Select Committee on European Communities Minutes of Evidence

Examination of Witness (Questions 420 - 439)



  420.  That is very interesting. We have had a number of witnesses—from Brussels, from the Government, from the airlines and now from yourselves—and everybody is very coy on this subject. Would it be correct, in your opinion, that in the most recent KLM annual report there is a credit item of some $3 million, which we understand was for the giving up of slots by Air UK to Guernsey? That seems to imply that they are worth money.

  A.  My Lord Chairman, I think it is fair to say that, like any scarce resource, they have value. I have some difficulty with this questioning at the moment, because you may be aware that the States of Guernsey Transport Board has actually taken out a legal action in the High Court against ACL, alleging that ACL is in breach of EC Slot Allocation Regulations because we allowed the transfer of Air UK's Heathrow slots to Guernsey to British Airways (BA). That matter, I am sure, will come to the High Court probably in September.

Chairman]  Very well, I fully appreciate that that is sub judice. Equally, I should make it clear that although I am sure we will have questions alluding to it, it is not part of our enquiry to look into the details of the BA/American Airlines (AA) proposals. I am sure there will be questions, because we would like to know—and I am not asking the question right now—what is going to happen to the 267 slots, how are they going to be allocated, etcetera. I am sure some of my colleagues will charge into that one. Lord Skelmersdale.

Lord Skelmersdale

  421.  Thank you, my Lord Chairman. Mr Morrisroe, you made the point that the airport operator is the baker of your cake, and that ACL is the caterer—in other words, it slices it up. Given that the baker has ingredients and the ingredients consist of the British Airports Authority (BAA), the Civil Aviation Authority (CAA) and the Department of Environment, Transport and the Regions (DETR), in the sense of planning—for example, moving the sewage works at Heathrow or whatever—is it not rather odd that none of these ingredients is part of your organisation?

  A.  My Lord, the structure of ACL was developed in 1992 from a previous arrangement in which British Airways was responsible for the allocation of slots in the United Kingdom. That was quite a normal pedigree for this kind of work, and in many parts of the world slot allocation is still undertaken by the national carrier. Europe has generally moved forward on that, and there are increasing numbers of independent agencies like ACL. When ACL was formed, there was a full consultation process with the Government, the Commission, the airports, the capacity providers, and NATS, as to what the appropriate arrangements would be for the management of this task in future, whilst needing, if you like, to draw on and to keep the expertise which existed in the United Kingdom in this subject, which at that time was centred in British Airways. We have developed this—to the outside view perhaps—rather odd structure of a company which is owned by airlines and partly funded by airlines.

  422.  For the benefit of airlines?

  A.  For the benefit of all airlines, not particularly the United Kingdom airlines; they receive no different treatment by ACL from any airline. However, we are also under contract to the airport operators. Effectively, control is exercised over us by the airport operators—the bakers—through these contracts, and these contracts oblige us quite strictly to make sure that whatever we do is in absolute conformity with industry guidelines, Slot Allocation Regulations and so on and so forth, so we have no alternative but to follow the rules.

  423.  Then can I take you slightly sideways. When the 15-year agreement at Gatwick against a second runway comes to an end and DETR, CAA and the rest of them agree that yes, it is about time to have a second runway, there will be vast numbers of new slots, will there not?

  A.  Yes.

  424.  So in my analogy, is that a new cake?

  A.  That is a larger cake.

  425.  It is a larger cake, but it is not a new cake?

  A.  It is a larger cake. If I may, twice a year there is a process of assessing the capacity of the airports, making a judgment about whether the cake can be made any larger, even within the current infrastructure. There has been a progressive increase in efficiency in the use of airports in the United Kingdom over the years, which has led to an incremental increase in capacity and a few more slots available each season to be shared out. The scenario which you describe is a step change, as indeed we shall see in a couple of years' time in Manchester when the second runway becomes available. There is a runway under construction at the moment.

Lord Haslam

  426.  Following up Lord Skelmersdale's point, you have these airline representatives who you say are part of management. How do you stop them influencing the decisions of the coordinators? Do you have Chinese walls? Are they allowed to speak to each other? What happens?

  A.  The airlines which own ACL each have one share in the company and each appoint one director. The board of directors meets quarterly. I am accountable to the board for the running of the company. In general terms, the issues which we are dealing with are the management of the business, the funds, the resources, the manpower, investment in new computer systems. The only scheduling issues which are even considered by the board are examples I cited a moment ago as to where a legal action is being taken by the company. Beyond that, those directors have no involvement in the decisions made by their appointed coordinators. I would describe it as slightly stronger than a Chinese wall. It is a taboo subject. They do not get involved in any of the decision-making process.

  427.  One of the major problems, nevertheless, is that the history was that BA owned this operation until 1991?

  A.  That is correct.

  428.  So there are an enormous amount of "grandfather rights" which really the new system does not seem radically to have changed. In other words, you seem to be dealing with the fringes rather than the heart of the problem. Putting it another way, suppose ACL has been set up, say, 20 years ago; do you think the pattern of slot allocation would be very different from what it is now?

  A.  I can only speculate. I will just say that the structure of ACL has served this country, I believe, quite well over the last few years. We are already in the process of debate as to whether or not as an organisation its relationship with the other organisations in the United Kingdom should be changed in the future. Indeed, we are holding a meeting on 30 July to discuss those very subjects. So it is an evolutionary step, I think, in the management of airport capacity in the United Kingdom.


  429.  Can I follow that up, if I may, so we can get a feel for the overall size. You mentioned the present Gatwick capacity at 48 slots per hour, is that right?

  A.  Yes.

  430.  Can you give us the statistics of how many slots you administer over your 12 airports?

  A.  It is about 1.4 million flights a year.

  431.  That is 1.4 million landings or take-offs?

  A.  Yes, that is right.

  432.  Movements, in other words?

  A.  Movements, that is correct.

  433.  Of those, how many are what I would describe as "grandfather righted"?

  A.  If I may say so, that is quite a difficult question to answer in the broad. Can I bring it back perhaps more locally to home, to Heathrow, if that is possible?

  434.  Yes. Before you do that, could you tell us how many slots there are per annum at Heathrow?

  A.  There are 440,000 flights a year at Heathrow, which is something like 95 per cent, I believe, of the available capacity. There are a few spare slots in the evening.

  435.  We want to come to that in a minute, but let us just go step by step. Of those 440,000, how many of those are "grandfather righted"?

  A.  I am calculating.

  436.  I thought I was trying to help you, because you said you wanted to go to Heathrow.

  A.  Thank you, my Lord. I would say at Heathrow, out of that 440,000 around 425,000 are operations by airlines and the balance are things like helicopter movements and ambulance flights, one off operations, we call them ad hocs, which do not have any rights associated with them. Of the 425,000 flights that are there, all those flights have historic rights. The definition of historic rights is if an airline has an operation approved by an ACL and operates that flight then they build up historic rights for that service.

Lord Skelmersdale

  437.  For that service?

  A.  For that particular service.

  438.  If they change the service those rights disappear, do they?

  A.  No, that is not the way the system works, my Lord. The slots are not route specific. A slot is an approval to operate an arrival or a departure at a particular time or on a particular day.

  439.  To anywhere in the world?

  A.  Anywhere in the world.

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