Memorandum submitted by the Department
of Enterprise, Trade and Investment
REQUEST FOR FURTHER INFORMATION ON THE AIR
ROUTE DEVELOPMENT SCHEME IN NORTHERN IRELAND
1. The Committee requested a breakdown of
the overall budget over the three-year period including the administration
element and costs of consultants advice and economic appraisals
(showing actual expenditure to date and projected expenditure
over the remainder of the period). This is provided in the table
below.[1]
|
| 2003-04 £000s
| 2004-05 £000s*
| 2005-06 £000s*
| 2006-07 £000s |
2007-08 £000s* |
2008-09 £000s* |
|
| Investment Support | 0
| 428 | 1,530
| 1,200 | 440
| 65 |
| Administration | 17
| 12 | 5
| 3 | 2
| 2 |
| Consultancy | 111
| 130 | 15
| 4 | 3
| 0 |
| Economic Appraisals | 14
| 71 | 0
| 0 | 0
| 0 |
|
(*projected)
4. The Committee also sought details of specific and measurable
benefits expected to accrue from two sample routes supported by
the Route Development Fund, namely Belfast International—Paris
and City of Derry—Manchester
It should be noted that the primary objective of the Air
Route Development Scheme is to improve the economic infrastructure
of Northern Ireland by improving accessibility for the benefit
of promoting business linkages and enterprise development. To
that end, the creation of new routes is in itself the main benefit
that the Scheme is seeking to realise. However, it is also the
case that each individual route must pass a test of economic benefit
in orfer to qualify for funding from the Scheme. Some of the benefits
identified by economic appraisal for the two specified routes
are set out below.
BELFAST INTERNATIONAL-PARIS
Journey Time Savings
The Department of Transport's aviation model (SPASM) assigns
monetary values to the time taken to travel from one point to
another. The direct air service from Belfast to Paris offers considerable
time savings over indirect services via London.
The service is forecast to carry 90,000 passengers annually,
of whom 40,000 will be originating in Northern Ireland. If this
forecast is fulfilled, it is calculated that those 40,000 NI residents
will have saved approximately £765,000 in journey time. This
saving will recur for each year that the service operates.
Similar savings are projected for passengers travelling in
the other direction, but this benefit does not accrue to the NI
ecomony and so is not included in the figure quoted above.
Air Fare Savings
The introduction of a new direct air service also brings
air fare savings as compared to indirect routes.
If this service meets its forecast of carrying 40,000 Northern
Ireland residents to Paris, it is calculated that those passengers
will have saved approximately £2,000,000 in air fares. This
saving will recur for each year that the service operates.
Similar savings are projected for passengers travelling in
the other direction, but this benefit does not accrue to the NI
economy and so is not included in the figure quoted above.
Business Links
The European Cities Monitor, published by Cushman
and Wakefield Healey and Baker, ranks Paris No 2 in its table
of the top business centres in Europe. It greatly facilitates
business linkages therefore for Northern Ireland to have a direct
connection to such an important business location.
Hub Connectivity
Connections to hub airports also benefit business people
by providing opportunities for global connections. The International
Air Travel Association (IATA) maintains a Global Airport Connectivity
Monitor which measures the degree to which each airport offers
connections to others around the world.
The introduction of direct flights to Paris Charles de Gaulle
Airport has raised Belfast International Airport's connectivity
score from 50.49 to 80.80, an increase of 59%.
Social Connectivity
This is a measure of a population's access to different destinations
and has been shown to correlate with increased standards of living.
It is expressed as a %age increase in the number of flights.
The introduction of direct flights to Paris Charles de Gaulle
Airport has raised the Northern Ireland population's connectivity
score from by 1.06%.
Direct Employment
Information provided by easyJet suggests that the operation
of this service will involve the creation of 10 jobs at Belfast
International Airport.
Indirect Employment
A standard rule of thumb used within the aviation sector
is thaty one airport-related job is created for each 1,000 passengers
travelling. On the basis of the total projected passenger number
for this service (90,000), a conservative estimate is that it
will generate an additional 50 jobs indirectly.
CITY OF
DERRY-MANCHESTER
Journey Time Savings
This service is forecast to carry 15,000 passengers annually,
of whom 7,000 will be originating in Northern Ireland. If this
forecast is fulfilled, it is calculated that those 70,000 NI residents
will have saved approximately £5,353 in journey time. This
saving will recur for each year that the service operates.
Air Fare Savings
If this service meets its forecast of carrying 7,000 Northern
Ireland residents to Manchester, it is calculated that those passengers
will have saved approximately £56,578 in air fares. This
saving will recur for each year that the service operates.
Business Links
The European Cities Monitor, published by Cushman
and Wakefield Healey and Baker, ranks Manchester No 13 in its
table of the top business centres in Europe. It is a significant
benefit to Londonderry, therefore, to have a direct connection
to such an important business location.
Hub Connectivity
The introduction of direct flights to Manchester Airport
has raised City of Derry Airport's connectivity score from 3.66
to 4.85, an increase of 32%.
Social Connectivity
The introduction of direct flights to Manchester has raised
the Londonderry population's connectivity score by 18.42%.
Direct Employment
Information provided by Aer Arann suggests that the operation
of this service will involve the creation of 10 jobs at City of
Derry airport.
Indirect Employment
On the basis of the total projected passenger number for
this service (16,000), a conservative estimate is that it will
generate an additional 10 jobs indirectly.
5. The Committee asked what specific economic targets have
been set for each of these routes, such as employment targets
or targets for additional tourism spend, how these targets have
been identified and how frequently they are monitored.
The specific economic target which has been set for the scheme
as a whole, and indeed each route, essentially is to strengthen
Northern Ireland's economic infrastructure by improving the Province's
connectivity to other regions of the UK, Continental Europe and
further afield. In the final analysis the success of the scheme
will be assessed in terms of the sustainability of those routes
which have been secured by means of the operation of the Scheme.
An assessment of journey time savings, improved connectivity,
the potential for developing business linkages and promoting inbound
tourism, as well as job creation, etc, all form part of the detailed
economic appraisal of each prospective new route. These are factors
which ultimately determine whether a route is supported, but do
not in fact form economic targets in their own right.
Passenger numbers are monitored monthly. In addition each
claim for grant assistance is required to be supported by data
on passengers carried, supplied by the airline concerned. This
is quite separate from the surveys conducted by the NI Tourist
Board. For example, as an early indication, NITB figures for the
period June-September 2004 show that the number of French visitors
who entered NI directly increased by about 21% over the same period
in 2003. Moreover, about 28% of all French visitors who entered
NI directly between June and September 2004 did so via the new
easyJet Paris-Belfast route.
6. The Committee sought details of the information collected
on passengers using the Paris to Manchester routes, both inbound
and outbound and whether leisure or business passenger.
|
| Paris OutboundInbound
| Manchester OutboundInbound
|
|
| June | 2,383
| 1,652 | 480
| 263 |
| July | 4,617
| 3,960 | 1,488
| 935 |
| August | 4,619
| 4,039 | 1,440
| 855 |
| September | 4,470
| 3,516 | 1,440
| 870 |
| October | 4,619
| 3,854 | 1,392
| 913 |
| November | 4,470
| 3,205 | 1,264
| 634 |
| December | 4,470
| 3,374 | 1,296
| 746 |
| Total | 29,648
| 23,600 | 8,848
| 5,216 |
|
| Breakdown of business and leisure passengers is not available at this time.
|
22 February 2005
1
These figures reflect current assessments of the load factors
which will be achieved on the routes supported, and are based
on the assumptions that no currently funded route will cease to
operate within the period of assistance and that no further routes
will be assisted in the future. A review of the Air Route Development
Scheme has been commissioned and this may lead the Department
to seek alternations to the Scheme budget. Back
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