§ 4.8 p.m.
§ Debate resumed.
§ Baroness BURTON of COVENTRY
My Lords, I have the feeling that our report has arrived at the right moment, certainly for the travelling public and probably for some airlines, and I would hope as ammunition for our own Government to end what really has become a scandal; namely, the jungle of air fares in Europe.
Before going on, I should like to say something about the noble Lord, Lord 412 Boyd-Carpenter on two counts. Quite apart from his speech this afternoon which set the background so admirably for our debate—as this House will always expect him to do—there are two counts which I would like to comment on to the House. All Members of the committee would like the House to know how much we enjoyed serving under Lord Boyd-Carpenter, how much we appreciated his knowledge, and what a first-class job we think he did in producing what we regard as a very good report. The second point I want to make is a more personal one. I want to thank him for his kindness, his generosity and his forbearance to a most recalcitrant member of the Airline Users' Committee during his period as chairman. That is appreciated too.
I came into this particular area a long time ago and with very little encouragement. Starting on 18th February 1971, I raised what was to me a very obvious fact—that European air fares were far too high. I think the House agreed but, as is so frequently the case, not those in authority either on the ground or in the air. We all know that being right is not enough. You have to be right at the right moment! Hence my opening comment today.
Anyway, in December 1976 the Airline Users' Committee entered the fray. We —that is, the AUC—published a report in depth entitled European Air Fares. From it I wish to quote only two main conclusions which are particularly relevant to the debate today. Paragraph 7:As there is no tariff competition on scheduled services and there is limited entry into the market due to licensing requirements, it is essential that governments and regulatory authorities should take a strong interest in passenger fare levels".The second one at paragraph 10:The present European fare structure is not simple; we concur with the Authority's"—that is, the Civil Aviation Authority's opinion and—description of it as 'a jungle'. On one route, there are 25 different fares, plus six categories of discounts, and even on much less complex routes agents do not always know or sell what is available. The IATA 'mileage scheme' adds further to the range of charges".I do not recall the Government being enthusiastic about that report. In January 1977—one month later—British Airways issued a publication entitled, A Reply to the Airline Users' Committee Report 413 on European Air Fares. There was no doubt at all about their reaction, and I quote from page 17 of their reply:AUC has been led, through a complex piece of faulty reasoning, to make proposals which pose a serious threat to the economic health of the British airline industry. They fail, even, to serve the interests of normal fare passengers, with whose welfare AUC seems most concerned".And so, my Lords, neither welcome nor encouragement for myself in 1971 or for the AUC six years later. Why should I feel that 1980 might be better? I think it might be better because, with tiresome persistence I admit, I believe that the conclusions in the report that we are discussing today are the right ones. I think the public is now well seized of the fact that they have been overcharged in the past and indeed in many cases today. I think the airlines realise, at last, that something will have to be done about it. I say to the Minister replying to this debate, and I hope correctly, that I believe the Secretary of State for Trade will also do something about it.
So, my Lords, if we proceed from there, what did our witnesses tell us? What conclusions did we draw from their evidence? And, most important of all in so far as my remarks today are concerned, what do I feel must, can, and should be done? To save time and to ensure continuity, I would prefer not to weary the House with reference numbers, but all the references are available if any noble Lord cares to ask me.
There is no doubt that scheduled air fares are arranged between airlines and governments. In other words, governments, airlines, and IATA are indistinguishable. Only the air traveller, the consumer, and the would-be consumer, is excluded. National airlines spheres of influence are maintained to the detriment of healthy competition, service to the consumer, and an economical fares structure. Agreements between most countries, except for those in the United States of America and in some cases between the United Kingdom and France, provide for only one national carrier from each country. In no case within Europe is there open entry to an international route, and competition is frequently limited to the two national carriers. Competition on fares is restricted in many bilateral agreements. That is a crushing indictment, my Lords, and it is true.
414 One of our witnesses said that coming from Stockholm to London he was paying three times more per flight kilometre than if he were flying from London to New York. He realised that he was flying probably the most expensive airline in the world—more or less—and he also understood that there must be a difference in fares. What he could not understand was the very high difference.
We on the Committee were well aware that sweeping generalisations cannot be made about the American and European markets, or about the level of fares. However, the disparities between the European and the American fares are so great that the conclusion that scheduled European air fares are too high is unavoidable. But it is not only the Stockholm, or Scandinavian, route. Other witnesses said that air fares on scheduled routes in the Community were far too high. They were concerned that vested interests, within both the member states and the national carriers, would prevent the air traveller being given a better deal.
To conclude this section on fares, although I contend the case is made, I must say that I personally agree with the feeling held by independent airlines; namely, that trends in licensing policy have been anti-independent and anti-competition, and I would support their calls for a review of basic principles underlying that policy.
Surely there must be more scope for more competition and lower scheduled fares in Europe without going to the extreme of the United States domestic deregulation. Obviously this leads us to the area of why fares in Europe should be so high. Here we had a remarkable consensus of views. Leaving aside efficiency and overmanning—both arguable subjects—let us look at security charges, landing fees, and air traffic control. The House knows my views on security charges—views shared by the noble Lord, Lord Boyd-Carpenter, and the airlines. Contrary to both Front Benches in 1978, here and in another place, we believe that national security should be the responsibility of the Crown and not of the individual citizen.
When this House discussed the matter in March 1978, I said I believed it to be 415 true that the United Kingdom was widely regarded as one of the few states whose aviation policies were trend-setting. Unfortunately we set a trend on national security charges, against the wishes of the European Civil Aviation Conference and to the surprise of our partners in the Community, none of whom dealt with its security in such a way.
That was in 1978. What is being said today in 1980? There is widespread resentment that the charge has been increased recently from 85p to £1.65. This charge is made on each arriving passenger, which suggests that we are paying for the passengers to be searched abroad, rather than on outgoing passengers who are checked here. That has always been difficult for the general public to understand, and it seems a most peculiar arrangement, I must agree.
One group of witnesses told us that they had tentative information to the effect that, since the British Airports Authority took over security at Gatwick, the number of persons involved in the security industry has risen from 80 to 340. That interview was in February, yet only last month, in June, I was informed personally that numbers were to be cut drastically, so drastically that the unions involved felt that security was seriously impaired; but the charge per passenger was to remain. The airlines feel, and I agree with them, that this whole area of security charges, and the cost and competence of the operation should be reviewed.
What about landing fees? IATA told us that landing fees in the United States represent between 10 and 30 per cent. of European levels. When asked why European levels were so high, the answer was that in the United States the airports were put on a commercial basis and run commercially, whereas in Europe the airports were government organisations. The British Airports Authority has recently added very considerably to landing charges. British Airways told the committee that they were greatly concerned at this recent demand for a considerable increase in what the airline termed "government charges"; namely, route navigation, airport and security charges, which will average 40 per cent. for them in the year ahead. They emphasised that that was an increase of 40 per cent. over the level of charges paid last year. 416 British Airways have suggested to the British Airports Authority and to the Civil Aviation Authority that they should do something about their own productivity improvements and not just say that these total costs should be passed on to the consumer. When I heard them make that remark I said, "Good for British Airways", for that seemed a most robust and pertinent rejoinder.
I believe that air traffic control is one area where we in this country lead Europe. Many of our witnesses were of this opinion and agreed it would be beneficial if we could take the initiative in the co-ordination of air traffic control in Europe. A witness from the trade union side suggested that the TUC might help by raising the matter through the International Transport Federation. If you are flying from Brussels to Zurich, you are flying a distance which is 43 per cent. greater than the crow flies. These distances may arise because of the necessity to avoid military areas or areas of acute traffic congestion. This witness thought we needed co-operation between the Common Market and the Council of Europe.
IATA told us that one of the cost elements which differentiate United States operations from European operations is the fact that on any route between two points in Europe, the actual distance flown, on average, is 15 per cent. longer than it need be, and what was said next should be on record. We were told that in America, one country with one administration, the tolerance was between 2 and 3 per cent.; in Europe it is 15 per cent., and that is on average. Governments in Europe have drawn up the air routes which result in such deviation, and surely the cost of energy alone today should enforce some drastic reconsideration.
A Member of the European Parliament said it was absolutely vital that action was taken on this issue. The problems revolve very much around those countries with national air traffic control organisations not fully co-operating with their opposite numbers. We were told that the agreement on Euro-control expired in 1983 and that there did not seem to be any firm policy about either the control or what should happen to it. Surely member states must make up their minds as to what they want done with the European organisation.
417 Those are my three main points where I suggest action must be taken—security charges, landing fees and air traffic control —all of them valid comparisons between America and Europe, all of them adding greatly to high fares in Europe. A further point, smaller maybe, but of benefit to travellers, concerned the desirability and possibility of passengers knowing what fares are on offer, not only the travellers but the agents who offer the goods for sale. British Airways believe it is possible and desirable that there should be notices or lists in airlines' and agents' offices saying what fares are available. They argue that simplification in fares enables airlines to do far more to communicate in advertising and promotional material, and to ensure that agents understand it and can answer quickly.
Another witness told us there was growing criticism from consumers because they did not know how much they should pay for an air ticket. Indeed, he went on to say that, going into a travel agency, you can more or less negotiate the price because of the many different fares and discount fares available. Obviously this is far from satisfactory. But our witness stressed, and I think he was right, that it is a problem not only for the Common Market countries but one needing a common European approach; for example, in the European Council there are 21 member states. The Civil Aviation Authority state that what is required is a system where fares are formally filed so that everyone knows what they are and they can be made available to the public. They have done this for the United States and are in the process of introducing it for Europe, which is in terms of members the next most important area. The Civil Aviation Authority file covers only scheduled fares, of course.
That is my list of suggestions—security charges, landing fees, air traffic control and fares lists where tickets are on sale—and I want something done about consumer representation. In this country we have our AUC; we need either general European representation, which might be too large or unweildy, or AUCs in all the countries concerned. We now know that, following an initiative from the United Kingdom the Council of Ministers has asked the Commission to examine scheduled air fares charged in the Community. But we need to examine not 418 only what I would term the high fares in Europe but what causes them, and additionally we need to examine the basic principles plus present trends in the existing licensing policy. Certainly our report has arrived at the right moment.
§ 4.29 p.m.
The Earl of SELKIRK
My Lords, I very much agreed with what the noble Baroness, Lady Burton of Coventry, said. I enjoyed sitting on that committee. I found it extremely stimulating, as one might expect with the combination of Lady Burton and my noble friend Lord Boyd-Carpenter. This is a short survey of a very complicated subject. It is couched in courteous language, but it is really fundamental and radical in its implications. We have had to absorb a great deal in the 20th century, be it motor cars, television or nuclear physics, and this is another subject into which we must bring greater harmony than is the case at the present time.
Aviation as a conventional means of transport has been with us for barely 50 years. It was of course enormously boosted and distorted by the war. Thereafter there set in a phase which I describe as the prestige phase, which is really the dominant factor of the last thirty years or so. If anybody doubts that, I ask him to take a walk from Piccadilly Circus to the Green Park, and he will see just on 20 different airline offices. Two-thirds of that total, I am sure, are there for prestige reasons rather than commercial reasons. I do not say that that is a bad thing, but I should like to read a passage from the report relating to evidence given by the Commercial Director of British Airways. This appears on page 46. He was asked: "Who decides fares?". He replied:I think that the key authority in the whole operation is really the two governments concerned".He was further asked what would be the position if the airlines themselves came to an agreement. He said:There was a time when they did but it is certainly not the case to-day. There are many examples where governments all over the world will say that they do not agree with the levels proposed".That is the situation that we are in today. I would not say that it is by any means wholly unsuccessful. After all, business- 419 men and politicians are able to travel all over the world, and there are certainly plenty of conferences of one kind or another. It may be worth remembering that it was only in 1917, when Mr. Balfour went to the United States, that a Cabinet Minister visited that country for the very first time. We do gain.
But the fact remains that the fares are substantially set, and the licences are given, by two Governments, two airlines, and IATA—a committee of five. This is not a commercial arrangement. As my noble friend Lord Boyd-Carpenter said, IATA is not exercising the dominant action of a cartel which it did immediately after the war; if I may say so, a cartel which would never have been allowed to arise had it not in fact been run by substantially Government-organised airlines.
I do not think that one can ever cost what it takes to run an airline between one point and another. That is a pragmatic problem which does not submit wholly, or indeed very far, to any theoretical solution. May I give three examples, quite simply? When one buys an aeroplane, one has to consider whether it will be obsolete in the year 2000; by that I mean whether or not by that date someone will produce a more efficient and useful aeroplane. Secondly, one must keep an immensely complicated piece of mechanism punctual and clean. If there is a delay due to mechanical reasons, it is in fact an organisational failure of one kind or another. I am not going to say that it will not happen, but it is an immensely skilled task.
Thirdly, one has to guess that passengers will want to fill the aeroplane, or at least that they will do so. These questions all involve demands for the highest skill, which I do not believe can ever be submitted to a theoretical calculation. On the other hand, it is quite clear that aeroplanes can be filled, bearing in mind the fares offered by charter companies. These have shown that, given certain specialised circumstances, quite different fares can in fact be charged.
I must mention one particular point. Throughout our discussion there was never any question of reducing the safety standards, which would remain absolutely rigid. This question was never discussed; 420 it was quite unnecessary to discuss it. However, I believe that it is necessary to remind the House (as the noble Baroness, Lady Burton of Coventry, has), that there are many expenses which, strictly speaking, lie outside aviation fares. The noble Baroness has referred to them. The cost of security is certainly a difficult question, and we have a specialised way of dealing with it. But I wish to mention landing fees. I am informed that it costs seven times as much to land a 707 in Manchester as it does to land it in Dallas. I know that it is easy to take specialised cases, but it is a slightly sharp differentiation. I also wish to mention the restriction on night flying. If we are to open a new airport in this country, let us try to ensure that it is unrestricted as regards night flying. This would bring about considerable economy in the operation of aviation in this country.
I believe that in many ways the airlines must be congratulated upon finding their way through the political and economic maze which now surrounds the aviation industry. I believe that in many respects they have done well. However, the answer to the problem lies in the world of politics. Of course, our Government, from whom we always expect much, will not necessarily be able to solve it by themselves; of course they cannot. But we are asking them to give a lead which could point the way to a radical change and to far-reaching consequences if in the next 20, 30, 40 or 50 years we are to obtain the best and the most useful employment of this wonderful development. If the matter is left in the hands of Government, we shall still have fares that will range very much too high. It is for that reason that all members of the committee wish to press the Government to take as strong a lead as they can, not only in the European Community, which can never in itself he a unit of aviation control, but also in the wider field. I believe that great benefits would flow from that.
§ 4.37 p.m.
§ Lord SHERFIELD
My Lords, as a member of the sub-committee on air fares, I should like to join previous speakers in paying tribute to the outstanding contribution of our chairman, whose profound knowledge of the subject, and expertise in the chair, enabled us to digest nearly 200 pages of evidence and yet 421 produce a reasonably concise and, I think, lucid report. Unlike the chairman, I had virtually no knowledge of the subject prior to the hearings, and I should not care to sit for an examination on it now. I doubt whether I should satisfy the examiners. But I believe that I grasped one or two basic elements in the situation which led the sub-committee to resist the temptation to recommend a dash for freedom and to put this realistic and soberly-worded report before the House.
As has already been said, the fundamental obstacle in the way of rapid lowering of air fares in Europe is the national airline, Government-owned and subsidised, and, in degrees varying between countries, not efficient enough to survive the blast of free or even freer competition without increasing the subsidies by a large amount or putting the airlines out of business. As the noble Earl, Lord Selkirk, said, national aviation, as we know to our cost, is one of the most important prestige symbols, and there is more than a trace of ambivalence in our own official position over deregulation in the quite natural desire to have regard to the interests of British Airways.
It is not easy to get over or round this obstacle; so what can be done? It was suggested by some of our witnesses that one avenue could be pressure from the European Parliament, and we heard from two Members of that Parliament about the moves that are being made there. Other witnesses thought that better publicity, with figures of comparative costs, would help to build up pressures. Others, again, favoured more agitation from the consumer in Europe. But, as the noble Lord, Lord Boyd-Carpenter, has suggested, there are apparently very few people about on the Continent like the noble Baroness, Lady Burton, to keep the Governments, the airlines and everybody else concerned up to the mark. Others, again, favoured action through the European Civil Aviation Conference; but that body, though a useful forum, has no executive powers and can proceed only by consensus. The responsible Minister, who gave evidence, adopted a very cautious approach and felt that the best course was to move by slow steps in the Council, proceeding by consensus under Article 84, Section 2, of the Treaty of Rome. The Commission's initiative itself, which led to this report, is really to 422 set out objectives and to stimulate discussion, rather than to secure action on specific measures; and the implication of all the official and semi-official evidence was that the regulatory system must be continued, and can be liberalised only very slowly and cautiously.
My Lords, in the end, as so often in these Community affairs, it all goes back to Governments, who could quite quickly alleviate the situation if they had a collective mind to do so; for example, in correcting the rather horrifying statistic produced by Mr. Knut Hammarskjold and quoted by the noble Baroness, Lady Burton, that air routes in Europe are on average 15 per cent. longer than they need to be. It is the case that, as stated in paragraph 60 of the report, the European Court of Justice has already decided that the general rules of the Rome Treaty on the rules of competition apply, outside Title IV, to air transport. But the position does not seem to be quite clear-cut, and the Commision, in the absence of any regulation on this subject, cannot do anything much to give effect to this ruling.
Some further action by the court might help, and this reinforcement may come if the redoubtable Sir Freddie Laker carries out his announced intention to go to the court for a ruling. But, as things stand, my conclusion is that unless it is unequivocably established, either through decision by the Council or by further rulings by the European Court, that the rules of competition apply to air transport as well as to other forms of transport, any progress will amount only to nibbling at the fringes of the problem. The Community Governments will continue to support relatively inefficient national airlines by the continuation of subsidies and by declining to accept proposals from other Community airlines for lower fares. This action was clearly illustrated, as the noble Earl, Lord Amherst, suggested, by the refusal of the French Government to accept British Airways' recent proposals for the London-Paris route.
My Lords, I do not see any escape from this rather pessimistic conclusion. No doubt the various forms of pressure—from the Commission, from consumers, from the European Parliament in the ECAC and through other action referred to in the conclusions of the Committee, including bilateral negotiation—should be 423 continued and, indeed, stepped up; but until some legal or political sanction is in existence, whether or not it is actually invoked, progress, either by bilateral negotiation or by consenus in the Council of Ministers, is likely to be at a snails' pace. If the Minister who replies to this debate can take a more optimistic view, I shall be delighted, but surprised.
§ 4.45 p.m.
The Earl of BESSBOROUGH
My Lords, I feel that, speaking for the first time in the Royal Gallery, I should tell your Lordships that my noble forebear, who is also that of my noble kinsman Lord Ponsonby, trembled in his grave when the incident occurred in your Lordships' House the night before last, for it was he who, as First Commissioner of Works, and Lord Duncannon, in the lifetime of his father, who commissioned Sir Charles Barry to rebuild the Palace of Westminster, and Mr. Pugin to design the interior. I only hope that your Lordships will not hold the noble Lord opposite, nor your humble servant, in any way liable in so far as damages are concerned! But I look up to this ceiling too, perhaps, with some concern.
There is not a great deal of room in these Benches, my Lords, and I am having a little trouble standing up straight, and I have to remain by the microphone none the less. I am very glad indeed to support my noble friend Lord Boyd-Carpenter in his Motion today. He was, as other noble Lords have said, a most admirable chairman of our sub-committee—a most appropriate one in view of his former appointment as chairman of the Civil Aviation Authority. It is not, I think, in the least disparaging to our distinguished witnesses to say that my noble friend sometimes knew more about the subject under discussion than they. I do not think any of our witnesses would object to my saying that.
If it is not impertinent or irrelevant, may I also take this opportunity to congratulate him on the quite excellent reviews of his book Way of Life. I may say that I am in the process of reading the 21st Chapter, which is entitled, "Very Civil Aviation", and am reading at this moment that particular bit about watching a harassed Lord-in-Waiting reading the 424 brief which my noble friend himself had drafted as chairman of the Civil Aviation Authority.
My only regret as a member of his subcommittee, on which I had the honour to serve, was that other parliamentary duties prevented me from attending the meeting when Sir Freddie Laker gave evidence. He was, as expected, a most attractive witness, it appears, as well as, of course, being the famous pioneer in cutting air fares across the Atlantic. I only hope he will succeed in doing so in Europe, too. For six and a half years as a Member of the European Parliament—one of those described yesterday by Mrs. Barbara Castle as "homeless tramps often thought that I was spending almost half my time either at airports or in aircraft flying back and forth to Brussels, Luxembourg, Strasbourg and, indeed, at one time or another, all the capitals of the Nine, and indeed elsewhere in the world. My colleagues and I flew virtually every week, sometimes two or three times a week, and were critical of what we considered to be in some cases grossly, even grotesquely, inflated fares. It was no real consolation to us to think that the money did not come out of our own pockets, but was paid for by the European Parliament; that is to say, by the taxpayers of the nine member states of the Community.
I need hardly add that I fully endorse all that my noble friend said in introducing his Motion, and, indeed, what other noble Lords and the noble Baroness have said, and I want, if possible, to try to avoid too much repetition. It is most regrettable that the consequences of the existing system of allocating routes, fixing fares, pooling revenue and so on has resulted in the virtual elimination of competition. Your Lordships may have seen from the report that the committee noted that the Civil Aviation Authority had been criticised for excessive caution. As the report says, had the CAA always been so cautious it is unlikely that the existing independent airlines could ever have been established in the United Kingdom.
I recognise that by relating fares to the long-run costs of the most efficient operator, the policy of cost-based fares can be expected to improve airline efficiency, to push down the costs of inefficient operators by encouraging them to match the performance of the most 425 efficient airline and thus lead to lower fares. But I also recognise that even if this policy was implemented, the general level of fares in Europe might still remain higher than in the United States if the level of costs outside the control of the airlines—that is, as the noble Baroness has said, airport and security charges and air traffic control—remains higher in Europe. The noble Baroness made very good points on this and I agreed with all of them.
I should like to say, as did my noble friend Lord Boyd-Carpenter, something about the legal implications referred to in paragraphs 58 to 62. I think that ultimately the Council of Ministers should adopt a regulation for the application of the rules of competition to cover air transport in the same way as such regulations cover other branches of transport and economic life. The noble Lord, Lord Sherfield, I think, agrees with this. In my view, unless the Community's competition policy covers all sectors of the economy, I do not believe that we shall have a true European Economic Community. As the report says, if the competition rules were effectively applied, market sharing and fare-fixing arrangements could be outlawed. That is why I say that the full competition rules of the treaty should also apply to air transport and I am glad that the European Commission agrees on this point.
I think that paragraph 73 of the report is very important and that the Council of Ministers should agree to operate a more flexible regulatory system and also enforce the competition provisions in the treaty. A combination of the two procedures might well (as the report indicates) provide the best solution even if we do not all consider that it would be appropriate at present to adopt a regulation applying the full rigour of the treaty's competition provisions. I, personally, should like to see them applied but I understand the problems involved.
Another important issue, in my view, is that competitive conditions should be fair and that competition cannot be efficient if one Government subsidises a national airline to maintain its competitive position against a foreign competitor. Like the noble Baroness, I think that another important point is that airlines and air travel agents should be encouraged 426 to display notices listing the fares available. Obviously, as witnesses from the Civil Aviation Authority said in reply to one of my questions, in so far as the tariff field is concerned the best way of proceeding is by persuasion rather than regulation. But if persuasion does not succeed, what next?
In so far as the evidence from British Airways was concerned, I was a little unhappy to hear Mr. Draper's answer (in paragraph 209) that British Airways took a very parochial view and not an EEC view. He said this twice. Obviously, British Airways must put British Airways' interests first; but I should have liked to hear some remarks which might also have given a high priority to the interests of the European Community as a whole, including Britain. As Mr. Anders Björck of the Assembly of the Council of Europe said, what they have done in the United States is to "open the sky". I agree with him; but I dare say that at this point in time we have to be realistic and we cannot yet expect the Community to go quite that far. But that would be no problem if the political will or, as the noble Lord, Lord Sherfield, described it, the collective will, existed in Europe to do so. In my view, that political will should exist.
My Lords, hope it is true that the EEC may have more political elbow and more political influence than the European Civil Aviation Conference—known as ECAC—composed of 22 countries. Perhaps the Community might have more influence and therefore be more able to achieve the ends which we are looking for in reducing fares generally than has ECAC itself. I was glad to hear Mr Hoffmann (who my noble friend mentioned and who is the rapporteur in the European Parliament) say that he thought that in the long term there was a possibility of granting greater powers to the European Commission. It is most distressing, as my noble friend Lord Kinnoull said in Committee, that European air fares are at the moment the most expensive in the world.
Your Lordships may have been interested in an exchange (in paragraph 394) with Mr. Moorhouse, a Member of the European Parliament, when he said he felt rather embarrassed about the French announcement that the French Government were going to subsidise flights to Strasbourg. Obviously, MEPs must, 427 individually, have welcomed this. On the other hand, as Mr. Moorhouse said, this may have turned out to be against the best spirit of the Community. As your Lordships may have observed, there was a good deal of discussion about over-manning. Certain European airlines are, I think, somewhat culpable in this respect. Some European carriers may perhaps be over-administered and I hope that they are pondering this problem deeply. In so far as the £20 flight to Paris is concerned, with Mr. Thomas of the TUC (who was a most interesting witness) I think that it is regrettable that Air France turned this down. I was glad to hear that the TUC supported the £20 fare quite unequivocally. Finally, my Lords, I should again like to congratulate my noble friend on the admirable way in which he conducted the proceedings of his sub-committee, and I hope that the Governments of the EEC member states will take our conclusions to heart.
§ 4.59 p.m.
§ Lord GREENWOOD of ROSSENDALE
My Lords, I shall not delay the House for more than a couple of minutes, but some of your Lordships may recall that until I resigned at the end of last year I had been for two years chairman of the Select Committee on the European Economic Communities. I now, therefore, do not take part in general in debates on the European Economic Communities but I was a member of the sub-committee whose report we are discussing this afternoon. I should like very sincerely to join in the praise which has been given to the noble Lord and his colleagues. I hope that it will not seem immodest if I say that to have this sub-committee was my own idea and that I was in the seventh heaven when we persuaded the noble Lord, Lord Boyd-Carpenter, to take the chair. I have never worked under a better chairman; from time to time I felt sorry for the witnesses, whose agony was assuaged only by the invariable courtesy that the noble Lord showed. I agreed with everything he said in his speech this afternoon, not least in his tribute to the staff of the Select Committee who really are incredibly talented, unbelievably hardworking, and serve your Lordships' House in a way which leaves nothing at all to be desired.
428 Apart from myself, it was a star-studded sub-committee. It would be true, if perhaps trite, to say that there is no other legislative assembly in Europe which could have fielded so strong and so experienced a team, and produced so excellent a report. That is why the standing of your Lordships' House in Brussels, Strasbourg and Luxembourg is so high. It commands tremendous respect and it is good to feel that that respect will have been further enhanced by our discussion today.
The discussion is a very topical one. I read a few days ago suggestions by a fairly senior member of my own party that in some way this House was failing in its duty. I think that the report that we are discussing today gives the lie to that criticism. It would be a pity if such a simplistic attitude were to become part of the commonplace of inter-party political cut and thrust. It would damage the structure of our legislature; it would create bitterness and frustration; and I hope that my friends, and the critics of this House, will weigh their words very carefully before they indulge in such recriminations.
Perhaps I could say this in conclusion: The way that your Lordships have voted in the past few days, and the positive and the constructive work which the Select Committee does, show that this House commands both wisdom and compassion and, at times, a spirit of true independence in the work that it does. The report introduced by the noble Lord is a work on which the noble Lord and the whole House can congratulate him and itself.
§ 5.2 p.m.
§ The Earl of KINNOULL
My Lords, I must apologise for not adding my name to the official list of speakers. I rise briefly to support my noble friend's Motion. As one of the less experienced members of the fairly strong sub-committee, and therefore perhaps more baffled than others with the thick spider's web of the complexity surrounding the European air fares structure, one experienced and appreciated even more the skill, knowledge and mastery of my noble friend's chairmanship.
He led us, as we have heard, with panache and with typical humour. He 429 fired piercing questions at unsuspecting expert witnesses, always with exquisite courtesy; and most of us, as my noble friend Lord Bessborough said, guessed that he already knew the answer. I should also like to add my praise to our extremely hardworking clerk of the subcommittee. He persuaded such a wide range of experts to attend that this is really what gave the great value to the sub-committee, and I hope, the report.
My simple judgment on the state of the European air fares structure, their high cost, their general lack of competitiveness, the over-protectionism of their national carriers, is that if we achieve any measurable progress over the next 10 years to lower fares to a reasonable figure, we shall have done extremely well. I think that the noble Lord, Lord Sherfield, shared that view. Of course, controlled liberalisation is the right and proper course for improving the system; but it is no good, indeed it is unrealistic, to eye with envy the United States domestic air fares system, their de-regulation policy and their very competitive level of fares that they have achieved. One would add this rider: the meagre profits that some of the US air carriers have to survive on make one question whether the pendulum could go too far to the detriment and safety of the consumer. Their system is under one authority. The European system is under 22 Governments, as my noble friend has said. It is under 22 air transport policies; under 22 tourism policies; 22 travel policies and with that different laws and cultures as well. Harmonisation of this system, even with the guiding hand of the EEC, must take decades rather than years to work out.
The second factor which particularly struck me on the sub-committee, listening to our witnesses, is that Britain is way out ahead with its carriers in their competitiveness, their ingenuity, their skill in marketing and indeed the investment risks that they are prepared to take to grasp the market. We heard from British Airways, British Caledonian, Laker and Dan-Air. They all had their eyes on this vast undeveloped European market. All could see the value of lowering fares to provide a travel service within reach of the many thousands—indeed, possibly millions—of Europeans who have never flown before. All have produced appli- 430 cations and all have been frustrated. The trouble is that they are too good. The European competitors—mostly national flag carriers—with direct lines of communication to their Governments, do not want to know; they do not want to expose their heads above the ramparts. I suspect that they do not feel that they have the experience to compete. It is truly a somewhat depressing picture because air travel within Europe is perhaps one of the best ways to achieve European togetherness and understanding.
My Lords, I saw three glints through the clouds: first, the heartening evidence given by Her Majesty's Government and their positive determination to seek a greater competitiveness within Europe; secondly, the vigorous support that our European members give; thirdly, the undoubted determination of our carriers to expand their influence into Europe. Those glints in the clouds in time will surely turn to sunshine as the case is undeniable. Based upon this and on the progress of public opinion—and my noble friend based his case on optimism although he did not say how soon he saw real progress, and perhaps he is wise in that—I wish Her Majesty's Government well in their endeavours. I wish our European Members of Parliament well in their pursuits, and I trust that this report will have done some good to stimulate action in what is rapidly becoming a scandalous situation.
§ 5.8 p.m.
§ Lord PONSONBY of SHULBREDE
My Lords, first of all I should like to thank the noble Lord, Lord Boyd-Carpenter, for introducing the debate this afternoon. I should like to join with him and other colleagues on the Committee in the remarks that have been made about the staff of the Committee, and particularly the Clerk, who enabled the Committee to carry out its business in a very efficient and expeditious manner.
I should also like to join with other noble Lords in paying a tribute to the noble Lord's chairmanship of the Committee. This has been spoken about eloquently by many noble Lords, and, in particular, by the noble Baroness who was the first this afternoon to voice the unanimous view of the Committee. Unfortunately, because of business in the 431 House the noble Lord had to miss one meeting of the Committee. This was most unfortunate in a sense because it was one of the most stimulating meetings of the Committe at which the principal witness was Sir Freddie Laker. I must say that I enjoyed the opportunity of chairing that meeting. May I also say that I am the former chairman of the London Tourist Board and not the English Tourist Board.
The noble Lord said that the committee started off with a unanimous view that the scheduled fares in Europe were far too high. That is absolutely correct. By the time the committee had finished its deliberations, it was still—as has been shown this afternoon by a number of noble Lords who were members of the committee and who have contributed to the debate—of that view, although much wiser about the constrictions in the way of doing anything about it.
In referring to fares being too high, my noble friend Lady Burton used what might be a more appropriate word in saying that the airlines had overcharged for too long. Obviously the ultimate of efficient operation of any airline is that each aircraft flies to full capacity all the time and, if airlines were able to achieve such a situation, it would obviously be very easy for the level of aircraft fares to be reduced. In fact this could work only at very great inconvenience to passengers and therefore over the years a very complex situation, described as "a jungle" by my noble friend Lady Burton, has grown up in the whole field of air transport. It is interesting to notice that the success of British Rail over the past year or two in trying to persuade people to come back to the railways has been accompanied by a vast variety of special offers on the railways—aimed, as the airlines aim, at operating to full capacity at times when people do not normally want to travel. Also, in so far as the railways are concerned, it has induced a great deal of additional travel, particularly by old people and students.
The position, as your Lordships well know, is that a seat, like a hotel bed, if not sold for a particular flight or a particular day, is a complete loss so far as the operator is concerned, and if that operator is only able to receive a mere pittance for the sale of that seat or that 432 hotel bed, it is still much better for the operator than not selling it at all. Indeed we know well that if one is prepared to suffer the inconvenience of booking a flight at a very late date one is going to get one's ticket for a mere fraction of what one would have to pay if one booked some considerable time ahead for a particular date.
The committee felt, as has been mentioned already, that air fares in America showed what it was possible to achieve through competition in air transport. Certainly I would support the view that Europe contains a large number of potential air travellers who are prevented from travelling by the high cost of fares; and certainly the view that the committee had, that the interest of the consumer was being sacrificed to the prestige of the flag-carrying national airlines, was one that was supported. The problem, which has already been mentioned this afternoon, is that Europe is not a homogeneous unity as is the United States and that each nation has to support its own national airline, as the noble Lord, Lord Boyd-Carpenter, pointed out. It is impossible to envisage a situation where the national airlines would amalgamate with each other and work in larger units than they work in at the present time. Indeed it is also difficult, I think, to envisage cross-border amalgamations of private airlines in Europe; but in the United States this is going on all the time and one wonders whether airlines could get together for more sensible working arrangements and whether there could be more efficient use of aircraft at lower fares.
Competition, of course, is one way of producing that, and a number of views have been expressed this afternoon about the competition provisions of the Treaty of Rome. The view was expressed by the noble Lord, Lord Boyd-Carpenter, that it was not within the area of reality to think that these were likely to be enforced in the near future. I tend to agree with the sentiments of my noble kinsman Lord Bessborough that the competition rules will ultimately be enforced, although this may be some way ahead.
The view has also been expressed that one of the effects of the present methods of operation in Europe is that the airlines have managed to create a dense network of services throughout Europe, which is of 433 convenience for the consumer, and that if one had a greater element of competition than one has at the present time this would have the effect of leading to airport and airload saturation. I do not think that that view is necessarily right. One of the effects of more competition would be not to lead to over-saturation of airports and airloads but, over a period of time, to lead to the cutting back of the size of the network of European airlines. It is difficult to say whether or not that would be in the interests of the consumer—lower fares or more convenient services. It is necessary to strike a balance on them.
My noble friend Lady Burton raised the matter of security charges and handling fees. I know this is a matter which she has raised in your Lordships' House a number of times previously. I happen myself to think it is right that security is handled by the British Airports Authority and not by individual airlines.
On the question of landing fees, one is well aware that the British Airports Authority have for some time been trying to persuade airlines to switch their operations from Heathrow to Gatwick and that for some time they have had a price incentive in the shape of much lower landing fees being charged at Gatwick than at Heathrow. The question of differential landing fees was highlighted by the noble Earl, Lord Selkirk, who pointed out that Dallas is seven times as cheap as Manchester. One might say that, in a sense, is a question of competition in operation: Dallas is very desperate, as are a number of other cities in the States, about trying to persuade airlines to operate out of their airport, because they realise the benefits this brings to a particular community. One can envisage a situation in this country that a local authority would feel that in fact it would be for the general benefit of the people of an area if this sort of inducement was introduced.
So far as London is concerned, there has not been this concern to attract additional airlines into the London area, although I have often warned in the past, and warn again, that the pricing adopted by the British Airports Authority for London airports, the difficulties at London Airport and the difficulties operators face in landing in the London area could have the effect of driving airlines to use 434 nearby international airports on the Continent, which could have a very detrimental effect on this country. Therefore, this is something which has to be kept very closely under review, and it is something in which the Government should not hesitate to help the British Airports Authority, if there are signs that airlines are operating in a way which is taking traffic away from these major international airports.
It has been said that there was a wealth of experience on the committee, and that is so. I look forward very much to hearing what the noble Lord, Lord Trefgarne, who has unique experience in this field, has to say. One of the things which one has to remember is that the Government are not their own master in this field. They are in a sense at the mercy of fellow members of the European Community. They are at the mercy of the air traffic control operations in overseas countries, which will decide whether or not particular flights can take place. Finally, may I once again thank the noble Lord, Lord Boyd-Carpenter, not only for introducing the report this evening but also for chairing the Select Committee.
§ 5.22 p.m.
§ Lord TREFGARNE
My Lords, I want to start by a confession, or at least a disclaimer, which was put into my mind by my noble friend Lord Bessborough when he was recalling the words of my other noble friend Lord Boyd-Carpenter, who was once watching a harassed Lord-in-Waiting delivering a brief which he himself had prepared. Today, so far as I know, my noble friend Lord Boyd-Carpenter has not prepared this brief. But I am a trifle apprehensive about saying that, because I must confess to your Lordships that an envelope from the officials reached me via the hand of my noble friend. I think I had better inquire further into that at some future moment.
The Government welcome the subcommittee's report, as we did the European Commission's initiative in submitting its Memorandum on the Contribution of the European Communities to the development of air transport services. My honourable friend the Parliamentary Under-Secretary—that is, Mr. Tebbit—has recorded the Government's welcome for the Commission's initiative during discussions in the Council of Transport 435 Ministers, and the United Kingdom has taken the initiative to ensure that the memorandum is considered with all the priority which the subject matter requires. The memorandum covers many aspects of civil aviation, but the most important, from the public point of view, is the question of the level of air fares. It was entirely appropriate, therefore, that the sub-committee, under Lord Boyd-Carpenter's chairmanship, decided to concentrate on this aspect.
Efficient and low cost travel within the Community, for both businessmen and private travellers, is important in achieving the Community's economic objectives and in demonstrating that the Community has very much in mind the interests of consumers throughout the member states. The very high level of some normal economy fares in Europe has become a matter of widespread and active public and political concern in the Community. In the Government's view, the European air traveller is entitled to a better deal, and the Community has a responsibility to see that within the Community he gets it. We are, frankly, not satisfied with the present tightly regulated international civil aviation arrangements, and believe that a more liberal market environment would provide airlines with the ability to offer a wider range of air services at lower prices to satisfy all types of consumer demand, and would allow the airline industry to continue to grow and develop to the benefit of both Governments and consumers.
The question at this stage of the development of European civil aviation is whether the consumer and more general economic interests of individual European states would be better served by a freer market—approximating more closely to other commercial markets—than by continuation of the present highly regulated civil aviation operations. Aviation is, of course, as the sub-committee's report recognises, a high cost, high risk industry. Enormous sums are involved in the development of airports, in the acquisition of aircraft and, in recent times, in the purchase of aviation fuel. At the same time, the nature of the industry allows no compromise on safety standards. A continuing and stable level of profitability is, therefore, not easy to achieve in a competitive environment and, with the 436 high level of public ownership of airlines, the industry has become one of the most regulated in the world.
The responsibility for the present system must, of course, to a large extent rest with Governments. Many Governments have very large financial commitments to their airlines which they seek to protect. Moreover, the industry is frequently motivated as much by considerations of prestige as by commercial forces. This has been mentioned by several noble Lords this afternoon.
These factors work against free market competition, and as long as Governments allow fare fixing by airlines at levels aimed at viability for the least productive, it will not be possible to speak in terms of unfettered competition in civil aviation. Opening up civil aviation in Europe to a normal commercial competitive régime is not, therefore, an achievable objective in the short term.
The Government nevertheless believe that steps can and should be taken to produce evolutionary and well-managed changes in the present régime. With some exceptions, most bilateral agreements do not rule out the conditions for genuine competition. Some competition arises, for example, when more than one airline of a particular state is allowed to operate on the same, or closely adjacent, routes. There is also a degree of competition between scheduled and non-scheduled services. But the tight restrictions on entry to routes and agreements by airlines collectively on fares before submission to Governments for approval, plus especially the negative attitudes of the majority of European Governments towards innovative fare proposals in defence of their own airlines, all go to prevent such competition as exists from being adequately effective.
Ministers in Community states are fond of stating their support for open trade, but seem to have a blind spot when it is convenient and particularly in relation to civil aviation. For example, we freely allow imports of cars and apples from the Community in fierce competition with our own industries, but our airlines are not allowed to compete freely in providing airline seats in the Community. The Government consider that competition is needed and welcome the stimulus that British airlines have already given.
437 The Government's support for a better deal for the air traveller in Europe was reflected in the Conservative Party Manifesto for the European elections and in previous statements in both Houses. The European Parliament has given strong support and will be shortly publishing its own comments on the Commission memorandum. The Council of Europe has also called on member states to pursue the aim of more competition. The United Kingdom has a well-developed and innovative air transport industry, which has for many years been in the lead in pressing for new services and fares in Europe. Although the price of air fares is lower in the United States than in Europe, the air fares element of package holidays, pioneered by United Kingdom airlines, is probably the lowest cost air travel anywhere. We therefore need to achieve lower fares in Europe for straightforward travel, without losing the present advantages of low cost travel included in package arrangements.
The primary anti-competitive element is Governments' regulation followed by inter-airline commercial arrangements. It is not Her Majesty's Government which stands in the way of loosening up the market. For example, what can we do about the French blocking of British Caledonian's "Miniprix" and British Airways' £20 "channel hopper" fare to Paris? All we can do for the moment is to keep on trying to persuade them that there is a specialised but untapped market which would open up at such a price. This we are doing. We believe that the European Commission's initiative can be an important factor in this process and we are also attempting to influence European Governments in discussions in the European Civil Aviation Conference.
Her Majesty's Government have already implemented the Civil Aviation Authority's recommendation, referred to and supported in paragraph 40 of the sub-committee's report, and have presented formal proposals to liberalise charter rules to the European Civil Aviaton Conference. They will shortly be considered by the new high-level policy group which ECAC has set up, as a result of pressure by the United Kingdom, to parallel developments in the European Community. In due time we shall also consider raising the matter in the European Community.
438 The United Kingdom has already taken the lead by suggesting an urgent review of the regulations governing intra-Community regional services and the Commission's proposals in this area are expected in September. We believe that the vast majority of restrictions on such services can and should be swept away in order to lead to new and innovative ideas from the airlines for the profitable development of such services. We have also taken the initiative for a study to make freely possible the express carriage by air of small packages. But, of course, the most important factor is the level of fares and again it is the United Kingdom which sought a council agreement for this to be the next item for urgent study. I am very glad that, at the end of last month, the council agreed, and invited the Commission to examine the question in consultation with states' experts and to report the results of its examination to the council as soon as possible. We shall do all that we can to see that the examination is not a long-drawn-out duplication of ground already covered and that it leads to firm proposals,
The Government will be seeking agreement that the airlines should be allowed the opportunity to develop innovative fares of all types. As the sub-committee notes in paragraphs 50 to 54 of its report, the commission memorandum suggests some ideas on fares. Her Majesty's Government fully support the committee's conclusion in paragraph 57. In a move towards more commercial freedom in air transport the Government are certainly not willing to exchange control by national administrations for control by the Commission which, apart from anything else, has little background or skills in these complicated matters. The Government entirely agree with the sub-committee when it says in paragraph 72 of its report that the Community should not seek to prescribe in detail what airlines should do.
In all these matters we have so far met, with one or two notable exceptions, with a very unresponsive reaction from the other member states. But the Government hope that by the time these matters again come to the Council of Ministers later this year, or early next, we shall have persuaded our colleagues in the Community to go along with sensible measures of liberalisa- 439 tion. We are not seeking overnight revolution in European air transport, but we do need to move towards our objective with an opportunity to monitor progress—and, if need be, to modify our approach as we begin to see the results. This would be good for both European airlines and the travelling public. It is this Government's contention that increased competition—fair competition—will lead to a more vigorous airline sector and to more opportunities for the travelling public. We shall be prepared to take vigorous bilateral action with European Governments in an effort to secure new routes or fares approved by the Civil Aviation Authority.
May I turn now to a few of the specific points which have been raised this afternoon. The noble Baroness, Lady Burton of Coventry, asked me a number of questions, and three in particular I shall endeavour to deal with. First, she asked me about security charges. The noble Baroness, my noble friend Lord Boyd-Carpenter and I have exchanged views, shall I say, on that matter on several occasions in your Lordships' House, but the Government's view remains that these security activities must be arranged to pay for themselves. That is why the charges had to be raised as they were. The noble Baroness raised this matter with my honourable friend Mr. Tebbit when he gave evidence before the sub-committee, and on that occasion the Government's position was put quite clearly by my honourable friend.
A similar philosophy applies to the question of landing fees, a question which has been raised by several noble Lords. It is indeed the case that the British Airports Authority are required to earn an adequate return—currently 6 per cent.—upon their assets, and that they are doing. As for the differential in landing fees between Heathrow and Gatwick, to which the noble Lord, Lord Ponsonby of Shulbrede, referred, that is part of the policy to persuade airlines to move their services, or at least not to initiate new services from Heathrow. But the general level of fares remains the responsibility of the British Airports Authority.
The noble Baroness also referred to the question of air traffic control, and I think that the noble Lord, Lord Sherfield, also 440 referred to it. The difficulties in other countries are a matter for those other Governments, but the difference between the situation in Europe and the situation in the United States is very sharp. There are, for example, many more military areas in Europe which have to be avoided by civil aircraft. One of the matters which is particularly applicable in a small, densely-populated country like ours is that of noise routeings which cause aircraft to fly round built-up areas rather than across them, for very proper and understandable reasons. Having said that, we are not inflexible in these matters and we as a Government remain ready to talk with other Governments with a view to improving the situation to which several noble Lords have referred.
The noble Baroness, and indeed my noble friend Lord Bessborough, also referred to the desirability of having more information on fares freely available at travel agents and other places where tickets are sold. This is primarily a matter for the airlines and agents, but I can say that the Civil Aviation Authority are currently introducing a new fare filing system with the aim of making much clearer what fares are available, and under what circumstances. I hope that in future these new arrangements will help to overcome the problems, which I understand and acknowledge, to which the noble Baroness has alluded.
My noble friend Lord Bessborough also referred to the question of competition. Indeed, it is often asked why, since the Treaty of Rome provides for competition in the supply of goods and services, it is not applied to civil aviation so as to allow for free competition between the Community airlines. The Treaty is a complicated document, and as there have been no cases concerning civil aviation before the European Court, nobody can be absolutely certain of the effect the Treaty has in this area. The competition articles distinguish between their application to "undertakings" and to Governments. Because of Governments' involvement in civil aviation, in the ownership of airlines, the granting of access to routes and the approval of fares, nobody can be certain as to the question of application of the Community competition policy.
Because of the international character of civil aviation, we have to bear in mind 441 also the question of Community external competence. When the Community adopts internal rules on a given topic, provided that such competence is necessary for the attainment of Community objectives, external competence also passes to the Community. Because of our wider international interests, we do not see that it is either practical or desirable for the Community collectively to have any role in bilateral air service negotiations with third countries. Nor do we necessarily want an expanded Community role in multilateral bodies which might create a reaction towards "regionalism" in other parts of the world. The application of the competition articles has therefore to be considered with some caution, and other member states share this view.
The Government would therefore prefer to take innovative, well-managed and agreed steps under Article 84.2 of the Treaty. It is under this heading that we have made our proposals on intra-Community regional services, high speed cargo services and air fares. We agree with the sub-committee's conclusion in paragraph 73. Progress by agreement under Article 84.2 of the treaty is the aim of Her Majesty's Government. But there must be practical progress in a reasonable time. We shall continue to seek to persuade other member states of the need for action in response to public opinion and for the benefit of the European airlines industry.
But if sufficient progress is not made then, of course, it will be necessary to consider what other steps might have to be taken in order to make reasonable progress. The Government are committed to a more liberal regulatory régime in European civil aviation, to allowing airlines opportunities for innovative ideas in a more commercially oriented market and for a better deal for air travellers. We welcome the Commission's initiative as a good start while noting that we do not necessarily agree with everything in its Memorandum and the Government also welcome the support to their efforts which the sub-committee's report will provide. The sub-committee under the chairmanship of my noble friend has done the House a considerable service in preparing and presenting this report. I hope that my remarks today have shown clearly that the Government largely if not wholly agree with the sub- 442 committee's conclusions. Only good can flow from the clear expression of views in today's debate.
§ 5.41 p.m.
§ Lord BOYD-CARPENTER
My Lords, one of the advantages which this House has in dealing with civil aviation matters is that the reply comes from a Minister who not only speaks, as he pointed out, on behalf of his department but also with very great practical experience of civil aviation in which, before his promotion to his present post, he played a very prominent part. Indeed, those of us who have just listened to his speech realise that it was a great deal more than just the kind of speech to which my noble friend Lord Bessborough referred in a quotation from a work which of course I am inhibited from referring to!
My noble friend Lord Trefgarne made a very important speech. Like many Members of the House, I shall want to read it in Hansard in order fully to assess its significance, but it seemed to me to convey a very clear impression of Government policy and, from my point of view, very satisfactory Government policy. The House will have noted that he said bluntly that the Government view was that the air traveller was entitled to a better deal and that the Government were not satisfied with the present system. Those were very strong words from the Box and I welcome them very much, as indeed I welcomed the whole of my noble friend's speech.
I will only comment on one further aspect of it. He referred, rightly, to the success of the package charter development by British civil aviation and I referred to it too because it is perhaps an example and an encouragement to those of us who want to liberalise the scheduled services. As the noble Lord knows—although I am not certain whether the House as a whole knows—some years ago the Civil Aviation Authority had to consider imposing prices and fare control on charter flights and decided quite firmly not to do so. I have always believed that the subsequent growth and development of the charter side of the airline industry has owed a good deal to what at the time was regarded as a rather difficult and awkward decision. I am greatly indebted to all those who have taken part 443 in the debate. The noble Earl, Lord Amherst, I think, was the only one of them who was not a member of the sub-committee, apart from my noble friend the Minister, and I think he must have felt almost that he was in a closed-shop situation. Perhaps he will allow me in his absence, which privately as well as to the House he has explained as being due to an important engagement outside, to say that he made a most helpful speech with which I think the House found itself in general agreement.
I am most grateful to all my noble friends on the committee who spoke, not only for their speeches but still more for the help they gave during long months of work in the handling of a great deal of evidence. I must apologise to the noble Lord, Lord Ponsonby of Shulbrede, for having translated him from the London to the English Tourist Board. I suppose in my case that was a Freudian slip. I sat as a London Member of Parliament for 27 years and we were always accused of mixing up London with the whole of England. It may be that caused me to misapprehend for a moment the important function which the noble Lord, if he will allow me to say so, so well discharged. I am very grateful to him for his help on the Committee and for the fact that, as he told us, he took the chair at an epic meeting when Sir Freddie Laker was a witness. He did not tell the House, no doubt because it was too bitter a disappointment, certainly to Sir Freddie, that the arrangements made by the BBC to broadcast those proceedings failed, for the very simple reason that the recorder did not record. I am greatly indebted to all the noble Lords who have spoken, not least for their excessively kind personal references to myself and, as I have already indicated, to the noble Earl, Lord Bessborough, for what I can only describe as a "commercial break".
Finally, I should like to pick up what was said by the noble Earl, Lord Kinnoull, when he said so well that with British airlines we are very well placed; I think his phrase was that we were "well out in front." That is true. As noble Lords know, the United Kingdom is the second largest civil aviation power in the free world. We have the advantage of airlines both in the public and in the private sector which are full of enterprise and energy 444 and which are pioneers in the promotion of cheap fares, concessionary fares and all those interesting developments.
Indeed, it is this which causes us perhaps a little embarrassment vis-à-vis our European friends, because it is so obviously in the interests of the United Kingdom civil aviation that matters should be liberalised, that it perhaps makes the representations that we make a little less acceptable and a little more suspect when we talk to our European friends. They are inclined to say, "What you say is true, but if it is accepted will it not benefit you more than us?" The inherent difficulty is that the strong are always in a better position in a deregulated and liberalised situation than the weak. Therefore, we only have to fall back on fundamental economic reasoning that it really is in the long run doing no good to anybody to inhibit the free operation of efficient airlines in order to maintain in business airlines which, on a commercial basis, have very little justification at all for their existence. Given the whole ethos of the Community as it is today, the emphasis which, excepting of course the subject of agriculture, is on competition and freehold throughout the rest of the Community strengthens the hands of Her Majesty's Government, despite what I said a moment ago, in pressing steadily, as they have indicated they will, for greater freedom. Happily, this is not one of those Motions in which the noble Lord who has proposed it has at the end to go through the slightly degrading process of asking to withdraw it. The Motion asks the House to take note of our report and I hope it will.
§ On Question, Motion agreed to.