§ 1. Mr. Rhodes James
asked the Secretary of State for Trade what progress is being made to secure greater competition in the determination of air fares in Europe.
§ The Under-Secretary of State for Trade (Mr. Reginald Eyre)
We are making less progress than we would wish because many other European Governments wish to retain the present tightly regulated system and we can make progress only by agreement. But we support innovative fares proposed by British airlines; we refuse fare increases when we do not think them justified; and at our initiative the Commission is examining air fares in the Community, with a remit to report back to the Council of Transport Ministers.
§ Mr. Rhodes James
I thank my hon. Friend for that reply. Is he aware that the current level of standard air fares in Europe is ludicrously and unacceptably high in relation to other routes and is actively damaging to the increase of air traffic within Europe? Will he press this matter considerably further? What is wrong with further competition, particularly from the private sector, in order to improve the situation?
§ Mr. Eyre
We believe that major liberalising steps are needed, because air fares too often are too high. More innovative steps, such as lower standby fares and "mini-prix" fares, should be approved. Because of our international agreements, we cannot decide on the level of international fares without the agreement of the other Governments concerned.
Is it not true that there is a necessity to protect existing capacity within the European airlines, and that there is a relationship between the losses of British Airways and the attitude being taken by the Government on a free air policy?
§ Mr. Eyre
It is true that the world economic recession is adversely affecting the trade of British Airways and of other international airlines, but I emphasise that, against that background, our aim is to ensure that legitimate fares suit all categories of traveller. That is why my hon. Friend the former Under-Secretary of State is to be congratulated on his initiative in persuading the Commission to examine air fares in the Community and to report back.
§ Mr. Emery
Does my hon. Friend accept that the immense number of air tickets that are sold to what are termed "bucket shops" are in fact sold by the major airlines, including British Airways? In order to obtain a greater degree of competition, and to stop the aspect of illegality in this practice — which is frequently most welcomed by holidaymakers and travelers—should not the Government take a line and attempt to bring the whole "bucket shop" operation into a better perspective?
§ Mr. Eyre
I appreciate the practicality of my hon. Friend's question. I believe that he is right in his view of public opinion, but I have tried to emphasise that the agreement that is made for airline routes includes an agreement about fares. Airlines—or their agents—are required to charge approved fares. It is not possible for us to legalise illegally discounted tickets except by obtaining the agreement of our international partners to lower fares. That is why we are making efforts in that direction.
§ Mr. Neubert
However attractive and long overdue is the prospect of lower air fares in Europe, is my hon. Friend 3 entirely happy that British Airways should be embarked upon the present policy of matching the competition, whether legal or illegal, at a time when it is in such desperate trouble that it is having to borrow millions of pounds to pay its wages bill?
§ Mr. Eyre
My hon. Friend has not fully understood the purpose of, for example, Sir Freddie Laker, where, when lower fares have been negotiated on, say, the North Atlantic run, the result has been to increase the market available and therefore to increase the number of passengers who are able to afford to travel.