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Airline Competition

Volume 176: debated on Wednesday 18 July 1990

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2.

To ask the Secretary of State for Trade and Industry what plans he has to ensure greater competition amongst British airlines to prevent the development of a monopoly by any one airline; and if he will make a statement.

My right hon. Friend will continue to exercise his powers, where appropriate, under the Fair Trading Act 1973 and other competition legislation. In particular, he will continue to refer to the Monopolies and Mergers Commission those mergers in the airline industry that appear to raise United Kingdom competition or other public interest issues.

However, my right hon. Friend the Secretary of State for Transport has specific responsibility for airlines in the United Kingdom. His policy, which I support fully, is to encourage a sound and competitive industry with a variety of airlines while promoting healthy competition in all markets, in the interests of consumers.

I am grateful to my hon. and learned Friend for that answer. Given that competition invariably benefits the consumer through lower fares, more choice and a higher quality service, will he do his best to ensure that the smaller airlines are given every possible assistance and encouragement to resist the predatory and often unfair trading practices of British Airways? Despite British Airways' massive economies of scale, its prices are up to 40 per cent. higher than those of the smaller airlines. It also operates an unhealthy monopoly on the London to Newcastle route.

My hon. Friend identifies an important point. I agree that smaller airlines have an important part to play in maintaining a healthy, competitive airline industry. I am conscious of the importance of smaller airlines and small airports to the economic development of the regions which I visit in the course of my ministerial duties.

Is the Minister aware that when Mr. Michael Bishop and British Midland Airways applied for licences to fly between Glasgow and London, they stated that, if they were given those licences, they would compete fairly with British Airways in terms of price and service? Now that British Midland is no longer competing with British Airways in terms of price, it is complaining when British Airways gives a better service to passengers on flights between Glasgow and London. Will the hon. and learned Gentleman inform British Midland that, instead of trying to stop the service that British Airways provides for people travelling on that route, it should compete in terms of price? Will the Government break the pricing cartel of British Midland and British Airways?

These are essentially matters for my right hon. Friend the Secretary of State for Transport, but I shall ensure that he is made aware of the hon. Gentleman's views.

Why is it almost impossible to have deregulation in the United Kingdom and Europe? America ably achieved deregulation almost overnight. Does not the international aviation industry compete with aviation industries in other countries? Rather than encouraging competition between United Kingdom airlines, we should open the markets to all, resulting in lower fares throughout Europe and the world generally.

My hon. Friend makes an important point. I am in favour of considerable competition, but my hon. Friend will appreciate that we must carry many other countries with us on the subject of further deregulation.