Examination of Witnesses (Questions 100
WEDNESDAY 19 DECEMBER 2001
100. What are your predictions for business
on, say, 11th September 2002?
(Mr Cahn) I believe that the business will pick up.
I think it will take between one and two years to get back to
previous traffic levels, though that is pure speculation at the
present time. I would hope by 11 September in 2002 we would see
traffic figures getting back towards the levels of a year earlier,
but that is a guess.
101. Mr Parker-Eaton, I am interested in knowing
in your business as to what you predict? You seemed to give an
impression you do more predictions than, say, British Airways.
(Mr Parker-Eaton) No. We do not. We have to make predictions
all the time because of the investment required in the airlines.
The problem that we face is that it is a total unknown in the
future. We have never faced an occasion like this previously.
The Gulf War and the Falklands Crisis had a firm ending. Currently,
next summer continues to book at only 50 per cent of the rate
achieved in the same period last year. January is a key month
for people coming back. We have to await what happens in January.
We are doing so. We are hopeful that next summer will recover
and people will pull back in January, but we do not know. It is
a very big unknown.
102. A final question, do you not think this
is now overdue, instead of examining this on a UK basis we should
look at it on a European basis as an industry and you should reflect
that in terms of the way we might come to conclusions?
(Mr Wiltshire) I will try to take that question. My
initial reactionI will ask my colleagues to add to thisis
that dealing with it on a European basis is already happening
in many ways but until there is truly a level playing field across
European states, until regulation is standard across the States,
then we are all interested in our individual ways in ensuring
that competition is fair between one airline and another.
103. Mr Wiltshire, I want to release you but
I have got a number of important questions to ask you. What proportion
of the UK's airlines' fleets has been grounded as a result of
(Mr Wiltshire) Our estimate is that in the order of
50 aircraft which is in the order of seven per cent of the whole.
104. How many of those will return to service?
(Mr Wiltshire) You will have to ask individual airlines.
105. What proportion of that 50 would be Annex
16 Chapter 3 compliant?
(Mr Wiltshire) Again, I would have to respond in writing
106. Will you give us a note on that?
(Mr Wiltshire) Yes.
107. I think it would be important for us to
know whether as an Association you support the call by ABTA and
the CAA for greater protection for airline customers against airline
(Mr Wiltshire) Of course we would wish passengers
not to be affected by crises like this. The UK airlines, I think
their response to the current crisis and their maintenance of
their operations has proved that they are resilient to crises
even of this major nature.
108. Have you taken a view of the suitable measures
which should be suggested?
(Mr Wiltshire) No, we have not.
109. Because we are very concerned about this
business of slots, Mr Cahn, if you have not been storing them
at Heathrow, could you tell us do you think that we can get an
agreement on Open Skies without resolution of the slot position
(Mr Cahn) In the long term what is needed, clearly,
is more infrastructure in the South East of England. One way of
achieving more slots at Heathrow is to change the way traffic
is handled there and introduce mixed mode. It is possible by making
changes like that to get more slots. Slots do become available
anyway in the natural course of time. There are always slots being
made available. I do believe, yes, to answer your specific question,
Chairman, it is possible to negotiate Open Skies with the United
States of America, it is possible to gain anti-trust immunity
for the two British carriers who are seeking it with their American
partners, and I hope very much both these things will be done.
I believe it will be possible then for other US carriers to get
into Heathrow and get slots.
Chairman: Mr Cahn, you know that there is very
littlevery littlethat becomes available at Heathrow
in terms of slots. We are talking about a very, very tiny percentage.
I ask you again, without resolving the problem of slots at Heathrow
is it going to be possible to conclude an airline agreement? Mr
Bennett wants to ask something else on this.
110. What you are really telling us is you are
not actually storing the slots as not used, they are all the regional
slots and you would be happy to give up the regional slots in
order to get the Open Skies?
(Mr Cahn) Absolutely, I am not telling you that at
all. In our submissions to the competition regulators we have
made it clear that we believe that there are no competition issues
at stake which should require any divestiture of slots, that is
our position. We serve the regions of the United Kingdom. We are
very pleased and proud to. We are by far the largest regional
operator and we wish and intend to continue to serve the regions.
We are not storing or hoarding slots at Heathrow, we use our slots
at Heathrow effectively and fully both for regional services and
for European services and for long haul services and we will continue
to do that.
111. Mr Humphreys, on this point?
(Mr Humphreys) If I may, very quickly. The answer
to your question is absolutely not. British Airways keeps repeating
this claim that there are slots available at Heathrow for North
Atlantic services, there are none. A week ago Richard Branson
wrote to British Airways offering to contribute £2 million
for 10 pairs of slots to charity
112. Shall we start again. What is he offering?
(Mr Humphreys) I am sorry. He is offering to pay to
charity £2 million for each of 10 pairs of slots if British
Airways can produce them for us. If they cannot then he invited
British Airways to contribute the money to charity. They failed.
113. Normal level of intellectual negotiation.
(Mr Cahn) Two comments. The first comment is that
we would all be sent to prison in breach of our fiduciary duty
to our shareholders were we to give slots to Virgin. So it was
a pretty odd wager to offer. Second comment, I would like to ask
Mr Humphreys how come since 1996
114. No, no, you are not asking questions.
(Mr Cahn)Virgin has managed to get extra frequencies
to Los Angeles, to New York, new services to Chicago, Shanghai,
Delhi and Lagos.
115. Please. If anybody asks the questions around
here, strangely enough it will be me. Now then, I just want one
final question to you, Mr Wiltshire, on behalf of everybody. What
particular measures should Her Majesty's Government take at the
present time to assist the industry?
(Mr Wiltshire) We believe Her Majesty's Government
should maintain their support on insurance. We believe there should
be a review at an international level of the costs of security
which the UK Government should positively contribute to. We believe
there should be a fair distribution of costs in that area. Also,
we believe that the EU Commission's proposals on support that
are available should be followed by the UK Government.
Chairman: Thank you. Thank you, gentlemen, you
have been, as usual, very entertaining.
2 Note by witness: 100 per cent of the aircraft grounded
following 11 September are Annex 16 Chapter 3 compliant. Back