Examination of Witnesses (Questions 326
- 339)
WEDNESDAY 19 JANUARY 2005
MS BARBARA
ANDERSON AND
MR DENIS
GALWAY
Q326 Chairman: Ms Anderson, Mr Galway,
you are welcome. I am sure you have witnessed from the back the
basis of the process that we go through in terms of the Committee.
Can we, as we did previously, thank you for the work you have
done already in giving us your views in a written context. I am
afraid this session is a little truncated. We have got a meeting
of the main Committee to follow, but I wondered if I could launch
straight into our questioning with a couple of questions as to
the CBI's view on access to Heathrow from Northern Ireland. One
of recurring themes in the evidence given to us, and also reflected
in your submission, has been the vital importance that people
give to maintaining the access to Heathrow, and they say Heathrow
as opposed to London. They mark down the importance of maintaining
access to Heathrow. Can you elaborate briefly from a business
perspective how important it is to maintain that route?
Ms Anderson: Certainly from a
business perspective Heathrow is absolutely critical in keeping
the business economy, both inbound and outbound, connected with
the rest of the world, providing access into the advanced network
of flights from Heathrow at timings which able to travel into
Europe and beyond within acceptable timescales and costs. To take
the Heathrow link away would be a severe disadvantage to the Northern
Ireland business economy. Again, it is important as our economy
develops and grows and as we go forward, our potential customer-base
is global, that our customers are able to get to us in Northern
Ireland with the minimum of fuss and effort and therefore we can
compete more effectively with the rest of the world.
Q327 Chairman: I am glad you have
mentioned that, because the other thing you mentioned in your
submission, which is obviously important for the future of the
Northern Ireland economy is at moment the lack of routes and available
options for a lot of the Asian cities and countries given the
need for manufacturers to have easy access into the Asian market
and in return. How do you think that best could be developed to
benefit the Northern Ireland economy? Is it about new routes being
developed from Northern Ireland airports or is there already an
acceptable service from Dublin and Heathrow? How do you see an
improvement?
Ms Anderson: Certainly at this
point in time it will have to be very much market driven. Yes,
a lot of manufacturing is moving away from Northern Ireland into
Asian countries. It is essential that we are able to move our
customers backwards and forwards. There are some discussions underway
in terms of developing some routes, but again what we need to
do is ensure we develop the right routes. We cannot develop them
all. That is not economically viable and it would be probably
suicidal to do it. Therefore we need to be very careful that we
have a sound business case for the routes that are going and it
should match the market demand for people travelling into those
locations.
Q328 Chairman: At the risk of upsetting
some of your members but making some of your members very happy,
is there an obvious favoured route in terms of development for
Asia?
Ms Anderson: I would not like
to put a name to it at the moment, but what I could say, because
we are also looking at this from a freight perspective as well,
because obviously as manufacturing is moving out into the Asian
markets we are also bringing a lot of products in from the Asian
market, is that some of that product coming into Northern Ireland
is for added value services before it goes on to other markets.
We currently have a study in train at the moment looking at air
freight, and it may well be that the freight route will line up
with the passenger route, but it is a little too early to say.
Chairman: Thank you for that. I understand
the point you have made and you may not at this stage want to
put a name to that route.
Q329 Mr Pound: Thank you for the
written submission you sent in earlier. It is very helpful. I
may not be more educated, but I am certainly more knowledgeable
than I was before. You talk about the importance of maintaining
the slot at Heathrow and your preferred choice is a PSO to do
that, but obviously you are aware that that requires the European
Commission to co-operate or change the rules. In the absence of
that happening—it is not impossible but it is pretty unlikely—what
other mechanisms do you think could be used to maintain the Heathrow
access?
Ms Anderson: I think perhaps the
most effective mechanism is going to be maintaining the demand.
It is the old adage that if you do not use it you will lose it.
As long as the demand is there, then I think from the CBI point
of view, we cannot become complacent and say, "It will be
okay, British Midland will look after us." We have to watch
the situation very carefully, and, if it looks as though that
is coming under jeopardy, we will have to take appropriate action
at that that point in time.
Q330 Mr Pound: It is a fairly obvious
point, and it factors into what you said earlier on about market
driven solutions, but do you ever make that point to your members,
the point that you just eloquently expressed, use it or lose it?
Ms Anderson: Frequently, but perhaps
we should be a little bit more vociferous about it.
Chairman: I am sure that the Committee
derives some comfort from the comments made by our last witnesses
from Belfast City International Airport that that route is sustaining
itself very well and is showing a profit. It seems to be quite
healthy in terms of numbers and patronage. We take some comfort
from that, and I am sure you members will as well. We are going
to move on to another issue related to Heathrow. Could I ask Mr
Eddie McGrady to bring a question in here, please?
Q331 Mr McGrady: In your submissions
and comments indeed from others there has been emphasis on the
fact that there is not a late night flight particularly from Heathrow
Belfast and vice versa. Have you done any research to identify
the demand for that to give it some quantity, if you like?
Mr Galway: I think I will deal
with that one for you, Chair. Our information is that there is
insufficient demand at present. If such a demand was there, we
would hope that allowance could be made through the airport operating
hours, but I think it should be market led.
Q332 Mr McGrady: Without the research,
you are still convinced that, for instance, the business community
would benefit from a late night facility out of Belfast City.
If you believe that, have you fed that comment and that opinion
as a body into the current consultation of the planning process?
Mr Galway: CBI would have fed
this in through the Regional Transportation Strategy, and I would
think probably also through the Belfast Metropolitan Area Plan.
Q333 Mr Bailey: For brevity's sake
I will run a few questions together. First of all, since your
submission, routes to Europe, Rome and Berlin in particular, have
been announced. Do you think we are approaching saturation point.
Secondly, do you think there is too much bias in terms of tourist
route development as opposed to business route development? Thirdly,
how important do you think it is to develop routes to the new
EU countries in what was previously Eastern Europe?
Mr Galway: I think that with the
expansion eastwards of the EU it is absolutely essential that
we have sufficient routes to enable Northern Ireland to compete
effectively and economically. To ensure that the routes do become
viable and remain sustainable, I think it will be necessary from
a tourist point of view that sufficient marketing effort and resources
are directed for incoming passengers. It will obviously need some
time for that to build up but we think that business and tourism
will marry together. Tourism can expand very significantly on
a lot of the routes with the right marketing effort, but it needs
resources directed to it, both money and people, and I think on
this score we do not yet think that the number of routes has reached
saturation point and we would hope that more money could be directed
to the Air Route Development Fund if sustainable routes are identified.
Q334 Mr Bailey: Following on from
that, your submission mentioned three routes that you considered
important for business, the Brussels, the Frankfurt Cologne and
Geneva. We have now got a service available to Geneva. How important
do you think the other two routes are?
Mr Galway: There have been quite
a few new routes started there now. I am not au fait with
the figures for these other two routes as yet. We hope that full
and proper examination will be given and if the business case
is there that there would be assistance given to give them a kick
start, but I do not have figures at this moment in time.
Chairman: We have just mentioned the
Route Development Fund, and I know that Mr Beggs has some questions.
Q335 Mr Beggs: You have strongly
supported the Route Development Fund, and it appears to have been
very successful to date. Have you any concerns about the criteria
currently used to decide which routes to support and do you think
business needs are adequately taken into account?
Mr Galway: I do not have the full
detail of the cases being made for each route, but I think there
is a review mechanism, I understand, built into the Route Development
Fund and I do believe that they are looking at the sustainability
of these routes at the present time. The amounts of money that
are being directed to the routes are not vast in overall terms,
so I think it is certainly a very worthwhile investment and can
be a major kick-start for Northern Ireland's economy, both for
export business and for incoming tourism.
Q336 Mr Beggs: You were about to
say that the fund is only a pump primer that helps to move Northern
Ireland up the attractiveness league. How long do you think the
overall fund will continue to be needed?
Mr Galway: Obviously the routes
which have started there, I think the fund is of three-years'
duration, and that should be sufficient for those existing routes,
but if a new route comes along in a year and a half or two years
time, it may well need a period of two or three years to get it
up and sustainable.
Q337 Mr Beggs: Scotland has had a
Route Development Fund for some time and we understand that consideration
is being given to introducing a similar fund in other regions
in Great Britain. Have you any concerns that this may mean that
the fund will eventually be needed just to keep Northern Ireland
on an even footing, it would no longer give any edge over other
regions?
Mr Galway: I think the intention,
as I understand it, of the Air Route Development Fund was to give
a kick-start, and I would like to think that once the kick-start
has been given the routes would be able to exist and the Northern
Ireland economy would be able to exist without continuing use
thereof. We are the only significant part of the UK that does
not have a surface link to the continent, and we have things like
airport passenger tax and other security issues at airports, which
impact upon our competitiveness, and certainly the Air Route Development
Fund enables us to get the market growing to a state where it
can be competitive.
Q338 Chairman: One additional question.
You will have heard earlier on that we mentioned that in taking
evidence from the DETI last week the £4 million budget for
the Air Route Development Fund has now been fully committed, which
in itself may restrict further use. Is that something that the
CBI would want to comment on in terms of seeing it as a negative?
Mr Galway: We believe that more
money should be made available if a good business case can be
made for additional routes, additional new routes.
Ms Anderson: I think to add to
that, we also have our work cut out immediately in ensuring that
the new routes we have are sustainable. We must focus on what
we have today and make that work, and then, as Denis has said,
we justify future routes as and when they become available.
Q339 Reverend Smyth: You did mention
in your evidence to us that there is potential to develop air
freight both to and from Northern Ireland. That seemed to be the
best primary way to go in the light of earlier evidence we received
today. Would you like to elaborate on your views and perhaps tell
us what sort of impact was made on the withdrawal of British Airways
in 2001?
Ms Anderson: I will take that
question. It relates back again to the study which is currently
underway. As soon as that report is published, I will ensure it
is passed through to you. One of the issues with British Airways
pulling out of Northern Ireland was that we lost significant capacity
for belly freight into Heathrow. There is some belly freight capacity
with British Midland into Heathrow, Heathrow being the major global
cargo hub, and at the moment the majority of air freight leaves
Northern Ireland as the first leg of its journey by road and sea.
Needless to say, when you are coming up against ever increasing
customer requirements for shorter lead times, having to put more
stock into your supply chain to work for this duration of journey
and delays in Heathrow, in order to make us more competitive in
Northern Ireland we need to look at ways of shortening that supply
chain and taking costs out, and that is one of the key drivers
behind the air freight study that is going on. We need to have
some lateral thinking and look at ways and means that we might
be able to move product into and out of Northern Ireland using
air freight in a more cost-effective, efficient and innovative
way. All of that is in play at the moment.
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