Examination of Witnesses (Questions 180
WEDNESDAY 19 DECEMBER 2001
180. Three quick questions, if I might. One
is about slots from Heathrow. We heard from Mr Cahn of British
Airways that last year and this year British Airways had relinquished
something like 300 slots at Gatwick. What has happened to those
slots, Mr Toms?
(Mr Toms) Those slots have gone into the pool for
reallocation by the co-ordinator. We do not know yet who has got
them because it is quite difficult to follow the line of individual
slots. Some of them are still there to be allocated.
181. I am very grateful. Are you able to advise
the Committee which services were discontinued to provide those
(Mr Toms) We can provide that information to you.
182. That would be useful, if you could. When
the expected recovery occurs, how will the slot allocation be
restructured? Should it be restructured to account for the different
scenario that the industry may be facing?
(Mr Toms) It is worth just prefacing our response
to that by saying through this period
183. You are getting more confidential as you
are going into difficult waters, Mr Toms, a little louder, please.
(Mr Toms) My apologies. Through the current process
one thing we have not seen is the emergence of a significant number
of free slots. We see for the bids for next summer there is still
great demand for slots at Heathrow and at Gatwick in peak periods.
We are not actually seeing a pool of slots becoming available
that can be reallocated when the recovery occurs. What will happen
is when the recovery occurs there will be more internal trading
amongst airlines of those slots which are there. There will not
be a pool that we can suddenly distribute again to new users.
184. Given that there is, as you say, likely
to be rather more flexibility of slot allocation in terms of variability
than there has been in previous years and given your charging
policy, which is more expensive than it is at other airports,
Stansted and others, are you considering at Gatwick, for example,
restructuring your landing fees and your charges to recognise
that if no frills airlines are going to be attracted they, by
definition, because they use smaller aircraft, will require more
slots? Is your present policy towards this not an obstacle? Are
you not saying to no frills airlines "we do not want you"
(Mr Toms) Firstly, I may not have made myself clear
in relation to how many free slots there are. Our view at the
moment is there are not a lot of free slots coming into the market.
185. I am sorry to interrupt you but can I just
clarify that. For my benefit, are there a lot of free slots coming
into the market or not?
(Mr Toms) No. Slots have come into the market but
have all been taken up because the bids for slots are still higher
than the number of slots which are available. We are not going
to find ourselves in a situation at the beginning of the season
where there are free slots. In relation to landing fees, for this
year, for April 2002, because of the disruption faced by airlines,
notwithstanding our price increase availability, what we have
said is we are offering them a complete freeze on prices so that
everyone can stabilise their operations. Our ability to change
the structure of charges at Gatwick to favour one set of carriers
over another is highly restricted both by the CAA through the
Airports Act and by the British Government's international obligations.
The current arrangement is that each airline, each landing, pays
the same amount. There is a higher charge in the peak period than
in the off-peak period. It is a runway rental per aircraft rather
than per weight.
186. These rules and regulations, of course,
were agreed before we had the revolution in the industry that
we have seen over the last five years. What I am asking is given
that these restrictions are there, is it your view as an organisation
that this issue should be looked at and you should have the ability
to differentiate in your charging?
(Mr Toms) We will keep it continuously under review.
Every year as we set our charges we ask ourselves what are the
industry conditions which relate to those charges. I have to say,
notwithstanding 11 September, the rules under which we operate
are quite specific and they do prohibit unreasonable discrimination
which gives a significant limitation on our ability to target
187. I understand all that, but given the revolution
that has occurred, which is likely to continue in the industry,
and given that the charging regimes are now a little whiskery,
they have been around a little while, is it BAA's view that this
issue should be looked at, the regulations should be looked at,
so that you have more flexibility to discriminate in your charging?
That is the question I am asking, never mind about the regulations.
Is it something that you would like to do if you had the opportunity?
(Mr Toms) Would we like to discriminate? I think any
organisation like ours has to be very careful before it jumps
into discrimination because as soon as we do so we are put in
a position where we are favouring one set of customers over another.
I think our policy has always been even-handed. We will be reluctant
to forego that.
188. My last question is about even-handedness.
As I understand it, your organisation has said that in terms of
the waiver of grandfather rights, use it or lose, it in terms
of the slots, the waiver, which I understand the European Commission
has agreed to, should only apply to transatlantic routes, in other
words those affected by 11 September. (a) is that not inconsistent
with your even-handed approach and (b) would that not benefit
the North Atlantic carriers, the smaller operators, the ones that
you have been talking about?
(Mr Toms) Our position as put to the European Commission
and the schedulers is as you describe. In principle we do not
wish to establish a general exemption for slot under-use over
the current seasons. You are absolutely right that what we have
said is the schedulers and the European Commission should consider
especially those services which have been disproportionately hit
by 11 September, but we have tried to avoid that being discriminatory
by saying any operator in that situation who has suffered from
severe business disruption because they are operating to a significantly
hit location, North Atlantic and Middle East being the prime examples,
should be given careful consideration on that. We are not saying
that it should be one rather than another.
Chairman: Gentlemen, I am sorry to have interrupted
your evidence, I am sorry we had to make you wait. We will have
some more questions and, if you will forgive us, we will submit
those in writing. We would like a note from you quite quickly.
Thank you very much.