APPENDIX 10
Memorandum submitted by Jet2.com
INTRODUCTION
Jet2.com is pleased to contribute to the Committee's
Inquiry into Northern Ireland Air Services. As a company we have
operated air cargo services from Northern Ireland for many years
before expanding into scheduled passenger services during 2003.
We are keen to develop our presence in the Northern Ireland market
and, as such, we believe that any formal and influential guidance
which provides strategic direction to the aviation industry in
Northern Ireland is to be strongly welcomed.
THE COMPANY
Jet2.com is a trading name of Channel Express
(Air Services) Ltd which is a wholly owned subsidiary of Dart
Group PLC. Dart Group PLC is an aviation services and distribution
group whose shares have been quoted on the London Stock Market
since 1988. Dart Group's annual sales are around £250 (
350) million with net assets of £47 (
66) million.
As a company Channel Express (Air Services)
Ltd has been flying commercial aircraft for over 25 years. Originally
operating up to 14 Dart Herald aircraft, the company introduced,
during the 1990s, Lockheed Electras, Airbus A300B4 "Eurofreighters"
and in 2001, Boeing 737-300s.
Jet2.com commenced operations in February 2003,
initially flying daily from Leeds/ Bradford International Airport
to and from Amsterdam. For 2004-05, in response to customer demand,
our choice of destinations has widened. Now 9 Boeing 737-300 aircraft,
based at Leeds Bradford Airport, all of which are owned by the
company, fly to 14 key destinations; Alicante, Amsterdam, Barcelona,
Belfast, Faro, Geneva, Ibiza, Malaga, Murcia, Nice, Palma, Paris,
Prague and Venice.
Having launched services from Belfast International
Airport in November 2003 we now fly to Barcelona, Bournemouth,
Cork, Prague and to Leeds Bradford.
On 29 September 2004, Jet2.com announced its
second base, Manchester Airport. In doing so Jet2.com unveiled
the largest ever single commitment—thirteen routes—made
to Manchester Airport by any scheduled airline.
MISSION STATEMENT
Our aim is to be the safest, most responsive
and reliable operator of low cost services in Europe.
DEVELOPMENT OF
CAPACITY AT
EXISTING AIRPORTS
As stated Jet2.com passenger services from Belfast
International Airport are a relatively recent event. However the
experience of our company in launching low fare services has been
very positive and has entirely vindicated the research findings
which we acquired prior to launch, confirming the strong appetite
of the public for our brand of service. Our experience thus far
has taken us from Leeds/Bradford to Belfast to Manchester, the
common train being major population centres with a clear economic
growth record and obvious potential for further significant development.
At present we operate six daily rotations from
Belfast International Airport covering five routes. However we
foresee considerable development potential, especially to European
destinations, given the geographic remoteness of Northern Ireland
and our positive experience in launching both Prague and Barcelona
services, which were inaugurated following strong feedback from
our Northern Ireland customer base.
Belfast International Airport has been a strong
factor in our development from the region, not only offering us
unconstrained potential to grow our business but also offering
the flexibility of round-the-clock operations which provide us
with the aircraft utilisation efficiency of operating night time
cargo contracts (through Channel Express for the Royal Mail) and
offering daytime scheduled and charter passenger services, with
no range limitations.
We would concur entirely with the view expressed
in the Government White Paper (2003) that the development of Belfast
International Airport over the next 25 years should be supported
in full.
We would also push for strong strategic direction
from Government on future development of airport capacity which
establishes a framework of complementarity of airports which airport
operators must respect.
The current situation where two private airport
operators and a third local council develop their businesses separately
and without central co-ordination has led to different airlines
competing on the same routes from different airports. The resulting
fragmentation of the already small passenger base, relative to
other European regions, can seriously undermine the viability
of routes.
Moreover, where direct European services are
concerned, competition on the same route from another airport
would result in closure of one service; viability of international
routes especially cannot outlast any such fragmentation.
Furthermore we believe that there is a strong
case for integrated transport planning in Northern Ireland to
ensure that Belfast International Airport's status as the primary
gateway is fully supported by a programme of enhanced road and
rail access from all key towns and cities within the region.
SPECIFIC CHALLENGES
FACING NORTHERN
IRELAND AS
A PERIPHERAL
REGION OF
THE UK
Clearly the key issues with regard to Northern
Ireland's location in the UK are its separation from the rest
of the country and its land border with the Republic of Ireland.
The existence of water creates obvious opportunity for the viable
provision of air services and in this respect we would consider
that the Province is largely very well catered for in terms of
links to other UK points. The future challenge is to ensure that
UK services remain profitable in the face of prospective over-saturation
of the market, and a clear strategy for the development of services
from Northern Ireland's airports would be helpful in safeguarding
against this.
There is not, however, a level tax playing field
for air and sea transport providers, a situation which we would
like to see addressed. Sea travel to and from Northern Ireland
is not taxed by the Government, yet air travel is, creating an
unfair advantage for ferry operators where sea and air serve the
same regions.
NI has a unique dependency on air and sea transport
due to its peripheral location. Given this dependence, and the
lack of a level tax playing field between airlines and ferry operators,
Jet2.com would strongly support abolition of Air Passenger Duty
on flights departing Northern Ireland airports.
In our opinion the major opportunity for Northern
Ireland is to develop links across two seas into mainland Europe,
in order to integrate the Province fully into the European market
for maximum economic benefit. Of course the challenge will continue
to be to ensure effective marketing of Belfast routes within Europe
in light of Dublin's head start as the recognised entry point
for the island of Ireland.
THE EFFECTIVENESS
OF THE
NORTHERN IRELAND
ROUTE DEVELOPMENT
FUND
Although any form of assistance is welcome in
supporting the development of an air route in its early stages
we would contend that Government funding would be best channelled
towards supporting the promotion of new services at the destination
end of the route. We have not received Air Route Development assistance
for Prague or Barcelona, both of which we chose to launch on the
basis of stand-alone commercial analysis. Obviously we have sought
to maximise the prospect of success for these services by negotiating
good commercial terms with our suppliers, including the airports.
However real, practical marketing support to encourage inbound
activity would be a further benefit which Government agencies
could deliver.
THE POTENTIAL
IMPACT FOR
NORTHERN IRELAND
OF WIDER
AIR TRANSPORT
ISSUES ON
THE ISLAND
OF IRELAND
Ultimately the whole island is the air market
in which we operate, and as such, any developments within neighbouring
jurisdictions impact the commercial operation of air services
from Belfast. In this respect the sheer size and extent of activity
at Dublin Airport has an influence on air service activity in
Northern Ireland.
We have partially realised the opportunity which
exists to create a more extensive network from Belfast in recent
months. However it is vital that the Northern Ireland community
optimises the use of its assets to compete effectively for business
with Dublin. In this respect the region could be assisted by developing
further infrastructure and scale of activity at Belfast International
Airport, and it would also be helpful to the region's competitiveness
for the UK Government to explore how VAT and Air Passenger Duty
levels could be equalised with those in the Republic of Ireland.
CONCLUSION
It is Jet2.com's intention to continue our network
development in Northern Ireland. We commend the Committee for
their work in evaluating what is best for the region in terms
of an aviation development framework and look forward to reviewing
the findings of the Inquiry in due course.
20 January 2005
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