Written evidence from British Airways
(HSR 165)
INTRODUCTION
1. British Airways welcomes the opportunity to
contribute to the Transport Select Committee's inquiry into the
Strategic Case for High Speed Rail. The inquiry is timely and
seeks to address the key themes in the current debate.
2. In this memorandum, British Airways has focussed
its response on the impact of High Speed Rail (HSR) on UK aviation,
and in particular, offers a perspective as a Heathrow-based carrier.
It has addressed issues of concern to its business and the aviation
industry.
3. British Airways is one of the world's largest
international airlines, carrying approximately 32 million passengers
worldwide annually on around 750 daily flights. The airline employs
almost 40,000 people, the vast majority of these at its sites
throughout the UK.
4. The airline's two main operating bases are
London's Heathrow and Gatwick airports, with a smaller base at
London City airport serving New York and European business destinations.
From these, British Airways flies 237 aircraft to 152 destinations
in 75 countries. In addition to passengers, the airline also transports
cargo—more than 750,000 tonnes of cargo are carried around
the globe each year.
5. In 2010, the airline completed its merger
with Iberia of Spain to create the International Airlines Group
(IAG). Our combined business offers flights to 205 destinations
throughout the world on a fleet of 415 aircraft. It also commenced
a joint business agreement with American Airlines, which further
extends the benefits for its customers. The combined network of
British Airways, Iberia and American Airlines serves 433 destinations
in 105 countries with more than 5,180 daily departures.
SUMMARY
6. British Airways believes the optimal High
Speed Rail (HSR) scheme for the UK should operate the mainline
via Heathrow between Birmingham and London and include a High
Speed 2 (HS2) station at the airport. This would allow all trains
to stop at the airport, maximising connectivity to destinations
on the network and allowing maximum economic benefits and carbon
reductions to be realised. This scheme would have the most compelling
business case for airlines and would go furthest to realising
the Government aim of air-rail substitution.
7. The above model is the one used throughout
Europe for integrating new high speed rail lines with existing
hub airports. At Paris Charles De Gaulle, Frankfurt and Amsterdam
the high speed mainline runs via the airport with the station
located at the terminal of the main network airline—Air
France, Lufthansa and KLM respectively. British Airways believes
that this model should be adopted for HS2.
8. However, the scheme currently proposed would
see a spur from the HSR mainline connect to the airport from a
northerly direction. This would allow some, but not all, HSR trains
from the UK regions to access Heathrow directly. These HSR trains
would terminate at the airport, whilst other London-bound high
speed trains would not call at it. Heathrow would also be unable
to directly serve passengers travelling to and from Europe on
High Speed 1 (HS1).
9. Whilst this scheme may provide adequate capacity
for some UK air passenger markets to access Heathrow, it is less
desirable when compared to a scheme that has the high speed rail
mainline routeing through the airport. The scope for air-rail
substitution, economic benefits and carbon reductions will be
reduced. The proposed scheme could still be beneficial for airlines
in terms of increased connectivity and access to UK and near-Europe
markets, however the business case for investment would be much
more challenging for airlines.
Section 1: What are the main arguments either
for or against HSR?
10. British Airways supports the strategic case
for development of a HSR network in the UK that is directly connected
to Heathrow, the UK's only hub airport. Key arguments for such
an integrated transport system include:
— Improved
connectivity across the UK and onward to international destinations.
— Economic
benefits from increased connectivity and productivity.
— Potential
for air-rail substitution—dependent on infrastructure, HS2
fares and codeshares (joint airline-rail marketing of services).
— Reduced
carbon emissions.
11. British Airways intends to respond to the
Government's consultation on development of the proposed network
to discuss the scheme detail and business case for HSR from an
aviation perspective.
Section 2: How does HSR fit with the Government's
transport policy objectives?
2.2 Rail funding
12. British Airways believes the funding of HSR
should not detract from investment on the "classic"
network. In particular, there are a number of current schemes
and proposals that could benefit Heathrow Airport, and it is important
these are not sacrificed because of funding constraints. These
include electrification of the Great West Mainline; a "Western
Connection" from Terminal 5 allowing South West Mainline
and Great West Mainline trains to connect directly to the airport;
and increases in track capacity between Heathrow and Paddington.
13. There are also significant benefits that
improved rail access in the London area (eg an "Airtrack"-type
scheme) and better connectivity to South Wales, the South and
South West England would deliver as well.
2.3 What are the implications for domestic
aviation?
14. British Airways has provided detailed responses
on the impact for domestic aviation in previous submissions to
consultations by High Speed Two Ltd, the Department for Transport
and the Mawhinney Review. These are available for the Committee
on request.
15. In summary, we believe HSR will impact on
air passengers travelling point-to-point between destinations
served directly by the new rail network, for example between London
and Newcastle, and Glasgow and Birmingham. Other regional point-point
routes such as Southampton to Edinburgh or Exeter to Newcastle
would be relatively unaffected.
16. The restriction of the HSR stations to Central
London and the major cities of the UK regions will deter passengers
travelling outside of these centres. Indeed, many point-to-point
air travellers are not travelling between city centres—the
catchment area for domestic passengers using Gatwick Airport is
Kent, Sussex, East Surrey and South London. The HSR termini in
London are not easily accessed from this area, and domestic air
links from Gatwick may continue to operate.
17. It is worth noting that an HS2 station at
Heathrow would provide a significantly more accessible alternative
for travellers from the South West, South Wales and Southern England.
18. An assumption has been made that HS2 fares
will be comparable with regular long-distance rail fares. Even
if they are, air travel will remain a strongly competitive option
for point-to-point passengers, as it is today. For international
connecting passengers, the current rail fare offering is uncompetitive
and this is unlikely to change.
19. Domestic flights to Heathrow Airport provide
invaluable connectivity for the regions of the UK to the global
marketplace, and vice versa. If HS2 is to replace all domestic
flights then the network will need to serve the needs of air transfer
passengers as well as point-to-point passengers. At Heathrow,
an HS2 station at or near the airport is vital. Additionally,
if airlines are to codeshare with the high speed rail operator
as has been suggested, they will need assurance on the ability
of HSR to provide the interline customer experience currently
offered.
20. If these two elements are not in place as
part of the HS2 offering, British Airways believes that domestic
air links to London will continue, as well as cross-country routes.
21. HS2 will need to be competitive with both
domestic flights and flights from UK regional airports to overseas
hub airports as well. As happens today, if a UK air passenger
cannot fly to Heathrow, they will fly overseas to make their international
connection. HSR must offer a competitive transfer product if it
is to capture this market too.
22. In Phase 1 of the proposed scheme (London-Birmingham)
there will not be any direct air-rail substitution impact as there
are no flights between these cities. However, there will be opportunities
for air passengers who today fly from Birmingham to transfer at
overseas hub airports to use HS2 to travel to Heathrow instead
and then fly directly to their destination.
23. In Phase 2 (London & Heathrow-Manchester
& Leeds) there is the potential for air-rail substitution
between the North of England and London, for instance Manchester—Heathrow
flights. The potential for passengers who currently fly from regional
airports to transfer at overseas hub airports to switch to Heathrow
for connections will also be significantly increased as they gain
direct rail access to the UK's hub airport. However, as before,
this depends on there being an HS2 station at Heathrow providing
a competitive product and codeshare arrangements between airlines
and the high speed rail operator.
24. In the longer term (London & Heathrow-Glasgow
& Edinburgh), the scope for air-rail substitution is increased
but is again dependent on a Heathrow HS2 station and codeshare
arrangements. In particular, for stations located further from
London the frequency, journey times, scheduled timings and customer
offering of high speed trains will be critical. To compete effectively
for domestic air passengers, HSR would need to offer journey times
of around three hours and have early and late departures to allow
for return day-trips, an important consideration for the business
traveller.
25. Importantly, if there is a link between HS2
and HS1 that allows for through-running rail services from the
UK to Europe then Heathrow must be part of the high speed mainline
instead of located on a spur.
26. The proposed spur will only allow Heathrow
to effectively serve HS2 passengers travelling from north of the
airport. The spur will not allow it to serve passengers travelling
to the UK on HS1, as they would need to interchange in London
to reach the airport, making the journey unattractive. This would
not be equivalent to access enjoyed by competing EU airports such
as Paris-Charles De Gaulle, which would effectively gain access
to the UK domestic air market under the current proposed scheme.
A spur alignment to Heathrow would not support equal access to
UK and European air passenger markets for Heathrow and other European
hubs.
Section 3: Business case
3.1 How robust are the assumptions and methodology—for
example, on passenger forecasts, modal shifts, fare levels, scheme
costs, economic assumptions (eg about the value of time) and the
impact of lost revenue on the "classic" network?
27. British Airways provided analysis to the
Mawhinney Review included analysis of High Speed Two Limited's
forecasts for an HS2 station at Heathrow. We believe the forecasts
underplayed potential demand. British Airways estimated that c
7,000 passengers per day would use a HS2 station at a 2-runway
Heathrow by 2030.
28. The success of HS2 in securing air-rail substitution
will depend on:
— Competitive
passenger interchange located at or near Heathrow Airport.
— Airlines,
in particular British Airways as the UK's largest network airline,
entering into viable code share arrangements with the high speed
rail operator.
29. One of the key areas for concern is the fare
levels for high speed rail services. As mentioned previously,
High Speed Two Ltd has assumed that fares will be at a comparable
level with regular rail long-distance fares. Whilst fares may
be competitive with airline fares for point-to-point trips they
are likely to be more expensive than airline fares for transfer
passengers on UK domestic flights. Far-reaching commercial codeshare
agreements to attract transfer passengers from the regions to
Heathrow would be needed before airlines would remove domestic
flights and then market and price HSR as a viable alternative.
Without these agreements, British Airways is likely to maintain
some domestic flights because of the important contribution domestic
transfer passengers make to its network.
30. Simply building a rail network to meet forecast
demand is no guarantee of achieving modal shift.
3.3 What would be the pros and cons of alternative
means of managing demand for rail travel, for example by price?
31. From a pure air-rail perspective, there should
be no requirement for additional demand management measures to
promote high speed rail. The focus should be on ensuring that
the estimated £40 billion investment in HSR delivers
a competitive product for all passengers, allowing HSR to compete
on a level playing field with aviation. There should not be any
need for additional subsidy for HSR over and above rail industry
norms or increased taxation on UK aviation with the aim of suppressing
and then switching demand from air to rail. The quality of HSR
rail infrastructure, particularly integration between air and
rail at Heathrow, should determine the demand for high speed rail
services. Further market interference in HS2 may begin to look
like a solution in search of a problem.
3.4 What lessons should the Government learn
from other major transport projects to ensure that any new high
speed lines are built on time and to budget?
32. Terminal 5 and the Heathrow Expansion/Runway
3 projects offer important lessons for HS2. It is important that
HS2 enjoys long-term planning stability supported by robust policy
framework to ensure efficient, timely and successful delivery.
Establishing strong cross-party support for the project is crucial
to avoid politicisation of the proposed scheme. In the context
of taking a hybrid bill through Parliament, this will be essential
to maintain the required policy framework and planning stability.
An objective and thorough evidence base to support the economic,
social and environmental costs and benefits of the scheme is absolutely
necessary to ensure investment is appropriately targeted. Alternative
funding mechanisms such as EU TEN-T should also be pursued.
Section 4: The strategic route
4.1 The proposed route to the West Midlands
has stations at Euston, Old Oak Common, Birmingham International
and Birmingham Curzon Street. Are these the best possible locations?
What criteria should be used to assess the case for more (or fewer)
intermediate stations?
33. The choice of Euston as the London terminus
for HS2 drives the requirement for Old Oak Common—which
is needed for passenger dispersal onto the wider London transport
network as Euston cannot handle full capacity HS2 trains.
34. In Phase 1 of the proposed HS2 scheme Old
Oak Common will be the interchange for Heathrow. Heathrow Express
and Crossrail are assumed to provide the onward connection to
the airport. It is uncertain that Heathrow Express will operate
in its current form when Phase 1 is complete—Network Rail
has indicated a desire to move the service onto slower train paths
to allow for increased capacity into Paddington for intercity
services. Crossrail will be operational but it will provide a
slower, stopping service into Heathrow. Whilst these services
will provide good connectivity for passengers in the London area,
they are unlikely to provide an attractive option for air passengers
travelling from Birmingham and beyond to Heathrow.
35. British Airways is concerned that no full
or proper assessment has been made of the benefits of using Heathrow
as a "parkway" station for the wider South of England
region. High Speed Two Ltd cites the significant benefits of Birmingham
International station serving a far greater catchment area and
being more accessible to the wider Midlands area than Birmingham
Curzon Street terminus in the city centre. However, in the South
of England, which has the largest market for high speed rail,
both Old Oak Common and Euston stations are located deep in Central
London.
36. Heathrow is far better-placed than any other
London station to serve passengers outside of London as a "parkway"
station. The size of its potential catchment market should be
properly considered to fully assess the benefits of locating an
HS2 station at the airport. A mainline Heathrow station would
also make HSR more accessible to the South of England with increased
frequency and better connectivity to the UK and Europe.
37. We believe that in terms of Heathrow's catchment
area, the more connectivity that HSR can provide and the greater
the level of access that UK cities and regions can get to the
airport the better. The challenge for HS2 is to balance the number
of stops on the network (maximum passenger catchment and range
of destinations) with the speed of the service.
38. There is no benefit from linking airports
via high speed rail (eg Heathrow and Birmingham) to create a so-called
"virtual hub airport". This proposition will not deliver
competitive minimum connection times or the necessary customer
experience for transfer passengers. Without a competitive transfer
proposition, passengers will choose to connect at other competing
aviation hubs. Only passengers travelling from home to the airport
will benefit from high speed rail.
4.2 Which cities should be served by an eventual
high speed network? Is the proposed Y configuration the right
choice?
39. From a Heathrow perspective HS2 needs to
serve major UK cities that have air links to Heathrow and other
overseas hub airports.
40. This will help to achieve the Government's
stated aim of air-rail substitution. HS2 must also make Heathrow
more accessible and attractive for air passengers throughout the
UK. If there is a sub-optimal link between HS2 and Heathrow, then
air passengers in the UK regions will simply fly to foreign hub
airports, as at present—thus bypassing HS2 and contributing
to UK carbon leakage.
41. It is important that cities and regions not
directly located on the eventual HSR network are connected to
Heathrow too. This includes South and South West England and South
Wales, which could be better connected through integrating "classic"
rail routes with the airport, as well as cities in Europe that
could be connected to London and Heathrow through the linkage
of HS1 and HS2.
4.3 Is the Government correct to build the
network in stages, moving from London northwards?
42. It is likely that staged development is the
best way of delivering the proposed HSR network. A connection
to Heathrow in Phase 1 would enable the benefits of integration
between the airport and HS2 to be realised sooner. Deployment
of dual-use rolling stock that can run on both high speed and
"classic" rail lines would allow Heathrow to be connected
to more UK cities than those directly served by HSR and effectively
enable connections to the UK's hub airport at an earlier date
than HS2 itself could deliver.
4.4 The Government proposes a link to HS1
as part of Phase 1 but a direct link to Heathrow only as part
of Phase 2. Are those the right decisions?
43. No. British Airways believes both connections
should be undertaken in the same phase. A link from HS2 to HS1
should not be progressed before Heathrow is directly linked to
the HS2 network and is able to connect to HS1 services. Connecting
HS1 to HS2 will enable through-running rail services between the
UK regions and continental Europe. This will give major European
airports direct access to UK air passengers, without a reciprocal
benefit for Heathrow. The airport must be able to compete for
air passengers in the UK and in Europe too, which requires equivalent
access to both HS2 and HS1 services.
44. Heathrow and UK airlines will be at a disadvantage
if a link to HS1 was developed before Heathrow was served by HS2
and if the airport does not have equivalent access to air passengers
in Europe via HS1 that other airports such as Paris and Amsterdam
would enjoy.
45. Early construction of links to both Heathrow
and HS1 would deliver Government objectives sooner and should
be timed together to ensure parity of access for UK and European
airports.
Section 5: Economic rebalancing and equity
5.4 How should the Government ensure that
all major beneficiaries of HSR (including local authorities and
business interests) make an appropriate financial contribution
and bear risks appropriately? Should the Government seek support
from the EU's TEN-T programme?
46. Funding for public transport projects is
predominantly based on "the beneficiary pays" principle.
As far as Heathrow airport and its airline users are concerned,
the commercial case for contributing to development of HSR is
extremely challenging. Over the likely HSR construction period,
airlines will continue to fund a significant capital expenditure
programme at Heathrow designed to renew and develop the UK's hub
airport. In this context the airline community will not be able
to support funding for HSR as their primary focus and responsibility
is to the airport itself.
47. British Airways suggests the Government should
seek support from the EU TEN-T programme as HSR has the potential
to provide integrated and transformative transport infrastructure.
Section 6: Impact
6.1 What will be the overall impact of HSR
on UK carbon emissions? How much modal shift from aviation and
roads would be needed for HSR to reduce carbon?
48. We do not have research of our own to reference,
but refer to BAA's second submission to the Mawhinney Review.
This details its analysis of UK carbon impacts of HSR development.
From this analysis, it is clear the potential to reduce carbon
increases if:
— HSR
serves Heathrow directly and an excellent passenger interchange
facility supports commercial "codeshare" arrangements
between airlines and rail operators.
— The
HSR network is fully developed and balances serving the maximum
passenger catchment with speed of service.
— The
UK power grid supplying HSR decarbonises.
49. BAA's analysis indicates that if HS2 directly
serves Heathrow then between 226-262kt per year could be saved.
These significant reductions require the above conditions to be
met and demonstrate the value of running HS2 to the airport as
soon as possible.
6.4 How much disruption will there be to services
on the "classic" network during construction, particularly
during the rebuilding of Euston?
50. British Airways believes that disruption
to Heathrow Express and Crossrail services should be minimised
as much as possible during construction of HS2. Proposals for
connectivity in Phase 1 from Old Oak Common to the airport rely
on both Heathrow Express and Crossrail services. It is important
that fast and effective connections to the airport are maintained
throughout construction and this will require co-ordination between
Network Rail, franchise operators and HS2 contractors.
51. In a wider context, it is essential that
disruption be kept to a minimum to ensure the smooth and efficient
running of London as a world class city. London is a key driver
of the UK economy and the impacts of disruption will be keenly
felt beyond its border. Euston also provides the major rail link
to the north west of England and west of Scotland and it is vital
that these links can continue uninterrupted as far as possible.
May 2011
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