Memorandum by Manchester Airport PLC (IT
INTEGRATED TRANSPORT WHITE PAPER
1. Manchester Airport PLC is aware that the
Committee have been considering evidence about the implications
of proposals contained in the Integrated Transport White Paper.
It wishes to submit these comments for consideration before the
Committee concludes its deliberations.
2. Manchester Airport actively supports many
of the proposals in the White Paper and was pleased to see recognition
of its own efforts towards achieving an integrated approach to
ground transport. In particular, Manchester Airport supports the
emphasis being placed by the Government on the role of regional
airports in meeting a greater share of total demand for air travel.
3. The aviation industry is a major contributor
to the UK economy both directly and indirectly, through the stimulus
which international accessibility brings in terms of the UK's
national and regional competitiveness in trade, inward investment
and tourism. Given this importance, and the opportunity to maximise
the contribution which the industry makes to the UK's competitiveness,
the need for a comprehensive integrated aviation policy is urgent
4. Manchester Airport supports the Government's
initiative in seeking to draw up an airports policy for the long-term.
We support, also, Government's determination to ensure that airports'
policy is developed in the context of an integrated approach to
all forms of transport. We are concerned, however, that at the
present time Government may not have adequate tools at its disposal
to secure the achievement of its objectives. The previous Government,
in two decades of legislation, deregulated and privatised most
of the public transport network, in a way which was deliberately
designed to discourage an integrated approach to transport planning.
Similarly, a narrow focus on competition has been the key driver
of such aviation policy as presently exists both within the UK
and the EC. One effect of this has been to create a substantial
imbalance of power between airports and the airline industry,
with the extensive regulation of the former heavily focused on
protecting the interests of airlines to the exclusion of wider
transport policy considerations.
5. These considerations pose a particular challenge
for the Government in considering how best to give effect to the
aspirations contained within the White Paper. In its own deliberations
on this issue, the Select Committee will have heard the arguments
in support of voluntary change, based upon partnerships between
public agencies and private sector transport providers. There
is much that is useful in the ground work already undertaken pursuant
to this idea, particularly in the quality partnerships being promoted
in some of the metropolitan areas. It is important, however, that
the limitations of this approach, as well as the opportunities,
are clearly appreciated, and that serious thought is given to
what the Government can do to promote and hasten the implementation
of a more cohesive and efficiency approach to the planning and
delivery of transport services.
6. This submission is focused upon a number
of areas where there is scope for Government to take early action
which would support airports in furthering the objectives in the
White Paper. The freeing up of local authority owned airports
to borrow money for much needed investment, is already, of course,
an important step in the right direction. We would also support
early measures to reintroduce a measure of regulation to the bus
and rail industries, and in this regard we welcome the intended
establishment of a Strategic Rail Authority.
7. The following paragraphs address issues which
are specific to the airports industry, and which were the subject
of fuller analysis in our submission to the DETR during consultation
on the Integrated Transport White Paper.
8. The ability of local authority owned airports
to work in partnership with other agencies and the ground transport
operators to promote and develop an integrated approach to airport
access is handicapped by the legal limitationsvireson
the activities which local authority owned airports may participate
in. The present limitations within Local Government law limit
the activities of such airports to matters directly connected
with the operation of a specific airport. These vires constraints
would prevent, for example, a local authority owned airport, such
as Manchester, developing and operating ground transport services
in partnership with other transport operators, or entering into
relationships with other regional airports with the objective
of maximising the regions' contribution to meeting total air transport
9. Commercial freedom would also open the door
to airports making a greater contribution to levering out the
economic benefits of their operation into the wider regional economies
by allowing to invest in airport related activity targeted at
attracting and retaining additional economic activity. Manchester
Airport believes that an early opportunity must be sought for
legislation to amend these vires restrictions within Local Government
law and has made proposals to the Department of the Environment,
Transport and the Regions accordingly.
10. A key consideration in any integrated transport
strategy must be the achievement of the best possible transport
system within reasonable limits of sustainable development. Manchester
and the BAA London airports operate under a form of economic regulation
which increasingly brings their operation into conflict with the
basic principle of sustainable development that users should pay
the full cost of the infrastructure which they use.
11. The economic regulation of the designated
airports named above by the CAA and MMC is based upon objectives
designed to achieve the lowest possible charges to airline users,
with the operational charges supported by revenues from commercial
activities under the "single till" principle. This has
had the effect of reducing income from landing fees and passenger
charges to below cost at Heathrow, with the same downward pressures
leading to the achievement of the same result at Manchester and
the other designated airports in time.
12. Clearly this is not in line what the basic
tenet of sustainable developmentthat of the polluter pays.
It also has two other undesirable effects. Firstly, the extremely
low operational charges at Heathrow make the achievement of the
Government's objective of seeing greater use of regional airports
more difficult. Instead of the normal economic principles applying,
whereby charges would be highest at the most congested facility,
the low charges at Heathrow have the effect of sucking in additional
traffic. other airports cannot compete with these low charges
at Heathrow when seeking to attract airlines to commence new regional
13. Secondly, the quest for non-regulated commercial
income streams within the "single till" leads to airports
seeking to diversify into non-aviation related activity. This
in turn leads to increased pressure on the use of scarce land
resources within the vicinity of airports, to the probable eventual
detriment to airport capacity. This is inconsistent with maximising
the capability of the UK's airports to meet air traffic demand.
14. The Department of the Environment, Transport
and the Regions are currently considering the form of airport
economic regulation for the future in the context of the Utilities
Green Paper. Manchester Airport believes that there is an opportunity
for radical reform of the regulatory regime to ensure that it
works towards achieving the principles of an integrated transport
policy rather than against them.
15. The White Paper also confirmed the Government's
approach towards liberalising access for UK and foreign airlines
to operate air services to regional airports. It stated that this
should "enable UK and foreign airlines to plan the development
of services with confidence that their future growth will not
be limited by bilateral restrictions." Regrettably, the
terms of the reciprocity clauses have been such that many countries
have been reluctant to take up the offer because of effective
increases in capacity available to UK airlines out of London.
In one caseAir Hong Kongextra-bilateral freighter
services to Manchester were temporarily suspended pending negotiations
on the regional deal. This resulted in a reduction of freight
capacity to the UK regions, contrary to the basic policy objective.
16. The liberalisation offer relates only to
direct, point to point, third and fourth freedom, services to
UK regional points. All the remaining conditions of existing bilateral
agreements, including limitations on routing and intermediate
stops, remain in place. As a result, many airlines are still prevented
from operating viable services to UK regional points as the initiation
of such services often requires an intermediate stop at a European
point to sustain the operation in the early years.
17. Manchester Airport believes that fifth freedom
rights have also to be made freely available to and from regional
points for the liberalisation policy to be fully workable and
achieve its aims. This would include the ability of eastern airlines
to continue regional services onto points in North America, in
line with the already liberal regional transatlantic regime.
18. Slot allocation is another powerful tool
in determining how airport capacity used. At present, the rules
are determined almost entirely by the airlines, supplemented by
the EC Commission's objective to see an increase in airline competition
in Europe through the priority given to new entrants. The White
Paper makes reference to the need to secure appropriate access
from the UK regions to the Heathrow and Gatwick hubs.
19. This is not the only issue. Manchester is
also a fully co-ordinated airport and finds that the current rules
cut across its ability to ensure that it s own capacity is used
to best effect to meet regional needs for an increasing range
of air services. Manchester cannot effectively prioritise the
use of the airport capacity which it has created to meet regional
needs. Slot allocation is potentially an important policy tool
for Government in ensuring that its overall airport policy objectives
are met. Manchester Airport believes that the Government should
lobby for the amendment of the existing regulation to acknowledge
a greater role for airports and the relevant regional interests
in defining the priorities for the allocation of scarce airport
20. Manchester Airport welcomes the decision
of Government to look at the role of regional airports, emphasising
in particular their role in regional economic development. However,
a key to understanding the potential for regional airports will
be an understanding of their relationship to airports in the South
21. Manchester Airport is concerned that the
current regional air services studies are being carried out in
a piecemeal manner which will fail to identify the true potential
for regional airports in total to claw back regional demand presently
using the London airports. There is an urgent need for a truly
national policy which takes all factors into account.
22. This submission has sought to identify a
number of matters which it believes must be taken up as a matter
of urgency if the implementation of integrated approach to airport
operation and development is to be secured. Manchester Airport
would be pleased to answer any queries which the Committee have
on the matters raised.