§ 11.12 a.m.
§ Mr. Harold Steward (Stockport, South)
I beg to move,That this House takes note of the contribution being made by United Kingdom independent operators in the field of air transport, and is of opinion that the potential future growth of world air traffic gives scope for an accelerated expansion in association with or complementary to that of the national Corporations.It is unfortunate that this occasion, one of the first on which the House has been able to debate the work of the independent air transport operators, should follow immediately after such a tragic aircraft accident as that which occurred in Lancashire this week. In associating myself with what has been said this morning by the Minister, I have quite real regret that so many of those who have lost their lives are concentrated on that small island in which I always spend my annual holidays, and many of whom, indeed, I knew.
I wish to make it quite clear, at the outset, that it is no part of the case of the independent operators to attack the setting up, under the Civil Aviation Act, 1946, of the two national Corporations, B.O.A.C. and B.E.A. In the conditions then obtaining, there can be no doubt about the wisdom of that step. Neither can it be gainsaid that in the period since the Act was promulgated the two Corporations have, sometimes under great difficulty and much adverse criticism, done a splendid job in providing a network that has given great service to this country.
We do not regard this as a matter of independents versus the Corporations. If one could use recent terminology, it is more a question of interdependence. The same Act that reserved to the Corporations the exclusive right to develop these scheduled services allocated a very much lesser rôle to the independents, and I am quite certain that it was within the mind of the Government of that day that this rôle would be confined more or less to taxi-class operations.
Our consideration of the position as we find it today, and of the part that the independent companies have played, and could play, is dictated by no other 705 thought than that our air transportation system should assume its proper place in world air capacity and traffic. If we look at that position, we can have no room for complacency for, indeed, any of the figures representing the British share of world air capacity are somewhat disturbing.
Of course, as might be expected, the United States, cushioned as it is with that vast background of domestic air traffic, takes the lion's share in any percentage figures. The figures are known, I think, to the majority of the hon. Members of this House but, for the sake of the record, I will repeat them. The United States figures range from 60.4 per cent. in 1951 to 62.8 per cent. in 1955; not only a lion's share, but a progressive increase in the U.S.A.'s share of the traffic—
§ Mr. Ian Mikardo (Reading)
Would the hon. Gentleman please make it clear that that is not a percentage of traffic but of capacity, which is not the same thing? Secondly, of course, it is not a percentage of international capacity. That figure can be boosted merely by an increase in internal routes within the United States.
§ Mr. Steward
Both of those points I accept without any qualification whatsoever. That is quite true. Nevertheless, it is the only way we have of measuring global traffic and global capacity. This is a question of capacity, and we will come to traffic in a moment.
It is equally a matter for great concern that our proportion is not only small, but that it has, in recent years, actually fallen. Over that same period for which I quoted the U.S.A. figures, the capacity here has fallen from 5.3 per cent. to 4.8 per cent. while the position of France, over the same period, has changed in the other direction. Starting somewhat under our own figures in 1951, she had actually outstripped us and returned a figure of 5 per cent. by 1954. It is equally true to say that, in common with many other operators, there has been a slight fall in the intervening period.
That was the capacity, but the overall rate of increase shows exactly the same sort of pattern. Against a world average increase of 80.2 per cent. in the period 1951ߝ56, the U.S.A. figure was 87.4 per cent; that of France was 84 per cent., while that of the United Kingdom was 706 only 62.4 per cent. Even the Netherlands—and I think we all admire the efforts which the Government of that small country have made in support of their aviation—had a figure of 77.7 per cent.
It should be pointed out, in fairness, that if we were to separate the figures for the two Corporations we would find that B.E.A. had made a very notable rate of increase over that same period of time, and had, in fact, returned a figure of 144 per cent. As I say, it is no part of my case to be critical of either of the two Corporations.
To complete the thumb-nail sketch of United Kingdom figures, we have the Report of the Air Transport Advisory Council for the year ended 31st March, 1957. In page 9 of that Report, we find that in terms of actual traffic the number of passengers carried has steadily increased from 2,199,000, in 1953–54, to 3,605,000 in 1956–57, and that the load in short ton-miles has increased from 197 million to 288 million, or, near enough 289 million—increases respectively of 64 per cent. and 46.5 per cent. We see there a picture, whichever way we look at it, of an undoubted steady increase, but if we compare it as a rate of growth against the background of world air traffic or world air capacity, the position is completely unsatisfactory.
I should like to turn now to the progress of the independent operators during the period from 1946, stemming from the Act of that year. In 1948–49, it was found almost immediately, I believe, that there was need for a larger and more diversified transport effort than was provided at that time—and, again, I am not speaking critically—by the two Corporations. In fact, the independent operators were called upon to make something more than a taxi service contribution almost immediately. The situation arose primarily because of the Berlin airlift. If we look at some of the figures of independent operators, either individually or collectively, we have reason for some satisfaction at the part that they played in that demand. We find that they played the major British civil part, particularly in respect of freight transport.
As to the second necessity, for carrying greater traffic—that which could not be carried at that time by the national concerns—we find that on certain minor 707 routes, because of the limitations of the Act, certain services were operated by the independents as associates of B.E.A. In 1950 came the next major step in the independents' history when civil air trooping was introduced, and since that time contracts have been worked by the independent operators. I shall want to say something more about that later.
I think it was in 1952 that the Government amended the existing policy by introducing a new policy in which it was stated that theyfavoured a blend of public and private enterprise in whatever way was in the best interests of British civil aviation.This policy was implemented by amending the terms of reference of the Air Transport Advisory Council so that the independents and the Corporation were both able to apply to the A.T.A.C. for approval to operate scheduled services in defined categories. The existing networks of the Corporations, however, remained reserved exclusively to them, and there was no amendment made to legislation, which meant, therefore, that, inter alia, the independent companies must continue to act and Operate as associates of the two Corporations.
The main implications of this new policy meant that the sphere of opportunity open to the independents must essentially be on the fringe areas of the scheduled services—in other words, those which the Corporations did not wish to develop at all. In consequence, an important contribution made by the independents is that they have effectively supplemented the scheduled services provided by the Corporations and, in addition, have provided many other different types of service.
With the permission of the House, I should like to refer more specifically to some of the types of service which have been rendered by the independents in this way. First, there are the car ferry services on many routes. Reference has been made this morning to the substantial traffic which has been carried by Silver City Airways. This company pioneered this service and has developed it vigorously mainly from its own airport at Ferryfield. Also, Air Charter operates similar car ferry services from Southend.
There are also the all-freight services. In that connection one that springs 708 readily to mind is the Hunter-Clan Africargo service to East and Central Africa. Then there are Colonial Coach Services, which provide a low-fare service to the Colonies in aircraft providing, perhaps, fewer amenities than those of the Corporation services. Colonial Coach Services fly to Nairobi, Salisbury, Cyprus and Gibraltar.
Then there are the coach-air services—again a low-fare through-service combining the cheapness of coach travel with the convenience of air travel for the over water crossing. Skyways' coach-air service from London to Paris via Lympne and Beauvais was the pioneer of this kind of service and it has opened the skies to many who have never flown before. Certainly, as a type of service. it has had many imitators.
There are also the truck-air services for freight, run by Air Charter in conjunction with road hauliers. This provides a convenient and cheap through-service to the Continent, by road from factory or warehouse to Southend, then to Rotterdam or Ostend, and then by road. Recently, I read of a 24-hour all-freight service which is to be provided from 8th April onwards by Skyways to Paris, which combines a road and air freight service and will offer express facilities at lower cost than by express rail and boat. These are substantial contributions, and are opening up a new vista.
There are also the special charter flights which, at different times, have hit the headlines. I have found amongst ordinary lay people such as myself a disposition to regard charter services with some degree of suspicion. There is the thought, on the one hand, that this is a means of making a lot of easy money and, on the other hand, that if the word "charter" is used there is something of a risk connected with it which does not apply in the case of other operators. Neither of those two beliefs is true. Charter services are not only as safe as any others; they are not only governed by the same conditions from the Ministry of Transport and Civil Aviation as any others, but, in fact, they are highly competitive and, in the majority of cases, low revenue earning.
These special charter flights which have hit the headlines can be mentioned with 709 justification. It was at the request of the Air Ministry that Skyways sent three York aircraft round the world. A Hermes freighter was sent to Honolulu and back, and was, indeed, the first Hermes ever to cross the Pacific. The world-wide scope of this company's activities alone is exemplified by the fact that in a month their aircraft were committed for flights to Japan, Australia, Singapore, South Africa, America and the Pacific Islands. There is nothing of a taxi service about this. Charter companies now occupy a position which is world-wide in scope.
There are two other matters of which these companies can be proud with justification. In association with Pan-American Airways, the British independent aircraft are flying parts and spares wherever they may be required, and this service is "on tap" at all times. There is the case of a York which was able to fly at an hour's notice to carry a spare engine from London Airport to Shannon Airport, and it touched down there with the engine before the aircraft flying the Atlantic, which needed the engine, had arrived. This sort of useful service can be developed.
There is also the Skyways contract with B.O.A.C. for the operation of a freighter service to Singapore, which is a very happy augury for the type of association which we should all like to expand.
It would be possible to continue a recital of these activities almost ad infinitum but I am sure that it would weary the House. Before I leave the question of these unscheduled services. I should like to refer to one other contribution which, from time to time, has been the subject of a great deal of comment, and that is the service of inclusive tours. This type of service was pioneered largely by the independents. They are often confined to carrying passengers paying an inclusive sum for air transport, hotel accommodation, and possibly motor coach transport as well.
They are organised by travel agents in conjunction with the air operating company, and their great attraction, of course, is that they make possible a Continental holiday, using the speed and convenience of air travel without the cost of the regular air travel service. It is generally accepted that they have 710 attracted to holidays of this kind people who otherwise would have gone by boat and rail, because of the cost, or who may not have travelled at all.
Despite all their efforts in this repect, the independents are strictly limited, and in nearly every case these flights are approved for operation during the summer week-ends only. Owing to B.E.A.'s already severe peak problem—there is no doubt about the evidence of that—it is clear that the independents are providing something which is supplementary to B.E.A.'s services; yet they are doing it, at best, on very low revenue earning and in conditions of uncertainty brought about by short-term licensing which strips the work of any opportunity for vastly expanding it in the future, to the benefit of everyone.
To summarise the contribution of the independents, in the limiting conditions forced upon them by the A.T.A.C. terms of reference, we find that, since 1951–52, not only have they increased their non-scheduled traffic five times— from 17 million ton-miles to 89 million ton-miles—but they are now, in addition, providing a substantial part, nearly one-tenth, of the United Kingdom's scheduled operations. I myself, in coming to the House, use the services of one independent company each week. I have watched that particular little company, which is not, I think, even a member of the General Independents' Association, grow since 1951. I asked for some of its figures, and I understand that, in 1951, the company was carrying Continental passengers at the rate of 840 in the year. By 1954, that number had risen to 10,425. That, it is true, was an exceptional figure and the numbers have declined since; but they are climbing again. In this country, having started in a small way with cars and passengers in the first year, the company now handles 12,000. There has thus been a vast growth in that tiny company, fulfilling a real need in providing a service from a provincial airport to the Metropolis. That is a contribution which that Liverpool Company makes, and it is, I believe, something which could be paralleled in any part of the country without the present demand being fully satisfied. In general, the independents are now providing nearly one-third of this country's totally inadequate civil air effort.
711 While it is right to emphasise what I regard as the achievements of the independent operators, it would be quite wrong to suppose that the general position is in any way satisfactory.
§ Mr. H. Hynd (Accrington)
Before the hon. Gentleman leaves his summary of the contribution of the independents to air services, will he not say anything about trooping and an attempt to justify the monopoly that they have in that work?
§ Mr. Steward
I think I said, when I referred to 1950 and trooping, that I had it in mind to cover that ground later. I want to come back to that in the context of what should be done, long term and short term, in a summing-up of the final argument I put forward.
As I say, it would be quite wrong to suppose that the present position could be regarded as satisfactory. The limitations imposed prevent adequate access to the air transport market with any reasonable stability or security of tenure. Everybody is prepared to take a commercial risk, but there is here, because of the limitations, rather more than commercial risk involved. Some degree of stability and security is a reasonable thing to require. Lack of it prevents essential re-equipment with the most modern machines, a process which has been seriously retarded. I believe that it is generally accepted that re-equipment is now rather worse than it was three years ago.
In studying this matter and discussing it in some detail, the most powerful, overall impression I have received is that, despite all the vitality of the independents—there is no question about that at all—there is an urgent need for much rethinking about the total British air effort.
I should like to quote an extract from the chairman's foreword to the independents' annual report. It is only an extract; I am not deliberately taking it out of context in any way, and I hope that it may be accepted as complete:This situation has been reached during the period when it is known that British Air transport as a whole is not achieving a satisfactory position in the world and when foreign airlines are rapidly establishing themselves on an increasing scale to meet the problems and challenges of the future. The circumstances of the two State Corporations are changing for the better, and they can now advance towards 712 the future armed to meet the needs of the future. We certainly wish them well. But it should be obvious that their efforts alone can produce the full answer which is required, and the independent airlines—which, we repeat, today represent one-third of the total industry—must essentially be allowed to play a greater part.That could be accepted, I think, as a very fair assessment of the present situation.
It provides a striking contrast that two-thirds of this country's effort is, in fact, not only stable, not only being re-equipped with the latest type of machines in order to go forward into the future, but has also the enormous support of stability and public funds. The remaining one-third, on the other hand, is robbed of a sense of stability and any security of tenure, lacking the re-equipment which is necessary, and looking for a changing pattern which would give it a better and more justifiable share of the trade.
I have heard it argued that the thing to do is to make the two-thirds into three-thirds, all in the same conditions. I am quite certain that it is now accepted generally that independent operation is with us to stay and that we could not replace the 152 million capacity ton-miles; it would not be practicable at all. We have, therefore, got to find an answer—
§ Mr. Steward
I am not making any threats. The whole tenor of what I have had to say so far has been as far removed from threats as anything could possibly be. I made my attitude clear from the outset.
We have, in considering the future of world traffic, the advantage of the Report by the Air League, another useful body which carried out an investigation under the chairmanship of Sir Miles Thomas. The Air League gives certain information about world air traffic and the optimum size of an industry engaged in this work, and it draws certain conclusions. I do not say that all those conclusions are like the tablets which came down from Mount Sinai, but they do provoke very serious thought. In particular, I have never heard it rebutted on any hand that world air traffic and world air capacity will 713 double themselves in each five-year period.
I have also never heard it challenged that, on the present basis of the programme of the two national Corporations, if we follow the natural expansion of their capital commitment as we see it at present and follow the possibilities of the projected capacity which they have, we find that there is a straight line at a certain level, whereas the expansion on a world basis is of a parabolic form, leaving a vast gap between the two curves. I do not see how it can be argued that without major changes one will ever make up that leeway between the projected expansion of the two national Corporations and that share which we should occupy in world air traffic and capacity. That is the first consideration that we should have in mind. I believe that it is one which would be readily accepted.
§ Mr. Frank Beswick (Uxbridge)
The hon. Gentleman is saying things in an assertive way, as though he is backed by figures. This scientific graph to which he is referring would have been changed completely if the Comet aircraft had not failed B.O.A.C.
§ Mr. Steward
We have to take things as they are. I am talking of the position as we see it and as far as we can project it into the future. Aircraft do not grow on trees and are not developed in five minutes. Therefore, one can see, at least for a considerable number of years ahead, what aircraft at present in development or even in design will take their place in commercial traffic. One would be safe in making an assumption for the first five years, or for probably a longer period than that. If we make that assumption for the first five years, during which the world capacity will be doubled, then the point that I have tried to make is substantiated. The only point that I am trying to make is that there is a substantial gap between the position that this country's total air traffic should occupy and that which under any sort of assessment and estimate that can be made at this time one can see it occupying during the next five to ten years.
The second point is: what is the optimum size of any undertaking? Again, the hon. Member for Uxbridge (Mr. Beswick) would be right in saying that 714 this matter is again a matter of estimate. But in the pamphlet produced under Sir Miles Thomas's chairmanship, we find a graph for the size of output and the cost of operation. We find that the shape of that particular curve is one which descends rapidly and then flattens out completely. Wherever one takes the point at which it flattens out to a straight line, if one accepts the idea that that is the type and shape of a curve which occurs in operations of this kind one inevitably comes to the conclusion that there is an optimum at which at least the cost of operation cannot be reduced any further, no matter how far one goes.
§ Mr. H. Hynd
How does the hon. Member explain the success of companies like T.W.A. and Pan-American, which are much bigger than the British companies?
§ Mr. Paul Williams (Sunderland, South)
Would not the hon. Gentleman agree that figures are misleading in that the operations of different companies are totally different, and no comparison of any validity can be made?
§ Mr. Steward
I agree that there is a substantial argument in favour of that way of thinking, but, at the same time, anybody will accept the proposition that there is an optimum size for operation in any company of a given type.
§ Mr. Mikardo
Does the hon. Gentleman realise that it is one thing to say that there is an optimum size for an enterprise, but another thing to say that that optimum size is necessarily the point at which the unit cost ceases to follow. Many other criteria have to be taken into consideration in assessing optimum size.
§ Mr. Steward
I accept that. I started speaking about the point at which the costs levelled themselves out. I admit that the point at which costs would level out in any two companies is not necessarily the same. But I say without doubt that it is common experience that in any one company there is a point at which costs level out. No matter how far one increases—and I am taking the hon. Gentleman's point—
§ Mr. Steward
The moral is this. The point at which one increases beyond that 715 point will make no contribution whatever towards lowering the costs of operation. That is only the first argument in the question about the size of the company. I admit that one can go well beyond the point at which the costs level out and one can expand a company two, three or four times. But then one comes up against the question of the return which one will get within the framework of the overall capital expenditure. Once one comes to the point at which these costs have levelled out, one is not coming to a lower or diminishing return, but coming to a point at which there is no further additional return for increasing capital beyond a certain point.
§ Mr. Beswick
We want to follow the hon. Gentleman's argument. He is leading us into a most interesting sphere. Is his complaint that the companies have not expanded sufficiently, which was what we were rather beginning to understand, or are we to understand that they have expanded too much?
§ Mr. Steward
That is too naive. With due respect, what I have stated—clearly. I hope—is that as a country we have not expanded sufficiently, but there is a limitation placed upon expansion of any particular form. That is the theory I hope to put.
§ Mr. Steward
For several reasons. Hon. Gentlemen opposite, some of whom have a great deal of detailed knowledge on this subject, must be aware that there are a number of factors which have to be taken into account when one is making a comparison of that kind. There is no comparison between the two.
There is clearly a vast potential capacity which can be, and should be, enjoyed by this country over and above the contribution which we are at present making, both in capacity and traffic. I believe that there is the need today, above all things, for a complete investigation of the best way in which that can be achieved. At present, we are working 716 more under a system of regulation than by inquiring how the matter can be put on a different footing. If no other purpose is served by this debate than to inculcate a general desire for a commission to examine our present air effort against the background of world conditions, to consider the future and to evolve from that the very best system which would operate to the advantage of the only people with whom we should be concerned—the people of this country —then I believe that it will have served a useful purpose.
I have been subjected to a certain degree of criticism by people who, admittedly, know very much more about this matter than I do. But, on the other hand, I think that, generally, the British people accept that the independent operators have made a substantial contribution to the country's air effort, that they are here by the desire of those who are demanding a service in this country, and that people would like to see grow out of that in the future a natural partnership between the two national Corporations and the independents in which the country could itself play not only a great part, but a true part in the traffic of the world.
§ 11.5 a.m.
§ Dr. Reginald Bennett (Gosport and Fareham)
I beg to second the Motion.
My hon. Friend the Member for Stockport, South (Mr. H. Steward) has introduced his Motion sincerely and well, and I shall not detain the House long. I have watched this subject for many years, and as time has gone on I have welcomed all the first signs, as they might be described, of the beginning of co-operation between our national Corporations and the independent operators in civil aviation. In various parts of the world, new joint endeavours have been set up, and as an Englishman I certainly feel that that is the way we can best show our flag abroad rather than by carrying as it were, our sectional differences into the international field.
The achievements of the independent operators are on the record, and my hon. Friend has referred to many of them. Perhaps the first achievement to be mentioned today, which, unfortunately, was terminated in such a disastrous manner 717 yesterday, was the tremendous carrying feat for twelve years past by Silver City Airways without a casualty.
There are all the networks of the third-class services—the "Colonial Coach", the trooping and the inclusive tour services—which the independent operators have largely initiated and of which they have made a success. In doing so, one of their greatest achievements has been that they have brought aviation within the reach of entirely new populations. By bringing increasingly cheaper services into existence, which did not exist before and which, I believe, would not have existed now except by their agency, they have increased the flying population colossally and added not only to the country's prosperity, but added greatly to the knowledge of the world and brought pleasure and convenience to many people who would otherwise never have known it.
The independent operators have all along been operating on what might be called the crumbs from the rich man's table. They have done remarkably well considering the limitations under which they are bound. As an example of really enterprising work, I have only recently come to know of one example which appeals to me considerably. That is the later stages of what started as failure and has now been translated into success.
Many hon. Members will understand what I say when I refer to the "Tudor story". The Tudor aircraft was ordered originally for B.O.A.C. and was rejected and became a deadweight and a great loss to the taxpayer. It was then taken by British South American Airways and, after two of these aircraft had disappeared over the Atlantic, they were all grounded and withdrawn from service. If every type of which two have disappeared when in service had been grounded and withdrawn, there would be precious few American types flying about today, nor would there be the Comet. Then, this aircraft, which for a long time became a deadweight—scrap metal as it were, although many of the machines were only newly built or not even finished—was taken over by a company called Aviation Traders, whose dynamic force is a man well known to many of us in this House—the famous Freddy Laker.
718 These machines have been modified extensively in accordance with the requirements of the Air Registration Board. They have been put back into business and are today flying round the world carrying big, long-distance hauls to Australia, Christmas Island and such places. In hot competition within Europe, they have made £2 million in foreign currency for this country in five years, and they now have a full passenger certificate of airworthiness, years after the beginning of the story. This sticks out as one of the most conspicuous features of the enterprising manner in which the independent operators have forced their way ahead and done themselves and the country a very great deal of good.
As for the future, it seems understood that traffic will rise at something like 20 per cent. per annum as the years go on. This is an enormous amount, and I am quite convinced that if the country is to keep its share of the total at least stable, it is unlikely that all this increase can be absorbed by the nationalised Corporations alone. With all the best will in the world, I doubt whether they can themselves expand at the rate of 20 per cent. a year indefinitely and manage the whole lot.
That is why it is particularly important that the independent operators, whose services have been so well tried and found so good, should be allowed in the future to undertake a greater share of the traffic that will be available. In that, I am confirmed in my opinion by the well-informed Committee, to which my hon. Friend has referred, set up by the Air League, which contained people whose knowledge of the subject is absolute. I should like to quote these few lines from paragraph 8 of the Committee's Report:… the Committee feel strongly that these Corporations and any independent operators which may be authorised to operate scheduled services, should, while retaining their identities and operational autonomy, be integrated in so far as schedules, traffic and booking facilities and services for the convenience of the travelling public are concerned so as to present a united British front against international competition.That is what I regard as the punch-line of this whole debate. I want to see a united British front against international competition, and I commend the Motion to the House as being one which favours that set-up.
§ 11.57 a.m.
§ Group Captain C. A. B. Wilcock (Derby, North)
The House will be grateful to the hon. Member for Stockport. South (Mr. H. Steward) and the hon. Member for Gosport and Fareham (Dr. Bennett) for raising this very interesting subject, which is important to the House and very important indeed to the aircraft operators, whether the national Corporations or the independents.
At one time, I began to wonder whether the hon. Member for Stockport, South was directly interested. He did not make the suggestion, but he was at one stage speaking so much of Skyways—an excellent firm, of which I was one of the original directors—that I felt he must now be concerned with that undertaking.
§ Mr. Steward
Will the hon. and gallant Member allow me to make it quite clear that there was no necessity whatever, not even remotely, for me to express an interest?
§ Group Captain Wilcock
It is just as well that the hon. Member has made that clear. I should like to make it clear that I have an interest in aviation and in operating as an independent.
I should like first to express my very great regret at the tragic accident yesterday, which we all feel most sincerely, coming as it does after another unfortunate accident at Munich, and following also a very unfortunate train accident and all the other horrible accidents which are occurring on the roads. It seems to be a very bad period for accidents all round in every sphere of transport.
I am in a somewhat difficult position, being an operator and also favouring very much the Corporations, but I should like to say that the independent operator requires encouragement and assistance and does, in fact, get encouragement and assistance. I say that because I am talking now from the practical aspect as opposed to all the theory—and interesting theory—to which we have been listening for the last hour.
No independent operator today could operate without the good will he is receiving from the Ministry and from the Air Transport Advisory Council. That should be placed on record. There is no friction whatever, so far as I am aware, between the independent operators and 720 the Corporations. Of course, the independent operators would like more of the "cake". Obviously they would. The independent operator has put his own money and effort into his company, and he would like to get a bigger slice of the cake which is represented by the public who use air transport.
The Corporations have not only the task of flying the British flag and representing this great country throughout the world, but also they have to make a profit. I believe this to be a weakness. I say that knowing that I shall be followed in this debate by my hon. Friend the Member for Reading (Mr. Mikardo), who is an economist. But I have always felt that the primary object of the Corporations should not be to make a profit, and I have said that in this House before.
§ Sir Peter Macdonald (Isle of Wight)
Would the hon. and gallant Gentleman be quite happy if the Corporations always made a loss and never any profit at all?
§ Group Captain Wilcock
It is looking at the whole question too parochially to talk about profits in connection with this nationalised industry which had to start from scratch after the war and was faced, as it still is, with American competition and competition from K.L.M. and Air France, whose organisations were not broken to pieces by the war. Therefore, the profit motive should not be the primary aim, it should still be, rather development.
If hon. Members take this matter of profit seriously—and I know that a number of my hon. Friends on this side of the House do—then I think it would be possible to make a larger profit by integrating B.O.A.C. and B.E.A. Although originally a Labour Government set up two separate Corporations for very good reasons which existed in 1945, I am not sure that those reasons are valid today.
The independent operators have made a great contribution to aviation in the last few years. They have done so by the goodwill of the Corporations and of the Minister, and in particular of the Air Transport Advisory Council, which is regarded in the friendliest manner by independent operators. I say that in the knowledge that recently the Council has turned down several applications from my company to run services: so it will 721 be seen that I am paying the Council a genuine compliment. The Council is impartial and efficient, and anything which upsets that would be a grave matter for the industry.
Of course, the independent operators would like to do a lot of the work which the Corporations are doing and, on the other hand, would not like to do a lot of the work which the Corporations have to do. That is where uninformed criticism should be put right and an explanation made. We know that the Corporations fly services on which they could not make a profit—no operator could—but which it is in the national interest to be provided. We know also that the Corporations have "cream" services which the independent operators would like to take over. It would be ridiculous to suggest that that should occur and that independent operators should be granted licences to do what the Corporations are doing efficiently and to the public good. Beyond that we get the question of trooping—
§ Mr. Donald Chapman (Birmingham, Northfield)
Surely the hon. and gallant Member would agree that the independent operators are geting their share of the "cream," particularly regarding inclusive tour services, which represents a good deal of the "cream"?
§ Group Captain Wilcock
There is a great deal of difference between inclusive tour services and scheduled services. Inclusive tour services are started by the operators who take the risk and put in their own money and so on. It is open to anyone to do that. As a matter of fact, the Corporations have started doing the same thing, much to my regret. In this case, they have learned from the independent operators that there is money in inclusive tours. I should make clear that all these applications for inclusive tours must be considered by and receive the approval of the Ministry of Transport.
§ Mr. P. Williams
I have no fixed point of view about what the hon. and gallant Member has been saying about there being loss-making operations which the Corporations have to carry out as well as having the "cream" services. If this be so, is there not an argument that some of the "cream" and the loss-making operations might be shared between the 722 independent operators on the one side and the Corporations on the other?
§ Group Captain Wilcock
I do not consider that a valid argument. The hon. Gentleman is, presumably, talking about scheduled services started in 1945 by the Corporations, or resumed in that year. It would be unfair to take away the result of the Corporation's work. It would be indefensible to take their best services from them and share them out. The independent operators would take the same view were it suggested that the Corporations should take over certain scheduled services at present held and operated by independent operators. I hope the Minister is taking note of these words. The Ministry has never suggested that course, but a threat which is always hanging over the heads of independent operators is that after many years of developing a service the independent operator may lose it to a public corporation. That would be bad, and a statement from the Minister on the matter would be appreciated and valuable.
The question of trooping has not been mentioned, and I should like to refer to it. I shall probably get into a lot of trouble from my colleagues on this side of the House in doing so. I believe that trooping is a matter for Transport Command of the Royal Air Force. The Command should have a big enough and strong enough fleet of aircraft to carry out trooping operations, which would mean that it would also have a big and strong enough fleet to be used for conveying armed forces round the world to put out the "fires" we are always hearing about. When I was in Transport Command during the war, trooping was undertaken by the R.A.F. We know that Transport Command is to be given aircraft for these tasks, so the position should be satisfactory in a few years' time. Meanwhile, however, I do not consider the nationalised Corporations should do the work. I do not think they should move our troops or Service families. That is a useful task for the independent operators. I wish to make myself quite clear by repeating that I should like to see Transport Command doing the job, but that if it cannot do the job then I do not want to see the nationalised Corporations used solely in order that a little more profit should be made. Let 723 the independent operators have that job as a temporary measure. My company does not do trooping, so I can make this recommendation with my hand on my heart.
Turning to another question, the provision of new aircraft is a grave problem to the independent operators, and that is something about which the Government and the Ministry could help. The price of an aircraft is similar to that of a factory. It can be £250,000 if one is buying a Viscount, and for the type of aircraft which my company is buying, the Handley Page Herald, the price is getting on for £175,000. We are therefore talking about sums of money which represent the price of a factory. There is an element of gamble in laying out these large amounts, a risk not encountered in a factory or works. I think the risk might be shared by the Government, because it is in the interests of Britain and certainly of the aircraft industry that we should have new aircraft. I think we might have a little more sympathetic consideration from the Government on the question of aircraft requirements of the independent operators. It is not beyond the ingenuity of the Ministry to work out a plan by which the independent operators can be helped, either by having aircraft loaned or by receiving assistance to purchase aircraft.
In conclusion, Mr. Speaker, I think I am right in expressing the view that the independent operators—and I run a company which is one of the oldest in the—business are satisfied with the system, which was started under the Labour Government, whereby the independent operators could be granted certain scheduled services. The principle has been extended, and it is being fairly and reasonably applied by the Air Transport Advisory Council.
The independent operators are not pessimistic about the future. They know very well that they can handle their share of the increase in passenger flying and in freight traffic which is anticipated. There is no friction between them and the Corporations. They would like more profitable scheduled services, of course, but they will exist without them. They would like trooping to continue, as I hope it will, until Transport Command can do it, and they would also like to be assisted 724 in the purchase of aircraft. If all that could be done, what would we have achieved?
§ Mr. A. E. Hunter (Feltham)
Will my hon. and gallant Friend allow me? Would he not agree that the independent operators get the benefit of a lot of research and development work which is done by the airline Corporations?
§ Group Captain Wilcock
Yes; of course, they do. The independent operator has leaned upon the Corporations, and been greatly helped by the various Ministries and the aircraft industry, but there is no earthly reason why this should not be so. We are all the same people and the same country.
That brings me to my final point. It is the British flag that we want to see flying round the world. I want to see it flying, whether it is on the aircraft of B.O.A.C. and B.E.A., or those of the independent operators.
Irrespective of certain criticisms or comments in the papers, not only of the independent operators but also of the Corporations, on the question of the maintenance of aircraft—obviously written by some people who do not apparently understand that no aeroplane flies in the skies until it has been passed out by efficient, highly-skilled and highly-paid mechanics—notwithstanding that type of criticism, I believe that it is now generally recognised that flying with the Corporations and independent companies is the best flying in the world, and I speak as one who has done his share of flying. B.O.A.C. and B.E.A. stand above every other airline corporation in the world, and the independent operators are following that lead.
I believe that what we need now is that the independent operators should be further encouraged and that the Corporations should go on as they have been doing in assisting and helping them, so that we shall win for Great Britain in the future the same kind of reputation in the air as she has enjoyed for so long in the past on the seas. That is our desire and our mission in civil aviation.
§ 12.14 p.m.
§ Mr. John Hobson (Warwick and Leamington)
In this debate, I speak as an amateur who does not have the advantage, which so many hon. Members 725 of this House have, of detailed knowledge of the air industry, of the Corporations and of the independent companies. I shall, therefore, detain the House for only a short time, but I should like to examine the position of air freight and air freight traffic, to which reference is made in the second part of the Motion before us. The Motion says that the… the potential future growth of world air traffic gives scope for an accelerated expansion in association with or complementary to that of the national corporations.My interest in the expansion and growth of air freight traffic in the future lies in the fact that within my constituency there is one of the companies which is now endeavouring to develop a new air freight traffic.
Before I come to deal with this point, however, I should like to add my sympathy to that which has been expressed by all hon. Members who have spoken already with the relatives of those who were killed and injured in the tragic crash yesterday, and to express to them, on behalf of the whole of the House, our understanding of their sorrow in their loss. I should also like to say to the country as a whole that, despite this disaster, air travel still remains safe to a remarkable degree, in view of the figures.
The freight side of air traffic is one which is likely to become increasingly important in the immediate future. There is every prospect of a vast expansion in that side of air traffic, but it has received little attention in the course of debates in this House, either today or in the debate which was held on 27th January. There has been a threefold growth in air freight traffic in the last ten years, and it is now estimated on good authority that in the next ten years there will be further expansion, so that by 1967 the world freight ton-miles will have reached the colossal figure of 11 billion. It is in relation to our development and our capacity to take some part of that traffic that I should like to devote my remarks.
I hope that the airlift for freight will be no longer regarded as merely an emergency operation, but will become part of the commercial development of this country and part of our world-wide trade and prosperity. I think that we have to raise our sights and try to expand that side of our transport business to the maximum extent, using both the Corporations 726 and the independent companies, and, as the hon. and gallant Member for Derby, North (Group Captain Wilcock) has just said, let them play their respective parts in conjunction, so that the country as a whole has the benefit of satisfactory and expanding air services. I am sure that it is right that in an expanding market the independent companies should themselves be allowed to play an important part.
Many of the independent companies are, of course, at present financed, backed and organised by the shipping companies, which can bring their own experience of that particular type of traffic and trade to the expansion of our air freight transport throughout the world. The two Corporations are already heavily committed to the expansion of passenger traffic, and obviously require the assistance of, and to work in conjunction with, the independent companies.
In respect of this sort of specialised traffic, which is comparable to the specialised road transport lorry traffic, it has been shown, in my view, that where road transport is concerned, the independent and small operators can best cater for the specialised type of traffic requiring individual journeys and specialised treatment for people who desire to purchase and use particular types of plant.
There are, in my view, three reasons why it is vital that we should endeavour to expand the freight side of air transport. The first is that it has a very vital part to play in opening up and developing trade with the underdeveloped countries of the world. After all, the course of trade, commerce and the development of industry has followed, and must always follow, the existing trade routes. In this country, the development of traffic began with the advent of the canal in the eighteenth century, which played a large part in the development of our industries, their siting and trade routes. It was followed by the development of the railways, which also played a substantial part in our industrialisation and in the pattern of trade within Europe and throughout the world, and the development of shipping lines further assisted in that direction.
There are in Africa, Australia and the Far East areas in which it would be impracticable to develop trade on any scale at all except by air, because the physical 727 and geographical features are such that road and rail transport is not practicable for any substantial development of trade. Therefore, for that as a first reason, I ask the Ministry to do all it can to assist in developing the freight side of the British air transport industry.
There is a second and almost more important reason why it is vital for the country to develop the freight side of the aircraft industry, and that is the strategic reason. Upon this I join issue with the hon. and gallant Member for Derby, North in his view that the solution of the strategic problem is merely to provide Transport Command with sufficient aircraft.
I concede that Transport Command ought to have under its control sufficient aircraft for tactical requirements so that an Army in the field can meet its ordinary necessities. We all know that in September, 1944, it was much more convenient to supply our forces in Belgium when they were moving towards the frontier by aircraft from this country than by lorries from the beaches of Normandy. That is a use of freight capacity which it is necessary should remain under Transport Command.
But in our history the use of our sea power to move our forces strategically, and not only personnel but stores and equipment and all other necessities of an Army, has always had to depend upon the commercial and merchant shipping which has been at the service of the country. The real aim of the Royal Navy part of our sea power in our strategy has been to make it possible for our commercial ships to continue to carry the trade of the country and to carry our forces to the places where they are required.
§ Group Captain Wilcock
Is not the hon. and learned Member confusing two things—peacetime operation and wartime operation? The Mercantile Marine, of course, assists the Navy in time of war, but we are now talking about peacetime and I submit that in peacetime Transport Command should handle the job. In war, all forms of transport will be commandeered, just as B.O.A.C., then Imperial Airways, was commandeered in the last war.
§ Mr. Hobson
That is so, of course, but with the idea of a central reserve in this country, as the new strategy is developed, it is essential, in order to move forces and equipment about the world in time of war, to have a sufficient air fleet to meet that requirement. It would be utterly wasteful for Transport Command to provide that fleet in time of peace, because it would not have a particular use and would be kept in storage with a few training flights. This country needs a large and efficient air fleet, capable of moving not only large numbers of personnel, but also large quantities of stores. Without that, in the event of war we would be in an exceedingly dangerous position, because we would lack the air freight power to make our strategic reserve anything more than a mere police force which was carrying some rifles with it.
I say, therefore, that from the strategic point of view it is vital that our commercial freight air fleet must be developed. In times of peace it can be used profitably, and in times of war it will be available for the necessity of moving the strategic reserve round the world and keeping it supplied. That is why I put forward this strategic conception as a second ground for saying that it is vital that the air power of commercial transport in this country should be expanded to the greatest possible extent.
The third reason why I ask the Ministry to take all steps to encourage both the Corporations and the independent companies to expand the freighter part of the transport services is the possible advent of the European Free Trade Area in which, if it comes, the rest of the Continent of Europe will be able, as between itself, to deliver within the European Free Trade Area goods by lorry from door to door but we, without a proper air freight service, will have to undergo the difficulties and disadvantages of the transhipment of goods across the Channel in either direction.
I emphasise, for these three reasons, what I respectfully suggest has received far too little attention hitherto—the difficulties and problems of expanding the freight side of our commercial aviation. For all these three purposes and reasons we need a pure all-cargo aircraft which is not at present in existence. It requires 729 simplicity and ease of loading, and no doubt a ramp at nose and tail, and the ability to be used in all conditions and in all parts of the world, with sufficient range and lift for ordinary commercial purposes.
I hope that the Government will do everything they can to encourage the production of such an aircraft and see that it is soon brought into commercial use in the most advantageous way possible. I have already mentioned that Armstrong-Whitworth, which is located within my division, has projects for this purpose, and there may be others. I can only ask that the Government will see that the best is produced as quickly as possible, and I hope that it will be found that Armstrong-Whitworth has produced the answer and that it will do much to further the freight side of air transport in this country.
Hon. Members may have seen the remarkable supplement to the Manchester Guardian on 25th February, in which some of the advantages of air freight for commercial purposes are set out and a small part of the history of the recent development of such freight is discussed and emphasised. The advantages of air freight, of course, are fairly obvious, but are often forgotten. It provides speed of transport. It provides the saving of transhipment where water must be crossed. It provides saving from rough handling compared with shipment by sea or by air. It reduces very greatly the opportunities for pilferage. It reduces packing requirements, and allows certain types of goods to be put in the lightest possible kind of packing and transported quickly round the world. In pressurised cabins it reduces the problems of humidity and atmospheric conditions which cannot be overcome in other forms of transport.
The article in the Manchester Guardian pointed out that for many types of goods it provides a service which, in the long run, is cheaper than traditional methods, not only because of speed but because of reduction in the weight of packing, because of ease of handling and for many other reasons. It can provide and is providing a cheaper service, though most people do not yet realise it.
The goods which are now being carried by air—and I am sure that the variety will grow—include chemicals and 730 drugs, delicate machinery of all sorts, light machinery particularly, textile machinery, and spare parts, especially for motor cars. Coming as I do from a division in the Midlands, I regard the last named, of course, as of the greatest importance. It has been shown in Africa that motor dealers, instead of having to carry an eight-months' supply of spares for all sorts of vehicles and locking up enormous quantities of capital, can now order their spares on short-term from the car factories of the Midlands. This greatly increases the efficiency of the maintenance service and results in a much cheaper service by the reduction of the capital that has to be locked up.
§ Group Captain Wilcock
The hon. and learned Gentleman is kind to give way. He is talking a great deal of sense on this subject and I hope that he will send a copy of his speech to the motor manufacturers and to the Manchester businessmen, because everything he is saying is right. These very aircraft facilities exist today and these very gentlemen are not taking advantage of them.
§ Mr. Hobson
I am much obliged to the hon. and gallant Gentleman for that comment. I do not usually distribute my speeches, but I hope, nevertheless, that this one will be read.
Apart from those mentioned, there are other dealers who have already discovered the advantages of air freight transport. Valuable light goods, of course, go in quantities, and silver, jewellery and bullion, also electrical machinery and electrical equipment of all types. Even motor cars are sent in this way, and expensive race-horses, bulls and other livestock travel round the world by air. All these have led in their individual ways to the possibilities of expanding exports and prosperity for this country.
In view of that list, I ask the Minister to consider the development of Elmdon Airport, near Birmingham, as a freight airport. We know that London Airport is likely to deal with 13 million passengers in the next few years, and that this will mean colossal pressure on the existing facilities within the London area. If Elmdon can be developed as a freight airport on a long-term basis, it is within 50 miles of practically all the factories 731 which produce the goods I have listed, and it would also be a convenience to the manufacturers of the West Riding, Manchester and Liverpool, since it lies in the commercial heart of the country.
As an amateur in these matters, I fear that I have detained the House too long on this subject. I felt it was necessary to draw the attention of the House to the question of the expansion of the freight side of our air services. From that point of view, I welcome the second part of the Motion, namely:… that the potential future growth of world air traffic gives scope for an accelerated expansion in association with or complementary to that of the national corporations.
§ Mr. Speaker
I am of the opinion that if the Amendment standing in the name of the hon. Member for Reading (Mr. Mikardo) were proposed now, it would unduly restrict the debate. I understand from the hon. Member for Stockport, South (Mr. H. Steward), who moved the Motion, that there is no difference of opinion about the Amendment. He is prepared to accept it and, that being the case. I will call upon the hon. Member for Reading now not to move his Amendment, though the consideration which it urges is relevant to the general question. If it is agreed, his Amendment could be moved at the end of the debate, incorporated in the Motion, and the amended Motion put to the House.
§ 12.34 p.m.
§ Mr. Ian Mikardo (Reading)
As often, Mr. Speaker, we are much in your debt for giving us a Ruling enabling us to have the best possible debate, and yet succeeding in achieving what we all want to achieve. It would be a great pity if, in debating this subject today, we were not able to range over the wide limits set down in the Motion moved by the hon. Gentleman the Member for Stockport. South (Mr. H. Steward).
I think that all hon. Members will be grateful to the hon. Gentleman for having chosen to raise a discussion on this Motion, which is felicitously worded in the most uncontroversial and constructive way, in order to enable us to cover the subject with a minimum of heat and a maximum of light. I am glad, too, that we have in the hon. and learned Gentleman the Member for Warwick and Leamington (Mr. John Hobson) a new 732 recruit to the comparatively small number of hon. Members who, hitherto, have carried the burden of debates on civil aviation. If I may be allowed to say so, I hope that his intervention today was not an isolated one and that we shall be hearing again from him on this subject.
I agree with all that the hon. and learned Gentleman said about the possibility and the desirability of an enormous expansion in air freight traffic, and I share the hope that the Joint Parliamentary Secretary, who was listening to him, will see that the Ministry does whatever it can in facilitating an expansion of that traffic. On that subject, I want to make one suggestion to the Parliamentary Secretary. It is that he should talk with his right hon. Friend the Chancellor of the Exchequer about the procedures for clearing things through Customs in airports. They really are antiquated and they slow up the process.
I am sure that the hon. and learned Gentleman will agree with me that it is silly, if one knocks three days off the transit time of a parcel through sending it by air instead of by surface, to take four days to get the darned thing through Customs in the airport. I beg the House to believe that this is not an exaggeration. Many a weary hour have I spent in airports getting things through the enormous formalities. I know that the operators are very concerned about this and about the contacts between their staffs engaged on freight and the Customs and Excise. I know the Parliamentary Secretary is interested in this point, and I beg him to go to London Airport one day incognito and see what it is like to get a parcel through Customs in a hurry.
We welcome, too, the intervention of the hon. Member for Stockport, South in this subject. I am only sorry that on his first venture into the question of civil aviation he should have taken as his brief that superficial, slight, insubstantial report prepared by the Committee of the Air League. It is full of hasty and ill-considered judgments, based on insufficient thought and research. Apart from that, it is reasonably all right.
I admire Sir Miles Thomas for many things. I have known him many years and he is a man I admire very much, but there is nothing about him I admire so much as his cheek in producing that 733 report. He said, on the figures quoted by the hon. Gentleman, that from 1951 to 1956 Britain did badly in the air and that our share of air traffic went down. Then he went on to say that this was not the fault of British European Airways, because its share went up magnificently. Then he said that it was not the fault of the independent operators, because they did well.
So whose fault was it? The answer is that it can only be B.O.A.C.'s. Who was chairman of B.O.A.C. during that period? Sir Miles Thomas. I have not seen any other case in which a man went to a lot of trouble to get together a committee, which he chaired, to produce a document incriminating himself to the worst possible extent.
The figures which the hon. Gentleman quoted are an example of superficiality and the kind of judgments which are made on this topic. The hon. Gentleman was good enough to concede the two points which I put to him during an intervention. The first was that the figures on which these judgments about the share of British traffic are based are not about traffic, but about capacity. Secondly, they are not about international capacity, but are distorted by the growth of internal traffic and internal capacity in the U.S.A.
That is not the only factor which distorts the figures as a mirror of the change in our share of traffic. Both Corporations adopt as a policy the idea of taking shareholdings in companies which operate in different parts of the world—sometimes controlling shareholdings, sometimes fifty-fifty, sometimes minority holdings. Every time they take a holding in a company registered in another country and deliberately pass over some of their traffic to that subsidiary registered in another country, on paper a percentage of our traffic disappears and goes to the other country, whereas we have, in fact, lost nothing at all.
We have made a sensible commercial judgment to operate the traffic through a subsidiary, which is justified on its merits, but it distorts the figures, and if one uses the figures without taking that sort of factor into account one gets a very silly answer. Take a very recent example, that of Ghana. Until Ghana became independent, traffic to and from Ghana 734 would come into the figures as British traffic. Some part of the figures will now be shown as Ghana traffic, and to that extent our percentage will be reduced. All these factors ought to have been taken into account in making judgments about the figures.
Nothing is more superficial in that highly superficial document than the long passage where it talks about the optimum size of an enterprise. Evaluating the optimum size of an enterprise is a highly technical subject and cannot be dealt with by slapdash judgments such as the Miles Thomas Committee used. In particular, all it has set out to do is to try to show, without making any of the reservations for differences in type which were rightly pointed out by the hon. Member for Sunderland, South (Mr. P. Williams), that when a growing air operator gets to a certain point the cost of his operations per unit ceases to decrease.
That happens with almost every enterprise in the world. It happens with a manufacturing enterprise. Suppose one is making bars of soap. Starting with one bar, the cost per bar is high. It is less for ten bars, still less for 1,000, and still less for 1 million; but the cost may be the same per bar when the total is 2 million as when it is 1 million. Nevertheless, that does not stop a company which is making 1 million bars of soap a year from trying to make 2 million bars. The unit profit and the unit cost may be the same, but one makes twice as much profit by making 2 million instead of 1 million.
Sir Miles Thomas has left the sphere of civil aviation to run a large, famous, very efficient, excellent chemical manufacturing company which tries all the time to increase its size and to increase the output of its products; and it is not deterred from increasing its output by the fact that after a certain point it makes only the same amount and not an increasing amount of profit on each unit. Why Sir Miles should seek to apply to B.O.A.C. what he does not apply to Monsanto Chemicals I cannot imagine.
Of course, one cannot use the change in unit profitability as size increases as the only criterion of optimum size. Very many other factors have to be taken into account. But what a ridiculous situation we get into if we accept the argument of 735 Sir Miles Thomas and the hon. Member for Stockport, South. Let us look at it this way. Suppose that one produces 100 units at a cost of £6 each, that 150 will cost £5 each, that 200 will cost £4 each, and that the unit cost then never drops, so that if 250 are produced the cost will still be £4 each. What is said by Sir Miles Thomas and the hon. Member is that where one gets to 250 and the unit cost is not dropping any more, one should split it up and have two sections each producing 125—which means that the unit cost will then go up to more than £5. That sort of argument would be silly.
Even if Sir Miles Thomas and the hon. Member were right, and one could use the failure to decrease unit costs as size rose as an argument for saying that one should have more enterprises of smaller size rather than fewer larger-sized ones, it does not follow that the additional enterprises have to be independent operators. That is not a case for independent operation. When one makes out a case for more separate operators, one is not, ipso facto, making out a case for more independent operators. We now have two Corporations; we once had three. My hon. and gallant Friend the Member for Derby, North (Group Captain Wilcock) was thinking in terms of one corporation. There is no reason why we should not have five, six, seven or eight corporations.
It is the same sort of problem as we have sometimes discussed in relation to broadcasting. There are some people, including some hon. Members on both sides of the House, who think there is a case for maintaining at least the greater part of broadcasting in public hands but having a larger number of smaller corporations instead of one very large one. So the case for increasing the number of private operators is not made merely by the argument about optimum size even if the argument were valid, which, goodness knows, it is not.
When we last debated this subject I said that it is the view of hon. Members on this side that there is in this industry a place for both a public sector and a private sector. I do not think there is anyone in the House who takes the extreme view that all civil aviation should be run under private ownership or that 736 it should all be run under public corporations. I think we all share the view that, if we have a private sector and a public sector, much the best thing is that they should not be scratching each other's eyes out all the time but that there should be some integration and friendly co-operation. I was very pleased to hear, consequently, that my very minor Amendment, which will be moved formally later, is acceptable to the hon. Member for Stockport, South, because we are agreed about these things.
It seems to me that the independent operators can justify their existence, can justify an increased and improved existence and can justify the claims which they make for co-operation from both the Ministry and the Corporations only if they maintain proper standards and a proper code of conduct. In my judgment, such a code of conduct has three clauses. I believe, first, that private companies have to take into account in considering their operations the national interest as well as their own profit and loss account, and that it is that which should induce them to establish the best possible relations with the public corporations.
I said in our last debate, perhaps rather glibly in throwing out a phrase, that I do not like the public companies which mistake buccaneering for enterprise. Perhaps that is a phrase which ought either not to be used or, if used, ought to be explained a little further. The hon. Member for Stockport, South spoke of a natural partnership between the public and private sectors of industry. Some of the independent companies who share the view of the hon. Member do what they can—and it takes two to make a bargain—to find a natural partnership with one or both of the public corporations.
However, there are some independent operators who take a quite different line and who say that they will grab all that is going while the going is good and will make hay while the sun shines, whether they tread on the toes of the Corporations or not, or whether they tread on the toes of other independent operators or not. That is what I meant by describing some companies not as enterprises—I have nothing against enterprise—but as buccaneers.
One example of that is that the Air Transport Advisory Council has had to complain about the enormous number 737 of applications from independent operators to operate certain routes which are never proceeded with. Sometimes the applications are put in and never pressed to the point of hearing, and sometimes they are pressed to the point of hearing, but even if the licence is granted, the private operator concerned never flies the route.
I understand that the number of licences granted and never used is about 100 per annum, leaving aside all those applications which never reach that stage. The Air Transport Advisory Council has understandably complained about that, because it has to do a great deal of work which never comes to fruition and operators who apply in that way make a fool of the Council. If the Council is asked to give a judgment on whether an operator should run a service from A to B when the operator has no intention of running a service from A to B and intends only to stop somebody else operating a service from A to B, the council has to go to a great deal of trouble to make that judgment and is being badly treated if it is unnecessary.
Although, in some cases, the results of the work of the A.T.A.C. have had a very bad effect on British civil aviation, that is not because of the way the council does it work. It is because of the directive given by the Minister. Within the framework of its directive, the A.T.A.C. does its work extremely well and plays the game fairly and immaculately within the rules of the game, but the rules of the game are wrong.
When, in our last debate on this subject, I made some criticism of the independent operators, some indignation was expressed from the other side of the House that I was attacking the A.T.A.C. To stop that story, I must say that nobody on this side of the House is behind any hon. Member opposite in admiration for the way the A.T.A.C. does its work. We think that the rules of the game are wrong and some hon. Members opposite do not.
§ Group Captain Wilcock
My hon. Friend has made a very important point about independent operators applying for licences which they have no intention of using. He must know that it takes some time to get an application through. For example, if my company applied for a 738 licence now, it might take two, three or four months before the licence came through and it would then be too late to operate this season—and, of course, we operate in seasons—and it would, therefore, be a year or so before that licence was used. I wanted to make that point so that there would not be any misunderstanding.
§ Mr. Mikardo
I am aware of that, but there have been occasions when the licence, once granted, has not been used for the season in which it was granted or for a number of seasons afterwards. I am aware and the A.T.A.C. is aware of that point, but the A.T.A.C. has complained clearly because it considers, although too gentlemanly to use the term, that frivolous applications have been made.
To consider the effect of this procedure, I ask the House to consider B.E.A. running its great Continental network and building up its service and the demand for its service. For example, there might be a service between a provincial city in Great Britain and a city on the Continent. If B.E.A. were thinking of running a service between Glasgow and Düsseldorf, for example, how is demand built up and how is it calculated at what point a direct service can be run?
First, a service is run Glasgow—London, London—Dusseldorf, and very careful note is taken of how many people get off the Glasgow plane and on to the Düsseldorf plane. At a certain stage, as the traffic builds up, it is decided to take a crack at flying direct Glasgow—Düsseldorf, because the gain on the direct run will more than offset the loss on the Glasgow—London trip.
The point at which that decision is taken is a very tricky commercial judgment. However, while B.E.A. is doing that and closely watching the traffic build up, suppose that it suddenly gets information or a hunch that an independent operator will apply for the licence Glasgow—Düsseldorf. The Corporation decides that it must apply and get its application in, or be sunk altogether. The Corporation decides to apply quickly, even though the moment is not right and the service immature. It gets the licence and starts to run the service on very low load factors, which means that the Corporation loses some traffic on the Glasgow—London route and also runs at 739 a loss, because the low factor is too low, on the Glasgow—Düsseldorf route. In such a situation, the Corporation loses money—and let us remember that it is public money—by the mere threat of an application from a private company.
These things do happen and the example I have given is not merely theoretical. I can give the House other examples. At present, the Manchester-Hamburg-Copenhagen route is being flown by a private company which began in that way to take a good deal of traffic from B.E.A.'s Manchester-London-Hamburg-Copenhagen route. The result is that, although the private company has changed from Vikings to Viscounts, it is operating on a load factor of not much more than 20 per cent., which means that it must be losing money. Money is lost on Vikings with a 20 per cent. load factor, but on Viscounts the loss with such a load factor is absolutely enormous.
There are cases worse than that, cases which I would call "dog-in-the-manger" cases. I do not want to use exaggerated language, nor be unkind to anybody, but the expression describes what I mean. There are "dog-in-the-manger" cases in which a private operator gets a licence, keeps the Corporation out and then does not fly the route. I quote two examples of that. In 1956, a private operator was granted a licence to fly from Birmingham to Palma. He could not fly in that season, and he has not flown it yet, and there is no service from Birmingham to Palma. People in Birmingham who want to fly to Palma, or send freight by air, have to fly to London and get an aircraft from London to Palma.
British European Airways operates a service, Manchester-London-Palma. Would not the most sensible thing be for the plane flying from Manchester to land at Birmingham, pick up the Birmingham traffic and go on from there? However, it is not allowed to do so and the reason is that an independent operator has the monopoly for the Birmingham-Palma route and is not exercising the monopoly. That is what I mean by "dog-in-the-manger" cases.
It may be that one day this private operator will start operating a Birmingham-Palma service. What will happen when he does? He will fly half empty 740 from Birmingham to Palma, while B.E.A. will fly not very heavily loaded, Manchester-London-Palma, and for all but 100 miles of the journey the two aircraft might be flying side by side, each grossly underloaded, instead of one fully loaded and making money, instead of the private operator losing some of his money while the Corporation loses some of the State's money.
I am making some weighty accusations which should not be made unless they can be substantiated. Let me give the second example, the Manchester-Nice route. On this run both British European Airways and a private operator applied for the licence about the same time. The A.T.A.C., for reasons which, no doubt, it thought were good—and I make no criticism of that—decided, between the two applications, that the private operator should be awarded the licence. So far, so good. The next stage was to clear this with the foreign Government in the other country. When this was put to the French authorities, however, they would not clear this particular private operator for that service; they would not give him the right to fly. This has nothing to do with the British Government or the Corporation. It is purely a matter for the French Government, and they would not license this private operator to fly into Nice from Manchester.
At present, therefore, there is no Manchester-Nice service. British European Airways re-applied, as there was a vacancy, but the Air Transport Advisory Council had to turn the application down because the licence had already been given to a private operator, even though it was known that this private operator could never fly the route because of the views of the French Government. The one British operator whom the French Government will let in cannot get the licence from the A.T.A.C., because it has been given to a British operator whom the French Government will not let in.
There is, however, an aircraft which flies Manchester-Nice. It may fill up in Manchester with 40 people; it may have every seat occupied, all the passengers going to Nice. They do not want to go anywhere else and they have no interest in stopping anywhere else, because they want to get to Nice as quickly as possible, 741 for whatever purposes people want to go to Nice these days. They have no interest in stopping and there is no reason that the aircraft should stop, except for the operators' purposes, such as refuelling.
Nevertheless that aeroplane, with 40 passengers from Manchester, has to land in London and has to take off again from London, otherwise it would be violating the licence given to a private operator—a licence which the private operator is not working. It costs money to land an aircraft and to take it up again, and all that money is having to be wasted merely because the private operator is a dog barking in a manger and will not let anyone else in.
§ Sir Peter Macdonald (Isle of Wight)
This is a very serious matter. Surely the difficulty could be overcome by introducing a clause into the contract given to the private operator to the effect that if he could not or did not operate the service he should not keep the licence.
§ Mr. Mikardo
I fully agree with the hon. Member that an amendment to the directive given to the Air Transport Advisory Council would meet the point in the way he explained, and I hope that the Parliamentary Secretary will consider whether the directive ought not to be amended in that sense.
§ Mr. Chapman
Would my hon. Friend explain further? I know of some of the examples which he has given, but I am not clear whether the trouble has emerged from the practice of the A.T.A.C. or from the directive, the terms of reference from the Minister. Could he tell me where the rigidity has occurred?
§ Mr. Mikardo
There is no doubt that the rigidity arises entirely from the terms of reference. The A.T.A.C. is a body of sensible and practical men who, I have no doubt, chafe against these idiocies and anomalies, but are powerless to deal with them because of the directive which they have been given.
I think that the House will agree that the examples which I have given are rather serious, but they are not nearly as bad as other cases where a private enterprise dog barking in the manger keeps out the British Corporations and lets in a foreign competitor. The hon. 742 Member for Gosport and Fareham (Dr. Bennett) quoted a passage from a document which said, "We should show a united British front to foreign competition", or words to that effect. That is a sentiment which I think we all share, but it is not showing much of a united front if, through the operation of this sort of arrangement which I have been describing, an independent operator stops one of the British Corporations from operating but lets in a foreign competitor. There are such cases, and I should like to quote two examples.
The first is the route Manchester-Frankfurt-Düsseldorf. A private operator applied for the licence to fly the route and the Air Transport Advisory Council gave him the licence. Under international agreement that action by the A.T.A.C. of giving him a licence automatically created a reciprocal right for the West Germans to fly here, and, in fact, Deutsche Lufthansa got on with the job at once of starting to run a service Düsseldorf-Frankfurt-Manchester long before the British private operator who had the licence ever got around to starting the service. The Germants got in first and, having done so, did it very much to the detriment of the B.E.A. service Manchester-London-Frankfurt-Düsseldorf.
That is why the Amendment on the Order Paper is not academic. That is a case in which the granting of a licence to an operator who did not subsequently work it advantaged a Germany company to the detriment of British European Airways. That is not showing a united British front to the world.
May I give a second example? If hon. Members look at the back of the British European Airways timetable they will find that there is a twice-weekly freight service between London and Stuttgart, but no passenger service. Stuttgart is an important place. It is an area in which the traffic potential is growing, and so far it is an area which is not very well served by air. It is a place where some business could be done. Nevertheless, hon. Members will find that although there is a twice-weekly freight service, there is no passenger service. The only passenger service between Stuttgart and London is operated by Deutsche Lufthansa. British European Airways cannot fly it because a private operator 743 holds the licence. The private operator is not flying the route, but Deutsche Lufthansa is. What could be more dog-in-the-manger than that?
In considering these things we have to remember that, quite apart from the other benefits which the private operators get through the Air Transport Advisory Council, they are protected against competition from the Corporations in some very profitable fields which have already been mentioned, such as Colonial Coach Services and trooping. I have considered the trooping question rather closely. One cannot get all the information, because the Government do not disclose what price they pay, but sometimes one can get to know something about these matters from sources which are not altogether official. I make bold to say that I have no doubt at all, on the information which I have received, that the Corporations could do the trooping more cheaply than the rates which the Government are now paying. Moreover, they could do it in better aircraft, therefore providing more comfort and a better service than the troops and their families now have when they are being moved around.
The money which is given to the independent operators by the Government for trooping, over and above the price which the Corporations could quote, is a direct subsidy of public money to the independent operators. I repeat something which I and many of my hon. Friends have said many times in the House before in these debates on civil aviation: it ill becomes people who are talking about the advantages of competition to rest upon the removal of competition from the Corporations by statutory action—by the Government—in some of their most profitable businesses.
I have given the first of the three clauses in my code of conduct for private operators. Happily, I shall not have to take so long to explain the other two. The second is that they must be as good employers as the Corporations. Not a single independent operator in this country has a pensions scheme as good as the Corporations' pensions scheme, and many of the private operators are resisting any claims for improvement in their pensions schemes. Some of them—by no means all, I am happy to say— 744 have a history of very bad labour relations. Two or three of them have spent a lot of their time and effort trying to find ways of evading the obligations in respect of wages and working conditions which are laid upon them by Act of Parliament. As long as that goes on we shall have to look a little sideways at some of their claims for good treatment from the Government, let alone preferential treatment.
The third clause in the code of conduct is that they must keep up the same standards of operation and maintenance as do the Corporations because, of course, it is on maintenance as well as operation that the safety factor depends. We know that accidents happen in even the most excellently run operating organisation, both public and private. Whatever care is taken, there is always a marginal factor of human error—and, sometimes, just thundering bad luck, not even arising out of human error. That means that we can never have anything absolutely accident free, but we do our best to achieve that ideal even if we know that we will never reach it.
I do not want to say anything, especially now, to exacerbate any feelings—none of us does—so I will not go beyond saying that for a long time I have felt that some of the independent operators, whilst carrying out the statutory rules laid down by the Air Registration Board, do not break their necks to go beyond the minimum required. I believe that, in this matter, the minimum is not good enough, and that we should always be trying to improve on it.
We had this week a report from the Society of Licensed Aircraft Engineers on this subject. I do not want to comment on that report in detail, as it requires a great deal of study. I have no doubt that the Air Registration Board is studying it very hard, that the Parliamentary Secretary and the Ministry are studying it very hard, and I have no doubt that all the operators, both public and private, are doing the same. I know that the trade union side of the National Joint Council for Civil Air Transport will have a very close look at it. It will only be when we have carefully studied it that any of us will be able to speak on it with authority.
745 That report criticises, and severely criticises, the approved inspection organisations of a number of unnamed operators—the operators are not known. It then goes on to praise the approved inspection organisations of the two Corporations. It therefore seems to be a reasonable inference that those whom the report criticises are not the public Corporations, but the independent operators. That is something that should be looked at.
That is my triple code of conduct, and I am delighted to say that some of the independent operators are coming very near indeed to honouring it. Those operators, and any others who want to join them, should get encouragement from any Government, of whatever political colour. Those that are not only not honouring it, but not trying to—and even defying it—should be told bluntly that if their idea is to make hay while the sun shines the sun will not shine very long for them, and that they had better get rid of that idea.
On this, I want to be absolutely frank and mention something about which my hon. and gallant Friend the Member for Derby, North said that he meant to say something for which he would get into trouble. Well, I have no doubt that my hon. and gallant Friend is much more expert in flying than I am, but he is not nearly as expert as I am in getting into trouble—
§ Mr. Mikardo
I am very much obliged to my right hon. Friend for those kind words.
Three independent operators—British Aviation Services, Skyways and Airwork—are beginning to try to live up to the sort of criteria that I have been laying down, and I am grateful for it. I only hope that all the others will get to work and follow their example. I do not say that those firms are perfect, because I could criticise some of the things they do, but I do think that they are trying, and that others should follow their example.
I have spoken too long already, but perhaps I may be allowed to make what is my very last point—
§ Mr. Beswick
My hon. Friend mentions three firms, which he praises as satisfying his criteria. Do I understand that, in this context, he is referring to the last of his qualifications, namely, that they are good employers?
§ Mr. Mikardo
No, I mean all of them. I think that the firms are getting near to honouring the good-employer criteria, but those are not the only ones, and I think that those firms also look upon their rôle as being to carve out a niche for themselves in this industry in agreement with the Corporations. I do not think that they look upon their rôle as being to try to scratch the eyes out of the Corporations, and then go behind their backs and grab while the going is good.
I come to my very last point. Whatever we do in this industry about the relations between the private and the public sectors there will always be difficulties. This is not an easy question. The Parliamentary Secretary knows how complex it is—almost as complex as the distribution of water in Berkshire, about which he and I have been having trouble lately. That is why most of our civil aviation debates have largely turned on this relationship between the public and the private sectors.
I do not want to see in the industry the problem of double loyalties such as that that faces some people in the City. That matter was commented on in the Report of the Tribunal that investigated the allegations about Bank Rate leak. It was said then that some people were put in a position of almost intolerable strain by having to choose between one loyalty and another. I would hate to see that grow up in the civil aviation world, because it could complicate still further the already complex relations between the public and the private sides.
Again, I will quote a specific case. Among the part-time directors of British European Airways is Mr. Kenneth Davies. He also holds £12,000 worth of shares in a struggling little independent firm called Cambrian Airways. Recently, there have been negotiations—which have been concluded—for the purchase of some of the shares in Cambrian Airways by B.E.A. Mr. Davies, who is a man of honour, immediately and quite properly disclosed his interest and made his position clear. I do not utter against 747 him the least breath of an allegation, direct or indirect, implicit or explicit—not the very slightest breath—but let us just look at his situation.
Here we have a small and struggling private company, the value of whose shares will go up as a result of B.E.A. taking an interest in it. We have a major shareholder, who is also a part-time director of B.E.A. What sort of position is he in? He must have an idea as to what is the right and fair price at which, and what are the right and fair terms on which, those Cambrian Airways shares should be sold to B.E.A. If, in fact, the price fixed was higher than that, should he, as a shareholder in Cambrian Airways, rejoice, and, as a director of B.E.A., go into mourning? Or, if the price fixed was, in fact, lower, should he, as a director of B.E.A., rejoice that the Corporation has got a bargain, and, as a shareholder in Cambrian Airways, go into mourning for the money that he has lost?
I think that the poor chap is in an absolutely impossible position. Nor is he by any means typical of the only case in this industry in which there is the strain of double loyalty on people with a foot in the public, and a foot in the private sector. I would urge the Parliamentary Secretary—and I do it, as I say, without making the slightest breath of an allegation—to look at the position of some of these gentlemen and see whether we cannot staff our public Corporations with people who are not put in this sort of invidious position.
I end, as I began, by expressing my gratitude to the hon. Member for Stockport, South not only for raising this subject, but for doing it by means of a Motion that is wide, uncontentious and constructive.
§ 120 p.m.
§ Mr. Paul Williams (Sunderland. South)
As one who has repeatedly in these debates disclosed my connection with the industry, I hope the House will not be bored if I do so again. Because of that connection, perhaps I should begin my speech, not only out of duty but also because I feel it so personally, being connected with the industry, by expressing a deep sense of shock at the accident which occurred yesterday. A much greater impact is created on the public 748 mind when an aircraft crashes than when 50 motor car accidents are reported in a row. Often this impact brings us up with a shock when we realise that in the hands of one skilled man rests the lives of a great number of people who fly with him.
My second point relates to the speech of the hon. Member for Reading (Mr. Mikardo). Although I have been a Member of this House for only a very short time, I had always been led to believe that he was an extremist.
§ Mr. Williams
I appreciate the moderation of his speech today. It seemed to me that he helped to take this issue of civil aviation out of the intense bullring of party politics to a level where the advantage to British civil aviation may be considered paramount, whereas in the past we have tended to argue along rigid lines and often from doctrinaire approaches.
I appreciate the hon. Gentleman's three points about a code of conduct. It seems to me that they were the sort of things, as general headings, which were not unreasonable in any shape or form. I should like later to come back to some remarks which he made when we last discussed civil aviation on 27th January.
There was one remark in the speech of my hon. and gallant Friend the Member for Derby, North (Group Captain Wilcock) which needs a little emphasis in view of some of the criticisms that have been made. He said, if I remember aright, that there was no friction between the independants and the Corporations. I hope that is the true position. I hope that this spirit of co-operation and partnership which is referred to in the much-maligned Report of the Miles Thomas Committee is one which will develop in this industry.
There have been various references during the debate to the work of Transport Command, particularly by my hon. and learned Friend the Member for Warwick and Leamington (Mr. John Hobson), and the trooping work of the independent operators. I agree with my hon. and learned Friend's remark that we ought to look rather critically at this idea of inflating Transport Command. One of the lessons which we may have 749 learned at the time of Suez is that we need certain centres for our strategic reserve and that the mobility of that strategic reserve depends to a large degree on the ability to transport it safely by air to the centres where the material is held or to the centre of battle.
The only question which then arises is how can one combine efficiency with economy? I am not convinced—perhaps I take this point of view because I am to a degree prejudiced —that economy and efficiency automatically flow from putting the strategic movements in the hands of Transport Command. I think there is a great danger of twenty Britannias, if they ever become a fact, either sitting on their undercarriages, and the pilots, perhaps, doing the same thing, or else aimlessly flying around the sky filling up space. I am not sure that the aircraft are maintained effectively in that way, and I am not sure that the pilots get in the flying hours per year that they need if they are to be safe operators when they have to carry troops to battle.
I go no further at this moment than merely to raise this question of how shall our strategic reserve be moved in time of need, and to ask whether there may not be a case for placing this strategic movement in the hands of the civil operators. I go no further than that today. I do not wish to trail the herring of the independents versus the Corporations in trooping matters, but I have my doubts about the economy or the efficiency of the strategic movement being carried out by Transport Command.
The House will remember that the last debate on civil aviation that we had was on the Report and Accounts of the two Corporations. It was a half-day debate, and I personally think—though I hope I do not put it too highly—that it was an insult to the House that we should have had only half a day to debate this major subject of transportation. I hope that in future when we debate the Report of the two air Corporations we shall have a full day's debate so that the various points of view of hon. Members on both sides of the House on controversial matters can be properly heard. It was not fair either to the Minister or to the Parliamentary Secretary or to the Opposition Front Bench or to the back benchers that only half a day was made available.
750 As I have already said, civil aviation in this House has tended to be the plaything of party politicians, and although we may have had enjoyable afternoons playing about with phrases on civil aviation, the net result has been to the detriment of the total British civil air effort. I hope that in the future, perhaps partly as a result of this much maligned Report, we can do something to take this whole debate out of the ideological ground into the practical ground of co-operation between the public and private sectors.
In view of the scathing remarks, I would refer with great hesitation to paragraph 67 of the Air League Report. It is worth reading a few words in this paragraph:Our proposal, therefore, is that as a long-term policy some of the independent operators should be gradually brought into partnership with the two Corporations in order to share a part in the tremendous increase in the world's air traffic expected over the coming years.I suppose that phrase could mean a lot or nothing, depending on what the word "partnership" means.
The hon. Member for Reading in his speech has shown that there can be a willingness on the part of the Corporations, and there may be on the part of the independents, to co-operate in partnership to the benefit of both and to the advantage of the whole British civil air effort. I would refer in particular—and I hope it will not make him blush the colour of his tie—to some of the remarks which the hon. Member for Reading made in the debate on 27th January. He laid down five principles which, I think, depending on the tone of voice in which they were stated, can be valuable or vitriolic. I personally regard them as valuable contributions to our debates on civil aviation, for it seems to me that he laid down the course, which he has pursued again this morning, of moderation, in an attempt to produce a partnership between the Corporations and the independents. If our air debates proceed on that level, I am sure it will be to the advantage of both sides of the industry.
There can be no doubt that this is an industry which is still in the process of establishing itself, which is not sufficiently firmly based financially or from the point of view of the procurement of aircraft either. I hope, without too much of the semblance of a veneer or a surface view 751 of things, that I can quickly state what I believe has happened in the years since the war. The period up till 1952 was a period of virtual monopoly for the Corporations. I am not debating whether that was right or wrong; it is a fact. Since then, there has been a considerable improvement in the traffic and in the finances of the Corporations—something which should give heart to both sides of the House.
At the same time, there has been a considerable improvement in the traffic that has been carried by the independent operators. But let us be careful about this, as I am sure the hon. Member for Reading is, when comparing these percentage increases. In this case the starting point was so much lower; the percentage figures are as wildly misleading as most of us believed them to be.
One of the difficulties under which the independent operators work is the disadvantages of the sort of services they undertake. They have had to create new forms of traffic, inclusive tours and car services. I do not complain. It is an advantage that they have created these new services, but it is not an easy or a guaranteed market in which they operate. Many of their operations are weekend operations, with all the difficulties of peak traffic and troughs between, which are common to Corporations and independents alike. The short-term licence is undoubtedly a disadvantage and a disincentive to re-equipment with the sort of modern aircraft which the independent operators should be using and, in many cases, are now either using or about to use.
Moreover, it is significant in terms of re-equipment that much of the traffic—indeed, the greater part of it—is low revenue traffic. I should not be happy to go with the hon. Member for Reading when he says that trooping contracts are vastly profitable. In my opinion, it could well be said that they are very much of a "break even" business, but only just, from the point of view of the independent operators. Trooping contracts are certainly not money-spinners. This is true of all independent operation and, though I do not complain, I feel that it is right to remember that the section of the market which is to the hand of the independent is the low revenue section.
752 I believe that the Government have, since 1952, done much to help the independents to get a reasonable share—no more than that—of the market. This has been a worthwhile development from the point of view of the whole British civil aviation industry, but I believe that it is now time for the industry to be left free of political doctrine so that it may try to work out the practical solutions and the relationships of particular companies to the corporations. There would be great advantage in having a period during which we in the House cease to interfere too much in detail and allow the partnership which, I believe, is the chance of the aviation industry, to work itself out.
There is a need, however, for us to think in terms of long-term advance. I do not say "solutions," but long-term advances. I have one suggestion to make, which is similar to one made in the Air League report, that we should think in terms of an independent licensing authority. The hon. Member for Reading referred to the constricting and hampering terms of reference of the A.T.A.C. I myself would not go very far with him in that opinion, and I do not think he would expect me to, though I feel that there is a disadvantage in having a licensing authority which is not totally independent of political influence. There should be an independent authority, perhaps with the power to withdraw licences, perhaps with the power to demand certain codes of behaviour, certain standards of conduct and certain levels of maintenance. These are the things which we could think about when considering the longer term solution for our civil aviation problems. That is one proposition I make to the House today.
§ Mr. Chapman
Would not the difficulty there be that the independent licensing body would be left, so to speak, free to make up its own mind whether it wished to preserve what we in the House wish to preserve, namely, the prime advantages to be had from the work of the two Corporations? It would be in a difficulty, and we should be in a difficulty, in not knowing quite what was its duty.
§ Mr. Williams
I thought that both sides of the House were agreed that the corporations were facts of life and that 753 they play a valuable rôle in the British civil air effort. That does not preclude co-operation between the two sides, and an independent licensing authority may well be in a better position to judge who should receive permission to share certain routes than a body such as the A.T.A.C., which is often constricted and directed from political motives. The present position of the A.T.A.C. is unfortunate, because it continues the interference of politics in what should be an economic operation for the benefit of the nation.
There are, therefore, these two needs. First, we in the House should do everything possible to promote the interests of British civil aviation—I am not sure, that some of the remarks of the hon. Member for Reading on maintenance really help—and, secondly, we should try to carry that out by establishing an independent licensing authority to take the matter right out of party politics.
§ 1.35 p.m.
§ Mr. A. E. Hunter (Feltham)
I am very pleased to have an opportunity to speak in this debate today, and it is always a pleasure to follow the hon. Member for Sunderland, South (Mr. P. Williams) when he speaks on civil aviation, because it is a subject in which he takes a very great interest. I wish to direct my remarks principally to that portion of the Motion which deals with the potential and future growth of world traffic, together with some of the problems. The Motion before us covers a very wide range, and we have the opportunity to raise a number of important points.
I agree with the hon. Member for Sunderland, South, that any future debates on the annual accounts of B.E.A. or B.O.A.C. should be full day debates. After all, we are dealing with a future industry, an industry which will grow. As one hon. Gentleman said, it is growing at the rate of over 20 per cent. per year. Considering that civil aviation is expanding at that rate, we should request that the whole matter receives a great deal of attention and debate in this House.
In 1946, there were established the two airline Corporations. I am very pleased that hon. Members on both sides recognise that the airline Corporations have grown into efficient organisations which are a great credit to the country. I shall deal mainly with the airline Corporations, because I come into touch with 754 them through my constituents, many of whom work for the airline Corporations, and I know how keen and anxious they are to make the Corporations a success.
The great growth of air transit is an international matter and not merely a domestic matter. It is an industry which requires a very great deal of capital, probably more capital than any other new industry expanding in the world today. The hon. Member for Macclesfield (Sir A. V. Harvey), who is not here today but who always takes an interest in this subject, said that, taking world traffic as a whole, the rate of profit was lower in aviation than the average because of the vast amount of capital required. Therefore, we can readily understand that in the future, although, as my hon. Friend the Member for Reading (Mr. Mikardo), pointed out, there is room for the private operators, it is upon the airline Corporations that civil aviation must expand in this country.
The great need is for cheaper fares. The Minister said quite recently in the House that we do not need to go in for much more speed. After all, there is quite enough speed today. One can travel from London Airport to Paris in less than one hour, and it takes almost as long to get from London to Feltham or Hounslow. If aircraft cruise at the present rate of 260 miles an hour, that is quite sufficient for our needs. The need, therefore, is for cheaper fares so that this modern form of travel can be extended and used for holidays, for commerce and business, and for people to visit relations in other parts of the world.
We are in this country linked with all other parts of the Commonwealth, and it is in the national interest that there should be cheaper fares. Also, of course, there is the need for safety. I know that we all regret very much two very recent sad and tragic accidents. We know that both the airline Corporations and the independent airline operators have very good safety records. When we consider the expansion that must take place in the latter part of this century, we have to bear those two important points in mind, cheaper fares and safety, and safely must be our watchword.
I can imagine that in the future there will be excursion aircraft in the same way that we have excursion trains to Brighton, 755 Blackpool or Yarmouth. We shall in future have excursions to Paris, Brussels, and even New York and Australia. In order that all classes shall have the opportunity of air travel, I hope that the Parliamentary Secretary will make a note of this plea for cheaper fares.
There is also need for more international consultation with the different countries. I will speak very briefly on this point. I think hon. Members on both sides will be very pleased that Lord Douglas, Chairman of B.E.A., has been to Moscow and signed an agreement with the Soviet airline for a twice-weekly service between Moscow and London. I am sure that all hon. Members will wish it long and safe success. That is a step in the right direction. One can see that this type of consultation is likely to grow.
I want the Joint Parliamentary Secretary also to bear in mind the need for international consultation on other matters which affect residents around airports and also the ordinary citizen—the question of noise, damage and vibration. This matter has been raised by my hon. Friend the Member for Uxbridge (Mr. Beswick) and myself in a recent debate, in which my hon. Friend raised the point that there is no procedure to deal with liability for damage, and also that there is no legal responsibility for damage. It is not settled legally whether an operating airline or the Minister as the landlord of London Airport will be responsible for damage. This is a matter that not only worries local residents but also local authorities. Therefore, I hope very much that the Joint Parliamentary Secretary will give a lead and suggest to his right hon. Friend that there should be an international conference, a kind of summit talk, among the large world air Powers to get down to a number of these problems that are bound to grow in the years ahead.
There is another point upon which I wish to touch, and that is the aircraft industry in connection with civil aviation. We all know that the aircraft industry is facing a period of redundancy through the change in methods of defence and the cancellation of defence orders. Therefore, to some extent, the aircraft industry in the future must depend upon civil aviation and upon civilian aircraft. It must expand, as hon. 756 Members opposite suggested, by aircraft constructed solely for carrying goods across the world. Therefore, one can see the importance of this matter to the aircraft industry. There is also the question of the export trade, which is vital to this country.
If this country is to keep in the lead in air travel and to face very keen international competition, it is essential that we should have a well-equipped and well-manned aircraft industry. If it is to face redundancy in the nine or twelve months ahead, we may lose many skilled craftsmen, and at a time of future great expansion in civil aviation we may not have the craftsmen. Therefore, I hope that the Minister will keep in close touch with the Minister of Supply about the possibility of using ordnance factories for this type of work. The aircraft industry is essential to civil aviation.
In conclusion, I feel that we are only on the fringe of expansion in air transit. After all, it was only at the beginning of this century—I am not sure, but I think it was 1906 or 1908—when the first plane crossed the Channel. That was regarded almost as a seventh world wonder. When the Atlantic was flown that was another great achievement. Today one can take a plane to New York. Montreal or Australia in almost the same way as one takes a taxi from the House of Commons to Charing Cross or Victoria, providing one has the money. I visualise that in the years ahead air travel will grow. I want Britain to be a great civil aviation country. We were once the workshop of the world, and we can be again. We have the technicians, craftsmen and enthusiasm. If the Government give them the lead, Britain can play a leading part in civil aviation for peace and progress, and for the national benefit of the people of this country.
§ 1.47 p.m.
§ Mr. William Shepherd (Cheadle)
I agree with the hon. Member for Feltham (Mr. Hunter) that we need not quarrel too much about the respective rôles which the Corporations and the private companies are to play in the future. On the whole, there is a much healthier outlook than has obtained in the past seven or eight years. There is a growing acceptance of the fact that there is ample scope, given a reasonable outlook on both sides, for both the public Corporations and the 757 private operators. They perform perhaps distinctive rôles, but each has a sphere of some magnitude.
I have never been a supporter of those who have been anxious to diminish the Corporations' responsibilities and scope. I am very proud of the way in which the two Corporations have carried out their duties. The two Airways Corporations, following the lead of the old Imperial Airways, have given Britain in the air as distinctive a position as it occupied on the sea in the first half of the century. They have given us a reputation for courtesy and skill which is second to none. I think that all of us in the House, whether on this side or the other, are grateful to those who perform such sterling service, whether in the highest or lowest ranks, to give us during the post-war years our present envied position as carriers of passengers over the airways of the world.
Having said that, I do not want to leave the House with the impression that I think all is well with the Corporations and that they do not at times adopt a dog-in-the-manger attitude, because they do. Everybody who has a great deal seems to become greedy and want more. This applies to public corporations as much as to individuals.
I want to speak particularly about the apparent reluctance of British European Airways to extend the services between London and Manchester. I know that this issue is bedevilled by the need to provide social services. In Scotland, we have to fly aircraft which have no possible chance of paying their way, but the fact that we have to run such services in Scotland is no reason why the people who want to travel from London to Manchester ought not to be properly accommodated.
I have taken up this matter with B.E.A. and I feel very strongly that while the Corporation is not anxious to increase the frequency, it certainly is keen to see that nobody else does. I do not consider that to be right. If B.E.A. takes the view that it does not want to increase the services between London and Manchester, it should make way for somebody who will. If someone is prepared to run this service, it should be run in the public interest. If the appointed authority will not run it, it should make way for an airline that will.
758 It is true that when the war was over there was probably a greater frequency of flight between London and Manchester by the old Railway Air Services and latterly by the Lancashire Aircraft Corporation than there is today, about ten years later, by B.E.A. B.E.A. will point out that the Lancashire Aircraft Corporation and the Railway Air Services ran very small aircraft, and that is true—I believe they were Ansons; but the point was that they had frequency. Unless there is frequency between areas like London and Manchester, the whole development of the service is held down. Nobody wants to travel by air with only one plane up in the morning and one back at night. It is not flexible enough to serve the needs of people travelling for business or, for that matter, for pleasure. What a difference there is in the frequency between London/ Manchester and New York/ Washington.
I want, therefore, to see British European Airways adopting a more responsible and reasonable attitude. If it is the Corporation's view that it cannot afford to run this service, and that it must be put off until the prospects become more profitable, it should make way for a private carrier who will run the service and give the public the frequency it wants. I do not care who runs the service, whether B.E.A. or a private carrier, but I take considerable exception to B.E.A. saying, "We do not want to do it, because we cannot make it pay, but we do not want to see anybody else do it, either." That is entirely wrong, as wrong as those who want to attack the domain of the Corporation.
The hon. Member for Feltham said that we want lower fares, and that is true. The objective in air transport ought to be lower fares. That is not, however, very easy to achieve, because today world airlines are running at a rate of profit far below that which is necessary to secure a healthy industry. A 1 per cent. return is, I think, reckoned to be a fair average, but it is wholly inadequate to finance a growing industry. Therefore, if we are to have lower fares, we must have enterprise and ingenuity and we must turn away from some of the developments to which we have been so foolishly led in the past eighteen months.
I have said that there is scope for the private operator and I want to tell the 759 House, and the hon. Member for Feltham, how successful private enterprise can be. One of the firms which has done more to bring about cheap fares and to bring a new idea to the industry is Eagle Airways, which is perhaps the most enterprising firm in Europe today. It has started with the idea of providing an all-in holiday for almost as low a cost as the price of an ordinary ticket for the air journey. This is an ingenious idea and is an example of how flexible and enterprising a private enterprise company can be. I am convinced that a public corporation would never have conceived this idea. There would have been a dozen reasons why it was impracticable to do it.
I cite Eagle Airways not as an advertisement—I understand that the company's bookings are so full that it would not make any difference, anyhow—but to show that this company has taken a new turn in the business which has given a great deal of pleasure to a great number of people who would not otherwise have been able to afford to go by air. An entirely new avenue in civil aviation has been opened up. Therefore, to those hon. Members opposite who are a little critical of private enterprise. I say that it has a part to play and can do those things which a larger, less enterprising and more sedate public corporation is not likely to accept.
My second comment on fares is that I hope we shall press for differential fares even more than we have done in the international organisations. It is most important that we should press strongly for these differentials, otherwise the world will lose a great deal of the possible advantages of cheaper fares and the turbo-prop engine. The obsession with the pure jet over relatively short ranges is nothing more than an absurd form of commercial lunacy. There is no justification for pushing out a perfectly well-tried, economic, comfortable, safe engine like the turbo-prop for the sake of a block speed increase which is negligible. It is only because the great American corporations, led by Pan-American, have rushed into the Continent with the prospects of the big jets that all the other companies, in panic, have been caused to follow suit.
That is a bad thing, because the big jet machine is not only much more 760 expensive to buy and to operate, but it brings in its train problems of a social nature, concerning noise and the need to increase the length of runways, which are not to the advantage of the community. Unless we are firm and hold out for a differential fare, we shall see our turbo-props squeezed out of the business. My hon. Friend the Parliamentary Secretary will, I hope, ensure that when we go to the international conferences, we make a very firm claim for differential fares for turbo-prop operations. Otherwise, I am quite sure not only that the construction side of our industry will be disadvantaged, but that the community as a whole will suffer.
The situation in the aircraft construction industry causes all of us a good deal of concern. One feels very sorry for the men and women who have devoted their lives to this work and who now see the inevitable prospect of a not inconsiderable contraction in the size of the industry. We live in an age of great change, in which, unfortunately, we cannot afford to remain static.
The people in the industry will have to make their own personal decisions, but I would say to the hon. Member for Feltham, who seemed to be a little pessimistic, that our skill, which is very real, and our ingenuity, which has been proved, will perhaps have a much better chance to flourish in the future under conditions of contraction than they have had during the past seven or eight years. Nothing was more damaging to the British aircraft construction industry than the boom period of the Korean War. My only regret is that the contraction in the industry did not take place four or five years ago.
If the need to concentrate on purely commercial propositions had been pressed on the industry four or five years ago, I am convinced that we should have now in the course of active preparation, if not flying, aircraft with a much greater potential than at present. Because of the continuing pressure on this industry arising out of the Korean War—I do not blame either hon. Members opposite or the Government—we have put on the industry a technical and technological burden which is greater than it could bear.
As a consequence, we have made a lot of mistakes. It is tragic that the Fokker 761 Frenchship, made from over 60 per cent. of British parts, is being made and sold in advance of anything in this country. It is tragic that a Dakota replacement, which one would have thought would be a British affair, should come successfully not from a United Kingdom constructor but from a Dutch constructor with 4,000 employees, a unit of which most people looking at this industry would say was too small to do anything successful at all. It is unfortunate that that state of affairs exists.
Similarly, the Caravelle, with about 50 per cent. of British parts, is now well advanced and five years ahead of projects for British short-range jets. I agree that it is a smaller aircraft. This is happening because of pressure on the industry, because the Government required it to do so many things and made it easy to carry on with a large amount of Government financial support. Had the industry had to stand on its own feet four or five years ago, we should today have a healthier and more successful industry and we might have avoided many of the pitfalls which have been encountered.
I am not pessimistic about this. If our people can work under less pressure, and without having a state of affairs where every time one opens the newspapers one sees advertisements from aircraft manufacturers trying to snatch scientific men from each other, I think we shall get a condition in which jobs will be done much better than in the past. It creates difficulties in the aircraft construction industry if scientific personnel are being snatched backwards and forwards as though it were a chess game.
I hope that under conditions of less pressure, with the knowledge that it has to face commercial realities and with the good will which has been established by some successful aircraft like the Viscount and the Britannia, the aircraft construction industry, although it may be contracted, will do a more successful job in the commercial field in the next ten years than in the past seven or eight years. I am sure that it is a growing industry. Despite the fact that today the airlines have indigestion so far as orders are concerned, I believe that it has a tremendous future.
We have staked a good place in the world business with our Corporations 762 and private airlines, and those of us in the House who take an interest in aviation affairs wish well both to the public Corporations and the private operators.
§ 2.5 p.m.
§ Mr. Donald Chapman (Birmingham, Northfield)
I wish to take up a suggestion of the hon. Member for Sunderland, South (Mr. P. Williams) about an independent licensing authority. May I put to him the possible disadvantages in a way which he will understand—I do not mean it from a party political viewpoint? There is the danger that a sort of "Cohen Council" would become the licensing authority, a body which might be partial in its views even though it was supposedly appointed as an independent body, and one to which in any case we should have to give an instruction that the primary intention was to maintain the established predominant position of the nationalised Corporations. If we have to start by giving such instructions, what difference is there between having such a licensing authority and the present A.T.A.C., which is similarly instructed? We might as well stick to the A.T.A.C. and let it continue to be the advisory body for the Minister.
I wish to deal briefly with the passenger-carrying activities of the independent airlines. I shall not refer to freight or the question of companies in association with the Corporations. We are all agreed on certain things. First, that there is a place for the independent operator; secondly, that as traffic is likely to expand the opportunities for the independent operator will increase. In Europe alone, the area with which independent operators are mainly concerned, there is at present an expansion of half-a-million passengers a year.
Thirdly, we are agreed on the supreme importance of retaining the present superiority of the nationalised Corporations. But here we begin to question the wisdom of independent operators expanding faster, as the terms of the Motion imply, than they have been doing already. We must remember that in Europe B.E.A., although it has over half of the passenger traffic, is only just holding its own. We must also remember that B.E.A. is operating on very small 763 margins; on a turnover of £25 million or so, with capital assets of £20 million or £30 million the profit is only about £1 million when it is lucky and has a good year. These are very small margins on capital of that magnitude, and further comparatively small incursions by independent operators could soon put the publicly-owned Corporations in great financial difficulties.
We had an announcement that in January B.E.A. made a loss of £600,000. The Corporation always expects to make a loss in January. The important thing about that figure is that it showed the traffic was 10 per cent. down on what B.E.A. expected in that month. The blame cannot all be placed on foggy conditions. The higher Bank Rate and the general disinflationary situation developing generally in Britain and Europe had an effect. To some extent it means that unless B.E.A. has a more successful summer than would seem likely from the January figures, we may not have a good out-turn for this year. It may not be the most auspicious moment for saying that independent operators should begin to expand at an accelerated pace.
What I found unsatisfactory about the speeches of the hon. Member for Stockport, South (Mr. H. Steward) and the seconder of his Motion, the hon. Member for Gosport and Fareham (Dr. Bennett) was that after they had spoken of the need for expanding the activities of the independent operators they could not put their finger on the point at which they desired the expansion to take place.
There has been no suggestion from the other side of the House about the way this accelerated pace of expansion should go through. That is primarily because hon. Members opposite recognise the difficulty at the moment of an increased pace of expansion—the difficulty that the expansion may be made to the detriment of the nationalised Corporations. For example, it is very difficult, in looking at the applications made to the A.T.A.C., to see where such an advance is going to be made at the moment, for there seems to be no great new fields for exploitation by private enterprise.
§ Mr. Chapman
I am trying to make the distinction between a positive advance, in which everyone shares, and an accelerated pace of expansion, which is implied in this Motion, and which, in my view, will only be to the detriment or at the expense of the established airlines. Otherwise, why have there not been increasing numbers of applications to the A.T.A.C. to exploit new fields? The point is that it is not clear that any more can be done than is being done now in the general expansion, in which the airlines will together share.
When we come to the question whether the pace of expansion of the independent operators is already too great, there are several questions I want to ask. We are all agreed that the pace has been quite phenomenal. The figures were given to me in reply to a Parliamentary Question only yesterday. From them we see that in 1951 they started with 13,000 passenger-miles, and the figure had gone up to 260,000 last year, while the number of passengers carried has risen from practically nothing to approaching the million mark. They have gone ahead at a particularly rapid pace in a particularly short time.
The question which I want to ask the hon. Gentleman is whether he can throw some further light on the complaint already being made by B.E.A. in its Annual Report about the extent to which this expansion is to the disadvantage of B.E.A. itself. I think it is important for this debate that the Joint Parliamentary Secretary should be able to tell us a little more about what is said on page 26 of the Annual Report. I see the hon. Gentleman is nodding his head, and I am glad to have his assurance that he regards this as important. That Report says:Some of the scheduled operations of independent operators have been harmful to B.E.A.The Report goes on to refer similarly to the inclusive tour services and the Colonial Coach Services, and I know from the information which I have that there are at least some grounds for complaints. I know, for example, that on some of the holiday routes, particularly the Palma route, mentioned in the Report, B.E.A. last year found that the traffic increase was not up to expectations, largely because of the creaming-off 765 of traffic on that route by the inclusive tour services. I think this criticism apparently applies to other holiday routes as well.
Secondly, in regard to the Colonial Coach Services, it was stated by the Minister when he allowed them to start that the object then was that they were to generate new trade on these routes, and that that was to be the prime basis for the expansion. As far as I understand it, that has not happened at all, even though they are continuing. They have not generated any new traffic, but have largely persuaded B.E.A. to travel at the lower standards and fares of the Coach Services, so that the intention of the Minister in this respect is not being carried out. Can the hon. Gentleman throw some further light on this complaint?
My second question is on a point mentioned by my hon. Friend the Member for Reading (Mr. Mikardo), and I will not develop it. My hon. Friend talked about this practice of the A.T.A.C., under its terms of reference, in allowing, in effect, private operators to be "dogs in the manger" by having routes allocated to them which are not used, but which are merely taken up to prevent someone else from using them. The similar complaint which my hon. Friend made was about the way in which, in effect, private and public operators are fighting each other on roughly similar routes given under different concessions, on which both are running at a loss. Perhaps the Joint Parliamentary Secretary will have a look at paragraph 3 (iv) of the terms of reference, and perhaps he could tell us whether there is some prospect of amending those terms of reference in order to get out of this difficulty. The difficulty arises from the words that there shall be allowed serviceson any new route not forming part of their approved network and for which no independent company has been authorised to provide normal scheduled services.The sort of amendment we should want would be to prevent them stopping at the authorisation. The A.T.A.C. should be authorised to review these concessions in cases where the authorisation has never been made use of and where it is working to the obvious detriment of both public and private airlines.
766 Lastly, I want to know whether the A.T.A.C. is really working in the way that was originally envisaged, and, in particular, whether Article 13 of its constitution is now a dead letter. Article 13 of the constitution states that, in doing this work, the Council may adjourn any inquiry from time to time or from place to place as it thinks fit, and for the purpose of inspecting any place or thing connected with the inquiry. Does that mean, and was it intended to mean, that to some extent the Council should inspect the facilities provided by private airlines? My information is that it does not do that at all, but that, very largely, it is a licensing authority only in a nominal sense, and does not carry out the requirements of Article 13.
Similarly, because it is tied up with this, I would like to ask whether paragraph 5 (e) of the Terms of Reference is a dead letter, because it states that in recommending applications to the Minister, the A.T.A.C. should take some account of the extent to which the private operator will be able to provide satisfactory services in respect of continuity, speed and regularity, frequency, punctuality, reasonableness of charges and general efficiency.
I have a feeling that both these paragraphs are now dead letters and that the sort of inspection and checking which is implied in them is not being carried out. I want to give—because there has been some praise of the independent operators this morning—two examples of my own in which I have had the worst possible experiences of independent air operators, and the way in which I think those experiences could have been avoided if the A.T.A.C. had been an active body carrying out its responsibilities under these two paragraphs.
I travel a good deal by air, and I am not trying to label all independent operators as bad, but I think that my first example is not an unreasonable one. It concerns the service of Aquila Airways to Madeira. I had the great misfortune of travelling to Madeira on one of that airline's aircraft. It was a harrowing and most uncomfortable experience. I spent an hour with the chairman of the company going over my complaints, and I think that he would admit that he has not been able to satisfy me on them.
767 When one travels by an airline like Aquila Airlines one first of all is beguiled by the sort of advertising used by these firms. We are told that we shall fly in a matter of a few hours in superb comfort in a double-decked flying boat, with all mod. cons., and with a built-in cocktail bar apparently of stupendous luxury. One imagines that one will have almost the equivalent of first-class travel by one of our national Corporations.
We found in fact that the airline was flying Short Solent flying-boats. Their noise is incredible. They are very old machines developed during or shortly after the war. The journey is interminably long because they fly so slowly. On the occasion when I travelled we flew overnight. The heating system in the wretched thing did not work at all and everybody was so perishingly cold that it was beyond description. The blankets which the airline provided on the journey were dirty, and the stewardness clearly required a new uniform.
When we arrived at Lisbon we found at five o'clock in the morning—and we were lucky that it was fine—that we were decanted into an open boat and rowed at a leisurely pace to a hutment on the harbour. There, the facilities were appalling and the meal was terrible.
§ Dr. Bennett
Is it not rather difficult for closed boats to go alongside under the wing of a flying-boat?
§ Mr. Chapman
Yes, but the airline had not made even the slightest attempt to use some sort of covering, perhaps of a few feet, against the inclement weather. The company admits that it never thought of using anything other than an open boat.
The facilities on the aircraft were very bad. The cocktail Bar does not exist. It was all flashy, spurious advertisement. It is just a hatch through which rather poor sandwich meals are served. As to the return journey, this line is absolutely notorious for its inability to keep to any reasonable schedule. Conditions are such at Madeira that these flying-boats cannot take off in the slightest swell, and there are Heath Robinson devices for running people up and down the island and taking them off from small coves when there happens to be a break 768 in the weather. I have never had such an appalling journey in such appalling conditions in an aircraft in my life. It completely let down the established reputation of independent air operators.
The final irony of all this comes when one goes back to the A.T.A.C. and asks what is now happening about this route. One finds that B.E.A. has asked the A.T.A.C. for permission to continue its Gibraltar route on to Las Palmas in the Canaries, from which some sort of arrangement could be made for Madeira.
But what has happened already is that two independent air operators, Hunting and Airwork, have already a transit permit for the Canary Islands and are now applying for a termination permit at the Canary Islands. It seems quite probable, although it would be scandalous, that in the end, instead of giving permission to B.E.A., which badly needs to continue its journey from Gibraltar to the Canary Islands, authority will be given for a new separate service to be run direct by Hunting or Airwork to the Canaries from this country. That matter is still under consideration by the A.T.A.C., but it would be most unfortunate if that proves the sort of conclusion that it reaches.
§ Dr. Bennett
I gather that the hon. Member has appreciated the difficulties of operating from an open ocean in autumn and winter conditions. What aircraft does he consider B.E.A. would use to operate off the waters of Madeira?
§ Mr. Chapman
I did not say that they were going to Madeira. The hon. Member has misunderstood me. Las Palmas has land facilities, and perhaps boats or helicopters could be used to make the connection to Madeira. Also that would take care of a great deal of the flying-boat traffic which goes to Las Palmas in bad conditions by Aquila Airways.
My second experience, some time ago, was of Channel Airways. Here again I was beguiled by advertisements of the facilities provided by going by this airline from Shoreham to Paris instead of making the journey from my home in Brighton to London and taking one of the main services. When I tried Channel Airways I found that all the company had was a de Havilland Rapide, which takes four or five passengers with a pilot who sits and reads his one-inch map with 769 one in the cabin. If a person is bad in the aircraft, he finds that the slightest wind makes him completely airsick immediately.
When I complained, I was told that, of course, there was not sufficient traffic to justify a larger plane and that the company was not big enough to be able to run a bigger plane. The fact was that I had been totally misled by the standard of facilities which seemed to be offered in the advertising.
§ Mr. Stephen McAdden (Southend, East)
Channel Airways is in my constituency. I did not know that the hon. Member intended to make these comments. Had I known I could have had a word with the chairman. It has been known for a long while that this service is operated with de Havilland Rapides, though I believe that the company is getting other machines. What part of the literature gave the hon. Member the impression that it was operating any other aircraft? B.E.A. and B.O.A.C. go in for attractive advertising, too, and good luck to them. Why should not they, as long as it is not misrepresentation?
§ Mr. Chapman
That is the whole point. The big airlines, like B.E.A., have established a reputation in these matters. They are flying aircraft with facilities of a known international standard. One of the great troubles is that a number of these airlines are really trading on the reputation of the established international airlines and pretend that they are really offering facilities up to that standard.
§ Mr. Chapman
I have. All the advertising that I read led me to believe that the facilities were at least comparable with those of the great airlines.
§ Mr. Chapman
I will not give way again because I have been interrupted continuously.
Finally, I hope that the hon. Gentleman will give an assurance that the way in which A.T.A.C. was intended to act was that it should keep a check on the facilities, punctuality, and so on of the private independent operators. I am not 770 trying to criticise them all. I felt that as we had such a bucketfull of praise for them this morning it was time that someone gave examples in the opposite direction, because we must not pretend that everything in the garden is lovely. This side of the aircraft industry has increased rapidly in the last few years. Now that it has reached an adult stage, it would be a good thing to be assured that in its great network of independent operation there is adequate check on the facilities it provides.
On the broad question of principle, I hope that the Joint Parliamentary Secretary will assure us that the Government stand firmly on the principle that no accelerated expansion of independent operators should be allowed to interfere with the progress of the national Corporations. That is very important. It is almost crucial in view of the complaints that B.E.A. is already making in its Annual Report.
§ 2.31 p.m.
§ Mr. Frank Beswick (Uxbridge)
We have had a most interesting debate. I am sorry to intervene at this stage, but I thought, with all respect to the hon. Gentleman the Member for Basingstoke (Mr. Denzil Freeth)—who, I know, has been trying to catch your eye, Mr. Speaker, for some time—that there are now a number of other hon. Gentlemen opposite who want to intervene in the debate and, it seems to me, who want to divert it along a channel which it has not hitherto been taking—
§ Mr. Beswick
I am simply going by the fact that the hon. Gentlemen who rose to their feet just now had not been in the Chamber until the last few minutes.
§ Mr. Beswick
In any case, I am not in a position to terminate this debate. I am simply taking this opportunity to intervene having listened to all that has been said so far, and because I think it would be a pity if the hare which my 771 hon. Friend has started should be chased too far.
A lot of names have been mentioned in the debate. In some cases it has been a matter of praising them and in others of criticising them, as my hon. Friend has done. I cannot see that this kind of individual reference can do a lot of good. I agree with the hon. Gentleman the Member for Southend, East (Mr. McAdden) that if specific allegations are to be made there ought to be an opportunity to answer them.
It was inevitable, also, that during the course of this debate reference should have been made to the accident which took place yesterday. It was just as well that the Minister immediately put that accident in its proper perspective, and I am glad that the House has not dwelt unduly upon this aspect of air transport. On the other hand, it is natural that many hon. Members, and, indeed, the public outside, will, because of this series of unfortunate accidents, try to find whether there is any common feature about them. The one recurring theme which I can discern, having considered the different accidents, is the remarkable safety record of the companies concerned.
Silver City Airways, which has been mentioned today, has apparently operated for twelve years without an accident. Again, Eagle Aviation, which was involved in the accident at Blackbushe, had not previously scratched a passenger. Then there was the accident to the Elizabethan, which represented a type that had previously been flown for millions of miles without involving a passenger in a fatal or other accident. One might well wonder whether it is the very fact of freedom from accidents which has permitted the margin of precaution to be almost imperceptibly whittled away. I have no doubt that operators generally will be looking into their operating control to see whether anything can be tightened. I am satisfied, knowing most of the companies concerned, that if anything can be done, it will be done.
There is one other thing I will mention about this aspect of aviation, which was touched upon by two hon. Members earlier in the debate. One of the lessons which could now be learned from postwar experience in flying is that we might 772 now declare a moratorium on speed. I agree with what was said by an hon. Gentleman opposite, that one company after another now, motivated simply by competition, is agitating for faster and faster aircraft. I suggest seriously for the consideration of I.A.T.A. and I.C.A.O. that research and development should concentrate on comfort, economy and reliability rather than upon the factor of speed.
One thing I welcome about this debate has been the way in which many hon. Members have said that we should now look upon air transport as a whole, and see from that basis how we can best facilitate the expansion which will come about on this globe. Time and time again from this side of the House we have asked that in these discussions we should start from that assumption, namely, that we should look upon air transport as a whole and see how best we can encourage and develop it, instead of seeing how we can carve out an opening for a particular class of investors.
In our debate on 22nd July last year, I tried to set out a case for the planned development of air transport. I tried to show how, in air transport in this country, we had sought to avoid the waste and the disappointment there had been in the development of other forms of transport. In the classic, competitive, capitalist style there had been in this country and elsewhere the original scramble of small companies, the rough and tumble of competition, the failures, the bankruptcies, the mergers and the eventual emergence of one or two large companies which had sought to establish some kind of monopoly behind State protection.
This policy was accepted before the war by the Coalition Government which set up B.O.A.C., and it lay behind the White Papers published during the wars. It was also behind the Acts passed by the Labour Government just after the war. Behind that policy there was the principle of the planned development of air transport, matching equipment with estimated traffic needs and avoiding a thin spread of traffic over many companies and many different operators. This enabled larger and lower-cost transport aircraft to be brought into service at lower operating costs.
773 Judged by the test of the consumer, this policy has been successful. No one has criticised seriously the quality of the service offered by the chosen air transport operators in this country. Nor can people criticise the cost. Let us remember that no matter what is said about nationalised industries generally, when we are considering the achievements of the two Corporations the fact is that they are now offering a service for fares which, in absolute money terms, and even more markedly, if translated into the money values of 1948 and 1949, are less now that they were ten years ago. I do not think that there is any manufacturer or operator of any service in this country who could make the same claim for his product or service; and we should remember that.
It is against the background of that achievement that we have to examine the constant lobbying which is done on behalf of independent operators. I believe that there is a place for the small independent operator, and that has been stated time and time again by spokesmen of the Labour Government and the Labour Party. We have gone further than the simple claim for a place, and it is the further claims which we have to examine.
The Air League, in its report, stated that it was in 1952 that a change was made which permitted limited participation by private enterprise companies. In this respect, as in others, the report of the Air League is inaccurate. It was not in 1952 that the change was made. The change was made during the time that my noble Friend Lord Pakenham was in office, in 1949. Section 15 (3, b) of the Air Corporations Act, 1949, provided that… under the terms of any arrangement for the time being approved by the Minister as being an arrangement calculated to further the efficient discharge of the functions of the corporation …the private companies were enabled to participate. It was under that provision that the independent companies came into both the scheduled and other air transport services.
When I was speaking from the Dispatch Box for the Labour Government I was able to state—I was always very keen about this—that the period of the agreements, which had hitherto been rather limited—two years was 774 usual—would be extended. Lord Pakenham and I realised that it was impossible to invest in equipment if one had only the security of a two-year expectation of life.
The scope which the private independent operator should have at his disposal has also been stated on behalf of the Labour Party in more detail. I mentioned the charter operations. Much has been said today to indicate the wide scope that there is in charter work. We are now carrying articles varying from strawberries to racehorses and from monkeys to ships' crews all over the world in charter aircraft. A very large prospect indeed has been opened.
I spoke in 1951 of the car ferry service, which had been pioneered by a private company, and which I thought ought to be encouraged by the Government. Then there was the flying boat operation. The operator was the only British operator of a flying boat; and many of the difficulties which have been referred to today stemmed from the fact that this single operator was not able to share the offshore facilities which would be available if there were more flying boat operations from this country. I felt then, and I feel now, that it would be good for the country if the flying boat operations could be encouraged.
I have also stated that, properly con—and it needs some controlling—inclusive tours could make a valuable contribution to our national airline development. There is no reason why the Corporations should not enter that business. Indeed, they are now doing so. Although they are going into it, I feel, as I have always said, that that type of operation lends itself especially to the more flexible and individual approach of small independent companies.
§ Mr. P. Williams
Is the hon. Gentleman going so far as to say that he would limit it to independent operation, or not? I am not sure what he means.
§ Mr. Beswick
I did not say that. I said that the Corporations are going into that business, and I am pleased that they are, and there is competition, but, looking at what is involved, I feel that the smaller private company is in a position to exploit that business better than the Corporations can.
775 The question which we have been trying to answer here is: accepting the opportunities within the defined area which I have tried to describe, an expanding area, where do we go from this point? There have been developments in scheduled operations. There have been the combined air and coach services, and there have been some small local scheduled services which would never have been offered by the Corporations had it been left to them. In these cases there is scope for what the Motion refers to as services in association with and as complementary to the activities of the Corporations.
But the Government have gone further; and this is where the controversy is reached. They have gone to an extent where I think the services have been to the detriment of the Corporations. We have had the so-called Colonial Coach Services. It was stated originally in justification of them that they generated new traffic. The case was that they were a low-cost service with certain restrictions, which meant that the passengers carried would not otherwise have travelled with the Corporations.
But no one today seriously says that Colonial Coach Services are generating new traffic, or generating traffic which the Corporations could not or would not otherwise carry. The fact is that B.E.A. has made application for a night service to Cyprus at a fare which would have catered for precisely the kind of traffic that we have had in mind, low fare traffic, and yet the Corporation has been denied by A.T.A.C. the right to operate the service.
The hon. Member for Stockport, South (Mr. H. Steward) said that it was Government policy, under the terms of the A.T.A.C. directive, to preserve the network of scheduled services for the Corporations; but even that is not now true. By the present and projected services of Airwork and Hunting to Africa, inroads are being made into the scheduled network of the Corporations. It is now proposed to duplicate services to Africa not for any operational or commercial reason, but simply to satisfy the pressure put upon the Government. The service to Africa can do no more to bring down costs than is already being done by the Corporations. It cannot be 776 justified on any technical or economic ground.
This duplicated service, which is not a competitive service because the traffic is to be divided between the private company and the public company by ministerial direction, makes no more sense than would the laying of a second gas main down a street by an independent gas company. This is just about as sensible as laying another railway track to Cornwall to operate against the present railway service. When we see what has recently been done and when we hear what is now being asked, it is clear that we are getting beyond the point at which the independent operator can properly be satisfied.
Two arguments have been advanced today, one that the Corporations are not expanding sufficiently rapidly, and the other that they are already so big that they will lose efficiency if they expand further. I want, first, as my hon. Friend the Member for Reading (Mr. Mikardo) did, to examine the second charge, that the Corporations have passed their optimum size. This suggestion is, of course, taken from the report of the Air League.
However, there is no indication in that report about how size is to be measured. If it is to be measured by the number of employees, what about sub-contracting, when the service can be offered without putting another employee on the books? If it is to be measured by loads carried, surely some distinction should be drawn between an airline with full loads operating a limited number of routes and an airline with loads spread very thinly over a very wide network of services.
Probably the most sensible measurement would be that of unduplicated route-miles, but, if we take that measurement, we find that K.L.M., Air France, S.A.S. and Sabena, let alone the Americans, are all bigger than B.O.A.C. and B.E.A., and no one will suggest that all those companies are inefficient.
If one takes the criterion of capacity ton-miles, again the British Corporations do not appear to be oversized as compared with admittedly efficient American companies. The figure of 120 million capacity-ton-miles is quoted in the Air League report—it is taken from the very interesting book by Stephen Wheatcroft 777 —to support the charge that after one reaches the figure of 120 million capacity ton-miles efficiency begins to fall and no further economies can be made. As a matter of fact, Wheatcroft does not say that in his book. Moreover, B.O.A.C. itself has now gone by the 120 million mark and in its further expansion its costs per ton-mile have, in fact, fallen.
The opposite argument is that the Corporations are not expanding sufficiently rapidly and are not getting a sufficiently large share of world traffic. It is very difficult to see how that charge can be substantiated by those who, in the main, are anti-nationalisation and pro-private enterprise. The charge does not lie against B.E.A., which has not only expanded as rapidly as world expansion, but has far outstripped that total expansion. Its rate of growth in recent years has been almost twice as large as the rate of growth in world traffic as a whole.
So we return to the criticism of B.O.A.C.—that B.O.A.C. has slipped behind. That has been simply because B.O.A.C. has been let down by the product of private enterprise and it is still not properly appreciated just what a blow it was to the Corporation when the Comet failed. I have had the opportunity of going to different parts of the world, Canada, South America, and the United States, and was most impressed by the way in which people there told me how Sir Miles Thomas had enhanced British prestige and the Corporation's prestige by his salesmanship on behalf of the Comet aircraft. He addressed influential and large audiences upon this theme and much credit was gained for Britain as a result of the case he put forward.
Of course, all that crumpled in the air, as it were, when the Comet disintegrated. It has taken a good deal to get the Corporation over that blow and, personally, I do not think that it is yet over it.
§ Mr. P. Williams
I know that the hon. Member is not making too much of the point that it was a private enterprise plane which crumpled in mid-air, as he put it. However, if he was, surely he will agree that it has been a private enterprise plane, the Vickers Viscount, which has done so much for B.E.A.
§ Mr. Beswick
I gladly pay tribute there. In these debates I almost invariably pay tribute to the great partnership between B.O.A.C. and the Vickers Viscount. I am now simply dealing with a criticism about B.O.A.C.
It is fair to reply that it is not only the British aircraft constructor who has failed the Corporation. I do not in any way want to belittle the enthusiasm and the great help which the Joint Parliamentary Secretary has shown, but it is impossible to say that the Corporation has been encouraged by successive Conservative Ministers.
If the full story of the way in which efforts have been made to divert Corporation business into private hands were ever told, it would make for reading every bit as intriguing as that which we had in the Report of the Tribunal which inquired into the Bank Rate leak. As a matter of fact, grouse moors would come into it. There has been an attempt to put forward proposals for partnership and for the diversion of certain routes and all that has taken a good deal of time and energy on the part of the Corporation which should have been put into the expansion of British air transport and the capture of traffic from foreign competitors.
It has not simply been the specific restrictions which have been put on the Corporation by Conservative Ministers about which I complain, although they have been serious enough. Restrictions have been placed upon the Corporations in trooping. Specific restrictions have been placed upon them in freight. Further restrictions have been imposed about new schedule services. But it is not simply those specific restrictions about which I complain. It is the restrictionist psychology which has spread through the Corporations from the Ministry. The Corporations have not the encouragement for an aggressive expansionist approach which was there until a few years ago.
My hon. Friend the Member for Reading made one or two references to specific licences which had been granted by the A.T.A.C. to private operators and which had meant that traffic had been lost to the Corporations. I could give additional examples, but I do not wish to take up too much time. I hope that the particular case which my hon. Friend the Member for Birmingham, 779 Northfield (Mr. Chapman) mentioned of the traffic route into Las Palmas will be regarded very seriously indeed.
Here is a case where B.E.A. could operate a service in the winter months and could thereby cut its administrative costs. So far, permission has been withheld, in the first place, by the A.T.A.C., but in accordance with directions given by the Minister. There are other cases mentioned by my hon. Friend the Member for Reading which add up to a material diversion of traffic from the Corporations to private companies and which have an immediate and practical result in putting up the general overhead and administrative costs of the Corporations.
§ Sir P. Macdonald
Why should B.E.A. want to operate from Gibraltar to Palma? The Gibraltar stop is on the direct route to Madeira. I have been on it myself. Why should B.E.A. want to make the diversion and to take traffic from independent operators?
§ Mr. Beswick
I think that the hon. Member's geography is probably not too clear. I was talking of Las Palmas and not of Palma, in Majorca. If I am asked why B.E.A. want to operate there, it is because at that time of the year the Corporation has aircraft available and can offer a comfortable, reliable and efficient service helping to reduce its general costs and giving the public a good service into the bargain. I think that in the ordinary way that right to operate should have been granted to the Corporation.
I believe that the smaller, enterprising operator has a contribution to make. In charter work, in freight and in those specialist, individualist services such as the air-coach or the car-ferry operation there are independent operators who have shown initiative and ideas, and they should be encouraged. The inclusive tour is a project which, properly licensed and kept within reason, is clearly an operation in which the private operator can make a special contribution and in which he should be given some security of outlook.
I know that there are some aviation enthusiasts who do not work well in the large organisations but give of their best in a smaller enterprise, but no aviation enthusiast should think that the present 780 Government will necessarily help the smaller man. I have already mentioned two companies which, six years ago, I said from the Government Box that we should support. One was Silver City Airways Limited and the other was Aquila Airways Limited. In the meantime, both have been swallowed up by a larger concern.
When the Air League's report talked about encouraging independent operators, it talked about encouraging selected operators. The argument in this report is for a third Corporation to be run by a combination of independent operators. When the hon. Member for Stockport, South talks, as he did today, on behalf of some smaller companies, I would remind him that if he gets behind the kind of pressure which is exerted for greater support to the so-called independent operator he is not being the best friend to the smaller company.
Inevitably, if the pressure is satisfied it is not the smaller company which will get better terms from the Government's policy but the larger and bigger-financed operators who are left in charge of the independent field. As my hon. Friend the Member for Reading said, while there may come a point at which we can think again of a third Corporation, if it is receiving State encouragement, State support and some State privileges, it need not necessarily be, and ought not to be, a privately financed Corporation.
It can be financed more economically by general Government policy and guarantee along the lines of B.O.A.C. and B.E.A. Therefore, I say that whereas there may well be a case in the future for a third Corporation, or a third division, I would not accept the argument that has been advanced today that that Corporation should be under some form of privately-financed ownership.
I make this one final point about security. As I have said before, I think that those smaller companies that fill in the gaps, that complement the services operated by the Corporations, should be enabled to do so with some sense of stability and security. But when we get these further demands for the third Corporation, the sort of demand that has been put forward for an Atlantic freight operation, with B.O.A.C. providing capital along with the capital of some 781 of the larger independent operators—when we get to claims of that size, we are talking about an expansion that cannot look for stability and security in the future.
It is at that point that insecurity creeps in. But for the type of operation that I have tried to define, the genuine, voluntary association with the Corporations, I am sure the future offers expanding, stable and secure opportunities. With the Amendment that has been tabled in the name of some of my hon. Friends, I would have thought that the Motion could have been accepted by the House.
§ 3.8 p.m.
§ Mr. Farey-Jones (Watford)
My first wish is to praise my hon. Friend the Member for Stockport, South (Mr. H. Steward) for tabling this Motion. It is a courageous Motion which has served an extremely good purpose, because I have never known such an exercise in Lilliputianism as that shown in the speeches of hon. Gentlemen opposite. I hasten to make one apology. I did not hear the hon. Member for Reading (Mr. Mikardo), but that was for reasons beyond my own control.
After listening to what has been said today, I am convinced that this country as a whole has to adopt a fresh and completely imaginative approach to the future of civil aviation. We have only to remember the topic that the House has been considering this week—the adoption of the missile policy by the Ministry of Defence. The effect of that policy on Transport Command and on the R.A.F. will automatically produce a state of affairs in the aircraft industry which will affect every Member of the House and their constituents, whether they are employed in the Isle of Wight, Ulster or elsewhere.
I was delighted to find in the speech of the hon. Member for Uxbridge (Mr. Beswick) a much broader vision than I had previously heard from the other side. The argument that continuously comes from hon. Gentlemen opposite treats the independents as if they were some kind of fleas breeding on the bodies of the Corporations when, in reality, the independents, as they always have been throughout the whole course of air transport, are, and will be in the 782 future, the people who have brought forward the ideas, the new projects, the new plans. That is so, going right back to the days of Freddie Guest, Woods Humphries, Sefton Brancker, Albert Plesman, Juan Trippe, Kingsford Smith—they all started as independents. They all started with what has been lacking in the Corporations for many years, and that was the enthusiasm which automatically dies when the Corporation becomes a monolithic monstrosity.
I speak with no personal motive. I have no personal interest whatsoever in the independents as they exist at the moment. But I have been in air transport since about 1928. The hon. Member for Uxbridge knows that I have been on the Council of the Air League for years. I was one of the British members of the pre-war International Air Traffic Association. With Colonel Gorell of America and Mr. Goedhaus of Holland, I was among those who brought into being the present International Air Transport Association, which is probably the finest international air organisation today because it works in complete harmony.
That organisation has no illusions about the future of air transport. With their present allotment of spheres of influence, both B.O.A.C. and B.E.A. in the next fifteen years have got as much on their plate as they can possibly cope with. The policy of this and any subsequent Government should be directed to giving a wider sphere of influence to the people whom we now call the independents, and to developing the Ministry of Civil Aviation itself, because I should like to see the Ministry of Supply pooled with the Ministry of Civil Aviation and made one Ministry, for these reasons: the development of aircraft, even the development of guided missiles, autogyros and helicopters, will, perhaps, represent about 80 per cent. of the basic industry of this country in twenty years.
I think I ought to mention how much I deprecated the kind of speech of the hon. Member for Birmingham, Northfield (Mr. Chapman), whom I am sorry is no longer present. That kind of speech should never be made in this House, because those of us who have any knowledge of the handling or utilisation of flying boats and those with knowledge of the Canary Islands know that that company put up 783 a magnificent effort, using machines that were years old, and it deserves the utmost credit for carrying out the service.
During the war, many hon. Members on both sides of the House had to use those flying boats, as I did, to fly across the South Atlantic and even up the River Amazon to provide certain essential materials to the Forces. I suppose the hon. Member for Northfield will say that as a result we can expect an accident to happen somewhere to one of these flying boats.
Successive Governments have never realised the fundamental fact that this island is still the centre of the world and that instead of having one or two national organisations we should have four or five. I should like to ask the hon. Member for Uxbridge why we have not in 1958 a British air service to South America. During the debate there was some discussion about Las Palmas and the Canary Islands. As far back as 1934, I myself carried out an air survey of the South Atlantic because it was intended to run a flying boat service to South America and all round that country. The obvious thing was that Las Palmas, the Canary Islands and the Azores should automatically be part of the sphere of influence of whichever airline was to run a service to South America. Today, there is no British airline to South America. Why not? Are the aircraft not available? It is not that at all.
§ Mr. Beswick
It is perfectly true that Sir Miles Thomas, in his day, flew a Comet aircraft to South America to open a service there. The aircraft has not become available.
§ Mr. Farey-Jones
But the service is not there. Surely, it would be justifiable to say to one of the independents, "B.O.A.C. and B.E.A. have enough on their plates. Why do you not develop this particular route?" Everybody in the air world would at once agree.
We have heard some sound common sense today about freight, but does anyone really assume that air freight in the future will be carried by what we now regard as the normal transport aeroplane? Not a bit. The Korean war, the fighting in Malaya, and all the developments in North and South America today point to one thing, and the Fairey 784 company in this country is producing it, that is to say, an ever-changing type of helicopter, different from what we know today, for the transport of air freight. A new technique is being evolved. Why cannot some of the independents be selected for the purpose? Can anyone say that, throughout the British Commonwealth, there are not adequate spheres of influence to develop medical flying services or agricultural flying services—work in which those who are now trying to establish a rightful place in the air world can at least find guaranteed scope for development.
One hon. Member asked, "What about proving?" The real answer is what the international airlines—PanAmerican, T.W.A. and S.A.S.—have already realised, namely, that within ten years the amount of world air traffic will be not doubled, as we think now, but trebled, quadrupled or even, perhaps, multiplied by ten. We are approaching the problem almost with our heads in the sand instead of reinforcing the Ministry of Civil Aviation and putting behind it all the power at present being used by the Ministry of Supply.
I come now to what is my favourite subject, my own personal interest, that is to say, the urgent need to develop atomic-powered flying boats. We have, somewhere near the Isle of Wight—or they were there a few months ago—the Princess flying boats. There is available in a certain place in the United States advanced technology on the atomic equipment of a flying boat. Why not marry the two, and, perhaps, use the Isle of Wight, or, if necessary, Belfast, for that particular type of development? Year after year, in the air world, we have spent millions and millions of £s, not only here but in Australia, Canada and the United States, building ever bigger and longer runways and aerodromes; yet anyone with any vision knows perfectly well that, in twenty-five years, the aircraft will not be able to use the existing runways because they will be of a completely changed design. One of the independent companies could well be selected to accept this work.
Those who have thought about the future airline network of the world are becoming increasingly sensitive to the very great importance of development in the polar regions. As far as I am 785 aware, there is today no British concern—B.O.A.C., B.E.A. or anyone else—taking an interest in air routes across the North or the South Poles.
Lastly, I should like to emphasise that what we really need to do is to re-orientate our entire thinking about the British air transport problem. We must realise that for the last five years the British proportion of the total world effort has been steadily going down, and anything that can be done, either by amendment of the Air Navigation Act, 1947, or anything that this Ministry can do to open the floodgates and to show the British flag, is something which I am sure will receive the complete support of both sides of the House.
§ 3.21 p.m.
§ Mr. Stephen McAdden (Southend, East)
It was not my intention to address the House today upon this matter, although I think there are many reasons why I should. But in my own constituency we have an airport whose passenger handling is the third largest in the country and where independent operators, to whom reference has been made, have played a considerable part. Most hon. Members will be familiar with the excellent work done in the building up of a first-class ferry service for cars and passengers from Southend to Ostend, Calais and Rotterdam. This service, I think, is very much valued by people, and is a sphere of operation in which the independent operators are particularly useful. I should like to see an extension of those activities, as envisaged in the Motion.
I was goaded into taking part in the debate by what I thought were the rather offensive remarks of the hon. Member for Birmingham, Northfield (Mr. Chapman). I have already informed him that I intended to refer to his remarks. I think that his analysis of the situation and his suggestion that the independent operators were taking traffic away from the Corporations by misleading and extravagant advertising were not borne out by the examples that he gave.
I was particularly sorry to hear him quote a concern in my constituency, Channel Airways, as being people who led him up the garden regarding the service that they operate from Shoreham to Paris. I am sorry that he is not here, but I told him what I would say. He 786 lives as close to Shoreham Airfield as I do to Southend Airport. If he does not know by now what planes are operating on this service he must be more naive and gullible than I thought. By living in the district, it ought to be possible for him to see the kind of planes operating on this service. Surely it is possible for him to distinguish between the different types of plane which are operating from Shoreham Airport.
Nor am I altogether satisfied that advertising which gives a rather greater garnish to the attractions one has to offer is necessarily confined to those who operate airlines. I have known of people operating boarding houses and private hotels who sometimes advertise their attractions as being closer to the sea than is actually the case. I would have thought that the hon. Gentleman would be one of the last to take exception to the kind of advertising that he mentioned.
Channel Airways, together with many other independent operators, have started from small beginnings. This firm, which was subjected to attack by the hon. Gentleman, was started by a chap with a distinguished career in the war. He had very little money but managed to build up a service very much appreciated by the people who saw fit to use it. It is true that he had not at that time the resources to buy a more modern plane, but, as a result of his hard work and energy, his business is improving. He is improving his planes every year, and I should have thought that that was something worthy of praise, especially when one remembers that some of those who criticise the independent operators were the very first to object when they went into the market to buy first-class planes which until recently they were not allowed to use. When they were allowed to use them, they were subjected to a great deal of criticism from some of those who complained that their aircraft are not as up to date as they ought to be.
I should like to ask my hon. Friend the Parliamentary Secretary a question of which I am sorry I have not given him notice. If he cannot give me the answer now, I am sure that he will give it at some later stage. A suggestion is often made that the independent operators are chiselling traffic away from the Corporations by unfair methods. I wonder whether the Minister can say 787 why he has granted a licence to the Corporations to operate a helicopter service between Gatwick, London and Southend. The Corporations, I understand, have no machines with which to operate the service, and they do not know when they will have them. The whole idea of putting in the application and getting it granted is to stop anybody else from operating the service. That does not seem to me to be an example of the fair trading methods which hon. Members opposite are so fond of expounding. It is suggested that the Corporations are "pure white", but sometimes they are up to some smart tricks. If anybody wants my advice concerning some of the tricks, I have a good idea where they are getting them from.
Therefore, whilst the hon. Member for Northfield and those who think like him are perfectly entitled to submit valid criticisms of the independent companies—to which the independent companies would, I am sure, be very pleased to reply—it is rather hitting below the belt to quote illustrations such as those used by the hon. Member for Northfield. I am particularly sorry that he saw fit to refer to the uniform of the stewardess, especially when the stewardess in question has since died in a crash.
§ 3.27 p.m.
§ The Joint Parliamentary Secretary to the Ministry of Transport and Civil Aviation (Mr. Airey Neave)
This debate on air transport, and particularly independent air transport, has ranged widely. The whole House will be grateful to my hon. Friend the Member for Stockport, South (Mr. H. Steward) for introducing this subject today, and for the fact that we have been able to have a comprehensive discussion of this important subject.
My hon. Friend has now left the Chamber, but hon. Members will, I think, agree that, although we may query, as I shall, some of the statistics which he gave from a report about which we have heard a good deal, he moved his Motion most ably and provided us with information which some of us perhaps had not heard before. I was very glad to hear him speak on this subject.
We have had a number of other speeches, to which I shall refer. All of them have shown that we are thinking 788 now more and more in terms of air transport and less in terms of political controversy about the merits of public Corporations and independent operators. Although we have had a recent debate on the Report and Accounts of the Airways Corporations, it has proved most valuable to have a separate discussion on the contribution of the independent operators to the air transport effort.
Unfortunately, this debate has been overshadowed by the tragedy yesterday to a Bristol Wayfarer of Silver City Airways. I should like to echo the remarks of my right hon. Friend the Minister and of other hon. Members in offering my sympathy to all those who suffered loss. I also pay tribute, as hon. Members have done, to the record of Silver City Airways. If I may repeat my right hon. Friend's words, Silver City Airways have operated for twelve years and carried 1½ million passengers during 200,000 flights without any incident involving death or injury to a passenger. In the expanding world of aviation, we have to consider these problems of safety, and I assure hon. Members that my Department, which is responsible for matters of safety, has them always very much in mind.
References were made by my hon. Friend the Member for Stockport, South to the international traffic, and he wondered whether this country was obtaining an adequate share. The hon. Member for Reading (Mr. Mikardo) made a powerful speech—other hon. Members also referred to this matter—pointing out that some of the figures given by my hon. Friend were not wholly illuminating. In fact, my hon. Friend omitted a very important proportion, that of the United States domestic traffic, which is not available to the rest of the world. Without wishing to be critical about what he said, may I point out that the United States' share of traffic has fallen from 39.7 per cent. in 1951 to 36.4 per cent. in 1956—I am now speaking of international scheduled traffic. The United Kingdom share in the same period has fallen from 14.7 per cent. to 13.6 per cent. Those are much more realistic figures.
According to my information, the fall in the United Kingdom figures was due mainly to B.O.A.C. aircraft difficulties. We hope that the B.O.A.C. re-equipment programme will not only allow the 789 Corporation to maintain its proportion but increase its capacity and traffic at more than the average world rate. I look forward to the success of B.O.A.C. in that direction and to B.E.A. maintaining its present good position.
I do not wish to get involved. in any lengthy discussion about the optimum size and capacity of the Corporations, but I should point out that in capacity ton miles the American companies, among others, have a far greater capacity. Pan American, for example, had 692 million capacity ton-miles in 1956–57 and T.W.A. had 738 million capacity ton-miles. In 1956–57, the figure for B.O.A.C. was 286 million capacity ton-miles. No one has ever suggested that the United States carriers have passed the point of optimum efficiency on account of that. The matter was raised by my hon. Friend, and other hon. Members have replied, but I thought I ought to make those comments.
I was impressed by the remarks of the hon. Member for Feltham (Mr. Hunter), who thought we should extend our services in the world. He referred to something of great interest to the House, the recent negotiation and signature of the air services agreement with the Soviet Union. This agreement between the Governments was signed on 19th December, but it will not come into force until an exchange of notes has taken place fixing the date of its operation. At the moment, the position is that Lord Douglas of Kirtleside has just signed a commercial agreement between the two companies, B.E.A. and Aeroflot. The agreement provides for the operation of air services between London and Moscow, with a stop at Copenhagen, in each direction by Aeroflot and B.E.A.
The hon. Member also mentioned the question of noise. We are still considering that matter with the Soviet Union, and the arrangements agreed between the delegations of the two countries in this agreement provide for the operation and testing of the noise level of aircraft used by either country on the proposed service, a matter which Her Majesty's Government regard as of particular importance in the advent of the new generation of pure jet civil airliners. I know that the hon. Member has pressed for international consideration of this problem on many occasions 790 in the House, and he will be glad to know that we are actually carrying this out with the Soviet Union at the present moment.
Both he and my hon. Friend the Member for Cheadle (Mr. Shepherd) referred to the future of air transport and to the need for cheaper fares. Several hon. Members have pointed out some of the economic difficulties of the Corporations, in particular, and of other airlines in that respect, and reference was made to the need for a differential in fares. If I may repeat to the House what I said in a recent debate on the Report and Accounts of the Corporation:The most important development of the international services is a proposal by the International Air Transport Association, at present awaiting the approval of Governments, to introduce a new low fares service on the North Atlantic. This service, to be known as the economy class, is to be introduced from April, and the London-New York fare will be £90 single, compared with the present tourist fare of £103 12s. Tourist fares will be increased so that the differential between the new economy fare and the tourist fare will he 20 per cent."—[OFFICIAL REPORT, 27th January, 1958; Vol. 580, c. 101.]I thought my hon. Friend the Member for Cheadle might perhaps like to be reminded of that, because, in fact, there will be the differential for which he was asking.
Now, it is my turn to engage in this discussion on the future of the independent airlines in this country and of the Corporations, too. I should point out that my right hon. Friend is responsible for British civil aviation as a whole, and that he is concerned with the welfare of the Corporations and the independent companies alike. He has pointed out on more than one occasion that much of what we are considering today is governed by the world demand for traffic, and not necessarily by party points of view. I accept that view, and I intend to pursue that line in what I have to say today.
I think today's debate shows that the Government's air services policy is not far wrong, since it is suggested on the one hand that we have been too generous to the independent companies, at the expense of the Airways Corporations, while on the other hand we are accused of not giving to the independent companies a large enough share of the traffic. The criticisms suggest that we have, in fact, 791 achieved a fair and reasonable balance and that on the whole Her Majesty's Government are pursuing the right policy at the present time, although I do not suggest that the policy should not be reviewed from time to time to take account of the growing traffic and changing conditions. Indeed, unless that is done, we would not be able to deal with some of the developments to which hon. Members have referred in the growth of air traffic.
When the new air services policy was introduced in 1952—it was new except in so far as this Government acted, as the hon. Member for Uxbridge (Mr. Beswick) said, on the Civil Aviation Act of his day—the Government emphasised that, although they were proposing to give greater opportunities to private enterprise to take part in air transport development, they had no intention of undermining the position which had already been established by the Airways Corporations in the highly competitive field of air transport. I suggest to the House that the policy has worked out in just that way, and I think the onus is on those who criticise the policy of the Government to show that there has, in fact, been material diversion of a substantial kind from the traffic of the Corporations.
The two Corporations have continued to expand their services and their total traffic and are now more firmly established in the international field than they were in 1952. They have had their difficulties over aircraft. I have already referred to some of these in connection with B.O.A.C., but these are now being satisfactorily sorted out in a way which we hope will enable the Corporations to maintain their strong position.
At the same time, however, the independent companies have expanded from their small beginnings to the stage at which they now provide an important part of the United Kingdom traffic. At the same time, they have continued to build up their non-scheduled or charter traffic and have probably been helped to do so by the increased opportunities available to them in the scheduled field. The figures of the growth of independent companies' scheduled traffic speak for themselves. I believe that the hon. Member for Northfield has already received information about this in reply 792 to a Parliamentary Question: I will not, therefore, repeat the figures. But by 1956–57 their scheduled traffic had grown to over 25 million load-ton miles. My right hon. Friend is satisfied that this development has been achieved without materially diverting traffic from the two Corporations.
Because the Airways Corporations were already operating services on all the major international routes in 1952, most of the opportunities for the independent companies were in the operation of secondary routes and the provision of special types of services. In fact, the independent companies were encouraged to try out new routes and new types of service to supplement the operations of the Corporations, and great credit is due to them for having done this so well.
As a result, the public have been provided with a variety of services that might not otherwise have been made available. Hon. Members who dealt with this point were perfectly right in saying that. Perhaps the best-known of the special services is that to which the hon. Member for Uxbridge referred and which, I understand, he had some hand in starting, namely the car ferries pioneered by Silver City Airways on the short route across the Channel; these have been extended to other routes and are operated also by Air Charter.
Another major contribution by the independent operators has been the operation of the more controversial inclusive tour services. These services are arranged as a kind of package holiday, the passenger paying the travel agent an inclusive sum for air travel, hotel accommodation and possibly motor-coach travel. These tours have proved extremely popular, partly because they are offered at an attractive total charge, but also because everything is arranged in advance for the passenger. In contrast to what the hon. Member for Uxbridge said, the greater part of this traffic is new and is not obtained, as some hon. Members have suggested, at the expense of B.E.A.
§ Mr. Beswick
The hon. Gentleman has misunderstood me. I said precisely the opposite. I went out of my way today, as I have done on previous occasions, to say that this traffic is new. The service which I criticised, and upon 793 which I hope the hon. Gentleman will comment, are the duplicated services down to Africa—the Colonial Coach Services.
§ Mr. Neave
I am coming to that point. I apologise if I misunderstood the hon. Member. Perhaps it was another hon. Member who said that the inclusive tour traffic is not new.
This traffic clearly is new. I know that B.E.A. said in its Annual Report for 1956–57—and this was the point made by the hon. Member for Northfield (Mr. Chapman)—that inclusive tour services had caused a material diversion of its traffic, but I do not think that that can really be established. There were, at that time, other adverse factors at work, notably the shortage in the amount of money available that year to be spent on such holidays, and the Corporation may have over-estimated the amount of traffic that it could expect and for which it should provide. Inclusive tour services are operated in connection with cheaper holidays than those provided by B.E.A. services and generally satisfy a different market. That is my answer.
§ Mr. Chapman
There are examples such as the Majorcan route, where the Corporation found that the traffic increase was much less than it was on similar routes. That was primarily because of inclusive tour services by private operators.
§ Mr. Neave
Of course, the Corporation is always in a position to make representations, like any other operator, to the Air Transport Advisory Council, but that is my view on the inclusive tour services which the independent airlines are providing.
Now I come to the point raised by the hon. Member for Uxbridge, the terms under which Colonial Coach Services, as they were called, were operating. These services are, in effect, third-class services to points in the Colonies, operating with older or smaller aircraft than those used by the Airways Corporations. Until last year most were operated with Vikings but, on the advice of the A.T.A.C., my right hon. Friend agreed that on the routes to Africa the companies could introduce more modern aircraft.
The two companies concerned, Air-work and Hunting Clan, have now introduced Viscounts on their services to 794 East and Central Africa. The services to West Africa require special consideration, because when Ghana achieved independence Colonial Coach Services were no longer appropriate. Airwork and Hunting Clan, therefore, have been allowed to operate tourist services with Viscounts to Accra. On these African routes the two companies are providing a different kind of service from B.O.A.C. They are using smaller aircraft and are making at least one night's stop on the way, so that they are catering for those who, although they prefer air transport, are not in too great a hurry. I am satisfied, as is my right hon. Friend, that although they have introduced more modern aircraft, Airwork and Hunting Clan will continue to cater for a different market to that served by B.O.A.C.
§ Mr. Beswick
Really, the Joint Parliamentary Secretary should not say that unless he supports it with evidence. The only difference today is that one is allowed to operate the service at a lower fare than the other, and it is allowed to do so because the Corporations are not allowed to reduce their fares. Whether they stop overnight or not does not generate a new class of traffic. Even worse, in the future both the private companies concerned and the Corporation will operate the so-called T.34, precisely the same class of traffic.
§ Mr. Neave
I do not think I should be led into a discussion on the T.34 class now. At present it is fair to say that these operators are operating a different kind of service from B.O.A.C.
I must leave that point, however, and pursue one or two other points raised by the hon. Member for Reading. He referred to the Terms of Reference of the Air Transport Advisory Council. The hon. Gentleman is well aware of that part which refers to the question of material diversion from the traffic of the Corporations. I shall look forward to reading his speech tomorrow, because he gave examples of cases where the Corporation was suffering because applications had been made by private companies for routes which they were really not going to operate. I refer him, in answer to his question, to the Terms of Reference, paragraph 3 (ix). I will read that paragraph, because it shows that the Minister has powers to deal with 795 this matter and has, in fact, done so on a number of occasions. The paragraph reads:The operation by a Corporation or an independent company on any route of a service from which a Corporation or independent company has withdrawn for other than temporary or seasonal reasons.In those circumstances the Minister can take action, and he is in a position to withdraw the licence from the private company. If examples are given to the A.T.A.C. of what the hon. Gentleman suggests, and are substantiated, no doubt the Council will consider them.
The next rather important question, so ably raised by my hon. and learned Friend the Member for Warwick and Leamington (Mr. John Hobson), is that of the development of all-freight services. When the new policy was introduced in 1952—I say "new policy", although I bear witness to what was said by the hon. Member for Uxbridge about the part which he played in it—it was hoped that the independent companies would be able to develop vigorously from this country all-freight services, which up to that time had been rather neglected. Unfortunately, I do not think the prospects have proved as good as we expected. The carriage of freight by air is still relatively expensive, and unless the goods themselves are valuable, the extra cost can be justified only if it brings some additional advantages. The greatest advantage is speed of delivery, but this is to some extent nullified if the service operates only infrequently.
There are a number of other matters on the subject of freight with which I should have liked to deal if I had had time. Perhaps I may communicate with my hon. and learned Friend about them. He will be aware, as other hon. Members are, that, so far as the independent companies are concerned, the terms of reference of the Air Transport Advisory Council were designed, among other things, to encourage the freight operators.
My hon. and learned Friend asked me whether Elmdon Aerodrome, near Birmingham, was available for freight operation. That is so, but I do not think I could say that traffic could be artifically channelled there, though it is a matter about which I will communicate with him.
796 On the subject of freight again, the hon. Member for Reading suggested that I might go incognito, if I could, to London Airport to investigate Customs delays to freight. He will be aware that I have been taking up the matter in certain quarters and that discussions between the representatives of the Corporations and other operators at London Airport and the Customs are at present taking place over a wide range of Customs facilities, and he can be assured that my Department is following the matter up with very active interest.
I wish, in closing, to refer to a matter mentioned by my hon. Friend the Member for Stockport, South, the position at Liverpool and the question of the services provided by Starways, who operate from Liverpool. The matter has been carefully reviewed by the Air Transport Advisory Council, and my right hon. Friend saw a deputation about it. Starways was particularly concerned about the refusal of permission for a normal scheduled service to the Channel Islands. I will communicate further with my hon. Friend, but I am afraid that I cannot intervene any further in the question of applications. Liverpool City Corporation is now considering whether to take over Speke Airport when it is released from requisition in 1960. This may have some effect on what my hon. Friend said about Starways but I understand that at present no decision has been made on that point.
I wish to say a word about trooping, which has been mentioned by a number of hon. Members. The last statement made in the House was during the Air Estimates debate last year, when the Secretary of State for Air reaffirmed that the Government's policy has been to invite the independent civil operators to carry out the air movement part. We have heard several different approaches to the problem today. Our view is that the main business of the Corporations is scheduled operations and that the independent companies are more suited in many ways to charter operations and to trooping movements. That has been our reaction to the problem for some time. At present, discussions are still proceeding on the whole subject of trooping.
The debate has been most welcome, from many points of view, to many hon. Members and I am glad that so many have been able to take part. We are all 797 agreed that we see a very great future for British civil aviation and that we wish to see B.O.A.C. and B.E.A. maintaining and improving their position and doing better every year. Subject to what has been said today—and certainly my right hon. Friend will take note of this very constructive debate—we shall continue to try to keep a fair and reasonable balance between the Corporations and the independent operators.
We shall try to give the independents a fair crack of the whip, particularly where they have built up a business with their own capital, but we will have regard to everything which has been said today about the policy as it affects the traffic of the corporations, which most certainly still remain our main flag carriers.
Amendment proposed: After "to" to insert:
but not to the detriment of."—[Mr. Reeves.]
§ Amendment agreed to.
§ Question, as amended, agreed to.
That this House takes note of the contribution being made by United Kingdom independent operators in the field of air transport, and is of opinion that the potential future growth of world air traffic gives scope for an accelerated expansion in association with or complementary to but not to the detriment of that of the national corporations.