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United Kingdom-United States Air Travel

Volume 934: debated on Tuesday 28 June 1977

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asked the Secretary of State for Trade why he agreed that United States operators should continue to be able to carry passengers from the United Kingdom to Europe; and what equivalent right will be available to United Kingdom carriers in the United States.

In a negotiation of this type it is impossible to get all one wants. However, there will be a substantial immediate reduction in the points in Europe to which United States airlines can continue to carry United Kingdom originating traffic and the majority of those that remain are to be phased out over the next five years. In return, United Kingdom airlines will get rights to carry traffic between the United States and Canada and points in Latin America.

asked the Secretary of State for Trade how he intends to satisfy himself in practice that the capacity controls to be included under the new air service agreement can be effectively enforced.

The method of implementing the capacity control mechanism is clearly laid down in the new agreement. The agreement also includes provision for a review at the end of four years, at which any defect will be taken into account.

asked the Secretary of State for Trade whether, under the new air service agreement, a US carrier will be able to operate a cargo-only service between Houston and London in conjunction with the British carrier who will otherwise have sole rights on this route; and, if so, why he agreed to this provision, having regard to the fact that on the corresponding service from Atlanta to be operated solely by a US carrier, there is to be no right for a United Kingdom carrier to operate a cargo-only service.

Both British Caledonian and a US carrier can operate non-stop all-cargo services between Houston and London from the date of signature of the new agreement. However, whereas British Caledonian will be entitled to operate a non-stop all-cargo service from Atlanta after three years, this right will not be available at any time to a US carrier.

asked the Secretary of State for Trade whether, under the new air service agreement, Laker Airways remains a United Kingdom designated flag carrier on the London-New York route; and whether he hopes to be able to negotiate better terms for Laker's United States of America permit for the Skytrain service than that at present granted by the CAB for the service.

pursuant to the reply [Official Report, 27th June 1977; Vol. 934, c. 2–4], gave the following information:In my statement on 23rd June I announced that I intend to designate Laker Airways as the second United Kingdom airline on the London-New York route I am still considering the conditions that the CAB attached to Laker's US permit and its restricted period.

asked the Secretary of State for Trade to what extent United States of America scheduled or supplemented operators will be able to operate services similar to the Laker Skytrain as a result of the recent agreement (a) on the London-New York route and (b) on other United Kingdom to United States of America routes.

pursuant to the reply [Official Report, 27th June 1977; Vol. 934, c. 2–4, gave the following information:Under the new agreement, only one US scheduled carrier will be able to operate on the agreed routes to the United Kingdom, except on the routes from New York and from Los Angeles, where two US carriers can be designated. The extent to which these carriers will be able to offer Skytrain-type services will be a matter for the aeronautical authori- ties on both sides, in accordance with the relevant provisions of the new agreement.

asked the Secretary of State for Trade what change in United Kingdom-United States of America air fares he expects to see in real terms up to 1981.

pursuant to the reply [Official Report, 27th June 1977; Vol. 934, c. 2–4], gave the following information:The Civil Aviation Authority estimates that, if the capacity control arrangements in the new agreement work out as we hope, there will be a modest reduction in North Atlantic scheduled passenger air fares in real terms by 1981.

asked the Secretary of State for Trade what has been the annual growth in recent years in United Kingdom-United States of America air travel; and what rate of annual growth he expects up to 1981.Mr. Dell,

pursuant to the reply [ Official Report, 27th June 1977; Vol. 934, c. 2–4], gave the following information:

The changes in total United Kingdom-USA North Atlantic passenger traffic over the previous year, including both scheduled and charter services, since 1972 have been:

1973+ 3·6 percent.
1974 -11·9 percent.
1975 + 0·5 percent.
1976 +19·7 percent.

The Civil Aviation Authority estimates that this traffic will grow by some 8 per cent. per annum between 1977 and 1981.

asked the Secretary of State for Trade what reduction he expects to take place in seat capacity on the United Kingdom-United States of America air route as a result of the new air services agreement.

pursuant to the reply [Official Report, 27th June 1977; Vol. 934, c. 2–4], gave the following information:The new capacity control mechanism should prevent capacity on the North Atlantic routes from rising more rapidly than the demand. I expect that there will, therefore, be less capacity than if the old agreement had continued.

asked the Secretary of State for Trade what restrictions on United Kingdom-United States of America charter flights he expects to see as a result of the recent air services agreement.

pursuant to the reply [Official Report, 27th June 1977; Vol. 934, c. 2–4], gave the following information:None. On the contrary, the new agreement provides that the present memorandum of understanding on charters, under which the Americans lifted their severe restrictions on the access of our charter airlines to the US market, will be renewed annually, subject to certain conditions, pending the negotiation of a permanent bilateral agreement on North Atlantic charter services. It has been agreed that the bilateral agreement will contain, among other things, provisions for the freedom of market access to which I attach great importance.

asked the Secretary of State for Trade what is the present value in money terms of the total United Kingdom-United States of America air market; what are the United Kingdom and United States of America percentage shares of the market; what is his estimate of the total market in 1981 expressed in current £ sterling; and what he expects to be the United Kingdom and United States of America shares in that year.

pursuant to the reply [Official Report, 27th June 1977; Vol. 934, c. 2–4], gave the following information:In 1976 the value of the United Kingdom-United States of America scheduled airline market under the Bermuda Agreement was £378 million, of which the United Kingdom share was nearly 43 per cent. In 1981 the CAA expects the market to have grown to some £838 million in current—i.e., 1981—prices, or £640 million at today's prices.In the new agreement, United Kingdom airlines have solo rights from Manchester indefinitely and to Houston for three years. On all other routes they will face competition from United States airlines. There is no provision for fixing market shares, and market share will be determined by the competitiveness of United Kingdom airlines. Any estimates of market share under conditions of competition must be highly speculative, but I expect United Kingdom airlines to have fairer opportunities under the new agreement than they would have done under the Bermuda Agreement to fight for a bigger share of this growing market.