Examination of Witnesses (Questions 60
- 76)
WEDNESDAY 24 MAY 2000
MR FRED
W. SMITH, MR
RUSH O'KEEFE,
MR NIGEL
GOODSON AND
MR MORGAN
FOULKES
Mr Gray
60. These are just questions of detail really
on your courtesy call on the Deputy Prime Minister. Two questions
really are allied and I will ask both at the same time. First
of all, was the Deputy Prime Minister aware that Senator Mitchell
was in fact coming in his capacity as a Director of your company?
(Mr Smith) Of course. George Mitchell has been a Director
of our company for years and any group of people around the world
know, George Mitchell is a gentleman of the highest integrity.
It would have been ridiculous for him not to come. He is a—
61. Fine. So you are clear in your mind that
the Deputy Prime Minister would talk about this particular issue
and not anything else?
(Mr Smith) Of course. We told him in writing what
we were coming to see him about.
62. Okay, if that is the case why do you suppose
it is that he did not see the British Cargo interests?
(Mr Smith) Why did he not see the British Cargo interests?
I do not think—
63. Why did FedEx get such a meeting that the
British Cargo interests did not get?
(Mr Smith) I have no idea. Probably because Mr Prescott
thinks higher of George Mitchell than he does of the BCAA, I would
imagine.
Mr Gray: So that is why you get the special
deal with Mr Prescott which without any reciprocal rights—
Chairman
64. I do not think that we should put words
into Mr Smith's words here?
(Mr Smith) I do not agree with that characterisation
and twice now you have accused me of using some sort of improper
influence and it is incorrect.
Mr Gray
65. Madam Chairman, for the record, I have not
accused Mr Smith of using any improper influence of any kind whatsoever.
I am asking the questions, that is what I am doing?
(Mr Smith) Well, I certainly took your implications
about our political clout with Al Gore, which does not exist—
Mr Gray: If the cap fits, perhaps but anyhow
that is my view.
Chairman
66. I am sorry. I just want to ask you a very
simple question. What new services would you hope to introduce
if you had a bilateral agreement?
(Mr Goodson) If we had an `Open Skies' agreement,
Madam Chairman, we would be in a position to set up many more
directly with other countries simply within Europe, operating
out of the UK. That would enable us to do two things really. Obviously
to expand our UK operations as we have already described, but
secondly to provide better transit times to our customers and
I think this is a significant point that needs to be emphasised.
I think the express industry has been one of the engines of economic
growth. Companies like UPS and FedEx have been at the forefront
of developing express networks in Europe and internationally and
I think this has been to the benefit of business based in the
UK and in Europe, but if other European countries or other countries
in the world are able to offer better transit times to procurers
of goods and services then those procurers are more likely to
choose companies that are able to offer that sort of service than
companies that are not able to offer such quick transit times.
This is becoming much more of a significant issue on decisions
made on procurement basis these days than has ever been the case.
Mr Bennett
67. Mr Smith, you made a comment earlier about
lorries going from the UK to Schipol losing, if you like, trade
from this country. Can you quantify that or is it just a feeling
that it does.
(Mr Smith) No, I mean, the cargo growth rates in continental
airports have been significantly greater than out of UK airports.
We can supply the Committee with that. It has been well documented.
The real loss of the UK economic effect though is not just the
losses of our direct jobs or the mini-hub that we would put in
Stansted and in Scotland. What our points of service are—and
UPS's are—are the Liverpools of the 21st century and it
is around those ports that businesses locate in order to be able
to access these fast transit times. In Memphis, which is our largest
hub, there have been over 400 industries that have located around
our hub. The same thing is true in Louisville, UPS's biggest hub.
It is beginning to happen in Paris in locating around our hubs.
I will give you a perfect example here. It has been widely reported
in the press that are extremely interested in the A3XX aircraft
and we are; we have had them make a business case for us. The
aeroplane is offered with two types of engines; one is a Rolls
Royce engine manufactured mostly in this country and the other
a consortium of Pratt & Whitney and General Electric. Under
the current UK bilateral, if we needed a part for our Rolls Royce
engine out of Derby we would lose a day in transit and that 200
million dollar aeroplane might sit on the ground in Asia because
we could not even put it on our own aeroplane and move it to Asia.
The high-tech, high value added trades is a global trading network
today and UPS and FedEx and DHL and our other competitors we just
facilitate that and our not having a complete and open network
from the United Kingdom is tantamount to offering a telephone
service from the United Kingdom and saying: "You can call
every place you want in the world except for these 15 or 20 countries".
I mean, nobody would be successful. The bilateral system set up
by the Chicago Convention envisioned a world of flag carriers
flying people point to point with rights being traded back and
forth and slowly the beyond rights became important as the aeroplanes
got bigger and the underbellies became more productive. Now we
and UPS and your importers and exporters are locked in this archaic
world and we are being held hostage for the issues concerning
Heathrow slots and BA licences.
68. Okay, that is the economic case. Is there
an environmental case? If you have more direct flights would it
cut down fuel consumption, cut down transport or actually increase
it?
(Mr Smith) Well one thing it would do is that it would
eliminate the total waste of us flying air from the United Kingdom
over to Paris. What we do today is we offload our planes at Stansted
and then take off with air on board and have to move the traffic
by surface underneath it or charter another aeroplane to fly right
underneath our aeroplane with a tremendous waste of fuel.
Chairman
69. Not right underneath I hope?
(Mr Smith) No, not right underneath!
70. May I just ask you, is there any realistic
proposition that there will be cargo slots becoming vacant at
Heathrow or Gatwick?
(Mr Goodson) I do not think that is a realistic prospect
from the work we have been doing recently, Madam Chairman. I think
Stansted is to be the only London airport which is offering unrestricted
access for cargo, but we are absolutely determined to defend that
position because I think if we lose the cargo slots in Stansted
then access to the London and south east market becomes a very
difficult issue as far as UPS, and I am sure Federal Express,
are concerned.
Mr O'Brien
71. You referred to airports in the south east;
what about other regional airports? Are there any pressures on
there or are there vacancies there to get in and out easily?
(Mr Goodson) As far as our own operations are concerned,
East Midlands airport, as far as we are able to judge is likely
to be able to provide us with the growth that we potentially could
envisage in the UK without there being any concerns there.
72. And Federal Express?
(Mr Smith) I would point out that FedEx actually operated
at Heathrow and had to move from Heathrow to Stansted precisely
because we could not get slots, some years ago. Also, although
it would not be immediate upon the liberalisation of the treaty
as would our resumption of wide bodied service to Scotland, we
would undoubtedly, in relatively short order, also open a continuation
of our international flights to an airport some place in the Midlands
or a central part of the country.
73. What about the north?
(Mr Smith) I cannot say to that. We would add a third
point serve in the UK. Where the selection of that would be, I
do not know. It may well be in the industrialised north.
Miss McIntosh
74. Some reference was made to Article 7 of
the Chicago Convention which was obviously drafted before the
creation of the European Union. Do you not accept that we are
not discussing like with like because the US now is replicated
by the fact that the UK domestic market should be looked at, for
negotiation purposes, as the whole of the EU?
(Mr Smith) As I mentioned a moment ago, we would have
no fundamental objections to it.
Chairman: I think we could accept that, Mr Smith.
You would do very well out of it. We might not, but you would.
Mr Donohoe
75. Mr Foulkes, you indicated earlier that you
would give us some statistics. Rather than give them to us now,
maybe you could just write to us?
(Mr Foulkes) Okay, yes.
Chairman
76. Perhaps you could submit a note to the Committee?
(Mr Foulkes) Yes, we will do.
Chairman: Thank you very much. Gentlemen, you
have been very patient. We are very grateful to you.
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