Examination of Witnesses (Questions 500
- 519)
WEDNESDAY 14 JUNE 2000
MR GEOFF
MUIRHEAD, MS
ROWENA BURNS
AND MS
LOUISE CONGDON
500. And what evidence is there that European
carriers, such as KLM and Air France, are siphoning off UK passengers,
particularly from regional airports, and how many passengers pass
through Manchester to travel to the United States via European
hubs such as Schiphol or Charles de Gaulle?
(Mr Muirhead) I will ask Ms Congdon to answer that
in a minute, but the first thing I would say is that growth on
services out of the UK to Amsterdam and Paris is much healthier,
if that is the right word, much more robust than other services
are. And the issue of what is happening out of Manchester, where
we have a very strong service to Amsterdam, a quarter of a million
passengers a year from Manchester to Amsterdam, we do have some
figures about how many then are going back over Manchester to
fly to the USA, is what we do have; what we do not have is how
many people do that out of Humberside, out of Leeds, out of Newcastle,
out of Teesside, and all the other regional airports. Amsterdam
has positioned itself, within the UK, as the third London airport
anyway, and that was before Stansted came, I guess, and they are
marketing very strongly, and developed services very strongly
out of all the regional airports, those traffic streams. Louise,
what figures have we got?
Chairman
501. Do you have figures, Ms Congdon?
(Ms Congdon) Specifically, the figures from Manchester
via Paris or Amsterdam and then onwards to the USA amount to some
47,000 passengers last year, of which a third went via Paris and
two thirds via Amsterdam; but that is only part of the story,
obviously there is traffic over other European hubs as well.
502. How well does that compare with the year
before?
(Ms Congdon) I have not got the 1998 figures, I am
afraid.
(Mr Muirhead) We can let you have that. The interesting
thing, that is 47,000, nearly 50,000 passengers out of Manchester,
where we have 50, 60 services a week directly to the USA. Humberside,
Teesside, Newcastle, all these other regional airports do not
have any services, so that the flows will be, almost by definition,
much, much heavier out of those other regional airports.
Mr Donaldson
503. And I appreciate that you do not have specific
figures, but, from your contact with other regional airports,
would that be the feedback that you are getting?
(Mr Muirhead) I can talk a little bit about Humberside,
because we own 83 per cent of it, so it is a subsidiary. The KLM-UK
service out of Humberside is over 100,000 passengers; if you put
that against all of the other scheduled services, it totally dwarfs
them. So there is an awful lot of people in the Humberside area
that go out of Humberside to Schiphol and then from there to all
their destinations. And that, for me, very clearly, just exports
jobs out of the UK.
504. And if you were asked to give the main
reasons why someone living close to Humberside, or in that region
of the UK, chooses to fly to Amsterdam and then on to another
destination, rather than get a train to London and fly out of
Heathrow, what are the main factors that are leading to people
using that service rather than London?
(Mr Muirhead) I think, if you are flying anywhere
you want to get onto an aeroplane and go the quickest route. There
is, increasingly, in the regions, I believe, a reluctance to use
the South East, because of congestion, and, as a consequence,
there is an increasing preference being exercised by people voting
with their feet to go over European hubs. There is from certain
regional airports no service to London, so that is not an option
for them, but, for other regional airports, Amsterdam and Paris,
Frankfurt, are very powerful drawers now within the alliance networks
that are seeking to get people from there around, over hubs in
the most efficient way.
Chairman
505. I want to ask you a little bit about charters,
before I let you go. How many charter services did you operate
to the United States?
(Mr Muirhead) Round about 20 a week.
506. Where did they go?
(Mr Muirhead) All over the place, but mostly Florida—
507. It is a big country.
(Mr Muirhead) It is. Mostly to Florida, to Las Vegas,
we do have some to California; we are talking about the US now,
not Canada, because we have not got quite as many destinations
in Canada.
508. No, I am not talking about Canada. I do
think of it as a separate country. It is a sign of age.
(Mr Muirhead) It is quite an interesting issue in
America, of course, that carriers do that.
509. We are not into NAFTA, Geoffrey, we have
got enough problems without that.
(Mr Muirhead) Alright. So it is those, Las Vegas,
California, Orlando, those sorts of destinations.
510. Do we have passenger numbers?
(Ms Congdon) 417,000 last year.
511. For all of them?
(Ms Congdon) Yes.
(Mr Muirhead) For the charters.
512. What about the delay in granting extra-bilateral
permits to charter airlines following the breakdown in negotiations
between the two Governments; what effect did that have?
(Mr Muirhead) I am going to ask Ms Congdon to answer
that, because it is very technical.
(Ms Congdon) It is obviously something that should
really be addressed to the charter carriers for the detail, but
basically it was a situation where there were certain extra-bilateral
rights that would normally have been granted straightforwardly
by the US, even though they are not covered by Bermuda 2, which
were dealing with joint holidays where people are going to Florida
and the Caribbean combined. And the Americans, I think, just did
not process the applications for a number of weeks, in the aftermath
of the breakdown of January's talks, which potentially put those
holidays in jeopardy, from Manchester and other regional airports.
513. But that sort of thing has now been dealt
with?
(Ms Congdon) It was resolved, yes.
514. Finally, do you think that things like
load factors and some of the other problems have more of an effect
upon Manchester than the question of liberalisation in trade?
(Mr Muirhead) Load factors out of Manchester are not
a particular problem. Very often we are noted as not having high
yield, which is quite important to carriers.
515. So then what aspect of Bermuda 2 is a real
nuisance to you?
(Mr Muirhead) The restrictions, basically, that force
people to focus on trying to get best value, which focus them
directly into Heathrow in perpetuity. Until that is resolved we
are always fighting against everyone's views that all they need
to look at is getting into Heathrow, and that is all they can
have a concern about.
(Ms Burns) May I just comment.
516. Ms Burns. What did he say he should not
have said?
(Ms Burns) No, no, not at all.
(Mr Muirhead) They will tell me outside.
517. Yes, I can see from the look on her face
it must be something terrible.
(Ms Burns) Sorry, I was just dying to augment that,
by saying that, actually, it would be wrong to be misled by the
fact that our yields are not as good as London yields into believing
that it was difficult for us to grow and sustain long-haul service.
By comparison with equivalent capacity, hub airports in Europe,
places like Zurich, Copenhagen, and so on, we actually have a
relatively high proportion of long-haul service already operating
from Manchester. I think the critical point is it is the distortion
in airline priorities, that is produced by Bermuda 2, that is
our problem.
518. Now before I let you go, one final question.
You have referred to it in quite neutral terms, but you have said
quite clearly once or twice today that you envisage a situation
where a merger between BA and KLM could lead to the situation
where Schiphol became, in effect, a transit point for regional
services from the United Kingdom, and Heathrow became only, or
virtually only, long-haul, and particularly transatlantic. Is
that what you are really saying to us, that in five or ten years'
time, were the merger to go ahead, the United Kingdom might find
large amounts of its passenger traffic, particularly regional
traffic, going via Schiphol?
(Mr Muirhead) I think Heathrow is a major problem
for BA at the moment, because of capacity constraints. Schiphol
has some constraints upon it but they are environmental and could
be relaxed. I think, with the right attitude, it may well happen.
And it is pointless moving into a merger if you do not make best
use of your assets, and the asset of Schiphol for BA within that
sort of arrangement would be very powerful, and I cannot imagine
the circumstances where they would not want to do anything but
feed traffic over Schiphol, or over London, but predominantly
over Schiphol, if they could, because they have the opportunity
to spill traffic from London there, and make London more point-to-point
rather than transfer.
519. So the access to five runways might make
a minor difference to their traffic?
(Mr Muirhead) I think that would be a good understatement.
Chairman: Thank you very much indeed.
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