the calibration of instruments? If such services were made private this could not be done.


I must confess, my Lords, that I was not aware that the flights carrying Ministers and others were also used for the calibration of radio navigation facilities, and I am happy to hear it. But I do not think that alters the fact that a service is being provided to Ministers and others which ought to be paid for. That it is also being used to calibrate radio navigation facilities is a laudable use of resources, but the Government still ought to pay for the transportation of their personnel. I have no idea what is the exact cost of the Flying Unit. I looked through the annual report with as much care as I could, but I could not find the cost; perhaps I missed it. I hope that the noble Lord, Lord Winterbottom, will be able to help me on this. It must run into seven figures.

So much for the criticism. There are many plus factors. For example, I am very pleased that the Authority has recently exempted most single entity charters from licensing. That is a welcome step. I remember a year or so ago introducing a Bill in your Lordships' House to achieve just that, yet receiving a very dusty reception. I must confess that it was in the days of the previous Administration. However, I am happy to see that that step has now been taken.

My Lords, today we are asked to approve the Government's new guidelines to the Authority. The document contains certain major items, plus some detailed provisions. First, we are asked to agree to some further route swopping between British Airways and British Caledonian. I regard route swopping in much the same light as wife swopping: immoral and foolish, but unlikely to cause any real harm in the long run. Secondly, we are asked to agree to the assertion that dual designation on long-haul routes is undesirable and must be stopped. Implicit in this is to be the revocation of Laker's Skytrain licence and the cancellation of his designation on the bilateral agreement. I fail to understand the arguments that dual designation is something evil, to be done away with. The Americans have triple designation on the North Atlantic. There is TWA, Pan-American, and National Airlines, operating from Miami, and, lo and behold!, they have achieved much more of the traffic than we have, with only one airline operating on the North Atlantic. Is it not possible that if we were to designate an additional carrier on the North Atlantic, be it Laker or British Caledonian, we, too, could achieve an improved percentage of the traffic offering—


My Lords, I hope that the noble Lord will excuse my interrupting again. Is he not overlooking the fact that the American population is four times that of ours? Is not the present percentage earned by British Airways—34 per cent.—a very credible performance indeed, in view of the population discrepancy?


My Lords, I am not sure that population has anything to do with it.

Several Noble Lords



I certainly agree that the performance of British Airways is creditable. But I believe that we could achieve an even greater percentage of traffic across the North Atlantic if we were to authorise another carrier. Most of the passengers coming from the United States—certainly the ones we are concerned with now—come to the United Kingdom. Why could more of them not travel in United Kingdom airlines?

I shall now return to the points I was dealing with earlier. Thirdly, the new guidance contains a number of detailed provisions. Perhaps the most noteworthy, to my eyes at least, is contained in paragraph 2.11 which requires the Authority to keep itself informed of pooling and other commercial agreements which come into force between airlines on particular routes. I welcome this proposal, especially if it leads to greater control of the pooling agreements which I do believe are always in the public's best interests. Your Lordships will know that such agreements are illegal in some countries, particularly in the United States, and we ought to take a long, hard look at them on our side of the Atlantic.

I now wish to revert to the most important matter; namely, the Government's decision to cancel Laker Airways' designation under the bilateral agreement and to secure the revocation of that firm's licence. While not wishing to pursue the arguments relating to the principle of dual designation—although I say again that I do not believe that it necessarily dilutes the traffic in the way suggested—I believe that Laker's service should, at least, be allowed to continue as a possibility, rather than be cancelled altogether as the Government now propose.

I think there are many arguments in his favour, most of which have already been deployed this afternoon more effecttively than I could myself deploy them, but I do not think the argument of diversion is necessarily valid. First, it is not proved one way or the other, I believe; but I do not think it should necessarily preclude a second operator operating a different type of service. It may be that the customers are entitled to have a service such as the one which Laker proposes, which British Airways certainly have never proposed and are not even now proposing. Secondly, the assumption that an American Skytrain would start as soon as Laker started, or shortly afterwards, is really not proven at all. Under existing American legislation, a scheduled service can be operated only by an existing scheduled carrier, so all the supplemental carriers in America who have applied are for the moment at least under federal legislation, precluded from operating such a service. This leaves only Pan American and TWA, and to launch a service such as this from, say, Newark to Stanstead—because it would have to be a service exactly paralled to that of the Skytrain, otherwise we should be under no obligation to authorise it—would involve them in enormous expense which I believe they would not, at this time anyway, be anxious to incur.

Finally, there is of course the question of the morality of the Government's action in withdrawing the Laker licence, their predecessors having authorised it so recently and Laker, of course, having incurred such a great expenditure in making provision to operate the service. In my view, the Government are exposing themselves to the possibility, at least, of a law suit for compensation; and, as my noble friend Lord Strathcona said, the Government would then find themselves in a most difficult position. Unlike my noble friend, if that happened I should look to the resignation of the Minister. I cannot escape from the conclusion that the Skytrain licence has been cancelled for doctrinaire political reasons, and I hope that the Government will accept my noble friend's Motion and not secure the revocation of Laker's licence.

4.53 p.m.


My Lords, it is not my intention to comment on the Government's long-term plans for civil aviation. They seem to be based on less competition and the theory that big is good—and I am the last person to dispute that. I should therefore like to deal mainly with the question of Mr. Laker. Along with many noble Lords who have already spoken, I feel that he has been extremely badly treated. I feel he has worked his way through since 1972 fighting the case for Skytrain before various judges and committees in various parts of the world, and each time he has managed to win and yet get further away. He reminds me of a character called "Alfie" that I used to read about in a magazine called The Rover. He was the greatest Olympic runner of all time, and when he entered for the marathon he was asked whether he would deliver a gas stove as its destination happened to be on his route. I feel that the Government's final decision is Laker's gas stove. I think he has borne all that any man can nobly bear, and that this really is the last straw for him.

When the Americans were dragging their heels I felt that the Government were not giving him all the support they could, and now they have taken away his licence although, in fact, he has done nothing wrong. A ten-year licence on which you borrow money and buy planes is a serious matter, and I think that it would throw into question the viability of anybody lending any money to anyone in the future on such a Government pledge. I should imagine it might make a great difference. I think it is also sad that such an imaginative and bold scheme should be killed off, and we will never know whether or not it will work.

I read this little red book which has been referred to hoping that I could find some good reasons set out in it. It is very hard reading indeed. Of course, it has clearly been written by very clever people. It consists of a mass of cleverly-contrived figures and equations based on a series of differing suppositions, and it really is very clever. It is rather like those people who do a Latin crosword puzzle in five minutes: it is absolutely brilliant, but you cannot make a living at it. Although it is hard reading, I would not say that it is without plot. It has sixteen plots in it, all of which, so far as I can see, are designed to squash Mr. Laker. None of them is easy to understand, In fact, as I think many speakers have pointed out, it is curious that if you are against Mr. Laker you seem to base your case on two totally differing arguments. One argument is that there is not the traffic: that there will not be any case for a Skytrain; that poor Mr. Laker will go broke because obviously he has no knowledge of the aviation industry, and that is that. The other argument is that there will be thundering herds of Skytrains—not only 500,000 passengers with two Skytrains, but also, probably, with the Continentals joining in—that the whole sky will be black with them, and that it will be the end of all normal air transport; everybody will be dashing around in Skytrains and, of course, British Airways will then suffer. I think both of these arguments are an exaggeration.

One argument that is difficult to understand is that the many differing fares now are better than Skytrain can offer. If this is really true and what we are supposed to believe, why is anyone worrying about Skytrain? It is only Mr. Laker who has to worry. Mr. Laker's record is fairly good, but he really will be a worried man if this is absolutely true. On the other hand, knowing what a stubborn fellow he is I suppose he will make a start. It is rather sad that then we shall have Skytrain No. 2, this American Skytrain, immediately joining in, miraculously. It has been pointed out that there would be a slight delay, but according to our figures that would not happen. In order to make up the figures to 500,000 passengers and to make a case, the American Skytrain starts at once and, so far as I can see, practically wipes out British Airways' share of tourist-class passengers.

I wonder about these first-time trans-Atlantic travellers. I have two grown sons, with cousins in America. They do not have a lot of money, but they like to go across to America, as do many others. Mr. Laker, I know, carried out research in this country. He did not just do it out of his head; he did not just take off his hat and say, "Think of a figure; there are all these passengers". He carried out research, using an internationally-known firm, and some very interesting figures were produced which showed that there was an enormous demand. I am surprised that the Government have dismissed these figures, because Mr. Laker's research firm is precisely the same as that which the Labour Party have used to help them win four Elections. So I should have thought that at least they had familiarity, let us say; but perhaps it has bred contempt.


My Lords, is my noble friend aware that Mr. Laker is offering a benefit of £9 on a single flight, and is he assuming that that benefit will increase the number of flying passengers by 200,000 a year?


My Lords, I do not know; I have never run an airline. But Mr. Laker has run a very successful airline, and if he thinks it will have that result I believe him.

The Government agree that viability depends on the number of new passengers. I do not know, your Lordships do not know and it may be that Mr. Laker does not know. We shall have to "suck it and see". I believe that there are probably many new first-time passengers who could be persuaded on to these routes.

My Lords, I shall not go through all the different scenarios that appear in this little red book. The point, however, about competing Skytrains taking all the passengers from British Airways seems to me to overlook the point that was made by one noble Lord on the opposite Benches, and that is that the Americans run three to one to us on that route. Therefore it seems to me that the Americans, at least, will be affected three to one in the number of passengers lost; they cannot all come from British Airways.


My Lords, may I correct my noble friend? It is one to two.


I beg your Lordships' pardon; it is one to two. The important point is that Mr. Laker was given a licence and the go-ahead to import the three planes that he needed and borrowed the money necessary to complete the transaction. Now, under this policy, he has three planes purchased for a use now forbidden to him, millions of dollars plus interest to repay, and no chance to do so out of the services in which he believes. The Government do not feel responsible for it. On the other hand, I believe they have a responsibility in so far as if a man has a licence for 10 years and loses it through no fault of his own there should be some system whereby either he has a chance to start in the future or some form of compensation is provided for him.

There is one more point that has not yet been raised by anybody, and perhaps it comes rather strangely from these Benches. I believe that we have all heard too much of failures and people moaning and groaning and saying that it is the Government's fault, or the trade unions' fault, or the price of commodities, or the weather, or something. These losers are not going to help us out of our present problem. They are not the people who will make this country as great as we all want it to be. We need to encourage more people to stand on their two flat feet and do things better than the opposition; or to go on trying until they can. I believe that Mr. Laker is one of those people. He deserves our support for that alone. He, after all, has not gone around with a begging bowl and has never yet asked to be nationalised. I think that his achievements stand out in a world of "Identikit" airlines and fixed fares, where the customer's greatest choice can be made only from the trays of plastic airline food. Even at this late stage I ask the Government—and it is my Government—not to slam the door on the Skytrain before it has taken off but to leave open the possibility for it to fly at some time in the future when world conditions have changed sufficiently for the Government to be able to take a chance.

5.1 p.m.


My Lords, I rise with some reluctance to intervene briefly in this debate on the subject of the Skytrain. I say "reluctance", because I am one of those who happen to earn their living in the retail travel trade and it could be levelled against me that I am biased against the Skytrain because the nature of its operation precludes the travel agent. In fact, my particular type of business is such that the advent of the Skytrain would affect it, if at all, only marginally; so I hope that I can speak dispassionately on the subject. It may be said that Mr. Laker invested a considerable sum of money in aircraft, relying on the assurances given by progressive Governments; but these investments were made without the ultimate licence from the US authorities and therefore must have been done with an element of speculation.

Skytrain has never been able to commence services and the conditions which prevailed when the project was first put forward and when the Edwards Committee reported have changed radically. The expected traffic increase has not matured; indeed the forecast is for only very slow growth on the London-New York route. Massive increases in the cost of fuel, causing substantial fare increases, together with a downturn in the economic climate, have resulted in a significant decline in demand. Co-incidentally, and to a large extent as a result of the original licensing of Skytrain and also due to the gross abuses experienced in connection with affinity charters, there has arisen a new series of cheap fares both on scheduled services and particularly with the advent of the advanced booking charter. It is the latter version which competes most favourably with the charges proposed for Skytrain, and at certain times of the year their fares are lower than the Skytrain fares.

My Lords, it is contended by the supporters of Skytrain that one of its main advantages is that the fare is for a one-way journey and there is no restriction on the length of time one may stay in the United States. This is perfectly true. Indeed, it is only matched by the youth fare which has the same advantage although the cost is greater. However, in practical terms, how many existing and potential travellers would be able to spare the time and the money to stay away for more than the 45 days, which is the maximum permitted on the APEX fares and on most of the ABCs? My noble friend Lady Burton suggested that there would be some. I would not contest this, but I should not have thought that the numbers would be substantial.

So, my Lords, we come to the crux of the matter. What would be the effect of allowing Skytrain to operate? It is contended that there is little new demand for a service of this type and that, accordingly, the business which Skytrain would generate must be diverted from the existing schedule service operators and from the ABC operators. There is no dispute about this. What is disputed is the percentage of the business which would be diverted and the losses of revenue which British Airways would sustain as a result of it. As has already been mentioned several times, the airline calculates that its loss of revenue would be of the order of £3 million per annum, with a further £3 million should a reciprocal American service be introduced.

On this point, it is stated that the American CAB will not permit any of the US supplemental carriers to operate a scheduled service from America; and Mr. Laker has suggested that neither TWA nor Pan American Airways would operate a Skytrain service in parallel with their own scheduled services. This belief does not accord with that held by the Board of Trade. I cannot believe that the Americans, who are not exactly noted for their willingness to permit undue advantage to be gained by other countries to the detriment of their own operators, would allow a Skytrain service to operate into the United States without insisting upon a reciprocal arrangement.

That being so, were TWA or PAA to compete with Skytrain it would be inevitable that British Airways would feel obligated to enter the battle; and the consequential effect of such a price war would be heavy losses for all carriers, including Skytrain. The Department of Trade has produced a fairly comprehensive document showing how it arrived at the figures of £3 million and £6 million and extracts from that document have already been given this afternoon. I do not propose to repeat them. Inevitably, the conclusions it reached have been based on certain presumptions which may be open to challenge; but there is no doubt that there would be a substantial loss to the Exchequer should Skytrain be permitted to operate and, particularly in the present economic circumstances, I do not believe that this loss would be acceptable.

5.7 p.m.


My Lords, I think it is heartening to see the interest that this House has given to the approval of the new guidelines of the civil aviation policy. I am sure that the silent chairman of the Civil Aviation Authority is also grateful. I do not recall such an interest when the last guidelines were approved by this House. I am sure we should thank my noble friend Lord Strathcona for stimulating that interest and spotlighting the deeply contentious issue of the Skytrain. The purpose of the guidelines which we are considering this afternoon was stated by the Government in another place and again by the noble Lord, Lord Winterbottom, as being to achieve four objectives against the background of a sorely depressed industry. I must say that on the matter of "a sorely depressed industry", I find that talking now to those in the industry it seems that the industry was certainly sorely depressed at the time the review was set up but that the present situation is getting more and more hopeful.

The four objectives of the Secretary of State when calling for this review were: to stimulate international competitiveness in the British industry; to encourage stability and particularly long-term investment; not to damage employment—this particularly with British Caledonian in mind; lastly, to be fairer to British Airways. I think that the first three objectives of the Government are identical to those of the Edwards Committee and of the last Government when they set up the first guidelines. In regard to the fourth objective: "to be fairer to British Airways", I suppose that, in fairness to British Airways, it is possible that at the time of the setting up of guidelines, the objective was to establish a second carrier, British Caledonian; and possibly at the present time, the guidelines to the Civil Aviation Authority could be amended to that point. Nevertheless, one has to recall that the Minister was saddled when he came to look at this policy by his own Party's policy towards British Caledonian in 1972. It was with that background that I commend him for his responsibility and political bravery in publicly stating in the past year or so that he wanted British Caledonian to continue and develop. With immense skill he has undoubtedly produced a formula of the new "carve-up" of the long haul routes. I say "skill" because he has managed to win the grudging, unenthusiastic approval of both British Airways and British Caledonian. Of course one could have seen the Minister doing something much worse: nationalisation of British Caledonian, or even ruination. I earnestly hope that the new route patterns which have been granted to British Caledonian—the "Pigmy" in this argument only 10 per cent. of the routes are available to them—will prove as viable as the Minister judges; and his judgment holds a very heavy responsibility.

The Government have failed on these two guidelines in one important feature The Secretary of State expressed, as indeed did the noble Lord, Lord Winterbottom, the hope that the guidelines would be left untouched for many years, and that the politicians would keep away. I do not think anyone would disagree with that; hut, despite paragraphs 7 and 8 of the new guidelines and against a background of the depressed industry, the Government have tied the hands and the flexibility of the Civil Aviation Authority needlessly and restrictingly. They have tied their hands particularly on the question of double designation. It may not be a good point now to have double designation, but what will happen in three or five years' time if suddenly there is a boom? Are we to have yet another review?

So far as the British Caledonian position is concerned, I welcome their attitude, as I have said, for their continuing prosperity. They have proved undoubtedly their benefit to the consumer. This is a most important argument. Perhaps the noble Lord, Lord Winterbottom, does not travel with British Caledonian to Edinburgh or Glasgow, but if he did so he would see the undoubted benefit to the consumer. They have shown immense skill in winning international business for this country. I hope that the Government will give an undertaking that the change of routes which have been specified in the White Paper attached to the guidelines will be carried out as quickly as possible, particularly the difficult procedure of designation. I hope, in the interests of all parties, both British Airways and British Caledonian, on the long-haul scheduled routes that the noble Lord will be able to say that the Government will make an earnest effort in getting a quick and sensible changeover. I have particularly in mind the service to Houston and Atlanta for British Caledonian.

I should like to raise three brief points on the guidelines. The first is to do with the fares. In paragraph 16 of the guidelines the Government urge the Civil Aviation Authority to work for a more rational, simple and enforceable tariff arrangement for air fares. This is a splendid thought; I do not think anyone would disagree with the Government on this issue. I should like to ask how will the Civil Aviation Authority achieve this? What steps can they take at the moment with IATA, and what is the future of IATA in the eyes of the Government?

The second point is concerned with regional air services. In paragraph 15, the Government urge the Civil Aviation Authority to assist the development of the regional air services. I am sure they have in mind that the one point of growth in air transport at the moment, particularly in the United States, is the intercity development. The French Government are supporting certain of their airlines to develop and expand the transport between secondary cities between France and Britain. I hope the Government will also bear this in mind. Perhaps the noble Lord can comment on that when he comes to reply.

The third point concerns the Civil Aviation charges. My noble friend Lord Trefgarne (who has a lot of experience in this matter) has already commented on that. The Government expect the Civil Aviation Authority to balance its books by 1977–78. But how does the Civil Aviation Authority intend to do this? I say this in the presence of their silent chairman, for which I apologise, but are their charges to continue to go up for such services as certification and licences, which have already increased by over 200 per cent. in the past few years? Can the operators stand further increases?

The last item on which I should like to comment briefly is Skytrain. I am very glad that my noble friend Lord Strathcona and Mount Royal decided to put down his Motion today and to speak with such excellent force. The Government's decision on the future of Skytrain is both disgraceful and shabby. It is disgraceful because it is clearly against the interests of consumers; I do not think there is much argument about that. It is shabby because it is against the Civil Aviation Authority's advice. The decision looks horribly political, either domestic or American-orientated.


My Lords, may I interrupt? Is the noble Earl sure that the decision about Skytrain is against the Civil Aviation Authority's advice? Might it not he a case that the Government are getting the Authority off the hook?

The Earl of KINNOULL

My Lords, the noble Lord, Lord Winterbottom, has already been asked to state what is the Civil Aviation Authority's advice on this issue. If the noble Lord, Lord Brown, had looked at what had already been said, he would see that the Civil Aviation Authority indicated through the Secretary of State that it disagreed with the Sky- train decision; and what it favoured was a delay on the decision.

My Lords, what can one add to what has already been movingly said by other speakers regarding this issue? The history, as we know, is most extraordinary because Skytrain started in 1972, so far as its licence was concerned, and over three years have gone by and the American permit has yet to be decided. It has taken three years. I say, "taken three years" because the Americans have dilly-dallied, fobbed off and delayed. They have incurred the wrath of the Civil Aviation Authority because they were acting in clear breach of the Bermuda Agreement. Then on the point of the American Government saying that they would be prepared to issue the licence, the designation, the Government arbitrarily and against the advice—although I stand corrected if I am wrong—of their own experts, the Civil Aviation Authority, and against any proper consultation with Laker, decided to withdraw the licence. Was this panic measure really necessary? I agree with my noble friend Lord Balfour of Inchrye that the problem of this issue is shrouded in a cloud of figures, and all are different. Probably the central problem of this issue is the present capacity over the North Atlantic. My noble friend quoted that the present capacity for British Airways across the Atlantic was 34 per cent.


My Lords, the present average load factor of all the operators on the Atlantic, including British Airways, is 64 per cent. for the nine months ending December.

The Earl of KINNOULL

My Lords, I did not mean the load factor; I meant they had 34 per cent. of the market going across the Atlantic. I assume that relates to scheduled and not charter services. This is probably the key point in this issue. What are we talking about with Skytrain? We know it is a non-IATA scheduled service. But where is the market coming from? Is it indeed the charter market, or the scheduled services? I believe very strongly that it is much more orientated to the charter market because from the consumers' point of view, which is the basis of my first objection to the decision, this service adds greatly to the charter services even subject to the restrictions of APEX and ABC, as mentioned by my noble friend, on would-be customers. I also feel—and this is a judgment which my noble friend Lord Balfour very fairly referred to—that the damage to British Airways is over-stated. I do not criticise their Chairman for circulating before this debate his views and further figures: in fact, it was his duty to do that and we are grateful. But this question of the £6 million loss of revenue represents only an estimate and not a firm figure and it refers only to their scheduled services and not to their charter services, which is surely an important point.

Finally, I object strongly to a licence being taken away, having been properly applied for and won after careful consideration by the Civil Aviation Authority. This licence could have been of great benefit to the consumer. It was a licence which was granted a certain ratio of the price of the fare, with £59 single and £118 return. I believe that the noble Lord, Lord Brown, indicated that the price structure of Skytrain would have to be reviewed, but I think I am right in saying that the Civil Aviation Authority approved the present quoted figures only nine months ago.

Regarding the American "bogey" Skytrain, one has heard time and time again that this is one of the main arguments in favour of the Government's decision. Not only would there be the capacity of the British Skytrain but also that of the American Skytrain. I wonder whether the noble Lord, Lord Winterbottom, could answer two questions later this afternoon because I think some clarification is needed. The first point is this. Is it possible for the scheduled American carriers—Pan American, TWA, and so on—to introduce Skytrain without infringing their IATA agreements? If they could not introduce the service, could the American supplementary carriers operate the Skytrain immediately or, as I suspect, would it require a change in the American law? If the latter is the case, one can envisage this taking a great deal of time. I should also like to ask the noble Lord whether Laker Airways have offered to delay their introduction of the Skytrain services in order to meet the worries expressed not only by the Government but by the Civil Aviation Authority.

Personally, it seems to me that the worst aspect of the Government's action in this shabby affair has been the almost puerile consultation which has taken place between Laker and the Government. Originally Skytrain was not included in the review, I understand. Then through a private Question the Government announced that it was, and on 29th July last when the Secretary of State made his Statement, he summoned Mr. Laker to a meeting only an hour before announcing to another place his decision to scrap Skytrain. Naturally Laker Airways pressed for meetings about the matter and the first one took place some five months later, on 12th December, when they met a top official. That official received the evidence they had got together, with their counter-arguments to try to balance up the position. He took the documents away and said that the matter obviously needed careful scrutiny and that he would deal with it. The second meeting was on 15th January, when the Minister received a delegation from Laker Airways. At that time he said that of course his officials would have discussed the case and would have examined the details of it. Of course they had not: and it was not until a third meeting took place on 9th February that Laker Airways were able to spend four hours with officials at the Department of Trade. Of course, my Lords, one has to remember that on 11th February—two days later—the White Paper was published. So one can probably assume—


My Lords, the noble Earl has such complete detail of the case that he must also be aware that there was one occasion when Lakers refused to attend a meeting to which they were invited by the Department of Trade. I cannot give the precise date at the moment, but I can supply it later. The noble Earl has such an immense amount of detail about this: surely he could have mentioned this point alongside that already given.

The Earl of KINNOULL

My Lords, I am grateful for the intervention by the noble Lord. I was not aware that there had been a meeting which Laker Airways refused to attend, although I am extremely surprised to hear about it in view of their constant pressure to get this matter looked at carefully by the Secretary of State. However, I am very grateful to the noble Lord for that information. Nevertheless, I come now to the third meeting, which was an important one. Laker Airways had four hours with the officials and then two days later the White Paper was published. Some may say that the White Paper had already been printed.

That is the scope of the Government's consultation and now the Civil Aviation Authority have been instructed to withdraw the licence. It is a unique situation so far as the Civil Aviation Authority are concerned. They are now to withdraw a licence issued in 1972 and they pressed hard for the American permit for the licence to be able to go into operation. They are now to withdraw this licence on instructions from the Government against their own advice. As to the amount of the resulting loss to Laker—who knows what that will be? I suspect the compensation will be nil, because the CAA can hardly be to blame and very few people, wisely, sue the Government. That is the disgraceful decision which the noble Lord, Lord Brown, wishes us to support. I hope that this House will not accept the noble Lord's advice but will accept the Motion put by my noble friend and demonstrate that this House deplores the Government's handling of Skytrain.

5.27 p.m.


My Lords, the real issue today is not the abstract one of whether official discouragement of innovation and enterprise will further accentuate Britain's economic decline vis-à-vis other industrialised nations—although it will accentuate our relative decline—or whether the abrogation of Skytrain's licence would be unfair to Mr. Laker—although it would be unfair to him—but the more concrete issue of whether Sky-train has come to pose such a threat to the revenues of British Airways since 1972 (for let us not forget that in 1972 BOAC, as it then was, made no objection whatever to the granting of a licence for Sky-train) that the Government are entitled, and indeed obliged, for the sake of the taxpayers—and we are all taxpayers—to take the unprecedented step of revoking this licence. This was a licence which had been granted after long, careful and scrupulous deliberation by the Civil Aviation Authority.

There are only two assumptions, it seems to me, on which the Secretary of State could justify his case. The first is that the volume of transatlantic air traffic will remain static over the next few years. But the United States is already emerging strongly from economic recession, dragging the rest of the world on its coat-tails, albeit some way behind; and indeed British Airways' own Planning Co-ordinator visualised a growth of 66½ per cent. per anum on the North Atlantic route over the next five years. Another forecast which has been made is to the effect that there will be a growth of 12 to 18 per cent. in 1977 alone.

The second assumption is that Skytrain would syphon off habitual travellers in large numbers from scheduled airlines, and more specifically from British Airways alone as opposed to Pan American, TWA and other carriers. But no convincing reasons at all have been given for this assumption. The noble Lord, Lord Strathcona, estimated that 50 per cent. of Skytrain traffic would be newly generated, but I feel that that is an under estimate. Let us consider the categories of people who would be attracted to Skytrain. The first category would corn, prise students and they can be sub-divided into two groups. There would be relatively few British students who may wish to seek summer jobs on the North American Continent but do not want to commit themselves to a fixed return date; and I suggest that such initiative ought to be encouraged rather than otherwise. Then, in the other direction, there would be a very much larger number of American students—larger both because America has a greater population, and because, as your Lordships know, American students are, on the whole, much more affluent than British students. This tendency will benefit Britain's invisible earnings from tourism.

The second category—and I concede that it is a small one—would comprise small businessmen who have not previously exported to North America and want to dip a tentative toe in the water but feel that the payment of a full fare cannot be justified at this initial stage.

To the extent that their efforts are successful, the visible balance of payments will benefit; as indeed will British Airways, because once they start making profits they will not want to continue travelling by Skytrain, but will want to travel in relatively greater comfort from Heathrow.

The third and probably the largest category would comprise people of modest means with relatives on the other side of the Atlantic, who simply could not afford to travel at all at short notice other than on Skytrain. Consider, my Lords, the case of a family whose daughter married a GI in 1944. She falls ill and asks for her relations to go to her bedside, or, sadly, let us suppose that she dies and they have to go to the funeral. It is clearly impossible to book for a funeral two months in advance, and not many people going to one will want to stay for 22 days. So unless people like that can travel by Skytrain, they will not be able to afford to travel at all. Nearly all businessmen, most tourists and most families who can plan their trips well in advance will continue to travel by scheduled or charter services out of convenient airports such as Heathrow or Gatwick. After all, provided one can plan one's trip well in advance, the cost of doing so will be much the same as Skytrain, except in the peak months in the case of scheduled airlines, or the months of July and August in the case of charter airlines.

Furthermore, there is the difficulty of getting to Stansted, which is a long and arduous journey by car, as noble Lords who have done the journey will testify, and it will be impossible to buy a ticket at any London office. It will be necessary to go to Stansted and wait about before one knows whether or not one will get on the 'plane. Then, a lot of people find travelling by air an uncomfortable and nerve-racking experience, but scheduled airlines and most charter airlines are able to provide duty-free drink, free food and a general cosseting, which gives considerable psychological reassurance to such people. For obvious reasons, Laker Airways will not be able to follow suit to nearly the same extent. Even if Skytrain were to cut into British Airways' share of the North Atlantic traffic by more than the miniscule 5.4 per cent. which Laker estimates, I do not believe that this would justify taking the unprecedented step of revoking a valid licence, in a situation where the operator in question is totally without blame, thus depriving the consumer of the right given by the 1971 Civil Aviation Act to have provided for him or her air services which satisfy all substantial categories of public demand…at the lowest charges consistent with a high standard of safety. This is not a doctrinal or Party political matter. Apart from the noble Lord, Lord Lyons, on the Government Benches, I happen to know that the noble Lord, Lord Peddie, who, unfortunately, is not able to be here today, is a strong supporter of Skytrain, in contrast, for instance, to the noble Lord, Lord Balfour on the other side of the House, who is dubious about its merits. Therefore, I call upon all noble Lords in all sections of the House, who believe that the consumer ought to be given a chance for a trial period of two years—because that is all that is being asked for—to follow the noble Lord, Lord Strathcona, into the Division Lobby.

5.35 p.m.


My Lords, I shall try to be brief. First, I should like to join my noble friend Lord Kinnoull in the tribute he paid to the Civil Aviation Authority for the work it has done since it was set up. It is remarkable how few changes have had to be made in the guidance, and this is something which the House should note. I know how very difficult is the business of licensing air travel organisers, and I take it that the reason why paragraph 19 appears is to exonerate the Authority completely from any responsibility for what happens when the carrier carries people—I was going to say "cargo"—to their destination, so long as he gets them safely back again. However, I am tempted to ask; who is to be responsible for what happens in between at the other end? The least that is required is that, in some way or another, the customer, the consumer, the passenger or whatever he is called, should be enabled to know how much of what he is paying is for the charter of the flight, and how much is for food, bed and so on for his holiday at the other end.

The second tribute which I should like to pay is to British Caledonian. The acceptance of the Edwards Report was not an easy decision to make, and of course it inevitably meant that some adjustments had to be made in what was then a virtual monopoly of external services by BOAC. But British Caledonian has done very well, and one regrets that economic circumstances caused them to withdraw from North America. One can only speculate as to what would have been in the guidance had British Caledonian succeeded in North America. I should like to know at this stage what was the total revenue earned by British carriers for North Atlantic traffic.


My Lords, can the noble Lord repeat the question? I should like to answer it, and I believe that I can. But when he talked about "carriers", did he mean British Airways, British Caledonian and charters, or just British Caledonian?


My Lords, I was talking of the North Atlantic traffic, so it is mainly British Airways. Perhaps the noble Lord can give us the three figures: the figure for British Airways, the figure for the charter operators and the figure for the rest. On the subject of double designation, it is inevitable, in the circumstances which I have just mentioned, that it should cease. My noble friend Lord Kinnoull referred to stability, and I should like to echo what he said. The situation may very well change. I hope that none of us accepts that we shall be in our present economic trough forever, and I am sure that things will go ahead again. When that happens, it may well be that there should be double designation and, of course, the guidance does not completely exclude that. But it does exclude it without the consent of the party already designated. I think this goes a little further than the normal kind of provision.

I shall read the complete passage in paragraph 8, which states: Nothing in paragraph 7 should, however, prevent the licensing of: (b) British Caledonian Airways or another British airline to provide a scheduled service within British Airways' sphere of interest as defined by paragraph 7, provided British Airways has given its consent; or "— and the kind of words one normally finds are, "has not withheld its consent unreasonably." This would be a good amendment to make. Of course, exactly the same applies in the areas where Bitish Caledonian Airways are designated. They also should not unreasonably withhold their consent.

I turn briefly to the Laker question. I am sure that in principle we would all welcome innovation and experiment in this area of civil aviation. I think most of us feel that we have been cribbed, cabined and confined by the existing rules for far too long. We know the reasons: the safety factors, the need for international negotiation, bilateral agreements and all the rest of it, but here was an occasion for innovation and experiment. I join in what has been said by many of my noble friends about the cancellation of the licence. Unlike the noble Lord, Lord Monson, I think this is a matter of principle. It seems to me that it is wrong in principle that a licence to operate a service should be cancelled without fault on the part of the licensee, and if it is cancelled in the public interest then the licensee should be indemnified.


My Lords, may I interrupt the noble Lord—


No, my Lords; I am not going to allow the noble Lord to interrupt because I think I know what he is going to say and I am coming to it.


Right, we shall see.


My Lords, I am sure the noble Lord will forgive me. We do not know what loss is actually involved in this cancellation, but I think some independent person should find out. I think the noble Lord, Lord Brown, was about to say that the last Government revoked licences for BOAC.


My Lords, may I—


No, my Lords, I wish to finish this point.


My Lords, the noble Lord is quoting me.


My Lords, I cannot quote what the noble Lord was going to say; I was saying that in my judgment he was going to say this.


My Lords, the noble Lord must allow me the right to deny it.

Several Noble Lords



My Lords, I take note that the noble Lord wishes to deny it and I shall be glad to give way to him in a moment, but first I wish to make my point. The noble Lord may say—indeed the noble Lord, Lord Winterbottom, did say the other day—that the previous Government took away a licence from BOAC. The point there was that the Government had proposed and Parliament had accepted a policy: the policy, broadly speaking, of the Edwards Committee. That could not be implemented at all without some transfer of licences—a transfer obviously in the public interest. If any loss were to be incurred ultimately as a result of this, it would fall on the taxpayer and therefore the public interest was being sustained in this case by the Exchequer. It seems to me that the same principle should apply here.

I am not absolutely certain that I would really wish to support my noble friend's Motion as it stands, because I think this is a matter where one has to judge where the public interest lies. But I am absolutely certain that if the licence is cancelled there should be an indemnity paid since the cancellation is said to be in the public interest. I think one can rightly quote planning permission procedure here. If a planning permission is granted and it is subsequently revoked on grounds of public interest, then in those circumstances compensation is payable; I think the same principle should apply here. It may be, however, that Mr. Laker himself would prefer, rather than to have compensation at the present time, for the licence to be put in cold storage; if that is the better solution, think it should be adopted. For that reason I feel it right to support my noble friend. Before I sit down I believe the noble Lord, Lord Brown, wishes to say something.


My Lords, it really is quite improper for this House to try to call me to order because I rise to reject what the noble Lord has said he knows I was going to say when in fact I was going to say nothing of the kind. For those calls of "order" to be made to me is really unforgivable, because noble Lords in this House know perfectly well that when a Member is seriously misquoted—in hypothesis—he is entitled to rise and disclaim the hypothesis which is projected on to him by another Member of the House.

What I was going to say originally I will now say. It is not as necessary as it was, but it was this: how can the noble Lord, with a first-class degree in philosophy, at one and the same time support the principle of abolishing double designation and another argument in favour of Laker which produces a massive degree of double designation? They seem to be quite inconsistent arguments but apparently the noble Lord holds them both in his mind.


My Lords, first may I say that it was the noble Lord himself who was out of order in trying to rise to his feet when I was not ready to give way. I recognise that these things happen, and if I anticipated him wrongly it was simply that I wanted to conclude my argument at the time, and I feel certain that it was the right way to proceed. Having said that, I do not think there is any contradiction here at all. Double designation might be quite possible for an entirely new type of service. This is exactly what happened when charter services were originally introduced.


And Concorde, my Lords.


Yes, my Lords, and Concorde. It was a way of avoiding the very strict IATA rules, or letting them develop and evolve. I think it would be reasonable to do so in this case, and there does not seem to me to be any fundamental objection to this, except at the present time from Her Majesty's Government.

5.47 p.m.


My Lords, we have had an interesting and intriguing debate this afternoon and I should like to start by saying that, probably like several other noble Lords, I am not terribly happy about all the forecasts for expansion that we have had, and in particular on the North Atlantic run. As the noble Earl, Lord Kinnoull, said, we can all sometimes be blinded by figures. I am given to understand that the coordinator for British Airways has forecast that there will be a 6½ per cent. increase in travel over the North Atlantic in the next few years. At the same time a survey carried out in America by American Express said that if fares were reduced by 30 per cent. travel would increase by 49 per cent. These figures seem to be a little conflicting.

The noble Lord, Lord Strathcona and Mount Royal, and the noble Baroness, Lady Burton of Coventry, both said—I think quite rightly and it has been mentioned by one or two other noble Lords—that the airlines exist for the passengers and not vice versa. In that connection I should like to refer to what my noble friend Lord Amherst said about the amenities for travellers at London Airport, which still leave a lot to be desired.

Turning to the civil aviation guidance paper, the noble Lord, Lord Winterbottom, wrote to me the other day about British Caledonian and their route to Atlanta and Houston. I wonder whether he has any more definite views as at today's date. I should also like to ask the noble Lord, whether he can give some up-to-date information on British Airways' landing rights in New York for Concorde, bearing in mind that not only is this terribly important if the aircraft is to prove itself commercially viable, but particularly in view of the fact that I have been informed that Iran Air are getting more and more keen on buying aircraft 14 and 16 and wish to operate them from Teheran via London and Paris to New York.

Can the noble Lord please also tell the House how negotiations are going with the Indian Government so that the Australian route may be started, because I feel it is very important that if Concorde is to be a viable commercial success we should take advantage of it while we have it. In the not-too-distant future, towards the end of the 1980s, the Americans will probably have an advanced supersonic transport. Should Concorde prove itself commercially successful on the North Atlantic run—which I think is the hope of most noble Lords—would the Government consider letting British Caledonian maybe lease the Concorde for their South American run? For the benefit of anyone who does not know, there are wet leasings and dry leasings; a wet lease is the lease of an aircraft with its crew. On the subject of leasing, has any progress been made with the four airlines, SIA of Singapore, VIASA, Braniff and United who, I gather, have indicated a growing interest and a lot of enthusiasm about leasing Concordes?

My Lords, before I get to what must be the controversial part of this debate this evening, may I briefly speak on some figures of British Airways. Alas! British Airways suffers from that well-known illness, British disease. The company is as well-equipped as, and probably better equipped than, most of its rivals, but it needs nine men to make 1,000-ton kilometers available, as opposed to the eight men of Air France, and the six and a half of most other airlines. In spite of this extra manpower, it is also alleged—although I do not necessarily agree with this—that it makes poorer use of its aircraft. Whether this is due to inefficient management, restrictive practices, the airline's widespread route network, or its recent evolution from BEA and BOAC, I do not know. But I do know that British Airways earns a lower value per employee than most other airlines.

So I come to Skytrain. Until such time as it actually is "hatched from the egg", what we have said this afternoon must remain hypothetical. As I listened to the arguments for and against it, I felt like the noble Baroness, Lady Burton of Coventry—torn in two. I am in great sympathy with her feeling. With regard to civil aviation guidelines policy, we on these Benches have nothing against it at all. But as far as the Skytrain is concerned, it should not be a matter of Party, but of conscience, or one's own morality, for want of a better word.

In spite of the market researches that have been carried out, figures can be obtained which satisfy whichever side of the fence you want to sit on. I honestly think that most noble Lords who sit in this House and who are fair-minded must, somewhere deep down, agree that if Mr. Laker's licence is revoked, he will have had a very raw deal. The noble Lord, Lord Lyons of Brighton, put it far better than I can, at greater length and in more detail. Like the noble Lord, Lord Monson, and others this afternoon, I also believe that it is amoral to revoke a licence from an airline carrier who has not committed a misdemeanour—and to the best of my knowledge, Mr. Laker has not done that. The attitude of British Airways to Skytrain on 11th March was that because of little new demand, it will cause damage to British Airways. Again, such figures cannot be proved.

As was said by the noble Baroness. Lady Burton of Coventry, and my noble friend Lord Kinnoull, there seems to be two completely different and conflicting ideas about the Americans and Skytrain. Mr. Laker says they cannot operate; British Airways says they can. Will the noble Lord, Lord Winterbottom, please let us have the right answer? Mr. Laker also assures us that he will terminate or withdraw the Skytrain business, if he were granted it, if, through diversions, it became damaging to British Airways. That seems to be fair. If the Government are worried about this aspect, and the licence is not revoked, could not something be written into the terms of the licence which will guarantee this happening? I understand too that Mr. Laker is happy with the two-year trial period.

My Lords, I now want to quote one short passage from the Statement made by the Secretary of State for Trade on 11th February and repeated in this House. The right honourable Gentleman said: I have given further consideration to the proposed Laker Skytrain service but I remain convinced that in the conditions likely to prevail in the North Atlantic market for the foreseeable future Skytrain will develop relatively little new traffic. It would however add excess capacity and would do substantial damage to British Airways' existing services…. I am confident that the airline —Laker Airways— will continue to build up their already extensive charter business, particularly with North America, and my Department will continue to support them in this."—[Official Report; 11/2/76; Col. 105.] Perhaps I am a simpleton, but these sentences seem to be entirely contradictory.

To my mind, one or two noble Lords this afternoon seemed to be much too worried about Mr. Laker going broke, and putting this up as an argument against Skytrain. That could well be left for Mr. Laker. In all sincerity, I think that the licence should not be revoked, and that it should be given the light of day before it is buried. Therefore, I ask the Government earnestly to reconsider their decision, or to postpone it, and to repeat that the airlines are here for the consumer. This amendment should not be a Party decision, but one of conscience, and I shall vote accordingly.

5.57 p.m.


My Lords, this debate has been separated into two parts. First, we have the Motion of the Government for approval of the new policy Guidance set out in the White Paper (Cmnd. 6400) and I would like to say immediately that I support the Government in this, although I would like to draw attention to just one or two points contained in the Guidance. Then we have the separate Motion in the name of my noble friend Lord Strathcona and Mount Royal, which calls on the Government to reverse their decision to instruct the Civil Aviation Authority to revoke the licence for the Laker Skytrain.

My Lords, we have had a debate in which different views have been put forward by noble Lords, some of whom have a long and deep interest and experience of this industry. But I think it is fair to claim that on this issue, my noble friend has made a formidable case. He has been supported by other noble Lords in different parts of the House. I trust that before the end of the debate, we shall hear that the injustice towards the enterprise of Mr. Laker at the very least in being reconsidered.

But first, may I welcome the Secretary of State's Guidance—not totally, but in this sense. Like the noble Earl, Lord Amherst, I believe the Guidance ends the long period of uncertainty, and that there is little doubt that British Airways and British Caledonian are thankful for this. In particular, the decision about spheres of influence will, I expect, now enable both airlines to develop, having only one-tenth of the revenue of British Airways. This is obviously a vital factor for British Caledonian which now will be able to begin to introduce the use of wide-bodied jets; and thirdly the petition in paragraph 6 of the Guidance that British Caledonian is the national second force airline now clears the air on that particular issue.

Therefore, there is no need to repeat the case for British Caledonian, which so effectively was deployed by my noble friend Lord Kinnoull on 22nd January. May I just say one thing on that matter? If one looks at Chapter II of the Edwards Report, one reads what the Committee, seven years ago, called the possible objectives for British civil aviation. The 10 objectives which they listed included satisfying the customer, achieving profits through efficiency, air safety, helping the balance of payments, providing opportunities for both employment and enterprise, and improving communications. I would contend that on these, indeed on all the 10 grounds which were listed in that chapter, British Caledonian have borne out the recommendation of the Edwards Committee to establish a second force airline and have borne out the decision of the Government of the day to support the setting up of British Caledonian.

Only the Government have the full facts from which the Secretary of State was able to reach his very difficult decisions and produce the new Guidance. It is true that paragraphs 10 and 11 of the White Paper give some information, but it is only in very broad terms. I should like, therefore, to ask one or two questions about the reallocation of the routes. First, clearly the Secretary of State has tried to balance the allocation of routes as fairly as possible. But civil aviation is a hazardous commercial operation and success must depend on developing profitable services. The White Paper says that the British Caledonian route to Venezuela, Colombia and Peru should be capable of being extended to Ecuador. The White Paper also includes the welcome recognition of British Caledonian's right to the Atlanta and Houston services. Will the Government give an assurance that whenever licences are granted everything possible will be done to try to secure the authority of the foreign Government concerned so that flying operations can begin? I am bound to point out that of the North Atlantic routes for which British Caledonian had been licensed only New York and Los Angeles were actually fully designated.

I think it can reasonably be claimed, therefore, as the airline has done, that those routes represent a considerable proportion of their potential future growth which they had not been able to test. That reminds one that Atlanta/Houston, a route which belonged to British Caledonian by the right of being licensed, is now also waiting for the proper international agreement to be forthcoming. Really the very slow process of turning a licence into a full right to fly must be radically improved, and I do not ask that on behalf of a particular airline but in the national interest.

My noble friend Lord Balfour of Inchrye and the noble Earl, Lord Amherst, drew attention to paragraph 12 of the White Paper, which refers to future discussions between the two airlines on co-operation. May I just say that I think this must be right. For instance, there must be compelling reasons to co-operate in the provision and use of various technical services, and my noble friend Lord Balfour, with his long experience, mentioned another reason as well. But I doubt whether this co-operation is actually going to ensue unless some other help is forth-coming—I think my noble friend said, from the Civil Aviation Authority—possibly from the Government. And, of course, co-operation will not be achieved unless criticism of the new Guidance as being unfair to one airline or the other ceases—and may I quickly say that it is not coming from either airline. Some real sacrifices are being required, not least from staff who are having to be moved from one route to serve another. Within the context of the Secretary of State's policy, I believe that the decisions he has reached on this matter give a fair chance for British civil aviation to develop.

My last question about the Guidance is this. Like the noble Baroness, Lady Burton, I am not entirely clear from reading the text whether the Government's prohibition of dual designation is something which is going to be reconsidered by the Government as a matter of policy according to the state of British civil aviation. After all, Concorde is a form of dual designation; so in a sense are the charter services, because they are a different type of service, as my noble friend Lord Trefgarne put it. Paragraph 12 of the Guidance appears to indicate that the Secretary of State would not be obsolutely dogmatic on the dual designation issue, and I very much hope that this is the case. After all, no one can tell what the future holds for air travel. What is certain is that just as Concorde has become a reality because it is not in human nature to deny innovation, so the reality is that as time goes on more and more people will want to travel. Already there are some signs, so my noble friend Lord Kinnoull said, of a recovery from the severe recession of 1974. And no-where is this more likely to become apparent than across the North Atlantic. The United States economy is recovering, and the present disparity of exchange rates is, I should have thought, bound to attract United States citizens to this country in large numbers. Although I know he did not get absolute acceptance of his point, I thought my noble friend Lord Trefgarne made a valid point in saying that if the United States can have what is really triple designation perhaps under certain circumstances we could have dual designation.

I am not in any way contradicting my noble friend Lord Balfour, who said that in present circumstances single designation is about right; but I would ask that, if a revival in passenger air traffic begins and is sustained, the wish of the Civil Aviation Authority—so it was recorded by the Secretary of State in another place—to be given greater freedom to allow some dual designations not be wholly denied. After all, civil aviation is at the mercy of events, political, military, monetary and social, and it must make sense for an airline to be able to seize the chance to develop profitably when those opportunities occur. It may just be that before long the North Atlantic will provide such an opportunity. All am asking is for the Government to recognise that this may in the future be the case.

The issue of Skytrain, which has been raised by my noble friend, is, I think, entirely separate, and I emphasise this because, whereas the Secretary of State has reached difficult decisions with regard to British Airways and British Caledonian by imposing a degree of give and take in order to reach a solution, the Secretary of State has elected to kill Mr. Laker's Sky-train project stone dead. My noble friend and other noble Lords have argued this case at some length, and I think to great effect. I would only put some questions, if I may, to the Government.

First, when everyone—not least the Government, and quite rightly so—wants certainty in order to plan for the future, is it wise to cast doubt upon the judgment of the Civil Aviation Authority in this way? After all, when all is said and done, Skytrain is licensed. It is true that the Authority has recognised that it could not recommend a suitable date for launching the new service. But, as I understand it, Laker Airways recognise this, do not propose to start until next year, and could not do so anyway until agreement is forthcoming from the United States. The Laker Skytrain licence runs for 10 years from 1973, and it strikes me—I hesitate to put this forward when the chairman sits listening silently—that the Civil Aviation Authority might reasonably take the view that it has made it clear that the present moment might not be opportune, that in principle Mr. Laker has made his case and his day will come.

My noble friend Lord Strathcona and Mount Royal and the noble Baroness, Lady Burton, mentioned the valid point that neither the White Paper nor Government statements have mentioned the customer. If one glances at Page 9 of the Edwards Report, one finds these words written: One of the odd things about statements on civil air transport is that they very rarely talk about the customer in simple language. So let us say that in our view the primary long-term objective of a national policy towards commercial flying should be to see that each customer, be it for personal travel or for freight, gets what he wants, not what somebody else thinks he ought to want, at the minimum economic price that can be contrived. What will happen if the Civil Aviation Authority, bearing those words in mind, feels that it cannot accept the Secretary of State's guidance and simply takes no action to revoke the Skytrain licence?

Secondly, why do the Government—it was done in another place and it has been done by the noble Lord again today—make the mutually contradictory assertions that, on the one hand, Skytrain would damage British Airways and, on the other, the Skytrain concept is not an improvement on the existing structure of services? Both assertions cannot be correct. Either Mr. Laker has hit on a new service which would be preferred to other services, or he has not. Or is there perhaps a third option? Would Sky-train attract new travellers? The noble Lord will forgive me if I say that I sometimes wonder whether Ministers have any idea of the appalling cost of travel today. Simply to get to an airport costs a fortune, and there must be many people—and I say this seriously to the noble Lord—who would welcome the level of the fare of Skytrain without the conditions which have to be imposed by charter and tour flights. The noble Lord, Lord Brown, said that he was quoting a Laker return fare because it would be comparable with other services. The whole point of this debate is that the Laker Skytrain and the other services are not comparable: they are, as my noble friend Lord Drumalbyn said, an experiment and an innovation.

Thirdly, on the question of diversion, the Department of Trade Red Book estimates 25 per cent. of newly generated traffic. Mr. Laker does not agree. My only conclusion is that no one really knows how much traffic would be diverted because all the statistics refer to the past. But what we do know is that the Government statistics are not really very reliable. First, because, as my noble friend Lord Kinnoull pointed out, they make an assumption that diversions would he greater from scheduled than from charter services, and I should have thought that that was questionable. Secondly, the Government statistics have been taken between the years 1973 and 1975 when air travel was in decline, a situation which everyone in this House agrees would not be a suitable situation in which to introduce the Skytrain service.

In those respects, therefore, I believe that the Secretary of State has taken his decision to kill Skytrain on a false premise, and that the mistake is compounded by the false assumption that a competing United States Skytrain would start simultaneously. Having listened to the whole debate, I should have thought that there are rather tenuous grounds for such an assumption, and no grounds for the way in which the Department of Trade, with vivid imagination in its Red Book, has allocated what the noble Lord, Lord Lyons of Brighton, called, "thundering herds of Skytrains" to be operated from different parts of Europe by apparently all the airlines of the world. If, however, there is anything in the Department of Trade's contention, should it not lead the Government to consider whether Skytrain is perhaps a most attractive proposition commercially which should be encouraged so that Britain would get in at the van? Let me ask the noble Lord a last question. What would the Government do if the civil aeronautics board in the United States licensed a United States Skytrain in a context of sharply improving air travel? Would the Government refuse designation until our scheduled national flag carrier on the route, British Airways, could start one, also? That would be a monstrous injustice to the man who pioneered the whole idea.

The Government have a serious case to answer over their conduct towards Laker Airways. Under the existing guidance Mr. Laker succeeded in making his case before the CAA. He has raised considerable finance and he has purchased aircraft, but now the Government step in and reverse the CAA's decision. As my noble friend Lord Drumalbyn said here was a chance for innovation. Surely there is a compelling case to allow Skytrain at least a trial period. It is going to be very little use Ministers exhorting industry to invest if this is going to be the reward for enterprise and hard work. I think that the Government have taken a rather shabby decision based on incomplete evidence, and I trust that the decision can be reconsidered before it is too late.

6.14 p.m.


My Lords, I am grateful to the noble Lord, Lord Belstead, for the way in which he has welcomed the document relating to the directive and the general terms in which it has been written. Like him I should like to split our discussion into two halves: the first relating to the Guidance document itself, and the second relating to the Government's attitude in relation to Laker Airways and the Skytrain. The two hang together and are closely interrelated, but noble Lords are in fact discussing two separate issues and I should like to try to separate the two strands as best I can.

May I first turn to various points made on the guidance document. I think it is true to say that the general sense of today's debate is that in general double designation is damaging in the world economic climate in which we find ourselves. The case was made most strongly by my noble friend Lord Brown, with his previous deep experience of the situation of the aviation industry in the days when he held a most responsible position in the Board of Trade. Another point made very clearly early on in the debate by the noble Lord, Lord Balfour of Inchrye, was that the reason why we have a new set of guidance rules for the aviation industry was that out of an apparently sunny sky we were struck by the use of the oil weapon by the Arab countries which has led to the various economic difficulties facing all the Western nations of the world, one of which (and only one of which) is the problem which it imposed on world aviation. Everybody seems to forget, when arguing about our present economic discontents, this sudden blow that all Western economies received. It is the problems following upon that blow which my noble friend the Secretary of State has tried to resolve by this new set of rules of guidance to the Civil Aviation Authority. That is the first point I want to make.

I think that the most important point made by various noble Lords in the House was on the question of the position of the customer within the terms of guidance given to the industry. My noble friend Lady Burton was very strong on this point. However, the customer is not forgotten. The new Guidance in fact starts with the same words as before: Civil air transport exists by serving the public. The Authority should inform itself of the public's needs and take full account of them. That is a good statement of intent. In fact, the realities of the economic situation are even stronger than the statement of intent itself. The hard fact of economic life is that airlines prosper or do not prosper according to whether or not they serve the public who are their customers. If an airline is slovenly, late, and considered unsafe, then the various customers will travel by another airline. So the real discipline upon airlines is not so much directives in a White Paper but the service that these airlines can give to the consumer himself.

One point made by the noble Earl, Lord Kinnoull, is important. British Caledonian has won a very warm position in the heart of the travelling public because of the high quality of service it provides over a large number of routes on the short run and the long run. Having said that, may I say that I hope my noble friend will recognise that there can be no customers unless airlines exist. Airlines can exist only if, taking one year with another, they can run on a reasonably profitable basis. That is why the Government have been forced to lay down certain guidelines, reached after very careful thought and long discussion—in fact, the Government have been criticised for the delay in producing these guidelines—in the hope that the best solution of the economic problems of all the flying interests in this country can be resolved by taking these economic considerations into careful study and laying down a policy which will prevent wasteful competition between airlines in this country which should be uniting to fight the very powerful foreign competition which they have to face.

I wish to make an important point in reply to my noble friend Lady Burton of Coventry. She asked a question which I cannot answer in this debate, and a similar question was asked by the noble Lord, Lord Trefgarne. That question is about the interrelationship of the Civil Aviation Authority and this House and another place. The CAA is a State corporation but with as much independence of judgment given to it as is considered possible. As I understand it, my noble friend is anxious that the Airline Users' Committee should be freed from its relationship with the CAA and presumably given the power to question Ministers directly on various points of policy relating to the consumer, the air traveller. This is an interesting point but I do not think it is one that should be discussed today.


My Lords, I wrote to my noble friend last week and I gave him specific paragraph numbers today. I asked him if the Department of Trade had an opinion on the Report of the Select Committee on Nationalised Industries in regard to the Airline Users' Committee being given teeth of its own. As the document we are discussing was presented by the Secretary of State for Trade, I asked if that Department had or did not have an opinion.


My Lords, I have not had the benefit of being able to discuss the letter which my noble friend sent to me with the Department. In any case, I believe that this is a subject which could best be discussed not when we are discussing the guidance which is being given to the CAA but on another occasion; for example, perhaps when the annual report of the CAA is being debated in this House. This might act as a reply to the question asked by Lord Trefgarne. His search for facts is important and praiseworthy, but I think it is not a subject for today. The conditions under which such a debate might take place might be a debate raised on the annual report of the CAA. I think that that could be a most interesting debate because in its short life the CAA has been able to give very valuable service to the flying side of the aviation industry. What we are discussing today, however, is commercial guidance to the industry as a whole.


My Lords, do not the guidelines go in some detail into the finances of the CAA and was not the burden of my question the cost of a particular aspect of the Authority's activities, which, after all, have some bearing on the guidelines?


The noble Lord has a certain amount of right on his side, my Lords, but answering a question such as that in detail would come in much better perspective within a debate on the activities of the CAA as a whole and within the framework of its annual statement of accounts. I have, in fact, received two pieces of advice on the point raised by the noble Lord but they are not quite the same, so I would be grateful if he would not press me too hard to deal with the subject now.

The next point of major importance raised by several noble Lords, particularly by Lord Belstead, was on the question of co-operation between British Caledonian and British Airways immediately after the coming into effect of this guidance document. I think it true to say that no Government can impose collaboration on two commercial organisations; they can only encourage it. However, noble Lords will be interested to know that a joint airlines team comprised of representatives of British Caledonian and British Airways is currently visiting South America to make arrangements for the smooth transition from British Airways to British Caledonian. Both airlines have indicated then intention to examine the scope for increased co-operation in the commercial and technical fields and I am sure that we would all welcome such progress as is possible in these areas. Lord Balfour of Inchrye mentioned another area where collaboration might occur—in air safety and accident inspection—and might bring about major economies. The points which noble Lords have made will, of course, be carefully studied by my right honourable friend the Secretary of State. I hope I have answered the various points relating to the guidance and if noble Lords have other points they would like answered they will doubtless draw my attention to them.

The Earl of KINNOULL

My Lords, may I ask the noble Lord whether he will write to noble Lords who made points which he has not answered? I made half a dozen which he has not dealt with.


That is my usual desire, my Lords. If I cannot answer from this Box a question asked by a noble Lord, I try to answer in writing; some matters are complex and are better dealt with in that way.

I come to the difficult affair of Skytrain. I have great sympathy with noble Lords who claim that we are lost or, to put it bluntly, are being blinded with science and statistics; according to the set of hypotheses one takes up, one can reach almost any conclusion. Having had time to study the matter, I believe that the case for the Government's withdrawal of this licence is strong. It is based on the arguments made strongly by my noble friend about the illogicality of supporting the concept of double designation and then promptly proposing an even larger dose of double designation to follow on the guidance. Most noble Lords are basing their arguments on the actual public pronouncements of Mr. Laker and I wish to deal with one of them; that is, whether the introduction of Skytrain by Mr. Laker would lead to damaging competition across the North Atlantic, and I will give the view of Her Majesty's Government on that point.

In August 1975, following upon pressure from this Government, the United States authorities gave an assurance that if in future we decided that Skytrain should start, they would give prompt attention to the issuance of a foreign air carrier permit at that time. Although they gave that undertaking, they did not give any undertakings about the terms and conditions of the permit, which might well be very restrictive. For example, although the figure of £59 has been quoted throughout this debate, that figure has been plucked out of the air. That figure was approved by the Civil Aviation Authority last year but the Authority itself said that the figure would have to be reviewed before the service started. So £59 is not a firm figure. The licence, when granted, could reduce the amount of capacity below the 250,00 seats per year licensed by the Civil Aviation Authority and the United States authorities could specify different airports. If we entered into negotiations when there is no American agreement to the proposed licence we could run into trouble over fares, seats permitted and airports used. The United States authorities have always emphasised their concern about the proposed Skytrain fare because they regard it as uneconomic and diversionary, and they have described the proposed increase in capacity as "massive".

In the face of such competition from Laker, we have to expect the United States airlines to insist that they should be allowed to offer a matching service. The scheduled carriers—Pan American and TWA—both opposed Laker's application to the United States Civil Aeronautics Board, but they have made it clear that, if Skytrain were to start, they would expect to be able to offer a matching facility. Noble Lords will appreciate that their permits currently allow them to operate all their scheduled services into Heathrow. It would require difficult negotiations to limit a "United States Skytrain" to only one of those airlines and to force it to operate to Stansted like Laker Skytrain, given that their existing services are based on Heathrow. I believe that most damning of all is the view expressed by the Civil Aeronautics Board that, if Skytrain goes through, there would be an end to the capacity agreements which now exist between ourselves and the United States. It is those capacity agreements which brought a measure of sanity to the situation which ruled over the Atlantic immediately after the imposition of the oil weapon and the rise of three and a half times in oil prices.

So we are arguing this evening not about a fact but about a hypothesis. I suppose that I could bore your Lordships at some length with other statistics, but I do not propose to do so. We are arguing about a hypothetical project which more than probably would be killed dead by the United States Government. For that reason, this fact must be borne in mind by all noble Lords when they come to consider whether something precious has been killed or whether a rather attractive idea has died. I should, however, like to answer one point and I feel that it must be answered fairly firmly. A great deal has been said about the shabby treatment meted out to Mr. Laker in the course of the various negotiations. May I put on the Record the exact time scale of the negotiations? This review was announced in November 1974 and Mr. Laker was invited to give evidence. His original submission did not, oddly enough, include Skytrain. Following the Civil Aviation Authority's review and report in February 1975, Skytrain was expressly included and Mr. Laker was invited to give evidence. He did so both in writing and orally.

I come now to the point which, in my view, counters the statement that Mr. Laker was told about the Government's decision only at the last moment. He was clearly told on 29th July, when the Secretary of State made a Statement in another place and said: I have accordingly told Laker Airways that in these circumstances the Skytrain service cannot be allowed to start."—[Official Report, Commons, 29/7/75; col. 1504.] That is the situation. Nearly nine months have passed since the time when Mr. Laker was told that Skytrain could not start. All noble Lords who have spoken in today's debate have agreed that, even if the licence continued in existence. Skytrain could not start now. Time would have to pass until traffic over the Atlantic reached a level at least equal to that of 1972.

We come now to the rather more important question of the morality of the action. The Government are said to have acted immorally and to have treated Mr. Laker shabbily. We have a precedent which has been dealt with by my noble friend Lord Brown and by the noble Lord, Lord Drumalbyn. Active licences were withdrawn from British Airways and transferred without compensation to British Caledonian. I feel sensitive not so much on the point of withdrawal of the licences from British Airways—because it is an organisation which is underwritten by the Government and the situation is, in that sense, different—but because I am concerned about whether something of value has been taken from Mr. Laker, although it is of future rather than present value. I shall certainly draw the attention of my right honourable friend the Secretary of State to the point made by the noble Lord, Lord Drumalbyn, that damages might be costed and to the idea of the withdrawal of licences as a loss of something of value. This is almost certainly not the last time that a licence will be withdrawn and I believe that it is worth thinking about this question in the context of what might happen in the future.

Again, thinking in the context of the future, I believe that it was the noble Lord, Lord Belstead, who asked me if it were not possible that, if conditions improved, double designation in certain areas might again be considered. I am sure that this is true and that the guidelines are not rigid. If the Civil Aviation Authority considered at some time in the future that double designation was advisable on some routes, they would no doubt give advise to that effect. The noble Lord, Lord Drumalbyn, pointed out that the original guidelines have lasted pretty well when it is considered that this is their first revision. The original guidelines lasted for five years and the present ones may also do so. One noble Lord mentioned 20 years, but I believe that it is most improbable that they will last so long as that. The guidelines are a flexible document, negotiated in such a way that it is hoped that they will last for a considerable period and will give continuity to the industry as a whole.

I hope that I have convinced your Lordships that we are arguing about a hypothesis. The real problem is that Mr. Laker may or may not have suffered damage, but no one can really prove it. I believe that it is worth carrying out the study suggested by the noble Lord, Lord Drumalbyn, but may I draw your Lordships' attention to the situation if, after the second Question is put, the Government are defeated on the issue of Laker? I appreciate that a number of noble Lords have expressed their support for the Motion in the name of the noble Lord, Lord Strathcona and Mount Royal, which appeals to the Government to reconsider their decision in respect of Skytrain. Naturally I shall convey the views expressed in the House this afternoon to my right honourable friends the Secretaries of State for Trade and Industry and I know that he will give them careful consideration. However, I would remind the House that general support has been expressed in this debate—and I thank noble Lords for it—for the draft policy guidance for which I am seeking approval. Of course, it has already been approved in another place. If this House also gives its approval, the way will be clear for the Secretary of State to give guidance to the Civil Aviation Authority in the terms of the draft. He is, I know, anxious that new guidance should be given at the earliest possible moment so that the Authority and the industry shall not be left in uncertainty. Subject to that, my right honourable friend will take careful note of the views expressed in this House, and I shall ensure that they are drawn to his attention.

On Question, Motion agreed to.


My Lords, the House will be relieved to know that I am not about to make a speech. I ended my speech during the debate on the earlier Motion by moving the Motion which stands in my name. In doing that I hoped to be helpful and wished to avoid confusion, but I now learn that I was, strictly speaking, out of order and so I apologise to the House. I now beg to move the Motion that stands in my name on the Order Paper.

Moved, That this House calls upon Her Majesty's Government to withdraw the instruction to the Civil Aviation Authority to revoke the Laker Airways "Skytrain" licence.—(Lord Strathcona and Mount Royal.)

6.41 p.m.

On Question, Whether the said Motion shall be agreed to?

Their Lordships divided: Contents, 83;Not-Contents, 68.

Abinger, L. Ferrers, E. Redesdale, L.
Airedale, L. Fraser of Kilmorack, L. Reigate, L.
Aldenham, L. Gisborough, L. Ruthven of Freeland, Ly.
Allerton, L. Gowrie, E. St. Aldwyn, E.
Amory, V. Gridley, L. St. Davids, V.
Auckland, L. Halsbury, E. St. Just, L.
Balerno, L. Hanworth, V. Salisbury, Bp.
Banks, L. Harmar-Nicholls, L. Sandford, L.
Belstead, L. Harvington, L. Sandys, L. [Teller.]
Berkeley, B. Hornsby-Smith, B. Seear, B.
Bessborough, E. Kimberley, E. Selborne, E.
Brougham and Vaux, L. Kinnoull, E. Shannon, E.
Campbell of Croy, L. Long, V. Sharples, B.
Carr of Hadley, L. Lothian, M. Shuttleworth, L.
Carrington, L. Loudoun, C. Somers, L.
Cathcart, E. Lucas of Chilworth, L. Stamp, L.
Coleraine, L. Lyell, L. Strathclyde, L.
Cottesloe, L. Lyons of Brighton, L. Strathspey, L.
Cross, V. Lytton, E. Strathcona and Mount Royal, L.
Cullen of Ashbourne, L. Monck, V.
Daventry, V. Monson, L. Terrington, L.
de Clifford, L. Mottistone, L. Thorncycroft, L.
Denham, L. Newall, L. [Teller.] Trefgarne, L.
Drumalbyn, L. Nugent of Guildford, L. Vickers, B.
Effingham, E. Onslow, E. Vivian, L.
Elton, L. Pender, L. Ward of North Tyneside, B.
Faithfull, B. Phillips, B. Westbury, L.
Falkland, V. Rankeillour, L. Young, B.
Douglas of Barloch, L. Milner of Leeds, L.
Douglass of Cleveland, L. Morris of Kenwood, L.
Amherst, E. Elwyn-Jones, L. (L.Chancellor.) Northfield, L.
Aylestone, L. Evans of Hungershall, L. Oram, L. [Teller.]
Bacon, B. Feather, L. Paget of Northampton, L.
Balogh, L. Fisher of Rednal, B. Pannell, L.
Birk, B. Geddes of Epsom, L. Parry, V.
Blyton, L. Gordon-Walker, L. Pitt of Hampstead, L.
Boothby, L. Gore-Booth, L. Platt, L.
Briginshaw, L. Goronwy-Roberts, L. Popplewell, L.
Brockway, L. Hale, L. Ritchie-Calder, L.
Brown, L. Harris of Greenwich, L. Sainsbury, L.
Bruce of Donington, L. Henderson, L. Shepherd, L. (L. Privy Seal)
Buckinghamshire, E. Houghton of Sowerby, L. Shinwell, L.
Burton of Coventry, B. Jacobson, L. Slater, L.
Castle, L. Jacques, L. [Teller.] Stedman, B.
Champion, L. Kirkhill, L. Stewart of Alvechurch, B.
Collison, L. Leatherland, L. Strabolgi, L.
Cooper of Stockton Heath, L. Lee of Newton, L. Taylor of Mansfield, L.
Crowther-Hunt, L. Lloyd of Hampstead, L. Wallace of Coslany, L.
Darling of Hillsborough, L. Lovell-Davis, L. Wells-Pestell, L.
Davies of Leek, L. Maelor, L. Winterbottom, L.
Davies of Penrhys, L. Melchett, L. Wootton of Abinger, B.
Donaldson of Kingsbridge, L.

Resolved in the affirmative, and Motion agreed to accordingly.