B.E.a. (Aircraft Purchases)

Prayers – in the House of Commons at 12:00 am on 16th December 1966.

Alert me about debates like this

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North 12:00 am, 16th December 1966

With permission, I should like to make a statement about purchases of aircraft by British European Airways.

I am glad to say that, after further discussion with B.E.A., I have today been able to give B.E.A. my approval for the purchase of 18 BAC111/500 aircraft, with options for 6 more. This means that B.E.A. is now in a position to negotiate a contract for the first part of its requirement of new British aircraft.

The Government will consider, with B.E.A., when B.E.A. puts forward its proposals for the remaining part of its new British aircraft, what new financial arrangement may be necessary to fulfil the pledge given by my right hon. Friend the Minister of Aviation on 2nd August, 1966. As I indicated to the House on 21st November, I do not rule out any particular sort of arrangement.

Photo of Mr Peter Hordern Mr Peter Hordern , Horsham

We should like more time to consider the right hon. Gentleman's statement in view of the short notice that has been given to us. I should, however, like to ask him three questions as a result of the statement.

First, is the right hon. Gentleman aware that, while we welcome the announcement that B.E.A. is to buy 18 BAC111/500 aircraft, we should like him to tell us what further orders of British jets B.E.A. has in mind? He will recall his statement on 21st November when he said: I am also hopeful that, soon after this, B.E.A. will let me have its proposals for the extensive further orders of British jets that it plans."—[OFFICIAL REPORT, 21st November, 1966; Vol. 736, c. 1074.] With regard to the second part of the statement, is the right hon. Gentleman aware that we on this side recall very well what it was that his colleague, the former Minister of Aviation, said by way of a pledge. It was this: For these reasons B.E.A. would have preferred on purely commercial grounds to buy American aircraft. The Government, however, have informed B.E.A. that they will take steps to ensure that B.E.A. is able to operate as a fully commercial undertaking with the fleet it acquires."—[OFFICIAL REPORT, 2nd August, 1966; Vol. 733, c. 261.] We regard that as the pledge that the Minister made. When is the right hon. Gentleman going to make an announcement about the kind of financial support that will be given to B.E.A. to redeem that pledge?

Thirdly, has the right hon. Gentleman made any progress in making up his mind about a capital reconstruction on the lines of B.O.A.C? In his speech on 21st November he made some mention of a proposed capital reconstruction.

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

As to further orders, certainly further orders will be placed for British jets. B.E.A. is now working out the technical and other considerations involved in that, and I hope that it will be able to make proposals to me as soon as possible.

As to the pledge which my right hon. Friend made, the hon. Gentleman got it almost exactly right. The words were, I think: The Government undertake to ensure that B.E.A. can operate as a fully commercial undertaking with the fleet it acquires ". We stand by that, and I am very happy to repeat it today.

Finally, the hon. Gentleman asked about the possibility of a capital reconstruction. As I said on 21st November, that is not ruled out as one possible method of carrying out the pledge. We cannot, however, be sure of the details until we have the particulars of the further orders, sizes, amount of types, total value, and so on, but as soon as we know that I hope we can make a final settlement.

Photo of Mr Eric Lubbock Mr Eric Lubbock , Orpington

Is the right hon. Gentleman aware that, despite the knocking of the British aircraft industry, the existing BAC111 is fully competitive and doing very well in operation with U.S. airlines, that we believe that a stretched version also has an important export market, and that in the end it will not be necessary for the right hon. Gentleman to give any subsidy to B.E.A. for the operation of the aircraft?

Secondly, why is B.E.A. taking such a long time to reach a decision on the second part of its requirement, bearing in mind that the Chairman said earlier this year that an order had to be placed as a matter of urgency?

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

I entirely agree with the hon. Gentleman about the great technical and commercial merits of the various types of the BAC111. The aircraft is sold abroad on a very large scale. Indeed, it has been our best export aircraft this year. Our total exports of aircraft and parts will be more than £200 million, and I think it has great export prospects.

I do not think that B.E.A. can reasonably be criticised for taking some little time to reach a final settlement on the further part of the order. Tens of millions of £s are involved in these orders, and there are always very intricate technical questions in any proposals, as the hon. Gentleman knows, for jet aircraft. I do not think that B.E.A. will take very much longer, and I do not think that it can be criticised for making sure that it gets it right.

Photo of Mr Charles Doughty Mr Charles Doughty , East Surrey

I am sorry, but I did not hear the first few words of the right hon. Gentleman's statement. Perhaps I might ask him two questions. First, what is the expected date of delivery of the aircraft that have been ordered? Secondly, is he satisfied that in the meantime B.E.A. has a sufficient number of modern aircraft to carry on its business in view of the fierce competition on the European routes?

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

Yes, Sir; B.E.A. has a number of very serviceable aircraft, including Tridents. I should not like to give the hon. and learned Gentleman exact dates for the delivery of these aircraft, but it will be over the next two or three years.