With permission, I will now answer Question No. 77.
Over 90 per cent. of the output of British airlines is on international services. The industry must be strong in that intensely competitive field. In this country domestic services are limited and not very remunerative. There is need for rationalisation. Everywhere in the world civil aviation is highly regulated. We need to improve our regulatory machinery with the aim of strengthening the industry.
In the public sector the Government will establish an Airways Board charged with the task of securing that the fleets and resources of B.O.A.C. and B.E.A. are planned and marketed to the greatest overall advantage. This board will have complete authority and will not, therefore, represent an additional layer of decision-making. The Airways Board will also be responsible for setting up a separate regional airline bringing together certain domestic services of B.E.A. and of the British Air Services group.
The Government would welcome the emergence through combination of a strong independent airline undertaking scheduled services. We would favour the licensing of such a carrier on routes, notably on the North Atlantic, where the presence of a second British carrier could be expected to increase the British share of business. But we do not accept that the creation of such an airline should be made conditional on the transfer of a significant part of the air corporations' routes. We believe that there are continuing opportunities of growth for independent airlines and will pursue pricing policies which should assist them.
The Government accept that, after other steps have been taken to strengthen regional air services, it may still be necessary to subsidise certain services which can be shown to contribute to the economic or social development of the regions. They will seek powers to grant subsidies where detailed economic studies show them to be justified.
The Government propose to improve the regulatory machinery by setting up a Civil Aviation Authority which will have comprehensive responsibility for the regulation of the industry in all its aspects —economic, operational and technical. The Board of Trade will lay down the objectives and policies to be pursued by the authority: these will be published and come before Parliament before being made binding upon the authority.
In addition, the Board of Trade will continue to exercise its present functions in relation to the public sector—the Airways Board and the British Airports Authority. It will also continue to bear the main responsibility for negotiating international agreements affecting civil aviation, for investigating accidents and for the control of aircraft noise.
I am inviting the chairmen and members of the boards of the air corporations, of the Air Transport Licensing Board and of the Civil Aviation Advisory Committees generally to continue to serve for a further year, to allow time for the introduction of legislation.
With these changes the industry should be able to meet, with confidence, the challenges of the future and increase its contribution to an expanding economy and to the service of the public.
May I thank my right hon. Friend very warmly for that excellent statement? Will he say why he has abandoned the idea of a holding board in favour of the Airways Board? May I prompt him a little by asking him whether that is because he regards a holding board as being too weak an instrument for the vast powers which will fall to it?
I am obliged to my hon. Friend for his initial remarks. The Edwards Committee recommended a holding board which would have only a light rein over B.O.A.C. and B.E.A. and had in mind developing common services between the corporations such as industrial relations, freight handling, hotels and computers, for example.
Further study flowing from the Edwards' conclusions by the Board of Trade led us to believe that there would be greater gains if we could also look at the overlapping which takes place on B.O.A.C. and B.E.A. routes, gradually getting an integration of the routes and in time procuring aircraft which would possibly satisfy the flexibility of that route system.
We therefore came to the conclusion that it would be better to have a stronger body such as an Airways Board which would be, in effect, the board of the public sector and which would have overall management of the airlines and would satisfy the Government's aims with respect to their financial objectives.
When does the right hon. Gentleman expect to be able to introduce legislation on the matter? There are parts of the statement, at least, to which I can give a qualified welcome, assuming that he expects the criterion for licensing to be service to the public. Following his answer to his hon. Friend the Member for Glasgow, Govan (Mr. Rankin), may I ask whether it is not clear that the ultimate result of this Airways Board will be a merger between the two corporations? Would it not, therefore, be better to say so in unambiguous terms?
I do not think that is absolutely necessary at this time. I hope that we can prepare a Bill by April next year. That is my aim. Once we have embarked on this course it is essential that we get all the bodies involved to co-operate and to get the legislation into being as quickly as possible. The hon. Member will have noticed, although my statement was brief, that the establishment of the Civil Aviation Authority will take in the Air Registration Board and the Air Transport Licensing Board, giving, therefore, a stronger control of licensing, and that it will take over that segment of the Board of Trade which deals with safety and air traffic control.
Is the President of the Board of Trade aware that much of what he has said will be a great disappointment to the private sector? If the private sector is to play its role in the expansion of overseas routes it must have an improved structure. Will the right hon. Gentleman bear in mind the capital cost of modern aircraft and the need for them to be utilised to full effect? Will he recognise the need for the private sector companies to get in the queue to get aircraft; and that some steps must he taken in this respect?
I hope that when the House reads the White Paper it will regard it as a major charter for the future of British civil aviation. A special chapter is devoted to the independent airlines, but we are satisfied that we would like to see mergers of some of the domestic airlines. We would like to see them strong and viable enough to be able to undertake overseas airline routes, especially if they want to challenge B.O.A.C. or B.E.A. on trans-Atlantic routes.
Will the Industrial Reorganisation Corporation be prepared to assist in discussions between the independent airlines to create the second force, if asked to do so by British airlines? Will the licensing policy of the Board of Trade be spelt out in greater detail in his proposed legislation than it was in the Civil Aviation Licensing Act, 1960? Can he say anything about the common services that he thinks may be operated by the holding board which are not already being implemented by B.E.A. and B.O.A.C.?
I should have thought that the first point would be entirely within the province of the new Civil Aviation Authority.
On licensing, the hon. Gentleman must recognise, because I know that he takes a keen interest in these matters, that the A.T.L.B. was established in 1960, but that the framework of the legislation governing it did not prove quite satisfactory and that the licensing system has not therefore been completely successful. But the Civil Aviation Authority will be able to deal overall with licensing, and the proper routeing of domestic airlines in particular.
I have mentioned already some of the common services: industrial relations, freight handling, hotels, computers and marketing, in particular, can come under the Airways Board, and so can inclusive tours. But, particularly, the Airways Board can now look at how some of the routes overlap and see where great gains can be made by integrating those routes, and also bringing in special aircraft—perhaps building special aircraft—with that in mind.
My right hon. Friend's statement refers to a second carrier on the North Atlantic route. I welcome that if it leads to a greater share for British carriers. Can he say whether this more flexible approach will apply also to the Paris route? It seems ridiculous to me that there is no service between Gatwick and Paris.
My hon. Friend refers to a second carrier. There are all sorts of misleading descriptions when one talks about a second flag carrier and a second force airline. The point I am trying to make, and which the White Paper suggests, is that we would like to see a second force airline developed, but we are not intending to carve up B.O.A.C. or B.E.A. routes to assist it. We would hope that some independent airlines would merge, and gradually become strong and viable enough to contest overseas in their own right.
During the past two days I have consulted Professor Ronald Edwards, and the chairmen of B.O.A.C. and B.E.A., and we have met the chairmen of the A.T.L.B. and the A.R.B. and been in touch with the unions—I have not met B.U.A.—[HoN. MEMBERS: "Why not?"]—and all of them are quite happy with the report.
Will the President of the Board of Trade look again at the name "Airways Board", which is rather portentous and possessive for a body concerned with only two airlines? Will subsidies come from the central Government, or will the Government try to make a local authority which wants a subsidised airline pay its share out of the local rate?
The name "Airways Board" is self-explanatory. It will be the major body governing B.E.A. and B.O.A.C. It will be for the Airways Board itself to determine how fast and how far any merger may come about.
I shall take powers in the Bill to subsidise where necessary. As the hon. Gentleman knows, some of the small services now receive subsidies through cross-subsidisation, and this may continue. But I hope that they will gradually pay their way and that subsidies will end.
With reference to my right hon. Friend's answer to my hon. Friend the Member for Liverpool, Scotland (Mr. Alldritt), the development of civil aviation aerodromes is referred to in the report. Will he say whether it is now his policy that it should be left to local authorities to develop their own airfields, or is that to be a matter for central planning?
Can the President of the Board of Trade assure us that there is nothing sinister in the fact that he seems to have consulted the publicly-owned airlines chairmen but not the chairman of B.U.A.? May we have an assurance that this does not mean a move against independent operation.
Secondly, when setting up the terms of reference for the licensing authority, will the right hon. Gentleman bear in mind the interests of the air travelling public—which should have the overriding priority, as they have in the United States —and not just the other interests implied?