Anglo-United States Air Agreement

– in the House of Commons at 12:00 am on 8th August 1966.

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12.16 a.m.

Photo of Sir Douglas Dodds-Parker Sir Douglas Dodds-Parker , Cheltenham

Before we leave the subject of the "Possum" apparatus, I should like to add that I have had two letters recently from constituents who are using it—and possibly the Parliamentary Secretary, when he is down in that direction, might go to see how they are getting on—who asked me to support my hon. Friend the Member for Liverpool, Waver-tree (Mr. Tilney) in any efforts that he might make to have this apparatus given more publicity, and any support that we can give on the lines indicated by the Parliamentary Secretary to make it of greater benefit for the community as a whole.

I turn now, however, to Command 3015 on what I call the Anglo-United States States Air Agreement. I apologise to the Minister of State, Board of Trade, who has had only a short time to deal with the matter, because, as I have explained to the right hon. Gentleman, I have been working on it for some time with Ministers in Ministries which, if they have not gone quite as fast as I expected, have practically ceased to exist and which have been dealing with these matters, which have now shifted to the right hon. Gentleman's Department.

Command 3015 is an innocuous-seeming document, but I should like the Minister to explain to the House the changes which have taken place on the 1946 Agreement, the so-called Bermuda Agreement, which for 20 years has conditioned the operation of civil airlines between this country and the United States of America on routes all over the world, and to forecast the advantages to be gained by the new Agree- ment. I hope that my remarks will be constructive and helpful.

My reason for putting this matter to the House is that adequate United Kingdom and Commonwealth-based airlines are essential to the training and defence interests of this country. If this contention is accepted, it would give support to us being a modern industrial nation, not necessarily the largest nation, but a first-class nation based upon the technology of an adequate aircraft industry.

I should like to remind the Minister, although I am sure that it is not necessary, that in the debate on the Plowden Report, the Minister of Aviation said: I make it clear now beyond doubt that the Government fully accept the case for this country having a substantial aircraft industry, both military and civil, and that we intend to carry out policies designed to make that possible."—OFFICIAL REPORT, 1st February, 1966; Vol. 723, c. 892.] Why the point affects me particularly is that there are three parts of modern aircraft, airframes, engines and equipment—each accounting for roughly one-third of the production cost of aircraft; and I maintain that flight control equipment and hydraulics second to none in the world are designed and manufactured in my constituency. I like to concern myself—I do not want to worry; I hope that I will not have to do so—with the future employment of my constituents.

How does this new agreement give us the best chance to develop air routes based on a United Kingdom industry? In the summer of 1934 I was in the Secretariat in Khartoum when the Bullock Mission came from Britain to look into the building of some of the stages of the Empire air mail scheme, based on the Short flying-boat. Passenger and freight services were imaginatively developed decades ahead of anything else in the world at that time. There was excellent co-operation between Governments, who helped by sending their first-class air mail by this method, and the British aircraft industry, using British and Commonwealth airports in extending these services over a considerable part of the world.

But in those days there was remarkably little "by your leave", as for the most part we could count on airports or alighting areas for flying-boats which were within the control of this country. I was then, and still am, a great supporter of Imperial Airways and of British Airways—incidentally, I ran into a pilot the other day, I had better not say where, who flew those flying-boats 32 years ago—and I am a great supporter of the lineal successors of those airlines, B.O.A.C. and B.E.A. A successful pattern was established then of British Commonwealth airlines, British Commonwealth routes and British Commonwealth air industry.

Next, during the war I had the privilege of helping to develop a unique passenger and freight air and sea service, in and out of enemy-occupied Europe, and in the latter part of the war we had some first-class American aviators who came to help us. They used to discuss in the most friendly way how, the British, having had the seaways of the world for centuries, the future seemed to be for the United States to operate the airways. At that time they had the four-engined transport aircraft and we were largely limited to single-engined fighters.

The Bermuda Agreement signed after the war was, therefore, I think, partly defensive from our point of view. I think I am right in saying that Sir Henry Self, who led the United Kingdom delegation, came to Khartoum with the Bullock Mission in 1934 and for a long time played a distinguished part in British aviation and in international air transport administration.

It often puzzles me that, although the seaports of the world are free for use, the airports have not been so free. However, I am bound to admit that there is a difference between the two. So I ask the Minister what is the exact significance of paragraph 1(a) in page 2 of Cmnd. 3015, which says, (a) The agreement shall be further amended as follows: What is the reason for deleting paragraphs (a) and (b) of Section IV of the Annex to the original Agreement?

Secondly, in paragraph (b) it is stated that United Kingdom route 11 and United States route 3 may not commence before 1st January, 1970; as I read the Bermuda Agreement and this new Agreement, B.O.A.C. is surely already successfully flying on this particular route, route 11.

Paragraph (c) says, in line 5, … there shall be no objection to the issuance of a foreign air carrier permit …". In that context, I assume that the word "foreign" means also Commonwealth, as far as this country is concerned—that is, a Government or an airline not controlled by the United Kingdom Government.

I have a special interest in the routes which are covered by this Agreement, particularly those to the Caribbean and to South America through Bermuda and the Caribbean. Last year, with the hon. Member for Coventry, North (Mr. Edelman), I went out, at the invitation of the Secretary of State for the Colonies, as he then was—now Minister of Overseas Development—to make certain investigations of a constitutional kind in two West Indian islands, and I found there that air transport was developing in a way which I had not realised in the United Kingdom. I found that traffic is increasing very rapidly from the United Kingdom and Europe to the Caribbean and South America. It is increasing also within the Caribbean and in Central and South America itself. The United Kingdom is in a position to develop these mid-Atlantic routes without any restrictions imposed by I.A.T.A. or, by the same token, by the agreement I am now discussing.

Feeder services could be built up at several points to make fuller use of the trunk services which can be developed from this country to the Caribbean and Central America, both passenger and freight. In the air transport world, we are sometimes apt to overlook the possibilities of freight transport. I shall not go into detail on this aspect because I have been working with Ministers on it, and I hope that there will be a satisfactory outcome.

As British South American Airways gave up, and B.O.A.C., I understand, refused to take on some of these South American traffic, independents should be further encouraged to extend operations onwards to the West Coast of South America and into Central America through the Caribbean. British United Airways is already making a valuable contribution on the very popular VC10 service to South America.

I believe that such independents must be given a reasonable amount of traffic rights between the United Kingdom and the Caribbean if the service which I have mentioned is to be properly developed. I do not believe that they can fly the first 4,000 or 5,000 miles there and back without revenue being picked up at intermediate points in between, and the present expansion of traffic to these areas can give earnings to the independents without in any way damaging the existing services of B.O.A.C. Independents must have enough traffic rights to support another trunk route through the Caribbean to South America. As I say, I understand that B.O.A.C. refused to take on this area. The Government should not block any other independent which is willing to have a try.

I believe that such independent lines will operate entirely, or almost entirely, United Kingdom-built aircraft, if given the green light now to go ahead. I can tell the House that, when I was out there, I found that the VC10 had enormous passenger appeal. Wherever one went, the question asked was whether one had been in the VC10. I understand that the load factor over the break-even point is substantially higher in this aircraft than it is in the Boeing 707.

Can the Minister tell me what action the Government are taking to develop these United Kingdom and Commonwealth airlines before 1970, at which time, apparently, this agreement will limit certain developments, through these territories and islands? No permission is required from the I.A.T.A., and most of the points in which I am interested are not controlled in any way by our friends in the United States.

I have concentrated on routes 3 to 9 and 11 to 12 and the feeder services which go to feed those trunk routes, but there can be a great expansion, as aircraft ranges constantly increase, in other parts of the world, with the same pattern of United Kingdom and Commonwealth-based trunk lines and feeder services. We have seen this pattern developed successfully in Gibraltar and Malta nearer at home, and I can think of a number of Commonwealth islands which would enable expansion to be carried out in the Far East and Antipodes with feeder services coming into those Commonwealth points. Again, I believe that we could develop these Commonwealth services, based on Commonwealth built aircraft. If Quantas is allowed to fly from Bermuda to Nassau and pick up traffic, why cannot a United Kingdom based independent?

Finally, I hope that, in his reply, the Minister will explain the changes that have taken place in the original 1946 Bermuda Agreement by this latest Command 3015 and will tell us that the expansion of traffic in friendly competition with our United States allies particularly will give advantages not only to the nationalised airlines, B.O.A.C., B.E.A. and Quantas, but to independents who wish to risk their own money. I hope that we shall be told that this is to be an Anglo-U.S. air agreement and not a B.O.A.C.-U.S. air agreement, and thereby that we can, by greater use of British aircraft, benefit British industry and technology, and help develop on the lines of the Empire air mail scheme an even more widely co-ordinated system to the greater benefit of British and Commonwealth trade and defence.

12.31 a.m.

Photo of Dr Horace King Dr Horace King , Southampton, Itchen

Does the hon. Member for Mid-Bedfordshire (Mr. Hastings) wish to speak on this topic?

Photo of Mr Stephen Hastings Mr Stephen Hastings , Mid Bedfordshire

Yes, Mr. Speaker. My apologies for not making that point clear.

I wish to say a word or two in support of my hon. Friend the Member for Cheltenham (Mr. Dodds-Parker) and to congratulate him for raising a matter which seems to me to be of the first importance.

First, I believe that the routes which he has mentioned and the area about which he has been talking provide a real opportunity for the sale of British short-haul aircraft. If the question about which he has been talking is pursued energetically, there is a possibility of extending the market substantially.

Secondly, I believe that the point which he made about the independents is a valid one. On the question as a whole, it is noticeable that over recent years the inclination of the independents nearly always to turn to British aircraft as opposed to foreign aircraft is in sad contrast to the choices which are made by the State airlines. It is something which emerges from the speech which we have just heard from my hon. Friend, and it is yet another reason for the Government supporting by any means they can opportunities for the independents as well as the State airlines in these areas.

The Board of Trade has come into this sphere only recently. With its commercial experience, which is of very long standing, it has the ability to extend opportunity here. As the Minister will doubtless be aware, there is a real connection between the barter in air routes and the sale of aircraft. Perhaps it is something which is not publicised very often or openly acknowledged, but it remains a commercial fact about airline operations. Now that the Board of Trade is to have responsibility, I think that it could follow this question up, particularly with regard to the area which my hon. Friend has been discussing.

My hon. Friend mentioned freight. It is a market which is increasing at the rate of some 18 per cent. a year. It is a massive opportunity for us and, if I may say so to the Government, it is all the more regrettable that the future of the aircraft industry has been jeopardised, as it has, by the cancellations which have taken place over the last two years in this respect.

We have not the possibility of absorbing the market from the manufacturing point of view that we would have had if the Government had continued with the Hawker Siddeley 681. That could have been a world leader. The sad fact is that, as a result of that cancellation, within a measurable space of time we could be out of the freight market altogether from the manufacturing point of view. That does not excuse us if we fail to try and capture with whatever aircraft we may be operating a market expanding at this rate.

My hon. Friend mentioned the VC10 and I want to put another question to the Minister of State. This aircraft is without doubt proving to be commercially more successful than was ever appreciated or even perhaps imagined before it came into service. What disturbs me is that no facts or figures are forthcoming which are beyond dispute. We get one set from the manu- facturers and unfortunately another set from the operators. There is far too much vagueness about this aircraft which, without doubt, is today a world leader.

I should like to see the Government going into this question and proving what I believe—or I would not ask the question—without peradventure, that it is the most economically successful long-range jet operating today. If they are satisfied that is the case, let the Government produce the figures, brandish them to the world, and see if they cannot do something to recoup from the sad failure which has been made from the sales point of view of an aircraft which is proving in every other way technically and economically a magnificent success. I congratulate my hon. Friend on raising this question and I am sure the Minister of State will give it the weight it deserves.

12.37 a.m.

Photo of Mr George Darling Mr George Darling , Sheffield, Hillsborough

The subject of the debate is the Anglo-United States Air Agreement. If the hon. Member for Mid-Bedfordshire (Mr. Hastings) had let me know about the questions he wished to raise I would have been prepared to answer him.

I should begin by saying that I have been asked to reply. As the hon. Member for Cheltenham (Mr. Dodds-Parker) is aware, these important matters come within the scope of my hon. Friend the Minister of State, who is unavoidably unable to be present.

The hon. Member was good enough to tell me what he intended to say, however, and I have been able to look into his comments on the Agreement and his very constructive proposals and to have consultations in order to give him some of the facts he wants. I hope my reply will be acceptable to him.

The Air Services Agreement between the United States and the United Kingdom is just about the most important air agreement between countries for the worldwide significance of routes and their scale and value. Since 1946, when the original Agreement was signed, there have been many additions and changes in the routes available, both for the American and the British airlines, but the most comprehensive revision of these routes was that successfully included in the negotiations which have led to this Agreement.

The changes that have been made have taken the form of an extensive revision of the routes that are available to both sides out of the experience of flying over the last 20 years. Agreement was reached on a number of important new route rights for both countries' airlines and on amendments to other routes as well. Some routes which were not operated but which were in the original Agreement or no longer corresponded to sovereignty over territories were pruned out.

The hon. Member asked for information on what the new Agreement will achieve. First, the United Kingdom secured its main objective in the negotiations—to secure routes for the international trunk service of B.O.A.C. through New York and across the United States and the Pacific to Australia and New Zealand. That was the real achievement in that regard.

This will strengthen the Commonwealth links which we all want to see. I understand that B.O.A.C. plans to introduce services on this new route to Australia next year. The United Kingdom gains other rights in the United States, particularly to Chicago on the British direct route to the West Coast. It also secured rights to Commonwealth and Colonial territories in the Eastern Caribbean, on a trunk route through New York. This was (a) 3 (b) in the Exchange of Notes.

The United Kingdom also gained local route rights in the Caribbean and the Far East, as was shown in (a) 12 and (a) 13. In return, if one can talk about balancing things in this way, the United States was granted additional routes to Hong Kong through Europe and across the Pacific. Its routes in the Caribbean and the Bahamas and Bermuda were also extended together with additional flexibility on routes to Europe, some of them, as the hon. Member quite rightly stressed, all-cargo services. This is a development which we in the Board of Trade must particularly bear in mind. All of these additions and changes give further scope to airlines of both countries and will considerably help the United Kingdom's overseas territories to enjoy improved services.

The hon. Member mentioned in his speech, as he has mentioned in correspondence with my hon. Friends at the Commonwealth Office and the Ministry of Aviation, his particular wish to see British airline services developed via Bermuda, across to the Caribbean and down to South America. As the hon. Member rightly said, services not calling at points in United States territory do not need to be negotiated in this United Kingdom Agreement with the United States. A service across the Atlantic, for instance, via Bermuda to the Bahamas and to non-United States islands in the Caribbean and to South America is right outside the scope of this Agreement.

In so far as such a service or services—the hon. Member mentioned feeder lines coming in as well—go to other countries, that is to countries other than the United States, such service or services depend on international rights from those countries. Any new service of a British airline, not covered by its existing licence from the British Air Transport Licensing Board would have to be the subject of an application by that airline to the Board. I am in a difficulty, because any such application, I understand, could be the subject of an appeal to the Minister, in a quasi-judicial capacity, so that the hon. Member will agree that it would not be appropriate for me to comment—even if I had all of the information on which I could comment—on the prospects of whether such an application would be successful if one was made.

I understand that so far no application for a new regular scheduled services open to the public has been made by a British independent operator, for a route across to the Caribbean and beyond, to South America. I know that the hon. Member has corresponded with my hon. Friends in the Commonwealth Office and the Ministry of Aviation on some of these route matters, which are of interest to the territories overseas in the Caribbean area. I can assure the hon. Member that we shall be pleased to pursue these proposals in greater detail than is possible in a debate of this kind.

My hon. Friend, the Minister of State will be writing to the hon. Member so that these matters can be followed up. These proposals which has he made do not call for any alteration or revision of the United Kingdom-United States routes achieved in the negotiations this year. I think that he would agree that in spite of further proposals that he wants us to make, the revision in this new Agreement represents a major advance in the interest of air travel and of British aviation. I agree with him that the extension of United Kingdom routes in this way is bound to help to extend the use of British aircraft and, consequently, make a contribution to the prosperity of our aircraft industry.

The hon. Gentleman raised some specific points and, first, I would say a word on route 11 to Miami. I understand that B.O.A.C. is already flying to Miami at present on an international through connecting route, but not with Miami as a destination. There is a domestic route, from London to Nassau, to which the international route Nassau-Miami is added, but the direct route will come into operation, I understand, in 1970. He also asked why paragraphs (a) and (b) of section IV of the Annex to the Bermuda Agreement have been deleted, and what are the results of that deletion. The answer to that is that these two paragraphs allowed the parties to the Agreement to add any additional intermediate points which they wished on the negotiated route. But this sort of permissive arrangement has never really worked, nor been put into full operation, and both countries have agreed that from now on the intermediate points should be clearly stated, and be laid down in the Agreement. That is what has been done, and so the original two paragraphs have been deleted.

The hon. Member also asked what the word "foreign" means in paragraph 1(c) of the Agreement, and suggested, I think, that it referred to anywhere outside the United Kingdom. In fact, it is the other way round. This Note is from Her Majesty's Ambassador to the United States administration, and it means, therefore, that "foreign" applies to any country outside the United States. In other words, to paraphrase the Note, there shall be no objection to the issue of non-United States carrier permits to the designated United Kingdom carriers, allowing them to substitute Los Angeles for San Francisco and San Francisco for Los Angeles within the limits laid down.

There are two other questions. First, on the matter of independents, this is, as he himself suggested, something for British licensing and British policy, and not for the United Kingdom-United States Agree- ment as such. There are independent flights operated by British United to the east coast of South America, and I think the hon. Gentleman asks that, in working out the benefits of this Agreement, consideration should be given to the independent airlines which want to operate such routes. Of course, I am speaking at the moment for the Minister who, in his quasi-judicial capacity would have to pronounce on appeals on any applications which might come forward. I think that I have answered most of the points raised, and hope that the hon. Gentleman is satisfied that I have told him all I can.

12.50 a.m.

Photo of Mr Robert Carr Mr Robert Carr , Mitcham

I will not detain the House for more than a few moments, but should like to comment briefly on some of the points which have been raised. I am sure that my hon. Friends would like to thank and congratulate the Minister of State for having taken on this task at such short notice. We appreciate the way in which he has grappled with such a complicated subject in such a short time and given such informative answers. We understand the reason for the absence of his hon. Friend the Minister of State who is now dealing with these affairs—again because of the short notice involved.

We agree that this new Agreement with the United States is a very important one, and is of advantage to this country. The objectives which we have achieved—an international trunk service across the Pacific; new rights within the United States, and new rights in the Eastern Caribbean when operating through New York—provide very important new opportunities for British airlines. In return, the United States have themselves obtained new rights—and that is fair enough. One of the main objects of my hon. Friends is that since the United States are very vigorous and enterprising competitors who will almost certainly take full advantage of their new rights, this country should do the same. Hence the importance of the point which my hon. Friend the Member for Cheltenham (Mr. Dodds-Parker) made of the full development of the feeder services, as well as the main rights, in the Caribbean area, and also of making quite sure that while we use these new rights to give full advantage to B.O.A.C.—our major international flag carrier in airline operations—we should not allow B.O.A.C.'s inability to take advantage of these rights to prevent other British airlines from doing so.

When we say we want this to be a genuine Anglo-United States Agreement, and not simply a B.O.A.C.-United States Agreement, I can assure the hon. Gentleman that we are not expressing the slightest prejudice against B.O.A.C., or wishing the Corporation to be held back in any way. We are saying that if, as might happen, B.O.A.C., for economic or other reasons, felt unable to take up some rights which we have gained and which independents would be prepared to take up, we hope that the Government would make sure that our independent airlines got a fair chance to do so, and that there would not be any dog-in-the-manger business of saying that, because B.O.A.C. could not take up the rights, nobody else should be allowed to.

That brings me to the general point with which my hon. Friend opened his remarks. It is a matter of history that communications, and leadership in communications—whatever form they may take—are vital in Britain's interest. The account given by my hon. Friend the Member for Cheltenham of what was said to him during the war by some of his American colleagues, although no doubt said in the friendliest spirit, had some truth in it. It is not possible for Britain to dominate the world communications in the way she may have done in the past, but it is possible, if we are on our toes and determined to take advantage of every opportunity, to see that we maintain a leading part, because this is not only important in itself; by leading to the use of British aircraft, thereby giving us a broader base on which to sustain a viable and advanced technological British aircraft industry, we are also contributing to the technological and general economic strength of this country.

We beg the Government to be expansive in this field and to make sure, in one way or another, that Britain uses to the full the rights she has gained under the Agreement. As the hon. Gentleman will know from the Prayer we moved on Friday, we are not enamoured of the breaking-up of the Ministry of Aviation at this juncture, whatever may be the long-term advantages, but perhaps in this one field there may be some advantage in these responsibilities coming to the Board of Trade, and we may be compensated in this one respect for what we believe, overall, to be a pity at present. There would be advantage in getting from the Board of Trade a stronger and more worldwide appreciation of the commercial possibilities of airline operation and the benefit of its great experience in tough international negotiations. If it can take hold of these powers and make use of these rights for Britain we shall give it every support, because it will be doing a great service for Britain.

Photo of Mr George Darling Mr George Darling , Sheffield, Hillsborough

With permission, I should like to thank the right hon. Gentleman——

Photo of Dr Horace King Dr Horace King , Southampton, Itchen

Order. The right hon. Gentleman has exhausted his right to speak. He may speak again only if the House gives him leave.

Photo of Mr George Darling Mr George Darling , Sheffield, Hillsborough

With leave of the House, I should like to thank the right hon. Gentleman for his kind remarks about my trying to study this matter quickly. His views will be drawn to my right hon. Friend's attention.