HL Deb 10 March 1981 vol 418 cc169-72

7.4 p.m.

Lord Lyell rose to move, That the draft order laid before the House on 25th February be approved.

The noble Lord said: My Lords, the amendment order for which I seek the approval of your Lordships' House will increase the limit of the carrier's liability by air in respect of non-international, that is domestic, carriage by air from 58,000 Special Drawing Rights to 100,000 Special Drawing Rights. The currently equivalent sterling values of these strange amounts are approximately £32,000 and £55,000 respectively.

The increase in domestic carriage limits is consequent upon the CAA's decision on 7th November 1980 to introduce, as from 1st April 1981, an amended standard condition in air transport licences which would require United Kingdom airlines to contract for a limit of not less than 100,000 Special Drawing Rights, or about £55,000 sterling at the current exchange rate. Their decision meant that on or after 1st April the liability limit applying to United Kingdom airlines engaged in international carriage will be 100,000 Special Drawing Rights per passenger. The CAA reached this decision, having given due notice of its intentions in the Official Record and having arranged for a public hearing into the matter. This took place on 22nd October last year and the views of four British airlines were put forward.

The proposal which is before your Lordships tonight was very fully ventilated at this hearing. The airlines pointed to the effect that an increase might have on their financial position but the authority, taking all relevant factors into account—and bearing in mind the interests of the travelling public—decided that the limit should be increased. There is obvious merit in bringing our domestic limits into line with international limits which we set for our own carriers.

The airlines, and other operators, who must in any case have been expecting action on the domestic limits, were informed of our proposal by means of a notice in the Civil Aviation Authority's Official Record. The Department of Trade has also notified the smaller operators through the Air Taxi Operators Association and the Aircraft Owners and Pilots Association. There has been no adverse reaction to this proposal. Indeed, one would not really expect such a reaction since the increase in the liability limit is clearly in the interests of the air traveller, whom the airlines and other operators are in business to serve.

As I have said, the liability limit currently applying to non-international (that is, domestic) carriage is 58,000 Special Drawing Rights. It is desirable that the limit applying to non-international carriage should not be less than the limit applying to international carriage. Another reason for this change is the fact that the domestic liability limit has remained unchanged—except for changes brought about by currency fluctuation—since 1967 and since that time its real value has been eroded by inflation and would not now, in the Government's view, provide for adequate settlements in all cases. The Government, therefore, propose a non-international carriage liability limit of 100,000 Special Drawing Rights, in line with the liability limit which will apply to United Kingdom airlines in respect of international carriage from 1st April 1981.

Finally, I should like to mention that the Joint Committee on Statutory Instruments has considered this proposal and the joint committee has not drawn the attention of the House to any particular point. I commend this measure to your Lordships. I am sure that the new limits will be accepted by the air transport operators and that they will be welcomed by their customers, the travelling public. I beg to move.

Moved, That the draft order laid before the House on 25th February be approved.—(Lord Lyell.)

Lord Ponsonby of Shulbrede

My Lords, I should like to thank the noble Lord for explaining this draft order; and I am sure all your Lordships will agree that the same maximum limit should apply to domestic carriage as to international carriage, and certainly that that applying to domestic carriage should not be less than that applying to international carriage. I note that the new limit is to be 100,000 SDRs—Special Drawing Rights. I must confess that this term of a Special Drawing Right is a new form of currency to me. Prior to this evening, I was not aware of this particular new currency unit. One wonders why this liability limit could not be expressed in some more common currency, such as an ECU or an EMU—two units of currency of which we have some knowledge, as opposed to this particular unit, the SDR, which I feel that few of your Lordships will know about at all. Further, one wonders why it is necessary for there to be an upper limit at all. One would think that the possibility of individual passengers wishing to claim more, or the relatives of individual passengers wishing to claim more, is something which should not be curtailed. So I wonder whether the noble Lord could tell the House why it is necessary to have an upper limit.

Lord Lyell

My Lords, we are very grateful for the kind comments and indeed the reception which this measure has been accorded by the noble Lord, Lord Ponsonby. So far as his interest in currencies is concerned, I must admit that I have no approximation of the value of either the European Currency Unit nor indeed the European Monetary Unit. I will inquire about these. I suspect probably not from the department on whose behalf I am speaking; nevertheless with the usual courtesy of your Lordships' House I will find out exactly the equivalent values and measures of these two very interesting currency units which the noble Lord has mentioned.

I understand that the question of liability limits, particularly as it pertains to international carriage, is discussed at the round table of international airlines, and therefore we believe that Special Drawing Rights is the best medium for expressing these limits. I understand that Special Drawing Rights consist of a composite figure taken from what is known as a "basket" of 16 currencies through the International Monetary Fund. If the noble Lord will allow me, I will write to him in greater detail than would be possible to go into tonight on the exact amounts and description and makeup of Special Drawing Rights. I am able to tell the noble Lord and your Lordships that, as of yesterday, 9th March 1981, one Special Drawing Right is approximately 55.8p. That is the current value. So with the limit proposed of 100,000 SDRs according to the fluctuations in the pound and the other 15 currencies it would appear to be something in the order of £55,000.

The noble Lord also asked about the upper limit of liability. The régime under which any carrier's liability is limited incorporates certain benefits which we believe would be lost as soon as the principle of limiting liability was abandoned. Under the existing régime of limiting liability the dependants of any unfortunate persons who had lost their lives or had been injured in any air accident do not have to prove negligence. But if dependants did have to prove negligence we believe that compensation cases would become subject to far more frequent and indeed contentious and bitter litigation, which would certainly add greatly to the burden of the dependants and we believe the airlines, and of course ultimately the travelling public. I hope that covers the noble Lord's query on liability.

The winged messengers have produced a partial answer for the noble Lord, Lord Ponsonby, about the European Monetary Unit and the European Currency Unit. These are European currencies which are not especially suitable for international trade which goes outside Europe, but Special Drawing Rights are accepted internationally. Could I study any points I have missed in regard to the noble Lord's interesting queries. I will certainly let him have a fuller note about those two fascinating currencies at a later date.

Lord Ponsonby of Shulbrede

My Lords, may I thank the noble Lord very much for his very full reply to my comments. I was particularly interested to know what currencies are included in Special Drawing Rights which are not included in an ECU or an EMU.

Lord Lyell

My Lords, if it would be in order for me to reply, I can briefly say that there are 16 currencies in Special Drawing Rights. So far as I am aware, there are nine, I think now 10, currencies within the European Monetary Unit. There would be others—I would have thought Canadian dollars and American dollars—in Special Drawing Rights. If I may consult my advisers, I will give the noble Lord a very full list.

On Question, Motion agreed to.

[The Sitting was suspended from 7.16 to 7.45 p.m.]