Select Committee on Environment, Transport and Regional Affairs Minutes of Evidence


Examination of witnesses (Questions 100 - 119)

WEDNESDAY 9 DECEMBER 1998

MR W WHITEHORN and MR M FURLONG

  100.  On the Manchester trains you would be stopping at how many other places on the way through England?
  (Mr Furlong)  The Manchester services would stop at Stafford, Crewe, Milton Keynes and Watford.

  101.  Would you be confident that you could stop passengers getting off at those places?
  (Mr Furlong)  Yes; certainly. In terms of the security aspects, we are looking at on-train security. There will be selected door opening and there would be trained personnel at each door.

  102.  Selected door opening is already a specification on this rolling stock is it?
  (Mr Furlong)  Yes; it certainly is, yes.

Chairman

  103.  You do not mean Stockport instead of Stafford do you?
  (Mr Furlong)  Sorry: Stockport. Apologies.

  104.  Unfortunately for you there are members from all sorts of counties rushing up and down.
  (Mr Furlong)  Not Stoke-on-Trent or Leeds.

  105.  Not Stoke-on-Trent and not Stafford but Stockport. It is a different place also north of Watford.
  (Mr Whitehorn)  May I add on the subject of security and the boarding of trains that we have looked at this extensively and met with Eurostar UK. There is a general agreement that the plans we have for the management of security are feasible in every sense of the word.
  (Mr Furlong)  Certainly the plans for security and immigration have been very well developed by Eurostar UK and we see no problem in taking those over and running them.

Mr Bennett

  106.  And meeting the costs of them?
  (Mr Furlong)  And meeting the necessary costs.

Mr Stevenson

  107.  In answer to my colleague Mr Stringer's question about viability from Heathrow, you said there were two areas where you believed the proposition was not viable. If I recall correctly you responded at some length about the technical non-viability. What about the commercial non-viability which you are alleging? Would you like to expand on that a little bit?
  (Mr Furlong)  We have looked at the likely catchment areas for a Heathrow originating service and it certainly has a local catchment area in the west of London. There is a catchment area of feeder services both domestically and internationally. However, from the work we have done, and the indications that a Heathrow to Paris service would be likely to take in the order of three hours forty minutes, we do not believe that faced with an option, customers in any significant numbers will choose between an option which puts them in Paris in 40 minutes, 50 minutes, and then half an hour into the centre, an hour and a half journey, versus a three hour forty minute journey.

Chairman

  108.  You offered to operate these services without extra cost. Could you tell us whether you were in any way involved in the assessments which were put forward by LCR originally?
  (Mr Furlong)  For the inter-capital services?

  109.  Yes.
  (Mr Furlong)  Yes, Virgin in its role as part of the original London and Continental consortium was involved in the drawing up of the business plan and looking at the numbers, along with a number of other companies including National Express, including SNCF.

  110.  I know all about the others. They are not here. I am talking to you. Did you put in an assessment of traffic?
  (Mr Furlong)  Independently, no. As part of the consortium.

  111.  You put in some evidence on which the case was based.
  (Mr Furlong)  Yes, we put forward a view.

  112.  When the Deputy Prime Minister said one of the problems with the service was that there were over-optimistic assessments, do you agree with that?
  (Mr Furlong)  It depends very much on the commercial strategy which is followed.

  113.  Does that mean yes, you do agree that they were over-optimistic?
  (Mr Furlong)  In terms of the numbers; obviously the Eurostar service has under-performed on the numbers which were being suggested.

  114.  So the assessments were wrong.
  (Mr Whitehorn)  No. The Deputy Prime Minister was referring partly to the original assessment of traffic for LCR and Eurostar done prior to its ownership by a private consortium. Two sets of assessments were done. In the late 1980s the assessment was that Eurostar by now would be carrying several million passengers more than it is today. The second assessment was done in 1995-96 when a consortium of companies which formed LCR originally was looking at the traffic numbers. Those traffic numbers have actually largely been achieved. One of the problems which LCR had was the financing proposals rather than the traffic numbers themselves.

  115.  Surely there is a direct connection between the money people are prepared to put up and the accuracy of the assessments which you have put to them?
  (Mr Whitehorn)  That is absolutely true.

  116.  Backers have a nasty habit of expecting you to stick to your business plan.
  (Mr Whitehorn)  That is absolutely true but there was a very short space of time and a Channel Tunnel fire did intervene. That did knock back the growth of the traffic quite significantly. If you look at the trend line of the traffic, it was pretty much on track with the original assessments which were done in 1995. Is that correct?
  (Mr Furlong)  Yes.

  117.  You are going to give us anyway some more evidence and figures, models and these two alternative schemes.
  (Mr Furlong)  Yes, certainly; that is correct.

  118.  We would not be correct to have just the odd reservation about your assessments.
  (Mr Whitehorn)  In business it is always a good idea to have reservations about everything.

  119.  You obviously know Virgin very well.
  (Mr Whitehorn)  I know our competitors very well and I certainly have reservations about many of the things they say, especially the things they say to this Committee. However, it is very, very important, when we are looking at this, for the Committee to understand that this is something we would propose to do at our risk. There would be no public money involved.


 
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