HL Deb 11 July 1980 vol 411 cc1439-40

11.9 a.m.

Lord MERRIVALE

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

The Question was as follows:

To ask Her Majesty's Government what is their forecast of profitability for airlines, by reference to traffic statistics, of a two-carrier, three-carrier and four-carrier regime for the first two full years of operation, that is, 1981–82 and 1982–83, between London and Hong Kong; and how they can justify the viability of a four-carrier régime.

Lord TREFGARNE

My Lords, in taking his decision the Secretary of State had regard to the profitability forecasts which were given in evidence at the hearing before the Civil Aviation Authority. The Secretary of State, in considering an appeal, must do so on the basis of the evidence given at the hearing and he was satisfied that on the market forecast by Laker four carriers could operate profitably.

Lord MERRIVALE

While thanking the noble Lord for his reply, I see he refers only to Laker. Would the noble Lord agree with a first-year forecast, in these figures mentioned, of £79 million costs against revenue of only £70 million with the presently licensed three-carrier régime? So, if a fourth carrier is licensed with seven flights a week, requiring £38 million extra costs, would my noble friend not agree that profitability in the first year would be even more disastrous?

Lord TREFGARNE

No, my Lords, I would not agree with that. Costs depend, first, upon the efficiency of the operator, and the revenue depends on the efficiency of operators in securing business.

Lord REIGATE

My Lords, would not my noble friend agree that the introduction of a large element of competition is thoroughly to be welcomed?

Lord TREFGARNE

Yes, my Lords.

Lord MERRIVALE

My Lords, would not the noble Lord agree that in the figures that he did not mention, of those put up before the CAA, with a three-carrier regime, as forecast in London, in comparative terms there would be a loss of profitability of £412,000, and with a two-carrier regime as forecast in London there would be a profit of £2,320,000?

Lord TREFGARNE

No, my Lords; the profitability of the three- or four-carrier régime depends, as I have said, upon the efficiency of the carriers and the costs which they therefore incur followed by their success or failure in obtaining the necessary business.

Lord CAMPBELL of CROY

My Lords, is my noble friend aware that with some of the proposals for low-cost flights—for example, £99 to Hong Kong—it may soon be cheaper to fly from London to Hong Kong than from London to Inverness?

Lord TREFGARNE

My Lords, that is an interesting point.

Lord MERRIVALE

My Lords, in view of the extra strong support that Her Majesty's Government are giving to Laker, in terms of justice and fair play would he not agree that Her Majesty's Government should strongly support British Caledonian's application to the CAA to have a right to land in the Middle East? At the moment the other two licensed airlines have that right, which therefore adds to their—that is Cathay's and British Airways'—profitability.

Lord TREFGARNE

My Lords, the first part of my noble friend's supplementary, suggesting that we are specially supporting Laker, is a mistake. We are not specially supporting any particular carrier. As regards the British Caledonian application to the Civil Aviation Authority, that is a matter for them upon which I could not comment.