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Laker Airways

Volume 23: debated on Monday 10 May 1982

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asked the Minister for Trade what assessment has now been made of the total moneys owing to the creditors of Laker Airways at the time of its collapse.


asked the Minister for Trade what assessment he has now made of the total sums owed to creditors of Laker Airways.

I am informed that total liabilities are estimated at £260 million.

Just under 17,000 people held scheduled tickets on Skytrain with a total value estimated at £3·85 million. Some of them were able to use their return coupons with other airlines. How many remain with unused coupons is not yet known.

A further 139,000 people had paid in part or in full for a package holiday. Total liabilities are about £6 million, which can be met in full out of bonding arrangements and the air travel reserve fund.

In view of the fact that Ministers had drawn to their attention the shortcomings in the financial arrangements of Laker Airways before Christmas, that they decided to take no action, and that advertising by Laker continued after that time without any proper or improper pressure from Ministers to bring it to an end, will the Minister tell us what proportion of those massive liabilities the Government intend to bear, and will individual Ministers be held personally responsible?

The answer to the latter part of the question is "Certainly not". The hon. Gentleman has not thought through the implications of his question, or he would not have asked it in that form.

With the wisdom of hindsight, I believe that the Civil Aviation Authority used its powers sensibly. It would not have been right for that body to have stepped in earlier, because a hasty or premature intervention at that time could have brought matters to the very head to which they eventually came. The Government have no funds available for reimbursing the ticket holders.

Is it not clear that the sums owed by Laker Airways to travellers and to commercial concerns is much more than was admitted at the time of the company's collapse? Is the Minister really saying that he is satisfied that the Civil Aviation Authority effectively supervised the affairs of Laker Airways? Should not the whole matter be investigated and made public?

The Government considered carefully whether they should appoint an inspector under section 165 of the Companies Act 1948. However, the CAA, the Bank of England and the receivers advised that they were not aware of anything that would fall within the provisions of that section. I do not believe that the collapse of a major airline, such as Laker, can of itself justify an inquiry of the sort suggested by the hon. Gentleman.

In dealing with the sad collapse of Laker Airways, what immediate steps did the Government take to ensure that the routes operated by Laker were transferred to British companies? Could not the use of some of Laker's equipment have realised large sums of money for the creditors and been of considerable use to the British aviation industry in ensuring that those routes did not fall into the hands of overseas airlines?

I am glad that my hon. Friend has raised that matter. Great credit goes to other airlines for the way in which they assisted stranded passengers. The Los Angeles route has been taken over temporarily by British Caledonian. We are sympathetic to the position of those who hold scheduled air tickets which are not covered by the bonding and air travel reserve fund. As my hon. Friend will know, on 1 March the Government set up a review to consider any future provisions that might be made. We hope to have its report in June.

Does the Minister believe that Laker Airways was a good example of a private enterprise flying company? What assurance do we have that British Airways will not go the same way? Does the Prime Minister still believe that she is a Freddie Laker man?

As the hon. Gentleman knows, we have great confidence in our private enterprises. The hon. Gentleman has no right to cast reflections on other private enterprises simply because one airline runs into economic difficulties.

Does my hon. Friend agree that very few major airlines make profits and that, if precipitate action were taken, few of those airlines, including British Airways, would be flying the North Atlantic?

My hon. Friend knows that the number of airlines not making profits is not as large as he suggests. Some companies make profits. That emphasises what my hon. Friend the Under-Secretary of State said about ensuring that our airlines make profits as soon as possible.

Is the Minister aware that, bit by bit, more information is corning out about the way in which the affairs of Laker Airways were handled by the Government and the CAA in the months before the collapse? In view of the staggering figure of £260 million, which has been confirmed by the Minister today, is it not clear that there should be a full inquiry—judicial or otherwise—into the CAA's handling of the Laker affair and the handling of it by complacent Ministers at the Department of Trade?

The right hon. Gentleman is trying very hard to make political points with the wisdom of hindsight. I wonder whether he would have had the same attitude some months ago when none of those matters were known. We must await the receiver's full report.

On a point of order, Mr. Speaker. In view of the unsatisfactory nature of the Minister's answer, I shall take the earliest opportunity to try to raise this matter on the Adjournment.