Air Fares and Routes (Deregulation)

Oral Answers to Questions — Transport – in the House of Commons at 12:00 am on 20th July 1987.

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Photo of Mr David Atkinson Mr David Atkinson , Bournemouth East 12:00 am, 20th July 1987

asked the Secretary of State for Transport if he will make a statement on progress on the deregulation of European air fares and routes.

Photo of Mr Paul Channon Mr Paul Channon , Southend West

The Transport Council was unable to adopt a unanimously agreed package of air transport liberalisation measures, which Spain blocked rather than see Gibraltar included. The Government are now doing all that they can to find ways of saving the package, without compromising the legitimate rights of the people of Gibraltar.

Photo of Mr David Atkinson Mr David Atkinson , Bournemouth East

I thank my right hon. Friend for his reply. Will he assure the House that the proposals that he and his European colleagues discussed last month in Luxembourg would have resulted in true competition and lower fares? Does he agree that the proposed merger between British Airways and British Caledonian only makes the matter even more urgent to resolve?

Photo of Mr Paul Channon Mr Paul Channon , Southend West

I had better not comment on the last part of my hon. Friend's question. On the first part of his question, I can assure him that what we discussed in the Transport Council would have widened the choice of fares on European services, would have widened the choice of services, would have introduced real competition to many major routes for the first time, and would have been much in the interests of British travellers. I hope that a way can be found to achieve that.

Photo of Mr Michael Colvin Mr Michael Colvin , Romsey and Waterside

My right hon. Friend must have a view on whether progress towards deregulation will be helped or hindered by the proposed merger between British Caledonian and British Airways. May we hear it?

Photo of Mr Paul Channon Mr Paul Channon , Southend West

I am sure that my hon. Friend knows perfectly well that the matter is being considered by the Director General of Fair Trading. He has to report to my right hon. Friend. In the circumstances, it would be quite wrong for me to make any comment.

Photo of Dennis Skinner Dennis Skinner Member, Labour Party National Executive Committee, Vice-Chair, Labour Party

Is this the same Government who, several years ago. welcomed Freddie Laker and his enterprises?

Photo of Mr Paul Channon Mr Paul Channon , Southend West

As usual, the hon. Member has put an important point.

Photo of Anthony Steen Anthony Steen , South Hams

Does the Secretary of State agree that there is little point in having deregulation if there is no competition left in this country? Will he also agree, with his right hon. Friend the Secretary of State for Trade and Industry, to see the chairman of Virgin Atlantic, who is concerned about international routes, the chairman of Air Europe, who is concerned about European routes, and the chairman of British Midland Airways, who is concerned about domestic routes? Will he make sure that such a delegation is seen by him and the Secretary of State for Trade and Industry before any decision is made about the British Caledonian and British Airways merger?

Photo of Mr Paul Channon Mr Paul Channon , Southend West

All those people should, in the first instance, put their views to the Director General of Fair Trading. I have some experience as Secretary of State for Trade and Industry, and I know how these things operate. It is for the Director General to make a recommendation to the Secretary of State, who can then decide whether to accept or reject it. This question deals with the deregulation of European routes, and does not go nearly as wide as my hon. Friend's question.

Mr. Robert Hughes:

The Minister must realise that there is a connection between deregulation. whether internationally or in Europe, and the merger between British Caledonian and British Airways. Would it not have been much better, since, as I understand it, he was advised of the talks early last week, to have had a thorough discussion with the two airlines and with the other operators in order to arrive at a sensible and rational solution to the issues, instead of the unseemly scramble that is going on to try to get routes from British Caledonian and British Airways? If the matter is to go to the Director General of Fair Trading, will the Minister advise the Secretary of State for Trade and Industry to make a reference quickly so that the matter can be resolved as early as possible in the interests of all those concerned in airline aviation?

Photo of Mr Paul Channon Mr Paul Channon , Southend West

I take note of what the hon. Gentleman has said, and I am sure that my right hon. Friend will consider the hon. Gentleman's representation. This question deals with the deregulation of European air fares and routes. The House might he interested to know that British Airways serves 52 European destinations from London. British Caledonian serves eight, and competes with British Airways on seven of them.