HL Deb 16 October 1984 vol 455 cc879-81

2.59 p.m.

Lord Campbell of Croy

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

The Question was as follows:

To ask Her Majesty's Government what action they are taking to promote competition between British airlines.

Lord Trefgarne

My Lords, I apologise if this Answer is a little longer than usual. The Government published on 5th October a White Paper setting out their policy on airline competition. Its primary objective is to encourage a sound and competitive multi-airline industry. Internationally, the Government will promote competition by negotiating more liberal arrangements for air services either by "open skies" policies where possible or by designation of more than one British carrier wherever Britain's interests are not prejudiced. For domestic services the Civil Aviation Authority proposes to relax the present licensing restrictions.

In addition, the privatisation of British Airways will place it on the same footing as private sector airlines. The proposed exchange of routes between British Airways and British Caledonian should give the latter a sounder financial base, enabling it to take greater advantage of new market opportunities and to compete effectively with BA. British Airways' offer of financial support to the other independent airlines should enable them to expand further into Europe from regional airports.

Lord Campbell of Croy

My Lords, I thank my noble friend for his reply. The White Paper records an arrangement for an exchange of services to Saudi Arabia and South America between two airlines. Do the Government recognise that by their accepting, and not opposing, the arrangement, although considerably less than the Civil Aviation Authority recommended, British Caledonian has saved valuable time which is needed for the launch of British Airways into private ownership? Will the Government now pursue resolutely the intention, which is also in the White Paper, to promote competition on the short-haul European routes which will help to bring welcome reductions in fares for passengers?

Lord Trefgarne

Yes, indeed, my Lords, we shall certainly be seeking to do that. As my noble friend will recall, it is not always a matter for Her Majesty's Government alone, but wherever possible we shall seek to achieve agreements that will provide the benefits that he points to. Can I instance, for example, the recent agreement with the Netherlands which has achieved just that.

Baroness Burton of Coventry

My Lords, as there are varying views about the White Paper published by the Government, and as the Leader of the House has admitted the legitimate interest of the House in these matters, may I ask the Minister, without his referring me to the usual channels, to say whether it is the Government's intention to give the House time to discuss its own White Paper in view of the immense importance of the subject?

Lord Trefgarne

My Lords, I am afraid that that is not a matter for me. but I am certain that the remarks of the noble Baroness will have been heard by my noble friend who is sitting beside me on the Front Bench.

Lord Orr-Ewing

My Lords, is my noble friend aware that some of us feel that a little more competition and a little less consideration about the price would have been helpful to airline customers? When he approaches the question of competition on the short-haul routes, in an effort I hope to bring down the prices—which are at an incredible height at the present—will he also perhaps consider whether the pooling arrangement which has been there for far too long is in the interests of the customer?

Lord Trefgarne

My Lords, I think that pooling agreements continue to exist on only a few routes now. But that will be a matter for the Civil Aviation Authority in the first instance and, secondly, now for the Director-General of Fair Trading.

Lord Underhill

My Lords, does the Minister appreciate the fact that many people will support the Government's major proposals as they affect British Airways in the interests of British aviation policy, the staff of British Airways and not least Birmingham and Manchester airports' authorities? Will he recognise that there is also a strong feeling that the whole sorry business has not been concerned so much with aviation policy as with the Government's dogmatic policy of privatisation? Would it not have been better to leave British Airways as a publicly-owned undertaking to carry on efficiently, as everyone, including Ministers, says it is doing?

Lord Trefgarne

My Lords, I think that the best deal for the passengers and for the taxpayers is the one that will be embodied in the proposals that we are bringing forward, and I hope that they will have the support of the noble Lord.

Lord Kings Norton

My Lords, in view of the great disparity in scale between British Airways and British Caledonian, which will still exist despite the exchanges now being arranged, will the Government consider implementing the old recommendation of the Edwards Committee, that when a new route is instituted the first refusal to operate it should go to what the committee called the second force airline?

Lord Trefgarne

My Lords, I think that the difficulty with that proposal in the circumstances in which we now find ourselves—and of course the Edwards Committee was 15 years ago now—is that we should be rather distorting the comparatively free licensing procedure that we now enjoy. For that reason I think that the Government would have difficulty with the proposal to which the noble Lord refers.

Lord Beswick

My Lords, the noble Lord speaks of the bargain for the taxpayer. Does that mean that the taxpayer will not now be asked to infuse something up to £800 million into the accounts of British Airways prior to its privatisation?

Lord Trefgarne

My Lords, we have yet to announce in detail the arrangements for the privatisation of British Airways. But in the end the taxpayer will get a very good deal.

Lord Campbell of Croy

My Lords, in pursuing the praiseworthy objective of privatising British Airways, will the Government continue to take special care so that damage is not inflicted on the existing private sector of the airline industry?

Lord Trefgarne

My Lords, I believe that the proposals that my right honourable friend has recently brought forward achieve what my noble friend is looking for. They have been arrived at by agreement with all the parties concerned, and I am therefore satisfied that the difficulties he points to will not arise in practice.