Civil Aviation

HL Deb 20 May 1998 vol 589 cc1691-725

5.44 p.m.

Lord Mountevans

rose to call attention to Britain's civil aviation industry; and to move for Papers.

The noble Lord said: My Lords, it is a pleasure to move the Motion standing in my name on the Order Paper. On the one hand, we are commemorating the 50th anniversary of the Berlin Airlift, which did a great deal to kickstart the recovery of Britain's aviation industry after the war; on the other, we can celebrate one of Britain's great success stories—our airline and airport industries. It is a celebration which, since the battles over privatisation, has been largely bi-partisan.

I have no interests to declare, but I express my gratitude to the organisations which have advised me. In concentrating on airports and airlines, I should not wish to overlook the importance of Aerospace, the helicopter industry, general aviation, consultancy, aviation insurance, or aviation brokerage. All those have played their part.

I shall commence by highlighting how far the industry has travelled. I recently came across a 1955 BEA advertisement, offering, in all, 15 services a week to Copenhagen, Oslo and Stockholm—all using "the wonderful Viscount", and with return tourist fares ranging from £39 to £51 in old money. Given the cosy pool system of those days, SAS probably offered an older plane, but probably had the same frequency and fares and same capacity. Today each of the two carriers offers five or six flights a day to Copenhagen alone. The aeroplanes are between two and five times bigger than those being used in 1955. There are four other scheduled carriers as well as low-cost airlines and provincial routes. The lowest fares in today's money range from £99 to Stockholm to £116 to Oslo.

If one considers inflation which has aggregated 52 per cent. since 1988 alone, airport departure tax, security costs, the costs of new technology and other charges, one concludes that air travel prices have fallen so steeply that what was the privilege for the few has become the facility of the many. In more general terms, CAA figures suggest that air passenger numbers rose by over 800 per cent. between 1966 and 1997 and air traffic movements rose by some 300 per cent. during the same period.

In developing my airline topic, I should explain that I have gone for the concept of airlines, as the old scheduled carriers begat the charter companies—BA gave birth to British Airtours and SAS gave birth to Scanair—the charter companies then changed their nature by going into the "seats only" business. That in turn led to growing demand, creating opportunities for the low-cost airlines.

While there is much to celebrate, there are also problems. The first is air passenger duty. The tax was introduced in 1994 at a rate of £5 for domestic and European departures and £10 for journeys beyond Europe. It was doubled in 1997. Research by the Council for Travel and Tourism, British Airways, and the CAA suggests that there are already negative impacts upon our tourism industry—an industry which generates 11 per cent. of our jobs and nearly 12 per cent. of our GDP. At the initial rate, the CTT study carried out by Deloittes showed some 250,000 visitors switching from Britain, with a consequent loss of £180 million in foreign exchange.

At first sight those figures seem surprisingly high, but not if one reduces them to 25 visitors spending £18,000. The study showed also that Exchequer earnings would show a consequential fall. The figures were expected to double with the doubling of the tax, and they underline its negative impact.

Another negative impact is that of the low-cost operators where the tax can amount to as much as 35 per cent. of the fare paid by the customer. I hope that ADP increases, tempting though they are, will be resisted at all costs by the Department of the Environment, Transport and the Regions.

I turn now to the prospect of an aviation fuel tax—an environmental opportunity, some might say; a transport disaster I would argue. If the tax were on a domestic basis, it would harm our internal services as passengers would find it advantageous to switch transfer journeys to foreign airports and thus to foreign carriers—via Edinburgh, Schipol or Kennedy rather than London. Our airports would suffer as a by-product. Were the tax to be on an EU basis, it would penalise our short haul airlines while allowing the long haul carriers the facility of bunkering beyond the EU jurisdiction. If it were levied on a global basis everyone would suffer.

Whichever way, I oppose yet another tax on a thriving industry. I oppose it especially on behalf of British operators because they, uniquely among our transport modes, cover all their infrastructure costs.

I wish now to turn to the US bilateral negotiations—Beyond Bermuda 2. At the outset, I hope that they can be decoupled from discussions about the BA/AA alliance. Rather, we should concentrate on our strength in the US-Europe market. We have almost 40 per cent. of the traffic, and in BA and Virgin Atlantic the first and third biggest European players. Nothing should be allowed to reduce that dominance; rather, we should seek to develop it.

We should insist on the right to operate US internal services. Our carriers should be unshackled from that restraint on their commercial freedoms. I hope that the Government will press for such removal. Similarly, I hope that they will press for the removal of the US restriction on ownership. Under EC rules, US interests can own up to 49 per cent. of a UK airline, but British interests can own only 25 per cent. of the voting stock of an American company.

The Government can go even further by attacking the "Fly America" policy which insists that all travel on US government service must be by US carrier. The policy goes further as regards freight and, specifically, mail. US carriers can bid for GPO contracts, and do so to the advantage of us all. But our carriers are denied the reciprocal privilege. It is a great opportunity for the Government.

Lastly in terms of Beyond Bermuda 2 and of transatlantic traffic, we enjoy one overriding advantage. Heathrow is the hive to which all US bees aspire. If it is to become trade goods we must sell its status dearly.

Further from the airline point of view, there are hidden subsidies which Brussels allows European governments to use to bail out their ailing state airlines. They are airlines which are victims of our success. Between 1991 and 1996 there were nine instances, each of which was to be the absolute last chance. But Air France has had three rescues; Iberia has had two; and Olympic, Sabina and Alitalia have had one each. In total, those rescues cost £6.1 billion at October 1997 rates of exchange, which included a strong pound. Over half went to Air France which competes with several of our airlines on the London-Paris route, the most competitive in Europe. But while our carriers are competing, and satisfying the tensions between shareholder requirement and customer satisfaction, Air France is simply wallowing. I hope that the Government will tackle Brussels on the issue.

Both our airlines and our airports will suffer heavily from the abolition of duty-free concessions, in particular our regional airports since their traffic is so heavily EU oriented. I find yesterday's decision in Brussels very hard to stomach. The base premise for abolition—the single market—simply does not exist. Instead we have, for example, 13 different VAT rates on spirits among the 15 member states. Seven have no excise duty on wine, while the other eight each have different duties. That is hardly fiscal harmonisation. How do we explain to the public the abolition of a benign and enjoyable perk with a turnover of around £4 billion and the potential to lose 147,000 jobs in manufacture, distribution and retail were the perk to be abolished, whereas were it to continue, one could look to produce 30,000 additional jobs?

How does that square with a Europe committed to job creation and regional development as well as to enhanced regional links? Links will instead be distorted against airlines. Although the ferry companies are suffering the same withdrawal of concessions, especially on the Channel, they will continue to benefit from the duty-paid traffic, another example of the collapse of fiscal harmony. All our airlines and airports will suffer. The scotch industry will suffer. So will the family holiday and the low cost carrier. It is a dreadful decision.

Regardless of ownership, our airports see other opportunities for action. The planning system must be re-examined, if only as a pillar in an integrated transport policy. Our preoccupation with planning minutiae, environmental and social issues, seems uniquely British. Terminal 5 now has the longest planning inquiry on record. Our European competitors in Paris, Amsterdam, Frankfurt, Madrid and Athens must be rubbing their hands with glee as they get on with their expansions.

More locally, many of our regional colleagues look for greater integration into local planning guidance structure and unitary development plans. They seek an easing of financial regimes so as to develop their core businesses and transport access links, thus contributing to an integrated transport policy as bus, heavy rail and light rail do at Manchester following the quite exceptionally admirable work done by BA at Heathrow in respect of proposed rail accesses, extended rail accesses, wider rail accesses and coach integration. They have many opportunities. Let us try to lift some of the restraints.

I have a number of topics under the heading any other business. The alliance between BA and AA is worth a debate in itself. I hope that it comes to pass.

Air traffic control is important. Great progress has been made in improving European flows, but more needs to be done. Our own ATC system is among the best and safest in the world but one must be concerned about Swanwick and in particular any delays which may arise from the audit of management and software problems. I hope that the Minister will join the ATC unions in denying the scare stories that were circulated in this context, and will be able to give us some idea when operations will commence.

One would like to see national air traffic services given more financial freedom. There is the problem of runway capacity in the south-east. RUKATSE—I think that it was issued in 1994—and the subsequent Select Committee report are gathering dust. There are concerns about the safety of foreign companies flying charters for British tour operators. There are concerns about slots at Heathrow. And there are the long-awaited integrated transport proposals. Dare I ask the noble Baroness when we shall hear them? I beg to move for Papers.

5.58 p.m.

Lord Graham of Edmonton

My Lords, I am sure that the speakers who will follow are competent to discuss the civil aviation industry from a number of aspects: that of management, and from their broad experience. I wish to bring to the House my experience from a consumer's point of view. At the end of the day, that should be the overriding imperative of any airline: to serve the interests of the consumer.

I recently travelled on a long-distance flight. Four days later I was diagnosed as having a deep-vein thrombosis. That brought me into contact with a number of situations. I discussed my circumstances with colleagues in this House. They advised that I should have done this, that or the other. I profess that I was ignorant. Every previous flight had been a joy and a pleasure; and I pay the highest tribute to the competitiveness and the vigour of British airlines and tour operators. What happened to me, and the publicity that followed, caused a number of people to write to me. They told me of their own experiences and I should like to share some of those with the House. Dr. Dale Egerton wrote, my wife, Ann, suffered a major pulmonary embolus whilst disembarking from a British Airways flight from Cape Town, in February; she was very lucky to survive. I enclose a copy of the letter which I sent to British Airways, giving a summary of the incident. As yet, I have not received a reply". The letter sent to British Airways was dated 17th February. By 8th May no reply had been received. When I read Dr. Egerton's letter it seemed to me that he knew what he was talking about. The letter continues, It seems that air-travel is an obvious predisposing factor to blood clot formation, but I believe the risk could be greatly reduced, if not totally eliminated, if passengers were given appropriate advice (which is currently given to the crew). The advice I would give is as follows: —Avoid dehydration. A lot of water and very little alcohol should be taken throughout the flight. —Frequent movement. The legs should be able to move freely and often, with short walks every hour. —Take Aspirin, providing there are no contra-indications, e.g. a passenger with a known gastric ulcer. —Do not take sleeping pills as this reduces movement. —In addition to the advice above, I think airlines could also do a lot more themselves to help reduce the risk of blood clots developing in passengers: —Increase the leg-room in all classes, for all seats. —Encourage passengers to drink a lot of fluids, not alcohol. —Discourage from sleeping for long periods, instead walk around for a few minutes or exercise the legs often. —Keep the cabin temperature at a constant comfortable level. —Ensure that an adequate number of oxygen bags are used to keep the oxygen levels within normal limits". I thought to myself that it would be a marvellous service if it was somebody's responsibility—perhaps a government department, the CAA, the airlines—for such simple, cogent advice to be given to airline passengers, provided it is validated. I am not a doctor, but that advice seems to be common sense. Perhaps all passengers, not only those on long flights, could be given some general advice on simple measures to be taken to avoid health problems. I am indebted to Dr. Dale Egerton for writing to me.

In the Daily Telegraph on 18th April a lengthy article appeared with the headline: Blood clots linked to air travel: Can flying damage your health? A new study finds strong evidence". Before my own experience I may well have just turned the page and not been interested. The article relies heavily on Mr. John Scurr, a senior consultant in the Department of Vascular Surgery at Middlesex and University College Hospitals. He said that the results of the research referred to in the article came as no surprise to him. The article reads as follows: Researchers examined 134 patients who developed blood clots, known as deep-vein thrombosis (DVT), and found that 33 had travelled by air for four or more hours within the past month. A further 33 had been on lengthy car, train or boat journeys. Symptoms usually appeared within four days after the flight but some were up to 31 days later. In 50 per cent. of cases the condition is fatal". I shall select other extracts from the same article: Cramped seating in many airlines' economy class has also been blamed, but Mr. Scurr says his patients have included business-class passengers. He treats more than 400 people a year who have clots, and estimates that 25 per cent. have flown in the month before becoming ill. European Union statistics indicate that 90,000 people a year in Britain develop DVT but Mr. Scurr believes the true figure is much higher. 'It is nearer one million, with a significant percentage due to air travel'". I cannot validate any of that but it is the view of somebody who seems to know what he is talking about. I believe that the airlines should take what has been said very seriously.

A company called NZ Health Products Ltd. of South Woodford in London wrote to me: We were very sorry to hear of your ill-health whilst flying recently. We have long advocated the dangers of blood clots forming during long flights and have mentioned this specifically in our brochure. We have pleasure enclosing a sample of Jet Ease, the unique vitamin food supplement from New Zealand". I know nothing of this product but from the knowing winks and nudges from the Benches opposite noble Lords have obviously formed a view as to the basis of this leaflet entitled, Travel Tips. Techniques on how to stay healthy when flying". I wish somebody had drawn that leaflet to my attention before my flight.

Mr. Thomas of 61 Lime Tree Avenue, Rugby, wrote to me: Referring to your reference to DVT in the Telegraph today, I can tell you that not very long ago, surgeons when operating would often strap the patient's feet to a very simple machine based on an electric motor and a reciprocating paddle which would "pedal" the feet slowly twenty to thirty times per minute and thus prevent the pooling of blood in the leg veins and thus avoid thrombosis. A similar effect can be obtained on aircraft by consciously flexing the ankles up and down at least every 15 minutes for 15 seconds but sleep will obviously interfere with this. The mind boggles at how some people can, from their experience, draw relevance from a situation. If there are one million people in this country who are affected in one way or another, this is not merely idiosyncratic. It is a real experience.

Mrs. Deacon from Branksome Park, Poole, wrote to me: What all airlines must do is provide better seating and room for passengers to move around the aircraft at regular intervals. I fear this will never happen unless it is mandatory. One is prevented from walking up and down the aisles but a regular procession of drink trolleys, duty-free meals, newspapers, etc. often do. It should he perfectly feasible to have a shop or bar at one end where passengers could take it in turn to walk to. In any case, alcohol is dehydrating and therefore increases the risk of DVT. Mrs. Trench from Beeston in Nottingham sent me voluminous correspondence. She writes: I am sending you copies of our correspondence with the CAA and also with British Airways—Robert Ayling's Office. Both sets of letters were written by my husband as it was he who actually fainted and his name is Eric Rowe". She kindly sent me the correspondence, which is still ongoing. This lady is persistent because the health of her husband was put at risk.

I am not an alarmist. I am not someone who wants to say, in a panic, that unless something is done a great tragedy will occur. But from my own experience, I believe that there is sufficient evidence to indicate that that situation should be investigated.

I do not know whether this matter should be dealt with from the point of view of transport, health or trade and industry. Perhaps the Minister will consult with her ministerial colleagues to see whether something worthwhile can be done to protect the consumer. It is all very well to have the finest airline in the world, which I believe we have, and the best and cheapest services through our tour operators. But if in ignorance we are aiding and abetting an attack on the good health of the people of this country, we should do something about that. I am happy to leave the correspondence for the Minister so that she and her colleagues can consider it. There is obviously some urgency about this matter. However, if the department were to consult with the airlines and tour operators and the matter was dealt with honestly and openly with an admission that there is a problem, then some solutions may be found.

Before I sit down I should explain that, for the first time in 14 years in this House, I regret very much that I may not be here for the Minister's winding up speech. However, I shall certainly be here to listen to the speech of the noble Baroness, Lady O'Cathain.

6.10 p.m.

Lord Gladwyn

My Lords, this debate, admirably initiated by the noble Lord, Lord Mountevans, clearly covers many aspects of this subject ranging from the manufacture of great aircraft to consumer protection and the dangers of thrombosis. I should like to confine my remarks to the issue of the traffic rights pertaining to the air transport industry, in which I worked for many years. In surveying the scene today, it seems another world from the tightly regulated system that held sway when I first joined the airline business, a system whose bible was Stephen Wheatcroft's book, The Economics of European Air Transport, published in 1956. However, even in that post-war world of state planning, there were glimpses of what was to come and, indeed, my first job was in the promotion of the first service ever permitted to undercut the tariffs of BOAC. This was the so-called Safari Service, operated by the small independent airline Hunting-Clan, a service which took four days to reach Johannesburg, with three very pleasant night-stops on the way.

Another inkling of the future was a paper I prepared for BOAC itself in 1966, pointing out the radical implications for air transport that lay in the terms of the EEC treaty, which Britain had not then joined; though at the time the concept of complete European air deregulation seemed as remote and unreal as did that of European political union.

However, that concept has finally become a fact a generation later, with the freedom now accorded to any EU airline to operate services between any pairs of points within the Union, whether on international or domestic sectors. Britain was the prime mover in this achievement, and British Airways has led the way in its investments in Deutsche BA and Air Liberté. And it is on sectors involving British points that new low-cost operators have been most active. Easyjet, Debonair, Ryanair and Virgin Express have established themselves at Luton or Stanstead, and now British Airways is about to launch its own no-frills operator, Go, whose first service is on Friday. Speaking of no-frills, I recall that the original concept of the BEA Shuttles was for absolutely no cabin service in flight, but that this admirable aim was frustrated by the unionised demand for a full cabin staff whatever.

What we are seeing is in some ways a repetition of the deregulatory scene within the United States over a decade ago, though the general consensus seems to be that the European lurch to low-cost scheduled-service operators will be less dramatic, and their eventual market share less than the 30 per cent. which at present pertains over there. Specifically, on London-Brussels, where Virgin Express operates services for Sabena, it remains to be seen to what extent business travellers will condone the no-frill flights, though certainly it is significant that total traffic on this sector grew by 15 per cent. last year, despite the competition of the Eurostar trains. Generally, London enjoys lower fully flexible fares than does any other city. And besides all this there is the large and thriving charter-flight market.

The crux of the problem for the future development of British air transport lies not so much in the financial and commercial enterprise of those who run the airlines as in the restrictions imposed by airport capacity limitations. Heathrow, with its present throughput of some 56 million passengers annually, is already over capacity, a situation that will be alleviated only as and when the fifth terminal is in operation, probably not for another six years. Traffic at Gatwick is growing rapidly, and it too may be expected to be at capacity levels within a very few years. The tremendous pressure on Heathrow, the world's premier international airport, is managed by a system of time-slot trading between the airlines. This provides an efficient market mechanism for the optimal economic use of these slots. It is to be hoped that the EU commissioners, who are at present scrutinising this system, will endorse and legislate for it rather than impose an administrative framework which would restrict economic potential and, I suggest, be at variance with the principles that have brought about deregulation in the air.

Another aspect of the pressure on Heathrow and Gatwick is the intensification of interest in services to regional airports. This is, in itself, a desirable development, and one that has for long been supported by successive governments. But there are two factors in it that are injurious to the interests of British air transport operators.

The first is that, taking advantage of the congestion at Heathrow, European airlines are exploiting services between British regional points and their own hubs, notably KLM UK with its flights to Schipol, thus seeping long-haul traffic away from London. In the deregulated EU environment, there is nothing that can be done about this, other than to relieve the situation at Heathrow by granting slots for short-haul domestic flights at the expense of long-haul flights—obviously an uneconomic substitution.

The second factor relates to routes from the regions to points outside the EU. These are regulated by bilateral treaties between governments. But pressure is growing for the Government to grant rights to foreign airlines unilaterally, that is to say, without complementary benefits to British airlines. There have indeed been instances in the past when advantages were given to foreign airlines against our own, but they were always justified by some specific economic or political advantage for us. To grant rights without any assured reciprocity would seem to be unwise, and a CAA report which attempted to analyse the issue was definitely ambiguous.

Relevant also to the generation of international traffic by British operators, is the system of alliances between major airlines, by which code-sharing arrangements enable airlines to sell seats on each others' flights. Virgin Atlantic is, together with KLM, Alitalia and Air France, in alliance with Northwest and Continental, and other powerful alliances have been set up by other European and American carriers. But the great unanswered question is whether British Airways will receive regulatory approval for its alliance with American Airlines. In the broader interests of British air transport, I sincerely hope that these will be forthcoming. The multiplicity of airport gateways in North America and Europe has had the effect of diminishing the inherent advantage previously enjoyed by British airlines by reason of our geography, and it is essential that we should be able to counter the market force of groupings such as the Lufthansa-led Star Alliance.

I recently visited Dubai as a guest of Emirates, the leading airline in the Gulf States, whose capacity exceeds that of Virgin Atlantic. I had the thrilling experience of an hour in their flight simulator, in which I managed to land a Boeing 777 at Dubai in a sandstorm. I was immensely impressed by the professional efficiency of this extremely profitable airline, which operates from a base of total deregulation, for Dubai has a policy of completely open skies to all airlines, twenty-four hours each day. Such a policy could never apply in Britain, but it shows us what we are up against in the increasingly competitive industry of air transport. For us, rather than perhaps for Dubai, all sorts of environmental considerations are important and act as a constraint to the uncontrolled expansion of the industry.

Popular opposition to the provision of new airports, additional runways and terminals and aircraft noise is now a firmly established factor for our policy-makers. I expect that public attention will increasingly turn to the pollution of the atmosphere caused by the fleets of large aircraft which perpetually cruise over our fragile planet, calling at the very least for cleaner engines than exist at present. In the meantime, we await with interest the Government's forthcoming White Paper on an integrated transport policy and trust that it will cover in sufficient depth the specific problems of air transport.

6.20 p.m.

Baroness O'Cathain

My Lords, before I begin, I should declare an interest as I am a director of British Airways. However, I shall not deal with British Airways in my speech. I am extremely grateful to my noble friend Lord Mountevans for initiating today's debate. The British civil aviation industry is one of the success stories of the British economy. Yesterday, during Question Time, a visitor to this House could have been forgiven if he or she went away thinking that this country had a woeful record in business and commerce, based on the McKinsey Report which analysed British productivity compared with the so-called "earth shattering" success stories of other European, North-American and Far-Eastern economies. Today's debate can—as indeed it should—show that there is a great deal in which we can take pride; indeed, it has probably already done so.

The history of British civil aviation is so exciting. Indeed, some of us remember the much earlier pioneering days of helmets and goggles. We were cogently reminded of those early days by the fascinating speech just made by the noble Lord, Lord Gladwyn. However, it is not just the history that is important. The industry has led the world in so many areas and it is highly respected throughout the world. It is gratifying to note that the industry is also highly regarded here. It provides jobs and careers in a sector which is at the leading edge of technology. Young people apply to join the industry in their thousands. One statistic that I find absolutely staggering is the figure for staff turnover in British Airways—it is less than 2 per cent. per annum. That surely indicates that the industry is not only attractive to jobseekers but also that when people get jobs in it they want to stay and develop with the company. In every part of the industry the skills base of those employed is constantly being uprated and products developed by the industry, especially in the areas of safety, are sold and highly prized world-wide.

However, the success of the industry is achieved under very difficult circumstances, some examples of which have already been given this evening. In fact, it is successful despite many obstacles—obstacles which, in some cases, are peculiar to the official British attitude towards business operations when interlinked with our membership of the European Union.

I am not about to fall into the trap of special pleading, nor do I wish to complain about unlevel playing fields—a metaphor which is particularly inappropriate when discussing civil aviation. However, I am taking the opportunity offered by the debate to draw attention to a particular problem which is mirrored in so many other sectors of the economy. We consistently insist on applying every single dot and comma of every international/European directive, while being wholly aware that we are alone in being so meticulous. When it comes to EC laws or directives, we play the game of cricket while most other countries play a mixture of hockey and tennis on a rugby pitch.

There are two very live issues affecting the industry at the moment. They are matters of deep concern to the airlines. Both are fairly technical; both refer to EC directives and, because of this, I alerted the Minister to the fact that I wished to raise them. The first concerns ticket notices and passenger liability and the second concerns ground handling. As I said, these are technical issues but are symptomatic of the almost unseemly haste employed by our Government—indeed, I have to say, whatever government—to bend over backwards to comply with any directive issuing forth from the Commission: even, in one case, uniquely underpinning the EC regulation with the proposal to introduce criminal sanctions or fines if the EC regulation is not complied with. I emphasise the word "uniquely".

When it comes to such issues, it beggars belief that we can still be branded as being the "bad boys" of Europe and accused of being anti-communautaire. In one case that I shall describe, we are even more communautaire than the EC requires; indeed, at some significant cost to the industry. In another case, we are the only ones who are communautaire, as far as I can ascertain.

In raising these issues, I do not expect to receive a detailed response—that would be inconsiderate of me—but I do hope that, by flagging them up, I shall have some comfort that they will be re-examined sympathetically. I honestly believe that they represent an attitude which can, unwittingly, cause damage to the industry, an industry of which we should be very proud.

I shall briefly and simply—I hope—detail the situation. I shall refer, first, to liability notices on passenger tickets. As we know, all passengers have tickets when they fly which contain a massive amount of small print on the back. I hazard a guess that I am not alone in your Lordships' House in studiously avoiding reading any of that small print. It is sufficient for me to know that I have a booking, to know the time of the booking and to leave the rest to the airline. Some of that minuscule print relates to limited liability in the case of injury or death. The limit on liability was fixed decades ago under the terms of the Warsaw Convention, and is totally unrealistic now. Some airlines, realising that the limit on liability was not acceptable in today's world, decided to accept the principle of unlimited liability. That agreement, in the case of some airlines, came into force last year. At this point, the EC followed suit and will be introducing its regulation on unlimited liability on 18th October this year. That is fine, and there is no problem there.

There is no problem there except for the fact that the EC has drawn up the regulation in such a way as to impose differing requirements on EU airlines compared with those for non-EU airlines. For EU airlines, the EC has decided that the wording of its regulation—or, at least, some of its wording—should be included on the tickets. This raises two practical problems. First, there is no room on the tickets for the amount of small print that the EU wishes to see included; and, secondly, there is a stock of some 15 million tickets in this country which will become obsolete. Do we really need to have all that information on the ticket, or all the cost of reprinting 15 million airline tickets and throwing out perfectly usable tickets for the want of yet more small print?

However, the Government have gone one step better. They have decided to create a criminal offence, or impose other sanctions, in respect of non-compliance not on the question of unlimited liability but on the question of putting the information in among the small print on the tickets. No other government are planning to impose such draconian measures. No other EU member state is likely to introduce such legislation, so why are we? It can only lead to further criticism of the Government wishing to lean over backwards to comply with the EU and prove that we are the "goody two shoes" of the European Union.

We have a successful industry, so let us not take any unnecessary action to damage that position. There are no similar requirements in national law requiring suppliers of any other goods and services to inform customers in advance of the fact that their rights to compensation are as they would expect and not artificially limited. When we purchase a rail ticket, are we confronted with masses of small print telling us that it is unlimited liability? I shall leave the matter there.

I turn now to my second issue; namely, the European ground handling directive. The directive, which was adopted in October 1996 and passed into UK law in October last year, was supposed to open up ground handling markets around Europe. These markets are an area of peripheral civil aviation activity that has been described as, the last bastion of protectionism and anti-competitive practices in the aviation industry". Together, British Airways and the UK Government pushed for a liberal handling regime and both were disappointed when the directive materialised. However, the UK was one of the first member states to transpose the directive into national law and is the only one to implement it in a way consistent with both the letter and the spirit of the law. This situation, once more wishing to be the "goody two shoes" of Europe, could have the effect of reducing the amount of competition at European airports as well as reducing the ability of UK carriers to benefit from cost saving opportunities at our own airports.

What has actually happened is that some member states are only slowly, if at all, opening up their markets, thereby penalising the UK airlines operating to those countries by not making improvements in cost and quality, while in the UK foreign airlines are benefiting from the already liberal (much more liberal than any other country) regime. But, worse than that, UK airlines could be caught by some of the more restrictive clauses in the directive.

Of course, the UK authorities and airlines should comply with European rules, but the UK authorities should interpret the directive in the same way as other member states—pragmatism rather than dogmatism should be the catch-phrase (or soundbite).

The ground handling directive is an example of poorly drafted, ill-thought-out legislation that serves neither the industry nor its passengers. The Government should ensure that unwarranted costs and restrictions should not be imposed on United Kingdom airlines as a consequence of a poorly drafted and inadequate directive. We have a fine, thriving, admired industry; let us keep it that way.

6.30 p.m.

Lord Berkeley

My Lords, I congratulate the noble Lord, Lord Mountevans, on achieving this debate. As he said, it has taken him three years to win the ballot. The Terminal 5 inquiry has been going on for about as long as that. The Transport Committee in another place is examining regional air services. The European Select Committee of your Lordships' House is about to start to investigate responsibilities for negotiating bilateral or multilateral rights outside the European Union. This is an interesting time. I am sure that, as the White Paper on an integrated transport policy is about to be published, my noble friend the Minister will not give us too many answers. Nevertheless this is a good time to debate a few of the issues.

The noble Lord, Lord Mountevans, said that 147,000 jobs in the production and retailing of duty free goods would be lost if it is abolished. As I am sure he is aware, I do not agree with his view on that. I believe that the sooner duty free is abolished, the better, and that people should pay the true cost of travelling from a terminal. I never buy duty free and I am happy to be subsidised by those who do, although it is not really fair. But will people stop drinking simply because they cannot buy their drink duty free? They may save a couple of pounds on a bottle of whisky, but I am sure that if they cannot buy it duty free they will buy it elsewhere, and someone will still be employed to produce the whisky and to sell it. It will be sold in a supermarket rather than in an airport. I am not persuaded that more than 100,000 jobs will be lost if duty free is abolished.

My noble friend Lord Graham of Edmonton made a fascinating speech from the customer's point of view. We should start from the point of view of the customer. In that respect air transport is no different from road or rail; it is a form of transport which moves people and goods around. I wish to examine the framework of air travel and reliability. National transport statistics show that in the past 10 years UK international air traffic has grown 84 per cent. and domestic traffic 72 per cent. That is a big increase and it is forecast to continue. It is interesting to note how the Government have directed or have not directed policy during that period. Later tonight we shall debate the roads programme. Until recently that has been a "predict and provide" policy. As regards rail travel, the Government provide funds through the franchising director for certain socially desirable services but they also encourage new services and fair competition through the regulatory regime.

However, air travel is more of a free-for-all. Commodities in short supply are capacity, slots and air traffic control space. The noble Lord, Lord Gladwyn, referred to that. To my knowledge there is no government subsidy for air travel, apart from certain flights to the Scottish islands. I wonder whether the Government should not provide some kind of a policy framework within the integrated transport policy in which certainly domestic, and perhaps European, air services should operate.

The noble Lord, Lord Gladwyn, mentioned the role of Heathrow. However, there are tensions at Heathrow. Heathrow is seen as a hub. I have often heard people speak as if the success of UK plc is based on the success of Heathrow. Many international flights land at Heathrow. Many passengers just change planes there—which is of great benefit to BAA—and some passengers disembark there. However, from the point of view of the UK regions—Scotland, the south west, perhaps Wales and the north east—I wonder how the customers in those regions feel if their feeder services are no longer allowed to fly to Heathrow because the international flights pay more for the slots. One can hardly call those services feeder services if one cannot fly on from Stansted—lovely though it is—or from Gatwick, which is also a great airport. I do not know what the answer is. There is a government contribution to the train services in Scotland which run to Inverness and such places as it is thought to be socially desirable to make that contribution. I wonder whether there should not be a similar process as regards certain regional feeder services if that is the only way that they can obtain convenient links to Heathrow, which we probably all believe is the centre for all international air travel.

I have heard it said in Scotland that the previous government were less than enthusiastic in encouraging direct international flights from Scotland either to the Continent or across the Atlantic. Again, the noble Lord, Lord Gladwyn, mentioned this. I believe that many people in Scotland would say, "We do not mind who runs the flight as long as there is a flight. We do not like flying to Heathrow if we can fly direct". I question why so-called foreign airlines should not be able to fly direct to the regions if our own airlines do not want to do so. Perhaps the Scottish Parliament will negotiate some of those rights. Perhaps we shall hear something about that later. I do not always like using the word "regulatory" but I wonder whether there should not be some kind of process to ensure that the needs of the regions are met as regards the search for slots or as regards possible support for certain services.

We all start from a history of countries having their own airlines which seek to project the image of a state around the world. That is in some ways a "macho" image. We have eight or nine UK airlines according to the latest statistics. I am sure the Government take into account the views of all those airlines when negotiating slots. In my view competition is important. I am certainly not persuaded that the BA/AA alliance is all that it is made out to be, as I understand it. Perhaps we shall be given more details on that. Competition results in lower fares. At Easter I went to the United States. I was struck by the difference in fares as between different cities in the US. Some of them have crept up again to pre-deregulation levels; others have gone up and subsequently come down again when a low cost airline has competed with them. We shall need to bear that in mind as deregulation is introduced into European air travel to ensure that the benefits of competition are spread as widely as possible. The noble Lord, Lord Gladwyn, complimented Emirates Airlines on its competitive policies, but he said they could not apply to the UK or in Europe. Why is that? I cannot see why the benefits of that competition should not apply here too.

I now wish to consider reliability from the customers' point of view. Reliability appears to be deteriorating from the point of view of the average traveller. At best that is irritating and at worst it can have serious consequences for some people. The railways have frequently been criticised in this House and elsewhere for bad timekeeping. The average now is that 90 per cent. of trains arrive within five minutes of the stated time. Representatives from Virgin Trains spoke about this matter in a committee room in this House earlier today, and about their achievements in relation to journeys of between two and four hours. That is certainly an improvement on the past average. And compensation is usually paid if trains are an hour or so late.

The 1997 report of the Civil Aviation Authority states that 12 per cent. of departures—not arrivals, but departures—were delayed by more than 30 minutes. The figure has risen from 10 per cent. to 12 per cent. in the past three years, and is therefore getting worse. Transport statistics indicate that, of arrivals at London airports, 74 per cent. of scheduled flights and 47 per cent. of charter flights arrive within 15 minutes of the stated arrival time. Those are a great deal worse than the figures for trains. I know that the situation is very different; but from a passenger's point of view it is a matter of a service for getting from A to B.

I have never seen much of an offer of compensation when airline services are two or three hours late. At the start of our parliamentary visit to the United States at Easter, we were three hours late leaving, and we were offered a cup of coffee worth £4, or some such—which was very nice, but did not help very much. The system is complicated to operate, and it is easy to blame others: the airlines, air traffic control, crew problems; and of course safety considerations. Safety is always said to be paramount. I hope that the term is used genuinely. I was on a train last night which came to a standstill at Ealing Broadway at half past one in the morning "for safety reasons". I could not see what the problem was; but that is another issue.

I am sad to say that on the airlines a certain arrogance sometimes creeps in when the services are late. There are fewer apologies to customers and apparently less care in recognising that passengers want and need to arrive on time. Although the system is complex, passengers need to be taken into account. I hope that some of these issues will be mentioned in the forthcoming White Paper.

Air transport needs to be integrated in policy terms with ground transport—who can fly where, and when, the allocation of slots and capacity. It needs also to be integrated in planning terms with ground connections at airports for passengers and staff. Certainly BAA at Heathrow is making strong moves to get staff to use public transport as well as passengers. But the numbers are large.

The Heathrow Express to Heathrow airport is a great start. The Manchester airport link is important in both directions. But it is more important to have new services running on that line. The link itself is no good without the services. The station at Luton airport is about to open, and I believe that a new northern link from Aberystwyth to Stansted is starting next week. It is also important that public transport bus links are developed and that bus facilities for passengers arriving at airports are improved, as they need to be at Heathrow.

I very much welcome this debate and look forward with interest to my noble friend the Minister's reply, and to the White Paper, which I hope will be published shortly.

6.43 p.m.

Lord Glenarthur

My Lords, I, too, congratulate my noble friend Lord Mountevans on securing this opportunity to debate Britain's civil aviation industry. It is the first opportunity that we have had for many years and is extremely welcome. I shall not follow the noble Lord, Lord Graham of Edmonton, in his extraordinarily interesting speech. Frankly, as one who spends an enormous amount of time either between here and Scotland or travelling to other parts of the world, I also found his remarks rather depressing—in particular for those of us who are often stuck on very long journeys, his idea that alcohol might disappear altogether. It rather helps in keeping some of us going.

I should like to concentrate entirely on the helicopter industry. I am chairman of the British Helicopter Advisory Board, which is the trade association for civil helicopter operators in this country. I am also chairman of the European Helicopter Association and a council member of the Air League. I therefore declare an entirely non-financial interest in each of those.

When I made my maiden speech on this subject in your Lordships' House some 20 or more years ago, I was a professional helicopter pilot, operating mostly over the North Sea in support of the energy industry. It was obvious then that without the use of helicopters the exploration and exploitation of off shore oil and gas reserves would not have been so straightforward. Their operation in weather of all kinds, day and night, and currently flying up to 300,000 sectors annually, which technically generates well over half a million air traffic movements per year in the United Kingdom European Economic Zone alone, is a substantial feat. The volume of traffic, the harsh conditions in which helicopters operate and a pretty inspiring safety record reflect the professionalism and high standards of the operating companies and their staff and the proper demands of the oil companies themselves to secure the safest possible procedures.

Constant liaison takes place to improve all aspects of the service and safety through co-operation between helicopter operators, the United Kingdom Offshore Operators Association and the Civil Aviation Authority, especially with national air traffic services and the safety regulation group.

In any industry, the relationship between commercial organisations and their statutory regulatory authority can be a tense one. I should like to assure the Minister that the commercial helicopter industry has considerable respect for the role and integrity of the Safety Regulation Group of the CAA. I and my colleagues have regular meetings with the group. We all share a common cause and purpose in ensuring that the overriding matter of safety is treated maturely and realistically in both operational and airworthiness areas. Our dialogue is sound, and I genuinely believe it to be constructive.

There is perhaps one wrinkle that I should air. Unlike most European national aviation authorities, the safety regulation group of the CAA must recover all its costs through levying charges on those whom it regulates. It will come as no surprise to the noble Baroness to know that that inevitably leads to some resentment of the authority by the industry. Small companies find it irksome and difficult to pay the additional charges for the privilege of being regulated—and frankly, also for the sometimes seemingly bureaucratic manner in which this regulation has to be conducted. I hope, therefore, that the noble Baroness will do whatever she can to ensure that the costs associated with this regulation are minimised wherever possible. As matters stand, the charges have a varying but frequently harsh impact on the commercial side of some helicopter operators' activities.

The commercial helicopter industry also conducts diverse over-land operations. These tasks are essential to the efficient functioning of a modern economy. Many of them are tasks which could not be undertaken without the use of helicopters, at least not as efficiently or as cheaply. Pipeline surveys, powerline inspection and maintenance, photography, surveying, lifting loads to places inaccessible by road and track—all are examples of the way in which helicopters are flexible tools and provide reliable and economic service to their customers.

I am sorry that the noble Lord, Lord Puttnam, is not in his place. If he were, I am sure he would agree with me that modern filming and the resurgent British film industry would be hard-pressed to survive without the extra dimension provided by aerial photography, much of it from helicopters. And indeed, your Lordships will be well aware that news gathering techniques increasingly rely on helicopters.

Air accidents, whether they be of helicopters or fixed-wing aircraft, make for tragic headlines, and they are deeply regretted. The helicopter industry works closely with the Air Accidents Investigation Branch of the Department of the Environment, Transport and the Regions to determine the cause of any accidents involving helicopters. But it is worth noting that in recent years very few accidents have been caused by mechanical failure. Helicopters have become increasingly reliable and safe. Huge investment has been made by manufacturers and designers to ensure that the very highest standards of engineering are incorporated in the design and subsequent manufacture. Many advances in gas turbine technology and in systems for monitoring the health and usage of all sorts of components in helicopters have produced a much more reliable vehicle than even 10 years ago.

The causes of accidents are generally complex and cannot be put down to one factor. But it is a sad fact that, inevitably, there are some accidents which would not have occurred had their crews obeyed existing rules and carried out correct procedures. Any accident is likely to generate adverse comment on the safety and integrity of helicopter operations, as they would for fixed-wing aircraft. That can be to the detriment of the industry. But I question whether further regulation is needed. Rather I suggest that, where possible, simplification of the rules, coupled where necessary with a tightening up of piloting standards, would be a far better and more reliable approach. There is no excuse whatever for poor airmanship, and yet from time to time I am afraid we see examples of just that. It generates bad publicity and damages confidence in an increasingly mature industry.

One area in which there has been considerable growth in helicopter use in recent years has been in police forces and in helicopter emergency medical services. The flexibility and speed of response by helicopters to activities in support of the police have enormously improved some operational policing techniques. Modern equipment is allowing this to develop at a pace and at a cost which police authorities find not only operationally attractive but also cheaper than some of the surface options they would otherwise have to employ. Ambulance services are increasingly looking to helicopters to provide vital back-up to ensure the care which patients rightly expect as techniques for treating them rapidly and transporting them safely become fully developed. Again, in both those roles the very highest standards are maintained by the industry and encouraged by the regulatory authorities.

By their very nature, police and air ambulance operations are rarely pre-planned. There exists a proven risk of collision with fast, low-flying military aircraft. Systems exist for planned operations by others, such as those involved in pipeline inspections, to minimise risk by notification procedures. But fast jets operating at low level are something of a liability, particularly for those operating un-notified emergency sorties. It also happens from time to time with planned sorties. The civil helicopter industry seeks to minimise any risk. We conduct frank discussions of the problem with the Ministry of Defence and particularly with the Royal Air Force. We have to find safe ways of sharing low level airspace. One measure which will help enormously is an effective collision avoidance system fitted to military aircraft. I very much hope that this will emerge before too long and prove to be a useful adjunct to other techniques, which are being employed to provide warning and enhance visibility. I should be grateful if the noble Baroness could say whether she knows what progress is being made. I am sure she would agree that it would be a tragedy to have further collisions of the kind which, from time to time, have occurred in recent years.

Having been involved in planning applications for helicopter landing facilities, I am well aware of views on the environmental impact of helicopter movements and the need to minimise the impact. Thankfully, the application of new technology is beginning to have a marked effect. It is now increasingly possible for a modern helicopter to be flown in a considerate manner over a congested urban area at heights of 1,500 feet or so in a way which is rarely heard above the ambient noise level. Take-offs and landings can also employ techniques which minimise noise nuisance.

If the environmental and operational issues can be addressed adequately, one has to pose this question: can helicopters contribute to future integrated transport systems for the benefit of a wider community? Certain operations have demonstrated that they can. I would cite the service operated by British International Helicopters from Penzance to the Scilly Isles as a case in point. It has carried over 2.5 million passengers in the past 30 years. We now see new ventures in other parts of the world operating in much the same way.

But helicopters require suitable landing facilities and for all-weather operations, in particular, they require access to suitable air traffic control systems. As quieter helicopters are introduced and enjoy wider service, it is essential that properly pre-planned and well-sited places be found in many large city areas. Helicopters with twin engines, operating under what we call performance class 1, can either land or fly away safely on one engine should the other one fail. In any case, that is an extremely rare occurrence.

Of course, helicopters can operate out of small spaces compared with the huge infrastructure needed at major airports. The arrival in commercial service in only a few years' time of the GKN Westland/Agusta EH101 opens the way for much larger scale, economically viable, inter-city operations; not only inter-city, but also linking airport with airport and city centres.

So-called feeder/reliever airports to serve Heathrow, Gatwick and other major hubs could also usefully benefit from helicopter services integrating with fixed-wing traffic. We all know the practicalities and difficulties of planning airport extensions, so simply using existing smaller airports to serve major hubs seems to me eminently sensible. The UK economy cannot afford to miss out. I should be most grateful if the noble Baroness could say what is the Government's view on these feeder/reliever airports.

We shall also shortly see the introduction of aircraft which can not only land and take off vertically but also operate with much the same cruise characteristics—that is much faster than helicopters—as fixed-wing aircraft. The introduction of the tilt-rotor aircraft should be able to supplement transport links in an even more enhanced way.

However, it is disappointing to understand that for the millennium celebration facilities at Greenwich no regular helicopter landing sites are to be available—that is, to the best of my knowledge. I would be most grateful if the noble Baroness, Lady Hayman, could give some indication as to whether the subject of rotorcraftas they should perhaps more correctly be called nowadays, as technology develops and encompasses the tilt-rotor aircraft I mentioned—is likely to be considered as part of the much heralded integrated transport strategy. It could possibly feature in the White Paper, although perhaps that would be hoping for too much. If it is possible, that would be a way in which the comprehensive strategic policy guidelines for the location of heliport facilities in the national interest can best be considered.

Through their special characteristics, flexibility, improved technology, safety aspects and their increasing economic viability in so many fields, I do not believe it is an exaggeration to describe rotorcraft as economic force multipliers. They are not toys or luxury vehicles simply for the rich and famous. Rather they are tools, which, if properly exploited, can be an increasingly valuable economic aid. Their use requires sensible regulation, but not over-regulation, high standards of training and supervision, the minimisation of excessive cost to those who operate them and a sensibly liberal operating environment. I should be grateful if the noble Baroness would confirm that this is an aim which the Government share and will encourage.

6.58 p.m.

Lord Norton

My Lords, I begin by thanking the noble Lord, Lord Mountevans, for introducing this debate to the House this evening. I have to declare an interest in that I am a private pilot who has the privilege and pleasure of enjoying flying in United Kingdom airspace. It is from the perspective of air traffic control of the airspace that I wish to say a few words.

I begin by saying that I have the utmost regard and respect for the manner in which air traffic controllers undertake their duties. It is a very demanding, stressful job and in my experience it is always undertaken with the utmost skill to ensure the safe passage of aircraft through United Kingdom airspace.

Safety is the overriding duty of the air traffic controller. Nothing that the air traffic controller does should compromise the safety of the aircraft. It is an activity where one mistake can cause a major disaster. In the London area, for the years 1996 and 1997, there were 24 airprox incidents: that is, incidents where, in the opinion of experts, the safety of the aircraft has been compromised. Of the 24, 12 involved controller error; 10 of the 12 incidents were categorised as bearing a risk of collision. It is no defence to relate those figures to total aircraft movements, as is sometimes done. Another way of putting it would be to say that in the past two years we almost had a collision every other month over the London area.

The British aircraft industry would be in dire straits if the air traffic controller did not have the correct information on hand to advise and sometimes instruct the pilots of aircraft. It is not just the risk of collision that is of concern. British Airways sets great store on punctuality. It is a key to its business. The imposition of delay impacts upon passengers, especially transfer passengers, and can result in extra direct costs such as fuel burn and crew costs. Most noble Lords will have experienced stacking delays over London when travelling by air. Estimates made by British Airways indicate that in the past year £50 million has been lost due to air traffic delays.

Air traffic in the UK is increasing at 5 per cent. per annum. Delays to aircraft movements are increasing due to the fact that current air traffic facilities are operating at full capacity. It is estimated by National Air Traffic Services Limited (NATS), which operates the air traffic control systems in the UK, that delays will increase this summer—a further acknowledgement of the current burden with which the system and staff are having to cope. The problems have long been anticipated and in 1988 the Swanwick project to enhance the UK's air traffic systems was born using technology described as, more advanced than anything that is being tried in the world". The project should have been operational by January 1996. The reality is that the project has been a catalogue of mistakes and incompetence. The mistakes have been such that the project has been the subject of much parliamentary scrutiny, the latest being a report of the House of Commons Environmental, Transport and Regional Affairs Committee, Fourth Report, dated 27th March 1998. In the report there was evidence that the project could be showing early signs of disaster. Evidence was given by Dr. John Riley and Tony Collins of Computer Weekly. Those gentlemen have made studies of computer disasters and now recognise the tell-tale signs of possible disasters. They recognised several indicators in the project.

In the report there was evidence of a lack of direct involvement of the air traffic controllers until a system had been delivered by Lockheed. The involvement of the air traffic controllers resulted in the discovery that the original specification given to Lockheed in 1992 was inadequate and had to be amended by NATS.

There has been repeated missing of internal deadlines, despite assurances by the management that all was well. An important example of that was given directly to the sub-committee when, on 19th November 1997, a statement was made by the chief executive of NATS that the training and development unit (TDU) had passed all technical tests. That was important because it meant that there could be simulation of the operational system and air traffic controllers could be trained. However, within a few weeks—in December—it was established that the system was not stable. That stage had been described by the chief executive as one of the key remaining activities. There is a desire to push ahead with the acceptance tests before all the known bugs are removed, and here I remind your Lordships that this is a life support piece of software that is being developed, not a computer game.

There is strong resistance to an independent audit. A project that is going well will experience complete openness and thus, when there are specific problems, discussions can take place, solutions be found and expectations adjusted if required. Where a project is going badly, experience shows us that there are generalities, perhaps bridges to cross, and expectations are maintained to the end.

The excellent committee report concluded that there should be an independent audit to run in parallel with existing work to establish answers to questions relating to safety; whether the system should be abandoned; the estimate of future traffic requirements and whether the same system should be used in Swanwick and the new Scottish centre. That was in March 1998. What NATS is not asking itself is whether or not the project is feasible. Does it fulfil requirements? There is too much concentration on specific problems rather than the project as a whole.

I draw your Lordships' attention to the method used by Barclay's Bank when it develops complex systems. There is a regular review of the feasibility of the total project. If there are problems, then expectations are reduced or the project abandoned. When a system is going live, there is an hourly review of the project as to whether it should continue or be abandoned. The bank is aware of the consequences of disaster. That does not happen in the public sector because it is not politically expedient to abandon a project. It is assumed that the project has to work.

There is evidence in the report that the main conclusions as to the viability of the project could be established within a very short period. Under one month has been mentioned. I draw the Minister's attention to the ASSIST project in the committee evidence and the CROESO findings in Appendix 1 and 2 of the committee's evidence where, in two weeks, it was established that a six-year project involving many tens of millions of pounds had to be abandoned.

The advantage of a quick audit is stated by several computer experts in the report, though the chief executive states that such an audit could take up to two years. To my mind that shows a complete lack of understanding on the part of the chief executive of the objectives of the audit.

By the examination of quality assurance reports and the high level, non-technical progress reports, the audit should establish whether the system is under control and thus deliverable. The British aircraft industry is entitled to such reassurance, given the previous disappointments. I urge the Minister to undertake such a course of action.

I shall finish with just two other observations. Although the management expect the start date to be winter 1999–2000—just 18 months away—no start date has been announced. There is a fall-hack plan of a year's delay. The existing system will be unable to cope with the traffic unless the North Sea is resectorised to ease the traffic loading. Such a procedure takes between 18 months and two years. Can the Minister confirm that the North Sea is being resectored in case the year's delay is put into effect so that the existing system can cope?

Finally, the most recent announcement on 13th May by the chief executive of NATS stated that the system acceptance tests had been concluded and that the system performed so well that there were unlikely to be any fundamental problems with the design and the system meets the standard required. From that I put to your Lordships that one is led to believe that we have a working system. However, I understand—here I should like the Minister's confirmation—that the system has been tested only on a stand-alone basis. That resulted in the final payment of the £167 million fee being paid to Lockheed. It would appear that NATS is in danger of being dictated to by the sole supplier of its software.

But the system has yet to complete one of the three key activities as outlined by NATS in its evidence to the House of Commons committee; namely, the test and integration of the software into the NATS infrastructure—that is, the feed into the radar systems, communication systems, adjacent air traffic systems, system failure tests, and so on. So how can the system be described as technically complete or unlikely to meet any fundamental outstanding problems before it is tested in such an integrated environment?

Perhaps this is the meaning of the final paragraph in the progress update dated 13th May when the chief executive states, there are still some important bridges to cross".

7.10 p.m.

Baroness Thomas of Walliswood

My Lords, the noble Lord, Lord Mountevans, has introduced a most interesting and varied debate. We have had the usual expert contributions from various people with specific experience, such as the noble Lord who has just spoken. I shall return later in my speech to the subject that he raised.

It is always a pleasure to listen to the noble Lord, Lord Mountevans, give his robust defence of the free market. However, I am sure that he will not expect me to agree with every single word he said in the course of his speech.

I should like to give a brief resumé of the Liberal Democrat view on the subjects that have been touched on. I agree with what the noble Lord said on the US-UK negotiations. They have dragged on for a long time. It is not right that we do not get cabotage within the United States and that our airlines are more restricted there than US airlines are in Europe. We should do something about it with the greatest rapidity. I hope that the Minister will respond to the points that have been raised on that subject from a number of different quarters.

I agree with the noble Lord's views on the subsidies within the European Union for state airlines. Those have been allowed to drag on for far too long. I have some sympathy with what the noble Baroness, Lady O'Cathain, said about compliance in this country with EU legislation. It is what I think Commissioner Martin would call "gold plated", whereby a very thin document arrives from the European Union and by the time it has been through our system it is very thick and has become five volumes. For example, adding criminal penalties to something which is in many ways far from the criminal law is an outstanding example of the idiocies to which we are sometimes subjected; and that comes from someone who is and always has been a convinced European. It has nothing to do with whether or not one favours the European Union, ever closer union and so on.

I share the views of the noble Lord, Lord Berkeley, on the BA/AA merger. It has an anti-competitive ring to it. We feel that a more competitive approach should be encouraged. For that reason we are also interested in looking again at slot allocation between different airlines.

The size and importance of the industry, a point to which both the noble Lord, Lord Mountevans, and the noble Baroness, Lady O'Cathain, made reference, is incontestable. One can describe it in a number of different ways. One can say that during every 24-hour period 5,000 or more flights pass over the United Kingdom; or one can say that two years ago 23.7 million visitors to the United Kingdom arrived by air and spent about £12 billion; or one can say that 160 million passengers passed through UK airports in 1996. There is also rapid growth in the freight business, which is worth more than £330 billion to the various companies involved. There is a growing likelihood of all-freight aircraft as opposed to the current position whereby 60 per cent. of freight is carried in passenger aircraft. There is a tremendous dynamism within the industry which brings great benefits to the United Kingdom economy.

However, as with all other industries, one has to ask oneself about the downside. The civil aviation industry damages our environment. We have to tackle that damage just as we do with other forms of transport. The damage comes in a number of different ways. There is damage at high altitude to the ozone layer; there is air pollution at ground level; there is noise; and there is the disbenefit brought to the surroundings of any airport by ground transportation, as the Americans call it, to and from the airport.

For many years I have lived in Surrey. I have one airport to my south east and another one to my north west. I can tell the House that there is nowhere in east and central Surrey where one is free of aircraft noise. The problem has been growing considerably in the 15 or so years I have lived in Surrey.

The noble Lord, Lord Mountevans, was wrong when he suggested that concern for environmental considerations is unique to this country. On the contrary, it was agitation in the United States, which started when the big airports in New York began to expand some 20 or 25 years ago to something like their present size, that resulted in air noise certification being part of the basis on which any aircraft could be produced. I have played my tiny part in that fight. We were told at the time that it would be impossible to make aircraft quieter. However, the fact of the matter is that if governments impose sensible regulation on a gradual basis mechanical change can be achieved which will assist in the reduction of nuisance and pollution.

We would support work to introduce a tax on aircraft fuel on an international basis. It goes without saying that one cannot do it on a national or an EU basis, but why should aircraft fuel as distinct from any other fuel be untaxed? It does not make sense. I think we have to go down that route. It would have the effect of ensuring that aircraft manufacturers paid more attention to the efficiency of their engines. It would increase the pressure on them to make their engines more efficient. I am not saying that they are not becoming more efficient anyway but it would increase that pressure in the same way as a fuel tax has had an effect on the efficiency of car engines. In the United States, where fuel has been less heavily taxed, the large car is still part of the scenery, which is much less the case in Britain today. So one can achieve things by regulation.

One can do other things. One can encourage rail travel for shorter distances. The Channel Tunnel assists in that ambition. Short-haul aircraft are pro-rata more polluting than long-haul aircraft because most of the emissions take place on take-off and landing. If we can make it easier for people to take short and medium journeys by rail then there will be an environmental benefit. Equally, we must press for better rail access to airports, which the noble Lord, Lord Berkeley, mentioned.

I turn now to the matter of London Airport and Terminal 5. I very much hope that if permission for the terminal is granted one of the conditions will be that more money is spent by the developer—part of the planning game process—in improving rail links to Heathrow, and particularly from my point of view, from the south, the south-west and the west. From those directions it could be relatively easy to approach Terminal 5 in particular by rail. I am glad to see that a new consortium has been formed to investigate this in partnership with a major engineering company. I hope that that will take the matter further.

Reference has already been made to Terminal 5 and to the length of the enquiry. The reason it has taken so long is that airports policy is being made by the enquiry. There is no overall policy background or context for a discussion as to whether or not there should be another terminal at London Airport-Heathrow. As a result, a start has had to be made from basics. There were long discussions about employment and housing policies, needs and statistics before the inquiry reached the mundane issues which interest you and me a little more, such as whether the M25 will still function if there is a Terminal 5. It has taken an immense amount of time. It is an open secret that the British Airports Authority has spent something like £100 million on that inquiry.

Those who have objected are minnows in a pond—and I include the county council on which I used to serve—compared to the main promoters of the scheme. It is still going on. I wish to encourage the Minister to tell us how—and other noble Lords have made this point—the planning of airports is to be incorporated into an integrated transport policy to be set out in the Green Paper when it arrives. I know that the Minister cannot anticipate the Green Paper, but an indication that at least the matter has been considered would be very welcome.

A Transport Committee report entitled UK Airport Capacity of May 1996, included the following conclusion, Far more information is needed before a coherent airports policy can be devised. An approach which relies on forecasts of increasing demand while making limited assessment of the economic effects of aviation or the local and global environmental costs it imposes is in conflict with both the policy guidance issued by the Department of the Environment and the UK's international commitments to sustainable development". I could not possibly put it better, which is why I have quoted from that particular report. Those are precisely the considerations which should be taken on board.

The last subject is safety. The noble Lord, Lord Norton, brought that very much before us in his discussion of the Swanwick centre and the failures. There is an increasing rate of near misses of a dangerous kind. I believe they are called "airprox incidents". My honourable friend in another place, Mr. Tom Brake, has been pursuing this matter through parliamentary Questions. Airprox incidents have increased more than three times over the past five years. So there is mounting dismay at the delays to the completion of the Swanwick air traffic control centre. I hope that the Minister will be able to tell us more about that and her Government's attitude to it, if only because that will enable me to do what I have been asked to do, which is to remove my Unstarred Question from the now ever-lengthening list of such Questions.

But there is a more serious objective. Air traffic is a great boon and a benefit to many people. It is part of our way of life, but it must be sensibly controlled both from the environmental point of view; from its effect on the lives of people who live near airports and from the point of view of air safety. I hope that the Minister will be able to tell us that progress continues to be made in the direction of a single European air safety regulatory authority, which is a subject that we discussed in this House not very long ago. I look forward to the Minister's responses to the many questions that have been raised during this debate.

7.25 p.m.

Earl Attlee

My Lords, I, too, am grateful to my noble friend Lord Mountevans for introducing this subject for debate and for the manner in which he did so. The noble Lord remarked on the 50th anniversary of the Berlin airlift which took place during the time of my grandfather's administration. How far the industry has moved since those days!

I also have a sense of déjà vu because when I last came to the Dispatch Box last July we were debating aerodromes and we are now debating the civil aviation industry. When the Minister comes to reply I do not expect that many noble Lords anticipate a preview of the results of the integrated transport review. However, I am sure that noble Lords will be interested to know if their concerns will be covered in the White Paper and they would also like to know when it will be published.

When the White Paper is published my noble friend Lord Brabazon will be taking a close interest in the aviation parts of it. I also know that he regrets being unavailable for this debate.

Aviation is one of the industries where Britain leads the way. We have one of the top international airlines in the world and in Heathrow the world's number one international airport. My noble friend Lord Mountevans mentioned the international strength of BA and Virgin Atlantic. My noble friend Lady O'Cathain mentioned the low staff turnover at BA. I believe she said that it was 2 per cent., which is quite remarkable.

The industry generates 1 per cent. of GDP and has 500,000 jobs directly or indirectly. I understand that 50,000 people owe their living to Heathrow alone, making it a highly significant employer in that part of London. In addition, one-third of western Europe's top companies have their headquarters located in London which is more than twice the number in any other EU country.

I looked forward to the contribution of the noble Lord, Lord Graham, and I was not disappointed. Sadly, he is not in his place. He raised some interesting concerns regarding the health risks of air travel. The appropriate advice that he read out did seem to be commonsense. However, I am not sure how passengers would react to being woken up in the middle of a long-haul flight. It will be interesting to see how the airline industry reacts to his suggestion as regards the provision of information.

My noble friend Lady O'Cathain raised the issue of liability notices on airline tickets. It is an extremely complex subject and I am grateful to my noble friend for explaining the problem so succinctly. My noble friend also raised the issue of ground handling regulations. In a nutshell, it appears to be the standard British Government machinery procedure of over-implementing or gold-plating any EU directive. This problem of departments over-implementing EU regulations keeps reappearing. Why do we do it to ourselves? I well recall the campaign to allow holders of vocational driving licences to retain their licences while the EU sight standards changed. There was pure over-implementation but, fortunately, the campaign was successful in the end. The noble Baroness, Lady Thomas, made some very helpful comments about the gold-plating of EU regulations.

The noble Lord, Lord Berkeley, said that there are no subsides for air travel. He is right. Air passengers pay air passenger duty, as pointed out by my noble friend Lord Mountevans. The noble Lord seemed to be suggesting some kind of subsidy for "desirable" air travel routes. I believe he referred to feeder routes to Heathrow. I hold the noble Lord in high regard, so I was a little surprised by his comments. I thought that we wanted to move away from subsidies for any form of commercial activity.

My noble friend Lord Glenarthur raised some important points about helicopters. He referred to the difficult issue of regulation, but he recognised the need for it. I seem to remember that similar concerns were aired during our debate last July. My noble friend also raised the difficult issues of safety regulations and planning consents.

The noble Lord, Lord Norton, raised the important issue of NATS and in particular the Swanwick new en-route centre. The noble Lord explained the background and activities of the Select Committee in another place. I am sure that noble Lords will have read its report carefully. As many have said inside and outside Parliament, progress is now a little more encouraging.

There seem to be two important issues. The first, which was of great concern to the Select Committee, is whether or not the system will actually work. The Minister, Parliament and the public need to be confident on this point. However, with the challenges that NATS faces, a long-running and exhaustive inquiry by outside "experts" is likely to be counter-productive. At this stage, we do not need to know what, if anything, has gone wrong or, if something has gone wrong, who is responsible. The question is purely a technical one at the moment. It is whether or not the technical problems are soluble within the approximate timescale expected by NATS. If the Minister does instigate an inquiry, it seems to me that it ought to be possible to complete it in less than a month. The terms of reference ought to provide for that. What is the view of the Minister regarding such an inquiry?

The second problem is the perceived need to separate the regulation of NATS from provision of the service. Currently, both come under the CAA. The conflict of interest is obvious. Some form of privatisation, or possibly corporatisation, of the service provision has much to commend it. The Canadians may have found a solution.

One of the most difficult tasks in managing the civil aviation industry is the allocation of slots at the main London airports, particularly Heathrow. Many noble Lords have covered that point. The Bermuda ii agreement is highly restrictive. It is ironic that our liberal regime creates more complaints than on the continent due to the number of operators actually able to operate in the UK, even out of Heathrow. The noble Lord, Lord Gladwyn, in his very interesting speech, talked about liberalisation and the new low-cost operators, among other things.

The BA/AA alliance may be necessary to secure access to US markets without the need for primary legislation in the US to undo the ownership rules. On the other hand, the Government will have to be careful not to undermine the competitive position of other operators, not least Virgin Atlantic. My noble friend Lord Mountevans explained the challenges which the Government face in the US. But when the Government negotiate these matters they do so with a unique negotiating leverage. This is due to the US carriers' desire for access to London Heathrow and for the right to operate services from the UK into Europe and beyond. I trust that the Government will negotiate with a view to securing the best possible deal for the UK airline industry as a whole.

The last issue I wish to address is the Heathrow Terminal 5 inquiry and our planning process, on which many noble Lords have commented. In 1946, the first few commercial passengers queued up at a trestle table outside a canvas tent in order to check in at Heathrow. We now have a high technology airport, handling 58 million passengers a year. At what point in an airport's development do we call a halt and reject further growth? Is it now or should it be when further development is physically impossible without taking more land for the airport?

I do not propose to rehearse the arguments for and against T5 or even to prejudge the outcome of the inquiry. What concerns me is that nearly as much money, and therefore resources, is being spent on this inquiry as the main political parties spent on the last election when we were selecting a government. More money is being expended on this inquiry than would be required to run your Lordships' House for nearly two years. I do not believe that your Lordships would take many months to decide whether T5 was desirable, even if it is necessary to start from first principles as suggested by the noble Baroness, Lady Thomas.

I am not suggesting for a moment that objectors' valid concerns should be smothered. Indeed, by any standards the objectors themselves have spent vast sums. However, because of the economic imperative of T5 to BAA, BAA is prepared to spend whatever is required for a successful outcome to the inquiry.

At the same time as we are dithering over T5, at Paris airport the French are spending £4.5 billion on two more runways and two terminals. I understand that originally the fear was that T5 would be fouled by the 1997 election. Now, apparently, it is the next election which may foul the decision-making process.

Is the Minister satisfied with the current planning regime or does she see scope for improvement, particularly in terms of the speed and economy of the process? Can we expect anything on this point from the integrated transport review?

The Government must ensure that their airline policy can demonstrate a commitment to ensuring that all airlines can compete on equal terms within a European single market and, most importantly, with the US. We look forward to the White Paper when it finally arrives.

7.36 p.m.

The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Baroness Hayman)

My Lords, like all who have spoken, I am grateful to the noble Lord, Lord Mountevans, for initiating this extremely interesting and wide-ranging debate. The nature of the debate makes trying to give a comprehensive response from the Dispatch Box all the more challenging. That challenge is intensified given that we are shortly to produce a White Paper, the contents of which I cannot anticipate tonight; since the Government are working on their response to the Select Committee's report and since, as has been pointed out, the terminal 5 inquiry is ongoing. So there are a number of constraints on what I can say to the House tonight and on how many questions I can answer, but I shall do my best to deal with the detailed points.

The noble Lord, Lord Mountevans, took a self-denying ordinance in introducing the debate when dealing with the aerospace industry. I was slightly disappointed, given that that is the only area of this subject of which I have any personal experience. I had the privilege to represent Hatfield in another place for five years, so for obvious reasons I am very interested in the civil aircraft construction industry.

The noble Lord, Lord Mountevans, rightly emphasised that our civil aviation industry is one of the most successful in the world. The noble Baroness, Lady O'Cathain, made the same point. That position has not been achieved without the hard work of both employees and managers, combined with a real spirit of innovation and entrepreneurship. I begin by paying a tribute to the efforts of all those who work in the civil aviation industry, and I commend them on their success.

Our open economy and geographic position create particularly favourable conditions for civil aviation, which stimulates economic growth, world trade, international investment, and tourism. Civil aviation is a rapidly growing industry, with demand for world-wide air travel expected to increase at over 5 per cent. annually well into the new millennium.

Our airline industry has doubled in size over the past 10 years. British Airways is one of the most successful airlines in the world. It transports the greatest number of international passengers of any carrier. Despite its prominent position, it has not been sheltered from competition. As the noble Lord, Lord Gladwyn, pointed out, other scheduled UK carriers have challenged incumbent airlines head-on, increasing choice for air travellers and maintaining downward pressure on fares. Virgin Atlantic and British Midland with their flair for innovation and service have played an important part and set an example for the rest of Europe. Another example of the dynamism of the UK industry has been the recent arrival of what are sometimes called "no frills" carriers such as EasyJet and Debonair. These provide yet further choice for passengers and bring air travel within reach of many more people.

Within Europe's highly competitive charter market UK operators have earned an enviable reputation. UK charter companies carry around 40 per cent. of total charter traffic in the European Union and enable increasing numbers of UK residents to enjoy affordable holidays at a growing number of overseas destinations. Heathrow ranks among the largest international airports in the world, handling 56 million passengers in 1996. It is by far the busiest airport in Europe, while Gatwick is the sixth busiest and is larger than both Madrid and Rome. The large number of destinations served by London's airports help maintain the capital's position as a leading financial business and tourism centre.

But aviation is not just about London. Our regional airports have been growing more rapidly than the London airports over the past two decades. Notable among them is Manchester, the eleventh largest European airport, which last year was voted the world's most popular airport in an international survey. Its second runway, now under construction, offers potential for further development both as a major European airport and as a driving force in the economy of the north-west. In short, there is no doubt that the story of UK civil aviation reads well. But success brings challenges, particularly in reconciling economic efficiency with environmental concerns as recognised by the noble Lord, Lord Gladwyn, and the noble Baroness, Lady Thomas. The potential conflict is especially acute for our small crowded island. In line with policies elsewhere, we are committed to ensuring that the development of our aviation industry is sustainable. We are acutely aware of the problems caused by aircraft noise. We have issued a preliminary consultation paper on night restrictions. We are also preparing a supplementary paper on proposals for stricter day and night-time noise limits at the three airports where we exercise direct control on aircraft noise: Heathrow, Gatwick and Stansted.

Civil aviation is responsible for about 2 to 3 per cent. of global man-made pollution. We have been pressing for a proactive approach within the International Civil Aviation Organisation in conjunction with the United Nations Framework Convention on Climate Change. We are at the forefront of moves to establish a stricter global standard for emissions of oxides of nitrogen from newly-certificated aircraft and other measures aimed at constraining the polluting effects of civil aviation.

The noble Lord, Lord Mountevans, expressed concerns about the possibility of aviation fuel tax. However, as the noble Baroness, Lady Thomas, pointed out, the current exemption from taxation on aviation fuel is anomalous. The UK, together with some other European countries, has questioned its continued validity. We have pressed for action within ICAO and have also supported a commission study into the effects of removing this exemption within the Community. That study will be published at the end of this year. I can reassure the noble Lord, Lord Mountevans, that a major concern will be to avoid distortion of competition between carriers or transport modes.

A number of noble Lords have referred to the pressures and problems arising from congestion at airports in the south-east. The Government welcome the fact that regional airports have been able to meet more of local demand in recent years. Passenger numbers at regional airports totalled over 48 million in 1996 and are growing more rapidly than at London airports. Passenger numbers have increased by 86 per cent. between 1986 and 1996 compared with an increase of 75 per cent. at London airports. We look forward to this trend continuing.

Airports make an important contribution to the prosperity and regeneration of their hinterland and regional economies. We also recognise the potential for an even bigger contribution. Every year, millions of people from the regions have to travel via the London airports, particularly for scheduled flights. There would be great benefits from meeting more demand locally: a significant contribution to regional regeneration; a reduction in long car journeys to the London airports; and some easing of the pressure on congested airports in the south-east. The Government's integrated transport White Paper will set out the framework and the starting point for airports policy both nationally and regionally. Issues relating to regional airports and their counterparts in the south-east will be considered in more detail once that framework has been set out in the White Paper. I have been asked twice this evening about the date of publication of the White Paper. In Civil Service language, we have moved from "at some point this year" to "soon". Noble Lords will require a lexicon to interpret exactly when that will be. Everyone eagerly anticipates the integrated transport White Paper. I am fascinated how in today's debate the importance of integrating modes and looking at links with land use planning, for example, has come up again and again. To look at this in the context of integration is a very important and timely development.

My noble friend Lord Berkeley asked why we should not allow foreign airlines to come to regional airports even if UK airlines did not want to put services on those routes. He was particularly interested in the Scottish context. I must inform my noble friend that even after devolution, responsibility for international relations will remain with Westminster. The noble Lord, Lord Gladwyn, was concerned that air services from the regions should not be constrained unduly by congestion at the London airports, but acknowledged the problem that arose if profitable long haul services from London were replaced with less profitable short haul services. He demonstrated very well the difficulty of satisfying all of the interests in this field. In considering liberalisation at our regional airports, we shall bear in mind the plea of the noble Lord that we must not unwittingly give away valuable negotiating cards in the interests of liberalisation without ensuring that reciprocal concessions are made by other countries.

I turn next to an important matter raised by the noble Earl, Lord Attlee, and the noble Baroness, Lady Thomas. They were concerned about the planning of major new airport infrastructure. They asked whether there would be any change in planning policy in this respect. They both described some of the difficulties that have been well illustrated in this field. In our policy statement Modernising Planning, we made it clear that we envisaged change. For major new infrastructure projects of national importance, explicit national policy statements on need and site criteria will be published well in advance of any proposal being brought forward. Public inquiry procedures will be streamlined, in particular by giving the Secretary of State power to set a firm timetable for the delivery of the inspector's report. Where appropriate, Parliament itself will be asked to approve the broad principle of a project, so that only matters of detail and local interest need to be examined at a public inquiry. I hope that that will meet some of the concerns that issues of national importance have been debated in the incorrect forum while at the same time recognising that local concerns must be properly aired and considered.

I turn to the question of access to airports which was raised by the noble Lord, Lord Gladwyn, and my noble friend Lord Berkeley among others. One of the central themes in last year's consultation paper on integrated transport was the need to reduce the nation's dependence on the car and lorry by providing genuine alternatives and promoting greater use of more attractive public transport. Airports are major destinations in their own right and have a significant role in promoting the use of public transport. The Government want to send clear signals about the direction of the new approach and the overall policy context for individual decisions. The crucial need is for each airport to work with other local players in devising and implementing a strategy which meets local needs. There have been good examples in this field. In the integrated transport White Paper, we intend to set out in broad terms what we believe needs to be done and how it might be achieved.

I turn now to the issue of US/UK aviation relations raised by several noble Lords. They are of vital importance to the UK's civil aviation industry as a whole. The UK Government are committed to liberalising services between this country and the US. That must be a balanced liberalisation which acknowledges the concerns of both countries, not a one-sided arrangement which benefits only US carriers. I hope very much that we shall be able to conclude a satisfactory new agreement with the US before the end of this year.

In our dealings with the US, we are of course mindful of the experience of US deregulation. While deregulation may be good in principle, there must be adequate safeguards to prevent larger carriers from driving off smaller innovative airlines by unfair means. The US Government have recognised that and recently produced proposals for dealing with anti-competitive practices. The UK has long argued for effective competition safeguards. We will be insisting on a proper competition regime for any new UK/US air services agreement to ensure that UK carriers have a fair opportunity to compete.

As far as the proposed British Airways /American Airlines alliance is concerned, to which my noble friend Lord Berkeley referred, the UK and EC regulatory investigations are at a delicate stage. Noble Lords will understand that I cannot comment on the detail of those investigations or their timing.

I think the whole House listened with great interest to my noble friend Lord Graham of Edmonton. He set us all to flexing our ankles as we sit on these Benches. It is a sensible thing to do. He made the serious point about passengers' understanding of the risks while flying and how those risks might be reduced. Many airlines, and BA in particular, take such matters seriously, and offer their passengers advice on how best to conduct themselves on long flights, through leaflets at the back of seats. They include advice on matters such as healthy eating, and I am afraid I have to say to the noble Lord, Lord Glenarthur, not drinking too much alcohol during flights. I take the point also that not everyone understands or has access to that information. I shall draw my noble friend's remarks to the notice of the British Air Transport Association and to the CAA, as the industry's regulator.

The noble Lord, Lord Glenarthur, raised the issue of helicopters. I was particularly encouraged by his support for the work of the Civil Aviation Authority's Safety Regulation Group. He went on to draw attention to the costs of safety regulation, and the burden they place on the helicopter industry. Equally, I am sure the industry as a whole would recognise the commercial value of operating in a safe and well-regulated environment. As far as the level of costs is concerned, the Government are committed to the "user pays" principle, by which the Civil Aviation Authority is required to recover all its costs from the industry. The Civil Aviation Authority consults industry annually on the charges it makes and has had a good deal of success recently in keeping down its costs, despite the ever-increasing volume of traffic. It will continue to endeavour to keep the costs down to those which are essential.

The noble Lord spoke also of the need for an effective collision avoidance system for military aircraft. The Ministry of Defence is considering the procurement of a collision warning system for military fast jet aircraft. That is being examined as part of the strategic defence review. Furthermore, the fitting and use of aircraft collision avoidance systems will become compulsory in Europe for large passenger aircraft by 2000 and smaller aircraft by 2005. That should help to reduce the human-error factor.

On a slightly different regulatory tack, the noble Baroness, Lady O'Cathain, raised the point about the Government's attitude towards complying with certain European directives. She received some support from the noble Baroness, Lady Thomas. We are not talking about gold-plating here. I agree that we in the UK have implemented the ground handling directive carefully and properly, and that the position is more patchy in some other member states of the EU. However, the directive is delivering benefits for UK airlines operating in Europe; for instance, in opening up the ground handling market at Frankfurt Airport. The Government will continue to press the European Commission to take vigorous action to ensure that the directive is implemented quickly and properly in all member states, which should help to ensure the level sky, if not the playing field, to which the noble Baroness aspired.

The noble Baroness, Lady O'Cathain, also mentioned the recent Community measure on air carrier liability. That provides a welcome increase in the levels of compensation paid to travellers injured or killed in air accidents and their dependants. Though, as a Council regulation, it has direct effect in the UK, we are obliged to prepare implementing legislation to eliminate areas of conflict with existing national law, and to impose appropriate sanctions for non-compliance. As far as the information requirements set out in the regulation are concerned, I understand that discussions are taking place between the industry and the Commission with a view to finding an acceptable common form of words.

The abolition of duty free sales, was raised by the noble Lord, Lord Mountevans, and my noble friend Lord Berkeley, who took different views on the issue. At the ECOFIN meeting yesterday, a number of finance Ministers made it clear that they opposed any re-opening of the 1991 decision. That meant that there was not the unanimity needed to change the decision. The UK wished to see a Commission study into the effect of abolition, but there was no majority in favour of that either. We shall have to live with that decision. Meanwhile, some of the concerns of the transport sector are being addressed through discussions with the trade on the operation of a duty-paid regime post-1999.

The noble Lord, Lord Mountevans, talked about air passenger duty. I should point out that air transport continues to benefit from duty free fuel. In the UK, unlike most other European countries, VAT is also levied at zero on domestic journeys. Certainly, there is little evidence that air passenger duty is constraining the industry: UK airports report continuing passenger growth and there was a 7 per cent. increase in the overseas package tour market in 1997.

The important issue of safety was raised by the noble Lords, Lord Norton and Lord Glenarthur. The noble Lord, Lord Norton, talked about airproxes. Of course any risk-bearing airprox incident is one too many. The National Air Traffic Control Services and the Ministry of Defence carry out the most stringent investigations into all such incidents which are judged to bear a risk. The appropriate lessons are learnt. I agree with the noble Lord that we can never relax vigilance in that field. He also mentioned, as did other noble Lords, the new air traffic control centre at Swanwick. Concerns have been expressed. I listened carefully to what was said on that issue. I hope that noble Lords will understand that while the Government are considering their response to the Select Committee's report, I cannot respond in detail. I assure noble Lords that the Government are taking the report seriously and will be publishing a response shortly.

Perhaps I may assure the noble Lord, Lord Norton, that the so-called Clacton sector to which he referred is being resectorised—that is a horrible word, but I am sure he will understand what it means—which will help to provide the extra capacity needed until the Swanwick centre comes on stream.

During the past few months, we have had a particularly prominent role in Europe through our presidency of the European Union, during which aviation has formed a major component of our transport agenda. We have given priority to safety-related issues. Much work has been done to prepare for negotiations which we hope will lead to the establishment of a new European aviation safety authority, an issue raised by the noble Baroness, Lady Thomas.

In the field of air traffic management, we have been paving the way for Community membership of EUROCONTROL. We hope a mandate for negotiations will be agreed at next month's Transport Council. Community membership should allow the European Union to pursue its proper interest in this important area of aviation infrastructure. We have also worked on improvements to the rules governing computerised reservation systems; and have started to look at changes to the system of denied boarding compensation, both of which are useful consumer protection measures. I think that the interests of the consumer have been highlighted in today's debate. We shall not be able to judge properly our success until after the next Transport Council on 18th June. However, at this stage I think we can reasonably claim that during our presidency we shall have made a substantial contribution to the development of the Community's aviation policy.

I hope that I have left noble Lords in no doubt about the significance the Government attach to the civil aviation industry. It plays a vital role in our economic prosperity. We have a challenge to create conditions for its development which are sustainable in the longer term. It has been a well informed debate in which noble Lords have drawn attention to some of the problems faced in the short and longer term. We shall bear in mind the views expressed as we develop policies on civil aviation.

8 p.m.

Lord Mountevans

My Lords, my pleasure at the opportunity to move the Motion has been sustained by the quality and variety of the contributions of noble Lords. Even if I cannot agree with every sentiment, and I would not expect the Minister to agree with every one of mine, I am grateful to all who have taken part, and especially to the Minister—I think that I speak for all when I say this—for her reply. It was detailed and wide-ranging. We appreciate the many constraints under which she spoke. I beg leave to withdraw the Motion.

Motion for Papers, by leave, withdrawn.