Examination of Witnesses (Questions 160-175)
Wednesday 11 June 2003
MR ALASTAIR
MCDERMID
AND MR
TIM HAWKINS
Q160 David Wright: Is the figure
of 480,00 flights a year, which was imposed by the planning inspector,
going to be abandoned, in your view?
Mr McDermid: It would have to
be abandoned if a third runway were provided. What we have done,
in our submission, is to try and make clear our view of what the
environmental impacts are, as well as our view of the economic
benefits of each of the options. In the consultation document
that came out last year there are certain environmental aspects
which we think have been overestimated in the Government consultation
and there are other environmental aspects which we think have
been underestimated in the Government's consultation document.
Q161 David Wright: You have recently
commissioned some consultants, have you not, AEA, to do some work
on NO2 at Heathrow.
Mr McDermid: Yes, we have.
Q162 David Wright: What input are
they going to make? If you are not going to respond in relation
to environmental factors, why have you engaged them? Do you not
think it would be better perhaps not to engage them and encourage
the independent sector to do that work rather than you engaging
and then I presume using those studies to inform the debate? You
seem to be having two positions here.
Mr McDermid: I would entirely
accept that it would be very helpful if independent parties did
undertake their own analysis of this. At the time we were asked
to respond to the Government's consultation document, we could
not be sure whether anyone else was or was not going to do that.
We, like many other parties, were being called on by the Government
to give our best assessment of what the benefits and disbenefits
were. For that reason, we could see, as could anyone, that the
scale of the air quality impact, as assessed by the Government's
consultants, the same consultants, AEA, using the same model but
in a less well developed form, was estimating a very dramatic
air quality impact for the Heathrow option. Our belief was, from
our own previous work in this area, that the model that was used,
using the inputs that that model used, was probably overstating
the impact. There are two issues that the Government was trying
to address here. One was the comparative impact between a number
of options. For that, you can argue that it does not matter as
the model does not give very precise answers. The second issue
that it is trying to address is: where there is an impact, what
is the absolute impact? As I say, on the Government's operation
of that model, a very dramatic impact would be foreseen. We could
not be sure that everybody else was going to undertake further
work on it. We thought it was right to undertake work on that
ourselves for the possible eventuality that the Government might
choose that option and did they have a right? The objective was
to try and get it more accurate. We were not, as I know some commentators
were suggesting to you, trying in some way to doctor the analysis.
As it happens, the same consultants have used the same model but
developed it in a way that it had not been developed in a more
infant state at the time we undertook the analysis for Government.
They have come out with their assessment that the impact would
be lower, not non-existent; there is still a residual impact there,
which is really quite significant, in our view. We think it could
hold the prospect of being resolved if action were taken by Government
and by the industry, but the judgment on that as to whether or
not it could be resolved again we think is better undertaken by
Government.
Q163 Mr Ainsworth: If there were
to be another independent survey done of the NO2, who should pay
for it or who would you be happy to see paying for it?
Mr McDermid: Probably Government,
to be honest.
Q164 Mr Ainsworth: Can I look at
what may be another hidden subsidy here for the airline industry,
which is the function of the single till approach? I understand
that applies to regulating the balance between your retail input
and the money that you receive from landing charges. Can you place
a value on the subsidy that arises as a result of this regime?
Mr McDermid: I cannot give you
a precise figure but I can try and characterise it for you.
Q165 Mr Ainsworth: Does a precise
figure exist?
Mr McDermid: Not as far as I am
aware.
Q166 Mr Ainsworth: Does it vary from
year to year?
Mr McDermid: It probably would
vary from year to year. Can I try and put it into some sort of
yardstick for comparison? As you know, this was a big issue at
our last regulatory review. The decision was to keep a single
till running. At best it might be argued the door should be left
ajar for the issue to be re-visited at our next regulatory review.
Our view is that if we were to move from a single to a dual till,
then the cost of airport charges, which is how we get our money
back from investment directly in airport facilities, would, over
time, probably go up to some degree, but not dramatically. It
would go up to some degree. We do not think that it would go up
to a degree that would choke off demand to any material extent.
What we do not think it would do is leave BAA with windfall profits.
We just think it would give us better pricing rules on which to
work with the airlines to pay for the facilities that they are
requesting from us.
Q167 Mr Ainsworth: Would you like
to see the single till replaced with a dual till?
Mr McDermid: That is what we asked
for at the last regulatory review.
Q168 Mr Ainsworth: Do you think the
present level of landing charges is sufficient to influence the
behaviour of airlines at all, really?
Mr McDermid: Yes, we do think
it has a role to play. Airport charges are by no means the biggest
element of an airline's costs, but if they were immaterial to
airline costs, we would not have the challenging relationship
that we sometimes have with them over our negotiations to raise
airport charges, so I think they have a role to play. They also
have a role to lay in the way in which we structure our airport
charges, which we currently structure in a graduated way to charge
more for noisier aircraft than we do for quieter aircraft. We
are also trying to introduce now an emissions element to that
as well. We are in discussions with airlines currently over that.
Q169 Mr Ainsworth: Did you propose
that to the airlines?
Mr McDermid: Yes, we did.
Q170 Mr Ainsworth: What kind of reaction
have you had?
Mr McDermid: So far the reaction
has been relatively negative, I have to say, but I think that
is largely because of points of technical detail that we have.
Q171 Mr Ainsworth: It is too hard
to measure?
Mr McDermid: It is quite hard
to measure. That is correct.
Q172 Mr Ainsworth: Have you discussed
that, extending those charges to cover emissions, with the Department
as well?
Mr McDermid: I am sure we will
have mentioned to them in passing that it is our intention to
do that. I am sure they will be aware that we are proposing to
introduce an emissions element. We would like to do it.
Q173 Chairman: What sort of role
do you think the airport industry can play in all this? You are,
in a sense, indirectly involved. The airline companies create
the emissions, not yourselves.
Mr McDermid: I think there is
quite a lot that we can do. Like many people, I do not think there
is a single solution here. There are a lot of different things.
I think we have shown ourselves to be influential in encouraging
better environmental performance. I have to say that some of the
airlines at our airports have shown a very responsible attitude
towards replacing older fleets with more modern, more fuel-efficient
aircraft. We would like to work with them to get a co-operative
approach. As Peter Ainsworth I think knows, at Gatwick when we
had an issue of aircraft track-keeping, we worked with the airlines
in a very positive way and we received their positive support,
now to the point where track-keeping is at a very high standard
at Gatwick.
Q174 Mr Ainsworth: Would you like
to have bigger levers that you could pull to influence behaviour?
It is all at the margin at the moment, is it not?
Mr McDermid: It is at the margin.
It depends on the specific proposition. In general probably we
would like to have a bit more clout, if you like, in some areas.
Q175 Mr Ainsworth: That might be
to your commercial advantage as well, of course?
Mr McDermid: It might be but I
doubt we would get it for that reason.
Chairman: Thank you very much indeed.
We are grateful to you. We have a division.
The Committee suspended from 4.42 pm to 4.41
pm
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