§ 3.1 p.m.
§ Lord Glenkinglas rose to call attention to the state of the British civil aviation industry with special reference to the condition and situation of British Airways and of the airports operated by the British Airports Authority; and to move for Papers.
§ The noble Lord said: My Lords, it was with some trepidation that I viewed the possibility today of moving this Motion knowing my love for short speeches and realising the great width of this particular debate. But I was then considerably comforted by the thought that almost all of your Lordships are experts in the field of airports and airways, and so on, and that any shortcomings in my speech would be immediately and most adequately filled by speeches from other noble Lords.
§ It is just over 10 years since I was responsible for a short period, a year or two, for civil aviation, and I thought it might be of some interest to your Lordships—it certainly was to me, and I hope not too boring—if I look back to 10 years ago and think of some of the things that we found acute problems then and see how we have got on since. May I start by saying a few words about what I call the day-to-day problems which existed at that period. The first and most horrible problem that landed partly on my plate was the hijacking by Leila Khaled and her friends of a couple of aircraft on to what I believe is known as Dawson's Field. We had all the traumatic and appalling problems which immediately result from a situation of that sort.
§ It is a great comfort to all the airlines in the world to realise that since then the amount of hijacking in the 688 world has decreased enormously, and not least I hope to my noble and learned friend the Lord Chancellor, who at that time suggested that the only way of safety for air travellers was for everybody to be stripped before they went on board at London Heathrow airport. This was the moment when Oh! Calcutta! was first promoted in London. Because there were no suitable rooms, or anything of that sort at London Airport, I had the most appalling vision of what London Airport was going to look like if we were forced into that ultimate solution. But thank goodness that at least seems to have passed, if one may touch wood, and hope that it will be a continuing success.
§ My second day-to-day problem in those days was aircraft noise. There was hardly a single day when I did not have letters, petitions, and problems about noise around our main airfields; Heathrow, Gatwick, Luton, and to some extent later on at Edinburgh, Glasgow, and so on. It was an acute problem. Your Lordships will perhaps remember that a few years earlier we produced that wonderful aircraft the VC.10, which was advertised as, "The aircraft that leaves its noise behind it". This may have been entirely satisfactory for those people who were lucky enough to get on to that excellent aircraft, but it produced a few problems for the people on the ground. But with the arrival of the RB1–11 and now the RB2–11—of which I see the thousandth model was on its test bed this week—the noise problem has at least been, if not solved, very much mitigated.
§ Then there was the great controversy at the time about the third London airport. If it had been agreed to go ahead with Maplin at that time, which was thought to be the right solution by some, although not by all, Maplin would have been in existence today. Now once more we are looking for a possible third airport. I am told, though I do not move in those circles any more, that the most likely contender is Stansted, which was the one that was thrown out some 15 years ago and then we had to look for an alternative. We are more or less right back where we started. I recall that in those days I was assured by several people that by this time almost all aircraft would be vertical take-off aircraft and that one did not need long runways or anything of the sort. I just notice that for the first time this week British Airways have bought a number of vertical take-off helicopters to operate in a slightly different field, but otherwise aircraft still seem to be trundling up and down runways at rather greater speed but in very much the same way they did ten years ago.
§ Another of the day-to-day problems at that time was the procurement of aircraft. There were great arguments about Concorde. I think the first moment that I got into my office I was presented with a bill for a sort of facial operation to the Concorde. I think it was called "a redesigned nozzle" which cost £52 million, which seemed to me at the time to be the most expensive facelift I had ever heard of. At least Concorde is now flying. People may argue, and I am sure will for a long time, whether it was a good or bad investment of money but it is certainly flying, and flying successfully on the routes where it can at the moment operate.
§ Then there were what you might call the longer-term problems which crowded in, so that one's day 689 was never anything but absolutely full with civil aviation problems, and they were mainly set off by a comprehensive and extremely good report by the Edwards Committee. They suggested the setting up of the Civil Aviation Authority; an authority which would combine a lot of regulatory affairs which has previously been dealt with by the Ministry, and which included things like the Air Transport Licensing Board and the Air Registration Board. My noble friend Lord Kings Norton saw me pretty regularly because he was very worried at the time whether the new set-up would adequately protect the safety of British aircraft, a safety about which he was extremely knowledgeable and competent. At his request we changed into some rather odd name, the purpose of which was to maintain the initials ARB. I had his assurance a minute or two ago in the Lobby that not only have the initials remained satisfactory but so has the work, so I am glad that that worked all right.
§ The Civil Aviation Authority, as you would expect, has worked on the whole with remarkable success since its inception, not least—and I think he probably would agree with me about this—because my noble friend Lord Boyd-Carpenter was appointed chairman and looked after it in the early days. But of course not everybody agrees with their decisions. How could they, when often they have to decide whether somebody should have a route and somebody else should not, and the person who does not get the route is inevitably upset that he has lost his case? By and large, however, it has worked extremely well and has certainly worked to the advantage of civil aviation as a whole and to the British section of it in particular.
§ Another of the Edwards Committee recommendations was the amalgamation of BEA and BOAC. Those two great parts of British aviation were a little like those families in Boston; the Lowells spoke to the Cabots and the Cabots spoke only to God. So far as I was concerned, BOAC were the Cabots and I was God, but I was God in a totally unsatisfactory situation because the Cabots insisted that they wrote the Ten Commandments and that often made it extremely difficult to achieve what one wanted by way of a smooth merger.
§ However, in the next year or two that was done. The purpose of the merger was largely to save a great number of jobs which were reduplicated by having the two separate corporations. That was not achieved. In 1971 there were about 26,000 people employed by BEA and the same number by BOAC. Last year there were 60,000, so not only was there not a reduction in jobs but there was an increase. The present new management are determined to get the figures down to well below the original figure of 52,000. They believe they can do it and I hope they can, because it is that more than anything else that has caused the great loss of money which has been only too obvious in the last year or two.
§ The third Edwards Committee recommendation was the setting up of British Caledonian. That was politically controversial at the time, and it was my job to see it through the House of Commons almost exactly 10 years ago. It is fair to say that British Caledonian, who had their own particular problems in 1974, met the problem of overmanning, dealt with it toughly and sensible and are now a much stronger 690 and better airline than they were then. If only BEA and BOAC could have done the same we would not now have the financial problems we have.
§ I am occasionally worried by the proliferation of routes, which is now under consideration. The problems which I find still needing a good deal of thought are the whole of the problems concerning what are called multiple designations, and I am sure the House mostly understands what that means; it means allowing several different airlines to operate the same route. It was clear and I think sensible that where one was thinking in terms of the very heavily used routes—London/New York, London/Los Angeles, London/Paris and so on—it was possible to have more than one British airline operating scheduled services, apart from charters or anything else, and in so doing to increase the total amount of traffic carried by British airlines. But if it is true that competition is a good thing, I do not think it is true that total competition is totally satisfactory. I do not believe—there is an argument going on about it now—that giving everybody routes into Hong Kong and on to Australia is necessarily for the good of British aviation as a whole.
§ Another problem about which I should like the Government to think concerns the pooling of airlines. This is really the negation of competition in any real sense because if a pooling operation is done—this is a Government-to-Government arrangement and is not generally done, if at all, by airlines—then if 100 people want to travel by Swissair from Zurich to London and one person wants to travel by British Airways, it does not matter because they are each charged one-half. They each get half of the fares, so there is really no sensible way in which competition works to improve a service when those services are pooled.
§ I should also like the Government to think seriously about the problem of getting private investment in one form or another into British Airways—and I hope we can avoid that ghastly word "privatisation". The Government want to get private money into the corporation and, if that is what they want, they must be careful about the number of profitable lines that British Airways are operating which they are giving to other people. If they are not careful, nobody will want to put money in.
§ A brief comment about IATA. There is no sensible justification that I or any other sensible person believes in for remaining a member of IATA. There is an important job to be done, but it is done by ICAO, the people who organise the international arrangement of these things, and IATA is just an expensive nonsense, a non-tariff barrier to trade which should be quickly removed.
§ On the question of air traffic control, I will only say that in America to move aircraft from one part of the country to another is enormously easier, cheaper and on the whole far more successful than is the task of moving them around Europe. We pride ourselves on trying to make Europe into a community, and I hope somebody will be able to do something about the air traffic control problems which cause British aviation great delays.
§ I must make a brief comment on British airports. They are very expensive compared with those of most other countries, though they provide slightly different 691 facilities. It is possible to price oneself out of a business, and if one studies what Schipol are trying to do now by way of advertising the marvellous facilities of Schipol, one can see what might happen; I do not say would happen because London is a much bigger draw than Amsterdam for most people. However, an airport like Sumburgh, which is not part of the British Airports Authority, because they were charging enormous sums, has perhaps been a major factor in British Airways buying Boeing helicopters, which now have sufficient range to avoid going into Sumburgh at all; and that cannot be satisfactory for those who spent a great deal of money developing it.
§ My final points about airports are some very old and well-worn ones. I picked up my British Airways News and read that they were having a splendid new promotion of whisky at £2.99 abottle. Whisky costs under £1 a bottle and I cannot see why they should be allowed to charge three times that amount and soak those of us who drink and travel at the expense of others.
§ Then the question of luggage trolleys. They breed, and I know where they breed because I watch them almost every week when I go to Scotland. In a corner near Gate No. 3, where the shuttle goes from, there are never fewer than 300 or 400 trolleys. The trolleys are desperately needed all over the airport by people who arrive with luggage and cannot find them. If any of your Lordships are in that position, let me assure you that if you go to the shuttle desk and pick up a little card, you will be allowed through into the shuttle area where you can collect and then come back with a trolley. There does not seem to be any other way to get one, at least in Terminal 1.
§ I have tried to keep my speech to under 20 minutes and I have only just done so. I am sorry that I could not be quicker. There are so many people who have done so much in this House for British Aviation; and I am looking at the noble Baroness, Lady Burton of Coventry, who I think has done more than anyone else in this House or the other House to try to get a really good deal for the consumer. I am very much looking forward to listening to the rest of the debate. My Lords, I beg to move for Papers.
§ 3.21 p.m.
§ Lord Ponsonby of Shulbrede
I am sure that the House would like to thank the noble Lord, Lord Glenkinglas, for introducing this debate this afternoon, so enabling your Lordships to have a comprehensive discussion on the aviation industry. Over the past year or two we have had a number of debates on different aspects of the industry, but the Motion before us today enables us to look at the aviation industry as a whole. As the noble Lord said in his final remarks, your Lordships' House has in particular excelled itself in acting as a watchdog for the consumer interest—travellers' interest—and that work has been spearheaded by the noble Baronesses, Lady Burton of Coventry and Lady Trumpington, on many occasions in this Chamber.
I was sorry that I was not present last week when the House debated Concorde, to which the noble Lord, Lord Glenkinglas, referred in his speech. Unfortunately I had to be in Geneva, performing some of my duties as chairman of the London Convention Bureau, 692 which exists to attract conferences to London. However that engagement gave me the opportunity to lunch with Mr. Hammarskjold, the Director-General of IATA, for whose views on the industry I have respect.
The noble Lord, Lord Glenkinglas, spoke in particular of the history of the industry over the past 10 years and reminded us of some of the problems that it has had to face during that time. On the whole I want to look at the situation as it is now and to consider what problems lie in the future. The most obvious, stark problem which we see is that of the grave financial trouble which British Airways is in at present, though there must be considered side by side with that the general overall state of the industry throughout the world. British Airways' revenue last year was £300 million down on expectations, and the indications are that the situation is worsening. The bottom line loss for British Airways as at the end of December was over £40 million, and the remaining three months of the financial year, which are traditionally loss-making months, are unlikely to show any improvement.
It should be emphasised that no European airline is prospering at the present time, and for the first time ever 1980 was a zero growth year in passenger traffic for IATA member airlines. For British Airways it was a year in which it saw a drop in its traffic of 10 per cent., compared with an annual growth rate of 10 per cent. throughout the 1970s.
As a consequence of that situation, airlines have filed negative sets of operating results, which means that there is no profit to bank to compensate for depreciation and to buy the next generation of aircraft that are vital for greater productivity and fuel economy. For IATA members 1980 can be assessed in stark terms: costs up 27 per cent.; revenues up only 19 per cent. Whereas British Airways had expected to fund about half of its capital expenditure programme this year from internally-generated funds, it is now found that this is impossible and all capital expenditure will have to be financed from external sources. The Government have recently given approval to further external borrowing by British Airways of £85 million beyond that originally set as a part of the public sector's external financing limits.
In the next few years we shall see a number of European carriers in serious trouble, and they are already reacting in different ways. They will be cutting back on staff, routes and facilities, and I believe that the industry needs a fuller understanding of the cost problems—both fuel and non-fuel—that it faces.
I think it helpful to remind ourselves that six of the top 10 airlines in Europe are British, and that there is a situation which might not be widely realised, in that a British airline such as Dan-Air is in fact a larger airline than Swissair.
As was said by the noble Lord, Lord Glenkinglas, in speaking about the multiple usage of particular routes, the Hong Kong situation which has developed over the past year means that there are airlines offering below-cost fares on long routes such as this. It is quite clear that such a situation cannot continue and that the honeymoon which the airlines at first thought they enjoyed when deregulation was taking effect is fast coming to an end. That inevitably means that 693 there will be commercial airlines that will go to the wall during the coming years. But it should be added that one cannot see that happening to national airlines.
One of the problems which the committee so ably chaired by the noble Lord, Lord Boyd-Carpenter, was looking at concerned the question of why European air fares are so much higher per mile than air fares in the States. The committee came up with a number of different reasons for that. Undoubtedly one reason lies in the fact that there are too many airlines in Europe, all with their establishment costs, and that is a situation which I think will be very difficult to resolve. If there is, as there is bound to be, continued national support—which one thinks is only right—for national airlines, it will create an artificial situation for competition in the industry. However, one should say that the airlines are more fortunate than the operators of airports, because if an airline finds it is in trouble it can switch its capital from route to route, or it can divest itself of its capital by selling off surplus aircraft; but, of course, an airport authority cannot take that particular action.
The year 1980 showed very starkly for the first time in the United Kingdom the link between prices and costs. The Government's policy on the future financing of airport development could be seen as directly affecting current airport charges, and thus the airlines' non-fuel costs. The industry has questioned the British Government's support for the campaign for lower European airfares in the context of its domestic policies on charges, which affect all major European airlines. The noble Lord, Lord Glenkinglas, mentioned the question of airport charges. The particular remark made to me last week by Mr. Hammarskjöld was that he felt that British airports were non-competitive; and one can understand what he meant by that. Lord Glenkinglas referred to them as being expensive.
Airlines have reacted to greater competition in different ways. Some are concentrating on the top end of the market and are limiting their capacity and sales in the lower yield sectors, like Swissair. Others are making a clear distinction between business and leisure traffic and are offering sharply defined products to both ends of the market, like Air France. A third group is down-grading its first-class service and relying on the emergence of a new, middle-market product, like British Airways. Innumerable promotional fares are now available to the public, and fewer than 25 per cent. of European air travellers buy a normal economy ticket. These evolutionary steps have the encouragement of the EEC Commission, the European Parliament and the Government. As to the ways that these particular airlines are adopting to solve their problems, one does not know, until one has hindsight, whether or not these will in fact prove to be the right solutions.
In the lengthy debates we had on the Civil Aviation Bill last year we discussed the case of airport charges, but this continues to be a sub judice matter, I assume. However, one can say on airport charges that the security levy has been held for the forthcoming year. However, a general point remains, which is that as the Airports Authority enters on to a period of intensive capital expenditure it needs to attract external finance, and it is up to the Government to provide support and to act as a broker in encouraging private investment and the underwriting of future programmes.
694 So far as airport siting is concerned, the endless Maplin-Stansted-larger Heathrow debate always fails to mention the user. There is, as I have said on many occasions previously, no God-given guarantee of the continued high-level involvement of British airports with the airline industry, and we must continue to make it attractive for airlines to use our major British airports. We must ensure that our London airports continue to be a major gateway for the airlines, and in particular the No. 1 gateway for airlines coming from North America into London.
Over the years there have been in this House continual criticisms of the facilities offered at Heathrow, of over-crowding there, and of lack of space. One should say that a lot of this has been caused by the need for the British Airports Authority to continue to manage at Heathrow, in many cases erecting more expensive buildings than they need erect because of the contraints of the site; because of the need to build down into the ground and of the need to build up. And the continued vacillation by many Governments of different complexions over the ultimate siting of a third London airport should be recognised. I think we know only too well (and I spoke previously about this) of the ability of airlines to switch their capital and of the inability of airports to do that.
Of course, the building of an airport which is found to be not commercially useful is a wasted expense. One can think of airports which were built on the assumption that aeroplanes would have to refuel before they landed in Europe, followed by the development of aircraft which did not have to refuel in the same way, as airports which were in fact in the wrong places at the wrong times. However, I feel that we have a fair assurance that the London airports will continue to be—and I hope the Government fully support this—the No. 1 gateway, and that the continued need of additional space in the area is one which will have all encouragement.
Having referred, on the one hand, to the poor financial results for British Airways, I think one should recall that during the most recent financial year Gatwick showed an increase of 12 per cent. in the number of passengers using that airport and Heathrow an increase of 1 per cent., whereas Amsterdam showed a decrease of 7 per cent. This, I think, shows a satisfactory situation for the British Airports Authority in their desire to switch an increasing amount of traffic to Gatwick.
There is one other aspect of the problem which I do not think has been mentioned so far, and that is the question of cargo. This is an area where British Airways have made considerable advances in the handling of air cargo in the last year, and this is obviously an area where one can see very considerable growth in the future. I was not expecting to speak for as long as Lord Glenkinglas but I see that it is almost coming up to 20 minutes. I have tried to touch on some of the problems concerning the different aspects of the industry. These are obviously problems which will have to be discussed again and again in the future and it is very difficult to focus one's telescope absolutely clearly on what the state of the industry will be 10 years from now.
§ The Parliamentary Under-Secretary of State, Department of Trade (Lord Trefgarne)
My Lords, before the noble Lord sits down, may I intervene for a moment on his reference to the question of British Airports Authority charges? He will know that there are legal proceedings on this matter at present, and I should like to refer to the second paragraph of page 84 in the Companion on this matter. It reads:Matters awaiting or under adjudication in a civil court should not be referred to in any Motion or debate on a Motion or in any Question, including any supplementary question, from the time that the case has been set down for trial or otherwise brought before the court".I have to say the matter has now been set down for trial in January 1982, and I am advised that it is strictly sub judice.
§ 3.42 p.m.
§ Earl Amherst
My Lords, I, too, should like to thank the noble Lord, Lord Glenkinglas, for raising this Motion but he has raised it in such wide terms that, in the interests of brevity, I think I shall confine myself to drawing attention to some of the more salient points. British Airways is the first "special mention" on the Motion and, like most airlines in the West, this airline is now suffering from a monumental slump in traffic. This condition is not helped by the current rises in fuel and airport charges; but as the noble Lord, Lord Trefgarne, has said that this matter is sub judice I had better say no more on that except that I hope that an examination will be made of this, with particular reference to how these charges impinge upon the very high fares charged within the United Kingdom for local services which are sometimes short- and sometimes very short-haul services. Compared with the passengers carried in 1979, in the first nine months of the current financial year the figures have dropped by something like one million passengers, which has resulted in a cut in British Airways' revenue of something like £3 million. I think that this was mentioned by the noble Lord, Lord Ponsonby of Shulbrede.
There is a considerable outcry over the high fares now charged for scheduled services in Europe. I am told that at a recent meeting in Geneva, British Airways was reported as having been successful in obtaining agreement with some of its opposite numbers in Europe to reduce some of these fares. Presumably, such reductions will have to be referred to the appropriate governments under the bilateral agreements affecting fares and rates. I wonder if the time has not come when we should seek to have these agreements revised, at least so far as they affect fares and rates, if only to bring an end to those airlines who sometimes oppose reductions for reasons of their own finance or prestige and then get their governments to exercise a veto by not approving the proposed fares. Perhaps the noble Lord may have something to say about this when he comes to reply.
I do not propose to go into the vexed question of bucket shop discounted tickets as to do so might preempt the discussions on this subject on a Motion that the courageous and (if I may say so) indefatigable noble Baroness, Lady Burton, is going to raise in a short time. On retrenchment to adjust capacity and costs to the traffic situation brought about by the slump, 696 British Airways have undertaken massive replanning to cover this winter season which has involved the following cuts. The service from Gatwick to Düsseldorf, Frankfurt and Zurich has been cancelled and so has the service to Georgetown as well as the Concorde service to Singapore. The services to Stockholm and Copenhagen from Gatwick have been combined and frequencies on some 40 routes and 80 services have been reduced. British Airways have recently sold off some £20 million-worth of aircraft. They are examining the possibility of leasing or selling one or two of the 747s now on order and have been able to arrange for a postponement of delivery of these.
In the past 18 months, British Airways has been able to reduce its work force by 4,000—and this by normal wastage, without having to resort to enforced compulsory redundancy. In each of the last two years, British Airways have increased their productivity by 10 per cent. on average which, I am told is a considerably higher increase than obtains generally in the industry. In the last two months of 1980, a 90 per cent. punctuality for departures and a 100 per cent. regularity was achieved—which are even better figures than that given last Monday by the noble Lord, Lord Lyell. We discussed the Concorde operations last week, so there is no point in discussing that again today.
To turn to airports, the second of the special references made in the Motion, I understand that the public inquiry concerning the provision of a fourth terminal at Heathrow has been completed, planning permission is now awaited and, if there is no delay in obtaining this, the building will be complete by 1985. The completion of the extention of the Piccadilly Tube from the central area to the new terminal is awaiting the outcome of negotiations as to who is to be responsible for the funding of what is known as the "station box", which is the structure which will house the tracks, platforms and other ancillary equipment required for the station which will lie under the new terminal. Can the noble Lord give any information about these negotiations and their progress? As I have told your Lordships before, while the operators welcome the provision of the fourth terminal, many of them (notably British Airways) regard it as a stop-gap and better than nothing and hope that the present policies will be reversed and that eventually the Perry Oaks site will be developed as a fifth terminal.
In regard to improvements, Pier No. 3 in Terminal One, which is a very long one, if not the longest in Heathrow, is now to be widened so that a travelator can be installed. This was originally asked for by BEA before that corporation took over the buildings, but the pundits of Whithall said no. It is good news to hear that the airport authorities have grasped the nettle so that in due course elderly travellers such as myself and others will not have to trudge its dreary length. A central control is also being installed, so that if a travelator or a moving staircase does not move, its location will be recorded immediately and engineers can be sent to make repairs. Some new model carousels have been installed where the cubic capacity allows, and this, it is hoped, will alleviate some of the delays that passengers have to endure and the long wait that they have had to put up with before they could claim their heavy baggage. It seems that much effort is being made to get rid of the causes of so 697 many delays and inconveniences that have long been complained about.
It was estimated before the slump that a ceiling of 30 million passengers would be the order of the day at Heathrow; but only the figure of 27 million was actually reached. The slump and, it is likely, the move to Gatwick of British Airways' Spanish services may account for this. However, until the fourth terminal comes it is probable that the continued passenger congestion will remain. As regards Stansted, it is reported that the public inquiry concerning its development will not start before next September. It will probably take some time, so, in the meantime, presumably no actual development work can start, apart from some planning.
From the report of the British Airports Authority which was recently published, it seems there are plans for British Rail to run a spur into the airport building from the Bishop s Stortford/Cambridge line. There are to be four special trains an hour going to and from St. Pancras which is a much more convenient London terminal for most passengers than Liverpool Street station. Special passenger facilities are to be installed at St. Pancras. Even so there will be considerable problems in effective, quick interlinking with services using Heathrow and Gatwick. The road running from the south end of the M.11 to the centre of London, even if you use the North Circular Road, will be lengthy and tiresome, especially at peak times. I wonder whether the noble Lord, Lord Trefgarne, can tell us whether there are yet any plans for transferring services from Heathrow and Gatwick, and, if so, which airlines and what services will be affected?
Last December, in his declaration of airport policy, the Minister expressed a hope that the congestion in the London and South-East area could be eased if more services could be dispersed to provincial airports and more services from those airports to Continental destinations could be developed. I wonder whether the noble Lord can tell us whether any progress has been made in the matter. I seem to have asked a great many questions of the noble Lord; but, as I have given him some prior notice, I hope that he will be able to answer some of them.
§ 3.52 p.m.
§ The Earl of Kimberley
My Lords, I should like to ask for your Lordships' dispensation as unfortunately I shall probably not be able to be here for the last speeches, because I have an appointment with the Under-Secretary of State for Defence and the All-Party Defence Study Group. I hope that I may be forgiven. I shall read Hansard tomorrow with great interest. Last Monday, when I raised the matter of British Airways' punctuality, it was said that it was very much improved. I have already mentioned two figures—that is to say, on the short-haul the punctuality percentage has improved from 45 per cent. two years ago to 82 per cent. this January; the long-haul figures from Heathrow are that about 70 per cent. of the flights are punctual, and that compares with the figures of 54 per cent. for Pan Am and 65 per cent. for TWA. I should like to reiterate that this can only reflect great credit on the management and staff of British Airways 698 and, in particular on Sir Ross Stainton, who has just retired.
However, not everything is rosy in Britsh Airways. There appeared to be inconsistencies between public policy in attracting a private sector shareholding in British Airways and the effects of licensing policy in British Airways' principal asset: its route structure. My noble friend Lord Glenkinglas referred to that. To enlarge briefly on this, a previous Conservative Government and a subsequent Labour Government thought that Britain would achieve and maintain its maximum share of global air transport if dual designation of British carriers were, at the very least, severely limited. As has been mentioned this afternoon, this policy was beginning to show some success, but of late it has begun to erode slightly. An excess of new competition on international routes in conjunction with the world recession makes it nearly impossible for British Airways to keep a balance between profitability and the maintenance of its market share, and Hong Kong has already been mentioned as a good example.
Many think that the negotiation of the so-called Bermuda 2A Agreement with the United States has produced a very unfavourable result for the United Kingdom. The British Government's exercise of choice in the new route options, which were ostensibly to help Laker and British Caledonian, may well have helped them but it has also given a considerable advantage to American operators; and so Laker's and British Caledonian's traffic to Hong Kong has no doubt, wrongly or rightly, hived quite a considerable amount of Gulf traffic away from British Airways. Of course, the same principles and arguments will apply to the Australian route.
Perhaps I could mention here that other carrries, not unnaturally, show a great interest in the "fattest" routes because these routes have been developed by British Airways with British Airways' money and expertise. We do not seem to see many applications for the less popular routes on which there are at present no scheduled services. Many, if not most, of the countries which run principal airports see it as their duty to help and give preferential treatment and exposure to their national carriers, but this does not appear to be the policy in this country. I was going to say something else about this, but in view of what my noble friend said about the British Airports Authority I shall remain silent.
I should like briefly to mention the security service which currently, in a full year, costs British Airways about £16 million, which is not an inconsiderable burden. I am led to believe that the security fund is already significantly oversubscribed. When my noble friend answers for the Government perhaps he could mention this. May I also mention helicopters? I know that my noble friend Lord Glenarthur is very much more expert than I am and will probably go into it in far greater detail, but if we look at the United Kingdom, over a period of years we have been virtually non-existent in helicopter development, despite that fact that geographically our country is one of the most suited for this type of air transport.
It must give us a lot of satisfaction that the only British manufacturer of helicopters—namely, Westlands—have at last realised the tremendous 699 potential that the civil helicopter has. Perhaps it should be brought home that we ought to export our high technology projects such as this. Westlands would be more than capable of doing this, particularly with the assistace of British Airways. Each Westland WG30 helicopter is worth about £1¼ million on the world market. I believe that we should really try for this because I am told that there is a market for at least 400 of these helicopters and it is an opportunity we cannot ignore.
That brings me to what appears to be reluctance on the part of the Civil Aviation Authority and the British Airports Authority to allow the helicopter service to link Milton Keynes with London Airport. I believe that progress is being made but the wheels are still turning very slowly. While on the subject we must remember that the Westland helicopter is full of British steel and British avionics and has a British Rolls-Royce engine. As the Government are well aware, there has been a lot of talk about a London international heliport. It has been discussed, I believe, between the Government and the Opposition, and there does not appear to be any objection to siting such a heliport down in the docks. Of course, this would again be a further way of alleviating the present depression being felt in the East London area. It would appear that if we had a heliport, there it could comfortably accommodate sometwhere between 6 million and 8 million passengers a year. I wonder whether the British Airports Authority have taken this into consideration when they have been considering Stansted.
I think it must be appreciated over the years that fixed-wing aircraft cannot always make profits over short sectors, and this is where the helicopter proves its worth. One has only to examine the successful service between Penzance and the Scilly Isles, which has been operating for something like 17 years highly successfully and highly profitably.
Let us hope that the Concorde operations, which were so ably debated the other night in connection with the Unstarred Question of my noble friend Lord Glenarthur, will continue. Let us hope that the punctuality will continue to improve even further and that the policies so well started by Sir Ross Stainton w ill continue. Sir John King, whom I personally know and who has a great expertise in the nuts and bolts as well as in the pursuit of the uneatable, will, I am sure, devote his considerable charismatic leadership as the new chairman to seeing that British Airways will be able to improve its performance in every sector, so that when we fly the flag every passenger will not cost the company £6 per head, as is reported in one of the newspapers today.
§ 4.2 p.m.
§ Lord Orr-Ewing
My Lords, before I start I should like to apologise because I also have to slip out at a quarter to five to discuss with the Minister for Air, defence matters which we are to debate shortly, but I shall be back in my place very soon thereafter. Therefore the Front Bench need not wag their heads in disapproval: I am just apologising because I shall not be here for one and a half hours.
I should like to join with others in congratulating the noble Lord, Lord Glenkinglas, for initiating this 700 debate. It is one with very widespread interests among the taxpayers of this country and among nearly 50 million travellers who travel by air every year. It is of interest, I think, to all those who wish to see Britain prosper through our invisible exports which foreign travellers earn for us and, above all perhaps, through our export trade. I hope to deal with those points in my speech.
First, the taxpayers. Among our nationalised industries which come up for quite a lot of debate in your Lordships' House, British Airways and British airports until very recently have been somewhat unique in that they have been profitable. It is sad, though, that possibly as a result of, or accentuated by, the world economic downturn or recession, British Airways, who in 1978–9 were making £90 million profit, only just broke even last year; and in the current year it is now forecast that there will probably be a loss of some £100 million.
The British Airports Authority, which is also included in this Motion, is expected to continue to make some small profits. Certainly these two corporations are not the voracious consumers of taxpayers' money which we have discussed when debating British Steel, British Rail or British Leyland. Until recently they have had a near monopoly position, and I would suggest that competition has too often been very restricted through licensing, through the pooling agreements to which my noble friend has referred and, to some extent, because of the IATA fare-fixing rules. I believe the time has come to amend these restrictions.
Until recent years, the growth of air travel has really been sensational. I am a believer in regional airports so that we are not centralised around the London area, but I shall concentrate on the performance of London's two main airports at Heathrow and Gatwick, since they handle so many more passengers than any other airport in this country or in Scotland or Ulster. Last year 27,500,000 went through Heathrow and nearly 10 million through Gatwick. Therefore in the period 1979–80 those two airports handled some 37 million passengers. At Heathrow on eight days during last August—many of us experienced this and thought there were even more—there were 100,000 passengers a day. That is a pretty formidable task to cope with. What is also significant is that of the 37 million travelling through Heathrow and Gatwick, 17 million were foreign visitors; not only travellers for holiday purposes, but also businessmen coming to this country.
The impression which these 17 million annual visitors get is absolutely vital. If a bad impression is created it may take years to rectify. If a good impression is created it will make a lot of difference to whether they start subsidiaries in this country, whether they buy our goods when they are back in their own countries and whether they decide to create jobs by the creation of businesses here—and we all want to see more jobs created. So part of the impression which is given when you come to this country, perhaps for the first time, is the way you are treated at London Airport or Gatwick. That is why I want to accentuate their importance.
What else does the traveller want? He wants first, perhaps, courtesy; secondly, efficiency; and thirdly, 701 the maximum of punctuality and the minimum of frustration. Who would say there is not one of those categories in which we could not do better? Could we not, as a race, be rather more courteous to our visitors? Could we not be rather more efficient in every facet of handling air travellers? And could we not reward punctuality? I shall develop these points very briefly.
I have to travel, as probably many of your Lordships have, once a month or more, sometimes to the United States and sometimes within Europe. When you arrive at London Airport—and incidentally you now, for security reasons, have to report one and a half hours before take-off, so it is probably 2½ hours at least after you have left your home—you have to consider the following things. Can you quickly find a baggage trolley? Most of you will find it is not all that easy. Do you have to queue for check-in, taking your heavy luggage along as you edge up the queue? Are all the desks fully manned? Is passport control, both for overseas visitors and for United Kingdom passport-holders fully manned? My personal experience is that they are generally restricted and that there is a queue.
Too often the lounges are grossly overcrowded and sometimes, when I have tried to get into the Executive Lounge, I have noticed very considerable criticism when the door is locked or there is no room. That airport has been there now for 35 years, and surely it is possible to enlarge the facilities for first-class passengers, who very often are business people and who expect a little more comfort and courtesy. They do not expect to be locked out if they are entitled to go there on their first-class ticket.
Is our punctuality beyond criticism? It may be Sod's Law, but one of the things I always seem to find with my particular aircraft—and I have realied that other travellers find the same—is that it is always in the very last position along those "fingers". You walk past the first one, which has always got meal wagons, petrol wagons, baggage wagons and everything else by it; you walk past the second, the third and the fourth. For those who are elderly it really is a long drag with your hand-luggage to walk half a mile without a travelator, right to the end of a finger where the aircraft always seems to be parked. In addition, en route you have generally to queue for security, though I think it has got better since the X-ray machines have been installed.
Inside the aircraft, is your seat as comfortable as it might be? Do you get a drink promptly offered to you?—because that seems to be something one needs amid the frustrations of air travel, and it seems to me that very seldom does it come within the first 45 minutes. When you arrive at the other end do you immediately get a bus, a taxi or your rail connection? The trouble is that this is a complicated chain and any single weak link of efficiency in that chain reacts back along the chain, and everyone is blamed. So I come back to the fact that people want efficiency, courtesy and punctuality.
I should now like to say something about British Airways in general. Your Lordships may have seen in Flight International a series of tables showing airline efficiency. In that article, which was published on 3rd January, there are eight sets of comparative tables which show how 12 different airlines use their 702 capital, their personnel and their aircraft. It is difficult to make sure that you are always comparing apples with apples and pears with pears, but if one airline is consistently at the bottom, or nearly at the bottom, of all those tables there must be something wrong with it. If you study that article you will find that, sadly—for every one of us is loyal and patriotic—British Airways are near the bottom of every single one of those tables.
My noble friend Lord Glenkinglas mentioned overmanning. When those two great organisations were put together—I am afraid that it was done in the era when biggest was best—it was believed that it would save manpower. But instead of saving manpower, the numbers have actually gone up and peaked recently at 59,000. I am sure that the new management, under Sir John King and the chief executive, Roy Watts, are doing their damnedest to bring those figures quietly and painstakingly down. I believe that the aim is to get them down to 50,000, but my own guess is that they ought to be nearer 40,000, if they are to compare in efficiency and make reasonable profits for future investment.
I should now like to say a word about punctuality. Two years ago on international flights, 80 per cent. of British Airways flights were more than 15 minutes late on departure or arrival; that is to say, only 20 per cent. took off punctually. I am delighted to see that there has been a campaign and that those figures have improved. I always try to travel by British Airways, while some of my friends travel by the alternative route. I have to go to Switzerland quite often, and my friends seem to get off on time and to arrive on time.
Some of your Lordships were part of the Lords and Commons ski club, which went across to compete against the Swiss parliamentarians in January. I am sad to say that we had 20 on one flight and 20 on the other, because you cannot put all your eggs in one basket when you have a majority of only 40. So we shared the risk between two aircraft, and both were over half an hour late leaving. Coming back, there was the usual announcement: "We are sorry to announce that owing to a late incoming aircraft from London, British Airways flight 000 is delayed for 30 minutes." We were actually 40 minutes late on that occasion. But when I travel by Swissair, I seem to take off on time and arrive on time.
So I suggest to the Front Bench that this has something to do with the pooling agreement. At the moment, as my noble friend pointed out, if 50 people go from London to Geneva by British Airways and 150 are attracted by the punctuality and service of Swissair, they chop the revenue right down the centre, after adjusting for the seat capacity. I am sure that this is a restriction of competition which cannot be in the interests of the traveller, so I ask my noble friend to examine this most carefully.
In the USA, where I have to go once or twice a year and travel around a number of centres for business purposes, I fly by a number of different airlines. I see there the intense competition to get the aircraft door closed absolutely on time. Even if there is only one minute's delay, they start to ask questions about it. There is not that drive here. There is no such pooling agreement there, and on most routes they have competition 703 between two airlines in order to attract the traffic.
I suggest that the time has come when we really must abolish the pooling agreement, in the interests of passengers as well as in the interests of improved cabin service. I do not say that cabin service is bad on British Airways, but I say that it has deteriorated over the last 10 years. I am sure that we must do our best to put that right. There is no substitute for competition in this field. I would also urge my noble friend to get out of IATA. It is a restrictive, fare-fixing cartel. The USA airlines left it some time ago and it has done them no harm. It has increased the competition and the efficiency of their airlines.
Heathrow and Gatwick are now the main gateways to Britain. I hope that this debate will encourage the authorities, and particularly the British Airports Authority and British Airways, to redouble their efforts to improve and to compete with their rivals. Thereby, they will benefit the 40 million or 50 million air travellers every year and, above all, help Britain's reputation.
§ 4.16 p.m.
§ Lord Hayter
My Lords, in the days of ancient Rome, Cato the Elder used to end up every speech with the phrase "Delenda est Carthago", which reminded his hearers that Carthage must be destroyed. Whenever we have a debate on the civil aviation industry, I hope your Lordships will allow me to remind you that cargo must not be forgotten. It is on that subject of air cargo that I should like to make a contribution.
Last time we had a debate here, in November 1979, on British Airways' future strategy, all the speakers and the Minister concerned concentrated on the passenger element and assumed, I suppose, that cargo looks after itself. But it does not. The situation is highly complicated. It needs the collaboration of many bodies—the unions, the customs, the International Trade Procedures Board, the Civil Aviation Authority, British Airways, the British Airports Authority, the freight forwarders industry and—as the noble Baroness, Lady Burton, will doubtless be reminding us in her own context—industry itself, which pays for all these things. That is, perhaps, why the task of looking after international freight movement was pushed over to Neddy, as being a neutral forum.
I remember reporting in that debate how the little Neddy for international freight movement, of which I had the honour of being chairman, had just been disbanded. However, I am glad to be able to tell the House that the Air Cargo Committee, which was perhaps one of its most important elements, has a new lease of life. The valuable work of comparing our situation with rival airports on the Continent has already brought signs of astonishing contrast, particularly on the transshipment of air cargo. When the little Neddy was closed down in October 1979, this very committee was examining how we could increase the United Kingdom's share of transit air freight which, as many of your Lordships may know, is the long-distance cargo which is arriving to go on to other European countries, or long-distance cargo coming from other European countries for further destination. There is open competition in this very important business with all the 704 European air freight gateways.
My own little Neddy made a contribution at the time, by helping to set up at Heathrow the freight forwarders' bond, which at least allowed the freight forwarders the opportunity of helping in this work. We initiated at the same time this study, about which I have been talking, of the five European transit air freight gateways; that is, of course, including ourselves. Now, as a result of one or two minor problems on this freight forwarders' bond, the British Transport and General Workers' Union, British Airways and the freight forwarders have got together and have asked for a general agreement to see how they can increase the growth in transit air freight.
Already it is clear that the proportion is lower, or much lower, than at competitor airports, and yet the goal is a tremendous one: possibly, 65,000 tonnes annually, which will mean an income to this country of £70 million. Incidentally, of course, we should be helping the passenger trade because, as many of your Lordships know, air cargo is not always carried in air freight carriers. The biggest passenger plane of today can carry 22 tonnes of cargo in its hold.
Our other advantage which has not been touched on yet, but it is an advantage, is that we have the biggest number of flights of any airport in this continent of ours, so there is a golden opportunity to be grasped if we can tackle the problem. Incidentally, how intriguing and in some ways romantic is the air cargo aspect of Heathrow. On one day last week they had, side by side, the Grand Prix racing cars coming back from South Africa and going on, I fancy, to the States and cartons of live tropical fish from Hong Kong.
But it is already apparent that there is a startling contrast between what goes on in our airports and what goes on in Europe. This is perhaps excusable because it is due partly to history and geography. We have been so used to being an offshore island. Now we have become part of Europe. Therefore, some of the philosophies of the past may have to be changed.
One can think of an example in the customs area, and also in the airport itself. The extraordinary position at Heathrow is that there are no less than 17 foreign airlines with depots there. These have grown up over the years. You do not see those depots at the continental airports we have been talking about. Therefore, I am hoping that the Air Cargo Committee will steer this project through. It will involve all the principal interests which I have mentioned and I hope it will come forward with some conclusions and recommendations.
I can see that at the end of the day the persuasion of Government may well be needed to resolve some of the differences among the parties concerned. I do not think that this will involve the Government in more money other than that dictated by the airports themselves as growth in their own industry expands. I hope that there may be an indication from the Minister that he approves of this enterprise and wishes it well. If we clearly define the objectives and the way to achieve them, we shall have done something for which I hope this country will be grateful.
§ 4.23 p.m.
§ Baroness Trumpington
My Lords, as for the first time I am not speaker No. 27, or thereabouts, I hope 705 that I might have something original to add to this excellent debate which has been initiated by my noble friend Lord Glenkinglas. Although not entirely original, it may be worth accentuating certain aspects which have been touched on both by my noble friend and the noble Lord, Lord Ponsonby of Shulbrede. May I thank the latter for his very kind remark.
I should like to direct my few words to the question of the uncontrollable costs which are incurred by the British Airports Authority. Airport charges in Britain are exceptionally high and those for the British Airports Authority airports are among the highest in the world. Some alleviation of the present high costs could be achieved by alternative methods of financing. I shall be interested to hear the Minister's reply on why bond financing, successful elsewhere, cannot be undertaken by the British Airports Authority. Foreign airlines feel aggrieved by our high airport costs, and so do passengers. It seems ironic—
§ Lord Trefgarne
My Lords, I hesitate to intervene during my noble friend's speech but I mentioned earlier that this matter is now very much sub judice. I hope my noble friend will take care as to what she says.
§ Lord Ponsonby of Shulbrede
My Lords, will the noble Lord tell us exactly what the matter is which is sub judice? I think that the matter which is sub judice is the right of the British Airports Authority to increase charges rather than what the charges are.
§ Lord Trefgarne
My Lords, I cannot immediately spot the difference between the two things which the noble Lord has put to me. Perhaps I may read a short sentence, with your Lordships' permission, which I was planning to use later in winding-up. I understand that in open court this morning Mr. Justice Parker granted an injunction to the British Airports Authority against Air Canada and the other airlines which have been withholding a proportion of the landing charges for the use of Heathrow Airport, pending trial of the main legal action which has now been fixed for January 1982. Therefore, I am advised that it would not be appropriate for me or other Members of your Lordships' House to comment in any way on this decision, or the contents of the main legal case to be heard next January.
§ Baroness Trumpington
My Lords, may I say to the Minister that I think I am all right but that he must stop me if I am not. If he will not mind me continuing my Tallulah-like intervention before my voice finally goes, I shall make it as quickly as possible. It seems ironic, to say the least, that today's passengers are paying through the nose to finance the provision of facilities for tomorrow's. Why should you or I, if we take an aeroplane flight this week, finance the capital expenditure of the British Airports Authority?
§ Lord Trefgarne
My Lords, I am sorry to intervene again, but that is the core of the case which is to be put before the court next January.
§ Baroness Phillips
My Lords, if nobody is going to be able to comment for a whole year, surely it is a totally ridiculous situation which the Minister cannot substantiate in this House.
§ Lord Harvey of Prestbury
My Lords, is my noble friend saying that no aspect of the British Airports Authority can be discussed until January 1982? It cannot be so clearly defined as that.
§ Lord Bernstein
My Lords, I wonder whether we should have the advice of the noble and learned Lord the Lord Chancellor on this matter.
§ Lord Trefgarne
My Lords, he is not here. I hope noble Lords will forgive me for intervening once more. I apologise for pressing this point. I want to emphasise that I have no desire to stifle the discussion of this or any other matter in your Lordships' House, unless there is a clear danger under the sub judice rule. The matter which is to come before the court in January of next year is the question of the charges of the British Airports Authority. Both the British Airports Authority and my right honourable friend the Secretary of State for Trade are defendants in the case. As I understand it, the case is that the charges are too high and that the British Airports Authority is not complying with its duty in laying charges at the rate that it does. Questions therefore which may fall to be considered by the court following that action seem to me to be sub judice and not therefore proper to be discussed in your Lordships' House at the moment.
§ Lord Ponsonby of Shulbrede
My Lords, we all appreciate very much this standing order of the House and we all want fully to comply with it. I attempted, I believe, to comply with it fully in the speech which I made. However, it seems to me that the matter before the court is primarily the right of the British Airports Authority to increase its charges. That is the issue in dispute. I should have thought a comment on the level of charges was quite different from the matter which is to be taken before the court. Neither I nor the noble Lord are lawyers, so it may be that we should seek advice elsewhere.
§ Baroness Trumpington
My Lords, may I ask a question before I continue with my remarks? What happens to how far I have gone with regard to Hansard?
Lord Campbell of Croy
My Lords, while my noble friend is having consultations, for which I see he needs a little time, I may be able to assist by suggesting that what he has said so far is that the question of landing charges, if referred to, might (because none of us really knows what was said in court this morning and we are not all familiar with the case which is being put) lead us to stumble, without meaning to, into the sub judice area if we were to talk about the policies of the British Airports Authority concerning landing charges. However, I do not see why some of us should not talk about those charges which are not landing charges, but quite different kinds of charges. I have risen not only to give my noble friend time to receive messages on this technical point but also because I am due to speak shortly. I intend to speak 707 in my capacity as the chairman for Scotland of the International Year of Disabled People and therefore to talk about a specific charge on the handling of a disabled passenger. That has nothing to do with landing charges.
§ Lord Trefgarne
My Lords, I apologise yet again for intervening. If I may say so, I think my noble friend has got it just right; the level of landing fees ought not to be discussed. I feel certain that the risk of straying into the area of the legal proceedings if we do discuss the level of landing charges is very great indeed. Therefore, I hope your Lordships will agree that it would not be appropriate to discuss the level of charges in your Lordships' House this afternoon. Another matter that is to come before the court is whether my right honourable friend the Secretary of State has the power to impose certain financial duties upon the British Airports Authority, and thus comment upon that matter, too, might be inappropriate.
§ Baroness Trumpington
My Lords, I am still worried, but I will press on until I am told to sit down. I still cannot see why the general public should finance the British Airports Authority's capital expenditure or the development of Stansted. Is that also part of the case?
§ Baroness Trumpington
I will leave that, then, in order not to cause any more embarrassment. Am I allowed to talk about the security levy?
§ Baroness Trumpington
I am?—right. My Lords, my final point, on which I know the noble Baroness, Lady Burton of Coventry, and I fully agree, concerns the cost of security at airports. Naturally I am in total favour of the best and most efficient methods of security. Equally, I am certainly against the appeal made by my noble friend the Lord Chancellor, as related by the noble Lord, Lord Glenkinglas, for strippers in pursuance of this aim; but unless the cost of security at airports is funded nationally, as it is in most other countries, then I fear that airline passengers may well be down to their last shirts to pay for the ever-rising costs of the matters about which I have spoken and had hoped to speak. At present domestic passengers are paying an extra £4 on a round trip for security, and both airlines and passengers are constantly complaining about the seemingly unrestrained growth of the brown army of uniformed security personnel employed by the British Airports Authority.
At other airports where private enterprise security firms fulfil the same function the actual cost per passenger can be as little as 85p, although he is still charged at 708 the standard rate of £2, £1.60 of which has to go to the Government-controlled security fund and 40p to the airline for administering the complex system involved. There is still a certain amount of difficulty when user representatives seek to obtain information regarding the breakdown of cost and revenue. I really apologise to the Minister for causing him any embarrassment. I shall look forward to his reply with eager anticipation and I shall now hurry off and take a course in law!
§ 4.34 p.m.
§ Baroness Burton of Coventry
My Lords, luckily I do not want to talk about either landing charges or security charges. I think the views of this House on both those matters are well known and have remarkable unanimity right across party lines. I should like to move on from there and I should like to thank the noble Lord, Lord Glenkinglas, for giving us this opportunity today and for drawing his Motion so wide. I should also like to thank him for his kind remarks and to emphasise that such progress as we have been able to make in this House, particularly in connection with the users of air transport, I think has been due to the support given by this House on these matters, quite irrespective of party. I believe we all feel that very strongly.
Given such a wide choice in the Motion before us today, it seems ungrateful that although there are several areas with which I should have liked to deal I intend to confine myself to one particular aspect. I want to talk about the marketing policy of British Airways in relation to the bucket shop and discounted air fares. Obviously this affects the state of the British civil aviation industry, which has always been held in high repute throughout the world.
Perhaps I may say straight away that I should have preferred to deal with this subject in a debate specifically so entitled, but having been unlucky in the ballot for short debates it did not seem to me to be desirable, nor indeed advisable, to wait until late March for another possible opportunity. Indeed I would say that in 29 years in both Houses of Parliament I have never once been fortunate in even the smallest of ballots. Waiting seemed to me to be neither desirable nor advisable because of the considerable public interest both concerned and involved. I would suggest that the existence of a widespread market in such tickets shows not only the absurdity and the inefficiency of the existing price-fixing system but also the level of public demand for low-cost air transport. My regret is that I have to use British Airways as an example, because many scheduled airlines are involved but, under the terms of the Motion today, I really have no alternative but to select them and to hope that they will understand. I must say that, nuisance though I am, they have usually been kind enough to do so.
I believe, as stated in the Travel Trade Gazette on 28th November last, that scheduled airlines and their agents realise that there must be give and take on both sides to achieve a solution to the bucket shop problem. I think that agents realise that a deal will have to be done with British Airways and the other scheduled carriers and, for their part, the carriers now know that they have to find legal channels to sell off their cut-price tickets. That is why I pursued the noble Lord, Lord 709 Trefgarne, on 27th January concerning the proposed meeting of the Retail Agents' Council and British Airways in an effort to find out not only the attitude of those two organisations but also that of the Government. That is at columns 624 and 625. We did not get very far. We often do not get very far; we have to make very slow progress, but the noble Lord did say that he would welcome a debate to give him an opportunity to expand in more detail on Government policy. I cannot give him a debate but I can give him the necessary details in a speech, which is a better vehicle than Question Time. I have of course informed him that I should be raising this today in connection with the marketing policy of British Airways.
Many people, in this House and elsewhere, alarmed at the possibility, have asked me several times during the past three months whether I was trying to stop cheaper air fares. I am glad that they did so because it gives me the opportunity of stating once again what perhaps I did not make clear on other occasions, that my aim is that cheaper and/or discounted air tickets shall be on sale at all retail outlets and available to all travellers.
I think perhaps I had better start by quoting from an article in the Sunday Times Business News of 4th January by a Mr. Andrew Cornelius, whom I do not know. Mr. Cornelius opened by saying:The scramble for passengers among the world's airlines has become so tough that the officially regulated fares structure is near collapse. On many flights out of the UK, after a year in which IATA's member airlines lost more than £1bn, tickets are being sold through unlicensed sales agents or 'bucket shops' at discounts up to 60%.Racked by falling profits, increasing fuel costs and a projected downturn in traffic on many of its routes, British Airways, once regarded as a bastion of the airline establishment, has shocked discounters by beating them at their own game. One foreign airline's manager says BA's sales drive has intensified 'in the last two to three weeks to the point where they have hit my marketing activity by 10%'. The travel trade now widely confirms that BA's tactics include:Turning a blind eye to the sale of 'instant' APEX tickets by bucket shop. Normally these must be booked at least 30 days in advance to qualify for a cheap fare. At a 'bucket shop' they can be written out on the day of a flight by back-dating the validator date stamp…Ticket sales staff can gain authority within minutes to match, or beat any rival fare.BA is actively seeking more 'bucket shop' custom by closely watching discounted prices and then undercutting other airlines.Fourthly, and lastly:BA has admitted that its tickets do reach 'bucket shops' but will not go into details about its marketing policy".My Lords, in this House on 10th December, at column 724, I told the Minister that on 30th September British Airways had admitted on television that they sold tickets to bucket shops. At least they were honest. May I make clear to the House that I am not seeking prosecutions, nor am I condemning practices that are certainly not confined to British Airways? I merely think it is time that the whole affair was brought out into the open for the benefit of travellers, agents and airlines. And that commonsense is allowed to prevail.
The figure may or may not be correct, but I am informed that some 40 major airlines discount to their own bucket shop operators. The other day one of your Lordships asked me a very simple question, what is a bucket shop? Well, I offered him the definition of the noble Lord, Lord Trefgarne, at column 725 on 710 10th December—namely, that it was one of those places where you can buy a ticket at other than the correct fare.
This practice of discounted air tickets goes back a long time. Indeed, Lord Glenkinglas, whose Motion we are discussing today, did tell us in the House on 20th January at Question Time that he had tried to deal with the matter in 1970 and 1972. Well, if we go back to 1967, BARUK, which is the Board of Airline Representatives in the United Kingdom, initiated a clean-up campaign. It soon faded out. Why? I think it faded out because it really was a quite ridiculous situation. Here you had a collection of national carriers, the majority of whom were discounting to their own bucket shop operators, sitting round a table laying down the law, or presumably discussing the possibility of laying down the law, to stamp out these very practices. At the moment I understand the so-called bucket shops sell an estimated five million tickets a year in Britain at prices up to 60 per cent. lower than the Government-approved fares as airlines try to fill seats which would otherwise be empty.
The Minister will correct me if I am wrong, but, as I understand it, Section 21(5) of the Civil Aviation Act 1971 and the amended Section 11 of the 1978 Act make it quite clear that if an airline or a charterer sells a ticket to a passenger who has not paid the full approved fare set by the Civil Aviation Authority it is committing an offence, although the person who buys the ticket is in the clear. The noble Lord, Lord Trefgarne, was very firm about all this at column 343 on 20th January. Indeed he even went on, at column 344, to say:there may be steps I can take which fall short of prosecution, and I shall consider what might be done".As I have just said, although not wanting prosecutions and holding no brief for IATA on this matter, these facts do give substance to their statement that I mentioned to the House on 27th January—namely, that Mr. Hammarskjöld had said that IATA were powerless to stop the bucket shop trade in illegally discounted air tickets while Britain was lax in applying the law.
If we move on from IATA to ABTA, which is the Association of British Travel Agents, their chief executive, Mr. Michael Elton, has just said that the ABTA policy is that the Government should either enforce the law over the sale of airline tickets or change it. It does seem to me that it is nonsense to have a law that people, and the Government, ignore. In this respect, particularly to the despair of travellers, I would contend that both IATA and the Government have been so busy passing the buck one to the other that progress has been absolutely nil. I am glad the noble Lord shakes his head, and I hope he will prove me wrong when he comes to answer. Perhaps now we shall at last get some action on this.
On 14th January, Mr. David Hewson wrote an article in The Times headed, "Why the travel trade is angry about air fares". This article has considerable bearing on what I have just said about the law, and I would like to quote a section from it. Mr. Hewson says:With a few notable exceptions, the last place to find the cheapest international air fares available in Britain at present is a travel agency"—the last place—That more than anything explains the travel trade's anger with the price-cutting campaign now being waged by the airlines.711The bargains on offer may be riddled with restrictions but they are undoubtedly bargains and available to anyone—anyone, that is, except a travel agent. The diligent traveller, for instance, by following up newspaper and magazine advertisements can find himself a reserved return London to Bombay with Gulf Air for about £290. If he went to a travel agent or booked direct with the airline the price would be £800…ABTA's position, not unnaturally, is that its members should also be able to avail themselves of bucket shop prices and pass them on to their customers.BA, and the other airlines who decide to go down the mass discount road would no doubt be happy to do so, but it is difficult to see how such widespread flouting of the law could be sanctioned without a lead from the Government. If the Government is convinced of BA's strategy of seeking volume above all else, it may give that lead".On 20th January the noble Lord, Lord Trefgarne, did tell us, at column 343, that this problem was one which he proposed to pursue with the utmost vigour. On 27th January, at column 625, he told us of his determination to see that the law in this matter was properly upheld. I am sure that, in common with everyone in the House, I doubt neither the determination nor the honesty of the noble Lord, Lord Trefgarne. I am hoping that when he comes to wind up today he can tell us just where we have got to on this matter.
In conclusion, I should just like to say that all sorts of information comes my way from people who are kind enough to help, including airlines, agents, bucket shop operators, and, of course, passengers. Information comes even from "moles" and I do not think we need explain to anybody that the moles are the underground guerrilla operation of the British civil aviation industry. Some of this information is prejudiced, some is incorrect, but much is true.
I end as I began. I hope that British Airways will understand why they have been cast as the villains, but I would emphasise that it is as only one villain among some 40 others. Perhaps if we succeed in all this they will be glad to have helped, even unwittingly, in what I have had to say and they will not overbook me or refuse me passage on their airplanes as a result! I want to help and I want our House to be instrumental once more in putting right something which is so obviously unfair.
§ 4.51 p.m.
§ Lord Harvey of Prestbury
My Lords, I am sure that the whole House is grateful to my noble friend Lord Glenkinglas for initiating this debate. I hope that the noble Baroness, Lady Burton of Coventry, will forgive me if I do not follow her line, although I think that she has raised a very valid point which requires looking into.
The general theme of the debate today has been that most airlines are having a very rough time, but some are doing rather better than others. As has been said, when BOAC merged with BEA one expected very real economies. They had a very able Chairman at the time, Sir David Nicholson, but those economies have not been forthcoming. As has been said, the number of those employed in the British Airways Corporation has increased by 5,000 or 6,000. That has happened throughout British industry, not just in British aviation. We are seeing it every day. The fat is being taken off by people who are employed by companies which cannot possibly afford to employ 712 them. We are now paying the price as a nation.
In 1971 the Corporation employed 52,500. That figure has increased to 59,000. We are told that much has been done about it. But it should never have been allowed to happen. It would only happen to that extent in a nationalised industry. It may be said that the services have expanded. Yes, they have of course expanded, but so have the traffic and the number of passengers carried. My noble friend Lord Orr-Ewing referred to Flight International, which gave eight charts. It is very difficult to determine what is an efficient airline except by the final balance sheet of profit or loss. As regards Flight International, on eight different charts which it gave British Airways was bottom of the league. There must be something radically wrong to get into that position.
I would say with great respect to British Airways that most international airlines are more efficient than British Airways. Let us take as an example what happened three weeks ago. I think that it was a Friday and all the ground staff of British Airways—an airline that is losing about £100 million a year—went on strike. Those people endangered their own jobs and those of all their fellow workers. As a consequence thousands of would-be passengers had to be transferred to other airlines, and many of those passengers will not go back to British Airways. However, when it comes to inconvenience it is the passengers who pay the price. I do not understand what is going on as regards the personnel relationship between the management and the workers of British Airways. They are even threatening action again. Any time we shall have another one-day strike, turning tens of thousands of people away and losing millions of pounds in revenue.
Punctuality has improved, but not very much. I frequently travel between Malta and London and invariably I am late if I travel by British Airways. They are courteous and give very efficient service, but a small airline—Air Malta—admittedly operating from its own terminal, invariably arrives on time. This must be looked into. My noble friend Lord Orr-Ewing said that most airlines in America leave on the dot because there is competition. It is clear from the charts referred to that the most efficient airlines are Delta, Scandinavian Air Services, Lufthansa and, I think, Swissair.
But, of course, it is difficult to compare European operations with those in the United States. In Europe for the last three summers we have had air traffic control causing delays either in Spain or France and we have had aeroplanes ticking over or shut off and waiting for anything up to one or two hours. That causes great delay to the services generally and costs a great deal of money. I think that it should be looked into. We now have the EEC to co-ordinate all these matters. Vast sums are spent and I hope that something will be done about it.
As I have said, British Airways operates a good service and their safety is as good as any other airline. But what about the procurement of aircraft? I read recently that they have now sold two 747s and they are probably trying to sell more. Why have they over-ordered? I have noticed that they have abandoned the routes that did not pay—routes to the Channel Islands and the Isle of Man. The independents had 713 to take them on because they did not make a profit. I am not surprised that they did not make a profit. There are too many people hanging around. One sees all the girls and young men in uniform with their gold braid. They all have to be paid and they are in the pension scheme. The whole thing wants skinning down very rapidly indeed.
I should be very careful what I say about the British Airports Authority, which has already been mentioned by my noble friend the Minister. I shall not refer to landing fees although I suppose that the rents of cubicles and desks come into it as well. I shall not refer to those matters. Heathrow is a terrible mess, and that goes back to 1945 when the late Lord Winster, then Minister of Aviation, dug up the first sod of soil on 1st January 1946. The Labour Government of the day rushed the airport through, determined to get it up in the lifetime of the Attlee Government—I mean no disrespect, but this is what happened—and they put everything into a triangle and it was obvious then that there would be little room for expansion. Every bag of cement had to go through the tunnels. The tunnels became flooded or something went wrong. I know that in the early 1950s when a Conservative Government were in office I begged them to start again, to scrap the lot and to build the terminals round the airport like any normal international airport. Now we are paying the price. I met an American recenty who said that when he arrives at Heathrow he either falls down a hole or trips over a sleeper. He is not far out, because that is what happens.
Gatwick has great potential. One can get there in 33 minutes by rail from Victoria. It has one runway. Nobody likes an airport near their home. Millions of people want to fly but nobody wants an airport within 20 or 30 miles of their home. When Gatwick went up there was an outcry from all the residents of Surrey and Sussex. At the time I lived in Surrey. I was in the take-off path. Why is there only one runway at Gatwick? Vast sums are being spent on the buildings. It is the second airport and, to make matters worse, a second runway can now never be built. They have put the large cargo freight sheds where the second runway would have gone. I think that it was probably done deliberately by some planners or somebody involved. It is a monstrous situation. All that I shall say about the British Airports Authority is that from October 1975 to February 1980 they would not set a financial target, though that was remedied later.
Nothing in today's debate has been said about Manchester Airport. I have watched Manchester Airport grow up because it is next door to what was my own constituency 35 years ago. Of course it is run by the Manchester Corporation and, if I may say so, it is run far better than any of the airports of the British Airports Authority. They have planned ahead and got the runways organised and they are doing extremely well. One never hears much criticism about Manchester.
In conclusion, I think that British aviation should be all right, but there are too many meddlers. It wants skinning down rapidly because there are too many controls. As I have said, I despair of Heathrow. I dread going there and arriving there. One either loses one's bag or it takes 45 or 55 minutes to arrive. I hope that the Government, who believe in free enterprise, 714 will get really busy and tackle the problem, because an international airport is the shop window of a country. I beg the Government to get on with the job.
§ 5 p.m.
Lord Campbell of Croy
My Lords, I congratulate my noble friend Lord Glenkinglas on having initiated this debate and for having introduced it in such an effective and agreeable way. I was a colleague with him in the Cabinet between 1970 and 1972 and well remember the problems with which he had to deal, particularly the amalgamation to form British Airways and his help in organising a British private enterprise sector internationally. Air travellers and the British public should be very grateful to him for what he did, which resulted in British Caledonian. In particular some of the British leaders in the private enterprise sector—and I think particularly of Mr. Adam Thomson and Sir Freddie Laker—have played leading parts in keeping the costs of air travel from becoming prohibitive for ordinary people. My noble friend's policies also led to the expansion and competitive success of British private airlines. This was illustrated by the noble Lord, Lord Ponsonby of Shulbrede, when he told us that six out of the 10 largest European airlines are British airlines.
My noble friend and others have drawn attention to several of the most important issues and problems. I propose to address myself simply to one subject. This year is the International Year of Disabled People and I am the chairman for Scotland of the International Year. Now, of all times, we should endeavour, where improvement is needed, to improve arrangements in air travel for very severely handicapped people.
I start by saying that on the whole British airports and British airlines take a great deal of trouble over assisting severely disabled people, particularly if reasonable notice is given before travelling. Wheelchair passengers can be catered for and can be well looked after. There are lifts and ramps—in fact, British airports and airlines set an example to many other public buildings where such assistance does not exist, though it should—and there are special vehicles and lifting devices. British Airways has a medical unit at Terminal 3 at Heathrow which seems well-equipped for various types of physical handicap. Good organisation and communications between ground and cabin staff are needed in order to make the best use of that equipment.
However, I regret to say that there is a serious flaw in the system, to which I now draw attention. Forklift vehicles are now being used, and used effectively, for raising a wheelchair with a passenger to the door of an aircraft. They belong to the British Airports Authority. I understand that the authority is imposing a financial penalty on an individual airline amounting to £15 for each disabled passenger so assisted. Hitherto, the airlines have not been passing on that penalty to the passengers. I believe that one airline has been an exception, but in general the airlines have not.
But, I ask, why should an airline be subjected to this penalty for carrying a severely handicapped person? How long will the airlines feel that they can carry this penalty themselves?—for there is a built-in financial disincentive here to airlines to fly such disabled passengers. 715 To me this is a monstrous and offensive state of affairs. What about the airline which finds itself asked to take a wheelchair team to a session of paraplegic games, either at home or abroad? It will be landed with a penalty for every wheelchair.
Severely handicapped people do not travel unnecessarily. If there were to be any wealthy, disabled eccentric who indulged in whims to be flown around the world unreasonably, I can assure the Government and the authority that those of us involved with disabled organisations and in this International Year would express our disapproval, publicly, of that action by a disabled person. But I think that just to consider that indicates that it is unlikely. Such people do not travel by air for fun. A change must be made. To have a financial penalty on flying wheelchair passengers must be wrong. In 1981, the International Year, this is surely the time for change.
My noble friend Lord Orr-Ewing pointed out that there are very long walks to departure gates at British airports, and he was talking about the able-bodied. There are few travelators, like those in some modern European airports—and I give Schipol and Brussels as examples. This leads to wheelchairs and men to push them having to be provided for people who normally never need to use a wheelchair. They are the partially handicapped who normally can walk short distances in ordinary life but who cannot walk the hundreds of metres which some of these corridors involve. There is also usually nowhere to sit and the long passages provide a vista, for those who cannot walk very far in one go, with nowhere to perch or to have the rest which in many cases is required by their doctors. There has recently been an improvement which I was shown at Gatwick a few weeks ago: an electric jeep, which is how I can best describe it. It can go through all the small entrances and can take such passengers some of the long distances. But I would point out that it is really the elderly who mostly fall into this category of partially handicapped persons, and there are quite a number of elderly people who have to travel. Therefore, I suggest that more must be done to find methods between using the wheelchair, for people who do not really need it, and assisting people who are not completely able-bodied to pass through airports and on to aircraft.
My last point on this concerns the shuttles operating in the United Kingdom. Again, there are shortcomings here for those people who can walk only short distances and cannot stand for long. Your Lordships who have experienced the shuttles will know that when the announcement is made, there is an ugly rush for the small, single-file gap. Moreover, those involved are herded through this gap, and those of us who need only a small tap on one hip to be knocked over and then have some difficulty getting up again find this quite impossible. I can tell your Lordships that British Airways is very good at helping those who cannot cope with the "shuttle herd". I would ask British Airways to do more to make this known, because if someone taking the shuttle says that they need to be dealt with separately, British Airways takes the trouble and does it; but I have seen elderly ladies in great distress and, as I say, people being knocked over. I simply suggest that more needs 716 to be done, especially in the way of encouraging those who cannot survive the stampede to speak up beforehand and so be allowed to proceed separately.
There are three principles which I have been promoting in this International Year in order to assist very severely disabled persons. I call them the three As: Access, Awareness and Adaptation. There is nowhere where these three principles are more relevant than in air travel for the severely disabled.
§ 5.10 p.m.
§ Lord Glenarthur
My Lords, I should like to confine my remarks exclusively to the commercial use of helicopters, which play an increasingly significant and important part in aviation in this country and indeed throughout the world. The subject was last discussed in your Lordships' House almost exactly three years ago. There have been some impressive developments since then to which it is right to draw attention. Here, not for the first time, I must declare an interest. As many of your Lordships know, I fly helicopters for British Airways, specifically on the North Sea.
The offshore oil industry has certainly been the area of greatest activity, and it is as true to say now as it was three years ago that the development of our North Sea oil resources would have been quite impossible without the very extensive use which has been made of helicopters. Increased sophistication, refined operating techniques, particularly under instrument flight rules, and our ever-increasing experience have combined to qualify the helicopter as a means of transport in a fairly hostile environment which is second to none in safety and reliability. Twin engines, duplicated essential systems, advanced avionics and automatic flight control systems have enabled helicopters and their operators to demonstrate completely the integrity and reliability of the aircraft they use.
The offshore population at present is about 15,000. Some 100 helicopters operate in the United Kingdom sector of the North Sea, moving about 2,000 people a day to and from oil rigs, production platforms, diving support vessels, crane barges, pipelaying barges, et cetera. Between 1970 and 1980 some 10 million passengers have been flown in this way and only one life has been lost because of a helicopter accident. I believe that this is a startling statistic and one which is better than some comparable fixed wing operations can claim. It demonstrates that the helicopter has come of age, that it has adequately exhibited the special characteristics its design allows, and for those reasons it is important that we now actively pursue the other roles for which it is eminently suitable in the transport field.
Currently three ordinary commercial routes are operated by helicopters in this country: Penzance to the Scilly Isles; Gatwick to Heathrow; and a small one between Glasgow and Fort William. Each of these is profitable, and in the case of the first two, which I know rather more about, achieve 98 per cent. or so regularity using only one aircraft in each case. A further route is in the melting pot and has been for some time. It was referred to by my noble friend Lord Kimberley. That is Milton Keynes to Heathrow, which is an imaginative route with a known market for passengers and, as my noble friend said, is a particularly good platform for the introduction of the first British civil 717 helicopter, to which I shall come later.
This route has been beset however by difficulties at the Heathrow end associated with the arrangement of approaches to and from the airport from the North; problems of air traffic control sequencing, and "traffic slot" times, as they are called, and so on. I am afraid that these have been problems which have been caused to a large extent by the reluctance I think, without being unfair, almost amounting to intransigence on the part of the Civil Aviation Authority (including National Air Traffic Services), and the British Airports Authority, to identify and latch on to the key characteristics of the helicopter which allow it to be used in a much more flexible manner than fixed-wing aircraft.
Instead modified principles applying to fixed wing are adopted for helicopters which have effectively negated many of the helicopters' considerable advantages, although should it be necessary to conform on special occasions helicopters can of course still fully conform with standard fixed-wing practices. I understand that progress is being made but at the expense of an additional seven minutes flying on what is only a 22 minute leg in order to approach Heathrow from the South in the same way that the Gatwick to Heathrow helicopter link does at present.
There is no properly valid reason in my mind for not allowing helicopters to approach and depart from the airport using the North side, especially since it is acceptable to do it from the South, particularly when sophisticated modern specialist helicopter precision approach aids are available to operators. I detect a reluctance on the part of conventional fixed-wing theorists in the Civil Aviation Authority to appreciate the fundamental differences between fixed wing and helicopter operations, and fully to capitalise on the opportunities which the latter affords, and also realistically to appraise the way in which the special flight characteristics of the helicopter can be used to best advantage.
There have been two recent developments in this country which are milestones in the use of helicopters. One, which was referred to by my noble friend Lord Glenkinglas, was the arrival of the first Boeing Vertol 234, which is the civil derivative of the well-known twin rotored Chinook helicopter of military distinction, which will carry 44 passengers in airline comfort and which starts operations on the North Sea in July of this year, and will operate directly from Aberdeen to oil rigs to the North East of the Shetland Islands, thereby removing the need to operate through Sumburgh.
The second has been the announcement a couple of weeks ago, to which my noble friend Lord Kimberley also referred, that Westland are at last entering the commercial helicopter scene with the introduction of the WG30, which is a private derivative of the military Lynx. This is going to come into British Airways Helicopters' service later this year. Personally I am delighted that a British civil helicopter venture has come about. I have every confidence that it will be a success internationally. I have in your Lordships' House criticised Westland in the past for failing to get into the civil market. I now congratulate them on seizing the initiative, and I hope that they will maintain it.
I would also urge the Government to give every support and encouragement to the aerospace industry 718 generally in this country to think not only of pure helicopters and the need to develop and refine them but also to consider the logical extension of vertical flight through helicopters; compound aircraft which can take off and land vertically, but with the ability to cruise at high speed. The Americans are developing these now with various technical innovations—counter-rotating rotors, tilting pods on the ends of the wings with large diameter propellers—and I think particularly of Bell and their XV15 which is being developed into a possible commercial venture in due course.
We ought to remember that we once led in this field in the late 1950s and early 1960s with the Rotordyne project, which was dropped for technical as well as financial reasons. We must not allow the state of the art to be lost completely. Entry of any of these current ideas into commercial service is 10 to 15 years ahead anyway; but I do implore the industry to pick up the lead which we once had, taking advantage of collaborative arrangements to get back in on the act.
If I may return to the introduction of the BV234, the civil Chinook, we have here the basis for a type of helicopter which makes inter-city, particularly cross-Channel, helicopter operations much more viable economically than has been the case hitherto. Seat mile costs are already a distinct improvement on existing types, and projected developments to capacities of 70 seats in the near future and heavy-lift helicopters capable of carrying in excess of 200 passengers in about 10 years' time all point towards commercial viability in this respect, provided that they can be operated from sites close to city centres. Once airports have to be used, the advantage is lost.
To give just one example: last year a modern helicopter, an S76, flew from Battersea to central Paris where it landed, took off again and flew back to Battersea, all in two hours and 18 minutes. This speaks for itself. With suitable sites near city centres—and, as we heard earlier, parts of London dockland have been mooted as possibilities—and adequate surface links, it will be possible to halve the time it takes a businessman to get from the city of London to the centre of Paris, or to central Brussels or central Amsterdam, this without the need to use colossally extravagant airfields and the considerable infrastructure necessary to operate them.
Here I must add a note of caution. As I hinted earlier, it seems that at present the advantages of vertical flight are being undermined by the rather illogical and outdated thinking of part of the regulatory authorities. I am told that in the case of the United States, the FAA have imposed conditions which almost certainly will result in the loss of many of the advantages of vertical flight. I know that a reviewed code of practice in relation to operating techniques of helicopters in this country is under active consideration by the Civil Aviation Authority. I sincerely hope they do not follow the disadvantageous course which the FAA seem to have adopted.
It increasingly concerns me that twin-engined helicopters, which are supposed to be safer, are more restricted in the sites from which they can operate than single-engined machines. Again, this stems from views which go back to applying fixed-wing criteria to those of helicopters in the case of one power unit 719 failing. The point I wish to emphasise, notwithstanding the safety implications, which in my professional life I am only too well aware of, is that rigid adherence to modified fixed-wing principles is beginning to diminish the useful properties of helicopters.
Of course, to some extent the manufacturers have a role to play here. They must develop helicopters with such reserves of power that twin-engined machines have a true single-engined performance in all parts of the flight envelope. In a sense, too, some double standards are applied because by no means all twinengined fixed-wing aircraft have guaranteed singleengined performance throughout all phases of flight; and if they have to make a forced landing they can do so only at much greater risk to passengers and people on the ground than is the case with helicopters.
In summary, therefore, what I look forward to in this specialist field is for us to capitalise on the wealth of experience we have so far gained in a realm of civil aviation which is still comparatively immature, for every support and encouragement to be given to the manufacturing industry, not only to refine pure helicopters but to look ahead to what comes next, and to encourage a much more enlightened and far-sighted approach by the regulatory authorities.
Even railway engines and motor cars were not for long preceded by a man waving a red flag. But that, to me, seems very much the case with the CAA so far as helicopters today are concerned. Helicopters have proved themselves, they are different, and people must think differently about them so that the civil aviation industry can make the best use of the potential they offer.
§ The Earl of Longford
My Lords, before the noble Lord sits down, may I ask him a question which I hope he will not think is absolutely frivolous? Being such an expert on helicopters, he may be able to answer it. Over 30 years ago, when I was Minister of Civil Aviation, I inaugurated a helicopter flight from North to South Wales. Can the noble Lord tell me what has happened to it and why there is not a service of that kind 30 years afterwards?
§ Lord Glenarthur
That was in the fairly early days of helicopter operations, my Lords, when they were not so economically viable as they have become. I entirely support the noble Earl's view and should be delighted to see an operation between North and South Wales.
§ 5.24 p.m.
§ The Earl of Cork and Orrery
My Lords, I hope that anyone who considers at all seriously taking steps to abolish your Lordships' House will pause for a moment to reflect on the extraordinary characteristic, so familiar to us, of having in our midst not only experts but actual professional experts in almost anything one can think of, from beetles to bombers, and, in this connection, helicopters; where else could one hear a speech such as the one to which we have just listened from my noble friend Lord Glenarthur? He made a great contribution to this debate.
For myself, I have attracted a certain amount of criticism before now for referring to the way in which 720 the airport system round about London has grown, if that is not too strong a word to use; it has come into being by a series of planned or unplanned environmental disasters, such as the fourth terminal at Heathrow. Nobody planned it until they suddenly found they wanted it, and then they told an engineer to draw up some plans. That is not planning for an airport, but the whole thing has grown in that way. This is a pure truism and if anybody doubts the truth of what I say they need only take a look round the airport system that we have to serve the capital, and ask whether anyone but a lunatic would plan what we have now.
It makes a change, therefore, though not a particularly attractive one, to realise how much planning is going on—again, if "planning" is not too strong a word—in connection with the airport at Stansted. It is slightly ironical that there have been no fewer than three promises that no such planning would take place, but here we are and it is going ahead, not only in the British Airports Authority but in the Government. A spin-off from that is that I do not suppose anybody will ever again believe any undertaking given publicly by a British Government, certainly not in the field of aviation.
§ The Earl of Cork and Orrery
That is my opinion, my Lords, and it is probably not without foundation. I say that in connection with Stansted for a particular reason, especially in relation to the magnitude of the planning. The planning which is now the subject of an application which is coming up for inquiry in September of this year is for an expansion to an airport capable of handling 15 million passengers a year. But beyond that the possibility is envisaged—this is where I speak with some admiration for the new idea of planning in advance—of expanding the same airport to a capacity of 50 million passengers a year. We must remember that 50 million passengers a year is more than all the passengers handled in one year by all the London airports now.
That should give pause for thought to anybody who is interested in the future in the countryside round about Stansted. It means an expansion to a total area of 5,000 acres and a town of about the size which Sir Colin Buchanan estimated some time ago—about 200,000 people. As for the statement of the case which the British Airports Authority will be putting before the inquiry in September, I do not know how much it weighs but it is about three-quarters of an inch thick. So far as I can discover, it does not in any way mention the people living at Stansted now, except in one case on page one, and then it refers to them in connection with what will happen when the area—the big, far out area which may never be taken into use but which is part of the overall forecast plan—is taken into use; the blight that will fall on the land, the houses and the people who live there.
To avoid that blight, the British Airports Authority, it is said, are prepared to buy that property now at a fair market price. One way of looking at it is to say that that is a fair and reasonable offer. Looking at it another way, one might say that, as in places like Soho, it is a protection racket: "You may take your choice. 721 Sell to us now and do not have your house or land taken away from you in the future". It is a fearful prospect. It goes with what Sir Colin Buchanan, who is well worth quoting in this connection, describes as,the largest single deliberate act of urban-industrial development ever to be thrust upon rural England, and in a particularly important sector into the bargain".I hope the Minister will not be too put out by my strictures about government; I assure him that nothing personal is meant. About a year ago I asked whether there had ever been an inquiry into or project for the building of a new bridge over the Severn—the point of my question will become clear in a moment—or a tunnel in order to get across the Severn estuary. My noble friend informed me then that he would try to discover the answer. He never has let me know, and, although I am raising the matter now, I assure him that I am not complaining. There was such a project in about 1973, but we need not go back so far as that.
I believe that there is now sitting a committee or interdepartmental commission—I am not sure of its correct description—consisting of civil servants from the Welsh Office and the Department of Trade, considering the possibility of either a new or another crossing of the Severn estuary. One of the projects that is being considered, I believe, is an enlargement of an existing crossing, or perhaps a new bridge at Gloucester. I should like to ask my noble friend whether he can tell me when we can expect a report from that committee, since the local authorities in South Wales are being thrown into some doubt and confusion while awaiting it.
In the past the objection to building a new airport not at Stansted but at Severnside has been based on the expense of constructing a new bridge to carry the road and a new tunnel for the trains. The question is, is a new bridge going to be needed? It appears that in any case in a few years' time there will have to be a new bridge in connection with the M.4 crossing the Severn; this is accepted. If the crossing is to be higher up, at Gloucester, there will have to be a new road to reach it. So regardless of whether an airport is built there, new bridges or crossings will have to be devised. There is no reason why they should not incorporate a motorway which would lead, by means of a spur of no more than a mile long, to a site where there could be an offshore airfield at Severnside. When may we hear about this?
With regard to the building of a new tunnel, which the Government say is necessary, at a cost of, I think, £650 million—I am not exactly sure about the cost—I am advised by railway experts that the existing tunnel is perfectly adequate to carry the traffic. Perhaps my noble friend will comment on that point, if he cares. Reverting to Stansted, according to the case which has been prepared, the rail connections would involve the railway running from St. Pancras to Cambridge. Frankly, I do not believe that the railway could carry 50 million passengers, though at the moment that figure is not envisaged; it is only 15 million. However, let us suppose that it could do that. That would be very handy and agreeable for people who wanted to go to London, but if they wanted to go to anywhere else, they would have to travel to Cambridge and change, which would not be the best way to enter England.
722 On the other hand, if one wanted to go to Severnside one could board a high-speed train and travel directly to the airport, without interruption. Customs and Excise procedures could be carried out on the train, which would travel at 120 miles an hour and the journey would take, I think, 1 hour 40 mins., which is as quick as one could travel from touchdown at Stansted to city centre.
On both sides of the Severn estuary there are tank farms fed by pipeline, and so there would be piped fuel within easy reach of the airport. I should like to ask my noble friend whether in fact there is a pipeline to Stansted, since it is quite clear that it would not be possible to carry by road adequate aviation fuel to a major airport. This point involves an item of expenditure that I do not find mentioned in the British Airports Authority's case. Nor do I find any mention of who is to pay for the railway. A vast amount of railway construction work and alterations would have to be carried out, in particular in the North-East of London, which is the longest way into London. It is suggested that an Act of Parliament would be sought by British Rail. Is British Rail to pay for this work? I should not think so. May we have from the Minister a forecast of how much this is likely to cost?
I wish once more to quote Sir Colin Buchanan. He ends by saying:There is no place inland in the whole kingdom where an airport would not be bitterly opposed by local people".Now just for once Homer nods; Sir Colin is in error. There is one such place: at Severnside not only would an airport not be opposed, it would also be heartily welcomed by the county council and the people of Gwent. Here is the possibility of an enormous brand-new gateway international airport, with runways in the sea, disturbing almost no one, with road and rail communications already passing within a mile, and with very high-speed transit to London, Birmingham, the North of England and all the great centres of population. The people there want it to happen. Yet so far as I can tell, the Government are proposing to go ahead with a vast development which nobody wants, at everybody's expense, in the worst possible place.
The only real problem that I believe would be encountered in siting an airport at Severnside rather than at Stansted would arise from the extreme difficulty of persuading the airline operators to use it. That would be a difficulty, I agree. However, it is a difficulty which the Government might face if they consider what otherwise could be the consequences for our nation, with the benefit going to those airline operators and nobody else.
§ 5.36 p.m.
§ Lord Gisborough
My Lords, there are always problems between the British Airports Authority and the aviation industry and the airlines. First and foremost is the lack of adequate consultation by the British Airports Authority regarding the needs and limitation of needs by airlines operating the authority's airfields. In the past there has been inadequate response and reaction to the needs of airlines at local executive level and often there has been too ambitious local investment beyond the needs of the airlines. There 723 are cases where capital has been invested in airfields to create desirable new facilities, but facilities which have been far above the needs of operating airlines and which have jacked up unnecessarily the ever-increasing airport charges.
It is therefore a good development that the BAA has at last agreed that changes should be made to the present procedure for consultation with its air transport customers and that a council is to be set up, and will meet for the first time in April. The proposed consultation co-ordinating council will allow consultation in excess of that required by statutory obligation, but the success of the council, which should benefit both authority and user, will depend on the willingness of the different representative airline associations to participate together in one consultative form. Of airlines themselves, only British Airways will be represented, in view of its massive use of BAA facilities. One wonders whether it would not be right for there to be a seat on the council for the Board of Airline Representatives representing the needs of all foreign airlines, with their rather different problems to those of our own home-based airline.
The next problem is that of landing charges and parking fees in general, and I am sorry not to be able to discuss them. An article in the Sunday Telegraph, which may or may not be true, states:A row has been growing since last year when the authority issued what it described as a discussion document on increased airport charges. Although the increases averaged only 35 per cent."—I do not know whether I am allowed to quote.
§ Lord Sandys
My Lords, I think it would be appropriate to remind my noble friend that this item is sub judice—a point to which my noble friend Lord Trefgarne drew attention earlier in the debate.
§ Lord Gisborough
My Lords, I thank the noble Lord for that intervention. I felt that perhaps it was in order to quote something which existed; I was not really producing anything new.
According to press reports, security costs are a further worry—and I do not think that this point is subject to the sub judice rule. BAA airports have far higher charges than private airports. For example, Heathrow's charges were doubled from 83p in 1979 to 160p in 1980. That is peculiar because the high traffic flow could be thought to maximise the use of security personnel per passenger, and it seems to be another case where the public authority charges so much more for its services than the private company under greater competitive pressures. According to press reports, high charges have not appealed much to foreign operators, and now that this point is sub judice I must say no more about it. To say no more than the Minister himself remarked, the present situation is that the fees are going into a holding account and some airlines are talking about leaving London airport and flying to Amsterdam instead.
The cold wind of competition is blowing even on to Heathrow, and if airlines leave it the position there can only get worse. It seems necessary that, whatever the result of the court decision, the BAA should strive urgently and immediately for efficiency and economy, 724 going from the very top to the very bottom of the authority, rather than just demanding higher charges. Further, airlines fear that in the future—not the present, the future—interest on the cost of developing Stansted may be spread overall by the authority and will result in further charges at Heathrow for operators who will not even benefit by using Stansted. I think I am all right there, because it deals with the future.
Further afield, and in particular at Aberdeen—which, again, I do not think is the subject of the court case—the parking rate rose for one operator from a monthly rate of £828 in 1979 to £2,217 in 1980.
§ Lord Sandys
My Lords, I think we are touching upon an area which is sub judice. I speak without reference to this particular case, but I think my noble friend should be very wary of what he says in this regard.
§ Lord Ponsonby of Shulbrede
My Lords, in supporting the noble Lord, Lord Sandys, the point of the sub judice rule is that the outcome of the case shall not be affected one way or the other. Therefore, though certain areas may be commented on, anything which is commenting on the propriety or otherwise of certain actions of the British Airports Authority could be said possibly to have an influence on the case.
§ Lord Gisborough
My Lords, I apologise, and I will leave out all about Aberdeen. With regard to Stansted—again, this is in the future—would it be possible for the authority, when it comes to consider it, to consider raising its funds for capital development by way of loans in the money market, as other commercial enterprises are obliged to do, rather than doing it by raising charges, violently and often? With regard to the Stansted of the future it might be desirable to make of it a separate company owned wholly or partly by BAA, with its own profit centre to create good management policies and discipline. If the private sector could own 51 per cent. and the authority 49 per cent., the loan would no longer fall within the PSBR. The problem would be to design an adequately attractive and guaranteed investment to attract the public. Perhaps this could be achieved by novel and imaginative tax incentives on the eventual and inevitably delayed dividends to attract both private and institutional investments.
There is almost certainly large scope for economy within the British Airports Authority. There is no reason to suppose that it does not suffer from overmanning, along with all other public bodies; and there is equally no reason to suppose that its attempts to become more efficient have not been thwarted or at least slowed down by union resistance.
But looking ahead, there is nothing to stop the authority from increasing its charges year by year to cover these mounting costs, where any private company would long since have had to raise its own efficiency to contain its price rises and to retain its customers. It is, in practice, impossible for a monopoly to become competitive as there is no competition (period). This has been recognised in the case of the Post Office, as a result of which the Government have recently taken some steps to open up the Post Office monopoly to competition from private industry. Would it not be possible to move the BAA into a more competitive 725 position? In particular, would it not often be cheaper for the authority to subcontract many of its activities to private firms in competition with one another?—and, in particular, one would refer to security.
Finally, my Lords, there is the small but locally important question of the use of MOGAS as against AVGAS. The requirement to use AVGAS for even light aircraft involves a very high cost for recreational flying, both for fuel and for delivery and handling, particularly on smaller airfields. While the use of AVGAS is mandatory by the Airworthiness Board, the supply is a near monopoly by Shell and BP, and the recreational flying movement in the United Kingdom consider they are being "ripped off" by its excessive and unnecessary cost. In practice, MOGAS is being used clandestinely, and this is particularly so in certain types of engine where flight manuals do not specify 100 LL or other grades.
Aviation insurers are happy with the use of MOGAS, and experience of its use has proved satisfactory. There is therefore no reason why the Airworthiness Board should not permit the use of MOGAS for certain groups of engines and for certain categories of flying, such as non-public transport, unsupercharged and low-compression engines, and other conditions, thereby reducing the cost to light aircraft. An example of this would be the towing of gliders, where a tug, even with engine failure, could always glide to an open field or back to its base. Many sports get subsidies, but this is no request for a subsidy for recreational flying. It is a request that this particular recreation should not be unnecessarily penalised.
§ 5.46 p.m.
§ Lord Trefgarne
My Lords, I want to start, if I may, by apologising to my noble friend Lord Gisborough and to my noble friend Lady Trumpington for the repeated interruptions of myself and my noble friend Lord Sandys on the vexed sub judice question. It is a matter which clarified itself only this morning, and I am not surprised that my noble friends were not aware of the precise position. I deeply regret that I was obliged to interrupt the calm flow of their oratory on more than one occasion while they were speaking, and I apologise to them for the rudeness that that appeared to be; but I was intervening in what I thought, and what I still think, were the best interests of the House and of your Lordships.
My Lords, there have been a number of occasions in recent weeks when we have debated specific matters concerning civil aviation. This is a useful opportunity to stand a little further back from such detailed questions (although I shall deal with some of them later) and consider the situation of the United Kingdom aviation industry as a whole. It is entirely appropriate that this opportunity should have been given us by my noble friend Lord Glenkinglas, who, as we have heard, was closely involved with the industry in the early 1970s and whose knowledge and experience is therefore invaluable to our debate.
Civil Aviation is one of this country's success stories. Throughout the world it is an industry with considerable potential for growth and in which the United Kingdom has been a major force. The industry is also at the forefront of technological progress, and is constantly changing. Governments must be prepared 726 to change their policies towards the industry accordingly. My noble friend himself presided over one such period of change, which was reflected in the Civil Aviation Act 1971 and the policy towards United Kingdom airlines which followed that legislation. Since then I think it is no exaggeration to say that further changes in the industry worldwide have been fast and furious, and that process of change continues unabated.
In addition to change, the international aviation industry has had to cope with two periods of severely adverse market conditions since the early 1970s. The first of these followed the massive and unprecedented rise in oil prices in 1973. It has become something of a cliche, but is none the less true, that fuel is the lifeblood of all airlines. The 1973 price increases placed a gigantic strain on airline costs as well as depressing demand for air travel, and the poor financial results of airlines in 1974–75 and 1975–76 bear witness to these effects.
The industry nevertheless recovered, and there followed a period of growth and relatively healthy profits. But in 1979–80 worldwide economic factors began to lead to a second trough in airline fortunes. Again, the problems began with much higher oil price rises than the industry had assumed. The significance of this factor was well illustrated by the chairman of British Airways, who said in the airline's 1979–80 annual report:Our total fuel bill was £413 million compared with £240 million in the previous year—a 72 per cent. increase".He went on to add:The average cost of aviation fuel is now nearly eight times higher than it was nine years ago".But the problems caused by fuel prices were compounded in 1980 by the effects of the world economic recession, and the state of the airline market last year, and now, can only be described as grim. In 1980 airline capacity grew by 8 per cent., but scheduled international passenger traffic showed no growth at all. During the year, the 108 member airlines of the International Air Transport Association are estimated to have lost between them over £1 billion—equivalent to 7.6 per cent. of their collective revenues—after depreciation and interest. It is therefore not surprising that the Director General of IATA has described 1980 as the worst year in civil aviation history. Nor do the immediate prospects look much brighter—to quote IATA again:1981 will be better than 1980 only because 1980 was such a deep and unprecedented trough".That is the general background against which we must consider the United Kingdom civil aviation industry, which has, of course, not been sheltered from these problems. Before speaking about British Airways, to which the Motion before us makes particular reference, I think it only right to pay tribute to the United Kingdom airline industry as a whole. Although British Airways tends to dominate debates of this nature, and I would not for one moment seek to undermine its importance in the structure of the United Kingdom industry, our independent airlines have come a long way over the past decade and now represent a significant proportion of our total airline capacity. My noble friend Lord Glenkinglas was involved as a Minister of the day in the establishment 727 of British Caledonian and, since then, a number of other independent United Kingdom airlines have developed and flourished. I also think it true to say that all our airlines—whether in the public or private sector—exhibit the spirit of innovation necessary to succeed in such a rapidly changing and increasingly competitive international industry.
I turn now to the particular situation of British Airways. This year is the tenth anniversary of the legislation which preceded the merger of BEA and BOAC into the British Airways Board and to which my noble friend Lord Glenkinglas referred in his own speech. There are those who argue that the two corporations should have been left separate and, indeed, it is argued in some quarters that they should now be separated again. In the Government's view it would be folly to reverse the process when so much has been done, and in any case we do not believe that a return to the previous structure would provide any answer to British Airways' current problems. The merger was undoubtedly a mammoth task and none of us should underestimate the problems involved, not least in respect of individual loyalties of employees who had spent long careers with either of the erstwhile air corporations. It would be foolish to deny that such loyalties are still held by some, even though the British Airways Board has now been in existence for almost nine years. That is a matter of human nature which no amount of efficient management can fully overcome, although I know that the board has made every effort to fuse British Airways into a single airline which maintains the best aspects of each of the old corporations.
Equally, the board has had the task of achieving economies of scale and rationalising labour resources following the merger. I have already referred to the problems suffered by all airlines in the mid-1970s. British Airways had to contend with those problems at a time when management was still heavily engaged in implementation of the merger and it is to the credit of all concerned that the airline weathered that particular storm and returned to net profit in 1976–77 after two very difficult years. Relatively healthy profits continued in 1977–78 and 1978–79, and I would remind your Lordships that, to make profits, British Airways has to compete with many other airlines both at home and abroad. It is anything but a monopoly and the market is highly competitive, so profits cannot be made merely by increasing fares.
As we all know, British Airways' financial performance after 1978–79 has been less satisfactory. The airline managed a small net profit in 1979–80, but made no secret of the fact that it had planned a much better result. Fuel prices and the strength of sterling were part of the problem, but there were already signs of the effects on the market of the world economic recession which has since made 1980–81 an unprecedented difficult year.
At present, the revenues and profits of all major international airlines are being hit by the recession in the market, and many operators are making large losses. British Airways has forecast that during 1980–81 it will earn around £400 million less revenue than originally planned for the year. Much of this has been made up by savings both in capital expenditure 728 and operating costs, together with proceeds from sales of assets, but it has not been possible to meet the anticipated revenue shortfall in full. Your Lordships will recall that the Government have agreed that British Airways may borrow an additional £85 million to assist the airline in meeting its immediate financial commitments to the end of the current financial year.
I will take this opportunity, if I may, to correct some misinformed comment that there has been about that decision. The additional £85 million is not a subsidy, and, indeed, is not being provided from Government funds. We have simply agreed that British Airways may borrow £85 million more in 1980–81 than we had previously been prepared to allow. The money itself will be borrowed by British Airways from banks—as are all the airline's loans—and will be charged at commercial rates of interest. So it is not a "soft option" by any means.
As I have indicated, the current problems are not unique to British Airways and in the short term there has been little that airlines, including British Airways, can do to escape from the effects of the depressed market. But any business must have a long-term strategy and it is right that we should also examine British Airways' plans in this respect.
I have mentioned that the international aviation market is increasingly competitive, and your Lordships will be aware that there has been an established trend in recent years towards lower air fares. British Airways' long-term strategy takes those two facts as its starting point and assumes that heavy competition on routes and fares will continue and probably grow. The airline has also assumed that over the next few years an increasing proportion of the airline market will be represented by leisure travel at low fares. I shall have more to say about the Government attitude towards air fares generally in a few moments.
There are basically two main elements in British Airways' long-term plans to meet these developments successfully and profitably. The first is to offer the whole range of airline users the products they want. Because British Airways intends to continue to serve all sectors of the market, this means recognising and meeting the needs of business and leisure travellers. With the move towards lower fares aimed primarily at the leisure market, there has naturally been a degree of resentment by business travellers and others paying the full fares that they are getting an unfair deal from airlines. British Airways has therefore examined the nature of services offered to full-fare and discount-fare passengers respectively and made changes to meet the interests of each group. The results are already to be seen in what British Airways call their new European product, which comprises only two classes—club, catering for passengers paying full fares with a higher standard of service to match and tourist class for those who pay considerably below the club-class rates. I understand that these changes are proving a commercial success. The same general principles are being applied to all British Airways' international services but with first class being retained outside Europe.
Of at least equal importance to offering the right product for the market is the ability to do so at the right price, and this is the second element in British Airways' strategy. Profits can only be made from low fares if an 729 airline's costs are contained within commensurate levels and the airlines which succeed in the future will be those who maximise efficiency in the use of both capital assets and labour.
A significant contribution towards cost reduction will be made by the rationalisation of British Airways' fleet which is at present under way. This is mainly concerned with replacing old aircraft with new models which will consume less fuel and reduce operating costs as well as meeting more stringent noise regulations due to be applied in the United Kingdom from 1st January 1986. These fleet changes involve a very large capital investment programme, of which the funding has contributed to British Airways' present cash flow problems, but they are essential to the airline's cost reduction targets.
But more efficient equipment alone will not be enough to enable British Airways to compete profitably, and must be accompanied by significant improvements in labour productivity. One of the main criticisms made of British Airways is that it is overmanned and its productivity is poor compared to its international competitors; and these points have been raised by previous speakers in our debate today. I accept that there is substance in these criticisms but, more important, British Airways' own management acknowledge that they are valid and that improvements must be made.
That is not to say that productivity has been stagnant. In 1979–80, the number of available tonne kilometres produced per employee rose by 7 per cent. compared to 1978–79, which itself had shown an improvement of 10 per cent. over the previous year. That is commendable but there has until recently been no reduction in staff numbers and it is impossible to achieve sufficient productivity improvements without reducing manning levels, particularly when there is no traffic growth. British Airways have therefore begun to make such reductions: manpower will have been reduced by 4,000 in the current financial year and there are plans for this process to continue thereafter at the rate of 2,500 a year.
Having described the present problems and future plans of British Airways, I should complete the picture by referring to the Government's own proposals to give the airline private sector status and offer shares for sale to the public. Because of present difficulties in the market, it has not been possible for us to implement that policy as soon as we would have wished, and we have already announced that there will be no flotation this year. The fact that we are prepared to wait until the time is right does I think prove the validity of the assurances, given when Parliament debated the Civil Aviation Bill—not least by me to the noble Lord, Lord Ponsonby, that we would not rush into a sale of shares at the wrong time for the wrong reasons. But I should make it clear that the Government maintain firmly the belief that privatisation offers the best chances for British Airways' future success; that the right time to make the change will come and that we shall implement the policy as soon as it does.
Before I move on to the matter of the British Airports Authority, I turn to some of the points which have been made in connection with British Airways during the course of the debate. I fear that I am going to take them in a somewhat random order. The noble 730 Lords, Lord Orr-Ewing and Lord Glenkinglas, referred to the question of pooling. I have noted what my noble friends said about these arrangements. The vast majority of pooling arrangements are essentially commercial agreements made between airlines, to which the Government are not a party. In the uncompetitive environment in which they often find themselves operating, they are in many ways a rational, if admittedly self-interested, response. They can promote sensible solutions to a variety of problems such as the need for capacity to be provided at the right times of the day which suit the convenience of the passenger. I shall, if I may, reflect upon what my noble friends have said in the light of the words that they put to me.
My noble friend Lady Trumpington and at least one noble Lord referred to the question of aviation security arrangements. My noble friend proposed that we should change the system so that security is funded nationally. The previous administration decided to pass the cost of aviation security measures from the taxpayer to the industry in the 1978 Civil Aviation Act. The present Government do not wish to change that policy. We believe it right that those who benefit from aviation security should pay for it. The noble Baroness also suggested that details of the costs and revenues of the aviation security fund are difficult to obtain. In fact a great deal of financial information is given to the working group on the fund twice a year. A representative of the Airline Transport Users' Committee attends these meetings. Such information includes, for example, total income and expenditure for the previous year; an estimate of income and expenditure for up to two years ahead; costs at individual airports, any significant variation in manning levels and major wage awards in the previous year. It is my department's intention, whenever it is necessary to revise the levy rate, to put a report containing such information in the Library of both Houses of Parliament.
§ Lord Orr-Ewing
Before the noble Lord leaves that point, since they are recruiting staff for security and presumably at a certain maturity—that is to say, 35 years of age, when they have the experience and level-headedness—are they not going to have a shorter working life and will not the future taxpayers be saddled after that short period is over with paying them fully-indexed pensions for the rest of their lifetime? Is not this unproductive as compared with hiring persons to do the job for a limited time?
§ Lord Trefgarne
My Lords, the costs of the security operations at both BAA airports and indeed at some others have been kept under review for a long time. I can assure my noble friend that the present arrangements, of which of course future pensions play a part, are kept under consideration and we are convinced that the present arrangements are the most cost-effective that can be devised. It is necessary of course for us to ensure that the effectiveness of the security arrangements remains unimpaired. That is one of the reasons why we have the arrangements which are presently in force.
731 The noble Lord, Lord Hayter, referred to air cargo. I can assure the noble Lord that the importance of that industry is not forgotten, if only for the fact that I have spent most of my working life in it. I certainly welcome and appreciate the work in which the noble Lord is personally involved in this important area. If he will allow me, I shall study more carefully the words he used today and see if there is anything further that I can say to him, and if so, I shall write to him.
May I now turn to the question of air fares? This has interested several noble Lords and Baronesses, not least the noble Baroness, Lady Burton, the noble Earl, Lord Amherst and my noble friend Lord Orr-Ewing. The noble Baroness, Lady Burton, mentioned the subject of air fares again and although it is not immediately within the compass of today's debate perhaps I may mention it briefly. It is in Europe that the level of air fares gives me the most concern. Here we have a number of developed democratic companies with a sophisticated air transport system which can no longer be considered an infant industry. Yet, nevertheless, we see a tightly regulated system which prevents airlines from offering fares to their consumers at price levels and on conditions which they believe that their customers want. This is not only against the interests of consumers, but I believe in the longer term it is against the interests of the airline concerned and it is certainly contrary to the whole philosophical background of the European Community, which envisage a wide measure of free trading conditions in goods and services.
We are not looking for revolution in the air transport system which could bring chaotic conditions with it and we do not seek the kind of overnight United States-style deregulation which some of our partners fear. We are however pressing them very hard indeed—and was in Amsterdam earlier this week doing just that—to accept some sensible liberalising steps which could allow new innovative fares and some new services to be introduced. At our initiative there are now three aviation issues under discussion in the European Community, including the one of air fares. The Commission is currently studying this with national experts with a remit to report back to the Council, and we very much hope that the Council will be able to take action on this during the course of the year.
§ Baroness Burton of Coventry
My Lords, I am sorry to interrupt. Is that the answer on bucket shops or is the noble Lord going to tell us a little more?
§ Baroness Burton of Coventry
My Lords, if the noble Lord has finished it, may I ask him whether he thinks that what he has said constitutes any answer to a case which I think has—
§ Lord Trefgarne
My Lords, I said, "I have not finished yet". On the bilateral side, we cannot unilaterally introduce lower fares but we can and do disapprove fare increases where we believe that they are unreasonable. For example, the normal economy return fare to Rome would be over £70 higher now if we had not taken such action, and to Stockholm nearly £100 732 higher. In our bilateral negotiations with other European countries, we shall continue to negotiate vigorously for the introduction of fares which our airlines wish to charge and which we believe are entirely reasonable in relation to the terms and conditions and the costs of operations.
It is encouraging that British Airways have now secured agreement for the introduction of its new and somewhat lower fares structure extensively throughout Western Europe. Our experience with other innovative fare types has been less encouraging. I was acutely disappointed, for example, by the unwillingness of the Austrian Government at talks last month to accept the new low Mini-prix fares proposed by British Caledonian. But we shall persevere with determination, and I believe that other European Governments will come in due course to accept that a balance needs to be struck between the interests of the traveller and the interests of airlines which is rather different from that in the past.
I do not pretend that this is going to be an easy task, because other governments take a very different view of this matter from us, and many give pre-eminence to the legitimate commercial objectives of their national airlines without, in our view, paying enough attention to the equally legitimate needs of their citizens as consumers in the air travel and the air freight markets. I believe it is quite wrong that the market should be restricted in this highly regulated way, and it also leads to the kind of abuses and illegalities which we have discussed in this House recently in connection with bucket shops. It is a matter which I and my department intend to pursue with the utmost vigour.
The noble Baroness mentioned the views of Mr. Elton, the chairman of ABTA, who suggests that we should either enforce the law or change it. I am sorry to have to tell the noble Baroness what she knows already: that there are difficulties in both of those courses. To enforce the law to secure a prosecution we need to have adequate evidence, and to persuade the court that a breach of the law has occurred and indeed who has done it, which is far from easy. To change the law, we have to persuade our international partners. That too is proving difficult, but is likely I think in the end to be the best course along which to proceed.
§ Baroness Burton of Coventry
My Lords, I do not want to make this into another debate, but is the Minister really saying that the sale of 5 million tickets in a year in this country through bucket shops is something which can just be left? I am glad the noble Lord indicates that is not so. Is the noble Lord telling the House, then, that the Government intend to take this matter to IATA, because it is IATA which is concerned also with this problem? Could he give us an assurance that that will be done?
§ Lord Trefgarne
My Lords, Britain is not a member of IATA; IATA is an organisation of airlines. The British airlines—British Airways and British Caledonian—are themselves members of IATA and they are as aware of this problem as we are and as the noble Baroness is. IATA, like other bodies, has to proceed with some form of consensus and it is some of the other airlines in IATA which are obstructing what we think 733 to be proper progress in this direction. I want the noble Baroness to understand quite clearly that I attach the greatest importance to this matter. It is something I have been considering almost every day since I took over the post that I now occupy, and I am determined to see that something is done as soon as possible.
My noble friend calls attention also to the condition and situation of the airports operated by the British Airports Authority. He and others have raised a number of matters which bear on this. Therefore, it may be helpful if, before replying to these points, I speak briefly about the responsibilities of the authority, about its success and about its plans for the future so that my replies are seen in the proper context.
As your Lordships will recall, the authority was established on 1st April 1966 to own and manage four major airports—Heathrow, Gatwick, Stansted and Prestwick—formerly under the direct control of the Government. It has since acquired Glasgow, Edinburgh and Aberdeen airports which, together with Prestwick, are now managed by the Scottish Airports Division of the authority. The authority therefore now owns and manages seven major airports in the United Kingdom which during 1979–80 together handled 78 per cent. of all passengers and 84 per cent. of air cargo traffic in the United Kingdom.
The authority's primary task is to plan, develop and operate those airports to meet the present and future needs of the international and domestic air transport system. Since 1966 the annual total aircraft movements through BAA airports have doubled, while the annual total number of passengers has increased threefold. That difference reflects the introduction of wide-bodied jets in the early 1970s. Indeed, it is the continued development of aircraft capacity which has changed the nature of the business to the extent that passenger-handling capacity rather than runway capacity is now the main limiting factor.
I see that I have gone on for longer than I had hoped on this matter. I shall delete a number of paragraphs which I have still before me. However, can I say that a number of points that have been raised by a number of speakers dealing with the British Airports Authority are very valid ones and, if I may, I will write to noble Lords on them. Can I now bring my remarks to a close by saying that this has been a timely and constructive debate and we have been fortunate to hear from a number of speakers who either have direct experience or a considerable knowledge of aviation matters. I conclude by repeating a remark I made at the beginning of my speech: the British aviation industry, in all its forms, is a success story and one in which we can take genuine pride. It is right that parts of our debate should have concentrated on certain problems which face the industry at present and it would be quite wrong to pretend that those problems do not exist or can be easily overcome. But I think all sides of your Lordships' House would agree that the problems should not overshadow the achievements, and would join me in wishing future success to all those involved in our civil aviation industry.
§ 6.15 p.m.
§ Lord Glenkinglas
My Lords, when I opened this debate I said I was confident that there were enough 734 people in this House who would fill up any gaps in my rather hasty opening with a great deal of useful flesh—if one can actually do that; I am not quite sure! But that has happened and we have had some most helpful and useful speeches on all sorts of specialist topics. The noble Lord, Lord Hayter, referred to cargo and my noble friend Lord Glenarthur spoke on the helicopter side of it. We also heard some more general and very useful comments from other noble Lords on every side of the House. Two of my noble kinsmen spoke. My noble friend Lord Campbell spoke very ably about the disabled, and I could not help feeling a certain sympathy as he spoke about the partially disabled, because I find the walk from one end of London Airport to the other almost feels as though one were walking to Glasgow in order to get to the beginning of it, and I have to stop pretty regularly on that way myself. I also have great sympathy with my other noble kinsman, Lord Cork and Orrery, when he talked about wanting to plant an airport on Severnside.
But the person who really has my deepest sympathy is the noble Lord, Lord Trefgarne. He has all the worries that I had 10 years ago. I think some of them are a little less. For example, I do not think he gets woken up by the telephone at 2.30 every morning by somebody ringing to say that they have just been woken up by an aircraft and what is he going to do about it. That happened so regularly with me that in the end the Post Office had to cut off my telephone from 10.30 until four. I knew perfectly well how to deal with the situation, of course. That was merely to ask the caller for his telephone number and ring him back the next night at 2.30 and say: "I was just going to bed and I hope you were sleeping well!" But for some reason my civil servants did not think that was a proper way for a Minister to behave.
In asking leave to withdraw my Motion, I would thank all those who have taken part in what I believe has been an interesting and useful debate. As the noble Baroness, Lady Burton, said, we all want to help. We know that British Airways are improving daily. We have great confidence in their new management and we hope very much that, as a result of our debate, a little greater speed in some of the improvements referred to will come about. I beg leave to withdraw my Motion for Papers.
§ Motion for Papers, by leave, withdrawn.