Examination of Witnesses (Questions 420-428)
WEDNESDAY 19 MARCH 2003
MR PAUL
KEHOE, MS
NATALIE RAPER,
MR ED
ANDERSON AND
MR ROB
LUND
420. Before I let other people in, you have
set out quite clearly what happened to you when British Airways
decided to withdraw the service, the difficulties from their point
of view and the efforts you have made. Have you been given any
support by, say, the CAA in suggesting that you should have some
way of protecting your slots into a London airport? (Mr
Anderson) Not so far, no. So we use opportunities like this
to come and raise the question.
Chairman: I think you have answered the question.
Tom Brake
421. On the point Mr Kehoe made about the third
runway at Heathrow, are you suggesting that there are safety implications
or are you suggesting that there are, perhaps, capacity problems
for air traffic control? What point exactly are you making? (Mr
Kehoe) What I think we have looked at is the third runway
potentially slowing the ability of Luton to launch traffic to
the west. That is the critical issue. We are affected by those
heavy Jumbos coming out of London Heathrow today and what happens
is our aircraft are restricted in their climb profiles. If we
are going to go through all the pain of building a runway, to
build a very short runway which is less than optimum really does
not serve the purpose at all. Whilst it may be for regional services
(I take Mr Anderson's point) are the commercial interests of the
airlines currently at Heathrow best served by providing regional
services? If we are to create a new runway for regional services
who will provide those regional services? Will it be British Airways
or will it be British Midland? Or will new entrants be allowed
to come in such as EasyJet, Ryanair and the like, and will they
create problems for British Airways and British Midland who have
been experiencing those competitive problems whilst those airlines
have not been there? I think if we are going to build a runway
it should be a full-length runway, but I come back to the point—you
are quite right—I do not believe that the air traffic control
simulation has been adequately completed to give me confidence
that a third runway at Heathrow would not compromise Luton.
422. If it is shown that, as you are suggesting,
Luton's ability to launch services going west would be hindered
by the third runway, does Luton airport have any scope for seeking
compensation? How would you try and address the commercial implications
of that? (Mr Kehoe) I do not believe there is a mechanism
today and I think we would be in unchartered territory. Clearly,
we think the market has demonstrated there is an opportunity for
Luton to grow quite successfully and we should not restrict that
market demand within those environmental capacity limits that
we have. Five, six or seven years ago Luton was a bit of a laughing
stock, quite frankly, but now it has 7 million passengers (thereabouts),
40% of which are business passengers (second only to Heathrow)
and the passenger profile is not mum, dad and two children on
their two-week holiday, it is now business passengers and people
who are now able to fly where they were not able to do so before
because of the no-frills airlines (so it is socially inclusive
as well) and it has been demonstrated because of its position
on the M1, the M40 and the M25 that it can offer services and
it can grow if there are mechanisms to allow it to do so.
423. Do not bother to answer this if it has
already been covered, I will read it in the minutes. Have you
got detailed plans about the transport requirements of any expansion? (Mr
Kehoe) My concern with all the studies that the department
has done is the lack of clarity, I guess, in terms of the event
horizon. Road is five years in the strategic horizon, rail 10
years and airports 30 years, but without adequate road and rail
provision to any of the options there is going to be no airport
strategy. In the department's options we were concerned that there
had been not enough attention paid to road and rail. That is what
we sought to address. What we sought to address in our review
was saying "Let's bring together that which we know today
and expand it." We know there is an east-west rail consortium
being developed to take trains from Oxford to Felixstow. The alignment
of that track has yet to be brought forward, but it would make
sense if it was being brought forward to put it through Luton.
Currently, I think the plan is to put it through Bedford but let
us think about Luton. There is a plan to widen the M1. Let us
make sure that plan in the Milton Keynes multi-modal study incorporates
access to the airport and, indeed, a northern bypass for Luton.
Government has already provided us with £21 million to build
a brand new dual carriageway into the airport, so that covers
the short term from 2005 onwards, but let us start looking at
these longer-term horizons. That has not been adequately covered.
I do feel that is a real issue for the department to get to grips
with in terms of delivering these plans and the White Paper.
Chairman
424. Did you want to add to that, Mr Anderson? (Mr
Anderson) Leeds Bradford also has plans for improving both
road access and, also, to get some sort of rail access, probably
light rail, as an extension of the Leeds Supertram scheme.
425. I just want, briefly, to finally ask you
what was your profit margin last year? (Mr Kehoe) At
London Luton, after paying Luton Borough Council—
426. We do not want specialised pleading, Mr
Kehoe, we just want the answer! (Mr Kehoe) After paying
our £11 million because we had an EBITDA (Earnings Before
Interest, Tax Distribution and Amortisation) of some £21
million, an operating profit of £12 million on a turnover
of £55 million. (Mr Anderson) Our turnover is
about £17 million, and EBITDA is four point something million,
and overall pretax profits in the current year will be £1.5
roughly.
427. How do you think that compares with your
airline customers? (Mr Anderson) I heard you speak
to BAA earlier. They are a very profitable organisation. What
has happened in the industry is that margins generally have been
under enormous pressure. That impacts first upon airlines, but
airports are not immune from that. So the pressure that airlines
feel is passed on, in turn, certainly to regional airports.
428. Gentlemen and madam, you have been very
kind. I am now going to allow you to escape. (Mr Kehoe)
Thank you, Madam Chairman. (Mr Anderson) Thank you.
|
