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Volume 175: debated on Thursday 5 July 1990

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To ask the Secretary of State for Transport, pursuant to his reply of 2 July, Official Report, columns 428–29, if he will make a statement outlining the nature and extent of the changes which will result from the commitment to establish a single market in aviation by the end of 1992.

The agreement reached by EC Transport Ministers on 18 June set the Community firmly on course to complete a single market in aviation by the end of 1992. As well as setting out a second stage of EC liberalisation, this agreement incorporates into EC law the earlier Ministerial commitment to the key ingredients of a single market: the abolition of bilateral capacity sharing and the introduction of the double disapproval system for the setting of fares by 1 January 1993, and the adoption of uniform licensing criteria by 1 July 1992. The United Kingdom has welcomed these commitments and will continue to take a leading role in negotiations on the completion of a liberal EC market in air transport.

To ask the Secretary of State for Transport if he will seek to establish why the French Government blocked the proposal last month by British Midland Airways for a cheaper business fare from London to Paris; and if he will initiate proceedings against the French Government.

The French Government initially maintained that the three-day business return fare of £149 proposed by British Midland for its London-Paris service was not reasonably related to the costs of the airline.Under the EC arrangements for fare approval, which provide criteria for the assessment of fares proposals and for consultations in cases of disagreement, the Department of Transport met the French authorities on 2 May in Paris.

At these consultations the French agreed to accept a fare structure on British Midland's Heathrow-Paris service which would include a new three-day business return of £165. This is higher than first proposed, but is still substantially lower than existing business class return fares on the route of around £240. I understand that British Midland was content with the result.

To ask the Secretary of State for Transport, pursuant to his reply of 2 July, Official Report, columns 428–29, if he will make a statement explaining the nature and extent of the greater freedom being made available to commercial airlines in consequence of the Transport Ministers Council of 18 June.

I am particularly pleased that the EC Transport Council adopted a second package of measures which seals the commitment to the liberalisation of air transport in the European Community by the end of 1992, and provides for arrangements which will function in the interim.The new package builds on the first set of measures agreed in 1987. It contains arrangements for setting fares which introduce an element of double disapproval and simplify the existing zonal system. It further relaxes the limits on capacity sharing by progressively increasing the maximum share of capacity enjoyed by the airlines of any one state to 75 per cent. The package also eases access to the market by creating third and fourth freedom traffic rights between virtually all Community airports, relaxing restrictions on fifth freedom services within the Community, and progressively lowering the thresholds for multiple designation. The Council accepted the need to deal quickly with predatory practices; and agreed principles against which air cargo services should be further liberalised by March 1991. Ministers also reached agreement on a mandate for the opening of aviation negotiations for EFTA.