§ Mr. Snape
To ask the Secretary of State for the Environment, Transport and the Regions what representations he has received from the travel industry about the practice by airlines of separately listing the 109W passenger service charge on air passenger tickets; what assessment he has made of the impact of the practice on the level of airfares; and if he will make a statement. [R]
§ Ms Glenda Jackson
We have received a number of representations on this issue, both from private individuals and from representatives of the travel industry, including the Guild of Business Travel Agents, the Institute of Travel Management, and the Association of British Travel Agents. I am examining, together with my right hon. Friend the Secretary of State for Trade and Industry, whether showing PSC as a tax may be in contravention of legislation on misleading price indications and trade descriptions. The Office of Fair Trading has written to the International Air Transport Association (IATA) about possible effects of separating out PSC and showing it as a tax in the context of the Unfair Terms in Consumer Contracts Regulations 1994, and has asked IATA to cease representing PSC as a new tax.
Our general policy is to allow air fare levels to be determined by the market place wherever possible. However, before approving the separating out of PSC, the Civil Aviation Authority sought undertakings from British Airways (BA), the only UK airline with sufficient market share to enable it to bring market power to bear on fares, about the effect on fare levels. BA agreed to reduce its lowest fully flexible fare on such routes by the amount of the PSC, thus leaving the fare paid by the passenger unchanged. Within the EU, fares are governed by EC law. Nonetheless, on a number of intra-EU routes BA has undertaken to keep the total amount paid by passengers unaffected by the separation of the PSC. I understand that these undertakings have now been put into effect.