HL Deb 11 June 1981 vol 421 cc315-7

3.20 p.m.

Lord Bethell

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

The Question was as follows:

To ask Her Majesty's Government whether, in view of the alleged illegality under European law of the present system of fixing air fares for travel between European Community member states, they will refuse any further request from British Airways or any other member of the International Air Transport Association for an increase in such fares until the legal situation is clarified.

Lors Trefgarne

No, my Lords. Applications for fare increases within the EEC or elsewhere are decided in accordance with the considerations which I have referred to on a number of occasions, not least the need to provide the customer with an adequate competitive choice. We would certainly welcome liberalisation of the present arrangements, but we would not be justified in refusing all increases in air fares within the Community until such time as this legal point is resolved.

Lord Bethell

My Lords, will the Minister please confirm that the present system of fixing air fares within the EEC member states is totally illegal under the Treaty of Rome? Has not his department determined that this is the case? Also, could he please tell us whether he is aware of the legal action that will soon be brought by myself against the EEC Commission for fixing air fares and arranging an illegal cartel? Does he appreciate the fact that if he and his department continue to connive at this illegal arrangement he may find himself before the European Court of Justice as well?

Lord Trefgarne

My Lords, that is a prospect which I shall have to face with such fortitude as I can! For my noble friend to suggest that the system is illegal is not the position of Her Majesty's Government, and I shall certainly look forward to hearing what comes from my noble friend's complaint.

Lord Orr-Ewing

My Lords, would my noble friend bear in mind that if he is not able to break this IATA cartel for fare fixing in Europe, the best alternative is to encourage competition on these individual routes by independent airlines? Is he aware of the fact that only when Laker Airways and others came in on the Transatlantic routes were fares substantially lowered? Is he further aware that British Airways are currently circulating Members of Parliament, asking them to discourage competition by British Midland on the route between London and Glasgow on the shuttle? This is another instance where a single monopoly tends to keep prices up; and competition will lower prices.

Lord Trefgarne

My Lords, I absolutely agree with my noble friend that monopoly situations on air routes or anywhere else are highly undesirable. That is why we have been pushing forward within the European Community, particularly recently, with the initiative on air fares which we launched to get a better competitive régime for member countries within the Community, and I am hopeful that we shall in due course achieve some success.

Lord Bray

My Lords, can the noble Lord tell us whether this fixing of air fares by the EEC applies to all private airlines?

Lord Trefgarne

My Lords, the EEC do not fix air fares and, as far as I know, have no plans or proposals to do so. Air fares between the member states of the European Community, as between other states, are agreed by the Governments concerned upon the recommendations of the relevant airlines.

Lord Bruce of Donington

My Lords, will the noble Lord tell the House whether the European Commission themselves have submitted any firm proposals in this connection to the Council of Ministers for their consideration and, if they have submitted proposals, could the noble Lord give some indication as to what has happened to them?

Lord Trefgarne

My Lords, no proposals have actually been submitted yet, but we expect to receive some proposals in a very short time—possibly as early as next week. I very much hope there will be a draft directive or regulation included with that document.

The Lord President of the Council (Lord Soames)

My Lords, pending that, I suggest that we go on to the next Question.