Memorandum by Liverpool John Lennon Airport
(EU 09)
EUROPEAN UNION
COMPETENCE AND
TRANSPORT
Liverpool John Lennon Airport presently serves
3 million passengers per annum and is considered to be one of
Europe's fastest-growing airports.
We are in a market whereby many of our primary
customers, the airlines, have already purchased or leased their
aircraft assets for many years to come. They then have the flexibility
to place these assets at a wide variety of European airports and
they take into account several factors in making those decisions.
Thanks to the liberalisation efforts of the
European Commission and the member states, (and in particular
with the so-called "Third Package"), the airlines now
view Europe much more as a single market. We have moved on from
the days when the only agenda was the protection of the national
flag carrier by individual member states. Nowadays, the market
is internationally mobile between member states and competition
has led to the emergence and continuous development of the low
cost sector.
Whilst the Committee has structured its inquiry
by making particular reference to negotiations with the US on
aviation issues, it is not this issue that will be the most important
issue for many of the European regions. Most European regions
are seeking to compete for the fastest-growing market, namely
point-to-point intra-European traffic and not for the transatlantic
business.
In order to effectively compete for the intra-EU
business with our European airport and regional counterparts,
it is crucial that we at Liverpool John Lennon Airport have a
level playing field on which to do so. As the operators increasingly
strive for the lowest possible cost base in reaching their decisions
on where to base aircraft, the ability of an airport to offer
a competitive business proposals has become more important and
for these airline decisions, all other factors across the market
should be neutral, wherever possible. When it is not neutral,
there is in effect a distortion of the market.
When an airport or a region competes for a single-based
aircraft from an airline, it is effectively competing on two levels.
First there is the business for the airport, in terms of aeronautical
income and non-aeronautical per passenger income, and second there
is the strategic economic benefit the aircraft generates for the
region of that airport, which equates to about 40 million euros
contribution to the GDP per aircraft.
It is essential to both John Lennon Airport
and the region for which we serve, that we develop a fair and
equitable status alongside our European airport competitors. This
is not the case at present.
Specifically we would like to see:
(a) Slot-ring-fencing provided in the UK
in a similar way to that has been adopted within other EU member
states. For example at Paris Orly, some 30% of slots are ring-fenced
for domestic services into Paris for both point-to-point and connecting
services. If Liverpool is to be linked as a city to other cities
of the world, the preference is that we be connected over Heathrow
and not over a European hub. We do not need to wait for additional
runway capacity at Heathrow to achieve this. As and when slots
become available at Heathrow, they should be ring-fenced for regional
air access. For too long our city and the region of Merseyside
has been ignored by our airlines who always have something better
to do commercially. If we are to prioritise the needs of the region,
slots into Heathrow for connecting flights should be prioritised.
No other south-east airports offer these connections.
(b) Public Services Obligations—We
welcome the views expressed in the White Paper on PSOs and would
seek that these be applied for economic reasons as well as for
reasons of social exclusion. Objective One regions have been identified
as areas targeted for economic regeneration and PSOs could be
very effective to help achieve this objective. Some routes in
France for example, are supported by PSOs even when they are used
by over 300,000 passengers per annum. Again a common application
of PSO rules would assist in developing the level playing field
we strive for.
(c) Taxation—The Air Passenger Duty
generates approximately £800 million of income to the UK
but no one has quantified the cost of this in terms of loss of
business. We know at Liverpool, the loss of one particular operator
which had earmarked two-based aircraft would have generated approximately
80 million euros to our region's GDP, yet we only account for
£7 million of the £800 million generated by the APD.
In relation to the question put by the Committee, what is required
once again, is the level playing field across the European ensuring
there is no such market distortion in the future. This principle
equally applies to any other taxation proposals.
As for as the question of US negotiations is
concerned, all we are concerned with is that any customers wishing
to book into Liverpool cannot at present through any widely used
Computer Reservation Systems. CRS systems are the tool agents
used in identifying the most suitable flights, and without direct
access, Liverpool is not as accessible as it would wish to be.
The American Airlines CRS system for example, identifies a connection
over Dublin and the Isle of Man as the preferred routing, entailing
a stopover in the Isle of Man. British Airways identify a transatlantic
flight to Heathrow followed by a bus operation to Luton then a
flight to the Isle of Man before connecting to Liverpool.
Invariably however, any search for flights to
Liverpool simply generate the response that "no flights are
available". This result is commonplace not only in the US,
and it would be naive to think that the geographical knowledge
of users outside of the UK extends to the understanding that they
should think Manchester when wanting to purchase Liverpool. After
all we in the UK do not think to fly to Dusseldorf when we want
to fly to Cologne, yet it is a closer city pairing than Manchester
and Liverpool. More bookings are made to Frankfurt with connecting
flights to Cologne than people booking Dusseldorf and then using
surface transport to Cologne.
Liverpool will be an increasingly attractive
city brand thanks to the Capital of Culture nomination and when
an operator does wish to offer direct connections, then it should
be allowed to do so, and so long as this is not jeopardised by
any EU:US agreement, then we would not have a concern with that
specific issue. However, the need for indirect connections is
a much more important issue at this time for Liverpool and the
Merseyside region.
I thank you for enabling us to be consulted
on these important issues.
31 December 2003
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