Laker Airways: Future (Hansard, 8 February 1982)

§ Lord Balfour of Inchrye
My Lords, I beg leave to ask the Question of which I have given Private Notice.

§ Lord Trefgarne
My Lords, my honourable friend the Parliamentary Under-Secretary of State for Trade made a Statement in another place last Friday about the events which have overtaken Laker Airways. Since then I understand that one financial institution have been exploring ways of raising additional finance to save the airline. The Receiver has made clear that, if they succeed in doing so, they will need the concurrence of the other major creditors who have loaned money to Laker Airways. Strenuous efforts were made by the banks in recent months to find ways of marshalling additional financial support, and I cannot be optimistic that this effort will succeed.
It is hoped that the tour operations will survive and result in continuity of employment for some of Laker's staff. It is too early yet to say what arrangements may be possible to preserve employment for the remainder under new ownership.

§ Lord Balfour of Inchrye
My Lords, I thank the Minister for his reply. Will he agree that Laker has pioneered mass air travel and that, while fares must, of course, be at a level which will give a reasonable return on capital, never again, as in past years, shall we see the high level of fares, exploitation of the public, by means of what I would term cosy cartels, monopolies and international traffic pools? May they never be countenanced again. That is my question to Her Majesty's Government.

§ Lord Trefgarne
My Lords, my noble friend is certainly right when he suggests, as I think is the main gist of his question, that things will never be the same again in international air transport, even though Laker himself may or may not be part of them. The fact is that Laker gave birth to a new era in international air transport and will certainly always be remembered for that, if nothing more.

§ Baroness Burton of Coventry
My Lords, while being glad to hear the tone of the Minister's reply, may I ask him whether it is not true that in the past Governments and airlines have co-operated to keep out competition and, as a result, air fares have been kept high? As the noble Lord has just said, Laker posed a challenge to this cartel in air travel. Would the noble Lord agree that that is why there has been such an incredible response to this situation from the public, from his pilots and from all the employees of Laker? I wonder whether the noble Lord could tell us whether it is not right to say that established airlines will make a mistake if they think that what Laker worked for has dis- 12 appeared. Can the Minister help us by going a little further? Can he convey to the Government, if it is necessary, that this very strong force of public opinion has surfaced because Laker offered to the public something they had never had before? He made it possible for people to visit distant parts of the world and see their relatives, whereas before the cost had been much too high. May I ask, finally, whether that is not too valuable a thing to lose, and will the Government do all in their power to retain what is possible?

§ Lord Trefgarne
My Lords, as I said to my noble friend Lord Balfour, things will never be the same again in international air transport. I am thinking particularly of the competitive arrangements that exist in some markets. It is certainly the case that the British Government find themselves at variance with some overseas Governments with regard to fare levels and other conditions which attach to air services around the world. But, having said that, we are, of course, obliged to operate in the existing international environment. We are doing our best to change that environment, not least in Europe.

Lord Campbell of Croy
My Lords, may I ask my noble friend whether it is correct that a time limit has been set for any decisions on the future, reported to be six days from last Friday, and, if so, what organisation has required this time limit and is it necessary, bearing in mind that all the Laker aircraft are grounded?

§ Lord Trefgarne
My Lords, I understand that the Civil Aviation Authority have given notice of their intention to suspend and, in due course, if need be, to revoke the air transport licences held by Laker Airways. That is a necessary concomitant to what has happened, because of course the CAA have to have regard to their duty as laid down in civil aviation legislation, which is to ensure in general terms that the operators are in a fit state to discharge the obligations of their licences.

§ Lord Ponsonby of Shulbrede
My Lords, I should like to agree with a lot of the sentiments expressed by the noble Lord, Lord Balfour of Inchrye. We are concerned that this tragic demise of Laker Airways should not lead to a return of the high fares of the past. I think that the question which this particularly poses is whether the Government feel that they should be reconsidering their whole policy on the question of air routes and air traffic; whether the lesson of Laker is something which the Government should learn in regard to their policies about control of air routes. Immediately one is concerned about the welfare of those passengers who may be stranded; that all possible is being done to ensure that no individual passengers are unable to return home, and that there are no losses so far as those who have booked potential flights—

Noble Lords
Question!

§ Lord Ponsonby of Shulbrede
My Lords, my question is whether the Government have any plans to review their policy in this area.

§ Lord Trefgarne
My Lords, I am not quite certain what aspect of policy the noble Lord thinks we ought to review. The general policy towards air transport, as with other industries, is that they should be allowed to compete fairly and squarely with all the other international companies in the business. That is in fact our main bone of contention at present—and I fancy the main bone of contention of Lady Burton of Coventry as well—that British airlines are not allowed to compete on all fours with other airlines in the world market.

§ Earl Amherst
My Lords, if the Government agree that the sudden collapse of Laker Airways now raises most important questions regarding consumer interest, taxpayers' money and route licensing, let alone the livelihood of the large Laker Airways' staff and many other issues that now arise in what is now a vast international business, will the Government issue now, or urgently, a statement of what is to be their future policy for civil aviation?

§ Lord Trefgarne
My Lords, we have had many debates lately on a number of different aspects of civil aviation policy. It is, of course, the case that the British independent air transport industry, as a whole, actually made a profit last year, albeit a small one, and so I do not think that we need to have any fears or cause for concern for the long-term future of the British independent air transport industry. As for the nationalised side of the air transport industry, our policy remains, as I have reported to your Lordships on a number of occasions, that British Airways itself should be privatised as soon as is practicable.

§ Lord Cledwyn of Penrhos
My Lords, in view of the profound implications for so many people of the collapse of Laker Airways, would Her Majesty's Government consider setting up an inquiry—because there are many lessons to be learned from this—to find out precisely what went wrong, why it went wrong and what part Her Majesty's Government played or should play in this? Would he also consider what bearing Section 165 of the Companies Act has on this collapse?

§ Lord Trefgarne
My Lords, the policy of Her Majesty's Government with regard to the British independent air transport industry is, of course, that it should stand on its own feet and flourish or otherwise, as its own management determines. It is unhappily the case that, as a result of various factors—some of which I think were outside Sir Freddie's control, but perhaps not all of them—Laker Airways has found itself in difficulties. A number of things are going on, as the Question indicates, and it is too early to say yet that Laker Airways is finally finished. I must say that I hope that it is not, but it is not the Government's policy to stand behind Laker Airways or, indeed, any other commercial company of this nature in these circumstances.

§ Lord Cledwyn of Penrhos
My Lords, I should like to address the Minister further because he has not dealt with my question. In view of the concern which has been expressed by Ministers from the Prime 14 Minister downwards on this issue, and in view of the profound public concern which has been expressed by individuals, by newspapers and by the media over the last three days, does he not consider that there is a strong case for a full public inquiry into this issue so that lessons may be learned and so that the errors that have been committed, if there were errors, may not be repeated in the future?

§ Lord Trefgarne
My Lords, I do not think that I would agree with the noble Lord. I think that the difficulties which have caused Laker Airways to come to this sorry pass—as, indeed, it is—may to some extent be a result of misguided decisions within the management of Laker Airways and may to some other extent be as a result, for example, of fluctuations in the currency rate which Laker himself has referred to. But I think that a profound reinvestigation of the British civil aviation industry is not appropriate in this context. As I said earlier, the independent sector of British civil aviation taken as a whole actually made a small profit last year and I think that there is no reason for any long-term worry about the future.

Viscount St. Davids
My Lords, would the noble Lord be surprised if there are a number of persons, some within this House and many, many outside it, who feel that, although Sir Frederick may well have been the author of some of his own troubles and also that public money should not now be put to his support, yet public support should be given to him? Moreover, would he be surprised if I myself was willing to sign a list, under the heading of some greater personage perhaps—or if they were not willing to do so, to start a list on my own—of those in this House and elsewhere who were willing to express the wish that in some form support should be given for keeping Sir Frederick flying an independent airway?

§ Lord Trefgarne
My Lords, the difficulty is that once he gets Government support he ceases to be an independent airline and that is the view which, I think, Sir Freddie himself takes: it is certainly the view that the Government take. The public have been very forthcoming just lately in the various undertakings that have been given and I have heard of figures of £1 million or so that various people have undertaken to put in. But I have to say that, in the context of the figures as I understand them with regard to Laker Airways, £1 million is nowhere near enough.

§ Lord Molloy
My Lords, would the noble Lord at least not reconsider the reply he gave to my noble friend on the Front Bench that perhaps a public inquiry might contribute in regard to the sadness that has happened with regard to Laker Airways, particularly in this savage world of cartels and multinationals where it would appear that it is the well-intentioned who are driven to the wall and finished off? Also it would appear that a lot of people are contributing small sums and large sums which they think will save Laker. What will happen to their money if there is no saving of Laker? Will it be returned to them?

§ Lord Trefgarne
My Lords, the money to which I referred has, I think, been contributed to private funds 15 destined for some rescue operation with Laker Airways. I understand from what I have read that if the rescue is not mounted and the funds are not therefore used, then the funds will indeed be returned.

§ Lord Campbell of Alloway
My Lords, does my noble friend the Minister agree that it would be wholly premature to seek to set up any inquiry until consideration has been given to the international cartel arrangements to which my noble friend Lord Balfour of Inchrye has referred?

§ Lord Trefgarne
My Lords, Laker, of course, was a fairly doughty opponent of the international cartel arrangements to which my noble friend refers and had, indeed, achieved a very considerable measure of success in being allowed to operate free from the restrictions of that cartel—witness the obvious fact of his Skytrain service across the North Atlantic, which was, of course, operated outside the confines of IATA; and, indeed, the other scheduled services which he had in mind would likewise have been operated outside the confines of IATA. IATA, of course, is not a Government body, as people often seem to think: it is, in fact, an association of airlines, and the Government's views on that matter have been frequently expressed.

§ Lord Cledwyn of Penrhos
My Lords, will the Minister confirm that a public inquiry can, in fact, be set up without reference to any cartel?

§ Lord Trefgarne
My Lords, I have no doubt that it can if the circumstances merit it: I do not think that they do on this occasion.