§ Baroness Burton of CoventryMy 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 serious threat to airline profitability, and in particular that of our national airline British Airways, posed by the sales of cut-price tickets, they are prepared to support discussions with and within IATA on the desirability of either amending or enforcing existing legislation; and whether they will make a statement on the present situation.
§ The Secretary of State for Trade (Lord Cockfield)My Lords, the Government fully support the current efforts of the airlines, acting under the auspices of the IATA Fare Deal Monitoring Group, to bring a better measure of order into the international market for air tickets. The Board of Airline Representatives in the United Kingdom have made progress in securing agreement between British and foreign airlines to reverse the trend towards increasing discounting and move back to charging the fares approved by Governments. Success depends on the collective good sense of the airline industry rather than on changes in legislation or Government policy.
§ Baroness Burton of CoventryMy Lords, is the Minister aware that it is very good to receive an Answer like that and to know that at last progress is being made? May I ask the Minister whether he will comment on the new resolution adopted by IATA, namely, the Tariff Integrity Resolution, which is an attempt to curtail illegal practices? That resolution calls for the active support of Governments. Will the Minister comment on that?
§ Lord CockfieldMy Lords, I am grateful to the noble Baroness for what she says. We do support IATA in all the efforts it is making to bring discounting to an end, but in the end this must be a matter that only the airlines themselves can achieve. Two agreements have now been entered into for policing fares between London and Japan and London and the Gulf, and further agreements of this sort are expected shortly.
§ Baroness Burton of CoventryMy Lords, I do not wish to draw too much encouragement from what the Minister says—because I could hardly hear what he said, though that was not his fault. May I ask whether it is not correct that his department have been asked 906 for discussions on this Tariff Integrity Resolution and whether any such discussions have taken place, particularly as the 11 major airlines involved in this include our own British Airways and British Caledonian?
§ Lord CockfieldMy Lords, I certainly take note of what the noble Baroness says and I will let her know what further progress is made in this field.
§ Lord MonsonMy Lords, does the noble Lord not agree that cut price air tickets are an inevitable consequence of an excess capacity, whether short term or long term? Would he not also agree that a Government which opposes cartels and believes in the market economy should never interfere in the spontaneous functioning of the market?
§ Lord CockfieldNo, my Lords, I do not entirely agree that cut price air fares are the result of excess capacity. One could have excess capacity existing with maintained air fares. Indeed, if I may say so, that was the whole objective of the IATA agreements. The problem that one faces here, of course, is that the air lines need a level of profitability to stay in business and, so long as many of them are in fact financed by Governments, complete freedom to compete may be a desirable objective but one remarkably difficult to attain.