Examination of Witnesses (Questions 101
- 119)
MONDAY 29 NOVEMBER 2004
MR ALAN
WALKER AND
MR EDDIE
LYNCH
Q101 Chairman: Gentlemen, let me
formally welcome you although we met just a few moments ago. Thank
you for taking the time to be with us. Today the Committee has
met with representatives from both Belfast City Airport and also
from Belfast International. You will know that the Committee's
terms of reference are pretty broad in terms of trying to get
a grip on not just the issues related to consumer choice but also
in terms of competition and in terms of use of the Route Development
Fund. We very much value the views of the General Consumer Council
acting as the voice of those consumers who will use the two airports
that I have mentioned and also City of Derry Airport, which we
shall visit tomorrow. Could I ask you the first time you speak
to give us your name so that can be recorded. Could I start our
deliberations by asking a general question. In the evidence that
you supplied to us you suggested that the main issue for Northern
Ireland consumers is that you maintain and retain access to hub
airports in the South East of England, particularly Heathrow.
We understand that you recently held a seminar on that specific
topic. Could you elaborate on the outcome of that seminar?
Mr Lynch: We held a seminar in
June of this year which was well attended by business representatives,
airlines, airports and politicians. The aim of the seminar was
to raise all stakeholders' understanding of the importance that
we feel Heathrow has in particular for Northern Ireland and access
to it. In 2003 there were over two and a quarter million passenger
journeys between Northern Ireland and the five London area airports,
of which 810,000 of these were to Heathrow. From a resident population
of some 1.7 million in Northern Ireland, we have an exceptionally
high propensity to fly to London airports and in particular to
London Heathrow. We believe that access to Heathrow is not just
a commercially viable link for Northern Ireland but it is really
an economic lifeline for the Province as it impacts significantly
on the tourist, leisure and business travel industries here and
has a wider economic impact on the region as a whole. It impacts
on business travel in terms of a lot of Northern Ireland businesses
have a high dependence on exporting their goods across not just
to the UK but further afield to Europe and to the rest of the
world. It is through Heathrow that we have the best gateway to
the rest of the world. Northern Ireland can access 91 long haul
connections from Heathrow to the rest of the world compared to
only 39 available at Gatwick and none of the other three London
airports provide any long haul destinations. It is for this reason
that we feel Heathrow is of particular value. For leisure travel
it is also a great interlining opportunity for Northern Ireland
travellers to gain access to the rest of the world. From an economic
point of view, economic investment would be negatively impacted
if we lost that direct link. Speaking to a number of organisations
on this, including business organisations and tourist bodies,
they all agreed with us when we said that Heathrow is such an
important issue. Some of the research that has come out of the
Department for Regional Development shows that passengers coming
into Northern Ireland are eight times more likely to use Heathrow
than any other airport. All of these reasons have a value. We
held a seminar in June and at this conference we put a number
of resolutions to the attendees on the day and we asked them for
their agreement. We talked through them and presented them to
the attendees to ask for their support. Since then we have received
support from 13 of the local councils in Northern Ireland on these
resolutions. We have received support from various Chambers of
Commerce, the Federation of Small Businesses and other business
organisations. We have received support from the Northern Ireland
Tourist Board and a number of the local political parties. We
have also received support from representatives of universities,
transport companies and private individuals. We can forward to
the Committee a full list of the organisations that have given
support on that.
Q102 Chairman: That would be very
helpful.
Mr Lynch: If I could just run
through the four resolutions that we proposed on the day that
we feel are very important. We feel that Northern Ireland and
other peripheral regions in the UK should be given the right to
reserve slots at key hub airports and we feel that the UK Government
should seek appropriate changes in the new slot reservation rules
to allow this to happen. We feel that Northern Ireland's current
access to Heathrow should be maintained. Currently we have 16
slots, eight from Northern Ireland and eight to Northern Ireland.
We feel that they should be secured as only one operator operates
those at present. We feel that the UK Government should seek changes
to the EU Public Service Obligation rules. Currently we understand
that these rules do not allow for airport specific designation
but city to city, so, for example, they allow PSOs to apply to
secure Belfast to London but not Belfast to Heathrow. That is
one of the things that we would like to seek changes to. Also,
we would like to seek changes to allow less profitable routes
to be guaranteed with an alternative use for those slots which
would lead to a reduction in services to a region. For example,
in Northern Ireland at the moment, after BA's withdrawal in 2001,
we only have the one operator that provides us with that link.
Finally, we feel the whole issue of capacity in the South East
of England and the airports there needs to be looked at. We feel
that the UK Government should take the initiative in working with
all those involved in the enhancement of airport capacity between
BAA, NATS, the airlines and airports to look at ways that airport
capacity could be increased in the South East of England and a
certain amount of slots could be ring-fenced to secure access
in the longer term.
Q103 Chairman: In some ways you have
pre-empted my next question. You have mentioned that you have
called for changes to the PSO regulations and we understand the
difference between protection to London airports as opposed to
protection to a specific airport in London, in this case Heathrow.
What do you think your chances of a positive outcome are for that?
If it is not successful, how else might you look to protect slots
at Heathrow?
Mr Walker: Alan Walker, Head of
Consumer Affairs at the General Consumer Council. The simple fact
of the matter is this is extremely important and in the working
paper that the European Union have out at the moment for consultation,
which is due for response on Wednesday, clearly they have said
if market mechanisms are introduced as they are proposing, there
will be a diminution in regional services. This is a major concern
that needs to be addressed now. The key to this is persuading
the Department for Transport in London to move forward with this
at EU level to press for the changes. If we cannot persuade our
own national government to do that then the chances of it are
much reduced unless other regions of Europe are experiencing similar
difficulties. One of the options that has been projected, but
which we do not support, is in the advent of market mechanisms
that regions could buy slots. When one considers the state of
Northern Ireland's wider transport infrastructure I am not sure
that with slots passing hands at £10 million a slot Northern
Ireland could afford an additional £80 million and possibly
that would be over a 10 year cycle depending on one of the options
that is being proposed by the EU. I am not sure that would be
a good use of public money in the advent of public transport needing
more funding and other services within Northern Ireland and in
the face of increased charges on households here. The other options
are not particularly attractive for us at this time. The simple
fact of the matter is we do not believe the market is the appropriate
mechanism to guarantee our future access to Heathrow and that
is why we need the Government to take action, not only for Northern
Ireland but for other peripheral regions, such as the Highlands
and Islands of Scotland.
Q104 Chairman: I wonder if I can
move on to a connected but different subject. We have just seen
Continental Airlines' ticket office and they will be operating
a service to America, to New York, from next May. The CAA tell
us that 37% of those using the bmi service from Belfast to Heathrow
are doing so to connect with other flights and two-thirds of those
are connected to US flights. What impact do you think that having
direct access to New York through Belfast will have on the two-thirds
of that 37% of bmi's business?
Mr Walker: It will have an impact
in three ways. First of all, as has happened with all new routes
out of Northern Ireland, it will create new business where people
will make a journey that they did not do before directly from
Belfast to New York. Secondly, it will draw people away from interlining
via Heathrow, but if we look at the options of those going to
Heathrow, it is in the high teens in terms of America, so not
everyone will be going in the New York and North America direction,
so that would need to be taken into account as well. The third
group of people are those who currently travel not to London but
travel down the motorway and developing the roads infrastructure
to Dublin, therefore, is going to prove attractive to those. Equally,
the service will prove attractive to people who live in the border
counties of Southern Ireland to open up New York as an opportunity
to them from Belfast as opposed to Dublin.
Q105 Chairman: One slightly confusing
aspect of the written evidence you gave us is that there was a
suggestion within that that almost by definition additional capacity
at Heathrow would result in additional flights to Northern Ireland,
yet surely we are in a situation where it does not matter how
much additional capacity there is at Heathrow, there is only the
same number of people within Northern Ireland who will want to
travel to and from irrespective of the capacity at the other end.
Mr Walker: In terms of clarity,
what we meant was additional capacity at Heathrow should be ring-fenced
for regional services. We do not believe it is fair that airlines
that have been loyal to the regions do not benefit. In this case
that is bmi because BA throughout the 1990s had always wanted
to pull out of Northern Ireland because they claimed the route
was not making money, although we would argue that was down to
their accounting principles and not necessarily that the route
itself did not make money. There may have been a slight over-saturation
in the market but what we are saying is any additional capacity
could be used to ring-fence and guarantee regional access which
could then be operated by any airline whereas at the moment we
are really dependent on bmi and in terms of last year's negotiations
between bmi and Virgin, had that alliance gone through, it could
have put regional services at risk because it is obviously much
more attractive to fly an A380 to the United States or, indeed,
to Australia than it is to fly an Airbus 320 or 321 to Heathrow.
The airlines and the airports would make more money out of that
principle, so it would be a much more economic use of slots from
their point of view. We are not criticising them for that but
what we are saying is if we guarantee the access aside from that
then it does not actually interfere with the market mechanisms.
Chairman: Thank you for that.
Q106 Mr Bailey: Can we just talk
about Europe for a moment. Throughout your evidence you seem to
suggest that the scope for direct services from Northern Ireland
to mainland Europe is limited. Have you given any consideration
to what additional destinations you believe it would be important
to be served directly from Northern Ireland?
Mr Walker: I think we look at
this in a strategic way. There are key links. In terms of all
of our transport policies we keep talking about key locations.
In terms of the routes we do not have served at present you would
look at the likes of Brussels, the capital of the Commission,
and indeed the Parliament sits there sometimes, and indeed one
of the other options would be to Germany perhaps in terms of the
banking and financial infrastructures that they have there. That
is in terms of the business capacity. In terms of other routes,
what we have said is Northern Ireland has a population of 1.7
million people and, even taking into account the border communities
of the Republic of Ireland, we have a limited catchment area so,
therefore, there is a limited number of routes that can be sustained
on a long-term basis. What we want are sustainable routes for
the future, not just routes that exist for a small number of years
with support and then disappear again in the future because there
are not sustainable travel patterns on them.
Q107 Mr Bailey: What you have said
is reinforced by the CBI who single out Brussels and the Frankfurt/Cologne
routes. Do you think there is a case to be made for PSO support
for these areas, as in the case of Paris?
Mr Walker: In terms of PSO Route
Development Funding?
Q108 Mr Bailey: Yes.
Mr Walker: In terms of those,
our view on the Air Route Development Fund is that is a very welcome
step to help get routes off the ground and, indeed, it is generally
accepted that in the aviation sector it takes three years to establish
whether or not a route can operate profitably. In terms of the
routes that have been supported to date under the Fund to mainland
Europe, there seems to be a rationale there and they have not
gone for five a day services to Paris. We need to get a sensible
pattern of flights that enables them to be sustainable in the
longer term so that we do not end up losing them in the future
which would have a detrimental impact in a number of ways.
Q109 Mr Hepburn: How important is
the Route Development Fund in developing new routes to Europe?
How can we ensure that these routes do not fold when the money
is withdrawn?
Mr Walker: I think the key to
it is that there has to be an overall strategic approach to how
we take forward aviation in Northern Ireland. We have to look
at this in the whole when we are making these decisions, that
they are based on a rational business case that in the longer
term they can be sustained. We need all of the partners and, indeed,
the Route Development Fund has pulled together most of those partners
in terms of the tourism sector and the business sector and the
board of the Fund itself, so they will need to be working in partnership
because if we are going to make this work in the longer term,
we can always get people to leave Northern Ireland because of
these other destinations but we need to get people visiting Belfast.
That may be helped by the fact that Dublin is becoming more expensive
as a city in terms of hotel accommodation and general expenses.
We do need to be seeing ourselves as an alternative destination,
so instead of the tourism profile we have at the moment where
people come to Dublin and visit Belfast, what we want to look
at is getting people to come to Belfast and maybe visit Dublin.
Q110 Mr Hepburn: We are informed
that one of the objectives of the Route Development Fund is to
forge links with Europe. We are also informed that two of the
new routes are particularly within the UK.
Mr Walker: Yes. The issue there
is the two airports in question—Manchester and Birmingham—were
already served from both Belfast International Airport and Belfast
City Airport, so the additional benefit to Northern Ireland consumers
could very well have been limited. That is not to say that there
is not a right to have a third route out of Northern Ireland to
those airports but whether or not it is in the wider interests
of Northern Ireland to support those services and maybe not an
additional European service, if they meet the conditions of the
Air Route Development Fund either there is something wrong with
the conditions or there is nothing wrong with the application.
Q111 Mr Beggs: Can we look at competition
or complementarity. You have highlighted the different markets
of the two Belfast airports and have concluded that they are complementary
in many ways. How important is it for consumers that they also
retain an element of competition?
Mr Walker: I think it is very
important. If you look at the bmi situation in relation to Northern
Ireland, four years ago bmi operated from Belfast International
Airport and what you find now is that they have moved to Belfast
City for commercial reasons. Therefore, competition is alive and
well between the two airports. Indeed, last year Flybe, one of
the main operators at Belfast City Airport, were in discussion
with Belfast International Airport and concluded that it was in
their best interests to stay at Belfast City. Competition does
exist between the two Belfast airports and the Council has long
held the view, and it is well documented, that we support the
retention of two airports in the Belfast catchment area. From
that point of view there is complementarity in terms of the way
that they operate but there is direct competition also and there
is nothing to stop either airport poaching operators from the
other, with the exception that Belfast City is approaching the
limits of its capacity.
Q112 Mr Beggs: How big a factor in
reducing competition are the present restrictions on Belfast City
Airport? Would you support the City Airport's current bid for
an increase in the limit on the number of seats sold?
Mr Walker: The limits on the airport
have been well known for a long time so, therefore, that was the
market they entered into and they were well aware of that. In
terms of the application that was made, in principle we do not
have a difficulty with the application because we now live in
a different market in terms of aviation. The average size of aeroplanes
to make a route sustainable is larger than it would have been
in the past. On the face of it, there does not seem to be a proper
match between the number of seats for sale allowed and the number
of air transport movements. Certainly on the basis of not having
had the opportunity to consider the current consultation in full
in terms of the planning consultation, in principle we do not
have a difficulty with extending the seats for sale arrangement
provided that it does not affect the ATMs. On the other side of
that there are clear issues to do with City Airport that cause
concern to other groups, such as local residents and environmentalists,
which need to be taken into account, particularly in relation
to the number of late night flights after the 9.30 official closure
time. That is a very important issue that needs to be addressed
from the residents' point of view but, in principle, we do not
see seats for sale as being a major obstacle.
Q113 Mr Beggs: The Minister, Angela
Smith, has just announced an open public consultation exercise
on this request by City Airport for a review of the current planning
agreement and has indicated that she will decide on the need for
a public inquiry when submissions have been received. Have you
any concerns about how this consultation exercise is being carried
out?
Mr Walker: I understand there
is a consultation being carried out in accordance with the planning
guidelines and, indeed, one of the difficulties is the timing
of the consultation in that it takes in the Christmas period.
From our point of view, any consultation on the changes, because
of the particular objections in that area, should take account
of all views and there should be given adequate time to do that.
That should be the views of the airports, the airlines, consumers
and their representatives, including ourselves, environmentalists
and, indeed, local residents so that all interests can be considered
and a balance achieved in moving forward so that we have a sustainable
and competitive aviation industry in Northern Ireland.
Q114 Mr Pound: Good afternoon, gentlemen.
Earlier on you referred to the City of Derry Airport in the context
of Manchester and Birmingham and I have to say the economics of
that airport present something of a challenge to some of us. We
are not entirely sure how it works. Currently they are seeking
public funding to enable the terminal and runway to be expanded.
From your consumer perspective, how important do you think it
is for business people in the North West and for the development
of the local economy for there to be a North Western airport?
Mr Walker: In terms of the City
of Derry Airport, it provides an important service to those people
in their view. What we have in Northern Ireland is two commercially
owned airports which operate on a profitable scenario. In terms
of the City of Derry Airport its profitability appears marginal
at best.
Q115 Mr Pound: It is subsidised,
is it not?
Mr Walker: It is highly dependent
on one operator in addition to that in relation to Ryanair. From
this point of view that is why we strongly believe that in terms
of the White Paper, in terms of Northern Ireland, we need to have
a further discussion on the impact of the White Paper and how
that can be taken forward on a more local basis including more
of the detail. Because of the differences in the way airports
are governed—obviously they were a devolved matter during
the process of the White Paper—we believe that further discussion
on the outcome of the White Paper and how it is moving forward
in Northern Ireland is necessary to take account of all of the
interests and that will allow us to consider the future of all
the airports in our wider aviation strategy and, indeed, what
role City of Derry Airport plays in that. At the moment it is
subsidised by the people who live in the City of Derry area and
those people may not wish to continue that in the future. Equally,
others could argue that it may not be the best use of public funds
to support the extension of the runway or the development of the
airport when there are more pressing transport needs throughout
Northern Ireland.
Q116 Mr Pound: From your perspective,
do you feel that it is an important facility?
Mr Walker: From our point of view,
we believe that discussion needs to happen on how we take forward
the White Paper in Northern Ireland. We need to ensure that Northern
Ireland has a sustainable and competitive aviation industry. If
that includes City of Derry then we will support that. We do not
have the evidence at this point in time either way and that is
why we believe that more discussion is needed between the Department,
consumer representatives, the airports and the wider interest
groups, so that we can get the information to enable us to reach
a conclusion on what is best for Northern Ireland.
Q117 Mr Pound: That is an answer
which combines erudition and diplomacy magnificently. I do congratulate
you on that. I was going to probe you further but I suspect you
will keep coming back to me in the same coin. Can I just ask you
a final question: receiving evidence from the CBI we were told
that Northern Ireland loses about half a million passengers a
year to Dublin Airport. Obviously you have a slightly different
perspective here because the Consumer Council has a different
view from local business people and local politicians. Do you
think that the strength of Dublin Airport is a good thing in terms
of providing competition and complementing the services from Belfast
airports and provides a better choice for consumers in Northern
Ireland, or do you feel that there is a problem there?
Mr Walker: As a consumer organisation
we would not see competition as ever being a problem.
Q118 Mr Pound: Good.
Mr Walker: Certainly for people
who live in the border communities of Northern Ireland, with the
road improvements south of the border, Dublin has to be a very
attractive option if there are routes that are either direct from
there or, indeed, comparable routes from Belfast. Equally, if
Northern Ireland provides those services then it is equally competitive
the other way for people who live south of the border to look
at Belfast as an option. Yes, we do see Dublin as a competitor
in the field but it is competition both ways and Belfast, in terms
of its two airports, has to offer alternatives if it is to attract
people in the opposite direction.
Q119 Mr Pound: The road being principally
the East Coast route?
Mr Walker: Yes, in the main.
Mr Pound: Dublin, Drogheda, Dundalk,
Newry, Lisburn. It used to be called the M1, I cannot remember
what it is called now.
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