TNAG-0965-FCO40-1184-Air-services-between-the-UK-and-Hong-Kong-1980 — Page 99

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Air Services

17 JUNE 1980

[Mr. Nott.] In the submissions to the CAA, most of the applicants were suggesting a single, one-way fare to Hong Kong, at the lower end of the scale, of between £100 and £150. The present lowest return APEX fare is £400. He is saying that his con- stituents will not be able to afford the fare. On the basis of the evidence sub- mitted, it is not much over double what it now costs to go on the sleeper journey to Edinburgh. I believe it costs more than £100 for his constituents to go on their holidays in Spain.

Mr. McCrindle: Would the Secretary of State accept from one who is a believer in competition in aviation that there are several reasons to question whether the maximum potential foreseeable traffic on the London-Hong Kong route can con- ceivably justify four airlines flying it? In coming to his decision, did he have occa- sion to look across the Atlantic to see the results of the deregulation policy intro- duced a few years ago in the United States and note the plunge in profitability

of some of the airlines there, as a result of which many of them are on the verge of bankruptcy? Would he not agree that if that were to be the result of his deci- sion it could not conceivably be in the long term interests of the business or domestic traveller?

Mr. Nott: Clearly if that were the re- sult, it would not be to the advantage of their airline operators or the passengers. I think that is an indisputable fact.

May I remind my hon. Friend that similar gloomy predictions about com- petition in world aviation were made before the arrival of Skytrain on the North Atlantic? In the year following the arrival of Skytrain on the North Atlantic, which was in 1978, British Air- ways passenger revenues on the route excceded all previous records. Pan Am and TWA had an equally good year.

I

May I remind my hon. Friend of what happened on the North Atlantic? accept that at present the airlines are not going through a profitable phase. That, overwhelmingly, in the current period is because of massive increases in aviation fuel costs. In 1979 airline passenger growth rose by 9 per cent, over 1978. The current problems of the airlines are the problems of rising aviation fuel costs and other costs. I do not think that we

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can decide a medium-term and long-term aviation policy on the basis of short-term criteria. If we are frightened for the future, we shall never have the right avia- tion policy.

Mr. Gregor MacKenzie: Is the Secre- tary of State aware that by effectively countermanding the decision taken by the CAA he has succeeded in pleasing no one because the three airlines concerned could not operate viably on this route? I am, ignoring the Secretary of State's geo- graphical error when he talked of taking a sleeper train to Edinburgh. It is a pity. he did not take a sleeper train to Glasgow to consider the effect on the employment prospects of the people who work for British Caledonian in the Strathclyde area, which already suffers from exceptionally high unemployment. We hoped that that was a factor he would take into considera- tion. We all regret that he seems to have ignored it completely.

Mr. Nott: I do not think that this

appeal which I was deciding was, by its very nature, one in which I would please everyone. I certainly accept that this decision on appeal will not please all the airline operators, but I believe it will greatly please future airline passengers.

My duty under the Act is to weigh the interests of the airline passenger with those of the airline operator. On the evidence submitted on the appeal- aviation fuel costs have of course risen since then--we are talking about extreme- ly attractive fares at the lower end of the scale.

I am not instructing the airlines how many flights to fly; I am not telling them what frequency they should have. British Airways now have seven flights to Hong Kong a week. I am not saying how many flights British Caledonian or Laker or Cathay Pacific should fly. That is up: to them. They must make their own economic choices. I believe that this route will throw up a large untapped market of future air travellers. That is why it is important. It is the only cabotage route, I the only international route, on which we have control and are able to make a de- cision. I believe that there are great prospects on this route over the long term. I think that the CAA took too short term a view in this case.

Mr. Trotter : Does my right hon. Friend sce extra traffic developing here from the

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Air Service whole of the Far East be to the interests of a this cabotage route? consequence of his d British Caledonian an can operate immediatel in practical terms, approval of the Hong K

Are there any implica future? Is there any leading perhaps to mo routes nearer home on are even more outraged the sleeper route to Gla

Mr. Nott: I think I other routes alone for t freedom carriers are fa

this

route-Swissair, France, KLM, Singapore sian Airlines, Thai Inter India.

I believe that there is say how great it is—in a to British airlines on London route.

I wan

to compete as effectively other foreign airlines. basis upon which I am the Act to pursue the po

I cannot tell how muc will be, but I believe t be a considerable amou this decision.

Mr. David Steel: Ha tary of State admitted in ments and his replies to he has, in effect, overrul bringing his political view ment of aviation to bear same evidence? If so, i intervening ministerially of a statutory body an tually setting aside its ro role to be in future licens

Mr. Nott: I have not view in any way. I deny completely. I have looked which was presented to t applications. I have look papers and I have made a this route based on the ev given to the CAA. It wa decision. In this case, 1 Act, I acted in an appea quasi-judicial capacity, an in that capacity that I too