HL Deb 26 November 1981 vol 425 cc850-2

3.5 p.m.

The Earl of Kinnoull

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

The Question was as follows:

To ask Her Majesty's Government whether they consider the present capital financing of the British Airports Authority for the development of their airports is satisfactory in view of the fact that 80 per cent. of such developments need to be financed from revenue and whether this constraint on the BAA is in the interests of airlines and the consumer.

Lord Trefgarne

My Lords, there is no formal requirement that the BAA should finance any given percentage of its capital investment from revenue. As with other similar nationalised industries, the authority is expected to earn the required rate of return on new investment and this will substantially determine the internal revenue of the authority. Its external financing requirement will vary from year to year according to the difference between its capital requirements and its internally generated resources.

The Earl of Kinnoull

My Lords, while thanking my noble friend for that reply, may I ask him this: In view of the recent reports that the British Airports Authority intends to increase its charges by 12 per cent. this year to the now very harassed airlines, is it not time that this monopolistic body should look to increased efficiency of service rather than increasing charges in isolation of market difficulties?

Lord Trefgarne

My Lords, I certainly agree that the BAA ought to be operated as efficiently as is possible, and although I would not claim that the authority is perfect in that respect it has a very creditable and defensible record. But what I think my noble friend is really asking for is some amelioration for the airlines which goes wider than mere internal efficiency in the authority. That would mean a subsidy from public funds which I cannot countenance.

Lord Taylor of Gryfe

My Lords, in view of the desire of the Government to introduce private capital into the nationalised sector, have they looked at the possibility of financing the airport developments by private capital and leasing to the Civil Aviation Authority? Is there any reason why such arrangements should be brought within the external finance limit of the PSBR?

Lord Trefgarne

My Lords, that is one of the possibilities that we examine from time to time. However, it would have no effect upon the costs of the British Airports Authority and thus its ultimate charges.

Lord Harvey of Prestbury

My Lords, is my noble friend aware that the British Airport Authority's charges are just about the highest in the world? Would he look into this matter and see that we are really competitive and encourage airlines and private operators to come to Britain?

Lord Trefgarne

My Lords, I am aware that the fees of the British Airports Authority are among the higher charges for their type of services in the world. On the other hand, it is one of the few airport authorities which operates without a subsidy.

Earl Amherst

My Lords, would the noble Lord not agree that the high tariffs charged by the CAA to the airlines are largely responsible for the very high fares now charged by the operators?

Lord Trefgarne

No, my Lords, I would not agree with that. The terminal charges—as they are called—at British airports, which relate to the total cost of course of British airlines, represent something less than 5 per cent. of their total costs.

Lord Jenkins of Putney

My Lords, in considering what help we should give to the British Airports Authority, would the noble Lord consider that it is desirable that further increases of flights into Heathrow should be discouraged? Would he therefore encourage the airports authority to allow for cheaper landing charges at Stansted and Gatwick rather than Heathrow?

Lord Trefgarne

My Lords, that is already the case.

Baroness Burton of Coventry

My Lords, is the noble Lord the Minister aware that these very high charges, whether they are justified or not, of the British Airports Authority are one of the main reasons for the high passengers fares, particularly to Europe? Could he not take that into account in looking at the proposed 12 per cent. increase?

Lord Trefgarne

My Lords, as I have just explained to the noble Earl, Lord Amherst, the noble Baroness is not correct.