HL Deb 10 June 1993 vol 546 cc1041-2

3.20 p.m.

Lord Brabazon of Tara asked Her Majesty's Government:

What progress has been made towards lower air fares in Europe since the adoption of the third liberalisation package.

The Minister of State, Department of Transport (The Earl of Caithness)

My Lords, the third aviation package was adopted on 1st January this year. Since then, several airlines have responded by offering substantial reductions on a number of services.

Lord Brabazon of Tara

My Lords, I thank my noble friend for that encouraging reply. It is good to know that British airlines, and in particular perhaps British Midland, have led the way towards lower fares. But does he agree that the one great danger to further progress and to our own airlines is illegal state subsidy to state-owned foreign competitors? Would he look in particular at the situation on the Heathrow-Dublin route, where Aer Lingus is cutting its business fares by up to £83 to match British Midland? It is a route on which Aer Lingus is already reported to be losing £15 per passenger? Moreover, does he agree that it is now apparent that Aer Lingus is looking to the Irish Government for state investment for restructuring? Will he ensure that the Commission is seized of this problem and, if necessary, raise it himself at the Council of Ministers?

The Earl of Caithness

My Lords, as my noble friend so rightly says, it is rewarding to see a UK initiative bearing fruit. Indeed, my noble friend was the Minister responsible for pushing the aviation package to a successful conclusion. His hard work is your Lordships' reward. With regard to Aer Lingus, I wrote to the commissioner as soon as I saw some comments in the paper and asked him to make sure that he took a formal look at any application that was made by the Irish authorities. As yet, none has been made.

Lord Carmichael of Kelvingrove

My Lords, the Minister said that reductions had been made. That was good news. However, there is a worry that a number of amalgamations are taking place at this time. Will he give an assurance that the British Government will encourage the relevant EC authorities to look carefully at any combinations to ensure that they do not lead to cartels and price fixing?

The Earl of Caithness

My Lords, the noble Lord is absolutely right. We need to prevent cartels. One of the great advances of the third package was that we got rid of so much bureaucracy that had been thwarting the aviation industry. Britain has more airlines than any other country in the world except for America. A great many of them, something like 75 per cent., have international destinations.

Lord Elton

My Lords, is my noble friend aware that many noble Lords on this side of the House have been waiting to hear the noble Lord, Lord Stoddart of Swindon, balance his impassioned intervention on an earlier Question with a welcome for the substantial savings for the travelling public that have been achieved by this package?

The Earl of Caithness

My Lords, I too was a little surprised that the noble Lord, Lord Stoddart, did not jump to his feet to commend the work of the United Kingdom. I know that he would prefer to pay the former price of £408 to fly from Manchester to Paris rather than the current £330. Of course, we would not have got that package had we not been in the European Community.

Lord Stoddart of Swindon

My Lords, in deference to the House I rationed my interventions.

Lord Auckland

My Lords, since the Scandinavian and Nordic countries may well shortly be joining the European Community as full partners, is my noble friend aware of the scandalous situation on the airlines to Finland, Iceland, Denmark, Sweden and Norway? Bearing in mind the increased amount of business which it is hoped will arise in those countries, does he agree that there is a real need, particularly for the Scandinavian airlines, for urgent action to be taken in that area?

The Earl of Caithness

My Lords, indeed we wish to see lower fares. If any of the EFTA countries makes a formal application that is accepted for entry into the European Community, they will have to comply with the third aviation package, although many do so at the present time.