Orders of the Day — Air Travel Reserve Fund Bill

Part of the debate – in the House of Commons at 12:00 am on 20th February 1975.

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Photo of Mr Peter Shore Mr Peter Shore , Tower Hamlets Stepney and Poplar 12:00 am, 20th February 1975

No, the point I am making is that in a recollection in tranquillity about the events of last year, I should not like to say at what particular moment I came to that view. But what I am saying is that anyone looking back now with the benefit of hindsight could scarcely dispute that judgment. That is not a matter which would divide any serious people, on either side of the House.

Today, we have to address ourselves to the task of making sure that if collapses do occur in the future, holidaymakers will at least be fully protected financially. As essential background to this I shall, first, briefly review the development of the air tour industry and, second, the measures previously taken to increase the security of holidaymakers.

The past 20 years have seen an extraordinarily rapid growth of holidays abroad and the development by go-ahead travel concerns of what amounts to a new service trade. Air carriers and hoteliers abroad, particularly in Spain, were eager to invest their facilities if a steady mass market could be established. The key to successful development was recognised to be cheapness and convenience for the customer. This meant the use of long-term block bookings in hotels and in aircraft to produce the low-unit-cost package. But the crucial reduction of costs was also secured by pruning the need for the operator to raise capital, accompanied by heavy interest rates, by the device of using advance receipts from the customer as a high proportion of working capital. The recipe for success and for a great deal of happiness for a great number of people seemed assured.

In 1957 it is estimated that some 57,000 Britons went abroad on package tours by air. In 1973 this figure was more like 3¼ million, with approximately 340 licensed tour operators in business, as compared with about 40 inclusive tour operators in 1957. Over that 20-year period, 1953 to 1973, the industry maintained an overall annual growth rate of 37 per cent. It was an astonishingly rapid development. These were, I suppose, the halcyon days.

But as 1973 wore on and, more markedly, in 1974, the climate changed and the temperature dropped. Inflation and uncertainty at home were dramatically compounded by the oil crisis and the impact of the three-day working week. Domestic political crisis in popular holiday destinations—Portugal, Greece and Cyprus last year—added to the problems. There was a marked falling off in the number and timing of summer bookings. Last summer five air tour operators, besides Clarksons, Horizon and Air Fair in the Court Line group, were unable to meet commitments to the travelling public. Approaching 170,000 or 180,000 people all told lost all or part of their holidays or, having completed their holidays, had to be repatriated under special arrangements. The disappointment and distress this involved for these people is not something that can be measured, nor can the damage which this involved for our business reputations abroad. These failures occurred at the height of the season.