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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 53-ii House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE NORTHERN IRELAND AFFAIRS COMMITTEE (NORTHERN IRELAND AFFAIRS SUB-COMMITTEE)
AIR TRANSPORT SERVICES IN NORTHERN IRELAND
Monday 29 November 2004 Aronmore Room, Fitzwilliam International Hotel, Belfast
MR ALAN WALKER and MR EDDIE LYNCH Evidence heard in Public Questions 101 - 123
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Northern Ireland Affairs Committee, Northern Ireland Affairs Sub-Committee on Monday 29 November 2004 Members present Mr Tony Clarke, in the Chair Mr Adrian Bailey Mr Roy Beggs Mr Stephen Hepburn Mr Stephen Pound Mark Tami ________________ Memorandum submitted by General Consumer Council
Examination of Witnesses
Witnesses: Mr Alan Walker, Head of Consumer Affairs, and Mr Eddie Lynch, Senior Consumer Affairs Officer, General Consumer Council, examined. 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 just 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 Small Business Federation 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 secure 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 ten 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 per cent 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 per cent 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 arrival, 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. Q120 Chairman: It is still called the M1, I think. Mr Walker: There was a major significant improvement last year south of the border and there is a further improvement which is due for completion early next year and it will reduce journey times to Dublin Airport. Obviously in terms of railway access, there is no direct railway access to Dublin Airport as we speak but it is an option for the future, so you are not getting a lot of people travelling that way. The road improvements do make Dublin an attractive proposition but, equally, they make it easier the other way, for people to get to Belfast and make Belfast a more attractive proposition. Mr Pound: I have to say that our Prime Minister would love to hear you say that competition is never a bad thing. Thank you very much indeed. Q121 Chairman: You have just prompted me to ask a supplementary question. We talked earlier on about a flight from Belfast International putting under threat some of those passengers who currently use Heathrow as a fly-through. Surely as the road improvements to Dublin happen and Dublin Airport itself grows and offers more routes and becomes more attractive - I think they want to be the fourth largest airport in Europe somewhere around Schipol, Amsterdam size - there is a threat that people will just use Dublin as an alternative to Heathrow and, again, would be a threat to some of that traffic from Belfast to Heathrow? Mr Walker: There are around five million people on the complete island of Ireland and there is a limit to how many routes can be sustained out of the island of Ireland. It will never be on the scale of having 91 destinations but if there are destinations that are complementary, particularly to North America which is where the main long haul routes are out of Dublin, then of course people from here should consider it and they should go to the one that offers them the best deal, the best price and, indeed, the correct interlining facilities because as we have moved more to point-to-point travel in Northern Ireland we have lost the guaranteed link-ups between services which are normally provided by full service airlines. Q122 Mark Tami: I note that you state that "The Council believes that the Department for Regional Development needs to consider any other issues on the island of Ireland that could potentially impact upon Northern Ireland air services as part of its consultation to devise a strategy on the future of aviation in Northern Ireland over the next 25-30 years". What does that mean? It is very catch-all, is it not? What do you mean by "other issues"? Mr Walker: In layman's terms it means we need clear definition of what the White Paper means for Northern Ireland, we need more discussion on that so that we all know in a clear and concise way how we are going to take this forward in relation to Northern Ireland, and that should include any issues such as the impact that Dublin may have, the impact that road improvements may have, or, indeed, the development of a second large airport in the Republic of Ireland if Shannon was to develop further, for example. I am not aware of plans to do that at this point in time but we need to consider all of the options so that we can then move forward to ensure that we have a sustainable aviation industry for the future and we do not lose many of these new services that have come to bear in the last few years. Q123 Chairman: One of those complexities in terms of who is doing what and who is suggesting what, I suppose, is that you are right in your evidence to us to say that the DRD needs to take seriously its responsibility for airport policy but, of course, with the suspension it is this Committee that is currently having to conduct the inquiries. We are very serious about ensuring that should we be successful this week in getting the Assembly back on track they can take the evidence from Westminster and that they have not wasted time in terms of taking on the task that will be set them. Your written evidence to us was very clear and certainly it assisted the Committee to the extent that probably it limited the questions that we were able to ask you verbally. As we often do, could I ask you if there are questions that we have not asked you that you expected, and therefore give you the chance to answer them even though we have not asked them? Mr Walker: I am not aware of any others and you can guess that it was deliberately written in that way to limit the questions you could ask us. Certainly I believe that the Committee's intervention is timely in terms of the representations that we have been making this year and in terms of the recent consultation with the Department for Transport and, indeed, the developments at European level as we currently speak. I look forward to seeing what results in terms of the report of the Committee. Unless my colleague has anything that he feels has been missed out, there is nothing. Chairman: Do feel free to supplement and complement the evidence you have given us, should you feel you wish to. Can I thank you on behalf of the Committee. We are looking to publish around February time, which is our target, maybe slightly earlier, but that will depend on a number of factors. We are very grateful for your input, thank you. |