OT 309: Letter to the Chairman of the Committee from Gillian Merron, Parliamentary Under Secretary of State

 

Thank you for your letter of 23 January to the Foreign Secretary about the airfares on the South Atlantic Airbridge between the Falkland Islands and RAF Brize Norton.

The primary purpose of the airbridge is to provide a safe, regular and reliable service between the UK and the Falkland Islands for MoD personnel in support of British Forces South Atlantic Islands (BFSAI). The airbridge is also vital to help deliver the British Government's responsibilities for the social and economic development of the South Atlantic Overseas Territories.

Since autumn 2007, officials from the Foreign and Commonwealth Office (FCO) and the Ministry of Defence (MoD) have been negotiating on the new Joint Policy Statement (JPS) which acts as the terms and conditions for civilian use of the South Atlantic Airbridge. The FCO has co-ordinated the input from the Falkland Islands Government (FIG), the Ascension Island Government (AIG), the Saint Helena Government (SHG) and DFID. The objective of the negotiations has been to update the 1992 JPS to reflect the use of an MoD-contracted commercial aircraft instead of an RAF-owned Tristar aircraft to provide the airbridge, and the issues that have subsequently arisen.

Both the National Audit Office report of November 2007 and the Public Accounts Committee report of May 2008 encouraged the Government to provide more certain booking arrangements, more reliable flights and the ability to provide a business class service to help with the Island's economic development. Both reports also said that FIG should take a greater share of the risk and cost, as well as the reward, of the airbridge.

 

In parallel to the negotiations, the MoD has provided (since October 2007) a premium economy service, sought statements of requirements from both FIG and AIG for the new airbridge contract, and invited the FCO to take part in the relevant part of the tender evaluation. The new contract which came into effect in October 2008 now operates four times a fortnight (up from three), and gives FIG and AIG their requested number of seats per flight, plus 10 premium economy seats.

 

I wrote to Bob Ainsworth, Minister for the Armed Forces, on 24 November to relay FIG's concern that the single tariff pricing schedule that the MoD had proposed was unaffordable. FIG would have liked the MoD to continue to provide either a 50% child/student discount, or to keep the present basic fare structures (Duty, Group, APEX, Economy, and child/student, all based on marginal costs). The MoD replied that they had to reconcile the provision of the service to civilian passengers with the cost of running the commercial service rather than relating it to the older RAF Tristar which has not serviced the route for many years. Whilst the MoD had been able to make some significant improvements to the service, and given FIG the flexibility to set their own fares, they were obliged to charge both FIG and AIG the flat price necessary to recover costs. This was in line with Treasury rules and the current economic crisis clearly makes this position that much firmer. However, the flexibility that FIG and AIG will have under the new agreement will enable them to take their own decisions on what fares and discounts they in turn offer their own passengers. I reported this back to FIG on 17 December, and the Falkland Islands Executive Committee agreed on 29 January to the fare structure being proposed by the MoD. FCO and MoD officials are now working to conclude the JPS text so that it can be implemented in time for flights from 1 April 2009.

 

I hope this is helpful. Please let me know if you would like any further information.

 

 

24 February 2009