Orders of the Day — Civil Aviation Bill

Part of the debate – in the House of Commons at 7:06 pm on 19th November 1979.

Alert me about debates like this

Photo of Mr Michael Colvin Mr Michael Colvin , Bristol North West 7:06 pm, 19th November 1979

It is a pleasure to speak following the right hon. and learned Member for Dulwich (Mr. Silkin), who may be a neighbour of mine domestically but is no neighbour politically. I think that it is the sign of a skilled advocate that he has been able to contribute so well to the debate in so impromptu a fashion and to grasp the brief so quickly.

Besides amending the law relating to civil aviation, the Bill is a very important piece of denationalisation. It is welcomed on the Conservative Benches and in the country at large. Although I accept what the right hon. Member for Lanarkshire, North (Mr. Smith) said about the lack of a specific mandate in our general election manifesto for selling off British Airways shares to the public I must say that repeated surveys of public opinion through polls have shown that the vast majority of the British people are opposed to nationalisation or any further extension of nationalisation. When such questions have been directed specifically to workers in industry, results of these polls have shown that workers in British industry are opposed to the nationalisation of their firm. Although that is absolutely no mandate, it indicates that what the Government have in mind is very much in tune with public opinion in Britain.

One other fact is that there were many references in our manifesto to the reduction in the role of the State, and to handing back more responsibility to the people of this country. I suggest that the Bill is one more step in that direction.

The situation in civil air transport has changed radically since the oil crisis of 1973. We have seen air fares rocket, then the Skytrain revolution, followed by de-regulation in the United States and the collapse of the transatlantic charter market. Sir Freddie Laker has shown that air fares can be brought down without sacrificing safety and reliability. In short, he has succeeded in busting the system of State control that has existed in some form or another in this country since Imperial Airways first flew the flag in 1924. The Government have recognised and welcomed that fact and are now, through the Bill, helping the British civil aviation industry to adjust and to benefit from the new situation.

Some hon. Members have suggested that the Bill does not go far enough, that the Government should not only change the role of the Civil Aviation Authority but press for reform of the IATA rate-fixing and advisory body, review the role of the International Civil Aviation OrganisationICAO—and call for an international conference to rewrite the 1944 Chicago convention, which set up the original structure of the international civil aviation industry.

I appreciate that these suggestions are outside the scope of the Bill, but I think that they merit consideration by the Government. This is a good opportunity to air that opinion. I suggest that such action would allow each airline eventually to fix its own fares, to serve whatever routes it could obtain and to offer whatever level of service it could justify so long as safety regulations were maintained and the environment protected. Therefore, it would be in the interests of the consumer in the long run. But I question whether Britain is ready for such radical de-regulation, for that is what it would be, or whether we could ever get agreement from the United States for such a policy. I think that the renegotiation of the Bermuda 2 agreement may indicate the answer to that question.

The Government proposal to sell about half the shares in British Airways Ltd. to the public—the so-called BP solution—is by far the best method for returning this nationalised industry to free enterprise, and it should perhaps be used for other industries.

If workers in British Airways own shares, so much the better. Ownership gives power, but demands responsibility in return. Despite what has been said, if another Labour Government should try to repossess those shares without paying proper compensation they could be in for a rough time.

I suggest that selling about half the shares in British Airways will rid the public sector borrowing requirement of some of the burden of British Airways finance. That will not only help in the fight against inflation by reducing the Government's debt; it will relieve the corporation of the immediate effect of possible cuts in Government spending, as my right hon. Friend has already said, because British Airways will be more free to respond to market opportunities. Indeed, they will have to do that if they are to remain the market leader.

The Bill will help to remove the ministerial shackles that so dictatorially bound Sir Freddie Laker's Skytrain until he obtained justice from the Court of Appeal. Incidentally, where is the United States competitor to Skytrain that the Labour Government told us would emerge to seize £6 million worth of revenue from British Airways? It just has not materialised. United States operators have not shown much of the frontiersman enterprise for which their country is renowned. But they say that they have been over-regulated, too.

My right hon. Friend made the point that deregulation of the United States domestic market had been proceeding at a considerable pace. I think that we on this side of the Atlantic will look forward to the day when we see British companies obtaining fifth freedom or cabotage rights in the United States. If hon. Members think that suggestion is a little far fetched, I suggest that it will not be long before the United States seeks such rights in Europe.

Welcome though the Bill is, it raises several questions in my mind relating to the Civil Aviation Authority, three of which the Minister may care to answer in his summing-up at the end of the debate.

First, the CAA has made great progress in reducing its annual deficit, as requested in the Civil Aviation Act 1971, which called on the Authority to recover its costs as soon as possible from those who use, or benefit from, its services: and to aim to dispense with grant-in-aid after 1977–78.

The Authority has not quite hit that target. Nevertheless, this year it has reduced its annual deficit, for the fourth year running, to £14·9 million. That compares with £15·6 million in 1977–78, £44 million in 1976–77 and £53 million in 1975–76.

I suggest that there is one more way in which the CAA might be permitted to raise revenue to cut its deficit still further. We know that deregulation will see many more applications for routes. For example, that knight in Skytrain armour wants to operate among 37 new destinations in Europe. That is a total of 660 routes. Will the Government consider permitting the CAA to charge applicants the cost of hearings following applications in order to reduce what I can only describe as a blunderbuss as opposed to a rifle shot method of making applications?

My hon. Friend the Member for Woking (Mr. Onslow) has already asked whether the Government feel that it will take the CAA six months to prepare its policy for its air transport licensing function in clause 11. That is rather a long time. My right hon. Friend the Secretary of State said that the CAA would be asked to bring forward a draft policy statement by the Committee stage. I understood that the Committee stage would not begin until after Christmas, and that seems a long time to wait. I should think that the draft, if it is to be a draft and therefore open to general discussion, could be prepared and produced at a much earlier date.

The Bill calls on the CAA to perform its functions in the manner which it considers is best calculated…to secure the most effective use of airports within the United Kingdom. Perhaps the Minister will tell us in his winding-up speech when he proposes to bring forward proposals for the third London airport and, for that matter, a comprehensive strategy for airports generally in the United Kingdom and thus end the most appalling state of uncertainty that the Labour Government left on being defeated at the general election. That is required for the future development of airports, and airlines must know from where they will be able to operate.

I applaud the Secretary of State's determination to wait for the right time to launch a mixed economy British Airways Ltd. My hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle), when discussing this matter, referred to the statement by British Airways.

British Airways have said about this important matter of timing: First, timing will be crucial. The shares will need to be offered at a time when British Airways' trading record and prospects enable it to write a prospectus that describes a strong business confident of healthy financial results in a favourable international environment. The company should have established a balance sheet demonstrably capable of supporting a very considerable capital investment programme. The timing will also, of course, need to take account of the climate and sentiment of the stock market. I agree with that statement and I am sure that the Government also agree. The Bill throws down the gauntlet to British Airways, and their greatest challenge over the next few months will be to increase the momentum towards greater productivity, thereby enabling that good prospectus to be written.

British Airways have two great assets that do not appear on their balance sheets—first, their route structure and, secondly, their determined and skilled work force. British Airways know that they will succeed in keeping those routes only if they make better use of manpower. It is important to ensure that the Bill releases some of British Airways' birds from the cage of regulation. We shall then look forward to seeing pust how well those birds can fly.