An air transport strategy for Northern Ireland€¦ · An air transport strategy for Northern Ireland 3 Summary For the people of Northern Ireland air travel is not a luxury, it is

HC 76

House of Commons

Northern Ireland Affairs Committee

An air transport strategy for Northern Ireland

First Report of Session 2012–13

HC 76 [Incorporating HC 1941-i, Session 2010-12]

Published on 30 November 2012 by authority of the House of Commons London: The Stationery Office Limited

£0.00

House of Commons


An air transport strategy for Northern Ireland

First Report of Session 2012–13

Report, together with formal minutes, oral and written evidence

Ordered by the House of Commons to be printed 22 November 2012


The Northern Ireland Affairs Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of the Northern Ireland Office (but excluding individual cases and advice given by the Crown Solicitor); and other matters within the responsibilities of the Secretary of State for Northern Ireland (but excluding the expenditure, administration and policy of the Office of the Director of Public Prosecutions, Northern Ireland and the drafting of legislation by the Office of the Legislative Counsel).

Current membership

Mr Laurence Robertson MP (Conservative, Tewkesbury) (Chair) Mr David Anderson MP (Labour, Blaydon) Mr Joe Benton MP (Labour, Bootle) Oliver Colvile MP (Conservative, Plymouth, Sutton and Devonport) Mr Stephen Hepburn MP (Labour, Jarrow) Lady Hermon MP (Independent, North Down) Kate Hoey MP (Labour, Vauxhall) Naomi Long MP (Alliance, Belfast East) Jack Lopresti MP (Conservative, Filton and Bradley Stoke) Dr Alasdair McDonnell MP (SDLP, Belfast South) Nigel Mills MP (Conservative, Amber Valley) Ian Paisley MP (DUP, North Antrim) Andrew Percy MP (Conservative, Brigg and Goole) David Simpson MP (DUP, Upper Bann) The following Member was also a member of the Committee during the inquiry. Kris Hopkins MP (Conservative, Keighley)

Powers

The committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No. 152. These are available on the Internet via www.parliament.uk.

Publication

The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the Internet at www.parliament.uk/niacom.

Current Committee staff

The current staff of the Committee are Mike Clark (Clerk), Duma Langton (Inquiry Manager), Edward Faulkner (Senior Committee Assistant), Ravi Abhayaratne (Committee Support Assistant) and Jessica Bridges-Palmer (Media Officer).

Contacts

All correspondence should be addressed to the Clerk of the Northern Ireland Affairs Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 2173; the Committee’s email address is [email protected].

An air transport strategy for Northern Ireland 1

Contents

Report Page

Summary 3

1 Introduction 5

2 Background 6

3 Connecting for growth 7

4 International Airlines Group’s takeover of bmi 10

5 Northern Ireland’s airports in the future 12

6 Transport links to Northern Ireland’s airports 14

7 Tax policy 16

8 The visa regime 17

9 The Civil Aviation Bill 19

Conclusions and recommendations 21

Annex 1 23 Public Service Obligations (PSOs) 23

Annex 2 24 The Irish Short-stay Visa Waiver Programme 24

Annex 3 25 The Schengen agreement 25

Formal Minutes 26

Witnesses 27

List of printed written evidence 28

List of Reports from the Committee during the current Parliament 29


Summary

For the people of Northern Ireland air travel is not a luxury, it is fundamental to family and economic life. To facilitate the rebalancing of the Northern Ireland economy, it is vital that the Region’s air links to Great Britain, mainland Europe and the rest of the world are robust. There are, however, several hurdles to overcome, which we have identified in this Report.

Air Passenger Duty—despite the Air Passenger Duty (APD) on direct long-haul flights being reduced to zero, this does not assist the 98.5 per cent of passengers who travel from NI airports on short haul flights. HM Treasury and the Northern Ireland Executive must explore ways to reduce or, preferably, abolish APD on all flights into NI from GB and on all direct flights from Northern Ireland to any destination.

Connectivity—air links to hub airports, particularly Heathrow, must be, at least, maintained at the current level, and further routes should be actively sought. The Northern Ireland Office and the Department for Transport must vigorously pursue their discussions with the European Commission regarding the ring fencing of slots at Heathrow for flights to and from Northern Ireland.

Airports Commission review—we welcome the review being carried out by the Airports Commission into options to maintain the UK’s status as an international hub for aviation. However, the Commission is not due to report until 2015 and delay as to the future airport configuration and capacity in the South East of England is causing concern among the business community in Northern Ireland. We urge the Government to expedite the review, and the consequential decision, as soon as possible given its importance to Northern Ireland’s international connectivity.

Internal access to Northern Ireland’s airports—road and rail links to all three of NI’s airports must be improved.

Visas—the UK and the Irish Governments should co-operate fully in order to introduce a joint, shared visit visa for the UK and the Republic of Ireland, as the current cost of two visas deters both business and leisure travellers from visiting both jurisdictions on a single visit.


1 Introduction 1. On 5 July 2011, the Northern Ireland Affairs Committee published its Second Report of Session 2010–12, Air Passenger Duty: implications for Northern Ireland.1 We had little doubt that Air Passenger Duty (APD) threatened the improvement of Northern Ireland’s economy and, in our Report, we called for the abolition of APD on all flights out of Northern Ireland airports and on flights from Great Britain into Northern Ireland. A major consideration at the time was the need to maintain the Continental Airlines (now United Airlines) transatlantic route from Northern Ireland to Newark in the United States of America, which was under threat; the airline was, in effect, subsidising its passengers by not passing on the cost of APD to them, but was absorbing the cost itself. The airline had indicated that it was no longer in a position to be able to do so.

2. HM Treasury was persuaded by the Committee’s arguments, and those of other campaigners, and in a Written Ministerial Statement made on 18 October 2011,2 agreed to cut the rate of APD on the Belfast to Newark route to the UK domestic flight rate of £12 (since increased to £13) per passenger, from £60 (now £65)3 per passenger, the standard rate of APD for flights to North America. In a further Statement, made on 21 February 2012,4 HM Treasury announced that the power to set APD rates for direct long-haul flights from NI would be devolved to the NI Assembly; this provision was included in the Finance Act 2012.

3. Welcome as these actions by HM Government were, the Committee remained concerned that APD was adversely affecting Northern Ireland’s economy and travellers. If people wish to travel from NI to GB, without spending many hours travelling, there is no realistic option other than to fly. We agreed, therefore, that we would revisit the issue as part of a wider inquiry into air transport in NI. On 23 March 2012, we announced an inquiry into An air transport strategy for Northern Ireland with the following terms of reference:

• the implications of current air links for Northern Ireland, specifically the economy and the effect on people’s social and family lives;

• regional and international connectivity;

• the lack of public transport links to, and between, Belfast International, Belfast City and City of Derry airports;

• the implications for Northern Ireland of the Civil Aviation Bill;

1 Second Report from the Northern Ireland Affairs Committee, Session 2010-12, Air Passenger Duty: implications for

Northern Ireland, HC (2010-12) 1227

2 Official Report, 18 October 2011, col. 57WS

3 From 1 April 2013 this rises to £67 per person.

4 Official Report, 21 February 2012, col. 71WS

6 An air transport strategy for Northern Ireland

• the implications of the proposed takeover of bmi by the International Airlines Group,5 and

• tax policy.

4. During the inquiry, the Committee took public evidence in Parliament Buildings, Stormont, from Belfast International Airport, George Best Belfast City Airport and City of Derry Airport and, at Westminster, from CBI Northern Ireland, ABTA, Unite, the Consumer Council for Northern Ireland, BALPA, the Department for Transport, the UK Border Agency, the Northern Ireland Executive Departments of Enterprise, Trade and Investment and for Regional Development, the International Airlines Group, Ryanair, easyJet, Belfast City Airport Watch, the Federation of Small Businesses and the Northern Ireland Independent Retail Trade Association. We also took the opportunity to raise the matter with the new Secretary of State, when the Rt Hon Theresa Villiers MP gave evidence on the Responsibilities of the Secretary of State for Northern Ireland. We are grateful to all those who gave oral evidence and to those submitting written evidence.

2 Background 5. Northern Ireland is served by three airports: Belfast International Airport, George Best Belfast City Airport and City of Derry Airport (CODA). Belfast International, situated at Aldergrove, about 20 miles from the centre of Belfast, is privately owned and provides a range of services to GB, including Luton, Stansted and Gatwick (with easyJet). It also serves popular holiday destinations as well as Paris, Amsterdam and Newark—the only regular service from NI beyond Europe—and handles all of Northern Ireland’s air freight. Belfast International is the second busiest airport on the island of Ireland, with some 4 million passengers in 2011, though this was a long way behind the busiest, Dublin Airport in the Republic of Ireland, which had almost 19 million passengers in the same year. Some 80 per cent of the services at Belfast International Airport are provided by easyJet.

6. Belfast City Airport, in Sydenham, roughly 3–4 miles from the centre of Belfast, is also privately owned and serves many GB destinations (including Heathrow with British Airways and Gatwick with Flybe) and, indirectly, Paris. In October 2012, Aer Lingus transferred its Heathrow service from Belfast International to Belfast City and added a new service to Gatwick. In 2011, Belfast City Airport had 2.4 million passengers; Flybe provides about 75 per cent of services.

7. CODA, in Eglinton, 7 miles from Londonderry, is owned by Derry City Council and serves a largely separate local market (including passengers from Donegal), relying on services to London Stansted, Liverpool, Glasgow Prestwick and Birmingham, and summer services to popular holiday destinations in Spain, Portugal and Tenerife. Currently, there are no services to Dublin, although until fairly recently there was an Aer Arann service subsidised by the Irish Government. In April 2011 the incoming Fine Gael/Labour

5 ie, British Airways and Iberia.


Government confirmed that it would not reverse its predecessor’s decision to axe the Public Service Obligation6 subsidy for flights from CODA to Dublin.

8. There is no direct motorway or rail link between CODA and the two Belfast airports, though a private company does provide a coach service linking the Belfast airports and the city of Londonderry. The airport had some 400,000 passengers in 2011. Almost all the flights to and from CODA are operated by Ryanair.

3 Connecting for growth 9. In September 2011, Heathrow Airport published a report by Frontier Economics, Connecting for Growth,7 identifying the importance and value of a hub airport to the UK. It argued that Heathrow was a successful hub airport but, because it was full, new routes could not be established without squeezing out existing services. This restricts economic growth. Other UK airports could not fill this gap because they did not serve the substantial hub and spoke networks that were needed to make new direct long haul services viable. Due to Northern Ireland’s particular dependence on air links to GB, a lack of available routes to Heathrow would have a uniquely negative impact.

10. A News Release issued by the NI Chamber of Commerce and BAA on 14 February 2012, pointed out that:

• One in ten jobs in Northern Ireland depends on foreign investment, and half of those companies can only reach their home market through a hub airport;

• Aviation supports £1bn of exports from Northern Ireland;

• Foreign tourists spend £195m a year in Northern Ireland and account for 360,000 visits, 150,000 of whom arrive by air, and

• Northern Ireland benefits directly from having a global hub in Britain, with Heathrow directly supporting 1,000 tourism jobs and 900 airport jobs in Northern Ireland.8

11. In an open letter to the Prime Minister, published in The Sunday Telegraph on 4 March 2012,9 some 70 business leaders, representatives of chambers of commerce (including the NI Chamber of Commerce) and others (including Belfast International Airport, Aer Lingus, Jim Shannon MP and Mike Nesbitt MLA) spoke of the need to support Heathrow, promote competition and find a solution to the UK’s need for increased capacity. The submission from ABTA stated that:

6 See Annex 1.

7 http://www.frontier-economics.com/_library/publications/Connecting%20for%20growth.pdf

8 http://northernirelandchamber.com/Content.aspx?nSectionId=1&nSubSectionId=10&nContentId=1387

9 http://www.telegraph.co.uk/finance/newsbysector/transport/9121332/Cameron-urged-to-back-Heathrow-expansion.html


ABTA Members in the UK’s regions often cite capacity constraints in the South East as one of their most important concerns. The policy of the Government to ban expansion in the South East removes the ability of the regional economies to develop air links with London and through airports in London to other destinations worldwide. These policies will begin to suppress demand, risking the future of international and regional airport routes and the economic benefits that they bring, while making the UK an unattractive destination for incoming tourism and international development.10

12. We were told by Nigel Smyth, the Director of CBI NI:

Air transport and air connectivity are crucial, and indeed vital, to the future success of the Northern Ireland economy. They will become more important as we seek to rebalance the economy and, indeed, achieve the goals set out in the recent programme for government and the economic strategy in Northern Ireland. We need to increase our exports significantly, including developing and emerging growth markets. We need to double our tourism revenues by 2020, coming from a relatively low base, and we need to attract significantly more foreign direct investment. Air access and air connectivity are clearly key elements in each of these strategic areas. Regional air services and links to the UK’s hub airport, Heathrow, are absolutely fundamental requirements. We do not have other options or alternatives in Northern Ireland. We cannot drive; we cannot get on a train. We have a very high reliance on air transport.11

13. John Rooney, Regional Liaison Officer for the Federation of Small Business made the point that:

Invest NI at this moment in time are trying to push us to go further afield, which all businesses in Northern Ireland are doing. My son has come home from Hong Kong with Invest NI and a group of people who they flew out there. There is no direct link; you cannot fly direct. We have one direct flight to the USA. It is crazy that Northern Ireland has only one direct flight out there. I think Dublin has 10 flights a day out there—to New York JFK or somewhere like that [...] We are looking for people to come into the country to invest. Again, they either have to go to Dublin or London and take a link over to Belfast. They are going to try and take the quickest link they can get, which is into Dublin. We have to have more streamlined flights to suit. Even flying home from the UK, we only have maybe one flight a day coming here, so you cannot get home if you are at a meeting.12

14. It is clear that there is widespread support in Northern Ireland for an expansion of capacity in the South East of England to improve connectivity between NI and the London hub and, from there, to the furthest parts of the world. There has been much debate how best to achieve this, whether it should be by a third runway at Heathrow, exploiting the existing spare capacity, or building a second runway, at Gatwick, the building of a Thames

10 Ev 131

11 Q82

12 Q611


Estuary airport, or the expansion of the airports at, for example, Stansted, Luton or Manston. HM Government is well aware of the need for such an expansion, and in a Written Ministerial Statement at the beginning of September 2012, the Secretary of State for Transport announced that:

The Government believe that maintaining the UK’s status as a leading global aviation hub is fundamental to our long-term international competitiveness [...]

The Government have asked Sir Howard Davies to chair an independent commission tasked with identifying and recommending to Government options for maintaining this country’s status as an international hub for aviation.

The commission will:

examine the scale and timing of any requirement for additional capacity to maintain the UK’s position as Europe’s most important aviation hub; and

identify and evaluate how any need for additional capacity should be met in the short, medium and long term [...]

The commission will then publish by the summer of 2015 a final report, for consideration by the Government and Opposition parties, containing its assessment of the options for meeting the UK’s international connectivity needs, including their economic, social and environmental impact.13

15. When Theresa Villiers, the new Secretary of State for Northern Ireland, appeared before us in October 2012, she said that:

The coalition makes it very clear that we are opposed to a third runway at Heathrow. I am supportive of that position.14

16. It is undeniable that improved air connectivity is absolutely vital for the strengthening of private sector business in NI and economic rebalancing. It is equally evident that expansion at London airports is crucial for the UK to maintain its position as a leading global hub and is particularly important for Northern Ireland. A decision on the future of airport capacity and configuration in London and the South East of England will have a significant impact upon the Northern Ireland economy. We recommend that the Airports Commission review, and the consequential Government decision, be expedited. In the meantime, airports such as Dublin, Schipol and Frankfurt stand ready to fill the vacuum created by delay and confusion over the expansion of London’s capacity. We also wish to put on record that we fully support the NI Executive in its efforts to encourage new air routes to and from Northern Ireland.

13 Official Report, 7 September 2012, col. 40WS

14 HC (2012-13) 616-i, Q52


4 International Airlines Group’s takeover of bmi 17. Concern was expressed by witnesses about the possible implications of the takeover of bmi by IAG, notably the threat to flights to Heathrow, and criticism was expressed about the manner in which the bmi staff in Belfast were treated, concerns which we share.

18. With respect to the question of whether British Airways (BA) would decide to end the service from Belfast City Airport in order to use Heathrow slots for more lucrative routes, David McMurray, Unite’s Regional Industrial Officer for Belfast stated that:

If we only have a secured flight by British Airways into Belfast City until, using Mr Walsh’s own statement, 2014, I do not think that is a future. I do not think it is a future to build on. There is no business that I know and no business I would go in and negotiate with that does not operate on a five or 10 year plan. What Willie Walsh is trying to sell to the people of Northern Ireland is a two year plan for flights into Belfast. I do not think that is a sound economic basis for a country.15

19. Antoinette McKeown, Chief Executive of the Consumer Council for NI said that the Consumer Council:

[...] is not confident about the security of the current slots. We wrote to Willie Walsh in December when the acquisition was made, and we wrote again in March. We have still to receive a response to either of those letters. We have written to the European Commission; and I have in front of me a letter to the Secretary of State [for Northern Ireland, Rt Hon Owen Paterson MP] and response. What we are receiving is confirmation that the routes will continue, but we do not know about the frequency of them or the capacity numbers. It is vital, given that Heathrow is a vital hub airport for Northern Ireland, that we secure confirmation as soon as possible.16

20. Willie Walsh, IAG’s Chief Executive, however, made a commitment that:

We are absolutely committed to Belfast. The move from Belfast International to City by Aer Lingus was anticipated by us. It was expected by the market. I can assure you that will not in any way impact on our decisions to return to Belfast. We are absolutely committed to it. We believe that this is a destination that can be a profitable part of the British Airways global network.17

21. He also raised two important considerations, the first around the number of slots into Heathrow, obtained by the acquisition of bmi, that BA use for domestic flights:

What we have publicly stated is that our intention would be to use probably a maximum of 30% of those slots for long-haul flying. What you have to understand here is that if we were to use 30% of those slots for long-haul aircraft flying, it would

15 Q195

16 Q221

17 Q447


require us to buy new long-haul aircraft. Each of those slots that we would use would require a new long-haul aircraft. These are very expensive, there is a long lead time, and it is not just a simple issue of saying, “We are going to take those 42 slots and now fly them with long-haul aircraft”. Those 42 slots, if we were to fly all of them with long-haul aircraft, would require 42 new long-haul aircraft.18

22. Secondly, he said it was in IAG’s interests to have domestic passengers flying into Heathrow to fill the flights taking off on long-haul flights:

the critical issue here is the only way we can provide that extensive long-haul network is if we are feeding traffic into our hub. This is where I have always argued that the interests of British Airways and the interests of Northern Ireland are perfectly aligned, because we want to take customers from Northern Ireland over Heathrow into our international network. That is what will make, or help to make, our international long-haul flying profitable. Your interests and our interests are perfectly aligned.19

23. In light of the remarks of Willie Walsh, we were reassured of IAG’s commitment. However, it should be remembered that IAG is a commercial operation. In the future, in light of possible changed economic circumstances, it may no longer feel that the Belfast City to Heathrow route is viable. This would have a detrimental impact upon Northern Ireland’s connections to the UK’s main hub airports and onward destinations. The same is true for other carriers and routes serving Northern Ireland airports. It is essential that the Heathrow route is maintained. We were, therefore, encouraged that the Secretary of State for Northern Ireland and the current Secretary of State for Transport had raised the matter of ring-fencing the slots at Heathrow with the European Commission. Theresa Villiers, in her new role as the Secretary of State for Northern Ireland advised us that:

I can understand why there is anxiety about what might happen in the longer-term future. It is something I raised with Commissioner Kallas, both by letter and directly. It was raised in working groups by Department for Transport officials. I know it is something that has been discussed in the European Parliament. My understanding is that, to date, it has not received a particularly friendly reception. We were seeking to explore with the Commission whether they could introduce a rule in the airports package that they are debating at the moment—the possibility of ring-fencing slots for regional destinations where an airport was particularly crowded.20

24. The Secretary of State for Northern Ireland was also confident of IAG’s intentions:

[...] I am very confident about the future of the Belfast to Heathrow flights. As the Committee will know, BA expressed great confidence and optimism about the viability of those flights. It seems to me that they are very full, and my understanding is that they feed in very well to BA’s long-haul network. BA has every commercial incentive to carry on running them. There are about 18,000 flights between the two airports in Belfast and the London airports. People should have confidence and feel

18 Q459

19 Ibid.

20 HC (2012-13), HC 616-i, Q51


reassured about that connectivity, which is clearly vital, given that the onward connections from London’s five airports are such an asset for those coming in from Belfast.21

25. We urge the Northern Ireland Office and the Department for Transport to vigorously pursue their discussions with the European Commission regarding the ring fencing of slots for regional destinations, and provide this Committee with regular updates on those discussions.

5 Northern Ireland’s airports in the future 26. The Committee has also considered whether Belfast actually needs two airports. It is undoubtedly true that both airports have points in their favour; it is equally true that both have their drawbacks. Belfast International is situated away from the main residential areas and its runway can accommodate long-haul flights. It is, however, situated some distance from the centre of Belfast (roughly the same distance as both Heathrow and Gatwick are from the centre of London) and passengers have to rely on cars, taxis or buses to get to it, there being no rail link.

27. In contrast, Belfast City Airport is a short taxi or bus ride from the centre of Belfast and is ideally placed for, in particular, business travellers. However, its runway is too short to accommodate larger aircraft, and it is also in a highly built up area. In its written submission Belfast City Airport Watch (BCAW) drew the Committee’s attention to the problems experienced by residents:

Belfast City Airport is situated right by a major residential area in east Belfast. As the prevailing winds are westerly and pilots prefer to fly into the prevailing wind, most flights take off and land over a huge swathe of east and south Belfast. The airport is one of just three to be designated by the European Union as a ‘city’ airport because of its proximity to a large urban area with a dense population where:

[…] a significant number of people are objectively affected by aircraft noise and where any incremental increase in aircraft movements represents a particularly high annoyance in the light of the extreme noise situation.

We estimate that nearly 38,000 people in the Belfast City Council area alone live under or close to the flight paths which traverse Belfast [...]

The noise problem was recently so severe that consultants’ reports commissioned by the airport show that, in 2010, 11,422 people suffered from a level of aircraft noise deemed by the UK government to cause “significant community annoyance” – more than treble the number in 2007, when it stood at 3,522 (measured as 57 LAeq or over, averaged over 16 hours).22

21 Ibid.

22 Ev 125; see also Q577.


28. However, one particular local resident disputed BCAW’s assertions. Glyn Roberts, Chief Executive of the Northern Ireland Independent Retail Trade Association, expressed his personal view:

I am a resident of Sydenham, a long-term resident, and I live right beside the airport. I listened to the previous speakers [BCAW] and wondered if they are talking about the same part of East Belfast that I come from. I do not recognise much of what they say. I live in that community [...] I do not hear any of these complaints from anybody in the local community.23

29. There would seem to be widely divergent opinions about the effect that Belfast City has on local residents. We welcome the continuing dialogue between the airport and local residents, and recognise that a balance must be struck between business development and the impact on local residents. The new generation of quieter, greener, aircraft might offer the solution.

30. It is fair to assume that, were we starting from scratch, the optimum solution would be one, single airport situated in a non-residential area on the outskirts of Belfast. However, that is not a viable option and therefore we have to make the best of what exists already. Both Belfast airports are privately owned so both will make any decisions for, ultimately, commercial reasons.

31. Both Belfast airports are very successful private enterprises which have increased passenger numbers, and employ many people without a public subsidy. They have a valuable role to play, and we wish them both continued success.

32. One matter which is of concern to us is that all three of NI’s airports are heavily dependent on three airlines: Belfast International on easyJet, Belfast City on Flybe and CODA on Ryanair. As Theresa Villiers confirmed, when she appeared before us in her former role as Aviation Minister: “the proportion of traffic by a single airline at Northern Ireland’s three airports is [...] above average”.24 The Committee is confident that the three airports are assiduous in trying to attract new routes and airlines, so we wish them well in their efforts—for example, Belfast International’s attempts to establish additional routes to, for example Canada and the Middle East.

33. In 2013, Londonderry will be the UK’s first City of Culture, but we are conscious that the road, rail and air connections to the City of Derry Airport could be significantly improved. CODA has in the region of 400,000 passengers a year. Londonderry is only 3 miles from the border with Co Donegal, in the Republic of Ireland. Donegal has its own airport, serving about 47,000 passengers a year, and operates two services, to Glasgow and to Dublin (the latter being supported, until 2014, by the Irish Government under a Public Service Obligation subsidy). Both airports are about 40–45 minutes away from Letterkenny, the main population centre of Co Donegal.

34. While we recognise all these airports are in competition with each other, opportunities for co-operation should be encouraged where they arise. As relationships

23 Q613

24 Q316


between the UK and the Republic of Ireland have never been better, the time might, therefore, be right to consider co-operation between the two jurisdictions on airports.

6 Transport links to Northern Ireland’s airports 35. Responsibility for public transport links to and between NI airports is devolved to the NI Executive. In its submission the Consumer Council for NI stated that its own research indicated that the number of Northern Ireland passengers travelling to airports by public transport was low, with most passengers (some 80 per cent of them) preferring to travel by car. The research identified a number of reasons for this:

• passengers from Newry and Enniskillen felt it was easier to access Dublin Airport by bus than either of the Belfast airports;

• Translink services required passengers from areas outside Belfast to travel into Belfast and then take a separate bus to either Belfast City Airport or Belfast International Airport, significantly increasing journey times and distance travelled;

• the frequency of public transport to City of Derry Airport was low. A greater frequency of services, more closely aligned to flight times, would increase the number of passengers travelling by public transport to the airport; and

• passengers believed the rail service to Belfast City Airport required improvement and would welcome the introduction of a rail link to Belfast International.25

36. Travel by road to Dublin is increasingly popular now that the road system has been greatly improved. However, services from Dublin Airport are limited to Europe, some destinations in the Middle East and mid/eastern USA. Otherwise a flight to Heathrow, Gatwick, Manchester, Birmingham or Glasgow is necessary. Save for the Dublin option, this is what distinguishes Northern Ireland from other UK regions without direct international flights: for example, travellers from Wales may not have a much greater choice of international destinations than in NI, but they could fairly easily travel by road or rail to Manchester, Birmingham or even the London airports. Likewise, passengers from North East England could travel to Manchester or Glasgow airports.

37. As a result of this, and the limited number of through carriers operating from Northern Ireland’s airports, passengers from Northern Ireland are more likely to have to pay a double rate of Air Passenger Duty, as they will have to fly to a GB hub airport and then fly on from that hub to their final destination, often with two different carriers.

38. Belfast International Airport told us that the provision of a rail link from the centre of Belfast to the airport would cost in the region of £98 million,26 The Minister for Regional Development, Danny Kennedy MLA, put the cost of providing a rail link to Belfast

25 Ev 123

26 Q7


International “in the region of £55 million.27 Belfast City Airport advised us that the cost of providing a rail halt at that airport would be about £10 million.28

39. As City of Derry Airport (CODA) conceded in paragraph 4 of its written submission:

Public bus transport has been poor at City of Derry Airport for many years with Translink providing stops at the airport on scheduled bus services that pass the airport. No dedicated bus service existed between the airport and Derry/Londonderry. That has recently been rectified by a private operator who operates a dedicated service from the city centre to meet all scheduled arrivals and departures.29

40. The submission continued:

Rail access to the airports is non-existent despite all three airports having main railway lines very close to the airfields. At City of Derry Airport the main Belfast to Derry/Londonderry railway line passes through airport property within metres of the end of our main runway. All attempts to look at development of stops at the airports has been met with officials quoting UK guidelines that railway access to airport terminals can only be justified when passenger numbers reach 10 million per annum. That instantly rules out all three Northern Ireland airports. This should be looked at more objectively given the relative closeness of the railway lines to the airports and the relatively poor current public transport provision.30

41. The Minister for Regional Development confirmed that that position was still the case, and argued that rail links to the two Belfast airports were not actually necessary:

The road links from both airports are very good. There is a shuttle bus between even George Best Airport and the Sydenham link, as indeed there are direct links into the centre of Belfast from both George Best and International airports.31

42. The railway track between Londonderry and Coleraine is currently closed for major engineering works, but will reopen in April 2013. The work is the first phase of a £75 million upgrade project on the Londonderry to Coleraine railway, which includes a full re-laying of the track between Coleraine and Castlerock and between Eglinton and Londonderry. The railway station at Eglinton, close to CODA, was closed in 1973. The ideal opportunity to reopen the station in order to improve access to the airport would have been during these railway upgrade works. We understand that such an option was considered during the early planning stages of the works, but was dismissed on the grounds that an airport has to have in excess of 10 million passengers per annum in order to justify a dedicated rail link.

27 Q390

28 Q43

29 Ev 137

30 Ibid.

31 Q390


43. In an ideal world, there would be a halt at Sydenham for Belfast City Airport, a rail link to Belfast International Airport and the station at Eglinton would be reopened to serve City of Derry Airport. We encourage the Department for Regional Development to keep this matter under review in light of changing passenger numbers. We therefore recommend that HM Government and the NI Executive seek advice on whether funding for such projects might be available from the Special EU Programmes Body.

7 Tax policy 44. As stated in paragraph 2 above, the Finance Act 2012 devolved to the Northern Ireland Assembly the power to set Air Passenger Duty (APD) rates for direct long-haul flights from Northern Ireland. On 6 November 2012 the Air Passenger Duty (Setting of Rate) Bill passed its Final Stage in the Assembly, with the result that, with effect from 1 January 2013, APD on direct long-haul flights departing from NI airports will be reduced to zero.

45. We congratulate the NI Assembly on seizing this initiative to help rebalance the economy of Northern Ireland and are grateful to the Chancellor of the Exchequer for his response to our Report last year, which has enabled the Assembly to do so.

46. However, only about 1.5 per cent of flights from Northern Ireland are direct long-haul, so some 98.5 per cent of passengers will not receive any benefit from the change in APD on long-haul flights. We will not rehearse at length the arguments we made in last year’s Report, but our position has not changed and we remain convinced that APD remains a major stumbling block to rebalancing NI’s economy and is detrimental to travellers. As we said in the Summary to our Report:

There is little doubt in our mind that the opportunities to expand Northern Ireland’s economy through exports and tourism are being threatened by the continuation of Air Passenger Duty (APD). We recognise that for many people in Northern Ireland travelling by air is not a luxury, but is an essential element of family and economic life. [...] Northern Ireland was unique because, as part of the UK, it had the highest rate of aviation duty in Europe but, unlike Great Britain, it shared a land border with another EU state which levied aviation duty at a minimal rate.32

47. Witnesses consistently told us that APD was a barrier to economic growth in Northern Ireland. However, Theresa Villiers, in her new role as Secretary of State for Northern Ireland, confirmed that the Northern Ireland Executive had not requested the devolution of APD on domestic flights to Northern Ireland.33

48. We recognize the pressures on HM Treasury but, assuming that APD is not abolished for the whole of the UK, there is only one solution: we therefore recommend that HM Treasury and the Northern Ireland Executive explore ways to reduce or, preferably, abolish APD on all flights into NI from GB and, crucially, on all direct

32 Second Report from the Northern Ireland Affairs Committee, Session 2010-12, Air Passenger Duty: implications for

Northern Ireland, HC (2010-12) 1227, Summary, p.3

33 HC (2012-13), HC 616-i, Q48


flights from Northern Ireland to any destination. In that way, Northern Ireland’s business, enterprise and tourist industry stand a much improved chance of being able to compete with the Republic of Ireland, where Air Travel Tax, the equivalent of APD, is just €3.

8 The visa regime 49. The United Kingdom, the Channel Islands, the Isle of Man and the Republic of Ireland are not part of the Schengen area, but do form a common travel area (CTA). As well as British and Irish nationals, any other person who has been examined for the purpose of immigration control at the point at which he or she entered the CTA does not normally require leave to enter any other part of it. However certain persons, in particular, those requiring visas, do require leave to enter another part of the CTA.

50. Under certain conditions, nationals of 17 countries34 who need a visa to enter the Republic of Ireland may, if they have a visa to visit the UK, have that requirement waived if they enter Ireland directly from the UK—either from GB or from NI. There is, however, no reciprocal arrangement whereby holders of Irish visas are allowed to enter the UK via Ireland. This, of course, is particularly unhelpful should a visitor to the Republic of Ireland want to also visit Northern Ireland. We asked Jonathan Sedgwick, the International Director of the UK Border Agency, whether there was any difference in requirements for a British or an Irish visa. His response was:

They are broadly, but not entirely the same. There are some countries for which we require a visa and they do not, and vice versa—it is a very small number but there are one or two differences [...] It is precisely that that the two Governments have committed to working together on to harmonise, so that we are, if you like, checking the same thing. We think, in the UK, that we pretty much have a gold standard of a robust visa process: we take fingerprints everywhere; we check them against databases; we take a lot of care and effort over verifying documents; and we take an awful lot of care over whether people have previously been in the United Kingdom and committed criminal offences or whatever. We want to be assured that any process that lets anyone into the UK is as robust as that, which is why we are working closely with the Irish Government to align our processing and the evidential requirements and conditions for visas and so on. I think that both Governments have said they would like to work towards the position where they could issue a joint, shared visit visa that would allow access to both countries. That was in the agreement signed in December last year.35

51. During meetings we had in Dublin in November 2012, we were again advised that the UK and the Irish Governments were working together to try and introduce a common visa, the main problem being that Irish Embassies did not have the technology necessary to take biometric data from applicants.

34 See Annex 2.

35 Q345


52. Provided there is no diminution of the level of security applied to visitors to the common travel area, the Committee welcomes the British and Irish Governments cooperating in order to try and establish a joint, shared visit visa which would enable visitors to enter both the UK and the Republic of Ireland without having to apply for two separate visas.

53. This would clearly be of benefit to those visitors and investors to the Republic who wished to visit Northern Ireland for tourism (for example, the Giant’s Causeway or Titanic Belfast or to spend a couple of days in Londonderry) and business opportunities, with potential benefits to the wider economy. Equally, it would be of benefit to visitors to Belfast who wanted to take a day trip to, for example, the Boyne Valley or the Guinness Storehouse in Dublin.

54. When we took evidence from ABTA, Luke Pollard, the Association’s Head of Public Affairs, stated that:

[...] there are two other factors that have a huge impact on the attractiveness of Northern Ireland for visitors. They are largely issues that currently Northern Ireland cannot do much about. One is aviation taxation [...] but the other one is visa costs. It is an issue that is facing all types of inbound businesses at the moment. In fact, a UK visa is considerably more expensive than a Schengen36 visa, which will give you access to all the countries of the Schengen area around the European Union, and it will also be processed quicker [...] If we are to achieve greater levels of inbound tourism, and it is not just Northern Ireland that thinks tourism should be part of rebalancing the economy, visa costs need to be factored into that as well.37

55. However, as Jonathan Sedgwick, from the UKBA, explained:

A UK visa is £78; a Schengen visa is €60, so there is clearly a bit of a difference there.38 It is quite important to be aware, though, that the UK visa buys you multiple entry over six months; the Schengen visa is a single entry for three months. In some Schengen countries, they apply [...] a number of compulsory extra charges on top of that €60 for delivery or for couriering; that is not all Schengen countries, but some certainly do. Whilst the headline numbers look unfavourable towards us in relation to cost, we think that, taken in the round, it is a competitive cost and a competitive product.39

56. In an interesting development, in her speech to the World Travel Market on 6 November 2012,40 Rt Hon Maria Miller MP, the Secretary of State for Culture, Media and Sport, indicated that she was working on plans to simplify Britain’s tourist visa system which, it had been claimed, was discouraging visitors from, for example China, visiting the UK. It was reported that officials at the Department for Culture, Media and Sport, which

36 See Annex 3.

37 Q134

38 The cost of a three month single visit visa for the Republic of Ireland is €60.

39 Q336

40 http://www.culture.gov.uk/news/ministers_speeches/9502.aspx


has responsibility for tourism, were understood to have reopened talks with the Home Office over a number of potential improvements, including a dual-processing system that would allow Chinese tourists to submit their UK application at the same time as their Schengen visa application.

57. The Committee hopes that such discussions will include the disparity in the cost of a UK and a Schengen visa. Additionally, a reduced bureaucracy could help persuade potential visitors to the UK to apply for a visa and, therefore, we welcome the initiative of a dual-process system for applications for UK and for Schengen visas.

9 The Civil Aviation Bill 58. The Civil Aviation Bill was introduced in the Commons on 19 January 2012, and is expected to receive its Royal Assent before Christmas 2012. The Bill’s key features include:

i. reforming the framework for airport economic regulation, by providing a more flexible and targeted set of regulatory tools;

ii. modernising the Civil Aviation Authority’s governance and operations; and

iii. conferring certain aviation security functions on the CAA.

59. Most of the witnesses we saw were broadly supportive of the Bill, and did not consider it to have any particular implications for Northern Ireland. As Theresa Villiers, when she gave evidence as Aviation Minister, pointed out:

One of the biggest changes delivered by the Bill focuses on economic regulation of airports to make it more effective, more targeted and much more passenger-focused. For the foreseeable future, that is not likely to be terribly directly relevant to Northern Ireland, because none of its three airports are subject to economic regulation, but we hope that it will provide benefits for passengers from Northern Ireland flying into the regulated airports in the south-east, because we are confident that it will help improve our airports, improve the quality of service and improve the nature of the investment that goes into those south-east airports.41

60. We agree that the Civil Aviation Bill has no specific implications for passengers travelling to and from Northern Ireland although, like the Aviation Minister, we hope that it will benefit them indirectly by improving services generally.

61. However, Jim McAuslan, BALPA’s General Secretary, was critical of the Bill, saying that:

[...] There is not enough focus on safety. The Bill tries to be economic; it tries to be regulatory; and it tries to deal with safety. It tries to deal with too much and it lacks

41 Q324


focus. It should be a debate about what the role of the CAA is and then you build it back from there.42

62. Responding to these concerns, the then Aviation Minister stated:

[...] I am aware of BALPA’s concerns about safety and I agree with BALPA that safety must be paramount [...] What the Bill will do is introduce certain responsibilities in relation to the regulation of security, and vest them in the CAA.

I have every confidence that the CAA will continue to be a top-class regulator. It has a reputation, particularly on safety, which is pretty much second to none globally [...] I believe that the reforms that we are introducing to economic regulation and the additional responsibilities that we propose to give them in relation to security regulation will not in any way impair their ability to continue that really strong record on safety.43

63. We are reassured by the then Aviation Minister’s comments on safety at the UK’s airports.

42 Q291

43 Q326


Conclusions and recommendations

Connecting for growth

1. It is undeniable that improved air connectivity is absolutely vital for the strengthening of private sector business in NI and economic rebalancing. It is equally evident that expansion at London airports is crucial for the UK to maintain its position as a leading global hub and is particularly important for Northern Ireland. A decision on the future of airport capacity and configuration in London and the South East of England will have a significant impact upon the Northern Ireland economy. We recommend that the Airports Commission review, and the consequential Government decision, be expedited. In the meantime, airports such as Dublin, Schipol and Frankfurt stand ready to fill the vacuum created by delay and confusion over the expansion of London’s capacity. We also wish to put on record that we fully support the NI Executive in its efforts to encourage new air routes to and from Northern Ireland. (Paragraph 16)

International Airlines Group’s takeover of bmi

2. We urge the Northern Ireland Office and the Department for Transport to vigorously pursue their discussions with the European Commission regarding the ring fencing of slots for regional destinations, and provide this Committee with regular updates on those discussions. (Paragraph 25)

Northern Ireland’s airports in the future

3. Both Belfast airports are very successful private enterprises which have increased passenger numbers, and employ many people without a public subsidy. They have a valuable role to play, and we wish them both continued success. (Paragraph 31)

4. While we recognise all these airports are in competition with each other, opportunities for co-operation should be encouraged where they arise. As relationships between the UK and the Republic of Ireland have never been better, the time might, therefore, be right to consider co-operation between the two jurisdictions on airports. (Paragraph 34)

Transport links to Northern Ireland’s airports

5. In an ideal world, there would be a halt at Sydenham for Belfast City Airport, a rail link to Belfast International Airport and the station at Eglinton would be reopened to serve City of Derry Airport. We encourage the Department for Regional Development to keep this matter under review in light of changing passenger numbers. We therefore recommend that HM Government and the NI Executive seek advice on whether funding for such projects might be available from the Special EU Programmes Body. (Paragraph 43)


Tax policy

6. We congratulate the NI Assembly on seizing this initiative to help rebalance the economy of Northern Ireland and are grateful to the Chancellor of the Exchequer for his response to our Report last year, which has enabled the Assembly to do so. (Paragraph 45)

7. We recognize the pressures on HM Treasury but, assuming that Air Passenger Duty is not abolished for the whole of the UK, there is only one solution: we therefore recommend that HM Treasury and the Northern Ireland Executive explore ways to reduce or, preferably, abolish APD on all flights into NI from GB and, crucially, on all direct flights from Northern Ireland to any destination. (Paragraph 48)

The visa regime

8. Provided there is no diminution of the level of security applied to visitors to the common travel area, the Committee welcomes the British and Irish Governments cooperating in order to try and establish a joint, shared visit visa which would enable visitors to enter both the UK and the Republic of Ireland without having to apply for two separate visas. (Paragraph 52)

9. The Committee hopes that such discussions will include the disparity in the cost of a UK and a Schengen visa. Additionally, a reduced bureaucracy could help persuade potential visitors to the UK to apply for a visa and, therefore, we welcome the initiative of a dual-process system for applications for UK and for Schengen visas. (Paragraph 57)

The Civil Aviation Bill

10. We agree that the Civil Aviation Bill has no specific implications for passengers travelling to and from Northern Ireland although, like the Aviation Minister, we hope that it will benefit them indirectly by improving services generally. (Paragraph 60)

11. We are reassured by the then Aviation Minister’s comments on safety at the UK’s airports. (Paragraph 63)


Annex 1

Public Service Obligations (PSOs)

The European Commission’s website44 states that:

In order to maintain appropriate scheduled air services on routes which are vital for the economic development of the region they serve, Member States may impose public service obligations on these routes. Therefore, they must respect the conditions and the requirements set out in Article 16 of the Air Services Regulation 1008/2008.

In case no air carrier is interested in operating the route on which the obligations have been imposed, the Member State concerned may restrict the access to the route to a single air carrier and compensate its operational losses resulting from the PSO. The selection of the operator must be made by public tender at Community level.

44 http://ec.europa.eu/transport/modes/air/internal_market/pso_en.htm


Annex 2

The Irish Short-stay Visa Waiver Programme45

The Programme was introduced on 1 July 2011, with a view to promoting tourism from emerging markets, and will run until 31 October 2016. Under the terms of the Programme, nationals from the 17 countries below, who have first entered the UK on certain categories of UK visa, may travel to the Republic of Ireland without the need to obtain an Irish visa, provided the UK visa is still valid. Visitors are not permitted to enter Ireland directly, only from GB or from Northern Ireland.

Eastern Europe—Belarus, Bosnia and Herzegovina, Montenegro, Russian Federation, Serbia, Turkey and Ukraine.

Middle East—Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates.

Other Asian—India, Kazakhstan, People’s Republic of China46 and Uzbekistan.

45 http://www.embassyofireland.co.uk/uploads/documents/Consular/Visa%20Documents/short-

stay%20visa%20waiver%20programme%20-%20march%202012.pdf

46 Except nationals of the special administrative regions of Hong Kong and of Macau, who do not require a visa to travel to Ireland.


Annex 3

The Schengen agreement

Under the terms of the Schengen agreement travel from one country to another within the Schengen area is not subject to border controls. The Schengen countries are:

Austria Belgium The Czech Republic Denmark Estonia Finland France Germany Greece Hungary Iceland Italy Latvia Liechtenstein Lithuania Luxembourg Malta GC The Netherlands Norway Poland Portugal Slovakia Slovenia Spain Sweden Switzerland


Formal Minutes

Thursday 22 November 2012

Members present:

Mr Laurence Robertson, in the Chair

Oliver Colvile Mr Stephen Hepburn Kate Hoey

Naomi LongNigel Mills

Draft Report (An air transport strategy for Northern Ireland), proposed by the Chair, brought up and read.

Ordered, That the draft Report be read a second time, paragraph by paragraph.

Paragraphs 1 to 15 read and agreed to.

Paragraphs 16 to 18 read, amended and agreed to.

Paragraphs 19 and 20 read and agreed to.

Paragraph 21 read, amended and agreed to.

Paragraph 22 read and agreed to.







Annexes agreed to.

Summary read, amended, and agreed to.

Resolved, That the Report, as amended, be the First Report of the Committee to the House.

Ordered, That the Chair make the Report to the House.

Ordered, That embargoed copies of the Report be made available, in accordance with the provisions of Standing Order No. 134.

Written evidence was ordered to be reported to the House for printing with the Report.

[Adjourned till Wednesday 5 December at 2.15 pm.


Witnesses

Monday 23 April 2012 Page

John Doran, Managing Director, Belfast International Airport Ev 1

Brian Ambrose, Chief Executive, George Best Belfast City Airport Ev 8

Clive Peter Coleman, Technical Director, Parsons Brinckerhoff, Damien Tierney, Managing Director, City of Derry Airport, and Mr Albert Harrison OBE, Non-executive Director, City of Derry Airport Ev 13

Wednesday 16 May 2012

Nigel Smyth, Director, CBI Northern Ireland, and Matt Sheldon, Senior Policy Advisor, Infrastructure, CBI Ev 21

Luke Pollard, Head of Public Affairs, ABTA, and Doreen McKenzie, Proprietor, Knock Travel Ev30


David McMurray, Regional Industrial Officer for Belfast, Unite, and Catherine Horgan, Angela Kelly and Paula Spiers, bmi Flight Crew and members of Unite Ev 38

Wednesday 13 June 2012

Antoinette McKeown, Chief Executive, and Aodhan O’Donnell, Director of Policy and Education, Consumer Council for NI Ev 46

Jim McAuslan, General Secretary, British Airline Pilots’ Association Ev 54


Rt Hon Theresa Villiers MP, Minister of State, Department for Transport Ev 60

Jonathan Sedgwick, International Director, UK Border Agency Ev 69

Wednesday 4 July 2012

Arlene Foster MLA, Minister of Enterprise, Trade and Investment, Danny Kennedy MLA, Minister for Regional Development, David Thomson, Deputy Secretary, Department of Enterprise, Trade and Investment, and Dr Andrew Grieve, Head of Air and Sea Ports, Department for Regional Development Ev 74


Wednesday 12 September 2012

Willie Walsh, Chief Executive, International Airlines Group Ev 85

Kate Sherry, Deputy Director of Route Development, Ryanair Ev 97

Paul Simmons, UK Director, easyJet Ev 103

Wednesday 24 October 2012

Dr Liz Fawcett, Chair, Steering Group, Belfast City Airport Watch, Jenny Simon, Sydenham resident, Barney Gadd, Belfast City Airport Watch Steering Group/Old Stranmillis Residents’ Association, and Joe McGlade, Belfast City Airport Watch Steering Group/Park Road and District Residents’ Association Ev 108

John Rooney, Vice Chair of the NI Assembly and Business Trust and Regional Liaison Officer, Federation of Small Businesses, and Glyn Roberts, Chief Executive, Northern Ireland Independent Retail Trade Association Ev 114

List of printed written evidence

1 Consumer Council Ev 120

2 Belfast City Airport Watch Ev 123, Ev 128, Ev 128, Ev 130

3 ABTA Ev 131

4 Department for Transport Ev 133

5 City of Derry Airport Ev 136

6 International Airlines Group Ev 139

7 Department of Enterprise, Trade and Investment Ev 141

8 CBI Northern Ireland Ev 145

9 British Air Line Pilots’ Association Ev 149

10 UK Border Agency Ev 150

11 Ryanair Ev 151

12 Basil Hutton Ev 156

13 Sheila Bradley Ev 157

14 Lagan Valley Group Residents’ Association Ev 157

15 Mr A R Hobson Ev 158

16 Kevin McLaughlin Ev 158

17 A Dunwoody Ev 159

18 Andrew Ellis Ev 159

19 David Donnelly Ev 159

20 Eric McGreevy Ev 160

21 Northern Ireland Chamber of Commerce Ev 161

22 Belfast City Airport Ev 163


List of Reports from the Committee during the current Parliament

The reference number of the Government’s response to each Report is printed in brackets after the HC printing number.

Session 2012–13

First Report An air transport strategy for Northern Ireland HC 76

Session 2010–12

First Report Corporation Tax in Northern Ireland HC 558 (HC 1767)

Second Report Air Passenger Duty: Implications for Northern Ireland HC 1227

Third Report Fuel laundering and smuggling in Northern Ireland HC 1504 (HC 272, Session 2012-13)

cobber Pack: U PL: COE1 [SO] Processed: [28-11-2012 13:59] Job: 022723 Unit: PG01Source: /MILES/PKU/INPUT/022723/022723_o001_th_NIAC - Air transport strategy i - corrected transcript.correcttemplate.xml

Northern Ireland Affairs Committee: Evidence Ev 1

Oral evidenceTaken before the Northern Ireland Affairs Committee

on Monday 23 April 2012

Members present:

Mr Laurence Robertson (Chair)

Mr David AndersonLady HermonKris HopkinsNaomi Long

________________

Examination of Witness

Witness: Mr John Doran, Managing Director, Belfast International Airport, gave evidence.

Q1 Chair: Welcome to the first public evidencesession of this inquiry into aviation policy. Since weset the Committee up after the last election, we havefocused on trying to help towards rebalancing andimproving the economy in Northern Ireland. There aresocial implications to aviation policy, so we are verypleased to be starting this inquiry. I thank SpeakerHay for allowing us to hold the meeting here in thiswonderful hall, and I thank the Assembly officialswho facilitated the meeting. We are very grateful. MrDoran, thank you very much for joining us. I inviteyou to make a few opening comments.Mr Doran: Thank you, Chairman. I am alwayspleased to be able to assist the Committee with itsinquiries. As a bit of an opener, I will take a briefwalk through the points that were raised on theinvitation that I received, and then I will be happy totake any questions that arise.All the areas highlighted by the Committee areinterlinked and have a role to play in aviation strategy,but if we look at the economic implications of currentair links, there is a very good summary in theinvitation setting out the data released by the NorthernIreland Chamber of Commerce that highlights theimportance of aviation to the Northern Irelandeconomy. One in 10 jobs depends on foreigninvestment, and half those companies can only reachtheir home market through a hub airport. Therefore,there is an implication there. Aviation supports £1billion worth of exports from Northern Ireland, and150,000 foreign visitors arrive by air into NorthernIreland each year.In relation to Belfast International Airport, the impactsare equally significant. We employ on the airport sitein and around 4,500 people, who directly rely onaviation for their employment. That puts somewherein the region of £450 million of wages, salaries andbought-in goods and services into the local economyeach year. Therefore, it is significant. There is nodoubt about that.We can conclude only that our connectivity to theeight billion citizens who live in the outside worldwill be very heavily dependent on air access for theforeseeable future. Therefore, a strategic approach tosustaining and developing a robust and durablenetwork of air services ought to be a priority and,

Dr Alasdair McDonnellNigel MillsDavid Simpson

certainly, an enabler for the rebalancing and growthof the Northern Ireland economy.With regard to the air transport environment, NorthernIreland is fairly unique in a number of ways. If it isnot the smallest population base or economy in thedeveloped world with a multiple airport system, it iscertainly one of them. We have been able to find onlyReykjavík as a city smaller than Belfast with two,never mind three, operational airports. So, we are wellsupplied with airport capacity and are certainly notanalogous with south-east England, where there is ashortage of capacity.We are also fairly unique in the European context inthat we are in the sterling zone with a land borderwith a euro zone country. Under those circumstances,a stable and sustainable air transport base is anessential element to support broader macro-economicstrategic development. We will probably talk aboutthat as well.In relation to regional and international connectivity,the first point to deal with is that Northern Ireland, asa region in common with other regions of the BritishIsles, has experienced a similar profile of growth andrelative decline in passenger numbers over the pastdecade or so. In the case of Northern Ireland, the keypoint is that we have seen a decline of about onemillion passengers over the past few years.We had a look at the numbers, and the retrenchmentsince 2007 or 2008 has been in the order of 1·3 millionpassengers. If we make the comparison with otherregions over the same period, however, we see thattraffic in Dublin declined by 5·5 million, in the centralScotland area by about 3·4 million, the GB midlandsby about three million, and the north-east of Englandby two million as each are impacted by similareconomic factors. It is not to say that we should notaspire to recovering that lost traffic but merely toprovide reassurance that we are not suffering alone.Other regions on these islands are seeing similardeclines and are making similar efforts to recover theposition.Currently, 75% of the Northern Ireland air market isGB domestic, where we are well served. However,direct international connectivity remains poor, andperhaps that is where the focus should lie in Europeanand worldwide terms. There are probably a couple ofsupporting measures in relation to that. The first

cobber Pack: U PL: COE1 [E] Processed: [28-11-2012 13:59] Job: 022723 Unit: PG01Source: /MILES/PKU/INPUT/022723/022723_o001_th_NIAC - Air transport strategy i - corrected transcript.correcttemplate.xml

Ev 2 Northern Ireland Affairs Committee: Evidence

23 April 2012 Mr John Doran

would be the maintenance of a level of stability in theexisting domestic network base in order to promotespeculation on international services. Certainly, wepromote in that regard a more structured engagementsuch as this between government and air serviceproviders—not necessarily airports but the peoplewho provide the air services themselves—in order thata common understanding of how the development ofair services can be achieved and facilitated. Thatdirect engagement would form a central plank of aregional strategy by engaging with all players in themarket.We also suggest that growth needs to be promoted inthose international markets that indicate a highpossibility of delivering economic benefits toNorthern Ireland with respect to tourists and inwardinvestors. In other words, we probably have enoughSpanish costa outbound traffic. What we need is moreinbound traffic if we are looking at how we rebalanceand grow the economy.Touching on surface access links; modern and fullyintegrated surface transportation systems are essentialif Northern Ireland is to compete in the global marketfor visitors and investment in practice and inperception. We do not presuppose the means by whichthose links could be facilitated, whether road or rail,but merely make the point that if we are trying togive the impression to inbound visitors of a modern,progressive economy then good means of access onthe ground are important. However, that againrequires a strategic approach to determine how asurface access policy can support aviation policy and,in turn, support economic policy.The question on the Civil Aviation Bill is interesting.I understand that the Bill has passed the CommitteeStage, and will go to the Report Stage later this week,on 25 April, I think. The thrust of the Bill is to reformthe economic regulation of airports, with particularfocus on those airports with market dominance. In thiscase, we are talking about Heathrow, Gatwick andStansted. There are some consequences of the Bill forall airports in Northern Ireland in two key areas. First,the CAA is running a consultation that may lead to asignificant increase in the level of charge that it levieson airports, so a cost element comes into play there.In addition, there is the proposal to transfer some ofthe aviation security oversight functions from theDepartment for Transport to the CAA, which, in turn,then will directly charge for those services to airports.That is not currently the case. As the Bill contains noprovision for the airport operator to pass these chargesdirectly to users, that will mean an increase in costthat the operator has to absorb. In the case of BelfastInternational Airport, that is likely to be in the regionof between £100,000 and £120,000 annually.Obviously, that is unwelcome because it eats into ourcapability to reinvest in infrastructure. Those areperhaps unintended consequences from that, but theyare significant.A current theme on the Committee’s agenda is theimplications of the proposed takeover of BritishMidland by IAG. That is now the real takeover ofBritish Midland. The key preoccupation with thesituation is the preservation of access to the main hubfor international connectivity, particularly for

Northern Ireland because if we cannot have directaccess, then indirect access to a hub such as Heathrowis very important to us. In that regard, reassuranceshave indeed been given by British Airways that it willrenew the commitment that British Midland hasshown to Northern Ireland in the past. Undoubtedly,over the weekend and this morning, members willhave seen full-page advertisements that were taken outin the national and regional newspapers as a means ofsaying “do not panic, it will be all right.” We shouldalso be comforted by the fact that Northern Ireland isbetter positioned than most other regions of the UKin that Aer Lingus operates concurrently from BelfastInternational to Heathrow. In recent days, it hasreaffirmed its commitment to this market.We see the key issue relating to this situation as notbeing the absolute level of frequency because it maywell be that, as we go into the future, British Airwayswill work out the best economic use for its newly-acquired slot portfolio. What we should be looking atis how we maintain an overall level of seat capacitythat meets market demand, thus facilitating overallworldwide connectivity and, indeed, providing a liftfor British Airways’ cargo requirements.The other implication of the transaction is on thefuture of bmibaby, which has received a lot of airtimeover the last wee while. If a loss were to occur as aresult of that, it would not necessarily be an issue forNorthern Ireland’s connectivity, given that every routethat that airline operates is flown by at least one, andup to three, of the airlines that are currently in themarket from a selection of easyJet, Aer Lingus, Flybe,Jet2, Thomas Cook, Thompson and so on.Connectivity is not necessarily impacted by that.Finally, the Republic of Ireland is the only validreference point for Northern Ireland on tax policy,given our co-existence on the same land mass. Ourthanks go to the Committee for its sterling work insupport of the changes to band B that have beenbrought about and which, in due course, will bedevolved to the Northern Ireland Executive. That dealtwith the pressing issue of the New York service, butit also opens the door to other possibilities for long-haul route development in the future, and it will dono harm to remind the Committee that the value tothe Northern Ireland economy of the current serviceto New York runs at just over £100 million during theseven years of its existence. For a potential hit on theblock grant of perhaps £2 million to £3 million a year,getting an annual return of around £20 million is apretty good return on the investment. Of course, weare concerned that, if the band A tax were to doublein the short term, as is anticipated, that could causeNorthern Ireland significant competiveness issues. Iam sure that we will discuss that in due course.That is our opening position on the key points that theCommittee has raised, and, as I said, I am more thanhappy to take any questions from the Committee onthose or any other subjects.

Q2 Mr Anderson: Good afternoon, Mr Doran. InMarch, you co-signed a letter in ‘The SundayTelegraph’ to the Prime Minister about, as theAssociation of British Travel Agents (ABTA) put it,the impact of the ban on expansion in the south-east.

cobber Pack: U PL: COE1 [O] Processed: [28-11-2012 13:59] Job: 022723 Unit: PG01Source: /MILES/PKU/INPUT/022723/022723_o001_th_NIAC - Air transport strategy i - corrected transcript.correcttemplate.xml



Effectively, that means that Heathrow will not beallowed to develop, which will have a knock-onimpact on people such as you. What exactly do yousee as being the consequences if, as seems likely, thereis no real expansion in the south-east? Have you hada response to the letter yet?Mr Doran: The situation in the south-east, as I havealready alluded to, is very serious because there is alack of capacity and there has been for some time.The implications, particularly for Heathrow, are that,whenever you are running at 98% or 99% of yourpractical capacity, every slot has to count for theoperators because they are very valuable commodities.About four years ago, Continental Airlines paid $208million for four slots at Heathrow, so they areextremely valuable.As time goes on and the capacity situation is notaddressed to any appreciable extent, operators will, nodoubt, look for the highest and best use to which theycan put those slots. It may not be Belfast; it may beRio de Janeiro, Guangzhou or somewhere in theBrazil, Russia, India and China (BRIC) economiesparticularly, where opportunities for hugely increasedtraffic exist. The challenge for Northern Ireland andother regions is to ensure that internationalconnectivity is not impacted as a result. There are twoways of doing that. If we are looking at Heathrow asstill being the primary hub for connectivity, the levelof frequency of connection may go down, but thelevel of capacity would have to go up on eachfrequency to compensate. In other words, you arelooking at swapping out smaller aircraft for largeraircraft to give you the same capacity while using asmaller number of slots.If you set that to one side, a parallel route, although itmay not necessarily benefit the UK directly, is to lookat other hub airports in Europe like Frankfurt, Parisand Amsterdam as connecting points for traffic thatwants to access Northern Ireland. You will look athow best you could organise air services to providethe necessary lift over those hubs. There are twotracks: what you can do with the capacity thatbecomes available at Heathrow, which means that theindividual unit’s capacity that is carried on eachrotation has to go up, or that you look at anotheraccess point.

Q3 Mr Anderson: Have you had a reply to theletter?Mr Doran: Not directly. I think that the letter camefrom ABTA, so a reply may well have been receivedin the meantime but has not yet been circulated to me.

Q4 David Simpson: You are very welcome to theCommittee, John. It has been put to us that, over thepast number of years, successive agencies and theGovernment have ignored the strategic importance ofthe International Airport, which may have resulted inlosing out to Dublin or whatever. What initiativescould the UK Government or the Executive take totry to help the airport?Mr Doran: It is an interesting question. Given a fewdays, I might be able to answer it. I will try to coverit briefly. The issues that the Committee touched onin its invitation are all very important enablers in how

the International Airport plays its role in supportingthe economic development of the region and therebalancing of the economy. The example that I gaveof the Continental service and the direct economicbenefits that it brings to the Northern Ireland economycould be replicated by other long-haul services. It isreplicated day and daily when you look at Europeanand GB domestic services. We already play a key part,but there are a number of areas in which we couldplay a fuller part. The taxation policy was touched on.A good start has been made on band B. We probablyneed to look at how we can expand that into band Aif that were possible, because, at the moment, band Ais running at £13 a sector. In a situation in which 75%of your traffic is to and from GB, that is £26 eachtime you take a return flight. That does not sound likea lot but it adds up, so there may be something to belooked at there.We touched on the issue of how we grow internationalbusiness, particularly international connectivity. Anumber of years ago, a good scheme—the air routedevelopment scheme—was set up, off the back ofwhich came routes such as the New York service.About £1 million of that scheme funding went intothat service; we also put in the equivalent of about £4million over that period. Air route development fundsare not flavour of the month at the moment, but thatdoes not seem to stop some countries from operatingthem. South of the border, just recently, there was abit of a move to try to remove or reduce the current€3 aviation tax. In the end, the Minister decided notto take away the tax but to hypothecate something like€8 million of the tax take from that €3 individual taxinto what, in effect, amounts to an air routedevelopment fund, or a fund for developing newaccess to Dublin. So, the fact that air routedevelopment funds may be questionable under stateaid rules does not seem to have any implication insome countries. Of course, I am not saying that theUK Government should break any EU regulation.However, at the same time, I am sure that there arecreative and inventive ways of coming up with—

Q5 David Simpson: To briefly follow on from that:do you see a difficulty with the International Airportnot having direct rail links to the city? By the way,the MP for the area told me to tell you that he islobbying hard for that. Do you see an issue there?Mr Doran: There is an issue. Again, in comparisonwith other international gateways such as Dublin, welack very high-quality surface connections. In myopening remarks, I said that I did not presupposewhether “surface access” means rail or road; it can beeither or both. Our connectivity is lacking. The roadssystem around the International Airport owes much tohighway planning in the 1950s. I am old enough toremember those roads being built. They were superbfor their day, but that was in the mid-60s, and we arenow in 2012. Perhaps we need to take a little look atthat again because it has an impact. When we aretrying to attract visitors, whether tourists or potentialinward investors to Northern Ireland, their firstimpression is that the rail or road connections do notexist. What is seen on setting foot outside the frontdoor is important in creating a lasting impression that,




hopefully, will be carried by the visitor. So it isimportant.

Q6 Dr McDonnell: Is the International Airport infavour of a rail link, against it or indifferent?Mr Doran: We have always been in favour of a raillink. The only issue that we have is the amount ofpublic funding that it would need and whether thatwould be better spent on a rail link or on upgradingthe roads. I am not in a position to make that valuejudgement. However, we have always supported a raillink just as much as we have supported surface accessby road.

Q7 Dr McDonnell: What would it take to moveforward the possibility of a rail link?Mr Doran: I am told that it would cost about £98million, which is an enormous amount.Dr McDonnell: That would not build much road.Mr Doran: Well, it would build a fair bit of road,actually. So that is where the value judgement lies.

Q8 Kris Hopkins: Is £98 million about the price ofa Titanic building? For that, you could have had arailway at your airport.I have a bit of difficulty here. There are a lot of thingsthat make assumptions that I am not sure are true.There are loads of “get outs” in this. I understand thatBelfast International is approximately 80% reliant—whatever “reliant” means—on easyJet, and thatBelfast City Airport is 75% reliant on Flybe. I thinkthat that is sort of eggs-in-baskets situation. Wheneach airport has only one golden egg in its basket, thatis a risk that needs to be mitigated in some form. Doyou feel vulnerable in that position? First, are thosefigures true? If they are, how do you mitigate thatrisk?Mr Doran: I would not cast any doubt on the figures,because the order of magnitude is probably aboutright. Having so many eggs in one basket is always arisk for any business, and you mitigate that by tryingto balance it out against the remaining portfolio beingas widely spread as possible, as well as by building astrong relationship with your key customer.easyJet has been in this market for well over 10 yearsnow, and during that time, it has grown from virtuallynothing to basically carrying one in two passengersin and out of Northern Ireland. Therefore, if you areconsidering risk, it is risk for Northern Ireland as awhole, not necessarily just for the InternationalAirport. However, having said that, during those 10years, a very strong relationship with and commitmentto Northern Ireland has been developed. Onlyrecently, easyJet announced a further development ofa Birmingham service from Belfast InternationalAirport. The release that announced that servicereaffirmed easyJet’s commitment to the NorthernIreland economy.We are looking at how you can then grow the pie byreaching out past GB into Europe and beyond to tryto bring in routes from key source markets that areimportant for economic development, whetherthrough tourism or inward investment, and develop aroute structure to support them. That would alsomitigate the risk.

Q9 Kris Hopkins: To follow on from that, youessentially have two competing companies. I knowthere is variation in some of their destinations andclient base, but I am a Tory and am fairly enthusiasticabout competition. Is there a sensible conversation tobe had between the two airports about not trippingover the same customers, or will the market facilitatethat?Mr Doran: I think the market has facilitated it up tothis point, but you make a good and interesting point.Northern Ireland is a small land mass with apopulation around the size of that of greater Leeds. Itis well served by three airports, and the two principalplayers in the market have a lot of overlap andduplication. That means that, not only do you havethe risk of your fate being in the hands of twooperators, but you also have the risk that some of theroutes may be over-served in some cases. I do notknow whether that is an area that Government wantto enter.We could have a more joined-up approach by havingthe Northern Ireland Executive rather than theWestminster Government looking at how the aviationassets at its disposal best serve the economicdevelopment of the region. They could then maybe doa bit of pushing and shoving around the edges to makesure that the economic development needs of theregion are paramount and are served by the players inthe market. That is not necessarily dictating how themarket should be developed, but perhaps thedevelopment of policy in support of economics wouldgive a bit of a nod to operators as to what they shouldbe doing.

Q10 Lady Hermon: Presumably, John, you have hadthese conversations with Arlene Foster, with SammyWilson the Finance Minister, and with the DRDMinister; have these conversations not already takenplace?Mr Doran: These conversations take place regularly.I think that, as with all the other things on everyone’splate, this may have fallen down the pecking order alittle bit. Perhaps we need to give it a little bit ofemphasis to ensure it is taken up to the top again.

Q11 Naomi Long: John, it is good to see you herethis afternoon. Thank you for your evidence so far.Since we took evidence from you in June last year aspart of the inquiry into air passenger duty (APD), theGovernment reduced the level of APD on long-haulflights, which covers direct flights from NorthernIreland to the US, to that of the domestic rate. Haveyou noticed any effect on the number of passengersusing that route as a result of those changes?Mr Doran: The derogation has only been in placesince 1 November, and it is very difficult to draw aconclusion over the winter period because it tends tobe the quieter part of the year anyway. If we look atthe last couple of months and at the forward bookings,we see there has been a little bit of an uplift so farover the past few months. Future bookings are alsolooking very positive.

Q12 Naomi Long: That is very good news.




You will have heard members of the Culture, Mediaand Sport Select Committee express concerns thatthere will be extra strain on Heathrow’s capacitybecause of the Olympics. They say that it could resultin chaos at that airport. You have already spoken tous today about the pressures at Heathrow already,even before we add that additional pressure. Have youas an airport, the Northern Ireland Tourist Board orTourism Ireland at the other end in the States beenpushing to persuade visitors to look at using the directflight from North America to Northern Ireland ratherthan travelling via Heathrow? Has there been muchpublicity of that direct flight to try to sustain itfurther?Mr Doran: The Olympics, the Titanic and the variousother events that are taking place in 2012 are forminga platform for Tourism Ireland to promote,particularly in the States but also in other parts of theworld, and encourage as many people as possible touse the direct services to Northern Ireland. I wouldnot say that it is specific to the Olympics. It is part ofthe package that surrounds all the events in 2012.

Q13 Nigel Mills: Have you had any discussions oradvice about what the Assembly policy might bewhen APD responsibility is formally devolved to it?Do you think that it will try to reduce the rate on long-haul flights further, or will it stick to where it is?Mr Doran: My understanding is that the intention isthat the rate will be reduced to zero or near zero onlong-haul flights just for band B. I believe that theEnterprise Minister has made that commitment.

Q14 Nigel Mills: Presumably, you would quite likeband A to get to somewhere near zero as well. Isthat something that you and your airports areworking to try to achieve?Mr Doran: The cost to the block grant of band B ismaybe £2 million or £3 million. Depending on howthings go, it might be up to £5 million a year in thedistant future. Band A might be £60 million plus, soit is a bigger chunk to take out.There is a certain nervousness about doing somethingsuch as this. However, there are equivalent casestudies in Europe that we could look at as guidanceon whether something like this should even becontemplated. The situation south of the border is ournearest comparator, but it is not confined to theRepublic of Ireland. The Netherlands introduced anair passenger duty and took it away again within ayear because it believed that it was having a negativeimpact on inbound traffic. Denmark did likewise butover a longer period of time. Germany has taken thedecision to reduce its air passenger duty by anequivalent amount to what the airlines are paying intothe emissions trading scheme. We have not yettouched on the emissions trading scheme, buteffectively it is now the European vehicle for taxingaviation for its carbon footprint. Germany has takenthe decision to hypothecate that into its APD, whichwill then reduce it to a very manageable rate. It mightbe useful to take those sorts of case studies asexamples and to look at the deemed economic impactof doing it against the cost to the Exchequer.

Q15 David Simpson: In written evidence last year,you indicated to the Committee that the airport wastrying to attract new carriers, whether from Canadaor the Middle East. Has there been any real successin that?Mr Doran: We are certainly in a better position tohave those discussions now than we were six monthsago. Until the change in air passenger duty took place,airlines were not interested in having thosediscussions because they saw the tax as a barrier totheir commercial success. Since then, we have hada number of discussions with carriers eastbound andwestbound. All that I would say is that we areencouraged by the noises that we are hearing.However, we are not there yet, and there is still quitea way to go.

Q16 David Simpson: I take it that the removal ofAPD for long-haul flights helped with that.Mr Doran: It helped the situation. We can have aconversation now that we were not able to havepreviously.

Q17 David Simpson: I take it that you are not givingtoo much away at the moment, what with yourcompetitors sitting in the gallery.Mr Doran: I think that we might operate in differentmarkets in this instance, but that is not the reason formy reticence. We are at early stages with each of thecarriers involved, and it would be inappropriate tocomment any further.David Simpson: I appreciate that.Chair: You are to ask the next question as well.

Q18 David Simpson: Am I? I am earning my keep.We are now on to the thorny issue. All three NorthernIreland airports have recently been criticised forsetting some of the highest rates in the UK for carparking. You are in the difficult position of kickingoff on this one. Your competitors will have a bit moretime to think of an answer. How do you respond tothat criticism?Mr Doran: If you look at the depth of the criticism,you will see that we are the least worst, if you wantto put it that way, which is an interesting position.

Q19 David Simpson: Out of the three airports?Mr Doran: Yes.David Simpson: That is dead on.Mr Doran: What is charged for car parking is areflection of the cost of providing the car parking. Weoperate within a fairly competitive environment, so itis not as if we have a free hand to set whatevercharges we want.

Q20 David Simpson: Why not?Mr Doran: There are quite a number of competingoff-site car park operators around the airport, two ofwhich have been there for quite a long time—for thepast 40 or 50 years, or near enough—and a number ofothers that have come along more recently, none ofwhich has any planning approval, but that is adifferent matter. If we are talking about joined-upgovernment, we should talk about the joined-upnessof the planning system as much as anything else.




It is not that we have a free run to decide to set therates that we want. The charges are merely a reflectionof the economic cost of providing the facility. I do notthink that you could argue that a rate of £5 a day isover the top, to be honest. Some of the operators thatwe are being compared with have greater volumes ofthroughput to start with, and when you have greatervolumes of throughput, the economic cost attached toeach unit decreases, so you can charge less. It is amatter of economics and of supply and demand, Iam afraid.

Q21 Lady Hermon: John, how much did youactually raise from car park charging in the pastfinancial year?Mr Doran: Car park charging is absorbed into ourcommercial revenues. It might do no harm to talkabout how the airport model works. Around 15 yearsago or thereabouts—perhaps 12 years—most airportsreceived the majority of their income from what theyearn from airlines coming and going. We were nodifferent. As low-cost carriers come on stream, theywant to benefit from lower charging than that whichthe carriers heretofore had experienced. Therefore, theonly way of reducing charges to encourage thedevelopment and growth of low-cost services is tofind income from elsewhere.We are probably no different from most regionalairports at the moment. Around 50% of our revenuecomes from commercial sources. Commercial sourcesinclude car parking, cafes, restaurants, bars andeverything else that does not fly. If you divide it intothings that fly and things that do not fly, around 50%of our revenue comes from things that do not fly. Outof that 50%, car parking is probably the single mostimportant revenue stream. You will have gathered bynow that I am not going to put a figure on it, becauseit is commercially confidential information. It is notdisclosed anywhere in our accounts, except where itis stated that 50% of our revenue comes fromcommercial sources, and, as I said, the single mostimportant source of that commercial revenue is carparking.That gives you an idea of the importance that weattach to car parking as a revenue stream and theimportance of that revenue stream to ensuring that wecontinue to be able to charge lower costs to the airlinecarriers, thus keeping down the cost of flying fortravellers as a whole. The basket needs to be lookedat in the round. You cannot just pick out one elementand say that it is too dear. You need to look at thething in the round.

Q22 Lady Hermon: Is all revenue raised through carparking reinvested in the airport?Mr Doran: Absolutely—every penny and more. Ifyou look at our profitability over the past five years,you will see that we have spent just under £50 millionon capital reinvestment and infrastructure at theairport. We did not earn £50 million over the past fiveyears, so we have had to borrow a bit to supplementthat. I can assure you that every penny gets reinvested.

Q23 Lady Hermon: What do you personally thinkof the £1 charge for dropping someone off? I speak

now as a mother who drops her son off at the airport.He is a student, so mother has to pay for these things.He is out the door of the car and across to thedepartures entrance. I do not even get out of the car,but I am charged £1. Is that not a very mean charge?Mr Doran: You may characterise it like that, but therewere good practical reasons for introducing thesystem.

Q24 Lady Hermon: Which are?Mr Doran: There are three reasons. First, we had torelocate our drop-off zone from the immediate front ofthe terminal after the Glasgow Airport incident. Therecommendation was to move the zone 30 metresaway from the front door. There is a cost to doingthat. Secondly, by doing so, we expanded the kerbspace, providing twice what was previously available.Thirdly, and most critically, a habit had developed ofpeople circling around and around the drop-off zone,which was doing nothing but adding to the congestionin the zone. The only way in which to stop peopledoing that was to make sure that, if people are goingthrough the zone, they have to pay to get out the otherend. That certainly does stop the circling. There aregood reasons for doing these things. We do not justdream up ideas and decide to do something for awheeze.

Q25 Lady Hermon: Do you accept that it makes theairport rather unpopular?Mr Doran: Probably less popular than we would liketo be, but it is necessary. I make no apology for that.

Q26 Kris Hopkins: I do not think that you are onyour own. It is my observation that regionalairports do similar things. Mine is doingsomething similar.We talked earlier about rail infrastructure. Whena significant part of your income is associated withsomebody driving a car to the airport and parkingit, it would not be in your interest to promote a raillink to the airport. It would, as you said, be in yourinterest to promote better road infrastructure. Isthat a good observation?Mr Doran: Better road infrastructure also supportspublic transport, whether that be taxis or buses. Wehave a very good bus service that could do with betterroad links. As I said, I do not have any particularleaning towards whether service access is by rail orroad. Both would be beneficial, as far as the airportis concerned.

Q27 Kris Hopkins: You do not think that a rail linkwould damage your economic model?Mr Doran: I do not think so at all. If you look atother airports up and down the UK that already havea rail link, you tend to find, outside the London areaand the main conurbations, that no more than 5% ofthe traffic actually use the link. A rail link does notmake a lot of difference.Naomi Long: My question has already been asked byKris. It concerned the link between rail and parkingcharges. I am satisfied.Dr McDonnell: That was my question, too.Chair: An important question, obviously.




Q28 Nigel Mills: I have a different question,fortunately. May I take you back to the Civil AviationBill, which we get to deal with again on Wednesday?You already mentioned security costs. Have you anyother comments to make on the Bill or concerns overit? Do you think that it strikes the right balance andthat passengers’ interests can be properly protected?Mr Doran: I think that the legislation brings a bitmore order to the regulation of airports than hadpreviously been the case. Regulations have grown upover a number of years and become a little piecemeal.It is good to bring them into one place and think aboutthem from scratch.The only other comment that I would make, which ismore to do with how this is going to work, is thatthere are provisions in the Bill to deal with thefinancial viability of operators and the regime ofcharging, or penalties, for failing to provide service.If you think back a number of years, you will recallthat Heathrow had a lot of issues in the wintertime.One year it was fog; the next year it was snow. Onthe back of that, an idea was developed that operatorsshould perhaps be fined for failing to provide service.The idea is fraught with difficulties, because no oneis sure how those fines would be levied, assessed orlegally imposed. There are some difficulties comingup. I am not making any comment on whether it is agood, bad or indifferent thing to do, but I seedifficulties arising from the mechanisms around it. Itwould be interesting to see how the financial fitnesstest will work, because most airports—certainly thosethat are privately owned—have a fairly complexownership structure for financing vehicles, and all therest of it. It would therefore have to be an all-encompassing approach rather than a mere look at theoperating company.

Q29 Naomi Long: We have already referred to thepressure on Heathrow, and I suppose that one of theeffects of that is the value of the landing slots there.Have you any comments or thoughts to share with uson the impact that the acquisition of British MidlandInternational (bmi) by International Airlines Group(IAG) may have on the slots currently available forits flights from Belfast City Airport to Heathrow, forexample? As managing director of BelfastInternational Airport, do you have any views on theimpact that that may have on connectivity from theregion?Mr Doran: I have alluded to it already, but, as Iunderstand it, British Airways has given acommitment that it will continue to serve NorthernIreland as a region, although it is not a cast-ironguarantee. Any airline in that position will look athow its interests are best served. If the market is therefor feeding into its onward services from Heathrow, itwill provide connecting services.There is another operator in the market: Aer Lingus.It currently operates three times a day from BelfastInternational Airport to Heathrow. It has given acommitment to maintaining those services and, in fact,has indicated that if additional slots were to becomeavailable as a result of the structural reorganisation, itwould be interested in putting its hand up and taking

one or two of them in order to enhance its Belfast toHeathrow service.We should not get too wound up about lack ofconnectivity, because it may be decided at some stagein the future that 10 or 11 services a day, for instance,are too much for the region and that some should betaken out. What is likely to happen under thosecircumstances is that the aircraft operating the peakservices will become a bigger aircraft and willtherefore carry the same number of passengers to feedthe outbound waves from Heathrow particularly andthe inbound waves from Heathrow back out to theregions again. I do not think that connectivity will belost; I do not think that there is any danger of thathappening.

Q30 Naomi Long: You also said that you felt that, inthis kind of battle, it would be a matter of frequencyversus seat capacity and that you might lose somefrequency but retain seat capacity. You said that thatwas the crucial issue. Take business travel, includingthrough-travel that passes through Heathrow and onto other business destinations. Do you accept thatfrequency is as important as simply being able to getfrom A to B, and that how quickly you can do thatand the number of options that are available have animpact on people’s choices?Mr Doran: Frequency is certainly important for point-to-point travel, so it becomes important when talkingabout traffic that is going from here to London to dobusiness there and come back again. At Heathrow andother similar hub airports, you will find that thethrough-traffic tends to come and go in waves. Withincertain hours of the day, you will find that there is anoutbound wave to North America and an inboundwave to the Middle East, the Far East or wherever.Correspondingly, there is an inbound wave at certaintimes. It is not beyond the wit of man for any operator,such as British Airways, to organise its big, high-capacity connectors to make sure that it feeds thosewaves outbound or picks up from those wavesinbound again in order to feed back out to the regions.British Airways is already doing that with Glasgowand Edinburgh.You will find that, at certain rotations during the week,because of having to meet the outbound waves, BritishAirways is putting a Boeing 767 on the Glasgow toHeathrow and the Edinburgh to Heathrow runs.Therefore, it can be done. In between times, therecould be a lower frequency of flights, but it is afrequency that hits the right times for point-to-pointtraffic.Chair: Thank you. We are bang on time, unless thereare any more very quick questions.

Q31 Lady Hermon: On Radio Ulster this morning,there was a very interesting item about the WorldPolice and Fire Games coming to Northern Irelandnext year, bringing thousands of people. Presumably,your airport has done some contingency planning forthat. Can you share the detail of that with theCommittee?Mr Doran: We have been in discussion with theorganisers of the games and the folks that will beproviding the infrastructure on the ground here to




ensure that the operation is as smooth as silk.Therefore, we reckon that we are in a good positionto ensure that, given the numbers that are coming andthe logistics of handling all the equipment that theywill be bringing with them, it will all work like a well-oiled machine.

Q32 Lady Hermon: Although there might be chaosat Heathrow with the Olympics, there will not bechaos at Belfast International Airport.


Witness: Mr Brian Ambrose, Chief Executive, George Best Belfast City Airport, gave evidence.

Q33 Chair: Welcome, Mr Ambrose. Thank you forjoining us. I invite you to make a brief openingstatement.Mr Ambrose: I can certainly do that. Good afternoon.We are delighted that you are considering a subjectthat is close to our hearts and that is important forthe region.In my opening remarks, I will touch on three points.The first one may seem a bit elementary, but it is vitalto this Committee. It is this: what do we mean whenwe talk about an air transport strategy? Secondly, Iwant to look a little bit at how things have evolved inthe region over the past 15 years. Thirdly, I want tolook at where we may be going and how that impactson the questions raised by the Committee.My first point is a suggestion that we need todifferentiate between government strategies andcompany strategies. There is a vital role forgovernment in ensuring that we address some of theissues that were discussed already during the firstevidence session, such as proper transportation link-ups to increase the use of public transport. However,when it comes to which airline flies which route fromwhich airport, you are in the realms of companystrategy, and I would be deeply concerned ifgovernment were to begin to involve itself in thatprocess.The issues that I see as being vital for government areinfrastructure, taxation, planning policy and planningdelivery. All those issues can have an important andprofound effect on how well we serve the region, andwe would be delighted were the Committee to lookinto them in depth.As far as where we are and where we are going isconcerned, there is a good news story here. We pickedup on some of the question about Northern Irelandhaving three airports. I can look back to a time whenwe had one airport, which was not a very pretty scene.There was no competition, and it was very stagnant.With competition, we doubled the market in thedecade from 1997 to 2007, with both Belfast airportsdoubling in size. As has been said, like most otherparts of the UK and other parts of Europe, passengersnumbers have decreased in the past four to five years.As a region, there is a tremendous goal for us torecover that business, both for the good of theeconomy and for the good of tourism. What hashappened in the past 10 to 15 years has been a greatsuccess story for the region.

Mr Doran: We have plenty of capacity.Lady Hermon: Thank you for that assurance.Chair: We are out of time. Thank you very muchindeed. The evidence session has been very useful.Mr Doran: Thank you, Chairman.

Obviously, we are somewhat unique. We are an islandoff an island, and we do not have the rail transportlink options that other parts of the UK have. If youwant to do a day’s business in Great Britain, you haveno choice but to fly. You cannot jump on a train orjump in a car and go by ferry: those modes oftransport play an important role but not in the contextof attending daily meetings. There are areas in whichwe need to open up the debate on where we may go.The region is particularly well served withconnectivity to Great Britain. Among the threeairports, we have excellent daily services. By that, Imean the number of destinations served and thefrequency of flights to the vital destinations. From ourperspective, the feedback from our customers is thatfrequency is vital for the business passenger. It is notjust that we connect to the region but that we do so atthe right time of day and with the correct frequencyto give flexibility for doing business.London Heathrow has a particular importance in thedomestic market. It is absolutely unique within all UKdestinations as far as its connectivity to the rest ofthe world is concerned. Any dilution in connectivitybetween Northern Ireland and Heathrow would bedetrimental to the region. We have other options. Wecan look at Manchester, Birmingham, Dublin, or wecan look further afield at Frankfurt or Paris, but noneof those destinations comes close to giving us the vitallinkages or convenience that we get through LondonHeathrow.The market beyond Great Britain into mainlandEurope has developed a lot in the past decade, and Ibelieve that there is further potential there. It has beenmentioned that we tend to serve the sun routes quitewell, but there are many major cities with which thereis zero connectivity. As someone who used to workfor a Spanish company, I am very familiar with theroad journey down to Dublin to fly to Madrid becausemy choices were to connect through one of the GBhubs or to get a direct flight, and I chose the directflight and the convenience of Dublin. The Europeanmarket has potential, and it is something that we needto find a way of fully exploiting.As you will know, we have one daily long-haulservice. There are restrictions for us as a region.Northern Ireland has been described as a region withthe same population as greater Leeds, but directconnectivity is always much superior for tourism orfor economic success than connecting via another



23 April 2012 Mr Brian Ambrose

airport. Therefore, GB is well served, Europe less so,and long-haul destinations are not very well servedat all.We have discussed at some length public transportlinkages over the next 15 years. One of the challengeswe face is that the rail network is quite limited here.I will be quite open and say that we would encouragea rail link to Belfast City Airport. You couldphysically throw a stone from my office to the railwaytrack. I have never done it, but that is how close weare to the line. It is literally at the other side of thedual carriageway.A rail link would be detrimental to our business. Thepeople who currently use our car park and pay for it,which I will come to, could then come by rail, but Ican wear a bigger hat than that of my Belfast CityAirport one. I think that greater joined-uptransportation is good for us as a region, and we asa business support a transport link into the airport.However, it would not be the only transport link. Wehave good road access. We are on a major artery, andthere are plans to widen the Sydenham bypass, but,for us, the main transport link is likely to be bus.There have been enhancements as we have grown, andwe are now at a frequency of a bus every 20 minutes,and that will go down to a bus every 15 minutes.Translink is committed to moving to every 10 minutesif we bring the passenger volumes to support thelinkages.Finally, on taxation, it has been mentioned that theNew York service accounts for just over 1% ofNorthern Ireland’s total passenger volumes. To date,the moves by the Government to retain the directservice to New York, although welcome, are doing meno good. If it ceased tomorrow, we would get at least50% of the business. However, as a region, and withme again wearing my bigger hat, we welcome it, andwe think that it is important for Northern Ireland tohave that direct linkage to New York. However, theaction that the Government have taken on airpassenger duty has left 98% of our passengersunaffected.We get the double dip, because if we are flying areturn journey to Great Britain, we pay the tax eitherway, which is unique to Northern Ireland, and it wouldcost £50 million or £60 million to remove APDentirely. The Executive need to have an informeddebate on whether that would stimulate the marketand give you sufficient return. Could the Governmentwork more effectively with the industry to try tosecure those seven or eight main destinations in NorthAmerica and Europe that are currently missing?Would that be a better way of spending the money?The support needed there is more like £10 million ayear for a small number of years rather than £60million a year ongoing.In summary, we need to be crystal clear when we aretalking about the air transport strategy and what iswithin the remit of government and what there is inan open and competitive market. We are verydependent on air access, so this is a vital subject fornot just the airports but the region—a region that hastargeted tourism. When it comes to all those issues,we have a close working association with theNorthern Ireland Assembly. We have good access, and

we will continue as an industry to try to leverage thatand work effectively. Those are the key issues.

Q34 Naomi Long: Thanks, Brian. It is good to haveyou before the Committee to give evidence. You willexcuse me for raising an issue that is a constituencyinterest: the situation with IAG having taken over bmi.Willie Walsh said that he is committed to the bmiservice from Belfast City Airport to Heathrow andthat it is secure. The EU Commission Directorate-General for Competition has given it protection, atleast until October. However, redundancy notices havebeen issued to staff based at Belfast City Airport. Thatmakes me nervous. I am not one of those staff, so Ican only imagine how the people involved feel aboutthat. How much confidence do you still have that thecommitment to continue flying from Belfast CityAirport to Heathrow is secure, given the importancethat you have placed on Heathrow links?Mr Ambrose: On the one hand, I am 100% confident,because the commitment is very explicit: the linkagewill be retained. However, that could mean anything.When you strip it back, business is not thatcomplicated. Our job is to make sure that thepassenger experience is a good one. We have investedheavily in infrastructure that has created a gateway.We get it wrong from time to time, but, generally, theairport proves to be a good experience for thecustomer. The security that we have has been achievedthrough demonstrating a demand for strong linkagesbetween Belfast City Airport and London Heathrow.Some 35% of our passengers go on to interline, andthose passengers are vital to any airline. I am veryconfident of our case, but, as I say to our shareholderswho frequently asks me the same question, there is adifference between being confident and havingsomething signed. The next few weeks are vital. I takea differing view from what you have heard in the past:frequency is important for point-to-point flights andfor interlining. The route is very profitable, but that isnot the issue.We had a very good White Paper from government.I remember submitting to what turned into the 2003aviation White Paper. It identified clearly the lack ofcapacity in the south-east and the need to expandHeathrow. Almost 10 years later, we are still wherewe were, with an airport running at full capacity. Theend result is the things that you are now witnessing:pressure on Heathrow slots; and regions having tofight to protect connectivity. I am confident that wewill have a good outcome, but the coming weeks willtell whether that impression is well founded orwishful thinking.

Q35 Naomi Long: I hope that it is the former andnot the latter, Brian. I realise that there is commercialsensitivity around this, and I am not sure how explicityou can be, but how important is the bmi operation,as it was, for the financial implications for the airportmore widely if the slots were to be reallocated andBelfast City Airport were to become a casualty ofthe process?Mr Ambrose: At a human level, it is a difficult timefor staff. There is uncertainty, and we are trying tosupport staff through that uncertainty. As I said, for a




region that is so dependent on air access, it would bedetrimental if we were saying to our passengers thatwe still have a service to Heathrow but that it is notas frequent. For you and me and everybody else whouses that service, you could end up at Heathrow aftera delayed meeting, and, instead of waiting a maximumof a couple of hours for your flight, you could besitting for three, four or five hours. It is not the end ofthe world, but it is not how you want to do business.Likewise, when we fly further afield, we try to makeour connectivity to limit our time on the ground. Noneof us, including me, like to spend too much time inan airport, so it would be a retrograde step if we werenot to retain the kind of frequency that we currentlyhave. That is more than an opinion. That is comingthrough crystal clear from our customers, who arevery explicitly telling us that frequency is vitallyimportant for them, particularly for the businessmarket, and less so for the leisure market, wherewaiting for an hour or so is less vital to us becausewe are in holiday mood.

Q36 Lady Hermon: Brian, are you able to confirmto the Committee that Mr Willie Walsh or someonefrom BA has been in touch with you to discuss thecontinuation of direct flights from Belfast City Airportto Heathrow?Mr Ambrose: I am sure that all the players in thisarena have been working, as I have been, behind thescenes to meet all of the key players and to try toensure that we get a positive outcome. I do want tobe explicit about who I have met and spoken to. WhatI have told our staff is what I can tell the Committee:we are working tirelessly to ensure that there is apositive outcome, first, for our business and, secondly,for the region.

Q37 Kris Hopkins: I have not been to your airportfor about 20 years. I was so impressed by the massivetransition that it has made in that time and by theexcellent service that I have had on the two or threetimes that I have been there since. That is importantto say. Northern Ireland has gone through massivetransition since I was coming here more frequently,and, as a gateway to a city and a country, the airportis extremely impressive. You are right about trying todifferentiate between government strategy andcompany strategy, but there is an issue aboutgovernments making choices in an informed way. Iagree that this is possibly not the best arena in whichto ask some the questions that we may be moreinformed about to make some of the choices andrecommendations that we want to make.As a company, you and your investors are taking risks.There is an issue of confidentiality, and I assure youthat, as an individual, I do not want to do a biggovernment job on a private business. If we are goingto make recommendations and put forward a strategy,we need to know where the best deals are and wherebusiness sustainability is. That means lifting theblanket up a little bit and having a look and havingsome confidence in that. I want to reassure you that,after your initial statement, this is not about BigBrother coming along to stamp over loads of peoplewho are taking risk and who are really working hard

to try to deliver a good product. It is about how wecan better support you.To that end, I will ask a difficult question. Recently,you announced that you were withdrawing theapplication to extend your runway. Why did youwithdraw your application, and what are theimplications? You might say, because of commercialconfidentiality, “go away, I am not telling you”.Mr Ambrose: I appreciate the positive feedback, and,as someone who has never in my life done any job atthe airport, I will pass on the positive comments tothe staff. I have no problems with dealing the hardissues. I come back to my third point that there arethree airports and that, with a blank sheet of paper,you would absolutely not start with three. One issupported by the region, and you are about to hearfrom that airport. It is none of my business if thatregion wishes to support an airport, and I wish it everysuccess. The two Belfast airports are privately ownedand profitable. I believe and argue strongly thatcompetition has been good. That is shown statisticallywhen you look at when there was only one airport.Monopolies are never good for business. I have notnoted your third question.

Q38 Kris Hopkins: It was on the runway extension.Mr Ambrose: I have said publicly that, some yearsago, we covered practically every base in GreatBritain, and competition helped to grow that pie. Webelieve that Europe would benefit from competitionand that we can take 20% to 25% of that market.We have been opposed in that legally. We had twolive applications in the system: one, which we do nothave time to bore you with today, is to remove a seat-for-sale restriction which is now eight years old; andwe had a runway application which was in its fourthyear. We have decided—and the wording was quitespecific—to remove the current runway application assome of the details are now out of date. The Ministerof the Environment has announced that the seats-for-sale application, the eight year old one, is goingthrough another public process which he is targetingfor this autumn and we will devote our energies toworking that process. However, as a business, we stillaspire to increase the city connectivity into mainlandEurope and I am confident that at some time in thefuture a runway extension will facilitate that.However, we have removed the current runwayapplication; we have not removed our ambition toexpand into Europe.

Q39 David Simpson: You are very welcome, Brian.Kris asked a question earlier about the reliance of eachof the two airports on one airline—yourselves onFlybe, and the International Airport on easyJet. Someof our questions will double up, obviously to getanswers from the airports individually. In youropinion, is that a sustainable situation, or is there someavenue, and I think you mentioned at the verybeginning in your opening comments, in yourreference to the fact that the airports are owned byprivate companies and so it will be a companydecision on all those things. Looking five or 10 yearsdown the road, is it feasible that the two airports couldshare routes internationally or domestically, split




them, or do something in order to make them viable?I would like to hear your view on that.Mr Ambrose: Your question has two parts. I wouldprefer not to be as dependent on one customer; that isbasic business practice. One of the reasons for it isthat such dependence is not unusual. You will find thatCity of Derry Airport is pretty dependent on a singlecustomer. For airports of our size, it is not thatunusual, in that there are not so many competitors anymore. A lot of airlines have gone to the wall in thelast 15 years. There are a few dominant players left.When you lose a route, and you try to find an airlineto replace it, the list is much shorter than it used tobe. However, we have demonstrated that we have agateway that is no longer an embarrassment to us, andwe are speaking to a number of airlines. Five yearsfrom now, we do expect not to be so dependent on asingle airline. So that is an objective.As to airports working together, the market carvesitself up quite well by default rather than design.Belfast International Airport has almost a monopolyin the freight market. We will not compete in thatmarket. It generally requires older aircraft and aircraftto operate at very late hours and through the night.There is no constraint from our side to stop BelfastInternational growing that market however they can.We are not in competition for long-haul business, soany aspiration that Belfast International has to go intoCanada, the Middle East or anywhere else goes withour blessing and best wishes. We wish them well inthat. We will not compete in the long-haul market.The Great Britain market is certainly big enough forcompetition between the airports and, if you look,there are 30 or 40 flights per day going into Londonbetween us. That is good for the region and it isimportant that customers have choice. It is also ourbelief that Europe is a big enough market to withstandcompetition and that the competition will grow thepie. It is a myth that anything that we do in thecompetition for the short-haul market is in any waypreventing the development of that long-haul market.We have said publicly that we are not interested in thelong-haul market. The biggest constraint indeveloping that market is our catchment. So, thoughwe have a population of 1·7 million, you can make itbigger than that. The road to Dublin goes north andsouth, and we all aspire to encourage people to takeadvantage of driving north as well as south. Even ifyou closed the City Airport tomorrow, it would makeno difference to those markets because we are notcompeting, we are not in them and they are not ourterritory.

Q40 Nigel Mills: We have heard a lot of talk aboutHeathrow as the hub airport. Can you update theCommittee on whether the Flybe regional hub atManchester has made any difference to yourpassenger numbers?Mr Ambrose: Yes. I spoke with Flybe this week, andthe short-term feedback is that it has seen significantgrowth on some routes using Manchester as adomestic hub, which Flybe is going to develop further.It is probably early days to be definitive with facts andfigures, although Flybe threw some our way, but Flybeis trying to promote the idea that, because of

congestion in the south-east, you can connect throughManchester to a reasonable range of destinations.Again, however, with its range of choices, Heathrowovershadows everywhere else. I think that the regionalhub at Manchester is a welcome development that willmake a positive contribution, possibly more on themargins than in the mainstream, but it is early days.

Q41 Naomi Long: We talked earlier about airpassenger duty and the fact that it affects about only2% of Northern Ireland passengers. With the probabledevolution of APD to the Assembly, have ExecutiveMinisters indicated to you that they would be willingto look at significant reduction in APD, which wouldimpact on a wider passenger group?Mr Ambrose: I think that representatives from allthree airports appeared last week before the Financeand Personnel Committee, which is specificallylooking into that. As I see it, the matter is beingconsidered. The issue for the Executive is that theGovernment nationally have decided not to follow theexample of the Netherlands or Republic of Ireland. Ifthey had followed their lead, the Treasury would havetaken the hit. Now that it looks like becoming adevolved issue, however, the conversation for theExecutive is about where to find that £60 million ayear; would taking it from Health, Education or otherDepartments be a good use of their moneys? I do notthink that enough work has been done to allow theFinance Minister or others to make a really informeddecision.The difficulty is that a number of factors led to thedoubling of passenger numbers during the decade1997 to 2007. There was a booming economy, thepeace process was kicking in, tourism had earlysuccess and there was favourable taxation. Improvingone of those elements does not guarantee a full reverseof the trend. However, anything short of removal willbe incremental and have no real impact at all. The factthat the Irish Government have not only reduced itbut ring-fenced and are redeploying those moneys intoaccess and tourism is to be welcomed. We welcomedsome short-term measures by the Executive last year,whereby money returned by Invest Northern Ireland(INI) was redeployed—about £4·75 million—intopromoting Northern Ireland and Great Britain. Wewelcomed that step. There is a debate to be had inthe Executive.I understand that £60 million would be the cost ofremoving the duty entirely. However, we suggested inour evidence last week that there are a number ofways in which Government can help positively, ofwhich that is one. Another is to actively work withthe industry—not necessarily through establishing anair route development fund, which may run into state-aid rules—to help us promote some of these newroutes. For Government, that is a real role with alasting legacy that you can list for yourselves: routesto Frankfurt, Madrid and Toronto would be great gainsto the region as a whole and would not cost a hugeamount.

Q42 Naomi Long: You give a couple of options—eliminate or significantly reduce APD or do theseother things. Is your first choice still the removal of




APD? Do you still think that that is the main lever?Would you support working with other airports tolobby the Executive for that? Are your othersuggestions merely a pragmatic response because youare concerned that they will not be able to find thosecosts? Or do you genuinely believe that removingAPD is the only option and there may be better oneson the table?Mr Ambrose: It is yes and yes: my clear andconsistent position for the airport is that the only wayto make a major impact is to remove the duty in itsentirety. Anything else is just playing on the fringesand will not make any impact.You are quite right to say that I am also pragmatic. Ifthat ain’t going to happen—although we are not atthat point yet—we have raised other ways in whichwe could work more effectively with the Assembly.However, unequivocally, we are saying that if youwant to make a serious effort at recovering thosemillion passengers and more, if you seriously want togrow inbound tourism and help local companies toexport, the only meaningful measure that will have amaterial impact is the complete removal of APD.What has happened to date, while welcome, has left98% of the problem totally untouched.

Q43 Mr Anderson: To go back to the discussion thatwe had earlier about the railways, I understand that anincrease—or start—in railway usage would have animpact on the income of your car parks, but hasanybody in Government or in your business done anyreal work on whether it is a viable option? Has anywork been done on the cost of converting stations nearat hand, what the capacity would be, and whetherthere would be any disruption to normal services, orare people just talking about it?Mr Ambrose: Work has been done by successiveMinisters in the Department.Mr Anderson: That sounds so familiar.Mr Ambrose: I can write the script now. Whathappens is that Ministers will visit the airport andstand in my office, which overlooks the railway line—I have a great view—and they will become enthusedabout the idea of linking up. However, before theyleave the office, I will tell them that their officials willsay that, using traditional rail metrics, there are notsufficient passengers using the City Airport to justifya rail halt. The officials will do the sums, quite rightly,and say that they have used the rail metric sums thatthey have been taught and trained to use, and theycannot justify a rail halt. It is a chicken-and-eggsituation.Of course, there are not sufficient numbers using it.People have to get off a half a mile from the airport,walk over a non-covered footbridge with theirluggage, possibly in the rain, press a little button andwait for our courtesy bus to pick them up and takethem to the terminal. The only people who currentlyuse that are a few students and folks who are veryprice sensitive. Therefore, until you make theproposition attractive, nobody is going to use rail, andyou will never justify the halt.The vision that I have proposed to successiveMinisters is that we are talking about less than £10million, so, go for it and put the halt in. I will sacrifice

my office, and the covered walkway can be broughtright to the front door of the terminal. That willencourage people on to public transport and out of thecar. Anything short of that will not work. However, asI said, it is a well-rehearsed answer. I have had it withfour different Ministers, and we still face the situationin which the Department comes back and says that ahalt cannot be justified.

Q44 Mr Anderson: Has that been worked upformally?Mr Ambrose: It has been worked up formally bydepartmental officials. They will come up with somemeasure to say that if there are x number of people ayear wanting to stop at that point, it justifies a newhalt. However, the reason why that will never get thereis that the proposition is so unattractive. Less than 1%of our passengers currently come by rail. It isnegligible.Mr Anderson: I understand. However, if we were totake that attitude, none of the things would ever havebeen done around the Heathrow Express.

Q45 Dr McDonnell: Brian, you are welcome. Thankyou for all the information and evidence that you haveprovided. Is your company in a position to make acontribution to that £10 million, or would it all beGovernment money?Mr Ambrose: We have agreed in principle to make acontribution. It will provide us with a superiorproduct. However, there is a conditioned expectation.We will have to go to shareholders and say that wewant them to contribute to something that will cost usin the long run. However, we are willing to have ajoined-up approach, as we did with the underpass. Theairport made a contribution to allow traffic going toBelfast to not interrupt traffic flows on the Sydenhambypass. Therefore, we have agreed in principle, butwe have conditioned it to say that the bulk of theinvestment would have to come from the Executive.However, it is a modest expenditure.

Q46 Kris Hopkins: How do you respond to recentcriticism that all three Northern Ireland airports, but,particularly, the City Airport, have some of the highestcar parking rates in the UK?Mr Ambrose: We were asked the same questionformally by the Consumer Council, and we are puttinga robust response together. Airport car parking isexpensive, as is downtown parking. We have alwaystracked what other airports are charging and whatdowntown Belfast is charging. In our response to theConsumer Council, we will demonstrate that we arecompletely competitive with the marketplace,although you can of course cherry-pick some aspects.We have a wide range of offers. You can park for aweek for £30, which I think is pretty competitive nomatter how you look at it. A holidaymaker who wantsto park his car for a week can do so for £30. However,if a business user wants to use the short-stay car parkovernight, that is expensive, but no more expensivethan it is in other car parks in the city or if you takea holistic comparison across the UK.Like the previous contributor, I would be more thanhappy to reduce car-parking fees significantly, but the




moneys we make from aviation revenue are now onlyaround half of our total income. Shops and car parksare the other two sources. If you look at the publishedaccounts, none of the businesses that will appearbefore the Committee today are making bucketloadsof money, but frankly, I think car parking is veryexpensive and we aspire to reducing it. However, weare owned by an international shareholder whofrequently demonstrates that, unlike the figures thatwere presented, we are far from being the mostexpensive and are in the lower half of the table. Whenwe give our considered response to the ConsumerCouncil, I am happy to share it with the Committee ifit would be of interest.Kris Hopkins: I presume that they asked the otherairports for a similar kind of response—there is a nodcoming from over there. We could ask for thatevidence or for that note to contribute to our pieceof work.

Q47 Nigel Mills: I refer you to the Civil AviationBill that is working its way through Parliament; doyou have any comments or concerns on the changesproposed therein?Mr Ambrose: The concise answer is that I think Johnhas articulated the issues as we see them. We concurwith his views. Rather than repeat them, I am happyto say that we view the issues in the same way as hasjust been documented here.Chair: Are there any more questions?

Q48 Lady Hermon: Chairman, having given myvery frank views about car parking and the £1 chargeat Belfast International Airport, I will repeat the wordsof our Finance Minister, Sammy Wilson. Correct meif I am wrong, but I think Sammy described the short-term car-parking charge at Belfast City Airport asoutrageous. Are you suggesting that our FinanceMinister is wrong?Mr Ambrose: If he views the short-term charges in allcar parks as outrageous, then I concur with him. Myview is simply to make sure that we are aligned withthe marketplace. As far as the £1 issue is concerned,the comment was made that many airports areintroducing this charge. It is a potential revenuestream and, again, our international shareholders areasking why we have not introduced it. I would prefernot to do so. I think it will take away from the servicethat we provide, but if the rest of the market takes thatroute of finding another revenue source, you cannotguarantee for ever that we will not end up going downthere. At the minute, whether it is the £1 charge or thecost of short-stay car parks, we benchmark ourselves

Examination of Witnesses

Witnesses: Mr Clive Coleman, Technical Director, Parsons Brinckerhoff; and Mr Albert Harrison OBE,Non-executive Director, and Mr Damien Tierney, Managing Director, City of Derry Airport, gave evidence.

Q54 Chair: Gentlemen, you are very welcome.Thank you for joining us. Mr Tierney, will youintroduce your colleagues and make an openingstatement, please?

against the industry. I believe the evidence weprovided to the Consumer Council put us in a verygood place.

Q49 Lady Hermon: In the short term, do you haveany intention of introducing a £1 charge just to comein and drop your child off?Mr Ambrose: I have none, but I get beaten up at everyquarterly board meeting and I may give in one of thesedays. However, at the moment, there are no plans tointroduce a £1 charge at Belfast City Airport.Lady Hermon: Thank you. I am very relieved tohear that.

Q50 Chair: On parking, I think you referred to theremaining APD a couple of times. It is relatively smallcompared to parking charges, though, so if that is adeterrent, then the car-parking charges must be adeterrent.Mr Ambrose: Only 5% of our passengers use the carpark, so it is a customer choice issue. One-hundredper cent of our customers pay the airport departuretax; that is not voluntary.

Q51 Chair: You do not know the views of those whodo not use the car park, do you?Mr Ambrose: It is an argument that we look atfrequently; could we change the rationale completelyand start to attract people? However, there is a culturein Northern Ireland, as members of this panel wholive here will know, of dropping off and picking upmore so than in most other airports. That is alsobecause our location is fairly convenient. We tend toget that more than most because we are a couple ofmiles from the city centre.

Q52 Chair: I am not suggesting that it is only yourairport. I will fly from Birmingham to Dublin onThursday and the car park will cost me more than theflight. I am not suggesting that only your airport is atfault. It is an issue.Mr Ambrose: Yes. As I say, if you nip to downtownBelfast this afternoon and go shopping for two orthree hours, you will gasp when you put your ticketinto the machine. The few pounds in your pocket willnot cover it. You need to take out a credit card ora banknote.

Q53 Chair: There are no other questions. Is thereanything else you would like to add, Mr Ambrose?Mr Ambrose: No. Thank you very much.Chair: Thank you very much indeed.

Mr Tierney: I will certainly introduce my colleagues.Albert Harrison is one of our non-executive directorsand is probably the only person in Northern Irelandwho can claim to have operated as chief executive ofall three airports here at one stage or another in hiscareer. The colleague on my right is Clive Coleman.



23 April 2012 Mr Clive Coleman, Mr Albert Harrison and Mr Damien Tierney

In its wisdom, as part of the restructuringarrangements for City of Derry Airport, Derry CityCouncil has entered into a partnership with Regionaland City Airports, which is a subsidiary of BalfourBeatty in the UK. It runs a couple of other airports inthe UK, including Exeter and Blackpool. It has beengiven the management services contract to run theCity of Derry Airport for the next five years initiallyand possibly beyond that. I am managing director ofthe airport.Albert will make the opening statement. We will takequestions thereafter.Mr Harrison: Thank you very much for inviting us. Iwill keep my opening comments fairly brief, and thenI would like to respond to some of the questions andpass comments on what my colleagues have said,giving you time to think about it and come back to me.Basically, the 2003 White Paper set the scene for theairports in Northern Ireland. It said that all threeairports were important to the development of airtransport in the Province. Since 2003, each airport hasmade considerable improvements in infrastructure.We have seen an improvement in the number ofpassengers coming through. Certainly, customerservices have improved at all three airports. City ofDerry Airport (CODA) has been commercialised andis now a commercial organisation set aside from DerryCity Council, so that, in the future, if it turnsprofitable, hopefully someone will buy it and I canretire.I agree with a lot of what has been said. One themethat is coming through is that air links for NorthernIreland are essential. They are not a luxury. Withoutair links, this place will cease to exist. I will bet youthat no one at this Table came across by ship or boat.It is impossible to get a train or to drive.We have one major issue that I do not think mycolleagues commented on sufficiently. It is that we areconnected to, and on the same island as, the Republicof Ireland. Dublin Airport is a two-hour drive away.The Government there are extremely proactive indoing everything they can to boost aviation. In thepast, they have given 95% grant aid to anything wherefacilities need to be improved for security, and 75%for growth. We have talked about the €3. They havereduced the airport departure tax because they sawthat it had an impact on tourism. Tourism in the Southof Ireland is double the impact of what we achievehere in percentage terms: our tourism is about 1·9%worth our growth domestic product (GDP), whereasthe South’s is 3·7%.Dublin Airport sees Northern Ireland as part of itscatchment area. Ireland West Airport Knock seesDonegal, Fermanagh and most of the north-west aspart of its catchment area. The latest estimates are thataround 1·5 million people a year leave NorthernIreland to fly out of Dublin Airport. Even BrianAmbrose said that he drives to Dublin in order to geta direct flight. John Doran was correct in saying thatits numbers have fallen substantially, but, at its peak,Dublin Airport had 23 million passengers. That figurehas now dropped to 18·4 million, which is far betterthan the three airports in the North put together. TheIrish Government have done everything that they canto boost aviation in the South. However, airport

departure tax will have a negative impact on tourism,business, connectivity and everything else.I will address some of the questions that were asked.The general rule of thumb is that around 10 millionpassengers are needed for a rail line to work. We arenot in that bracket. Belfast City Airport might be ableto use it, but a bus service for Belfast InternationalAirport is far better in the long run. If you were tospend £98 million on the infrastructure, the problemwould then be the running costs. How long would yoube prepared to wait for a train at an airport? You mightwait 15 or 20 minutes, and, if you want to wait for anhour, that is fine, but the more frequent the service,the higher the running costs. Therefore, putting in theinfrastructure is fine, because £98 million is not ahuge amount of money, but the ongoing running costswould be substantial.Greater Leeds was mentioned by way of comparison.Northern Ireland is a small place, but you can driveor get a train from Leeds to London. The propensityto travel out of this place is probably about four timesthat of Leeds. Therefore, if you look at our 1·7 millioncatchment area, you probably need to multiply it by afactor of two or three in order to take intoconsideration the frequency of travel.Brian mentioned the €3 charge at Dublin Airport.That €3, we believe, has been pumped back into aroute development fund. If you look at the way inwhich Knock airport has grown and at the number ofservices that it is going to have this year, it will havepossibly 600,000 passengers. Knock airport’scatchment area is sparse, but it has been able toachieve those figures predominantly through somesort of route development fund.Heathrow is important to Northern Ireland. I am oldenough to remember Belfast International Airportwhen it was government-controlled. Two airlines flewout of it, and there were around 1·5 million passengersa year. There are now probably around one millionpassengers. Therefore, the dependency on Heathrowis not as big as it used to be.On government versus company, I tend to agree withBrian that government can help with certain things,but there are other things that have to be left tocompanies to sort out. If you go back to the originalpublic inquiry when Belfast City Airport was tryingto expand, the limits that Brian was talking about wereput in. Brian has quite cleverly managed to move hisway around them over the years. Planning is still anissue in Northern Ireland. Joined-up governmentthinking with planning would help thingsconsiderably.Frequency is important. If bigger aircraft come, thatcould have an impact on Belfast City Airport,depending on the size of the aircraft.We have talked about air passenger duty. I willmention three things that I would like to see and thenshut up. We would like to see a strategy, somethingdone about airport departure tax, and some joined-upthinking to try to get APD down to zero would beextremely useful. All three airports are working onthat together. We have had a lunch or two, and it isthe three airports’ intention to try to approachgovernment at the end of this month or in early Maywith proposals on where we think an air route




development fund would work. I understand that thereare state rules, but there are ways and means aroundthose, as some of our sister and neighbouringcountries have found. Therefore, we are agreed on theneed for a strategy. We would like a routedevelopment fund set up, because it worked in thepast. I was at Belfast International Airport—I actuallyemployed John—when air route development kickedin. It has been worth it for Northern Ireland plc, andan air route development fund for long-haul flights,such as Emirates to the Middle East or a Torontoflight, would be well worth it.

Q55 Lady Hermon: May I clarify one point, MrHarrison? This is very interesting because none of theother gentlemen mentioned it. You explained thatthere will be a joint approach and a presentation byall three of the airports to government. Do you meanto the Northern Ireland Executive?Mr Harrison: To the Northern Ireland Executive, notto the UK Government.Lady Hermon: Thank you.

Q56 Dr McDonnell: I am very interested in yourreference to Dublin Airport. It is a point with which Ifully agree. Are you suggesting that we may belooking at this with only one eye if we do not,somehow or other, take Dublin into consideration?Mr Harrison: Very much so. We talk about roadinfrastructure and all the rest of it. You can get a busfrom Belfast city centre to Dublin Airport from 6.00am to 6.00 pm every day, and there are 12 buses aday. That service delivers capacity of 500,000 seats. Iam not sure about weekends, when the service mayease off a bit. That is a lot of capacity, and even ifyou allow for a 75% load factor, it means that morethan 300,000 people can use the bus. If I were to askeveryone present who lives in Northern Ireland toraise their hand if they do not know anyone who hasflown out of Dublin, I would be very surprised to seeany hands raised.Dr McDonnell: It costs only €10 or €12 for the bus.Mr Harrison: Yes, it is cheap. Therefore, we believethat a considerable number of people go out ofDublin. One and a half million passengers equates to1,500 jobs. As John said, there are around 4,500people employed at Belfast International Airport andaround 4·5 million people use the airport. In itsheyday, 5·5 million used it. It is roughly right to saythat one million passengers equates to 1,000 jobs, so1,000 jobs are missing from Northern Ireland’sairports through losing those one million passengers.When tourism, and so on, is added to that—Clive canhelp me here—you are looking at a loss of around3,000 jobs to the wider economy.

Q57 David Simpson: I have a couple of questions.One of them is a repeat question to which I need aresponse from the airport’s representatives. MrColeman, I assume that the organisation that yourepresent is involved in the refurbishment of theairport? Its facilities, infrastructure and all that. Canyou give us an update on the progress being made ortell us how things are moving?

Mr Coleman: We are not involved in that. BalfourBeatty has a small airport-operating company calledRegional and City Airports, which owns a couple ofairports in England and has an operating arm. One ofour contracts is, as Damien said, to operate City ofDerry Airport initially for five years. Although we area part of a major contractor, our contract with DerryCity Council is not for refurbishment.However, I can say that, since the difficulties that Cityof Derry Airport had in 2007–08, a considerableinvestment has been made in that airport, bothphysically on the runway and taxiways and in airnavigation systems to improve the condition of theairport, achieve its licensing and, especially, thecontinuation of its civil aviation license, and makesome improvements in the terminal. That expenditureis just about at the end. There is one more project tocarry out, which is to provide landing lights at oneend of the runway. That should be completed this year.

Q58 David Simpson: I am sorry about that. Myinformation was that your company is involved in therefurbishment. However, that is fine. It is good toknow the background.Gentlemen, I should have said at the start that you arevery welcome. The other two airports’ managementteams were asked a question on their reliance on asingle airline. Your airport relies on Ryanair. What isyour view on that for the long term? Is yourmanagement actively looking for other carriers?Mr Tierney: As the other two managing directorsrightly said, no airport wants to be dependent on asingle carrier if it can avoid it. However, for airportsof our size, and even for those as large as BelfastInternational Airport in the UK and beyond, one tendsto find that there is a dominant carrier. That situationis simply down to the fact that there are fewer airlinesaround. When there is a dominant carrier in an airport,it tends to put off other operations from coming in,because they would come in at much smaller level ofoperation and have to start from scratch. It is difficultto attract other operators, especially when you have abig carrier such as Ryanair or easyJet in the market.Having said that, I am sure that the other two airportsare in exactly the same position, because we are all inthe market to attract other carriers. We would all liketo have a much wider spread of carriers, and trying toattract them is something that we do as part of ournormal route development structure. However, in themedium to longer term, although that is a goal, thechances are that we will have a prominent carrier forsome time to come.

Q59 David Simpson: Brian Ambrose talked aboutcargo-carrying at Belfast International Airport. Youare a fair distance away from that airport. Is yourairport involved in any of that cargo-carrying?Mr Tierney: No, there has been a shift in how cargooperations are managed around the world. Hubairports tend to manage the cargo into a region, afterwhich it is taken off and put on to the road networks.To be honest, the amount of investment that wouldhave to be made at our airport, for example, to put ina freight base would be prohibitive for the amount offreight that we would get. Therefore, it is unlikely that




we would enter that market. It will probably beBelfast International Airport’s baby for some time tocome.

Q60 David Simpson: To finish, how manypassengers did you have in the past financial year?Mr Coleman: We had 412,000 passengers.I will add a little bit more about route development.As Damien said, we are currently all out in themarketplace. At any time over the past two years, wehave been speaking to 12 carriers and operators. Theseare difficult times. We all know that there has beengreat consolidation in the airline industry, and it isfairly obvious that one of the easiest ways of losingmoney is to operate an airline. Most airlines are veryrisk-averse at the moment.If you go back to the early 2000s, a lot of airlineswould have allowed one or two years to start a route,lose money and then make it profitable. Most airlinesnow will have no incubation period, and it is verydifficult to attract them. Hopefully, as economiccircumstances improve and markets become a little bitless price-sensitive, airlines will come back, but it isa very difficult marketplace at the moment. Weprobably spend between one and a half and two manyears in a team each year on actively pursuing groupdevelopment. However, that is very difficult when themarket is price-sensitive and fuel prices are high. Fora number of the carriers, it is because of APD,unfortunately. For example, the choice of two of thecarriers was to concentrate on running service intoKnock airport rather than into City of Derry Airport.Mr Harrison: Basically, Ryanair has stated that ifAPD continues as it is, it will not be growing in theUnited Kingdom; it will be growing in Europe instead.

Q61 Nigel Mills: In your submission, you raise theissue of redirecting point-to-point flights fromHeathrow to Gatwick to get some extra capacity intoHeathrow. However, you raise some concerns aboutthe implications of Gatwick pursuing a strategy ofbeing a hub of its own. Will you talk us through thoseconcerns and how you think they might play out?Mr Coleman: The point that we were trying to makeis twofold. First, Northern Ireland traffic into Londonshould not just concentrate on Heathrow, becausethere are other airports. If you are going to certainparts of London, such as the City rather than the WestEnd, Gatwick is a better option. The concern that wehave is that Heathrow, under its new owners, GlobalInfrastructure Partners (GIP), has invested well andturned it into a very nice airport. The aim is to makeHeathrow a hub for Middle East traffic, with a coupleof the big Middle East carriers being based there.The airport changed its pricing regime in April 2011,which led to some fairly significant increases in thetariff for aircraft of sub-110-seater size. Our concernis not an immediate one, but looking to the mediumterm, that might squeeze out some of the short-hauloperators. If that happens, the airlines will probablylook at what their most profitable routes are, and couldsqueeze out some of the intra-UK short-haul flights.That might have an implication for Northern Ireland,and it might have an implication for some other UKregional routes.

Q62 Mr Anderson: Can I ask about getting supportfrom the Government to keep services going?The example on the mainland is that of people flyingfrom the Scottish highlands and islands gettingassistance under a public service obligation (PSO).Have you considered asking for that, particularly forthe route to Stansted?Mr Tierney: We have not asked for that explicitly.The UK Government have made it clear that the onlyPSO routes that they would consider are the highlandsand islands routes. Whether Northern Ireland could beconsidered in the same light is debateable. However,we have made the argument when discussing APDthat we have an exceptional set of circumstances herethat makes us different from the other UK regions. Wedo not have road and rail links, and we have the addeddifficulty of a competitor on our doorstep with adifferent tax regime. Those issues do make ourargument slightly different from that of the other UKregions.That is part of the reason that we think there shouldbe a separate aviation strategy for Northern Ireland,whether contained in the wider UK frameworkdocument or sitting alongside it. There are issuesaffecting us that do not affect the rest of the UK,perhaps not quite to the extent of issues affecting thehighlands and islands, with their obvious remotenessand lack of connectivity. However, the two arecertainly similar.

Q63 Mr Anderson: I think that I am right inassuming that you used to have a PSO in place forflights from City of Derry Airport into Dublin but thatthe Irish Republic decided that that was not going tocontinue. Would that be something that you couldraise with the UK Government if, given what youhave just said, you can get them to accept that thereis a clear difference here? For example, I live in aregion that is similar in size to Northern Ireland, andthat has Newcastle Airport and Durham Tees ValleyAirport. There is an argument about how well DurhamTees Valley Airport can compete, particularly after itlost the flights to London. There are clearly hugedifferences in the relationship. Would you raise thepoint that Dublin is as important in reaching the nextstep for people from this part of the world as Londonis to people from my part of the world?Mr Tierney: The Irish Government took a view onPSO routes from Dublin to all its regional centres, oras many regional centres as it could. The Republic hasnow retrenched, and there are now only two PSOroutes in the Irish Republic.The UK Government never had the same appetite forPSO-type operations. Bearing in mind that we have atwice-daily operation to Stansted with a commercialcarrier, it would be difficult to persuade the UKGovernment to look at it as a PSO route, as someoneis already prepared to do it without a PSO. If thatservice were to be lost, we would have to examinethat, but it is not something that we would look at at

this stage./p>Q64 Naomi Long: Thank you,gentleman. It has been very useful to hear yourevidence so far. We noted that you and the two Belfastairports are working on a proposal to put to the




Executive asking for support for some form ofredevelopment fund.I suppose that this is the same question that I askedBrian: is your priority still the removal of APD? Isthis simply a pragmatic response to the fact that youfeel that the Executive may struggle to fund thatremoval, or would your preferred option be to haveAPD remain in place or be reduced slightly, with somesort of route development fund used as an alternative?I am simply trying to determine what your preferredoption is.Mr Harrison: I would prefer both; I would put bothoptions on the table. To return the Continental Airlinesissue, John is right, in that Belfast InternationalAirport put in around £4 million of its own money,the Government put in £1 million, and the return hasbeen £100 million. We need to encourage airlines tocome. With a bit of luck, having an air routedevelopment fund could very well attract an EtihadAirways or a Qatar Airways to fly to the Middle East,where there are big hubs that could service all of Asiaand New Zealand and Australia, thereby reducing theneed to go via Heathrow.Again, Toronto would be quite useful, as the numberof tourists whom we get from Canada is substantial.Air route development funds help prove to an airlinethat the route is commercially viable, which isessential. The key word is “development”. Adevelopment fund would help the airline to developthe route.If we slap on a large APD, that does not constitutedevelopment; rather, it is restrictive and will impacton the number of people who can afford to come toNorthern Ireland.I went to a wedding recently. A chap and his wifebeside me had travelled from Delhi. I asked whetherthey had come via Heathrow, but they told me thatthey had come via the Middle East to Dublin and gota car up because it was much cheaper. Those are twopassengers that we could have had, but they found amore economical route.I will use flights to Johannesburg as an example ofwhat is available on some websites. If I want to flyfrom Belfast to Heathrow to Johannesburg, it can costme £x. If I fly on the same airline from Dublin toHeathrow and connect with the same flight, the Dublinflight is always considerably cheaper. That eithermeans that the airline is doing extremely well out ofBelfast to Heathrow or, overall, the whole route isconsiderably cheaper, because both are connectingwith South African Airways out of Heathrow. Peoplewill go to where it is cheapest. To answer yourquestion: both, please.

Q65 Naomi Long: You obviously remain committedto the Committee’s view that the removal of APD isa major factor in trying to stimulate growth in theaviation sector. That is very helpful.Mr Harrison: We live in a very price-sensitivemarket. In the current economic climate, disposableincomes are not as high as they used to be, and thatwill have a negative impact on people’s willingnessto travel.Mr Tierney: APD is restricting growth in the marketas it is. Our primary carrier is Ryanair, and we have

had discussions with it over the past two years aboutdeveloping routes out of City of Derry Airport. It hastold us quite clearly that routes into the UK will notbe developed any further than they are currently andthat there may be retrenchment. Ryanair has pulled18% of seat capacity out of the UK, year on year, forthe past two years, and it has moved that off to Spainand Germany, where there APD is less. Ryanair is aprofit-driven organisation, so it will move to where itcan make more money. A tax of £26 on a return seatfrom City of Derry Airport to London Stansted is alot of money, when you consider that the average farethat Ryanair charges is probably £60 or £70.Therefore, £26 on top of that is a lot of money. Thefact that APD is restricting growth is in itself aproblem. Ryanair is not on its own on this. easyJetwill be in the same position, as will Flybe. As itstands, the fact that APD is there is restricting growthinto and out of Northern Ireland.

Q66 Lady Hermon: Is air passenger duty the onecritical reason that Ryanair has given?Mr Tierney: Every single conversation that we havewith Ryanair starts with APD. We are asked whetherthere has been any movement on APD or whether theNorthern Ireland Assembly is going to make anychanges to APD. Ryanair says that it cannot growuntil the situation changes.Obviously, Ryanair is having a much bigger argumentabout APD with the UK Government, but, in so far asour growth is concerned, it is about what the NorthernIreland Assembly can do, because there are moves todevolve the charge. Ryanair wants to know how thatis developing. As Brian and John said, the steps beingconsidered by the Assembly on band B air passengerduty would be very welcome for Northern Ireland plcbut would do very little for us as an airport and for98% of the passengers who fly back and forward fromthe UK.

Q67 Lady Hermon: That is the position for Ryanairon APD. I would like clarity on something that MrColeman said around 10 minutes ago. Am I right inthinking that the sole and main deterrent for newcarriers coming in is APD?Mr Coleman: It varies. Yes, that is the case for someof the carriers, but there are a range of factors forother carriers. Take Flybe, for example. It operated avery short series from City of Derry Airport last year.It operated for four months, and that was all that itwas guaranteed to operate for. It looked at it again thisyear, but it had other options, one of which was to goto Knock, and, because of APD, it chose Knock.Lady Hermon: Thank you. That is very worrying.

Q68 Dr McDonnell: Thank you for your evidence sofar, which has been excellent. I want to return to thesubject of rail access. I know that you have heard ittwice already and that you mentioned it in yourwritten evidence. Rail access is almost non-existent,despite the fact that main railway lines are on thedoorstep, as it were, of each of the three airports. Ithink that you intimated that efforts to rectify thathave been difficult and may have been met with adegree of intransigence on the part of the Department




for Regional Development (DRD). Did you approachthe Department on the basis of a united effort by allthree airports or on your own?Mr Tierney: To be honest, I do not think that a unitedapproach has been made to the Department. I thinkthat it was Brian who said that any time that rail linksare mentioned at all, we get the same response frompoliticians, who, when they see how close railwaylines come to the three airports, are usually quite infavour of saying that we should consider having raillinks.There are issues with departmental officials, who quiterightly go back to their investment criteria guidelinesand respond that an airport should have 10 millionpassengers before a rail link can be justified. Bearingin mind the very close proximity of rail lines to someairports here, it could be looked at in slightly moredetail before a no is given.I am not for one instant saying that all three airportsshould have a rail link. In our case, for example,although the railway runs literally metres from the endof our runway, it is still about half a mile away fromour terminal. Therefore, it would be quite difficult toput in a rail link that would be in any way justifiablein cost terms. However, Belfast City Airport, whichhas a railway line very close, could be a case in whichrail is a justifiable option. It cannot be ruled out ofhand simply on the basis of the 10 million passengersrule; otherwise, there would be no option at all for arail link at any airport in Northern Ireland.

Q69 Kris Hopkins: I have been given the challengeof grilling everybody on car parking.Lady Hermon: We know that you are up to thetask, Kris.Kris Hopkins: I think that you will have heard thequestion before. [Laughter.]Mr Harrison: We answered it when you stepped out.[Laughter.]Kris Hopkins: I am sorry that I had to step out; myapologies. I will read your responses to the otherquestions. All three NI airports have recently beencriticised for setting some of the highest rates in theUnited Kingdom for passengers parking their car.How do you respond to such criticism?Mr Tierney: We had a meeting with the ConsumerCouncil in January to discuss that very issue. Therecent report that it gave to the media fuelled thedebate that we are now having. In our discussionswith the Consumer Council, we outlined many of thereasons why we believe that our car parking fees andcharges are as fair and reasonable as they can be,bearing in mind what we are doing at the airport. Allthe arguments that John and Brian made about costsare very valid. We echo those arguments 100%. Weare responding in written form to the ConsumerCouncil about a request that it made just last week. Ifthe Committee would like a copy of that evidence, weare quite happy to pass it on.Car parking has to be an element of the overall costof flying, because it is all part of the same package.When you go to the airport, you book your parking,book your ticket and move on. When you considerwhat people were paying to get in and out of NorthernIreland 15 years ago, before the rise of low-cost

airlines, you were paying significantly more than youare paying now for your ticket. Brian mentioned that.A lot of airports, including ours, were offering freecar parking at that time because the airlines werepaying us significantly more than they are now.As a commercial organisation, however, and part ofthe reason that Regional and City Airports has beenbrought on board, is to commercialise how City ofDerry Airport operates. As a council-run airportbefore, it was very much about providing services andit was not very good at providing any commercialactivity. We have to justify every single penny that wetake from Derry City Council ratepayers. The thingabout a car parking charge is that it makes the userpay. Those who use the airport pay for the facilities.When you combine the current cost of car parkingwith the ticket cost from a low-cost airline, it is stillsignificantly cheaper to travel in and out of NorthernIreland than it was 15 years ago. Car parking cannotbe seen on its own. It has to be seen as part of theoverall package.

Q70 Lady Hermon: On quite a number of occasions,comparisons have been made with Knock airport. Isthere free car parking at Knock?Mr Tierney: No.

Q71 Lady Hermon: How do your charges comparewith those of Knock?Mr Tierney: They are very similar. Only recently, wewere at Knock airport and met its directors andmanaging director. Their charges are very similar toours, except that they are priced in euros. So, if it is€35 for a week’s parking there, it is £35 here. It isvery similar, allowing for the euro differential.

Q72 Lady Hermon: Did you pitch it at that to makeit competitive with Knock?Mr Tierney: No. Until now, our car parking chargeshave been set on the basis of competition withinNorthern Ireland. Obviously, as Knock has risen overthe past 18 months to be more of a competitor for us,that competition may drive our prices. That issomething that we, as a company, will take accountof. Until now, our prices are based on the NorthernIreland market, not on the Republic of Ireland market.

Q73 Lady Hermon: Do you have long-stay andshort-stay car parks? Do you have the awful £1 chargethat they have at Belfast International Airport?Mr Coleman: No, we do not.Lady Hermon: Bless you.Mr Coleman: There are no plans to introduce it,simply because we believe that it would cause chaosin the surrounding roads.Lady Hermon: That is excellent. I will have to comeand visit now. I might not fly, but I will come andvisit.Mr Coleman: City of Derry Airport is a little unusualin that it has really got only one car park. Mostairports, as you said, have a short-stay car park closeto the terminal and a long-stay car park that is remote.Due to our size, the car parking is all in front of theterminal. Long-stay parking is done, in effect, in theshort-stay car park. It is very close.




As Damien said, over the past year, we have triedto change our commercial approach. Until about sixmonths ago, we really had only a turn-up-and-payprice or a phone-up-and-book-the-day-before price.We are now similar to other airports in that we havea web-based booking engine, and the further inadvance you book, the cheaper it becomes. For thissummer, our prices include car parking for only £3·75a day. So, for certain tariffs for certain long-term staysbooked well in advance, we are below the prices thatthe Consumer Council has cherry-picked from CardiffAirport, I think it was, for comparison.

Q74 Lady Hermon: For all the celebrations forDerry city being the UK City of Culture, willadaptations—reductions—be made at the airport?Mr Coleman: We are looking at that. We are alsolooking at the ability to use the airport car park in thequieter winter periods as a park-and-ride facility forjourneys into the city. We are looking at those kindsof options. We are working very closely with the Cityof Culture team and certain airlines on how we canuse the airport as a gateway into the celebrations.Lady Hermon: That is very good and veryinteresting. Thank you.

Q75 Chair: Will the City of Culture status help youto increase the number of flights generally?Mr Tierney: It is very difficult to say, at this stage.We have been discussing, with our existing carriersand new carriers, the whole City of Culture year andwhat that will mean for the city. It has been slightlyhampered in that the programme for the City ofCulture has not yet been published and so we do notyet know what the events are and when they will be.Obviously, if we are telling our main carrier that wewould like to put on additional flights for an event inAugust 2013, it is good to be able to tell them whatthat event is. We still have a bit of an issue there. Thatis part of the reveal that the City of Culture is involvedin, and it has to get its programme in order before itcan publish it. However, we have had discussions withairlines, and we will pass on that information as soonas we get it. We simply do not know whether it willlead to anything long-term. Obviously, we would likeit to have a legacy beyond 2013. If we get a new orextended service because of it, I would like to thinkthat we could sustain that beyond 2013.

Q76 Nigel Mills: Do you have any comments orconcerns about the changes that the Civil AviationBill proposes?Mr Tierney: I think that the comments made by Brianand John are valid. There are concerns within theindustry about the possible additional cost that it maylevy on airports. The Bill does not yet indicatewhether the charge can be passed on to the final users.If it were simply to be levied as an airport charge, itcould be very difficult for airports that are already onthe margins as to whether they can stay open. Thegeneral thrust of the Bill, which is about improvingthe regulation of airports, streamlining how regulationis delivered and bringing security in with safety in theCivil Aviation Authority’s (CAA’s) remit, iswelcomed by most airports. The better we can

regulate airports, the more effective and streamlinedregulation can be and the better for airports andregulation itself. The general gist of how the Bill ismoving forward is fine. There are some issues aroundthe cost and how regulation will be delivered. Thedelivery mechanisms need to be agreed in advancebefore we move away from our current systems withwhich all airports are familiar. There has to be atransition period for moving to the new deliverymechanisms. However, by and large the Bill is OK.We are just concerned about costs.

Q77 Naomi Long: In the written evidence that youhave presented to us, you seem to be fairly relaxedabout the International Airlines Group (IAG) takeoverof British Midland and the impact that it is likely tohave. I have two questions. The first is: BA pulled outof its Belfast-Heathrow route in 2001, so why do youthink it would be more committed to the NorthernIreland market now than was the case then? Secondly,given the decision that BA took with respect to theirBelfast ground operation and the issue of redundancynotices to staff, has your relaxed position changed?Mr Harrison: Unfortunately, I was managing directorof Belfast International Airport when BA pulled out.Basically, 9/11 had happened. If you go back, you willfind that there had been a major falling out betweenmy predecessor and British Midland. British Midlanddecided to move to Belfast City Airport, which grewas a result. 9/11 happened. We had already talked toBritish Airways at a very senior level about increasingthe number of their services, etc. At that time, our coststructure with British Airways was quite good for theairport. Substantial revenues were coming in and,basically, the airport owners at that time really did notwant to reduce the cost. So, British Airways was facedwith a very high-cost base at Belfast International. 9/11 happened. I had a look at everything and decidedthat we had to cut our cloth. They were not gettingenough interlining passengers. easyJet had alreadykicked off and the low-cost easyJet service to Stanstedand Luton were having an impact on Heathrow.Heathrow used to take 1·5 million passengers, but Ibelieve that it takes only one million now. So, low-cost airline direct services to London had an impact.That is some of the background. Belfast to Heathrowwas one of the few profitable British Midland routes,as far as I am aware. They have streamlined it and cutout business class, etc. I expect BA to do the same,and I am fairly confident that BA will continue to flyout of Belfast.

Q78 Lady Hermon: Would you care to elaborate onthat? Which airport will they fly from?Mr Harrison: I am just confident that BA willcontinue to fly out of Belfast. I know absolutelynothing, believe me. Brian Ambrose and John Doranare extremely tight when it comes to that sort of thing,but I am confident that BA will continue to fly outof Belfast.I can see the advantages of all Heathrow servicesflying out of one airport and they may take that intoconsideration. If you remember, when British Midlandand British Airways were flying, if you had a flexibleticket and you were 10 minutes late for your flight,




you could walk across to the other airline and get onthe next flight. We almost had an hourly service. I donot say, in any way, shape or form that I knowanything—and please, that is gospel truth—but I amjust convinced that British Airways will be relaxedand will continue to fly out of here, because it isprofitable.

Q79 Lady Hermon: I have one minor point that Iwould like to ask about. It really is a matter ofcuriosity. There was a proposal to rename the City ofDerry Airport the Amelia Earhart Airport. Are youallowed to say whether you are disappointed, neutralor relieved at its failure?Mr Tierney: I am slightly disappointed in how it wasmanaged. It was proposed though a motion at DerryCity Council, but the proposers had not consulted withthe airport. That is where our objection originallycame from.

Q80 Lady Hermon: You had not heard about theproposal until it was made?Mr Tierney: No, we had not. We first saw it in thepress. That is local politics for you. We hadconsidered it before that at a board meeting and we

had come up with a number of issues that it mighthave raised and which might have been negatives forthe airport. However, we are happy to sit down andhave a discussion with the politicians who want topromote it. If they can persuade us that the hurdles,which we see as being in the way, can be moved aside,there is absolutely no reason why we would notconsider it. However, there has to be a widerdiscussion than a political decision taken within DerryCity Council. It has to involve the new structures thatDerry City Council has put in place for the airport.Lady Hermon: That is a really interesting response.Thank you. I did not know the half of that.

Q81 Chair: Are there any other questions? Is thereanything that you would like to add that has notalready been said?Mr Harrison: We have probably said too much.Mr Tierney: We will probably find out on RadioFoyle tonight.Lady Hermon: Radio Ulster will be in touch withyou later. [Laughter.]Chair: It has been very interesting. Thank you verymuch indeed.

cobber Pack: U PL: COE1 [SO] Processed: [28-11-2012 14:00] Job: 022723 Unit: PG02Source: /MILES/PKU/INPUT/022723/022723_o002_th_NIAC - Air transport strategy ii - corrected transcript (FINAL).xml



Members present:


Mr Joe BentonOliver ColvileMr Stephen HepburnKate HoeyNaomi Long

________________


Witnesses: Nigel Smyth, Director, CBI Northern Ireland, and Matt Sheldon, Senior Policy Advisor,Infrastructure, CBI, gave evidence.

Q82 Chair: Welcome, Mr Smyth; it is good to seeyou at the Committee. We are conducting an inquiryinto aviation policy and the impact on NorthernIreland, in terms of business travel and social travel,tourism, etc. You are very welcome. I look forward tohearing what you have to say. Would you like toperhaps introduce yourself and your colleague?Anything you want to say as an opening statement,please do.Nigel Smyth: Thank you, Chairman. Thank you verymuch for the welcome. I am Nigel Smyth, Director ofCBI Northern Ireland. I am joined today by mycolleague Matt Sheldon. He is a Senior Policy Adviserfor the CBI here in London, with responsibilityparticularly for infrastructure and aviation. We aredelighted to be able to give evidence today. I intendto make a short statement summarising some of thekey points in our written evidence, and we lookforward to being able to respond to the Committee’squestions.We welcome the Committee’s inquiry. Air transportand air connectivity are crucial, and indeed vital, tothe future success of the Northern Ireland economy.They will become more important as we seek torebalance the economy and, indeed, achieve the goalsset out in the recent programme for government andthe economic strategy in Northern Ireland. We needto increase our exports significantly, includingdeveloping and emerging growth markets. We need todouble our tourism revenues by 2020, coming from arelatively low base, and we need to attractsignificantly more foreign direct investment. Airaccess and air connectivity are clearly key elementsin each of these strategic areas. Regional air servicesand links to the UK’s hub airport, Heathrow, areabsolutely fundamental requirements. We do not haveother options or alternatives in Northern Ireland. Wecannot drive; we cannot get on a train. We have a veryhigh reliance on air transport.We have summarised the current position of NorthernIreland air services in our written submission. I do notintend repeating the detail, but maybe I will draw outa few key issues. Over the last decade, there has beena general improvement in Northern Ireland’s airconnectivity, especially with Europe and with theservice to the United States by United. We continueto be linked with airports across the rest of the UK.There are increasing concerns that capacity constraintsin the south-east of England, and particularly at

Jack LoprestiDr Alasdair McDonnellNigel MillsIan PaisleyDavid Simpson

Heathrow, are a significant risk to the Northern Irelandeconomy. Indeed, it is fair to say that the CBI believesthere are concerns about the wider impact on the UKeconomy because of the constraints at Heathrow.There is a concern that continuing increases in airpassenger duty are undermining the airline industry,and in Northern Ireland that puts us in an increasinglyuncompetitive position in relation to the Republic ofIreland, where the Committee will be aware theequivalent taxes are €3. We have clearly welcomedthe decision both to devolve the power and indeedreduce the Band B APD charges, and are grateful forthe Committee’s inquiry into that particular issue lastyear.We also recognise that this is an intensely competitivemarket, both in terms of the airlines and the airports.They have to act in a commercial manner. They havechoices about where they invest and clearly they needto make an appropriate return on their investment.This means that there are more uncertainties and morerisks. Clearly this has not been helped by the currentrecession, high fuel prices and increasing airpassenger duty. It also means that we do need to beparticularly careful about any potential Governmentintervention in the market.Our members believe it is essential that urgent actionis taken to address the capacity constraints atHeathrow. This is critical, as there will be increasingpressure to develop new UK air services tohigh-growth developing economies and we arecoming from a lagging position there. This in turn willput an even bigger premium on access to Heathrow.The status quo is not acceptable and risks, on onehand, the UK’s access to these developing marketsand, on the other hand, regional development withinthe UK and, in our case in particular, NorthernIreland. Without increasing capacity at Heathrow,there will clearly be greater risk to maintainingadequate capacity. That could be both in terms offrequency in services and indeed in seat capacity.On public transport links, we believe these areadequate within Northern Ireland. Indeed, bus links toour airports, particularly the two Belfast airports, arevery good. At a time of constrained publicexpenditure, we do not see rail access as a priority.We do not believe the implications of the CivilAviation Bill are major for the Northern Irelandeconomy, although there are likely to be additional

cobber Pack: U PL: COE1 [E] Processed: [28-11-2012 14:00] Job: 022723 Unit: PG02Source: /MILES/PKU/INPUT/022723/022723_o002_th_NIAC - Air transport strategy ii - corrected transcript (FINAL).xml


16 May 2012 Nigel Smyth and Matt Sheldon

costs, which ultimately the passenger is likely to bear,although these are likely to be modest.The recent acquisition of bmi by IAG has clearlycreated uncertainty. With regard to the strategicallyimportant Heathrow route, there have been reassuringstatements from the chief executive of IAG regardingtheir commitment to retaining the route and tomaintaining, in the short term, their current serviceprovision. However, as the Committee will be aware,bmibaby operations will now close on 11 June and,fortunately, other airline operators do fly to the threeGB destinations impacted by that. Clearly, bmibabydoes fly to a number of others in Europe. Indeed,already there have been some commitments toenhance their flight schedules from the other airlines,but there has been considerable disruption to summerholiday plans and also potentially to tourists actuallycoming to Northern Ireland, which is highlyunfortunate.Finally, the APD issue: this is an increasing burdenand an unwelcome one. As APD rises, flights fromNorthern Ireland become less competitive withDublin. We saw that very clearly with the Band Brates, which have now been addressed, so it isessential that the UK Government restrains futureincreases; otherwise there will be increasing pressurewith considering devolving all APD to the NorthernIreland Assembly. We look forward to answering theCommittee’s questions.

Q83 Chair: Thank you. We will come back to anumber of those issues. Just to give us an idea, do youknow roughly how many businesses based in NorthernIreland the CBI would represent?Nigel Smyth: We are a confederation, both with directmembers and with over 170 trade associations. Ourmembership is broadly about a third of the privatesector. That would be our best estimate.

Q84 Chair: Would that be across the UK orNorthern Ireland?Nigel Smyth: That would include Northern Ireland,about a third within Northern Ireland. That is amixture of small businesses, large businesses and froma variety of sectors including, I would say, airportsand airlines as well.

Q85 David Simpson: Nigel and Matt, you are verywelcome to the Committee. Recent evidence that theCommittee took from DETI set out a number of keytargets that the Northern Ireland Executive believe arenecessary for growth within Northern Ireland. What isthe CBI’s view on how we can obtain growth, or whatare the obstacles to growth that you see as the CBIwithin Northern Ireland? Is it regional or internationalconnectivity, APD, corporation tax or what in yourview is it?Nigel Smyth: I think there are currently a number ofkey headwinds. Clearly there are ongoing creditconstraints impacting on businesses, particularlySMEs in terms of accessing credit. That is in thecontext of a much riskier and much more difficulteconomic environment. Secondly, you have verysignificant public expenditure constraints, which wasa major driver for the Northern Ireland economy over

the last decade. That is going to be no longer. Weclearly have a very significant property constructionhangover, from a very significant boom ending in2007–08. We are picking up the pieces from that andthat will continue for some time to come, impactingnot just construction but the whole housing market.We have a very small private sector, which is one ofour biggest challenges. The final headwind would bethe whole area of consumer demand and consumerconstraint, due to high inflation and due to weak wageincreases on the back of that.What we need in the challenge of growing it—and weare broadly supportive of the programme forgovernment, the economic strategy, particularly thefinal ones, which were more ambitious than theoriginals were—is investment. The future’s going tobe driven by more investment, more exports andtourism. The investment will, by and large, includeforeign direct investment but also investment fromindigenous companies in Northern Ireland. That iswhy one of the key drivers of encouraging thatinvestment is going to be lower corporation tax. I havebeen here—probably 12 to 15 months ago—on thatdebate, which is ongoing. We believe it is anextremely high priority to get that to be able totransform the Northern Ireland economy. Without alower corporation tax rate, it is very difficult to seehow we get out of the very challenging structuralproblems that we have in the economy.

Q86 David Simpson: In order to obtain what youhave just outlined in relation to export, indigenousbusinesses and the lot, surely the key element of allof that is to make sure that those companies receivethe finance that they require and some flexibility fromthe banking society, in order to help them with credit.Especially small to medium-sized companies arefinding it very difficult today—and I raised it today inNorthern Ireland questions—to get access to finance.Surely that is one of the key components because, ifyou have the finance, you can do a lot.Nigel Smyth: I identified that as the number one issueand I would agree. It is a complex issue. CBI NorthernIreland has a report, which hopefully will be finalisedin the next two to three weeks, which has looked atall of that in Northern Ireland. There are no simplesolutions to that. For the banks themselves, there isless capital available. It is going to cost more money.On the demand side, the companies looking for thecapital are good trading companies that do not haveproblems, but there are a lot of companies that aremaybe in a less good position that are going to find itmore difficult. They are much riskier. There is no easysolution to all of that. I would agree that the accessand the constraints in capital, including venturecapital—Northern Ireland is very poorly positioned inthe venture capital space as well, not just in traditionalbank lending—are absolutely a key constraint.

Q87 Ian Paisley: Nigel, you are very welcome. Iwant to ask this question in the context that GeorgeBest Airport and the International Airport atAldergrove are both private businesses. Just have thatin front of us whenever you are answering this.Reading through your paper, the general wisdom of it

cobber Pack: U PL: COE1 [O] Processed: [28-11-2012 14:00] Job: 022723 Unit: PG02Source: /MILES/PKU/INPUT/022723/022723_o002_th_NIAC - Air transport strategy ii - corrected transcript (FINAL).xml



is, if I am correct, that we should actually just haveone super-airport in Northern Ireland, competing,blow for blow, against a Dublin Airport. Am I rightin that assumption?Nigel Smyth: No, you are not.

Q88 Ian Paisley: Really?Nigel Smyth: When I helped with a contribution tothe paper, we identified that within the two airports inthe Greater Belfast area, certain services areduplicated. But at the same time—and maybe we didnot draw that out—over the last 10 to 15 years, whenwe have had two very active airports competing, as Isaid in my initial statement, we have had a muchgreater range of services now provided in NorthernIreland. Our air connectivity is significantly betternow than it would have been 12 to 15 years ago, onthe back of that. We certainly have never argued tohave one airport. I think you will get a variety ofviews from the business community, but certainly thatis not on our agenda. As you rightly said, these aretwo commercial operations. They may, at one stage,decide to do something between themselves, but thereis no desire from certainly the CBI and my membersto argue that we should have one airport in NorthernIreland.

Q89 Ian Paisley: You are saying that the customersin Northern Ireland have better choice because thereare two airports competing against each other andcompeting with Dublin.Nigel Smyth: That is how it has worked out.Arguably, if you had one bigger and larger airport, theservices may well have developed too, but we arewhere we are on that. There is no doubt manypeople—I think the previous evidence you have hadhas indicated 400,000 or 500,000 passengers a yearwill, from Northern Ireland, go down to Dublin.Clearly they have got economies of scale down there.They have increasingly got something like 12 flightsa day to the USA in recent times. They have gotsignificant flights now through the Middle East, on theback of that. That is an extra choice for NorthernIreland customers. That keeps the pressure on theNorthern Ireland airports too, in terms of competition.What I am saying is there has been no debate orsignificant pressure from our members to say, “Whyon earth do we have two airports in NorthernIreland?” People use different airports for differentthings. Clearly the City Airport is very convenient forpeople living in Belfast and the east-of-Belfast area.

Q90 Ian Paisley: Are you aware of discussions forthe development to have better or some broaderdomestic and international route-sharing arrangementsbetween the two businesses?Nigel Smyth: I am not aware of the detail of that, no.

Q91 Ian Paisley: I am asking if it is a discussion thatcould be had.Nigel Smyth: It is possible. They would probablyhave to be careful in terms of monopoly commissionsand various things. My understanding is the airportsare, on a daily basis, trying to encourage more airlinesto come in to look at developing routes from Northern

Ireland. The airports offer different things. Clearlywith their access into GB in particular, they arecompeting head on. For the farther longer-distanceinternational freight, that is clearly the InternationalAirport. The view from our members is they havebeen well served. I think that is what we have summedup. We are in a fairly good position, despite evenbmibaby pulling three GB routes and six or seveninternational or European routes. Connectivity is stillmuch better now than it was 10 or 15 years ago.

Q92 Oliver Colvile: I just want to ask a quickquestion. You may not be aware of this, but can youjust talk to me as to how many airports there are inthe whole of Northern Ireland and how many theremight be in southern Ireland as well?Nigel Smyth: I cannot tell you for southern Ireland.In Northern Ireland, in Belfast, we have clearlyBelfast City Airport within about a mile of the citycentre, with 2.5 million passengers a year. You havethe International Airport about 15 miles outside, with4 million to 4.5 million passengers a year. Then youhave Derry City Airport, with probably less than0.5 million.

Q93 Oliver Colvile: So we are saying three.Nigel Smyth: There are three, but there are then somesmall private.

Q94 Oliver Colvile: How long does it take to drivefrom one airport to the other?Nigel Smyth: From the City Airport to theInternational, it is less than half an hour, and that ison the way up to Derry. Derry would be about an hourto an hour and a quarter from the International up toDerry City Airport.

Q95 Oliver Colvile: If you wanted to catch a planedown in southern Ireland, how far would it be?Nigel Smyth: Most people from Northern Ireland, ifthey were using a southern Ireland airport—and I donot know the facts, so need to be careful—would beflying out of Dublin Airport. Dublin is 100 miles fromBelfast. It is now, since two or three years ago, alldual carriageway/motorway, so you could be verycomfortably down in Dublin in an hour and a half.They are flying around 20 million passengers a year,so it is a different scale and obviously they have agood choice.Oliver Colvile: Thank you, Mr Smyth, and thank youalso for coming by the way, and Mr Sheldon, too.What would be quite helpful at some stage, ifsomeone might produce it for our next meeting, is toactually have a map of whereabouts all the airportsare within Northern and southern Ireland as well. Ifwe could have that, that would be helpful.Chair: Okay, we will do that. Thank you.

Q96 Kate Hoey: Welcome, both of you. As afrequent traveller back and forward to NorthernIreland, I actually think we are pretty well served byour airports, but of course—and we will come on tothat later—it is the air passenger duty and the cost ofthe taxes that are making it very difficult, not just forbusinesspeople but for people who have to, for all




sorts of reasons, go back and forward. Can I just askabout the three airports that you have referred to?Belfast International relies heavily on easyJet. CityAirport relies quite a lot on Flybe. Obviously City ofDerry is Ryanair. Are you, as the CBI NorthernIreland, trying to encourage more variety of airlinesto come into each of the airports, or do you have afeeling that that is not really your job? How do youfeel about persuading other carriers to bring in evenmore competition?Nigel Smyth: That is an easy one to answer: that isnot our job. Our job in Northern Ireland is to create abetter environment for businesses to invest to createmore jobs and employment. Hopefully that will thenattract the airlines. The primary responsibility for that,I would see, is with the various airports themselves,which I think are pretty active in that space.

Q97 Kate Hoey: Your members would be, on thewhole, happy enough with the choices and the routesthat there are at the moment from Belfast.Nigel Smyth: Broadly so. The one area that we maycome on to would be parking charges. The choice thatwe have, particularly into GB, is very good.Traditionally, we were very weak in terms ofaccessing Europe, if we go back 10 or 12 years. Thathas been partly addressed. There have been somebackward moves with the recession—some flightshave been pulled—but we are certainly in a betterspace. There may be one or two key European routeswe still do not have, which would certainly beattractive. That is where the interlining throughHeathrow is exceptionally important for those peopledoing exports. It is the exports that we need to beincreasing.

Q98 Kate Hoey: If you were to put one thing, onemost important thing, that would make a difference toyour members and the people of Northern Ireland, interms of air transport routes, what would it be?Nigel Smyth: Maintaining high-quality access intoHeathrow. If I am allowed a second one, it may beone or two additional cities into Europe, whether thatbe a Frankfurt or a Madrid. That may well move upthe agenda if we felt there was a serious threat, orthe threat to Heathrow did come to fruition in variousthings. We may have to look at accessing other hubs.The issue with Heathrow is it is good because of thefrequency. We do fly into Amsterdam, which isanother important hub, but it is one flight a day, so itis fairly limited. I think it is only one flight a day. Youdo need a certain degree of frequency to make thatattractive, particularly for business travellers.

Q99 Kate Hoey: So cost is not the most important.Nigel Smyth: Cost is not the most important. Clearlycost does come into it, but for businesspeople thefrequency of services is probably number one. Thereis no doubt that businesspeople are now tending totravel more on some of the lower-cost, because that isthe nature of the beast.Let me give you an example. In Northern Ireland,because of the downturn in our construction sector,the sector has had to look outside Northern Ireland.Of the top-20 construction companies, 60% of their

exports are now outside Northern Ireland. The vastmajority are now building things in Great Britain. Atypical contractor, when he is pricing a job, whenbidding, will have to build in between 300 and 400flights. The construction companies are telling me thatair passenger duty is a tax on their jobs, because theyare having to fly so many people across over thetwo-to-three-year nature, depending on the contract.Cost is important to them, because that is going to addup £20,000 to £30,000 or whatever it is. They have tobuild that into their tender price. Likewise foranybody who is exporting, it is time; it is cost. It isall factored in.

Q100 Jack Lopresti: You briefly alluded to transportlinks in your opening remarks. In paragraph 16 ofyour written evidence, you say that public transportservices to the two Belfast airports are good.Presumably you are not going to agree with otherwitnesses who have said that a rail link to BelfastInternational and a rail halt for Belfast City airportsare crucially needed.Nigel Smyth: I would agree. I did a little estimate. Atthe end of the day, I highlight in our day that publictransport is very good indeed, particularly to the twoBelfast airports. To have the cost of a rail link—andthis has been talked about on and off—myunderstanding would be, even with International’s4 million passengers a year, you need to be at anairport of something like 10 million. Just to give anexample, back of the envelope, if you have 4 millionpassengers a year—work that down to a daily basis—about 10% would use rail and that is probably at theextreme. That is 1,500 people. If you split that intotwo services an hour, that is 75 people a train. Youcan get on the bus every 15 minutes. You have a bigcapital cost and you have big ongoing costs. While itwould be a nice idea, in the current public expenditureconstraints we are in, it is certainly not a priority fromthe business sector.Access and indeed improved road access, particularlyaround Templepatrick—which is a small village youhave to go through—would be helpful. I know at CityAirport you are sitting there with a railway that isliterally across the way, but again you are looking ata relatively expensive link and moving the halt.Anything in railways does not come cheap on the backof that. Certainly from the business community, I haveheard no pressure or no demands for the rail link.

Q101 Ian Paisley: You do know Belfast very well,Nigel, and you do know that the fact of the matter isthat, if you try to go to George Best Airport by rail,you have to get out across the road and walk over theroad, carry your bags and walk to the airport. No oneis going to use the rail halt unless they are absolutelystuck. Aldergrove is the same; there is no direct link.The fact is, if it was provided, that small percentagemight quadruple, because people would find it easier.It would be cheaper for them, instead of parking theircar and all sorts of other arrangements. Should that bea priority, for Government, for the airports, forconsortia, to arrange to really put effort into makingpublic transport to the airports much moresustainable? The fact of the matter is, if we travel




from Heathrow or Gatwick back and forth to Ulster,we use an express train. It is the only way in and outof this city. I know it is not the same, like for like, butthat comparison is important.Nigel Smyth: You still have to park your car. I havebeen thinking about this debate. Where would I parkmy car if I was to do it? You would not drive intoBelfast city and park your car to get on the railway toget there.

Q102 Ian Paisley: You would probably get a businto Belfast.Nigel Smyth: I would spend a lot more time gettingto the railway than getting somebody to drop me offor driving up to the railway. I think one would like tosay we are all supportive of getting more people intopublic transport. We have been saying that at anational level, but you have to come down to it:railways are an expensive business. You needeconomies of scale. You need big airports to attractthat. At the moment, we do have good-quality buses.They get you from A to B, and they do it very welland very frequently. If you can get out of BelfastInternational, even compared to if you had a train atthe terminal, I would still bet that, most days, youwould still get into the city centre quicker on a busthan a railway line, which is going to take you allaround Lisburn or whatever it does. I have not heardany pressure from our members to be saying weshould be pushing strongly for it. There are otherpriorities for how we should spend capital money,when it is pretty precious.

Q103 Oliver Colvile: Certainly I am slightly awareof some of these issues, because I did have an airportin Plymouth, which has just gone and closed. One ofthe key things you need to have is to make sure youhave good transport links into the airport, so peoplecan get in and out. I think I am fair in saying thatNorthern Ireland is a specific story, because youfrankly cannot get anywhere apart from NorthernIreland, unless you want to go to southern Ireland,unless you end up taking a plane somewhere. Thatmeans, as an economy, the Northern Irish economy isvery dependent on being able to travel to and fromthe place. I think you would rather agree with me.In your memorandum you pointed out that the transferof surveillance responsibilities to the CAA, which isincluded in the new Civil Aviation Bill, would haveadditional costs, I think, of £100,000 to £120,000, ofthe running costs of the airport and the size ofInternational. Do you have an estimate on how muchextra airlines will need to charge passengers to meetthis cost to make sure that this happens?Nigel Smyth: I do not. We made just a short paragraphon that. Again, that was relying on feedback from ourmembers in the industry. If that is the only cost andyou divide that by the number of passengers, we arelooking at 20p to 30p, so that is why I said in myopening statement that this appears to be a relativelymodest cost. I will put my hands up and say I do notknow whether we have fully understood theimplications of this but, it appeared from the evidencethat we had here that this is not a major game changerin various things. Nobody likes to pay more, but it

seemed to be fairly modest in terms of some of theother charges we are seeing.

Q104 Oliver Colvile: Do you want to actually go off,after this afternoon is over, to look at that and justconfirm your position?Nigel Smyth: I am happy to confirm that.Oliver Colvile: I think that would be very helpful todo, because that then means we have all theinformation that we need to have when we come toour conclusions in all this.

Q105 Dr McDonnell: Nigel, you are very welcome;thank you for being here. I just want to turn briefly tobmi, British Airways and the acquisition of bmi byIAG. Do you have any comment or concerns, or arethere concerns expressed by business interests, aboutthe possibility that IAG might reallocate slotscurrently used by bmi at Heathrow for more profitableroutes and thereby lose that route?Nigel Smyth: As we have reflected in the paper, thiswould be a commercial decision. We have highlightedthat there is an increased risk. That risk, it is fair tosay, has probably always been there. Clearly now, aspart of a much greater airline industry, particularly, aswe tried to highlight, the pressure for the UK todevelop its international links with the developingmarkets more, we certainly believe that those riskshave now gone up. We certainly believe the routeitself, without seeing the detail, the talk in town wouldbe this is a profitable route. As we have highlighted,the chief executive has confirmed he is going tomaintain the route. The big issue will be that we arelooking at it varying between six and seven a day;normally, it is slightly less at the weekend. We havealso highlighted in the paper that we should not forgetwe have Aer Lingus flying three flights a day fromInternational into Heathrow too, which is important.They are going to be under pressure. Heathrow, we allknow, is going to be under significant pressure. Webelieve the best way of easing the risks for us is toaddress the capacity issue in Heathrow itself. Thereare different ways in terms of managing that capacity.One is the number of seats. If we reduce the numberof flights, you could actually put on bigger airplanesand carry the same number of people. At the sametime, level of frequency is very important too,particularly for people who are interlining. I thinkabout a third of people using bmi are interlining andgoing on to a further destination. The view I wouldsum up is that the risks have gone up. There wasalways a risk there, but the risks have gone up and thebest way of dealing with this is to address the capacityissue at Heathrow head on.

Q106 Dr McDonnell: Have you any views on theclosure of bmibaby or bmi Regional, and what impactthat might have on travellers generally or businesstravellers particularly?Nigel Smyth: I think it is a major disappointment. Itwas not a total surprise. The surprise was that we weregiven a month’s notice. British Airways had madevery clear that they had no intention of keepingbmibaby. It had been up for sale for several monthsby Lufthansa, so it is not a surprise. The unfortunate




thing is there were bookings, probably severalhundred thousand bookings, right the way through toSeptember/October time. While our automaticreaction and the media’s was around theholidaymakers in Northern Ireland who have beencaught out, who have booked their holidays both intoGB but also into the various Spanish destinations inparticular, there were also, particularly from the EastMidlands, people who maybe would have booked tocome into Northern Ireland who will be affected bythis.Encouragingly, we have heard the chief executive ofthe City Airport quite clearly say he is looking atnegotiating. There are interested carriers stepping intothat. My understanding would be Flybe has alreadystepped into the East Midlands, and put on additionalflights to look for that. That might be Birmingham.All of those airports are still serviced by otheroperators, and hopefully some of them will respond.They will see that as a business opportunity at thesame time. These are early days, but clearly the bigpoint and the big concern was it was just a shock atthe very short-term notice. If they said they weregoing to run the summer schedule then close it, peoplewould have generally accepted that. It was verydisappointing; it had a knock-on effect for NorthernIreland tourism for people coming in, but also for theholidaymakers in Northern Ireland, who haveobviously been significantly impacted by this for thosegoing out.

Q107 Naomi Long: Nigel, it is good to see you. Ijust want to explore a bit further what you weresaying, because we discussed this with the airportswhen we took evidence from them, and there seemedto be a very different view being taken, dependingon which airport was giving the evidence, about theimportance of frequency of the flights and simply justthe number of passengers that the airlines could carry.My personal view is that actually frequency isimportant, particularly for business travellers, in termsof both being able to access Heathrow at differentpoints in the day, but also being able to then connectonwards with different carriers. The argument inreturn for that was that, actually, some kind ofrationalisation of routes across with larger planes,carrying the same number of people but maybe withreduced frequency, but better co-ordinated with onlineflights, might actually benefit Northern Irelandbusiness passengers. I am just wondering if that issomething you have discussed with your members. Isthere any feedback that you would have? What wouldyour instincts be in terms of seat numbers orfrequency, when it comes to actually trying to protectthe links with Heathrow particularly?Nigel Smyth: It is fair to say we would not have hada detailed discussion on that. As I highlighted earlier,frequency is important. As I say, it does vary duringthe week. Some days there are six; sometimes thereare seven. On the weekend, it drops off a little bit. Ifthe seven were to drop to six, it might not be the endof the world, but the issue then is to make sure wehave sufficient capacity going in. We have, again, ata general level in our evidence, highlighted it is atkey times of the day. Depending on your international

connections and flights, whether that is coming backfrom the Middle East or coming in from the States, itis going to be different times of the day on the backof that. We have had no detailed discussion in that.Clearly you do need to have regular flights in thecourse of the day. That is where the weakness is interms of links into some of the European places,maybe if you fly into Amsterdam. If you only haveone flight a day, or even two probably, it is not goingto be enough to encourage that to be another hub orincrease our interlining through that.Businesspeople are probably happy. They probablyneed to allow maybe a couple of hours anyway, interms of transfer of luggage and various things, but ifyou are sitting four, five or six hours that is probablytoo long. People will look for alternatives around that.Time is pretty precious for businesspeople. There is alittle bit of a balancing act in there. There is a littlebit of a trade-off, but there would be a significantconcern if that number or frequency was to be cutconsiderably or if there was an impact on seat capacityif they cut it by one and put on a bigger plane to offsetthat. Clearly the risks have gone up. It is unclear whatwe can do. Our view quite strongly, and it is a strongCBI view, is that we do need to address the capacityissue. That would solve the problem and reduce therisks.

Q108 Mr Hepburn: Why do you think UKGovernments are so keen on a passenger duty, whenother countries, on the continent for example, areeither not introducing that sort of tax or, indeed, someof them are even scrapping them?Matt Sheldon: To pick that up, there is obviously anattractiveness to APD from a collection point of view.It is relatively straightforward. The administrativecosts of collecting APD are always attractive; they arevery low compared to other taxation. We areobviously looking back as an industry on the taxintroduced in 1994, which has increased fairly steadilyin leaps and bounds. We had a moratorium last yearbut, this year, I think it would be fair to say, what weput forward as the CBI ahead of the Budget was acompromise position. We recognise that, with thefiscal situation, the aviation industry needs to pay itsway, which is why what we proposed ahead of theBudget was that the full 8% above-inflation increasebe mitigated somewhat. We deferred some element ofthat; we were looking at more of a 5% increase. Wewere disappointed, it is fair to say, by the Treasury’sdecision to go ahead with the full impact of that. Thatclearly throws the competitiveness of UK aviation andthe viability of certain UK routes into question,particularly in the Northern Ireland context, where thecompetitive edge is sharpened with the land accessto Dublin.When we see the impact of this in the increasing callsfor reduction and derogation of some of the dutiesfrom Northern Ireland, that is a consequence of thevery high national levels, so our primary focus is arestraint on some of those future increases,particularly as well looking at ETS, which are theEmissions Trading Scheme charges beginning to beintroduced this year. From January next year that isgoing to steadily increase as a charge on flights as




well, so we want to look at the package of costs thatare being passed to consumers in the round.

Q109 Mr Hepburn: Have you given anyconsideration to putting your support behind acongestion tax as a replacement for air passengerduty?Matt Sheldon: There is a tangled thicket in howgovernment would intervene with the implementationof a congestion tax, involving what would be a fairlymicro-managed approach to the market. It issomething that would, perhaps, in a fiscal perspective,return you to a 1980s position, when the Governmentwas in an analogous position, telling airlines to whichairports they could and could not fly. We very muchsupported the liberalisation of the air market, whichallowed airlines to choose and make commercialdecisions on the airports into which they fly. On thatbasis, we are fairly stridently opposed to movingtowards a congestion approach. I know it is an issuethat has come up.

Q110 Mr Hepburn: What effect would a congestiontax have on Northern Ireland, if it was introduced?Matt Sheldon: We have not looked at the detailedmarket impact. We are not at a stage where there is aproposal so that we could understand exactly itsimpact. Our concern would be on its impact toHeathrow. The primary concern, as Nigel has pickedup on, is the interlining options from Heathrow—thepassengers who hub through Heathrow on fromNorthern Ireland. Our concern would be the impactof a congestion charge. Where we are looking at acongestion charge, if that falls most heavily onHeathrow, it is the impact that then has on some ofthe routes whose commercial viability is now beingcalled into question. That would be our concern. Iguess that comes back to our main point thatconstraint on Heathrow is the principal impact that wesee on Northern Ireland. Not tackling Heathrow has anegative impact on Northern Ireland.

Q111 Mr Hepburn: Just one last question: what isthe position of the individual Northern Ireland airportson congestion tax? Have they made a statement on it?Nigel Smyth: I am not aware of it. I have not heard adiscussion around that.

Q112 Nigel Mills: I think it has been about sixmonths now since the long-haul APD was reduceddown to the short-haul level. Have you seen anyevidence from your members yet of that increasingthe amount of investment in Northern Ireland from theStates or perhaps the other way, and more businesstravel going that way?Nigel Smyth: I am not aware of the detail in terms ofthe flying. We still obviously have an ongoingcommitment from United now, as it is branded, to theroute, which strategically we see as very important. Itis absolutely critical in terms of linking this with thedebate on corporation tax. Having that direct USinvestment and our link into the US are critical. If youlook at the south of Ireland, ongoing investments fromthe IDA, 70–80% of those are from the USA, so thatconnectivity with the USA is absolutely critical. We

would believe, in the medium and longer term, thatwould become even more important. To be honest, Ihave not seen the figures from that.

Q113 Kate Hoey: Would the CBI nationally, and UKCBI, support Northern Ireland being a special case?Do they support Northern Ireland being a special casefor the reduction of APD or the abolishment, as thisCommittee asked for, given our special nature—wecannot get a train and it is actually a very long andexpensive journey to go by boat?Matt Sheldon: I will pick up the first half and thenperhaps pass on to Nigel. We recognise that, speakingfor the aviation industry and airports and airlinesacross the UK in this perspective—so speaking for thecommon-wealth of the industry here—there was anextraordinary case and there are particular pressureson the Newark route. That route is offering aparticular value and is under particular competitivetension, so we recognised, accepted and supported acase for a re-evaluation and a specific interrogation ofthat issue. More broadly, our primary focus is lookingat APD at a national level. This is a consequence ofthe high pressure on airlines across the UK from theincreasing rates of APD, in the context of a higher oilprice, in the context of new charges on emissionstrading and other areas that are being passed on to theconsumer. That is why our primary focus comes backto that. That is why, again, looking forwards, ourprimary objective is a restraint on those nationalincreases.

Q114 Kate Hoey: Do you accept, even if you werenot going to argue for it, that businesses and smallbusinesses in particular in Northern Ireland suffermore because travelling back and forward actuallycosts? They have to fly.Matt Sheldon: We would recognise that, with the UKhaving the highest levels of APD in Europe, NorthernIreland is at the sharp edge of the competitive impactof that fiscal decision from Government.

Q115 Kate Hoey: I am just interested, because theonly way we are going to ever get this is for a reallyunited campaign, with all sorts of people saying thatit is just ludicrous that we should have to pay all thisextra money, when we cannot go by train likeeverybody else can.Nigel Smyth: We can get a ferry but, if you want tocome to London for the day, it is not the thing to do.Kate Hoey: I know how long that takes; I have beenon it.Nigel Smyth: Absolutely. I just have a couple ofcomments. My understanding of APD is that the costto Northern Ireland would be £50 million to£60 million. I have not heard any businesspeople,perhaps maybe bar the airports, arguing that weshould zero this and take a hit of £50 million to£60 million. I am not sure what that would deliverin value to the Northern Ireland economy. Passengerswould get a cheaper flight in and out, but it is notgoing to increase investment from foreign directinvestments into Northern Ireland. It is fair to say thatreal debate has probably not taken place.




The position that we have got to is we believe thereis increasing noise from our members to say, as theAPD goes up, we are much more exposed than anyoneelse in the UK and we are going to get into a similarposition that we did with Band B and thelong-distance international on the back of that. Thatwould be regretful, but we are not quite at that stage,but we see an increasing risk. It then comes; whatwould you do with it? Would you decrease itmodestly? I do not think there would be a strongcampaign from business, and indeed from ourselves,to say we should take the hit at £50 million and justhave no air passenger duty, because I just do not thinkthat would deliver. There are a lot of other prioritiesin terms of the Northern Ireland economy first. It doescome back to, overall, we have good air connectivity.We are in a good place. Clearly nobody likes to paymore. It probably has a bigger impact to the touristscoming in. Tourism is going to be very important forthe economy. For those people using the low-costairlines—and the market is dominated by the low-costairlines—APD is a much more significant element ofthe cost of those.

Q116 Naomi Long: In terms of the evidence that wetook from Belfast City Airport, they reckoned that thereduction in long-haul APD, the direct long-haulflights, which was reduced then to the short-haul level,affected about 2% of Northern Ireland passengersoverall. The point that they were making was that thatis quite a small percentage, although it is an importantpart of the market. What action would you, as theCBI, want to see the Government take, or indeed theNorthern Ireland Executive take, to help that other98% of passengers, in terms of encouraging that togrow?Nigel Smyth: Hopefully I understood that question. Itis only 2% because those are the people using theinternational flights, which is very important. To helpthe 98%, you are coming down into the whole APD.The CBI position is quite clear: we need to seerestraint on APD. If we do not achieve that, I thinkthere would be growing pressures in Northern Irelandto seek to have this devolved. We need to take adecision on whether we cap it, whether we reduce itmodestly or what it is. I suppose there is limitedevidence that people—there have always been acertain number of people going to Dublin, which iswhat we are competing against. They have the benefitof a significantly bigger airport catchment area andinternational flights. That will probably alwayshappen. The issue does come back to restraint at anational level on APD. If we had that, that would goquite a long way. It is a bigger impact for touriststhan a businessperson, to be honest. To go back to myconstruction company, that is still going to end upwith thousands of pounds that they are going to haveto bid and they see that as a tax on them having towin work in GB and various things. It does add up tothe same point. Restraint is the number one priority.

Q117 Naomi Long: Restraint on APD, but you hadalso mentioned earlier the issue about capacity atHeathrow itself. Which of the two do you think is themore critical?

Nigel Smyth: The two go hand in hand. They areaddressing different issues and challenges. Fortourism, foreign direct investment and for exportersthat access to Heathrow is absolutely critical and weneed to maintain that. I just think then, for the generaltrade exports, even those people who are “exporting”into GB for the tourism individual, the increasingAPD is just seen as another burden on business,creating wealth and for our tourism sector and variousthings, and with this likelihood that we are distortingourselves. If you are in Newry, all of a sudden, youare not going to get people travelling from the southof Dublin up to Belfast. The people living in Newryand the border areas, maybe even in Donegal, whetherthey use Knock or Londonderry, that will help themto make choices. If you take a family of four onholiday that all of a sudden adds up. It is not £13; itis £52 or whatever it is. This is a very competitiveplace, all done on the internet now. You look around.You look at your car park charging and all the thingsthat are billed into this. I think the two are actuallyequally important for their own particular reason.

Q118 Naomi Long: You mentioned the other chargesthat are levied by airports. Finally, you mentioned carparking and we have discussed public transport andso on. To what degree do those charges impact ondemand, growth and business?Nigel Smyth: As I hinted at earlier, if you go to lunchwith businesspeople, the one topic that may come upwhen you talk about air strategy is airport car parkingcharges, which are probably paid for by their companyanyway. The model has changed. The model haschanged significantly. For the airlines, first, you haveto pay for the car park, but clearly they get an incomefrom that and it is balanced because the airlineindustry has driven their costs, in terms of what theyget on the back of that. More people are using taxis.There is probably some demand for public transport.A lot of people get dropped off at the airports andvarious things. All the costs add up, but it is not theend of everything. You can book on the internet. Thereare ways of reducing the cost of doing that. You justneed to be a little bit smarter and work at it.

Q119 Kate Hoey: Can I just ask, because I like toget it on, did the CBI support International charging£1 to drop people off?Nigel Smyth: We did not support or not support. Thatwas done in their commercial interest. I have beendropped off outside the airport without paying £1. Ifyou want to walk a few hundred metres, it can bedone. I know that has not gone down particularly well.I think they argued they have had to make majorchanges for security reasons and various things. Allthese things cost money and there are various reasonswhy they did that. That does not tend to feature, the £1drop-off, as it would for general parking for 24 hours,coming in at £28 or whatever it might be, but thereare ways of trying to reduce that.

Q120 Oliver Colvile: Just before I ask the nextquestion, I seem to remember being told that one ofthe big key earners for airports was actually the carparking charges. Do you think that is right?




Nigel Smyth: IKEA? I passed a bus recently, and myunderstanding is IKEA is right beside City Airport.Oliver Colvile: Not IKEA, sorry. I obviously spokebadly. The key issue for—Nigel Smyth: Because IKEA does offer parking and abus ride. Apologies.Oliver Colvile: No; it was totally my fault. Do notworry about that. My understanding is that the bigearner, as far as the airports are concerned, is actuallycar parking and that actually makes the whole thingplay quite a bit.Nigel Smyth: Yes, I would probably agree with that.

Q121 Oliver Colvile: The Committee has produceda report saying that APD, from Northern Ireland intoGreat Britain and back again, should actually beabolished. Do you think that is a good idea?Nigel Smyth: If Great Britain taxpayers are going topay for it that would be great.

Q122 Oliver Colvile: That is the key issue, isn’t it?If we end up actually abolishing it, then we have tofind the money from somewhere else.Nigel Smyth: We need a mature debate. People goingto Dublin pay it, so I would argue that, if you areflying out of the UK to Dublin or Belfast, you shouldpay the same rate on the back of that. The issue iswhen we are flying from the island of Ireland intoLondon, East Midlands, Glasgow or wherever it is. InNorthern Ireland, we are paying significantly morethan you would be out of Dublin. That is the argumentfrom us flying out. My understanding is, if it weregoing to be devolved, we would then take the financialhit on it. You then have the debate about whether thatis the best way if you, say, eliminated it and you tooka hit of £50 million or £60 million. Is that in the bestinterests of trying to develop the economy? I ammaybe suggesting that probably would not be in theposition the CBI would come from, but it is fair tosay we have not had that level of debate yet.

Q123 Oliver Colvile: On the other hand, if webelieve in devolution, then maybe that is actually ananswer. Maybe we can get them to make a responsibledecision for themselves.Nigel Smyth: Perhaps.

Q124 David Simpson: I can understand theconfusion with IKEA. Oliver does not shop at IKEA.You made an interesting point in the last paragraph ofyour evidence paper, 27, about the increasedpassenger charges for domestic flights. Could youexpand that or clarify that a wee bit? Have thesecharges been introduced by Heathrow off their ownbat or have they been imposed due to a direct responsefrom Her Majesty’s Government or the EU? Wherehave they come from?Nigel Smyth: I do not know the full details of that.My understanding would be that this was a decisionby Heathrow. I do not think there was any pressurefrom the Government to do this, but I would not wantto mislead the Committee. I thought that was a view

from BAA, the airport operators in Heathrow itself,but I may be wrong on that, so I cannot answer youon that, David.Naomi Long: I could maybe just shed a bit of lighton it, because I have written to BAA and to Gatwick.Both are introducing passenger landing charges forthose whose terminal destination is their airport ratherthan for through passengers. It is essentially a tax thatthey are levying in order to encourage the focus to beon Heathrow as a hub airport rather than a destinationairport. They are basically charging passengers wholand as their final destination. For example, if you areflying to London, they are trying to press you to flyto other airports. If you want to fly through Londonto somewhere else, then you should go throughHeathrow. That seems to be the idea of imposingpassenger landing charges. I can share correspondencethat I have had with them over quite a period, becauseof the impact that it has on the cost of actually flyingin and out of London. I have actually written to themabout it and have had some clarification from bothairports about it. When Heathrow did it, Gatwick thenfelt that they could as well, and there did not seem tobe much more rationale than that for havingintroduced it. I can share that with the Committee,Chairman, if it is helpful.

Q125 Chair: Thank you; that would be very useful.Finally, you said earlier about the importance offlights to Heathrow. You presumably do meanHeathrow, not Gatwick, London Luton, LondonStansted or Boris island possibly. You are notpersuaded by the prospect of high-speed rail oranything. It is very much Heathrow that you arekeen on.Nigel Smyth: Absolutely: Heathrow is the key.Certainly Gatwick has a number of large internationalconnections, but actually Heathrow is the keyinternational hub and that is absolutely clear.

Q126 Chair: It is more for the connections ratherthan getting into central London.Nigel Smyth: Absolutely. I think Northern Ireland iswell served. If you want to come into central London,you have a wide choice of airports. Even this year,there is the Southend Airport; easyJet are flying intothat.Kate Hoey: A very good airport.Nigel Smyth: Heathrow, for the interlining aspect ofall of this, is the essential one. The majority ofpeople—I do not actually know the balance—but I amassuming the majority probably use the Gatwicks, theStansteds and the Lutons, so we are very well served,but Heathrow is the absolute key.

Q127 Chair: It is the connections.Nigel Smyth: Yes, it is the connections side.Chair: Okay, that was good timing. Thank you verymuch indeed for your evidence. It has been veryuseful.Nigel Smyth: Thank you for the opportunity.



16 May 2012 Luke Pollard and Doreen McKenzie


Witnesses: Luke Pollard, Head of Public Affairs, ABTA, and Doreen McKenzie, Proprietor, Knock Traveland ABTA member, gave evidence.

Oliver Colvile: Mr Chairman, I think I should justdeclare an interest in that Luke and I both know eachother, because Luke is a Labour activist down inPlymouth and we have seen each other for manyyears.Ian Paisley: Could I declare a serious interest? I doquite a lot of business with Knock Travel.

Q128 Chair: Thank you very much. Mr Pollard,Mrs McKenzie, thanks very much for joining us. Ithink you sat through the previous evidence, so noneed for me to go into what we are doing here. Thankyou very much for joining us. Would you like tobriefly introduce yourselves and make a very briefopening statement?Doreen McKenzie: Certainly. Good afternoon. MaybeI could start. I am Doreen McKenzie. I am the ownerof Knock Travel, and my business has been tradingsince April 1990. I employ 21 local people inNorthern Ireland. I have two retail shops, one inBelfast and one in Bangor, and a corporate traveldivision, which represents approximately 70% of mybusiness, which has a turnover of just about£5.5 million. We provide travel management servicesfor a number of prestigious Northern Irelandcompanies, including Government Departments, andwe are the leading independently owned travelmanagement company in the province. The provisionof quality, efficient and competitively priced air travelis vital to our clients, so aviation is very important tomy business. While the majority of our corporatetravel is domestic travel to the UK, approximately20% is related to inbound travel into Northern Ireland.I personally have over 40 years’ travel experience. Iam delighted to be here today and to answer anyquestions based on the personal business or, indeed,the wider industry opinion.Luke Pollard: I am delighted to be here today. Myselfand Doreen gave evidence to the Northern IrelandAssembly investigating similar matters about a monthago. In that, we discussed the impact of air passengerduty, aviation capacity and also holiday protection onthe Northern Ireland economy. It might be useful if Ifirst just give a sense of how many companies ABTArepresents. We have 1,200 members across the UnitedKingdom, representing about 5,000 differentlocations. In Northern Ireland, we have 39 membersthat have nearly 150 locations across NorthernIreland. We represent travel agents, tour operators andcruise companies, from the smallest companies up tothe largest multinationals, so it is a full range ofanyone involved in selling travel, be that leisure andbusiness, for whatever purpose that may be.The key areas that we have been focusing on recentlyhave been around air passenger duty. As a leadingmember of the Fair Tax on Flying campaign, we havebeen calling for the damaging increases in airpassenger duty to be halted and also for the structureof air passenger duty to be changed, especially usingthe income from the Emissions Trading Scheme to

be offset against that total amount. In particular forNorthern Ireland, we have been encouraging theNorthern Ireland Assembly and the Government hereto really take the mantle of devolution of air passengerduty to heart and really make a case for it. We thinkthe devolution of Band B and above was a welcomefirst step, but now we need to look at the other 98%of flights departing Northern Ireland to take the fulldevolution of Band A as well, as a further measure tonot only increase the economic prospects for NorthernIreland, but also to make it more affordable fortravellers as well.In addition to passenger duty, we have a wide rangeof views in relation to aviation capacity. Very similarto the witnesses you just heard from, a central keypoint, not only for businesses in Northern Ireland butalso in every other nation in the region of the UnitedKingdom, is connectivity to airports in the southeastof England, especially into Heathrow.In addition to that, there is the issue of holidayprotection. A lot of the correspondence we have withour members in Northern Ireland not only relates toair passenger duty and capacity, but also relates toissues around holiday protection and whether theirholidays are protected. The changes in the markethave not only affected the different types of airlinesflying in and out of Northern Ireland, but have alsoaffected the ways holidays are sold, from being soldpurely as a package to being sold as otherarrangements. I know that is something that theGovernment is looking at, and that will have animpact also on the holiday market and the travelmarket more broadly in Northern Ireland. I amdelighted to be here and answer questions.

Q129 Naomi Long: Can I just maybe ask you a bitabout your written submission? You have argued verystrongly, from a UK regional perspective, that it isimportant that there is an expansion of Heathrow.Could you just explain why that is so important,particularly in terms of Northern Ireland? Chairman, Ishould possibly declare an interest in that one ofDoreen’s stores is already in my constituency. I willdeclare that—at least the fact that I recognise that. Ijust wanted to see what the regional impact is of theconstraints that are on Heathrow at the moment.Doreen McKenzie: First of all, probably, Naomi, fromour perspective as a business, taxation is the mainthing that is stopping people travelling, because allbusinesses are very cost-conscious and that includesour Government Departments. Everybody is very,very cost-conscious. Whenever they are doinginternational business, they need the Heathrow hub,because that has so much more in terms of worldwidelinks to different destinations for them. It is mucheasier to go straight into Heathrow and straight out ofanother terminal, than go to Gatwick and have to geta coach or train across to another airport. From thatperspective, it is essential that we do have aHeathrow hub.




Q130 Naomi Long: Just briefly before we move on,one of the other issues obviously—I know because Ihave heard you discussing it in the aftermath of thebmibaby pull-out and so on—but one thing we havebeen discussing is the vulnerability of the direct routebetween Belfast and Heathrow, and the debate aroundthe value of the slots versus the value of the actualairline routes. Is that again something you think wouldbe addressed in terms of capacity issues aroundHeathrow itself?Doreen McKenzie: I think we probably would belooking for more capacity, rather than trying to ring-fence off slots, because I think it is government’s job,in my mind, to put together the sustainability of aframework that we can all comply into. If they starttinkering and meddling with commercial businesses,airlines are very risk-averse at the moment. It usuallytakes them a few years to get settled into a routebefore they start making money. If you start saying,“You have to operate here or here”, you will end upnot having anybody operate anywhere, so you have tolet the economic market, with its supply and demand,control that itself. It is a very important route. If wecan get the capacity into the southeast that will helpus as a region and all regions, but I do not think weshould be asking you to say, “You must fly betweenhere and here.”

Q131 Naomi Long: The key thing there is that, ifyou had the capacity in the south-east, the value ofeach individual landing slot would reduce and,therefore, currently those flights that are notfinancially viable, in terms of stacking up against thevalue of their landing slot, actually may be.Doreen McKenzie: Yes, you could well be right inthat. I have to say that, to date, Belfast-to-Heathrowservices have been a profitable route. It has not beenone that has been suffering. We do have a choicethere. You have already heard we have three flightsa day with Aer Lingus from Belfast International toHeathrow. We now have six flights a day with BritishMidland from the City Airport into Heathrow, so wehave a good selection of flights that feed into all theinternational flights going out of Heathrow.

Q132 David Simpson: In the evidence that we tookfrom the DETI officials, they have said that its keytargets for growing the Northern Ireland economyinclude increasing visitor numbers and revenue to4.5 million and £1 billion. Is that realistic and, if it is,what would the Northern Ireland Executive or othersneed to do to make sure that was achievable? Is itrealistic by 2020?Doreen McKenzie: It is a good target. Whether it isrealistic or not—David Simpson: That was a politician’s answer.Doreen McKenzie: We have gone tremendously wellthis year towards it, with the start of tourism comingto Northern Ireland. There is no reason why we couldnot get them to come back, but you have to make thecustomer the heart of all of this. They have to have agood experience coming into the airports and gettingfrom the airports into the city centre or getting intoour rural areas. The whole picture has to be puttogether; it is not just about a route from here to here.

We need to get the whole infrastructure in place. Weneed to not just have a Titanic every year. I think wehave a beautiful country and there is a lot for them tosee. I am not sure, in my own mind, we can have thenumbers coming and spending two weeks just there,but we would be happy to get them for a few days,send them to the south, send them up to Scotland. Weare in a nice position that we should be able to getthem, certainly for a while. We could do the numbersif we all have joined-up government in getting ittogether.

Q133 David Simpson: Apart from joined-upgovernment, what else? You mentioned infrastructure.Doreen McKenzie: Yes, we need to make sure that itis easy for tourists. Northern Ireland airports are notthat far away from any point where anybody lives,and a lot of people get dropped off by family andfriends. If we have tourists coming in, they are notgoing to have that facility. The two airports at themoment subsidise a little coach service that operatesbetween Belfast International, to the City Airport andback again. That is on a relatively regular basis, sothat is quite good, but tourists want to come in andeverything is about speed nowadays. People want tocome in and just jump straight on to something that iswaiting there. If you ask them to wait for an hour, itgives the first step a bad impression.

Q134 David Simpson: What would your view bethen on rail links, because you heard the evidencefrom the CBI? There was not a real demand for that.We know the difficulties. Belfast could be difficult.Doreen McKenzie: From a purse perspective, if wehad an upgraded possible rail link into the CityAirport—because we have a rail link, as Mr Paisleyalready said earlier, but it just falls short of the airportand it is out in the elements. You need to be able tobring that right into the airport and there would be acost element to that. Now, I understand that the CityAirport might work with government and have somesort of funding that might be able to provide that. Ithink that would be an excellent service and would bewell used. I believe it has already been put to theplanning people, but turned down because they arelooking at existing numbers on it. You cannot look atexisting numbers; you have to look at the potentialnumbers that will go on it. To the International, it is alot more of a distance to get to and I understand thereis a cost there of something like £98 million to put anextension in. That would be difficult, in today’strading, to justify perhaps, but it would get cars offthe road and it would get us up there, being aninternational airport with proper connections, likeother worldwide cities.David Simpson: Your turnover could double by 2020.Doreen McKenzie: If it does, then it would justifyitself.Luke Pollard: I think it might be worth adding, inaddition to the welcome and the facilities at theairports, there are two other factors that have a hugeimpact on the attractiveness of Northern Ireland forvisitors. They are largely issues that currentlyNorthern Ireland cannot do much about. One isaviation taxation, which I am sure you are going to




come on to, but the other one is visa costs. It is anissue that is facing all types of inbound businesses atthe moment. In fact, a UK visa is considerably moreexpensive than a Schengen visa, which will give youaccess to all the countries of the Schengen area aroundthe European Union, and it will also be processedquicker. As a result, what we are seeing across theboard is that the UK looks more expensive just fromthe visa point, let alone before you start looking at theflight options and the aviation taxation on that pointas well. If we are to achieve greater levels of inboundtourism, and it is not just Northern Ireland that thinkstourism should be part of rebalancing the economy,visa costs need to be factored into that as well.David Simpson: We need to talk to the coalitionabout that.Ian Paisley: That is above our pay grade, that one.Chair: I am Co-Chair of the British-IrishParliamentary Assembly. We were in Dublinyesterday and the day before and that is an issue thatdid come up quite a lot, the visa situation, so perhapswe will look into it a bit more closely as we progress.

Q135 Nigel Mills: I am sure you have seen the recentreports about the chance of direct flights to Abu Dhabiand maybe a Toronto flight being restored. Have youseen much demand from your customers already toget to those places or effectively to go to places thatwould use those as hubs? Do you think the activationof those routes would be beneficial to the NorthernIrish economy?Doreen McKenzie: We have quite a lot who go to visitfamily and friends in Canada. I thought you might beasking me how you felt the United service has settledin, in the last six months, so I looked at our statisticsfor our own company, and we have noticed in the lastsix months there has been an 8% increase on theservices that we have used for Continental to America.When I looked at the final destinations, about a thirdof those were actually going to Canada as opposed togoing to the States. People are using that direct serviceas a hop-on to go somewhere else. The Abu Dhabione is not so much generally a demand by ourcustomers, at the moment, as it is by the MiddleEastern airlines, coming in and trying to get marketshare. Emirates is operating a daily service fromDublin, and Etihad is five days a week. If they cancome to Northern Ireland with a few of those servicesthat really would be super for some of ourbusinesspeople.

Q136 Mr Hepburn: Which is the harder task for thetravel industry in Northern Ireland—to get people tomake their first visit to Northern Ireland or to getpeople to make their second and third visits?Doreen McKenzie: First visit is probably the easierone. If we have got the infrastructure and everythingon the ground right, they will come back a secondtime. It is getting them here first. I think, because wehave had a lot of marketing done by our tourist boardthis year, a lot of people are talking about NorthernIreland and in a good way, not in a bad way, so a lotof people are wanting to come. We have got it rightin getting them there for the first time. It might be just

a little bit harder to bring them back a second time orkeeping them longer.

Q137 Mr Hepburn: Where do you target theindustry, on overseas visitors or GB visitors?Doreen McKenzie: There are more GB visitors whovisit us than overseas ones, but the growing countriesof the Far East—China and India—are probablywhere we should be targeting them to come, andmaybe Japan because they love golf. We can bringthem and tell them about our lovely golf courses. Wehave a lot going for us, so we need to be targeting notany one specific country, if we can spread our net aswide as we possibly can.

Q138 Ian Paisley: You said in your comments inopening—and you are both very welcome; it is goodto see you—that taxes are stopping people fromtravelling. You heard the evidence from the CBI,where they seem to equivocate on that point. Did thatconcern you as a person on the ground, who dealswith customers?Doreen McKenzie: It did actually. I felt that they weremaybe talking not from a small business perspective,because we are seeing it. We are seeing it every dayfrom our business customers. We have to check everyrange of services, left, right and centre. People reallybaulk whenever they see the breakdown. They did notused to know before. They used to get the full fare;that was the fare, and they did not know what it wasmade up of, so they accepted that was what they hadto pay. Now they have every element broken down,and that is why you have people complaining aboutcar parking taxes or prices. Whenever they see thatthe fare is so much cheaper than what the taxes aregoing to be, they get annoyed about it. Yes, I woulddisagree with the CBI from that point of view.

Q139 Ian Paisley: You also heard them saying thattwo airports make sense. It has created competition; ithas created choice. Do you agree with that point?Doreen McKenzie: I think if we had a blank piece ofpaper and we sat down and wanted to have an idealworld, we would have one nice big super-airport,which is not going to annoy anybody or interfere withanybody, from a resident’s point of view, nature’spoint of view or whatever, but we have what we have.We have got two airports that have been verysuccessful. They have driven the numbers up. Theyare competing nicely and competition is healthy. Wehave got what we have, and we need to develop thatmore. We have capacity still in those two airports andwe use that to our best ability, rather than trying toshake that around and make just one airport.

Q140 Ian Paisley: For your customers, when theyare faced with choice and faced with travel needs, istravelling to the Republic of Ireland and travelling outof Dublin, not a problem for them? If that is wherethe best fare, the best connectivity is, that is what theywill do.Doreen McKenzie: They do, but it does make aproblem for them. As you know yourself, DublinAirport car park is not the easiest place to find yourcar again when you come back. It is quite a large one




and very expensive. Particularly people who live inBelfast or the north part of the island do not want todo that journey. They do not want to travel all the wayto the south to fly. The road has improved and it is alot better, but it is the cost of the ticket and the costof taxes that drive them down to the south of Ireland.They would rather go from their own airport,especially if they are travelling with children in a car,because it is a couple of hours’ car journey down.Chair: You may be aware though that, when wespoke to the airports, they took a much more seriousview of the level of tax. They did think it was aproblem.Ian Paisley: They are with you on the tax. The CBIare the only people, I think, who have said they areagnostic on the tax issue.Chair: Although the airports did not necessarily seethat the parking charges were a problem.

Q141 Dr McDonnell: I just want to come backgenerally—to go back to the beginning, if you like.The whole purpose of our inquiry here is to look atan air transport strategy. The point is this: if we cannotfind ways and means of improving access and easingaccess for passengers, then there may not be much ofa strategy. Really what we are looking for is whetherthere is anything you would suggest that wouldcontribute to the strategy. For instance, we did maybetouch on the two airports, the competition and all therest. In your view, either of you, is that a good thingor a bad thing? Are we oversupplied? Are wecompeting to the point that they are doing each otherdamage? Maybe that might have a commercialdimension.I would go back to the point as well, perhaps, aboutthe rail links because, in my humble opinion, the raillinks are probably symptomatic, more than anythingelse, rather than being significant in their own right.If people can get on a bus, and I think the last time Idid it for £10 or something, and you are in DublinAirport in two hours or two hours and 10 minutes, andif we do not begin to outreach beyond Banbridge—ifyou are sitting in Newry, for instance, it is easier togo to Dublin. How do we get the volume ofpassengers sucked into both Belfast airports to makethem more viable and more effective to provide theservices? The worry I would have and the worry a lotof other people would have is that if you bleed awayanother 10% or so, as a result of the air passengerduty, a number of the flights and a number of theconnections may not become viable, or they mightdrop to three days a week instead of five days a weekor whatever. Have you any views as to whatpractically we should be saying? Could I come backon the rail links, not just as rail links in isolation, butas reaching out? For instance, if we have a rail linkthat makes it easier for people in Coleraine and thatmakes it easier for people in Newry. That makes iteasier for people to stop on our train at Antrim,Ballymena or whatever and feed into our airports.Doreen McKenzie: I think both the Belfast airports,especially the International Airport, see people in thesouth of Ireland as part of their catchment area andvice versa. Both target both markets. If we did havethat rail link, that could take people from Newry or

Dublin straight up to the International Airport.Whenever we did have a good rate of exchange, whenyou went to the International Airport, all the car parkregistration numbers you were seeing were fromsouthern cars. Sometimes for people in the south, it isas easy for them to get to our airport as it is to get toDublin Airport. If we can make that infrastructure forthem and get the cars off the road, so that they do nothave to pay for parking, they can get on, it is apleasant journey and they literally jump off at theairport at the other end, then we are halfway therewith the strategy. It is trying to do what you can do insteps. We cannot do it all in one go. There is usuallya cost element to everything. It is trying to work outwhat is the best one. Luke, have you anything to addon the wider picture that might come into it?Luke Pollard: ABTA’s perspective when it comes toaviation policy is actually into looking at where theplanes go and where the customers go. If you followthe customer journey from when you book until whenyou get to your destination and vice versa, there aresome really critical paths in there. The affordabilityone is absolutely critical. If you consider that 1million passengers a year, approximately, fly fromDublin Airport that originate in Northern Ireland, youcan see actually that there is a huge potential marketfor realignment there. If affordability is one of themain reasons as to why they go there that certainlyneeds to be looked at. The reduction in air passengerduty for the Newark flight is welcome, but there arean awful lot of other destinations that people will betravelling to Dublin to connect through to save a lotof money, especially in tough times.If you look at the affordability part, you also have thereliability part of it. You have to make sure thatactually they are flying a reliable service and they areconnecting easily to get there. Connecting to theairport, the surface access, is absolutely essential aspart of that mix. To Doreen’s point, which she raisedearlier, one thing we are seeing in terms of airportsright across the country, looking at improving theirpassenger numbers, is not only looking at improvingit for people who live locally, but also what theexperience is for an in-bound passenger who has comeinto that destination for the first time. Once you getoff the plane, where do you go? Is it clear where youare going? Is it easy to get somewhere and is itaffordable to connect? If you can link all those bitstogether, then you will be in a better place.Dr McDonnell: Do you see or are you aware of anysource of revenue beyond government and beyond theairports themselves? Have you any suggestions as towho or what might help stack up?

Q142 Oliver Colvile: Can I link in my question tothis as well? As you may know, the coalitionGovernment is incredibly keen to try to make sure theNorthern Irish economy is very much more rebalancedthan it is at the moment. It is far too dependent on thepublic sector. One or two areas down in the south-west are a bit like that too, but do you perceive that,by rebalancing the economy, getting more privateinvestment and more private companies, and a privateeconomy actually going in Northern Ireland, that thatwill improve the numbers of people who will actually




want up using airports and will the airport businessthen flourish? Or is it the case that actually havingan economy that is dependent upon the public sector,because people need to come over here in order tocome and see Ministers, come to Whitehall orwhatever it might be, actually is the sustainable part ofit? Which one of those two—private sector or publicsector—do you think would make the airports inNorthern Ireland much more sustainable than they areat the moment?Luke Pollard: At the risk of giving a politician’sanswer, it is a little bit of both really, in that respect.The private sector rebalancing is something that isimportant, not only in Northern Ireland but across thecountry. There is no doubt about that. If you arelooking at a business investment decision, where youare entering a relatively high tax regime compared toa low tax regime that is just down the road, then thatdecision has already half been made for you. It is notonly looking at the corporation tax, which may be theheadline one that an awful lot of people look at. Ifyou are making an investment decision about whereyou have to site your business, you look at the wholerange of taxation levels. Increasingly in a connectedbusiness, air passenger duty as a cost of flying is oneof those reasons you look at.It is part of the balance along the way, but you shouldalso not forget here that, when you look at aviation,there is a lot of focus on business travel as the soledriver of growth. What is certainly clear is thatbusiness and leisure—because it is very rare that youget an entire plane composed entirely ofholidaymakers or entirely of businesspeople. You getcomposite flying. That is certainly true of all theNorthern Ireland airports. Actually, leisure drives anawful lot of jobs and growth as well. That should notbe forgotten within that, because sometimes there is afocus on foreign direct investment and people in suitsdriving jobs, but actually it can be people on leisure,on holiday and visiting friends and relatives that canprovide just as much of an economic impetus to aneconomy.Oliver Colvile: Unfortunately I have to go in abouteight minutes, because I have something else to do.Do not take it as a personal slight. It is not; it is justthat I have to go and do something else.

Q143 Nigel Mills: Can I take you to the CivilAviation Bill and the proposals to reform the ATOLscheme? I think you touched on it in your writtensubmission. Can you just explain to us why you thinkthat is such a key issue for ABTA members inNorthern Ireland?Luke Pollard: Absolutely. I can probably give thecontext around that and I think Doreen probably hasa more local view on it. As background, the way thatpeople have been buying their holidays has changedconsiderably since the ATOL scheme was firstintroduced. ATOL protection, by and large, coverspackage holidays and air-based package holidays inparticular. What we have seen, certainly since theATOL regulations were introduced, is the growth oflow-cost airlines and the growth of internet sales. Thathas fundamentally changed the way people buyholidays. ATOL’s perspective on holiday protection is

that we would like to see holidays protected, not justone unique definition of what a “holiday” is. At themoment, of all the holidays sold in the UK, only abouta third of them are packages, and so ATOL protectionhas been focused on a much smaller market in termsof the total number of holidays.In terms of the reforms that the Department forTransport has been leading on, and has been doing sonow for about five years or so, what we have beencalling for as ABTA is to see an extension ofprotection so holidays are covered. They would beholidays where they are booked as a package; wherethey are booked as a Flight-Plus arrangement—whichis the new definition that says that, if you buy a flightat or around the same time as a hotel or car hire, thenthat is a Flight-Plus arrangement—or as any othertype of arrangement. It is a challenge to find anyconsumer in any travel agent up and down the country,who will be able to correctly identify what legal entitythey are purchasing, in terms of their holiday. Thatdoes not seem to be the correct place to apportionwhether they are protected or not.In terms of the Civil Aviation Bill, the extension toFlight Plus is very welcome. It can be done undercurrent regulations. The bit that is left out from thereis any holiday sales outside a travel agent or touroperator is airline sales. There are two provisions inthe Bill that we are really keen to see put through.One is a holiday sold by airlines. Under the newreforms the Government has pushed through, yourholiday will be protected if you buy it from anyonebut an airline. If you go to an airline’s website, buyyour flight, buy your hotel and buy your car hire, thatcould be the identical hotel, car hire and flight as youare buying from a travel agent, but because you havebought one from an airline and one from a travelagent, one will be protected and one will not be. Wedid not think that was the right way forward and theGovernment has agreed with us. That is why theyhave put the powers in there.We feel it is really important that those powers are puton to the statute books but, more importantly, that theyare used once they are on the statute books. We wantto see the Department for Transport put in a decentconsultation to bring those holiday sales into thescheme so, at the end of it, if you have bought whatlooks like a holiday, you will be protected. Ultimatelythat is what consumers want to know when they arebuying what is, in many cases, the largest purchasethat that family will make in any given year. Theyknow that their money is safe if they are making apurchase in advance or, if they are on holiday whenthere is a failure, they are going to get brought home.That is absolutely critical for confidence in theindustry.Doreen McKenzie: I believe that financial protection,from our customers’ perspective, gives themconfidence in buying travel products. Probably anexample would be when bmibaby decided to close; alot of customers were ringing up and saying, “It isgoing to cost me more money to do it.” However, ifthey had booked it as a package through the travelagent, the tour operator accepted that liability and hadto pay the difference. Those customers did not haveanything, so it was quite good from that perspective.




That was an early example of it actually kicking intoplace. At the moment, we are just pushing for theGovernment to move as quickly as possible to get thelevel playing field, because there is still confusionfrom the public. If they just go and buy it online, asLuke said, click through and buy the second element,there is no protection.

Q144 Nigel Mills: The important thing is that peoplewho are booking know whether they are covered ornot. That is very hard at the moment.Luke Pollard: Absolutely. Consumer confusion is oneof the main reasons why it is worth doing. To makesure you get your ATOL stamp or your ATOLcertificate, as it will now be, for any protectedarrangement is so important. There is an assumptionfrom travellers right across the UK that, no matterhow they buy their travel arrangements, no matterwho they buy it from, they are protected. With fallinglevels of purchases of travel insurance, even if theymay be protected on their travel insurance, and not allpolicies cover failures in any way, shape or form, weare seeing the number of people still not beingprotected falling. We want to see all holidaysprotected, because that is good for the industry and itis good for the consumer.

Q145 Dr McDonnell: Air passenger duty on flightsfrom Northern Ireland to North America has now beenreduced to domestic levels. The responsibility forsetting the rate has been devolved to the Executivein Stormont. Have you had any discussions or anyindications from Ministers in the Executive that theyintend to reduce the air passenger duty on domesticflights? Have you had any feedback?Doreen McKenzie: We have not been told specifically,but we just have an understanding or have heard, shallwe say, that the will is there to take it to zero, whichwould be wonderful. That would make it competeeasily with the south of Ireland. As has already beenmentioned today, 98% of people are still having topay £13 each way, which, by the way, is intended tobe increased again next April.Dr McDonnell: That is where the worry is. That iswhy I am asking the question.Doreen McKenzie: That is a real worry. We wouldlike to see that you ask for the powers to be devolvedto the Northern Ireland Assembly for the whole ofAPD. Now I understand that the cost to theGovernment would be somewhere between£55 million and £60 million to cover the whole ofBand A, but, if we could get our tourist numbers up,it could pay for itself.

Q146 Dr McDonnell: My sense is that people wouldbe comfortable with the £5 to £10 range. Once youstart moving above the current range, it begins tobecome prohibitive. You have heard noises of goodwill but no substance.Doreen McKenzie: Just noises, yes.Luke Pollard: You need to have the economic factsand figures to back that up along the way. At themoment, there is a very strong emotional argumentabout reducing air passenger duty. What we arepreparing, as part of the Fair Tax on Flying campaign

and with other groups, are the economic figures thatsay, “If you reduce APD in some respects, not onlywill you gain a greater level of flights, so that therewill be more APD coming in at a reduced rate, butyou will gain additional taxation via other means aswell”. Certainly it is our view that the opportunity thatNorthern Ireland presents in allowing devolution ofdirect Band B flights, but also the potential fordevolving Band A, will really shine a strong light onthe fact that reducing air passenger duty will not onlyproduce more money for the Exchequer but also getmore people back into work. The only opportunityacross the UK to demonstrate the argument that lowerAPD will produce a greater return in the economy isin Northern Ireland. As well as looking at the specificcases in Northern Ireland, it is something that ABTAmembers right across the country are encouraging,because it is a firm belief of ABTA members thatlower taxation, when it comes to air travel, wouldencourage more people to get on planes. That wouldbe good for not only their businesses, but the widereconomy as well.

Q147 Jack Lopresti: On that point, in yoursubmission you point out that Netherlands, Belgiumand Denmark have scrapped or not introduced theirversions of APD. Why do you think this Governmentis so insistent on retaining it and, from 2013, actuallyincreasing it? Do you have any thoughts on that, apartfrom the obvious?Luke Pollard: One of the strong reasons why theNetherlands, for instance, and some other Europeanmember states have removed or reduced their airpassenger duty is because of shared land borders. Ifyou take the perspective of the customer again, if youcan fly from a low-tax environment compared to ahigh-tax one, and travel easily to there, you will doso, because that will make a big difference. That isexactly what we have seen in Northern Ireland, in thefact that Northern Ireland passengers have been flyingfrom Dublin precisely for that reason. The rest of theUnited Kingdom cannot access another EU memberstate with low tax as easily in terms of that. For thatreason, it has been a captive market, so to speak. Theability to increase taxation regularly has gone on.We are concerned that there has not been theother-side-of-the-balance-sheet research done by theTreasury. They can tell you how much money theyare going to net in, and they have projected that outuntil 2016, where it is approaching £4 billion a year,but they have not done the analysis that says, “If wereduced it by a certain rate, this would yield X amountmore jobs.” Looking at air passenger duty as part ofa way to kick-start the UK economy is reallyimportant. That is again why Northern Ireland,looking at devolution in this case, can provide such agood boost to the argument that actually lower APDacross the UK will provide more jobs everywhere inBritain.

Q148 Naomi Long: Could we maybe just look at theissue about the Heathrow slots again, just looking atthat very specifically? IAG has given an assurancethat the Belfast-City-to-Heathrow linkage is secure.The decision by the Competition Commission is that




it has to be protected until at least October. However,in the intervening period, we have seen ground staffput on protective notice from bmi. We have seenbmibaby rather unceremoniously removed at shortnotice to much inconvenience, I have to say, ofpassengers. How much confidence do you have in thereassurance that we have been given about theHeathrow link?Doreen McKenzie: I am pretty confident that it isbusiness as usual up to the end of this year. The factthat a couple of people in Northern Ireland have beenoffered jobs of a permanent nature with them, albeitthey are not based in Northern Ireland, has given meconfidence going forward that they intend to stilloperate the service. As to what that service is goingto look like in a few years’ time—whether it will stillbe operating out of City Airport, will it be splitbetween City and International, or will it be moved toInternational for larger aircraft—is just a guessinggame, at this moment in time. I think they will retainthe service. I think they can see that it is a feeder hubinto their worldwide services, so they would be verykeen to get that, because that is going to drive onwardbusiness for them. I am confident that, yes, we willhave it, but I am not sure that it is going to look thesame as it looks today.

Q149 Naomi Long: Just from your perspective—weasked this of the CBI, so you will have heard thisquestion—on the issue of frequency versus capacity,one of the arguments is that you could trade frequencyfor larger aircraft, retain the seat numbers but haveless frequent flights. That may work if it is simplyviewed as a feeder into other services, because youcan align those very carefully. From your perspectiveof booking people on to those flights to Heathrow,how important is frequency?Doreen McKenzie: Frequency is very important. I amnot sure you could align larger aircraft to feed intocertain times of flights, because we have so manylarge terminals in Heathrow and different timescalesto get, say, between Terminal 1 and Terminal 5, orTerminal 1 and Terminal 3. You could not just haveone flight going in, in the morning, to feed the wholelot. That would defeat the point of a feeder service.We need the frequency there for that. We need thatfrequency during the day, so you can feed into alldifferent flights going into different parts of the world,but we do need the capacity as well.

Q150 Naomi Long: In terms of the closure ofbmibaby and bmi Regional, what kind of impact hasthat had on UK holidaymakers and business travellers,particularly in terms of Northern Ireland this year andpeople going outward and coming in?Doreen McKenzie: We were okay on the businesstravel passengers, because that was mainly domesticand immediately there was a rebalance of otherairlines putting in additional capacity, so we were ableto get people there sorted out very easily.The holidaymakers were a different ballgame, becausethey had booked well in advance to get a cheaperprice. Where the disappointment really came throughis they knew that IAG did not intend keepingbmibaby; it was not a model that fitted with their

business model, so they had always intended to getrid of it for financial reasons. The shock came becausethey dropped Northern Ireland in June, a month beforeour peak season, and they kept Birmingham and EastMidlands until September. It would have been easierblow if they had kept it until September, but it wasobviously done for commercial reasons, so we justhad to accept it. However, I do believe that there aregoing to be more carriers announced very soon andthey will pick up the slack. As I say, those people whobooked a package through travel agents were out noextra money at all. It was just the people who haddone it themselves on a click-through.

Q151 Naomi Long: In terms of ABTA themselves,how many of your member organisations operate theirown flights, their own airlines?Luke Pollard: It is our three largest members, so:Thomas Cook, as in Thomas Cook Airlines; TUI, whohas Thomson and First Choice; and then MonarchGroup, who has Monarch, which is a scheduledairline. They are the three largest ones.

Q152 Naomi Long: Obviously you have said thatAPD is hugely important. How important would it beto your other constituent members, particularly thosewho operate airline services?Luke Pollard: It is an issue for all our members, to behonest. The passion with which members talk about itis the same whether they are one of the largestmultinationals, like TUI or Thomas Cook, or whetherthey are a small family-owned travel agent. Over theyears they have seen the increasing rates actuallyhaving an effect on their business. It may be easier toquantify if you are a large multinational, with thegreater statistical abilities and passenger numbers todemonstrate where that is having an effect, than it isfor a small business, but it is something that everymember certainly has expressed concerns about. Ithink there is a worry among some of the smaller onesthat we have seen around the fact that the impact ontheir businesses may be a bit more hidden, because itis an inexorable rise going up all the time.Actually, when it comes to small businesses, a 5%increase in this tax every year does have a bigdifference. The majority of ABTA’s membership issmall and medium-sized businesses. There are somevery large ones that carry an awful lot of people, butthe majority of our members are small businesses andthis is a tax that directly affects those smallbusinesses. It is not only on behalf of the travellingpublic that we oppose the increases in air passengerduty. It is also for that reason.It is worth bearing in mind that APD is not the onlytax here as well. The Emissions Trading Scheme iscoming in. It is something ABTA supports and ourmembers, generally speaking, support, but that isgoing to add another tax on top of what is going on.Unlike APD, which is to a certain extent transparent,because you all know how much tax you are paying,depending on what destination and what class oftravel you are in, ETS will be a much more hiddentax, because it will be based on the business model ofthe airline on which you are flying, so obscured fromthe public view. That is why it is really important that




the Government makes an early stage here and says,“Yes, we are going to offset ETS income from APD.”That is exactly what Germany has done. They havemade a very clear statement that they want to raise Xamount of money—I think it is about €1 billion ayear—from aviation. Emissions trading income willbe the primary one and then the remainder will bebilled in their version of air passenger duty. We thinkthat is the fairer way of doing it, and that is partly FairTax on Flying’s perspective. That is where the “fair”bit comes from, in the fact that we do not want to seemultiple taxation applied on here, because there is areal danger that we keep taxing and taxing at one ratebut Emissions Trading Scheme taxation is designed toincrease at a much faster rate than APD’s 5% a year.We should not kid ourselves into thinking there is onlyone tax that people sitting on planes are paying; thereare going to be two. That will especially have a bigimpact when the availability of carbon and the licencecost increases, as it will in the next five years or so.That is something perhaps for a more long-term viewof where aviation in Northern Ireland is coming from:it is actually looking at what the impact of theEmissions Trading Scheme is, as an additionaltaxation measure, not just APD. That might be worthconsidering.

Q153 Chair: It might be completely out of context,but does the minimum carbon price affect you at allor would that not affect you?Luke Pollard: It is not entirely clear about what theprice of the carbon licence is going to be down theline. What we can assume, based on the modellingthat has been done at the moment, is that it could beanywhere from £5 to £40 a ticket, so it is not entirelyclear what is going to go on. It is also not entirelyclear how airlines are going to adjust their ownbusiness models to adjust to the carbon licences thatare available. At the moment, certainly ABTA has nofigures to be able to say, “It will cost the averagecustomer this amount of money”.

Q154 Chair: You feel it will affect you though.Luke Pollard: ETS will certainly affect passengers,yes, and they will be paying for it through theirticket prices.

Q155 Mr Benton: If I might go back to the issue thatwas brought up about attracting people for the firsttime and why it is harder to get people to come backon additional occasions. I was just wondering if it waspossible to be a bit more explicit. I speak as a personwho will always remember my first visit to Northern

Ireland. I absolutely fell in love with the place. I findit difficult or hard to imagine anybody not wanting tocome back for a second time. I was just curious as towhether there was a compelling reason or someobstacle, not necessarily a reason. It seems difficultfor me to understand why somebody would not bewaiting to get back.Doreen McKenzie: That is great to hear. I do not thinkwe have a problem within Northern Ireland. I think itis because the consumer has so many choices now.We have so many airlines flying to so manydestinations from every airport in the UK that therehas been, just prior to the recession starting, peoplegoing on their annual two-week holiday, and thengoing two or three times a year for weekend breaks toEuropean cities and what have you, with all theno-frills offering cheap deals. That all started to dryup, but people still try to have their holiday. I do notwant to keep harping on taxation but, when that allstarts increasing the price, the short breaks aredropping off. People have a list of saying, “I will tryBelfast this time and maybe go to Newcastle nexttime. I’ll go to New York for Christmas shopping.”We are having people going to Hong Kong for aweekend, which is not a short distance. I think it isbecause there is so much choice that we, as a part ofa UK, have to compete against, not just from the restof the UK but from the rest of the world, to attractpeople coming in.What we have been very successful at, in the lastcouple of years, in doing is actually attracting a largenumber of cruise ships to include us now in theirdestinations. That has really opened up as a market,because those cruise shops that are normally comingin have about 1,000-plus passengers on board, andquite a lot of those are British citizens coming indoing round-British-Isles tours, and also Americancitizens coming in. They are starting to say, “I willcome back there. I will come back a second time,” soit is utilising that. Now, we need to do an awful lot onour welcome entry at the ports, but that is another day,another story. We are not welcoming there at all, butthe opportunities are there, if you get all theinfrastructure right, that they will keep coming back.

Q156 Mr Benton: The reason I went back to thatquestion was I take it the answer is commercialisationbasically. There is no other factor that you could pointto as creating an obstacle.Doreen McKenzie: No.Chair: That was a very useful session. Thank youvery much for coming over and giving us theinformation. Thank you very much.

cobber Pack: U PL: COE1 [SE] Processed: [28-11-2012 14:00] Job: 022723 Unit: PG03Source: /MILES/PKU/INPUT/022723/022723_o003_th_NIAC Air transport strategy iii (23 May) - Corrected (FINAL).xml



Members present:


Mr Joe BentonOliver ColvileLady HermonKate Hoey

________________


Witnesses: David McMurray, Regional Industrial Officer for Belfast, Unite; and Catherine Horgan, AngelaKelly, and Paula Spiers, bmi Cabin Crew and Unite members, gave evidence.

Q157 Chair: You are very welcome. Thank you verymuch for joining us.David McMurray: On behalf of the union and mycolleagues I thank the Committee for the invite toaddress this.

Q158 Chair: You are very welcome. As you know,we are conducting an inquiry into aviation policy withregard to the impact on Northern Ireland in terms ofbusiness, tourism and people flying to see their friendsand relatives. We are in the quite early stages of thatinquiry but are delighted that you have been able tojoin us. Mr McMurray, would you introduce yourteam and make a very brief opening statement?David McMurray: Yes, Catherine Horgan is my shiftsteward from the Belfast station; Angela Kelly is myshift steward from the Edinburgh station; and PaulaSpiers is, for want of a better term, my shift stewardfrom the Manchester station. I am employed inNorthern Ireland but I seem to have been giftedEdinburgh and Manchester as well.I do not know where this would fit into thisCommittee’s remit but we have a number of concernsabout the BA takeover of bmi. Speaking purely as atrade union, our initial concern is the loss of some100 jobs in Belfast. Speaking as a trade unionist, oursecondary concern is the damage that that may do tothe economy in Northern Ireland. British Airways aregoing to have to recruit some 110–120 people toreplace Catherine, Angela and Paula to fly the samenumber of flights into Belfast, Manchester andEdinburgh as they currently do. So what we see issomewhere in the region of 400 people from the threeoutstations losing their jobs. They are contributors totheir local economy and to Northern Ireland’seconomy in particular. They are then going to go on toclaiming unemployment benefit, housing benefit andeverything else when there is no justifiable economicreason for it that we, as a union, can see. We see adifficulty in that British Airways are going to locatestaff in Belfast to fly their first flight in the morningand, if one or two of those staff are taken ill, that firstflight does not go. So we do not see how abusinessman—or a businesswoman, taking in thedemographics of this Committee—Lady Hermon: Very wise.David McMurray:—could have any confidence inBritish Airways delivering a viable service out ofBelfast, because people take ill at the drop of a hat.That flight then will be cancelled for two hours. Some

Naomi LongNigel MillsIan Paisley

155,000 people fly in to Northern Ireland. Please donot press me on this, but I know from a confidentialsource that British Airways will operate the hub inBelfast until 2013. Now, Mr Walsh seems to havegiven an assurance to the Belfast Telegraph, aka JohnSimpson the Northern Ireland economist, that it willoperate until 2014. I do not see that as a long termviable interest in Northern Ireland. We have a personwho left British Airways to come to work at bmi:Amy James. When she came to British Airways, sheclosed down the Dublin outstation for BritishMidland, and closed Glasgow. She now seems intenton closing Belfast, Manchester and Edinburgh andwill shortly be TUPEd into British Airways again.I am always suspicious and I am always very carefulabout conspiracy theories, because conspiracy theoriesbecome paranoid theories. However, this conspiracytheory only took place four years ago when Lufthansatook over bmi. Lufthansa took over bmi very, veryreluctantly. We suspect that Lufthansa took over bmion the prospect that British Airways would buy outLufthansa’s share in bmi. It just seems that this AmyJames has created the model where British Airways,who are a global brand, are not going to operate outof regional airports. The same number of flights willfly into Belfast and fly out of Belfast, but the staff aregoing to be made redundant.What British Midland have offered to the staff inBelfast and my two colleagues is that they can applyfor a job in Mixed Fleet or take redundancy. MixedFleet means that Catherine has to relocate to London,and for relocating to London British Airways will payher the princely sum of £10,000 in two charges. Theywill pay Davy McMurray who lives in Slough£10,000 to relocate to Mixed Fleet. It just does notstrike me as fair. Nor is it economically sound becauseCatherine Horgan, from being a contributing memberof society, will have to relocate to London and thenearn tax credits. She will be able to claim tax creditswhilst working for William Walsh and BritishAirways. I do not see that as being a fair package forthe taxpayer, for Catherine Horgan, for Angela Kelly,for Paula Spiers, or any of their colleagues. I don’tsee why I should pay. We all pay our tax; I don’t seewhy I should pay Catherine Horgan to push a trolleydown an aeroplane and to serve me a drink, so WillieWalsh can put more money in his pocket. I just don’tsee that as fair or a justifiable expenditure oftaxpayers’ money.

cobber Pack: U PL: COE1 [O] Processed: [28-11-2012 14:00] Job: 022723 Unit: PG03Source: /MILES/PKU/INPUT/022723/022723_o003_th_NIAC Air transport strategy iii (23 May) - Corrected (FINAL).xml


23 May 2012 David McMurray, Catherine Horgan, Angela Kelly and Paula Spiers

Q159 Chair: We will explore a number of thoseissues as we go along, but thank you for that. Can youclarify which staff you represent as a union? Is it cabincrew and ground staff?David McMurray: I am in the unique position that inBelfast I represent cabin crew and ground staff, butfor the purposes of this I suppose it is cabin crew. Andit is Unite; I don’t think I acknowledged that we arefrom Unite.Chair: There are a number of issues to explore.

Q160 Mr Benton: Good afternoon and welcome. Iwas about to ask you what your understanding of thecurrent situation was but in fact, in your openingstatement, you have referred to it and expressed yourconcerns. Obviously I share those concerns too. Letme go in another direction following what you havesaid about your concerns. Has Unite taken it up withrepresentatives of the British Government or theNorthern Ireland Executive? What reaction have youhad? Have you taken it up with other companiesinvolved and what has been their reaction to thesituation?David McMurray: I really don’t know how to addressthe Committee members here, so excuse me myignorance.Lady Hermon: You can pick first names or whateveryou like; it is fine.David McMurray: I know your first name is not Lady.Lady Hermon: You can substitute Sylvia for that one.The point is that the Chairman and the Committeewould like you to feel at ease, so just give us as muchinformation as you can and don’t feel at allintimidated or that there is a proper procedure aboutwhich name to address a person by. We are all happywith first names, including Ian.David McMurray: We just want to be respectful,Lady Hermon.Lady Hermon: I know you are very respectful andyou can call me Sylvia without the Lady.David McMurray: The answer to your question is thatI personally have met with Paul Goggins and TonyLloyd in Manchester. Angela has met with MichaelMoore and David Hamilton in Edinburgh. Katie—because Catherine is just so long winded, she isknown as Katie—and I have met with the DUP, theOfficial Unionists, the Alliance Party and Sinn Féin.As the right hon. Mr Ian Paisley knows, we met withSammy Wilson yesterday, and we have met Sammyin Stormont. What we are trying to do, as a group ofworkers, employees and a trade union, is to garner asmuch cross-party support as we possibly canthroughout the three regional airports for thecampaign. We feel the only people who can putpressure on Willie Walsh and British Airways are—Ijust knew my phone would go off; I thought I hadturned it off. I apologise—Chair: It is usually mine.Lady Hermon: It is not an embarrassing theme tunethough.David McMurray: We know that the DemocraticUnionist Party met with Willie Walsh yesterday.Sorry, I am trying to switch this thing off.Lady Hermon: Yes, give it to a woman to do.

David McMurray: If in doubt give it to a woman.This is really sexist, Lady Hermon; come on, give mea break here will you?Ian Paisley: You are the trade unionist.David McMurray: What we are trying to do is get asmuch cross-party support through the three regions toput pressure on British Airways and Willie Walsh tonot close the outstations. We do not see any reasonfor the outstations to close. As I said in my openingstatement, the same number of planes are going tofly into the three outstations and fly out of the threeoutstations. British Airways are going to make some400 people unemployed and then recruit. They are inthe process of recruiting as we speak.Anybody that knows employment legislation willknow that in a redundancy situation there are anumber of steps you must take: no overtime; norecruitment. Apparently British Airways, IAG andWillie Walsh are oblivious to employment law in theUK.

Q161 Mr Benton: That, without appearing cynical,is the response I think you would get in normalnegotiations. What I am really seeking to draw out isthe actual responses. You have cited a few instanceswhere, for want of a better word, the figures do notadd up. You have said that it is not fair on the taxpayerand so on and so forth. What has been the responsefrom the Government, the employers and the airlineswhen this rationale is put before them? How do theyrespond? Do they recognise that they are not allowedto do it?David McMurray: From the political parties we havespoken to, the response has been very positive. I havementioned different political groups, especially inNorthern Ireland, who would be politically opposedto one another, and the same with Scotland. Theemployer who is making these people redundant isBritish Airways; we have been told that quite clearly.At every meeting we are told it is not bmi who aremaking these people unemployed; it is BritishAirways. I suggested they changed the brand namefrom BA to LA—London Airways—because whilstBritish Airways is a global brand, it just does not seemto operate globally around the UK. It is BritishAirways who are making these people redundant andBritish Airways have been quite blunt and matter offact that they are not keeping the outstations open. Ishould have included this in my opening statement:everybody else who is a bmi employee who lives inthe south of England, aka London, will be TUPEtransferred into British Airways.

Q162 Ian Paisley: Everybody?David McMurray: Everybody.

Q163 Ian Paisley: I was told there were going to be1,200 redundancies; 1,200 job losses across the wholeof the UK. Is that wrong?David McMurray: The information we got initiallywas that there would be 1,200 job losses, buteverybody who holds a current bmi cabin crewcontract is being transferred into British Airways. Theground staff who would be below wing are beingmade redundant.

cobber Pack: U PL: COE1 [E] Processed: [28-11-2012 14:00] Job: 022723 Unit: PG03Source: /MILES/PKU/INPUT/022723/022723_o003_th_NIAC Air transport strategy iii (23 May) - Corrected (FINAL).xml



Q164 Ian Paisley: BA do not employ ground staffoutwith London, is that not right?David McMurray: Bmi do.

Q165 Ian Paisley: Yes bmi do but BA’s excuse forthat is that they do not employ ground staff in anyother airport; they actually buy them from Servisairor wherever.David McMurray: In London they do.

Q166 Ian Paisley: Yes. You are saying that none ofthe 1,200 people are actually going to lose their jobsin London.Catherine Horgan: East Midlands as well.David McMurray: The bulk of the job losses aregoing to come from Birmingham and East Midlands.Sorry, maybe I should have been more specific Ian.Anybody employed at Heathrow on a bmi contractwill be TUPE transferred into British Airways. Whatour people are being offered is that they can apply fora job in Mixed Fleet under worse terms and conditionsand relocate in London.

Q167 Lady Hermon: Does that only apply to BelfastCity Airport?David McMurray: That applies to Belfast CityAirport, Manchester and Edinburgh. Sylvia, you couldlive in Slough, and Ian lives in Manchester. You get£10,000 to stay in Slough and go to Mixed Fleet. Iangets £10,000 to move from Manchester to London towork in Mixed Fleet on the same terms and conditionsas you and taking reduced terms and conditions thanhe currently enjoys with bmi. Anybody who isemployed in London—I hope I am beinggrammatically correct—is automatically TUPEtransferred over into BA under their bmi terms andconditions of employment. They attract the Londonweighting and everything. These people do not.

Q168 Naomi Long: The issue I was going to ask youabout is the reassurance that has been given by WillieWalsh that the bmi Belfast City to Heathrow servicewill be retained and is secure. You mentioned alreadythat you are sceptical about that reassurance.David McMurray: I am sceptical about Willie Walsh’stimeframe. Willie Walsh has given an assurance toJohn Simpson that Belfast is secure until 2014. Thatis only a year and a half away. As a businessman Iwould not invest in Northern Ireland if I could not flyin to see how my business interests are doing. I wouldsuggest that you, as a businesswoman, would notinvest in Northern Ireland if you were only going tohave a flight into Belfast until 2014. I have it on soundinformation—please do not push me on namingnames—that British Airways intend to pull out ofBelfast by October 2013.

Q169 Naomi Long: That is a year after therequirements of the Competition Commission to retainthe service, which expires in October 2012.David McMurray: You are a wee cynic, aren’t you? Iam not being funny; I am cynical like that too.Naomi Long: Okay, thank you.

Q170 Lady Hermon: Could I just interject and askabout the staff who are going to be affected; where itis looking likely they will be made redundant at theexpiry of the 90 days and then have to reapply fortheir jobs on less favourable terms and conditions?The uncertainty must be terribly draining and moralemust be very low indeed. Has there been anopportunity to meet with Willie Walsh and say to him,“We have heard these theories and there is a lot ofuncertainty about how long your commitment is goingto last with Belfast City Airport and LondonHeathrow”? Have you been able to put these points tohim directly? Has that meeting been asked for?David McMurray: We have requested it on numerousoccasions, Lady Hermon. At the last talks I attended,I think on 11 May—Catherine Horgan: Yes.David McMurray:—the BA senior representative tonegotiations did not even bother turning up to thatmeeting.

Q171 Kate Hoey: So British Airways, over the headof management level, are ignoring Unite.David McMurray: They are ignoring theiremployees, yes.

Q172 Kate Hoey: They are ignoring Unite the union.At the very most senior level Unite have asked fora meeting.David McMurray: It was a guy called Bill Franciswho is the lead negotiator for British Airways in theirredundancy talks and TUPE transfer talks for peoplefrom Heathrow going from bmi to BA. He askedmyself and my colleague for an obligation to clear ourdiaries, which we gave. I wish I was a Frequent Flyercard holder so I could have a holiday in Florida, butwe cleared our diaries and Bill Francis, funnilyenough, buggered off to Florida on the day of theredundancy talks. That left me sitting with Amy Jamesfrom bmi, who are not making the people redundant,leading the redundancy talks. That takes me back tomy conspiracy theory.

Q173 Lady Hermon: Was another meetingrescheduled? Surely that happens if someone does notturn up.David McMurray: No, because at that meeting werecorded failure to agree and asked to raise it to thenext level, which hopefully will include Mr Walsh.

Q174 Kate Hoey: This is a serious situation for yourmembers. Why is the union not, at a very senior level,going in and asking for a meeting with Willie Walshand taking the right people with them?Angela Kelly: I believe that is because the majority ofworkers in London Heathrow are safe and we are not.

Q175 Ian Paisley: It has been described to us asgeographic discrimination. I want to ask Catherine,Angela and Paula this specifically, because you workthe lines: is the case that, because you are Belfast,Edinburgh and Manchester, you are being penalised?Is that the feeling of you and your staff?Catherine Horgan: Yes.Paula Spiers: Yes.




Angela Kelly: Definitely, yes.

Q176 Ian Paisley: Could you give us a breakdown,starting with Catherine in Belfast, of precisely thenumbers affected here?Catherine Horgan: About 32 cabin crew. All in allthey were talking about 90 but then there areengineers.

Q177 Ian Paisley: Can you break that down for meroughly? So there are 32 cabin crew.Catherine Horgan: We have 32 mainline cabin crew,who would fly the route of Belfast to LondonHeathrow. Then there are all the ground staff.

Q178 Ian Paisley: How many?Catherine Horgan: About 60. I can only give youapproximate figures.Ian Paisley: That is okay.Catherine Horgan: There are engineers. At thebeginning all of them were going to be affected butnow they are retaining some of them at Belfast.

Q179 Ian Paisley: Do you have a rough number forthat?Catherine Horgan: About four.

Q180 Naomi Long: Is four the number they areretaining or the total number of engineers?Catherine Horgan: No, I think at one stage they hadabout four engineers based in Belfast but then whenbmibaby came in they then had to take on extraengineers. It stated in the newspapers that there wereno bmibaby crew based in Belfast but that is actuallyuntrue. There are 10 crew members based there.

Q181 Ian Paisley: What about pilot numbers?Catherine Horgan: There are about 10 or 11 pilotsand they were affected as well, but I think they aregoing to gain employment in Heathrow.

Q182 Ian Paisley: What is the situation inManchester?Paula Spiers: There are 69 ground staff, 39 cabincrew and I think there are 10 engineers. There areabout 12 pilots; they have been offered Heathrow aswell.

Q183 Ian Paisley: What about in Edinburgh?Angela Kelly: The numbers are roughly the same.There are 34 cabin crew; roughly 55–60 ground staffand 8 engineers.

Q184 Ian Paisley: So it is about 150 ground staff.BA do not do ground staff outwith Heathrow. Is thetrade union in a position to negotiate places for thosepeople in the likes of Servisair or with any of the otherground crew, or is that up in the air?Paula Spiers: That is up in the air. It is the GMB thatare dealing with that.David McMurray: I can answer for Belfast.Ian Paisley: Okay, give me Belfast.David McMurray: In Belfast I have been negotiating.It will either be Menzies or Servisair who will takethose people.

Q185 Ian Paisley: Do you think that for Belfast all60 ground crew will be taken? It is not a yes or noquestion; can you give me a statement on this?David McMurray: I hope so. The business lines aregoing to be TUPE transferred over. They were theones who, at the very outset of this thing, were toldtheir jobs were safe.

Q186 Lady Hermon: Was this in Belfast?David McMurray: Yes but here is the rub: they havebeen told their jobs are safe but they have not beentold who their employer is going to be. It is likesaying, “Your job is safe but I am giving you to JoeBloggs and we do not know how Joe Bloggs is goingto treat you in the future.”

Q187 Ian Paisley: So the ground staff are still innegotiation but, from what you said earlier—althoughI am not sure because I picked up two signals there—you are reasonably confident you can satisfy most ofthose 60 ground staff in Belfast.David McMurray: I would hope so; I did not sayreasonably confident.

Q188 Ian Paisley: So you would hope that you couldaccommodate them. What is the situation inEdinburgh and Manchester? Do you think the groundstaff will be accommodated there?Paula Spiers: No, I don’t think they will be.

Q189 Ian Paisley: Are any negotiations going onwith Servisair or whoever the operator is?David McMurray: It is a different union.Angela Kelly: Yes, it is a separate union that lookafter it. I think they are negotiating jobs with Menziesand Servisair but the jobs will be limited.

Q190 Kate Hoey: Can you do a deal with the otherunion and talk to them?Ian Paisley: At the end of the day if planes are stillcoming in—David McMurray: I am not involved in Edinburghor Manchester.

Q191 Kate Hoey: No, but the union is.David McMurray: I am here speaking for Belfast inthis Committee.

Q192 Ian Paisley: If a plane is coming in toManchester or Edinburgh it is still going to needground crew, irrespective of who the plane is. If thesame number of planes are coming in—we have notgot on to that topic yet—then the same amount ofground crew for aviation rules would still be required.One would be hopeful that ground crew would beaccommodated. Would that be right Paula?Paula Spiers: Yes.

Q193 Ian Paisley: So the people who are potentiallylosing most here, from what I am picking up, are thecrews based in Belfast because, geographically, that iswhere they happen to live and BA will only offer themLondon jobs, if at all.




David McMurray: I described it in the Daily Mirroras industrial ethnic cleansing. It is redundancy bypostcode.

Q194 Naomi Long: Can I just clarify a point on theissue Ian raised about the potential for the groundhandling operation to be done by a differentorganisation but with the same staff. Am I not right insaying that that would be a matter for them of whetherthey chose to employ the staff who are being maderedundant by a different employer? They could chooseto fill those jobs from a different pool of people whocurrently do not work in the industry at all. So unlessthere is an overarching agreement to take directtransfer there is actually no guarantee and peoplewould have to apply as jobs became available. Thereis no obligation on the people who provide the groundstaff operation in a separate company to take on stafflaid off by another company. There may be logic indoing so because they have familiarity with the roleand would be experienced if they were to apply, butit would not be as simple as a TUPE transfer across,because you would not be transferring with terms andconditions; you would potentially just be taking a newjob. So you may be able to be relocated but you wouldstill have a break in your service and everything elsethat impacts upon in terms of your longer term future.I am just trying to get some clarity around that. Arethere any negotiations ongoing that would talk abouttransfer en bloc as part of a proper agreement, or is itsimply a matter that you are hopeful they may be ableto absorb them into their workforce on a one by one,individual basis?David McMurray: If Servisair or Menzies take on theTUPEs of below wing crew those jobs are notredundant and it is a simple matter of a TUPE transfer.So those jobs do actually cross over on the same termsand conditions. I could not go into George BestBelfast City Airport tomorrow and open up a groundhandling service and make all those people redundant,because it would cost me an awful lot of money tomake them redundant and then I would have to gothrough the process of recruitment. If British Airwaysmakes those people redundant and then the newcontractor comes in, this union would certainly takeany new contractor to an industrial tribunal because itwould be a straight TUPE transfer as the jobs werenot redundant; the jobs were needed to be kept.

Q195 Kate Hoey: I appreciate that you are all reallyconcerned about the current situation and the threat tojobs, but in terms of our overall study of what we aredoing on air traffic, the evidence we got from DETIwas that they have set out a number of targets theNorthern Ireland Executive should consider to getgrowth and to help the Northern Ireland economy.Have you as Unite got a view on those targets? Couldyou tell us what you think are the main obstacles togrowth? Is it corporation tax; is it air passenger duty;is it the lack of regional connectivity in air travel?This is a wider question but it is very much key to thekinds of things we are looking at.David McMurray: I think the Northern IrelandAssembly, which would not be a body I would be verycomplimentary of, did a wonderful job on getting

APD reduced for Northern Ireland. For that I thinkthey do deserve to be congratulated.Ian Paisley: I thought we did that.David McMurray: Let’s not butt heads here. Ihonestly believe that was a good day for NorthernIreland. The George Best Belfast City Airport has atarget of—and I sit here to be corrected—about1.5 million passengers to come through this year. Lastyear, 1.2 million went through Belfast City Airport. Iam not being diverse here, but there will be Membersof this Committee who can remember Belfast CityAirport when it was a collection of Nissen huts andShorts owned it. I can remember it. Do not look soshocked, Lady Hermon. Somewhere in the region of150,000 to 160,000 tourists fly into Northern Irelandand the two main airports would be BelfastInternational and Belfast City. If we only have asecured flight by British Airways into Belfast Cityuntil, using Mr Walsh’s own statement, 2014, I do notthink that is a future. I do not think it is a future tobuild on. There is no business that I know and nobusiness I would go in and negotiate with that doesnot operate on a five or 10 year plan. What WillieWalsh is trying to sell to the people of NorthernIreland is a two year plan for flights into Belfast. I donot think that is a sound economic basis for a country.

Q196 Ian Paisley: Can I just jump to a question onthe back of that? Are you then saying that NorthernIreland only really needs one airport to be sustainable?David McMurray: No, no, no; I am saying it shouldbe retained the way it is. We have the City of DerryAirport, which is a local airport, Belfast Internationaland Belfast City Airport.

Q197 Ian Paisley: I do not want to be harsh but itcannot stay the way it is. Last year British Midlandlost £200 million per year.David McMurray: Not in Belfast.

Q198 Ian Paisley: Lufthansa British Midland lost£200 million a year, irrespective of where it gets itsmoney from. As a company, and it trades as a solecompany, it lost £200 million a year. Not all of itsroutes could be sustained and it cannot stay the same.What we want to ensure is that Northern Ireland’spublic do not get dumped, that they have fair fares,that they have good connections into Heathrow andacross the UK, and that current staff are treated fairlyin any change. There is going to be change here. Fromwhat I have picked up from you, the people that seemto be suffering the worst are the cabin crew based inthe regions of the United Kingdom because they arenot London contracted. That is the problem to sortout, and whether we can even contribute to sortingthat problem out is the thing that taxes me. This ischanging because that was a bankrupt company. Bmilost money, full stop, and it had to go. There is noother way of putting it.David McMurray: Can I put my cards on the table,as I have tried to do? I want business to make money.I want every company I am involved in to makemoney because it makes it easier for me, as a tradeunion official, to go and get a fair share for theworkers. I am not in the business of sitting here and




begging for preferential treatment to be made forBritish Airways bmi. What I will point out is that anycompany—and you could pick another company inNorthern Ireland—can lose money because it ismultinational and global, but be making money on theroute it decides to get rid of. That is my counterargument to what you are saying. Bill Francis has toldus bmi was losing £1 million a week.

Q199 Ian Paisley: The bigger picture is that bmiwere not doing long haul and bmi therefore lost.Internal, short haul companies are not profitableairline companies. The worldwide picture is that shorthaul does not make money. What makes money is ifyou get people to go on to long haul and use shorthaul as your feeder.David McMurray: That is what we need.Ian Paisley: BA makes money; they make about£500 million a year. Next year they will probablymake a loss of about £300 million because of petrolprices going up. That is the balance sheet thesecompanies are looking at. Short haul airlinecompanies are not making money. That is why bmi isgoing to the wall.David McMurray: But Northern Ireland needs a shorthaul carrier to get to long haul.

Q200 Lady Hermon: Northern Ireland needs athriving airport in Belfast City, George Best Airport,and a link between Belfast City Airport and Heathrow.We need that for our tourism and our business. Weneed that connection, and we need it to be thriving.Catherine Horgan: I just want to contradict you there.We did have a mid haul—Lady Hermon: You wanted to contradict Mr Paisley.Catherine Horgan: Yes, contradict Ian. So basicallywe did have the mid haul so we were like a feederbase for there. You are talking about saving money.As a bmi crew at the moment, in Belfast, we could bequite productive because we are brought to Londonand we night stop. At the minute we have bmi crewthere night stopping out of London, so you are notpaying them the weighting allowance and we are notearning the same money as London Heathrow, so thatcould be a saving. The Belfast route is also a verylucrative one, I think you would agree. That hasalways been one of our best routes; the Belfast routehas been way up at the top.

Q201 Ian Paisley: I do not think we arecontradicting, but we need to recognise that there aretwo models of operation here and that BA, the newowner, does not have crews based outwith London. Ifthey do, they commute to London to do their work.What I would like to ask is whether we could persuadeBA to adopt a change that would allow them to haveovernight or based staff from Northern Irelandoperating as their crew. Is that a possible negotiationthat can be had?Catherine Horgan: The thing is that if they are goingto operate the route into Belfast they are still going tohave to night stop crew.Ian Paisley: They could contract you in NorthernIreland.

Catherine Horgan: So in the TUPE transfer they canshut the base because of economical reasons, but isthat necessary in this instance? They are still going tohave to bring crew into Belfast and night stop thembut take away our jobs. All that is on offer for theBelfast crew and my colleagues here in the otheroutstations is you either take redundancy or you applyfor Mixed Fleet. We are skilled at what we do and wehave been doing it for a long time. I think it is alsogood for the regions to have their own staff bringingpassengers.

Q202 Chair: We are going back to the subject wejust left about transfers and there are a lot of otherquestions we want your opinion on, such as growth inNorthern Ireland, Heathrow connectivity and lots ofother things. While we entirely understand yourdifficulties with knowing where you are going, we feelwe have explored that and need to move on to othersubjects now.David McMurray: I am loth to disagree with anybodyin this Committee because I am well aware of what akicking feels like, whether verbally or physically. I donot like mentioning other companies but I have beeninvolved in a company that is a multinationalemployer in Northern Ireland and I would regularlyfly out to Canada—I hope that identifies the companyI am talking about to those people from NorthernIreland—and that is where the short haul comes in; toget me onto the long haul. So there would be shorthaul from Belfast to Heathrow and then Heathrow toCanada. There are managers, directors and vicepresidents of that company flying into Belfast viaHeathrow and back again. The company that I havenot mentioned are a massive employer in NorthernIreland. Would they still be there if they did not haveflights available into George Best Belfast CityAirport?

Q203 Kate Hoey: I suppose you would say theycould fly Aer Lingus from Belfast International toLondon Heathrow.David McMurray: Have you been through them?Kate Hoey: I have actually. I think Aer Lingus arehonest and run a very good service. It is from BelfastInternational, which happens to suit me better thanCity, but it does not go against any of your arguments.David McMurray: It is not a British carrier you areflying with, though.Kate Hoey: It is actually a joint share plane. BA goesup on it as well as Aer Lingus.David McMurray: Sorry Kate, you are one up on methere; I did not know that.Kate Hoey: I did not know it was originally either.

Q204 Lady Hermon: I just want to focus onHeathrow, seeing as we mentioned it in our recentconversation. Bearing in mind what we as aCommittee are looking at—an air transport strategyfor Northern Ireland—how important is an expansionat Heathrow, or at another site in the south-east ofEngland, do you think for the Northern Irelandeconomy, particularly for tourism and business? Doyou have a view about a third runway, about Stansted




or about the estuary airport proposed by Boris? Doyou as a union have a view?David McMurray: I am sorry, Lady Hermon, I amhere speaking on behalf of Belfast. I am sure there isa bigger political picture that is way beyond my salaryscale in Unite for expansion of a third runway,Stansted, and London City Airport. I am sure theunion has an opinion on it, but because I am just aregional official I would not be included in that. I amnot being disparaging.

Q205 Lady Hermon: Does anyone else want tocomment on that?Catherine Horgan: I think that because of NorthernIreland’s past it is good to open up the routes and BAare going to open up other routes. So for business tocome into Northern Ireland, so it will develop, itwould be very important. It could help with expansionand it could bring money into Northern Ireland aswell, which would be very important. Not only thatbut, when you think about the new road to Dublin, itis easy access so if people want to go to Dublin orelsewhere they could use that route as well and bringmoney into Belfast City Airport and the region.David McMurray: George Best Belfast City Airporthas a probably unique geographical feature, which isthat it is right in the heart of Belfast. The internationalairport is not.Lady Hermon: And there is no train linkDavid McMurray: There is no rail link; you eitherwait for a bus or you get a taxi. George Best BelfastCity Airport is right in the heart of the city. We havetourists come in on cruise liners into the port ofBelfast; we have spent significant amounts of moneyon the Titanic Quarter; we have a wonderful buildingat the top of the hill that you used to attend: Stormont.Lady Hermon: No, I was never there.David McMurray: Sorry, I apologise. Well, Ian’sfather used to be the First Minister; he attended it. Itis a wonderful building. There are all those touristattractions in the heart of Belfast.Ian Paisley: I hope local government is more than atourist attraction.Naomi Long: You might hope.Lady Hermon: Let’s be fair; the building is.David McMurray: I am not talking about the peoplethat inhabit it; I am talking about the building and thegrounds. There have been numerous pop concerts atStormont; I attended a Rod Stewart one. I have justdated myself. Belfast City Airport is in a uniquegeographic position that flies straight into the heartof Belfast.Lady Hermon: Yes, I agree.

Q206 Mr Benton: I take it, in the light of your morerecent remarks, that the Unite policy would be to seean expansion of destinations out of Belfast. I thinkthat goes without saying and you have referred to it.The question I would like to put to you now is: howdo you envisage Unite’s role in trying to push for thisexpansion, given your experiences? You quoted a fewwith employers. There is clearly a role for Uniteisn’t there?David McMurray: We only have a role if we areallowed.

Q207 Mr Benton: I totally appreciate that. What Iam saying is that, against that background, particularlyin terms of expansion of air traffic and air industryeven further afield than Belfast and the UK, how doyou see Unite’s role in trying to persuade people thatexpansion is the way ahead?David McMurray: This is way out of my salary bandbut I am going to try and answer it. If you are askingDavy McMurray, the way Davy McMurray sees Uniteexpanding air travel is that we want to play an active,supportive role. That may be coming up withagreements with employers for our members, to assistthem and to invest in growing routes. We would notbe neglectful in assisting an employer to go forward;that is our duty, and to the people we are trying tosecure jobs for. I am speaking slowly becausesometimes when I am over here I get accused ofspeaking too fast and having people not understandme. Sometimes we get accused, maybe not wrongly,of being confrontational. Speaking for Belfast,Northern Ireland, we are not really a confrontationalunion. We try to assist good employers; we are notgoing to let an employer walk roughshod over ourmembers but we will try to assist an employer toprovide good jobs. There are people sitting around thetable here who I have spoken to in the past and whoknow me from going with a begging bowl for othercompanies. Where there is a good employer and goodsustainable jobs we will work with that employer.With British Airways we are not being invited to thetable properly; we are not being invited as astakeholder. I have three people sitting beside me whoare major stakeholders in British Airways. That istheir careers, their livelihoods and their families. Paulais a mother; Angela is a mother; Katie can’t findanybody to—Catherine Horgan: I am the lucky one.David McMurray: I am sitting here speaking onbehalf of three principal stakeholders within BritishAirways, and British Airways do not want to invite usto the table to see how we can get out of this mess.

Q208 Chair: We want to interview them; wecertainly do.David McMurray: Good luck, Mr Chairman.Chair: The background you have provided has beenvery useful.

Q209 Kate Hoey: I have one final question on APD.Will Unite get involved in campaigning andsupporting what the Northern Ireland Assembly andExecutive want to see happening with the reductionof APD on internal flights between Belfast, City ofDerry, and the UK?David McMurray: I did not expect this Committeemeeting to be easy but I did not expect to be asked togive Unite policy statements. I would imagine that theanswer to that should be that yes we would. Furtherthan that I would not want to go.

Q210 Lady Hermon: That was not actually the lastquestion; I have saved a very interesting one.David McMurray: Is this Lady Hermon or Sylvianow?




Lady Hermon: This is a passenger who travels, parksthe car and, like many people who use the short staycar park at Belfast City Airport, is outraged at thecharge. Does Unite have a view of how that could bechanged? It is one of the most expensive airport carparks to stay in, in the short stay car parking. We havetaken evidence from the chief executives of the threeairports and we asked them in order about their carparking policies and the charges. They did not hintthat these would be changed. I am sorry that this isbased at Belfast airport but I am sure it is a problemshared at Edinburgh and Manchester as well. A veryimportant feature for those who use airports is howexpensive it will be to park the car for the length oftime required. As users and staff, could I ask yourresponse about airport parking at Belfast City Airportand how that could be changed or ameliorated? Katie?Catherine Horgan: Well I do not pay for my carparking, which is fine. I am sure there are ways aroundit. We are in a bit of a recession at this moment intime and I am sure if there was somebody going to goto the airports we could see if a lot of that could bereduced. I am sure there is a way around these thingswhere you could send a party to airports to seewhether rates could be reduced, which wouldprobably bring more people in to the airport.

Q211 Lady Hermon: So do you think it has adeterrent effect?Catherine Horgan: Being quite honest: no. I amspeaking from my own personal opinion but I don’tthink so because people need to use the airport. Do Ithink car parking is going to make a difference tothem? I personally don’t think it is in a lot of cases.David McMurray: I am coming from the point ofview of a consumer who has to pay for his carparking, even though he claims it back on hisexpenses. There is an argument being made about theinternational airport for why they should reduce theircar parking because they have competitors. There areall sorts of car parks out of the international airportand there is no reason why the international airportshould charge so much. Likewise George Best BelfastCity Airport: you are correct, it is extraordinarilyexpensive to park a car there. My car has been sittingthere since Monday; I think it is going to costsomewhere in the region of £38 and I am in the longstay, not the short stay. I know colleagues who parkdown at IKEA. What used to be Moscow Camp has acar park now where you can park your car and theywill bus you up to the George Best Belfast CityAirport. There is a sound, reasonable argument whythe airports should reduce their car parking charges.They have made their car parks, they have developedthe car parks, they have been there a long time andnow all they are doing is reaping in the benefits. Thebenefits were probably made within the first two yearsof the car parks being open. I think it is £28 a day inthe short stay.

Q212 Lady Hermon: Angela and Paula, do you wantto reflect on airport charges at either of your airports?Paula Spiers: People I know, instead of usingManchester, would fly out of East Midlands or

somewhere like that, where it is cheaper to park thecar.

Q213 Lady Hermon: So it does have an impact?Paula Spiers: It does have an effect, yes.

Q214 Lady Hermon: You are fortunate that youhave airports close enough that people can choose togo to the cheaper one to park, unlike in NorthernIreland.Angela Kelly: I think people do look for alternativeways to get to the airport. They will use cheaper carparks and get the park and ride buses. In Edinburgh itcosts you £1 to drop someone off at the front door aswell. I think there are campaigns to stop that too.David McMurray: Driving to the international airportin Belfast costs you £1 as well.Lady Hermon: Been there, have that t-shirt.Chair: Naomi has had to leave and sends herapologies. Nigel has the last question.

Q215 Nigel Mills: To help my understanding; howmany staff crew a flight and how many backwards andforwards does each crew end up doing? So how manycrews would BA need to staff the route they have atthe moment, just the Belfast to Heathrow one?David McMurray: The three girls did a wee bit ofhomework last night. Belfast currently has 32.

Q216 Nigel Mills: Is that cabin crew or staff?David McMurray: That is cabin crew; they are thepeople who serve you your sandwich or your mealand your drink. We estimate it will take 35 people toreplace those 32.Catherine Horgan: Are you asking how many crewswould you need on a daily basis?

Q217 Nigel Mills: Yes; how many does each flightneed?Catherine Horgan: At the moment you need two. Youhave an early crew and a late crew and then it dependson the aircraft type. If it is an A319 we have threecrew on it; if it is a bigger aircraft you have four ormaybe five crew.

Q218 Nigel Mills: How many ins and outs does onecrew do?Catherine Horgan: We do two flights; out of Belfastthere are about six rotations in a day, which the earlycrew will do at the moment. We used to do two flightsbut now we just do one. The late crew will do tworotations from Belfast and two to Heathrow.

Q219 Chair: Okay, thank you very much. I know wehave gone a bit beyond what you feel your expertiseis.David McMurray: Once again can I thank theCommittee for inviting us to ventilate our bile?Chair: It has been very useful to get the background.Thank you very much for the information and forcoming.

cobber Pack: U PL: COE1 [SE] Processed: [28-11-2012 14:01] Job: 022723 Unit: PG04Source: /MILES/PKU/INPUT/022723/022723_o004_th_NIA Air transport strategy iv (13 June) - Corrected (FINAL).xml



Members present:


Mr David AndersonOliver ColvileMr Stephen HepburnLady HermonKate Hoey

________________


Witnesses: Antoinette McKeown, Chief Executive, Consumer Council for Northern Ireland, and AodhanO'Donnell, Director of Policy and Education, Consumer Council for Northern Ireland, gave evidence.

Q220 Chair: Welcome. Thank you very much. Sorryto delay you by 10 minutes but we had lots of businessto get through. We are very glad you were able tocome. As you know, we are looking at aviation policy,with particular regard to the impact on NorthernIreland: its business, tourism and people travelling tosee friends and family. We would very much like tohear what you have to say. Would you like tointroduce yourselves and maybe make a very briefopening statement?Antoinette McKeown: Thank you. I am AntoinetteMcKeown, Chief Executive of the Consumer Council.Aodhan O'Donnell: I am Aodhan O’Donnell,Director of Policy.Antoinette McKeown: We very much welcome theopportunity to give evidence today to this Committee.We recognise the very strong track record thisCommittee has on taking account of the issues facingconsumers in Northern Ireland and making sure thattheir voice is heard. We have seen that on APD. I amjust going to make a few overarching points and thenwill be happy to answer questions.The importance of air links to our economy hasalready been detailed in other evidence to thisCommittee by the Chamber of Commerce and theregional airports, so today the Consumer Council’sfocus is very clearly on Northern Ireland passengersand consumers. This Committee has acknowledgedthat for many people in Northern Ireland travelling byair is not a luxury but an essential element of familyand economic life. The main focus for the ConsumerCouncil is not whether Northern Ireland should beserved by a UK-wide strategy or a Northern Irelandstrategy, but that the outcomes of that strategy shouldbe clearly focused on passengers, with coherencebetween the reserved and devolved issues, of whichwe are not seeing a lot.We want an air transport strategy that promotescompetition, choice and connectivity for consumersand the development of sustainable routes. We wantto ensure that proposed service and infrastructuraldevelopments at Northern Ireland’s airports areassessed rigorously economically, socially andenvironmentally. We want the strategy to addressissues concerning surface access to airports and publictransport links and we want to ensure that the uniqueaviation needs of Northern Ireland’s consumers arefully recognised by both the UK and NorthernIreland governments.

Kris HopkinsNaomi LongDr Alasdair McDonnellNigel MillsIan Paisley

We want to raise and talk about specific issues inrelation to connectivity: the fact that Northern Irelandpassengers travelling on domestic services account for75% of all passenger movements, in contrast to only17% at UK level. We want to focus on the fact thatNorthern Ireland passengers travel 9% more by airthan the UK average. We want to raise our concern inrelation to connectivity to Heathrow and the potentialimpact on the service operating between George BestBelfast City Airport and London Heathrow followingthe acquisition of bmi by IAG. Despite raisingconcerns with the Secretary of State, with theEuropean Commission and with IAG, we still have noconfirmation as to the nature or format of thecommitment given by Willie Walsh, and we have realconcerns about that.In particular we want to draw to this Committee’sattention the fact that the handling of bmi’swithdrawal from George Best Belfast City Airportwas very poor. The Consumer Council had no noticewhatsoever. We were advised 10 minutes ahead of theannouncement by City Airport. We were concernedthat Belfast was the first airport in the UK thatbmibaby pulled out of. It was at a time when manyconsumers had their holidays booked to destinationsover the summer period. We were very disappointedthat the airline failed to comply with its obligationsunder (EC) 261/2004. They offered to refundpassengers instead of offering them alternative travelarrangements and they did not do it within thestatutory time required, leaving many passengers verydistressed. The airline did not have sufficient staffresources or call centres to handle the volume of callsand the Consumer Council had to open our helplinesto scores of distressed consumers. There was a lackof information for consumers throughout the periodand there was a lack of information even to theConsumer Council, despite our best efforts. We wereleft with the impression that Northern Irelandpassengers were more expendable than our GBcounterparts. That is a very difficult position to be inas a statutory representative of consumers.In relation to air passenger duty, I want to put onrecord the fact that we have already given evidence tothis Committee. We welcome the recommendationthat you made, but the planned devolution of bandsB, C and D will do nothing for 98% of passengers inNorthern Ireland. We want to see the abolition of band

cobber Pack: U PL: COE1 [O] Processed: [28-11-2012 14:01] Job: 022723 Unit: PG04Source: /MILES/PKU/INPUT/022723/022723_o004_th_NIA Air transport strategy iv (13 June) - Corrected (FINAL).xml


13 June 2012 Antoinette McKeown and Aodhan O'Donnell

A included in current considerations, as thisCommittee has recommended.In relation to public transport links to and betweenNorthern Ireland airports, we published research in2010 that indicates the number Northern Irelandpassengers travelling to airports by public transport islow. There are a number of reasons for that; we arehappy to go through those in terms of questions andanswers.The Consumer Council has welcomed theGovernment’s proposal to give the CAA a primaryfocus on furthering passengers’ interests via the CivilAviation Bill. However, as other witnesses have said,there needs to be much more detail on how that isgoing to be effectively implemented. Essentially, theCAA must consult passengers as part of that.Finally, as this Committee has demonstrated a keeninterest in airport parking charges, I wanted to put onrecord that the Consumer Council, in February thisyear, examined the cost of car parking at NorthernIreland’s airports and compared it with the cost ofparking at other UK airports. We found that, with theexception of East Midlands Airport, all GB airportshave higher “turn up and pay” prices for seven dayparking than the Northern Ireland airports. However,with the exception of London Luton Airport, GeorgeBest Belfast City Airport and Belfast InternationalAirport have the highest charges for one day’s “turnup and pay” parking in the short stay car parkcompared to GB airports. Regardless, what we foundis that long stay and short stay parking in all threeregional airports has increased significantly in the past18 months. In our view, car parking seems to be aneasy revenue raiser, which is passed on to theconsumers, who are already paying disproportionatecosts in relation to APD. We feel that this is adisproportionate burden on Northern Irelandconsumers. I am happy to leave it at that and we areopen to questions and answers.Chair: Thank you very much; I am sure we will covera number of those areas.

Q221 Ian Paisley: It is good to see you both here;thank you for coming. That is a very good summaryof where things stand. You have expressed veryclearly the feelings of people when BA pulled out thelast time and, ultimately, why today an investment bya multibillion pound company into Northern Irelandis not being welcomed with flags of celebration;people are rightly thinking about this one. As youknow, Willie Walsh is on record as saying some thingsabout the certainty of continuing the routes betweenGeorge Best Belfast City Airport and LondonHeathrow. Do you believe the assurances that havebeen given that the slots that British Airways has nowprocured will not be reallocated for more lucrativeroutes?Antoinette McKeown: Unfortunately the ConsumerCouncil is not confident about the security of thecurrent slots. We wrote to Willie Walsh in Decemberwhen the acquisition was made, and we wrote againin March. We have still to receive a response to eitherof those letters. We have written to the EuropeanCommission; and I have in front of me a letter to theSecretary of State and response. What we are

receiving is confirmation that the routes will continue,but we do not know about the frequency of them orthe capacity numbers. It is vital, given that Heathrowis a vital hub airport for Northern Ireland, that wesecure confirmation as soon as possible.

Q222 Ian Paisley: This Committee will be talking toMr Walsh and his team in the future. It would behelpful for us to have copies of those letters you havesent to him. If you shared them we would be able touse them.Antoinette McKeown: We are happy to provide those.

Q223 Ian Paisley: I must say it is disappointing thatyou have not even had a reply since March.Antoinette McKeown: Not even an acknowledgement,Mr Paisley.Ian Paisley: That is a very poor show.

Q224 Oliver Colvile: BA pulled out of the Heathrowto Belfast route in 2001. Do you get the impressionthat they will make more of a commitment toNorthern Ireland and preserve these routes or not?Antoinette McKeown: Again, unfortunately, theConsumer Council has to say that, based on theexperience of Northern Ireland consumers whenbmibaby was withdrawn with very little notice andvery little additional services or support put in, we donot have confidence in any commitment at the minutein relation to the IAG’s continued investment. Wethink it is vital that it is secured, and secured now.

Q225 Lady Hermon: It is very nice to see both ofyou here this afternoon representing the ConsumerCouncil for Northern Ireland. Ms McKeown, could Iask you to reflect on a little bit of the evidence yougave us at the very beginning? Who do you blame forthe very poor communication to you, as the ConsumerCouncil and a very well-known representative of theConsumer Council? Who should we, as a Committee,be looking at? Why were you not consulted and givenmuch greater notice of the changes and bmi pullingout of Belfast City Airport?Antoinette McKeown: We are not sure, Lady Hermon.We work very hard with the full range of airlinesworking in Northern Ireland. We have a very goodrelationship with them, so it was to ourdisappointment that we did not have thecommunication. However, our focus was more onNorthern Ireland passengers and consumers than onthe Consumer Council. What we found most difficultwas that passengers were not able to get informationand we were not able to get information on behalf ofpassengers. George Best Belfast City Airport copedincredibly well and was very supportive of itspassengers and customers, but we did not see the samelevel of commitment from IAG. Our focus is ongetting the right representation for consumers.

Q226 Lady Hermon: You explained to us that in theend you had to open up your own helpline toconsumers. Can you give us an indication of thenumber of consumers who had arrangements madeand found they were all lost in this takeover?

cobber Pack: U PL: COE1 [E] Processed: [28-11-2012 14:01] Job: 022723 Unit: PG04Source: /MILES/PKU/INPUT/022723/022723_o004_th_NIA Air transport strategy iv (13 June) - Corrected (FINAL).xml



Antoinette McKeown: I think the announcement wasmade at 10 to five on the Wednesday evening. By theFriday morning we had dealt with just under 100 callsfrom very distressed passengers,

Q227 Lady Hermon: Are you able to tell us whetherthose people have now had their concerns addressed?Antoinette McKeown: We have provided advice to allof those passengers. Some have followed through onthe advice, have come back to us and we are takingtheir complaints through. We are getting some positiveresults and IAG are actually providing what isrequired by law of them. There will be otherconsumers who have not come back to us as yet, butwe are monitoring that very closely.

Q228 Lady Hermon: Moving on to a completelydifferent issue, we have taken evidence from theDepartment of Enterprise, Trade and Investment inNorthern Ireland and we have some indications ofwhat will encourage growth in the economy. Fromyour perspective, representing consumers, what areconsumers saying to you would help economic growthin Northern Ireland? Is it connectivity, eitherinternationally or within the UK? Is it corporation tax?Is it APD? Or is it a combination of a whole lot ofthings? It would be very helpful if you could throwsome light on that for us.Aodhan O'Donnell: Connectivity is one of the keyissues, both in terms of air and ferry travel—the costof ferry travel is another related issue. Consumers andpassengers are under a lot of cost of living pressures,with increasing energy bills, but in relation totransport and connectivity, air passenger duty is a keyissue for them. We talk about 98% of the air trafficbeing short haul and domestic; 75% of that isdomestic travel, to places like Manchester, Londonand Newcastle. Passengers feel that they are at asignificant disadvantage because they are payingalmost a double tax—a tax to get to another domesticdestination. That is an impact for us.We do have to look forward at what the future couldlook like in terms of connectivity. Passengers haveclearly told us that there are easier links. For example,there are better road networks to Dublin Airport. Theexchange rate is changing and air travel tax there is€3. So there is an incentive to travel to another airport,which impacts on the consumer spend in NorthernIreland, the sustainability of Northern Ireland airportsand the connections, both for small domestic businessand for international business. We really have onlyone long-haul link, which caters to America. Growingthat is a significant incentive to grow business andinvestment in Northern Ireland and give the consumerchoice. We want to see sustainable routes forpassengers. As we have seen in airline markets in thepast, they quite quickly disappear. We saw that withbmibaby and their “sunshine routes”, the majority ofwhich were taken out before the summer even began.That had a massive impact. The security of routes isa big thing for passengers to give them confidence thatthey can book six months ahead and know that theywill not have to deal with a refund or rebook at amuch higher cost.

Q229 Lady Hermon: Have you been lobbying boththe Northern Ireland Executive and the Treasury herein Westminster about getting rid of APD across theboard in Northern Ireland?Aodhan O'Donnell: Very much so. Air passengerduty has been one of the key issues for us for anumber of years. We welcome the change there hasbeen to long-haul flights and the devolution of that.However, as we said previously, it does not go farenough to make an impact for the majority ofpassengers. It is a perverse fact that you will pay morein tax to fly 104 miles to Glasgow and back than youwould to fly to Portugal or Spain. That has a realimpact on the vast majority of air traffic, which is GBbased; they are paying a higher rate than they shouldbe. We do not have the luxury or the ability to dependon alternative forms of transport.

Q230 Lady Hermon: Ms McKeown, you mentionedthat you had made representations to the Secretary ofState. Is this an issue that you have raised with theSecretary of State? Have you had a positive orencouraging response from him?Antoinette McKeown: Our focus has been on workingwith the Northern Ireland Executive and thisCommittee in relation to APD. In the last couple ofmonths we have given evidence to the Committee forFinance and Personnel at Stormont. We directed themto other European Member States that have scrappedor radically reduced APD. We wanted them to look atthe opportunity cost of APD: the inward investmentand the opportunities for tourism. We think that stillneeds to be explored.

Q231 Kris Hopkins: On that final point, I meet loadsof people with very good, justified reasons for whythey should not pay tax. It is easy to say that. Theremay be very justified reasons why you are doing it butthe hard bit is where you plug the gap as aconsequence of not paying tax. My suggestion to youwould be to come up with a cunning plan for how tofill that hole. It might be the fact you have greatergrowth as a consequence. However, lots of businessesdo not want to pay tax. If there is a reason, that needsto be explained, but the key thing about it is wherethe revenue comes from.My particular question relates to the importance ofexpanding. Do you have a view on the importance ofexpanding air capacity in the South-East of England?I know there is a great debate about the hub and theknock-on effect. This might be something you wantto put on paper rather than give me a long responseto because it is quite complex. However, particularlyin relation to Heathrow, what do you see as theconsequences of expansion or otherwise for NorthernIreland’s economic development?Antoinette McKeown: I will briefly respond to theAPD issue and ask Aodhan to respond to the latterpoint. The issue with APD for Northern Ireland airpassengers is that we are paying double. We arepaying APD of £26 return to get into Heathrow, a hubairport, before we can get access to Europe, whereasour GB counterparts are paying only for access toEurope. So we have a double tax. We think we arebeing punished simply because there is an Irish Sea




between us and the hub airport that it is in the UK’sinterest to get encourage Northern Ireland’spassengers to go to. We can argue that Paris, Frankfurtor Schiphol are actually better hub airports.

Q232 Kris Hopkins: I understand that. Like I said,you might have very justified reasons for doing it, butat the end of the day the Chancellor of the Exchequerwill need to balance that account. It would be reallyuseful if someone came up with another alternativefor how you plug that gap.Antoinette McKeown: I recognise what you aresaying. The final point I would make is that the UKGovernment is investing approximately £32 billion ina high speed rail link in GB. The Northern Irelandtaxpayer is not going to benefit from that. In one sensewe are being asked to find £50 million in revenuebecause Northern Ireland consumers are beingpunished, but on the other hand we are not benefitingfrom a £32 billion investment in other forms oftransport. We would ask for Westminster to take thatinto account. We have asked the Committee forFinance and Personnel in Stormont to raise that aswell. I am going to hand you over to Aodhan toanswer the second part.Aodhan O'Donnell: We recognise that capacity atHeathrow is at a ceiling and the slots are precious.That comes back to some of the first discussions wehad about the danger of the reallocation of slots atHeathrow in terms of the bmi takeover. For us at theConsumer Council, it comes back to making sure wehave security of access to hub airports. If there isfurther development of Heathrow or development inthe south-east of London then there needs to be arecognition that, for regions that depend on air access,as Northern Ireland does, there has to be that securityof access. That is not guaranteed anywhere. That issomething that would have to be pushed goingforward as a potential strategy: that the security ofaccess routes are maintained.Interlining is a key aspect for onward journeys. Thereare point-to-point journeys that can be made to awhole host of different airports, but for interliningopportunities for onward journeys, at the momentHeathrow is the key airport for Northern Irelandconsumers. The question we have to ask is: should itbe the only airport that provides that facility? Arethere opportunities for other UK airports to act assupporting hubs or additional hubs for onwardjourneys, or for extra routes to be developed fromNorthern Ireland to other European hub airports?From a consumer’s point of view, if they are going ona long distance journey it potentially does not matterwhere the hub airport is; it is about getting the serviceand accessing the hub at a cost that is fair. That iswhere the wider debate has to be had: around wherethe hub airports should be and whether they should beUK-based or promoted routes to alternative hubs.

Q233 Oliver Colvile: Given that you are incompetition with what else happens in Europe, do yourecognise that what is really important is to make surewe try to produce as low taxation as we possibly canin order to encourage inward investment, and that that

almost certainly would help Northern Ireland’seconomy?Aodhan O'Donnell: In terms of investment, yes, wewould agree with you.

Q234 Nigel Mills: Does the CCNI believe theinterests of consumers are best served by having twoairports in the Belfast area, or would you rather therewas only one?Antoinette McKeown: You have heard evidence fromboth Belfast airports stating this issue: both airportsare private concerns; they do not take money from thepublic purse. Since competition was introduced, bothairports have doubled in size. For us, they are offeringconsumer choice. The sustainability seems to be there.Although, as my colleague Aodhan said, we areconcerned with the long term sustainability of certainroutes and the choices open to consumers, they areprivate enterprises, they are being sustained and theyhave grown.Aodhan O'Donnell: Although we have seen growthin passenger numbers across the board over the lastfew years, numbers have fallen back in all airports.That is probably a natural impact of the recession andthe economic downturn. We have seen an increase inchoice for consumers; there has been an increase inthe routes being served for consumers; and there hasalso been an increase in competition on certain routes,both within the two airports and between the twoairports. If that is helping to provide increased choiceand better value fares, it has been an important impactfor consumers. That is something that has to bewelcomed.

Q235 Nigel Mills: I agree entirely with that. The onlydownside is that, in times of fiscal constraint, findingthe money to invest in public transport links to bothis not going to happen. That means that someone isgoing to have to choose which airport gets the raillink.Aodhan O'Donnell: They are quite close but insomewhat different geographical settings; one iscity-based and the other is further out of Belfast. Thepoint to remember around the operation of the airportsis that there is a restriction on Belfast City Airport interms of seats for sale, of around 2.2 million seatsand around 48,000 air traffic movements. Due to thedemand for air travel from Northern Ireland, bothairports are supporting different markets. There issome overlap in terms of short haul domestic routes,but for long-haul and cargo they are quite separate.Where competition is working to provide better choiceand fares for consumers, it is working well, and wherethe airports have an opportunity to play to theirstrengths, that is good for the airports.

Q236 Dr McDonnell: You mentioned in passing thecap. Some people have claimed that removing the capon the number of passengers using Belfast CityAirport would create a few hundred jobs. It has alsobeen mentioned to us at different times that a laterflight from Heathrow to Belfast would assist andsupport the business and economic developmentefforts. These initiatives might help the economy butthey certainly would not benefit the local residents.




What is your view on that? Do you believe there is acompromise there or do you believe the two positionsare irreconcilable—they are directly at odds witheach other?Aodhan O'Donnell: Seats for sale has been quite along-running issue and it has been something that theConsumer Council has taken a key interest in and fedinto as well. We are trying to recognise the balancebetween ensuring choice and frequency for passengerswanting to use Belfast City Airport, and the fact thatBelfast City Airport, both in terms of arrivals anddepartures, cuts right across quite a population size.The impact of the airport operations cannot beunderestimated. When it comes to seats for sale, wehave been clear in the responses we have providedthat we need to see effective noise monitoring systemsput in place to make sure that the airport tracks andmonitors the noise and impact that it has on localcommunities. That is something that they have beenworking on implementing in the last number of years.They are trying to make sure those impacts arerecognised and dealt with if they are significantly overany threshold where action is required. You mentionedthe potential for later flights. That is something wewould be less comfortable with because there arequite clear operational guidelines and frameworks forBelfast City Airport in terms of when flights can firsttake off in the morning and when they can last landin the evening. There would have to be strongarguments and examination to move away from thembecause people and communities living under theflight path are affected by aircraft noise andmovements and that is something you would not wantto increase in any way.

Q237 Dr McDonnell: You mentioned the flight paththere. Have you any suggestions as to how BelfastCity Airport might be persuaded to direct more oftheir flights in and out over the lough?Aodhan O'Donnell: I am not sure about the specificopportunities to direct traffic. I do know that in theplanning agreement there is a bias that flights have totake off and land over the lough. The airport doesreport on the percentage of flights that take off andland, to the Belfast City Airport forum that BelfastCity Airport has established. So there is a bias; I amnot sure whether that has been shifting over time, butI do know that is something they report on and theyseek to ensure that the majority of traffic flies overBelfast Lough as opposed to the city.

Q238 Dr McDonnell: My impression is that there isa bias but it is not observed.Naomi Long: It is roughly 70:30—70% over thelough and 30% over the city.Dr McDonnell: Yes, that’s right. But it is notobserved: sometimes it drifts down to 55:45. Thatwould relieve some of the pressure. I am not sayingthere are not any people out over the lough or adjacentto the lough who might be distressed but the loughroute, out towards Carrickfergus, is less threateningon most days to the people I am familiar with in andaround Stranmillis.Do you think it is in the best interests of consumersthat we have three airports in Northern Ireland and

that they are all so individually dependent on oneairline—although not the same airline in each case?Antoinette McKeown: It goes back to what we saidearlier. Derry City Council chooses to support the Cityof Derry Airport. That is a choice the Council hasmade. The other two are private enterprises. Theyoffer choice and competition and both have beengrowing in recent times. As long as they are bothoffering competition, choice and sustainability—ourkey focus is on the sustainability of the routes—thereis a real opportunity. That is why the ConsumerCouncil is very keen on an air transport strategy. It ispossible to seek the best interests of airports workingtogether, recognising that there is competitionbetween the three but that there are times when theycan work together in their best interests and in thebest interests of consumers. I do not see the interestsof consumers and the interests of airports as beingnecessarily always mutually exclusive. We believethat an air transport strategy could help to bring somecoherence to that.

Q239 Dr McDonnell: What about the dependence onone airline? That is a big concern.Aodhan O'Donnell: It depends on the airline. Goingback to the security of routes, airports are consciousof the fact that many of them are dependent on onekey airline. We saw the impact on consumers ofbmibaby removing its services from Belfast CityAirport. That is something that the airports need totake a commercial interest in: they need to make surethey try to spread that risk a bit, if it is possible. Theenvironment for introducing new airlines and newroutes is perhaps not as good as it once was but,certainly from a consumer point of view, no passengerwants to go through the issues they went through withbmibaby. We have seen a lot of other instances whereroutes have been taken off at short notice. It is alsoworth recording that, from the Consumer Council’spoint of view, the responses airlines are providing topassengers once they decide to remove a route orcancel an existing route are very inconsistent in termsof the information and advice provided. Just recentlywe saw two routes taken off by two different airlines.The information provided to passengers was differenteven though they both come under the sameregulations. I think there is real uncertainty forpassengers about what to do when things like thathappen.

Q240 Kris Hopkins: I have an observation on thebias towards take-off direction. A plane ideally wantsto take off into the wind; there is a cost implication.If my geography is right, the prevailing wind is totake off into the city. Therefore, it is a financialdisadvantage to fly into the lough. That may be oneof the considerations in why they do what they do. Ilive on a flight path and, certainly over the last 20years, the noise reduction has been significant; it hasbeen astronomical actually. I used to be a director atan airport and there were a significant number ofcomplaints. That has died off over the years. Thereare still people who do complain but the reduction innumbers has been significant. I just wondered whenthe cap was put in place, because if the cap was put




in some time ago and technology has taken over, therehas to be a different impact now from when the capwas put in place. If it is about environmental factorsand impact upon communities, then certainly thetechnology is different now; an aeroplane taking offand landing now has a hugely different impact on theenvironment. I was just thinking that that might be anopportunity to explore as far as numbers areconcerned.Antoinette McKeown: You are absolutely right. It isan interesting issue. George Best Belfast City Airporthas to monitor noise levels and we work with themon that. It might be interesting for this Committee togo back and see the developments in technology andwhat impact they have had. The other issue, about thecost of taking off in a particular direction, is a validone, but that is why we want to see an air transportstrategy that gives equal weighting to social,environmental and economic issues. I do not think youcan always balance the commercial and cost issuewhen there are residents right under the flight path. Itis about getting that balance right.

Q241 Lady Hermon: Could I just seek clarificationon one point? We are today in the middle of June2012. Am I right in understanding from your evidenceearlier that the Consumer Council, while trying tobalance the interests of consumers with those ofresidents who live under flight paths—many of themin my constituency in North Down—has a fixed viewthat it is opposed to a later flight from Heathrow toBelfast City Airport?Aodhan O'Donnell: The position is that the airporthas to operate within its existing planning agreement,which has limitations.

Q242 Lady Hermon: That is what the airport has todo. But you are a consumer group reflecting the viewsof the consumer in Northern Ireland. Has theConsumer Council come to a fixed view of oppositionto, for example, a later flight into Belfast City Airport?The reason I ask is that, on a number of occasions,you have mentioned to us that we as a Committeeshould have an air transport strategy. You obviously,as the Consumer Council, have some views aboutwhat we as a Committee should come up with for thisair transport strategy. I am just looking for themes,pointers or indications as to what you think thatstrategy should contain. As yet, I do not have adefinite guide as to what you think that strategyshould develop.Antoinette McKeown: That is a valid point. TheConsumer Council has a very clear view that anyfurther developments outside the current operatingenvironment or rules for George Best Belfast CityAirport would have to be very stronglyevidence-based and that City Airport would have todemonstrate that there was no additional detriment toconsumers. We have expressed concern about puttingon a later flight if, for example, noise reduction hasnot been very strongly evidence-based. As you areaware, there are two key inquiries going on at themoment. The public inquiries should bringtransparency and the whole range of evidence to thetable and we want to update our formal position on the

basis of the evidence presented. However, our currentposition is that we would have very serious concernsabout moving outside the current operating guidanceif there was not strong evidence to support the noisereduction or if there was not further support fromresidents. That is our formal position.The issue for us in terms of what an air transportstrategy would bring is that we want equal weightingto be given to commercial, social and environmentalissues, as opposed to just always taking thecommercial route. We want more coherence betweenthe reserved matters and the devolved matters and toget some synergy and complementarity between thosetwo issues.Chair: We have covered a lot on APD but is thereanything else you would like to pick up on, Kate?

Q243 Kate Hoey: Yes, there is. Can I firstly say thatI think it is great that you continually talk about flyingbeing an essential rather than a luxury? The more thateverybody says that and drums it in, the better. I oftenwonder if the Secretaries of State and Ministers hadto pay their own fares back and forward to NorthernIreland out of their own pockets they might feeldifferently on this. Clearly this Committee has itsview on APD and the Consumer Council shares thesame view. Apart from the Treasury, who is actuallyagainst it in Northern Ireland? Are any politicalparties or campaign groups against it? For example, isthe Green Party against a reduction or abolition ofAPD on domestic flights?Antoinette McKeown: We have not seen oppositionto the abolition of APD on band A, but there is someconcern that the decision to devolve band A decisionsto the Northern Ireland Executive would result in aloss to the block grant.Kate Hoey: Of approximately £60 million.Antoinette McKeown: Yes, £55 million to£60 million. There is a genuine and valid concernaround that. Our counterargument has been about the£32 billion investment for GB in high speed rail. Ifall UK taxpayers are contributing to that £32 billion,we are suggesting that all the UK taxpayers should becontributing to the £55 million.

Q244 Kate Hoey: What more would you like us todo as a Committee to move forward the campaign youare leading on this?Antoinette McKeown: We would like to see theabolition of APD on all routes and a recognition thatband A is impacting the 98% of passengers inNorthern Ireland who are travelling as part ofeveryday living, rather than as a luxury. Ms Hoey, youreferred to that in the last evidence session you heldon APD, which we very much welcomed.

Q245 Mr Anderson: In your submission you statethat the people of Northern Ireland would welcomethe introduction of a rail link to Belfast International.Having flown in and out of there a few times, I wouldwelcome one as well. However, we are advised thatthe cost could be £98 million. How could that bejustified given the strain on public finances?Aodhan O'Donnell: The issue around access toairports is key. At the moment only around 5% of




people travel back and forth to the airports on publictransport. If you include private buses and operatorsit goes up to about 8%. We would like to seeopportunities to encourage more access through publictransport, whether that is road or rail access. At themoment the majority of people are driving to theairports, and there are issues around car parkingcharges. There has to be a clear examination of whatthe value and potential usage of road and rail linkscould be. We have not said that there must be a raillink; what we have said is that there needs to be anexamination of how public transport links can beimproved to Northern Ireland.Links to the airports are very good from Belfast andpotentially from the North-West as well, but throughthe research we have done, passengers have told usthat if, for example, you want to go to Enniskillen onpublic transport after flying into Belfast Internationalyou have to take a bus back to Belfast, which iscompletely the opposite direction, to then come backagain. That is where the opportunity to grow publictransport usage is. We need to look at how it canfacilitate people from right across Northern Ireland toget access to the airports. In areas like Enniskillen andsome other areas of the Province, we have done workthat shows that they have much better road and publictransport links to Dublin Airport. There is a realchallenge here in terms of making sure there is choicefor people so that they do not have to take the car andpay high car parking charges and they are able to usepublic transport or taxis to Northern Ireland airportsfrom wherever they are in Northern Ireland.

Q246 Mr Anderson: What volumes are you talkingabout? How many people?Aodhan O'Donnell: In terms of who we haveengaged with and spoken to?

Q247 Mr Anderson: No. I can understand why atransport system to Enniskillen should be there, buthave you any idea how many people would be usingit?Aodhan O'Donnell: We have not said what form thatpublic transport would take. There are already goodpoint-to-point links on public transport fromEnniskillen through Dungannon to Belfast. Thebranching-off or the connections to both airports needto be looked at because at the moment manyconsumers are telling us it is difficult andcumbersome. Around 8% of the people we havesurveyed would look at driving to Dublin Airport. Weknow there is a new advertising and promotionalcampaign from Dublin Airport to try and attract morecustom from Northern Ireland. That could even gofurther and, if we can improve the links we have topublic transport, given the fact that many peopledepend on that as a form of transport, that couldimprove the overall connectivity experience from theirdoor, through public transport and on to the plane.Antoinette McKeown: Rather than looking at the cost,there is an opportunity lost if we have consumers inEnniskillen and Newry saying it is easier to travel toDublin. The tax from Dublin is a €3 flat rate, incomparison with our APD rates. We are losinginvestment in the Northern Ireland economy as people

spend money in airports and in car parks. We areactually losing that out of the local economy by notproviding the proper public transport access.

Q248 Mr Anderson: Again, do you have any ideaswhat numbers would be involved in that?Antoinette McKeown: No, but it I think it is a usefulquestion. The airports may be in a better position togive that information.

Q249 Naomi Long: It is good to see you both. I wantto go back to the issue of car parking. The figuresyou provided to the Belfast Telegraph earlier this yearshowed that passengers at Northern Ireland airportsare paying more than airports in GB or the Republicfor their car parking. The airports disputed that andsaid there were a whole range of offers available bothat Belfast City Airport and Belfast International, andindeed at the City of Derry Airport. Their allegationwould be that you cherry-picked and compared themagainst the cheapest rather than the average and madethem look bad by comparison. What would be youranswer to that charge?Antoinette McKeown: The first thing I want to sayis that the report the Consumer Council prepared inFebruary 2012 in relation to airport car parkingcharges across the United Kingdom was fair, balancedand very strongly evidence based, as is all of ourwork. We are happy to make that report available tothis Committee if it is of use. In fact, the first pointwe reported on was that, with the exception of EastMidlands Airport, all GB airports have higher “turnup and pay” prices for seven days’ parking than theNorthern Ireland car parks. We reported that verypositively. However, there is a mixed bag. Theinformation is accurate; it was assessed against awhole range of GB airports; and the reality is that wehave seen significant increases over the last 18 monthsat all three airports. I have written to each of the threeairports asking for some additional detail in relationto the report, which we made available to whoeverwished to have access to it. The airports have comeback but they have not actually answered thequestions. In one case we had to follow up with a veryspecific additional request for information in relationto charges that were provided to us but were notavailable on the website, for example. So we woulddispute very strongly the views expressed by the threeairports and, as I said, we are continuing to follow upand seek answers to questions we have asked inrelation to it.

Q250 Naomi Long: Do you believe the report wasrobust? You have said it was robust in terms of theevidence, but do you think it was reported as a mixedbag? Do you think, for example, it came through thatthe “turn up and pay” seven day parking in NorthernIreland was cheaper than in other parts of the UK, ordo you think that the sensitivity arises out of the factthat the focus was more on where it was dearer? Thatdoes not necessarily reflect your report, but rather thereporting of your report.Antoinette McKeown: I totally understand. Our reportwas very fair, very balanced, and, where we could saysomething positive, we were very clear about saying




it. We cannot take responsibility or provide commenton the reporting of our report. However, we believethat in the report that was made available to theairports and in the additional correspondence thatfollowed in seeking answers to specific questions, itwas clear that we have valid concerns. We still awaitanswers to those concerns.

Q251 Lady Hermon: As a matter of curiosity, in thequestions that you asked each of the airports, did youask, “How much did you raise in the last financialyear through car parking?”Antoinette McKeown: We did not ask that question.We understand that that is highly commerciallysensitive.

Q252 Lady Hermon: But we would love to know—Ian Paisley: And share.Antoinette McKeown: I recognise that this Committeehad asked for that information of a particular airportand I do not believe you were any more successful inobtaining the information than the Consumer Councilwas.Lady Hermon: We were hoping that, as theConsumer Council, you would perhaps have the insideknowledge that we would have benefited from.

Q253 Dr McDonnell: I want to change the directionslightly and ask you about the Civil Aviation Bill. Doyou think that will create circumstances where theCivil Aviation Authority will be able to stand up betterfor passengers’ interests where they come into conflictwith the aviation industry?Aodhan O'Donnell: In the consultations, theConsumer Council has broadly welcomed the progressof the Civil Aviation Bill. It is probably no surprisethat reprioritising the focus of the CAA to further andpursue passenger interests is something we wouldwelcome. From a consumer point of view—and Iknow this view is shared by the industry and theaviation sector—there is still uncertainty around thedetail of how this is going to work in practice withregard to fee structures and licensing regimes.Ultimately, on the balance of it, a focus on consumersand passenger interests is welcomed by us. We wantto see detail of how they are going to engage withpassengers and seek their views. In terms of dealingwith complaints, I think there is potentially a betterframework in there to deal with airport and airlinecomplaints. There is also scope within the legislationto keep up with changing consumer demands.Whereas before, ATOL protected the package holidaybooked in one go, consumers are now changing andbooking holidays separately from car hire and flights.Therefore, the opportunity to extend ATOL protectionis welcome, but again, we would like to see the detailof how that is being worked through, how consumersare being consulted, and especially how it will be paidfor—the charging structure and who the costeventually rests with.

Q254 Dr McDonnell: You mentioned ATOLprotection. Do you think it is reasonable that, if I wantto book a car, a flight and a bed in, say, Munich, thatrequires ATOL protection?

Aodhan O'Donnell: The issue for passengers at themoment is confusion. Passengers have often comeaway from a website or a travel agent thinking thatthey have booked a package when actually they havenot. They may have paid one fee for all this holidaybut in actual fact there are separate elements to thebooking that the travel agent has compiled for them.That should deal with some of the concern that peoplehave misunderstood the fact that they have not hadthe protection they thought they had. We need torecognise that the way people book their holidays haschanged and that they do need the protection ofATOL. We have recently seen a lot of scheduledairline failures and tour operators going to the wall,which has left people wanting to travel and thosestranded on holidays in a lot of distress. This has notbeen their fault, but sometimes they have only beenreimbursed for their flights, while the rest of theholiday has been wasted as well. There is an issue toexplore there.

Q255 Dr McDonnell: That adds between £3 and £6to the cost of the booking, which is almost as muchas air passenger duty.Aodhan O'Donnell: The interest of the consumer isin making sure they have the confidence that they arefully covered. It does not take away from looking atother alternative insurance opportunities to protectthemselves but, at a basic level, we want to make sureconsumers have the confidence in making a bookingthat they will be protected and that if somethingbeyond their scope or control goes wrong, they willnot be out of pocket.

Q256 Naomi Long: Do you believe that the flexiblelicensing regime arrangements that are proposed in theBill would enable the Civil Aviation Authority tointervene when airport charges are disadvantaging aparticular group of passengers? Do you think they aresufficiently robust to do that?Aodhan O'Donnell: That comes back to the previouspoint. These are things the Consumer Council wantsto see more detail on as we work through the process.In our responses around the flexible licensing regime,we recognise that there is an opportunity for the CAAto intervene, especially for vulnerable anddisadvantaged groups. How and when that wouldwork in practice is something that we want to seemore detail on, but we also want to be involved as aconsumer body in developing how those schemes andinterventions could work. I know that is somethingthe CAA is developing and is proposing to takeforward over the next few weeks as well.

Q257 Lady Hermon: There is one rather unusualaspect to the Civil Aviation Bill. I say “unusual” as afavourable comment. I have to say that, because Ihave to preface my remarks very carefully as I amnow going to quote from my former party leader, SirReg Empey—now Lord Empey in another place. If Iunderstand correctly, Sir Reg has proposed that thereshould be an amendment to the Civil Aviation Billthat slots at Heathrow should be ring-fenced for flightscoming from Belfast City Airport. Have you been intouch with Lord Empey? Are you working closely




with him? Has he been in touch with you? We wouldbe very pleased to hear anything that would fill insome of the background.Aodhan O'Donnell: This is an area that we welcomeand a point we want to follow up with Lord Empeyas well. The transport team in the Consumer Councilhave directed themselves to follow up personally withLord Empey to see whether there is any furthersupport or information that is able to be shared tosupport that. That motion is going forward becausethe protection of slots for domestic routes would dealwith a lot of issues that were coming out at the startof this evidence session.

Q258 Lady Hermon: Could I push you a little bitfurther? When you say “the domestic routes”, do youmean the domestic routes between Belfast CityAirport and Heathrow being ring-fenced, rather thandomestic routes generally, meaning AldergroveAirport as well?Aodhan O'Donnell: That is something we need tolook at in more detail as well. That is a priority thatwe have some concerns over at the moment,especially in light of what has happened recently.However, if there are opportunities for increasingsecure and better connectivity to hub airports or toother regional destinations, that should be welcomedas well.


Witness: Jim McAuslan, General Secretary, British Airline Pilots Association (BALPA), gave evidence

Q262 Chair: Thank you for joining us MrMcAuslan. You are very welcome. I think you satthrough the last session.Jim McAuslan: It was fascinating.

Q263 Chair: So I do not need to give the normalintroduction. Would you like to make a very briefopening statement? There will be a vote some timeafter four o’clock so we want to try to get all thequestions in before then.Jim McAuslan: My name is Jim McAuslan. I am theGeneral Secretary of the British Airline PilotsAssociation. We represent 8,500 pilots flying for UKcommercial operators. We have British Airways, bmi,easyJet, Flybe, Jet2, Thomson and Thomas Cook, aswell as a number of members in Ryanair, althoughthat is not a recognised company with BALPA. Weare a professional association as well as a trade union;this month is our 75th anniversary. We had our firstconference in Croydon when the airport for Londonwas in Croydon. That says something about the wayin which the world changes.As we mentioned in our written evidence, we have anumber of issues about the industrial scene withinbmi, but listening to your questioning earlier, clearlythere are a number of wider issues the Committee isinterested in and I will try to answer those. We ran asmall poll among our pilot members based inNorthern Ireland in advance of today’s hearing and Iwould be quite happy to share those results and someof the opinions expressed with you.

Q259 Lady Hermon: Ms McKeown, you arenodding your head in agreement.Antoinette McKeown: Absolutely. This goes back tomy comment that the Consumer Council reallywelcomes this Committee’s inquiry into an airtransport strategy. We know how important the slotsare commercially. However, if we only ever takedecisions in relation to commercial viability and notenvironment and social issues, then, where a particulargroup of passengers are disadvantaged—and wewould argue that Northern Ireland passengers quiteoften are—the commercial interest takes over. That iswhy we very much welcome Lord Empey’sintervention.

Q260 Lady Hermon: Thank you. Will you keep theCommittee updated on how you get on and whatagreement you come to? That would be very helpfulto us.Antoinette McKeown: Absolutely.

Q261 Chair: We have to draw this session to a closenow, but thank you very much for your veryinteresting and very useful evidence. Thank you verymuch indeed.Antoinette McKeown: Thank you for your time.

Q264 Ian Paisley: You are very welcome. Manyhappy returns; you do not look anything like 75.Jim McAuslan: That is kind of you; I might do at theend of this.

Q265 Ian Paisley: Could you give us an updateregarding bmi’s takeover of IAG? We know about theclosure of bmibaby and bmi Regional but could youlet us know where you think things stand?Jim McAuslan: There are four issues for us with theIAG takeover. They bought it from Lufthansa, as youknow. With bmi mainline, we are close to a deal thatwill integrate bmi pilots and operations into the BAoperations based at Heathrow. We had a number ofconcerns about redundancies that were going to bedeclared in the outstations, but we negotiated a dealwhereby all pilots took a pay cut of three days inreturn for preserving those jobs, which we weresuccessful in doing. So the jobs in bmi mainline havebeen preserved.The other issue in bmi mainline is over the future ofthe defined benefit pension scheme. Lufthansa hasessentially passed it into the Pension Protection Fundin the UK and that is causing us great concern. We aretaking legal advice, pressing the regulator and indeedgoing to Frankfurt, hoping to see Lufthansa, to pressour case for some more support for preserving thatpension fund rather than dumping it on the UKtaxpayer. Bmi Regional, which is based in Aberdeen,has now been bought by an organisation called



13 June 2012 Jim McAuslan

Granite and it looks as though that will continuewithout much of a blip.Bmibaby has been our biggest concern and, much likeyou heard earlier, we have had a pretty poor responsefrom BA, which is handling the brief about thenegotiations there. We were asked whether we couldcome up with any suggestions to make sure theoperation could be cost-effective. We proposed£3 million in cuts, which were substantial pay cuts forpilots in bmibaby, as a way of preserving jobs.However, it was quite clear throughout thoseconsultations that there was no intention of preservingbmibaby and it was a legal tick box to make surethere was no legal exposure for BA from having gonethrough a bad procedure. So we have been trying toengage constructively and we have tried to talk to anumber of other possible suitors, but everyone haswalked away and, to all intents and purposes, bmibabyis now an ex-airline. There is no winter schedulebeing published for 2012/13. It is not taking money,it is not operating, and it will close down totallyfrom September.

Q266 Ian Paisley: I am trying to assess whether youare in a position of strength, neutrality or weaknesswith regard to your position vis-à-vis British Airways.You said there were about 8,500 pilots in the UK. Arethere 8,500 jobs for those pilots, or are there too manyor too few? Where are we in terms of the overallpattern of jobs in relation to actual pilots?Jim McAuslan: It changes quite often. At present anumber of pilots are having to leave to work in theMiddle East and the Far East. It is that sort of job;pilots have to do that. Emirates, Etihad Airways, QatarAirways and suchlike are recruiting, so there are jobsto be found for pilots but they are having to up sticksand move abroad to get that work. There is a churnall the time. People are retiring, so companies likeJet2, Monarch and Flybe have been recruiting andpilots have been able to find jobs there. However, Iwould say that we have an abundance of labour atpresent in the UK, which is difficult for a negotiatorbecause, when there is too much labour, it drivesdown price. That is an issue for us.

Q267 Oliver Colvile: You have had discussions withBA. Have you come to an acceptable agreement withthem?Jim McAuslan: Tomorrow we have a meeting of ourtwo key committees representing BA pilots and bmipilots and we hope to have an agreement there whichwe will present to BA management. This is about bmimainline and BA coming together. All the indicationsare that BA management would accept that. We havemade an agreement to avoid redundancies. BmiRegional is no longer on the BA brief, because it hasbeen bought by Granite Aviation. The issue isbmibaby; we have no agreement there. We are goingthrough a charade of a consultation; I do not see anagreement emerging from that. We are seeing KeithWilliams later this month. With regard to yourquestioning earlier, do not pin everything on Willie:Keith Williams is now the Managing Director for BA.I do not know whether you are going to invite KeithWilliams to a hearing but he has certainly been

flexible about it. We are hoping to persuade him tolook for ways in which, rather than taking on newpilots out of school, he can find jobs for thesedisplaced bmibaby pilots. That is what we will bepressing the company to do.

Q268 Oliver Colvile: Could you let us know, afteryour meeting tomorrow, how that has gone and wecan think about it as well? That would be reallyhelpful.Jim McAuslan: That would be helpful. We actuallyhave a meeting in the House on 27 June about anumber of issues. There will be bmi pilots present atthat who will be pressing their MPs on the issue ofpensions. They will be available to answer questions.Oliver Colvile: Believe you me, I have everybodywriting to me about every single pension that seemsto exist in the world.

Q269 Mr Anderson: Can I ask whether there was aTUPE arrangement when this happened? Should thatnot protect your pensions?Jim McAuslan: We discovered that TUPE does notextend to pensions in the way we hoped it would.There are certain aspects of it, such as widows andorphans, which are contractual, but the defined benefitscheme itself is not protected by it.

Q270 Mr Anderson: Should they not offer you asimilar scheme as part of the TUPE arrangements?That is how it used to be.Jim McAuslan: I am afraid not Mr Anderson.

Q271 Mr Anderson: You give an example in yourbrief of somebody being £18,000 a year worse off,which is a huge chunk for anyone.Jim McAuslan: Yes. Part of that is because thePension Protection Fund is capped at about £30,000.That sounds a lot. I can understand that for a low paidperson it would be a lot and they would ask, “What iswrong with a £30,000 cap?” However, when you haveworked all your life and built up a £42,000 pension,to see it reduced by that extent is quite frightening.

Q272 Mr Anderson: What element of that will bepicked up by the public purse?Jim McAuslan: The fund itself will transfer to thePension Protection Fund. However, like all funds ithas a problem because of gilts at present, so there willbe a deficiency in that. We imagine it will besomewhere in the region of £132 million to£200 million that the public will have to pick up.

Q273 Dr McDonnell: You may have alluded to italready—and you have certainly referred to bmiRegional and bmibaby—but I just want to doublecheck with you: are the only pilots who are indifficulty or threatened with redundancy at Belfast, orare there pressures at Manchester and Edinburgh aswell with bmi mainline?Jim McAuslan: There was pressure in all the bmimainline outstations—that is those that are not basedat Heathrow—but we have now managed to preservethose jobs. The individuals will have to commute into Heathrow to work but the jobs themselves have




been preserved because all bmi mainline pilots took apay cut to fund the preservation of those jobs.

Q274 Naomi Long: Willie Walsh is already onrecord stating that bmi routes between Belfast Cityand Heathrow are secure. However, 13 of the 42landing slots that BA have gained as a result of thetakeover are going to be reallocated to long-haulroutes. I suppose there has been a growing concernthat that is the purpose of the takeover: not to acquirethe bmi brand and routes but actually to use thelanding slots at Heathrow for other, more lucrativepurposes. How much confidence do you have in theassurance that the Belfast City to Heathrow slots willnot be reallocated? We know they are protected untilOctober of this year but how much confidence wouldyou have beyond that point?Jim McAuslan: I would not have any confidence. Idon’t say that in a critical fashion; the commercialreality is that Heathrow serves 166 destinations andFrankfurt serves 266. BA has to be a commerciallysuccessful company. If it has capacity it is going toput that where the money is. That is one of the pricesof liberalisation, which has been a huge success storyfor aviation in the UK, but comes at a price. I do notknow who needs to pull all these threads together butwhat I see happening in aviation is that when anairline sees a competitor coming on to its routes, itreacts. For instance, if there was a huge upswell inpeople looking to use Schiphol by flying from Belfast,as sure as eggs is eggs, you would see Willie Walshand the company responding to that, because thatwould be stealing long-haul passengers; KLM wouldbe picking up those passengers, rather than BApicking them up at Heathrow. So you have to look atother ways.It is a bit like what they were saying aboutrepositioning the whole debate and the strategy thatyou adopt to try to put pressure on companies to dealwith you fairly. You can do that by introducing publicservice obligations, or you can look at creating amarket and making it an issue for the likes of BA tosay, “We need to look after Belfast because if wedon’t, we will see some of that long-haul traffic go toKLM or Lufthansa out of Frankfurt, or to Air Franceout of Charles de Gaulle”. I would not have anyconfidence about people’s words. That is not becausethey are untrustworthy: when Willie says something,he means it—as I have experienced industrially—andhe is making that company a success. You have tolook at other ways in which to respond to that if yourprime interest is looking after passengers coming outof Northern Ireland.When we asked our pilots what their issues were,APD was named as the biggest hindrance—and I cananswer your question about taxation and what you doas a result of that. The second issue was about havingconfidence in whether there was enough of a future inNorthern Ireland aviation. Thirdly, we asked themhow important the link was to Heathrow and 89% saidit is critical. However, at the moment I do not see thelevers there to make that real. Willie might say it atthe time but he is driven by commercial pressure.

Q275 Lady Hermon: Could I just double checksomething? When you give that figure that 89% ofpilots say it is crucial, does that relate to the linkbetween Belfast City Airport and Heathrow?Jim McAuslan: They did not distinguish betweenairports. I can tell you the three questions we asked.

Q276 Lady Hermon: Yes, please. Can you tell uswhat the questions were and then the results?Jim McAuslan: The poll was of our 70 pilots who areresident in Northern Ireland.1 It is not a hugenumber to pick from; it is simply an indication. Weasked, “Do you believe Northern Ireland should havedifferent air passenger duty rates to the rest of theUnited Kingdom?” 93% said yes, it should. We askedthem, “How concerned are you about the future ofaviation in Northern Ireland?” 96% said they wereconcerned, with 52% saying that they were veryconcerned about the future of aviation in NorthernIreland. We asked them, “How important is the airlink between Northern Ireland and HeathrowAirport?” 89% said it was important, with 64% sayingit was very important.When they were given the opportunity to express theirviews in free text, the issues that came up included afear that passengers will fly to lower APD places, suchas the Republic, Schiphol or Charles de Gaulle. Theirconcern is that APD is a blunt tax but it is also a taxthat people can avoid by going to other countries andone that may lead to a loss to the Exchequer in thelong term. When we asked about capacity, they saidthat there was probably too much and not of the righttype: “Do there need to be two airports in NorthernIreland 14 miles apart?” “Why has that emerged?”“One of them has too short a runway for some of theaircraft they would like to operate out of it”. So therewas an issue about the quality of that capacity. Theyalso had some technical questions about being allowedto have steep approaches to North-East to 04. I donot know whether you have experienced that in LeedsBradford before but there were technical questionsaround the way the whole thing was designed.The third area they expressed concern about was thewithdrawal of BA from Belfast, which would damagethe connectivity into Heathrow. While there might besome scraps thrown to Northern Ireland and theycould tick a box and say, “We have given you a slot”,it could be an absolute disaster of a slot: first thing inthe morning might not suit when you are trying to getinto Heathrow to get an evening connection. So therewere issues about how good that connection would beand there were concerns raised about some operatorsin Northern Ireland having very fragile, narrow routesthan can get knocked over, operationally, very quicklyand cause huge problems for air passengers. There isnot the robustness in Northern Ireland that there is inmainland UK airports. Those were the three areas thatour members commented on.

Q277 Kate Hoey: That is most interesting and it isgreat to have those results. Are you really suggestingthat the only thing that is going to upset or hit BAand make them look at things differently is if another1 BALPA has 203 members resident in Northern Ireland, 70

of whom participated in this poll




smaller airline, such as easyJet, decided to reallyconcentrate on a deal with, say, KLM to take peoplefrom Belfast to Amsterdam—where they fly already—and concentrate on getting people to have their linksoutside the UK?Jim McAuslan: Yes. We are the British Airline PilotsAssociation; we are not the British Airways PilotAssociation, although I represent 3,000 BA pilots.Another suggestion is that you may want to thinkabout inviting Ms McCall. She would not have torepaint the aircraft; they are all orange, so it wouldsuit Amsterdam very neatly. That is a very good point:what is to stop another UK operator having apartnership deal with an international hub likeAmsterdam and building that up, rather than puttingall their eggs into whether Willie will help them bygiving them some slots?

Q278 Oliver Colvile: I am rather curious about this.British Airways seem to have been playing around inother places as well; do you know what their generalstrategy is towards the business? Have they decidedsomething similar to Dr Beeching in 1964? Hedecided that intercity was the key thing as far as railwas concerned and cut a lot of branch lines. Do youthink British Airways have that kind of approach andwant to concentrate on international routes rather thandomestic flights?Jim McAuslan: Definitely. That is the clear policybecause that is where you make money. You makemoney on long-haul and in the front of the aircraft.That is where they will concentrate their business.They are increasingly frustrated by changes in policyby all governments in the UK. Sometimes they are abit strident in what they say. I do not think thatendears them to politicians. Part of the reason for thestrategic merger with Iberia is that in Madrid there isa large airport with lots of capacity and they want tobuild up that traffic, as well as gaining access intoSouth America. So their strategic direction isinternational, not domestic; not having the likes ofbmibaby or bmi Regional on their balance sheet andclearing the balance sheet up to focus on where theyare going to make money. That is what they are about:return to shareholder. My point about liberalisation iswhether there is a balance that needs to be broughtinto it by politicians to say, “That’s fine. We want youto do that, but there are also some things you need tomake possible as well”. That is not taking place atpresent, which is why I am suggesting that you mightwant to look at how you can create more competitionto try to get people to behave in a different way.

Q279 Oliver Colvile: So you think the key thing todo is to try to encourage more competition within thedomestic market, and that will almost certainly giveBritish Airways a bit of a kick?Jim McAuslan: It is less about the domestic marketper se, and more about the connectivity to long-haulroutes.

Q280 Oliver Colvile: We understand that there area number of key targets the NI Executive considersnecessary for growth to the Northern Irelandeconomy. Between 2011 and 2015 Invest NI aims to

secure a total of £31 billion of investment intoNorthern Ireland. They are also looking at how theycan increase exports up to about 20% and increase thenumber of visitors using Northern Ireland as a touristdestination. Do you agree that those are ways ofgetting growth into the Northern Ireland economy?Jim McAuslan: I’m not able to comment on that.

Q281 Oliver Colvile: What do you perceive to be theobstacles to growth?Jim McAuslan: In terms of aviation per se it is abouthaving a strategic plan. We just ran a feature in ourmagazine, which I am happy to share with you, whichtalks about the number of strategic plans there havebeen for aviation in the UK since Roskill in the late1960s. There have been so many: Maplin Sands; Valeof Aylesbury; and there is now “Boris Island”. Havingcertainty means that people will invest with somecertainty. However, people expect plans to change. Ifthe Committee is looking to develop a plan forNorthern Ireland, it has to be an all-encompassingplan, but one that investors have some confidence isgoing to become real, rather than one that mightchange because political preferences change.

Q282 Oliver Colvile: So APD, corporation tax orsomething else?Jim McAuslan: APD is a big part of it. Our memberswould like to see the tax axed. I think that isunrealistic, for the reasons that you gave earlier: thereis still a hole in the public finances. You need to lookat more degrees of sophistication, and you havesecured that in Northern Ireland, which is to yourcredit, although it affects only a small number of long-haul operations. More gradations and a look atdistances would help. If we do not do that we willexperience something similar to what happened to theDutch. People started flying out of Paris rather thanAmsterdam. They then axed the tax. That was asimilar issue. Our members report that they arealready seeing colleagues who used to fly in the backof their aircraft saying, “I am off down to Dublin nowbecause I can avoid APD”.

Q283 Kate Hoey: If the politicians changed theirmind in Amsterdam, why can it not happen here?Jim McAuslan: You are still left with the issue abouthow public finances are plugged. All tax will changebehaviour, but a tax that is so easily avoided by goingto another departure point is one to be avoided.

Q284 Kris Hopkins: I would like to ask the samequestion I asked earlier about the impact of expandingHeathrow Airport on Northern Ireland. If you couldsend us a note on that I would appreciate it.The question I would like to ask now is about the factthat we always come down to a crunch issue on aCommittee like this. One of the main dramas we haveto face up to is whether we go for a rationalisationof airports. The problem for several members of theCommittee is it is a bit like asking turkeys to vote forChristmas. Do they want to shaft the local airport thatmight be in their constituency or that might attract alot of people from their constituency? The answer wereceived earlier was that they are private enterprises.




However, if you are going to make one of them viableand more effective, it is about where you may investsome of the limited public resources. People need tomake judgments about things like railwayinfrastructure into what was Aldergrove, because thereis no connectivity there at the moment; it passes theend of the runway. If you clearly designated that asyour primary airport then you could feed it. I wonderwhat your and your members’ view is on that. Peoplekeep saying, “Make a strategic decision”. Actually,making a call on something like that is one of the keyissues around making a strategic decision.Jim McAuslan: The people who responded to oursurvey did not see the sense of two airports 14 milesapart: they said there is over-capacity and the wrongsort of capacity. The one that seems most sensible hasthe shortest runway, or not an appropriate runway. Wealso jump from foot to foot. When I look at Heathrow,where half of our members support expansion and halfdo not, it comes down to politicians and how bravepoliticians are going to be. If we are going to recreatethe Victorian era, with great big Brunel-typedecisions, then there are some infrastructure projectswhere you have to settle and say, “That is what weare going to go for”. I do not know whether havingthree airports in Northern Ireland, and two within 14miles of each other, is sensible. Our members do notsee that either.Oliver Colvile: A great man, Brunel.

Q285 Dr McDonnell: You obviously do not feel weare best served by two airports and you feel it wouldbe better for consumers if there was one. You havesaid that one has the right runway and the other doesnot, but the right airport has the wrong runway. Howdo we sort it out?Jim McAuslan: I was thinking about this earlier; I donot think it is a flip of a coin but there are issuesaround safety and whether there are safetyconsequences of expanding Belfast City Airport. Thatwould have to be looked at. There are issues aboutpublic demand and what the public want. There is anissue about how politicians—and all of us in civiclife—engage the public in a mature debate about someof those issues, including choices, how you makechoices and what the right choices are. I do not seethat sort of debate taking place. If you cannot havethat sort of debate in a city of 270,000 people, that isa bad state of affairs, but I think there is a case fortrying to bring people together in talking about thechoices and explaining the benefits from having oneairport, whether it is in Aldergrove or in the city. Thatwould be a brave thing to do, but probably the rightthing to do.If our members had the choice I do not know whatthey would say. The ones who responded to the pollindicated that they would prefer City with a longerrunway, but I am not sure whether that would be thesafest option, the right option, the most cost effectiveoption, or an option that would be most preferable tothe citizens of Northern Ireland. All of those thingswould have to be taken into account. It would bewrong for me to say it should be this one or that one;that would not be the right approach.

Q286 Dr McDonnell: You mentioned debate; we arehaving this inquiry to kick start that debate. I certainlywould welcome further discussion with yourorganisation because we know that what we have atthe moment does not have the maximum cost benefitor cost effectiveness. I started out on this discussionlooking more at access to the airports, but it is fairlyobvious that we have two airports that are not fullyutilised, are competing with each other and may verywell be damaging each other. Yet they are privatised—they are commercial entities—and there is a limit tohow much interference you would want Governmentto have. However, I think you are 100% correct aboutthe debate you refer to. That is why we are holdingthis inquiry as a starter. I see this debate getting moreintense with time.Jim McAuslan: You might not go far amiss to talk tothe people at Prestwick and Glasgow Abbotsinch, asit was called, about what it has been like to have twoairports within 17 miles in Renfrewshire and Ayrshire.I used to go to Prestwick as a boy because I lovedaircraft and it was marvellous to go there. It is nowan absolute ghost town. It would be useful to talk tothe people who operate Prestwick about what theirexperience has been and how, in the West of Scotland,they could create one decent airport rather than twohalfway houses. There is experience elsewhere thatyou can draw upon.We have been watching the way you have approachedthis from a distance and I think it is terrific. If UKaviation had similar sort of questioning and levels ofdebate that you are managing to generate on NorthernIreland then we would be in a far better place thanwe currently are with the ping pong we have aboutUK infrastructure.

Q287 Naomi Long: Could I just ask another questionon a slightly different tack? This is about the cap onthe number of passengers using Belfast City Airport.It has been claimed that removing that cap couldcreate 350 jobs. It has also been put to us that a laterflight from Heathrow to Belfast City would assist thebusiness community. There would obviously bepotential disadvantages to the local community wholive under the flight paths from those decisions, butfrom a pilot’s point of view, would there beimplications for pilot safety, fatigue and so on if thearrangements were to change significantly at BelfastCity Airport?Jim McAuslan: There are issues around fatigue but ifwe have proper fatigue rules it should not cause aproblem, depending on how pilots are rostered andwhat times of day they operate. Some pilots didsuggest that another hour of operation at Belfast Cityand variations to approach would help greatly. Irecognise that noise is becoming a bigger issue butwhen you walk about here now and listen to theaircraft coming into London City Airport, the newEmbraers, they are an absolute whisper. A lot of itdepends on the quality of the aircraft that you have.That is from a Brazilian manufacturer; it is a greataircraft and pilots love flying it. With some of thosemodern aircraft it should not be a huge inconvenienceto the public to have that sort of extension.




Q288 Mr Anderson: One of the things that couldpossibly build the airport would be travelling to newdestinations, particularly outside the UK. Is that arealistic prospect? If it is, where would you suggestcould be opened up as new markets?Jim McAuslan: I couldn’t really suggest. As I saidearlier, Heathrow has 166 destinations, compared withFrankfurt with 266. The UK is badly served tointernational destinations, which is a shame given theimportance of developing trade. China is opening 56new airports in the next five years so we are going tobe very constrained. But we are now seeing the likesof Emirates operating out of Newcastle and Virginflying out of Manchester and Glasgow, so there isdemand from London’s hinterland. However, I thinkyou will struggle, given the population of NorthernIreland, to service a huge number of internationaldestinations. You have to have the connectivity into adecent hub.

Q289 Mr Anderson: Would there be the technicalscope? You wouldn’t have to extend runways, forexample?Jim McAuslan: I don’t think that you would need toextend at Aldergrove, but certainly you would atBelfast City. I am not sure how people in the citywould feel about a 747–400 coming over.

Q290 Mr Anderson: We questioned the earlierwitnesses about the potential for upgrading the raillinks to the airport; they were very keen on doing it.Do you think that would make a big difference to theamount of people who would travel by car? Do youthink they would choose new rail or bus links if theywere better?

Jim McAuslan: We had the Heathrow Express put infrom Paddington and it did not really change what ishappening around the M25. People have got used tothe convenience of the car. The number of cars aroundthe airport causes more environmental damage thanthe aircraft. We campaigned with the ScottishParliament to try to get a rail link from Glasgow toGlasgow Airport, but that was unsuccessful so thereare still cars going in there. Does it cause a huge jam?Not really. The bus is terrible from Glasgow toGlasgow Airport, which is about the same distance,so people use cars and taxis, and it does not jam upGlasgow Airport. That is probably the same sort ofcatchment that we are talking about here. There is aquestion about how much public transport is used andrequired; I do not have figures on that but theConsumer Council would be the people to put thatquestion to. I cannot really answer more than that.

Q291 Naomi Long: Do you foresee the CivilAviation Bill, which is currently going throughParliament, having any particular consequences andimplications for BALPA members?Jim McAuslan: We have commented to theCommittee about our concern. There is not enoughfocus on safety. The Bill tries to be economic; it triesto be regulatory; and it tries to deal with safety. It triesto deal with too much and it lacks focus. It should bea debate about what the role of the CAA is and thenyou build it back from there.Chair: Thank you very much. That was some veryinteresting information. I apologise for the rush, butthank you very much for joining us.

cobber Pack: U PL: COE1 [SE] Processed: [28-11-2012 14:01] Job: 022723 Unit: PG05Source: /MILES/PKU/INPUT/022723/022723_o005_th_NIA Air transport strategy v (20 June) - Corrected (draft).xml



Members present:


Mr David AndersonMr Joe BentonOliver ColvileMr Stephen HepburnKate HoeyKris Hopkins

________________


Witness: Rt Hon Theresa Villiers MP, Minister of State, Department for Transport, gave evidence.

Q292 Chair: Welcome to this afternoon’s session.Thank you very much for joining us, Minister. As youknow, we are conducting an inquiry into aviationpolicy and how it impacts on Northern Ireland interms of business travel, people travelling for socialreasons or to visit friends and so forth. There are awide range of issues connected with that, so we aredelighted you are able to join us. Thank you verymuch. Would you like to make a brief openingstatement and then we can get into questions?Mrs Villiers: I would just like to say that I amdelighted to be here to take part in your inquiry. It isobviously an important time for aviation policy sincewe will be publishing our policy framework forconsultation over the summer. I look forward tohearing the perspective of members of this Committeeon the particular needs of Northern Ireland in relationto aviation and aviation policy.

Q293 Chair: Do you know when the closing datewill be for submissions to that document?Mrs Villiers: Since we have not yet announced apublication date, I am afraid that I cannot give you aclosing date. It would be very welcome if submissionscould come in as soon as possible after publication.

Q294 Nigel Mills: As your written submission setsout, aviation policy is still largely a reserved matter.Could you set out for us why so many matters onaviation policy are reserved and whether you thinkthere is any scope for devolving any further areas tovarious assemblies and parliaments?Mrs Villiers: One of the main reasons is that so muchaviation policy is driven by international obligations.With issues such as safety and security, much of it isdecided at a global level through negotiations throughorganisations like ICAO. Also a very significantcomponent of aviation policy is driven by EUdecision-making. So it has a very internationalelement to it. There is a logic in reserving a numberof matters; it is more difficult to deal with those on adevolved basis. Of course there has been somedevolution in relation to planning matters and surfaceaccess but at the moment we have not had a proposalfrom the Northern Ireland Executive asking for furtherdevolution. We would obviously look at that seriouslywere it to be made.

Naomi LongJack LoprestiDr Alasdair McDonnellNigel MillsIan PaisleyDavid Simpson

Q295 Nigel Mills: Presumably issues such ascompetition or air traffic management in NorthernIreland could physically be devolved and would notbe caught up in those global agreements?Mrs Villiers: I suppose competition issues arepredominantly domestic, but air space managementhas an international element too. It is certainly notimpossible that there could be further areas toconsider for devolution. This is not strictly a transportmatter, but there is a proposal on the table to devolvecompetence for air passenger duty. More could bedone in this space if the Northern Ireland Executivewere minded to propose it.

Q296 Kris Hopkins: Welcome, Minister. We arelooking at growth in Northern Ireland, and obstaclesthat may be in the way of that, particularly relating tothe area we are looking at. Is it a lack of regional,international connectivity, APD, or corporation tax?What is your view on obstacles to growth in NorthernIreland at the moment?Mrs Villiers: The overall perspective on the NorthernIreland economy raises issues beyond my remit, butthere is a longstanding concern about its dependenceon the public sector. The UK Government is veryclear that improving transport links throughout theUnited Kingdom is an important part of our strategyfor growth. We fully recognise that that kind ofconnectivity is a major driver of jobs and growth. Thatis why we have prioritised investment in the road andrail network despite the deficit. We are very focusedon measures to seek to improve our airports, whichwe hope can help airports in Belfast. For example, weare pushing forward with reforms to the way securityis regulated. We hope they are not only going to makepassengers even more secure, but enable airports todeliver security checks in a more cost-efficient andpassenger-friendly way. So there is a range of wayswe think improvements to airports can help improveconnectivity in various parts of the United Kingdom,including Northern Ireland.

Q297 Kris Hopkins: Do you recognise that, not justin Ireland but in parts of Scotland and maybe thesouth-west, an airport is not a luxury, as such; it isa vital part of communications, travel and businessrequirements, particularly for Northern Ireland? So itis quite special, as a challenge to growth.

cobber Pack: U PL: COE1 [O] Processed: [28-11-2012 14:01] Job: 022723 Unit: PG05Source: /MILES/PKU/INPUT/022723/022723_o005_th_NIA Air transport strategy v (20 June) - Corrected (draft).xml


20 June 2012 Rt Hon Theresa Villiers MP

Mrs Villiers: You are absolutely right to point that out.I think I even have those very words in the briefing infront of me. Domestic aviation is important for manyparts of the United Kingdom but it is absolutelyessential for Northern Ireland. That is one of thereasons why we have raised with the EuropeanCommission the points that have been raised with usabout the continuity of aviation between NorthernIreland and Heathrow and the London airports. I amsure that will come up later in the discussion, but thecurrent situation is very positive, with BA continuingwith the bmi flights. We recognise that, with thecrowding pressure at London airports, we need tothink of long-term solutions to ensure that we canmaintain those vital air links between Northern Irelandand London, for important economic reasons and forreasons of social and political cohesion as well.

Q298 Chair: Just before we get on to connectivity,you did touch on the subject of security. Do you havemuch to do with the security of the airports inNorthern Ireland, or is that entirely Owen Paterson’sremit?Mrs Villiers: No, security is covered by theDepartment for Transport, as far as I am aware, forNorthern Ireland, in the same way as it is for the restof the United Kingdom.

Q299 Chair: Are there any comments you can make?Obviously security is not something we can openlydiscuss, but are there any comments you can makeregarding the satisfactory nature of it?Mrs Villiers: Obviously Northern Ireland has a longhistory, sadly, of security being an even greater issuethan it is elsewhere. Now the nature of security threatshas changed. There is no doubt that aviation remainsan iconic target for al-Qaeda, and therefore there areintense efforts going into intelligence in this area, andintense efforts made to ensure that we do everythingwe can to stay one step ahead of the terrorists. Thereis continued interest from these groups in seeking tofind any kind of loopholes or weaknesses in oursecurity arrangements. We work very closely as aDepartment with airports and with airlines to ensurethat we do all we possibly can in the light of that veryreal and continuing terrorist threat.

Q300 Jack Lopresti: Minister, welcome. Youmentioned airport capacity briefly. Just to clarify, doyou have a view on the importance of expandingairport capacity in the south-east of England inparticular, especially Heathrow, for the developmentof the Northern Ireland economy and tourism?Mrs Villiers: As I said, we believe it is vital that wemaintain high quality and frequent air connectionsbetween Northern Ireland and London. Those kinds ofissues will be part of what we debate when we publishour aviation policy framework and our call forevidence on how we maintain the UK’s hub status ina sustainable way.Sadly, what I cannot do with the Committee today istell you what the outcome of that process is going tobe. Even if I was absolutely convinced that I had themagic solution, it would be inappropriate for me tohave reached a decision on that now. What we need

to do is ensure that we gather the evidence base todecide what the right answer in relation to aviationcapacity in the south-east is, and also ensure that wegive the communities affected by any options on thetable the opportunity to have their say and take partin the decision-making process.What I would say is that the United Kingdom, as anation, is phenomenally well connected, and actuallyNorthern Ireland, if one looks at the extent of its airconnections and the relative size of its population andeconomy, is very well connected. London and thesouth-east is one of the most well connected regionson the planet. Its airports serve, in total, over 350destinations, and Heathrow has more services toChina than any of its continental rivals. Sometimesthe gloom and doom one reads in the newspapersabout our airports, I am afraid, is exaggerated withregard to today’s situation. Assuming that passengernumbers go up in the way we expect, we will startto see ever increasing pressure on our airports in thesouth-east, even if regional airports start to take moreburden and more passengers, and that is somethingwe need to address. We all know that delivering newcapacity, or even changes to surface access at airportsto enable us to use our current capacity moreeffectively, takes a long time. So we need to thinknow about how we meet the capacity challenge wemay well be facing in the mid-2020s and 2030s.

Q301 Naomi Long: Minister, you are very welcome.This particular issue affects my own constituency, inwhich Belfast City Airport is located. Following theIAG takeover of bmi, there have been some concernsexpressed about the long-term future of the connectionbetween Belfast City Airport and Heathrow, inparticular. Obviously connectivity to Heathrow iscritical, not just as the direct link to London but alsobecause it is the most significant UK hub. Thereforeit represents Northern Ireland’s best link outwardsbeyond the UK to the rest of the world.Willie Walsh is on record as saying that the bmiBelfast City Airport to Heathrow routes are secure,and that is protected in the decision by theCompetition Commission: they are protected at leastuntil October. However, 13 of the 42 landing slotsthey acquired as a result of that takeover will now beredirected towards long-haul flights from Heathrow,which are a more lucrative use of those landing slots.Have you had any discussions with IAG about theBelfast City to Heathrow linkage and the importanceof its maintenance, just to ensure that those are notsubsequently reallocated to long-haul routes, whichmay be more lucrative but that would represent asignificant detriment to Northern Ireland if they werelost?Mrs Villiers: Yes, I have. The most recent time wasin a conversation with Tom King from BA in the lastcouple of weeks. I have to say that my colleagues inthe Northern Ireland Office have had even morefrequent contacts on this issue with BA. All theseengagements have been very positive, to be honest.As I tried to hint before, the current situation is acause for real optimism, because the reality is thereare lots of flights to Heathrow, and there is everyindication that these flights are commercially viable

cobber Pack: U PL: COE1 [E] Processed: [28-11-2012 14:01] Job: 022723 Unit: PG05Source: /MILES/PKU/INPUT/022723/022723_o005_th_NIA Air transport strategy v (20 June) - Corrected (draft).xml



and can provide positive support to BA’s long-hauloperations as well. I am grateful for the indicationsthat we have had from Willie Walsh and the repeatedassurances of BA that they are continuing with bmiflights and have no plans to stop the flights betweenNorthern Ireland and Heathrow. Not only do we havethose assurances but my understanding is that that isa commercially attractive option for BA as well.How long into the future we can be confident of thisposition is another thing, and this is why I think thereis a case for looking at whether, within the debate inEurope at the moment on how slots are allocated andon the Airports Package, there is any scope forring-fencing certain slots at Heathrow to ensure andhave a guarantee that those flights continue in the longterm. I have to say, however, that that would meanquite a significant and fundamental change to thedirection of travel of EU law and legislation over along period, so it would not be easy to achieve but itis something that we are actively pursuing with theCommission. I want to provide reassurance that we donot see this as a problem right now. We are veryoptimistic about continuing connectivity betweenNorthern Ireland and Heathrow, but we want to lookto a future where, potentially, crowding pressuresmight mean that the situation is changed.

Q302 Naomi Long: Short of formal ring-fencing ofslots, is there anything that the UK Government cando, I suppose in the medium term, to provide anyprotection of those regional routes, which are socrucial for economic development, as well as all theother connectivity that is required? Is there anythingshort of actual ring-fencing that would require thekind of changes that you have alluded to? Is thereanything short of that that the Government can doindependently?Mrs Villiers: The only other option is what is knownas a public service obligation, which is a procedurethat already exists in EU law and is designed to ensurethat one maintains connectivity between regions andparticular centres. As you are probably well aware,however, that is of limited usefulness in this context,because you cannot specify a particular airport, so itwould not resolve the Heathrow issue. Because thereare so many flights already between Northern Irelandand the different London airports, it is not a situationwhere I think the criteria for a PSO would be met.Therefore, without a potential change in current EUlaw, there are almost no levers that the Governmenthas on this kind of issue.In terms of the long-haul flight to Newark fromNorthern Ireland, we deployed almost the only leverat our disposal, which was air passenger duty. Whenanxiety was expressed about the continuing viabilityof that long-haul flight, the Chancellor acted swiftlyand introduced a reduced rate for long-haul fromNorthern Ireland. We are prepared to act but, in termsof connectivity between Heathrow and NorthernIreland, EU law means that we have very limitedlevers at our disposal.

Q303 David Simpson: You are very welcome,Minister. Naomi has taken my question but I willforgive her for that. In relation to the security of the

flights, let us put it in everyday terms: BA walkedaway from Northern Ireland in 2001. Despite thereassurances that Willie Walsh is giving—and, as aparliamentary party, we have met him and he hasgiven us assurances—there is still that doubt, or lackof trust—put it in whatever way you want—that, inthe not-too-distant future, BA will pull out of theBelfast routes. That will have a detrimental effect onthe economy of Northern Ireland. It will not help thegrowth of the economy and, whilst I hear what yousay in relation to there being very few levers thatGovernment can use, because they are all privatecompanies that have a profit to make and all the restof it, all we can ask is that the Government use everyinfluence they have to try to ensure that BA stays onthat route. It was a good move for the New York flightand absolutely essential to keep that flight opened forthe economy, but it is essential that we try to keep BAat Belfast Airport. It is essential to do that and all wecan do is ask the Government to use every influencethey can.Mrs Villiers: I agree on the importance of theseflights, as I have said. I do not think we shouldunderestimate the benefits that have been delivered byallowing airlines to operate in a commercialenvironment in the free market. It has delivered arevolution in flying that would have been impossibleif governments had continued to retain all the leversand the protectionist policies that they used to have.We need to proceed with care in this instance,because, if we were to go to Europe and ask for amuch more interventionist approach, we could findthat turned against us when it comes to access for ourairlines elsewhere in the world.I think we should not underestimate the consumer andpassenger benefits that have come from liberalisationof the air-services market, but with the discussions ofthe BA/bmi takeover, I was left in absolutely no doubtof the high priority that this has for my colleagues inthe Northern Ireland Office. The Secretary of State forNorthern Ireland was very engaged on it. TheGovernment has a very longstanding position stronglyin support of an unqualified approach to independentallocation of slots, so the idea that we are nowengaging with the Commission to say, “Actually, wemight need an exception to that rule for very crowdedairports and key routes to regional airports”, is, initself, quite a significant shift. We take this seriouslyand we would continue to use what options areavailable to us to support and encourage BA incontinuing with those flights, but we cannot directthem. It is a matter for them.

Q304 Mr Anderson: Minister, we have heard bothwritten and oral evidence that suggests that there isoverprovision in Northern Ireland, with two airportswithin 14 miles either side of Belfast. Does theDepartment have a view on that and, if so, will youshare it with us?Mrs Villiers: We do not have a view on what wouldbe the optimal approach in terms of the balance of thetwo airports in Northern Ireland. There is noprocedure that would enable either the WestminsterGovernment or the Northern Ireland Executive todirect one airport to close and to shift all traffic to




another. Even if there were seen to be significantbenefits in doing it, there would be no way to do that,because airports are privately owned enterprises, andit is really up to the owners and the airlines to decidewhere they want to fly from.

Q305 Mr Anderson: In the review you are doingnow, has this not come on the radar anywhere?Mrs Villiers: I know there is discussion about it.Certainly, people have raised this question with me,but we believe that there are real benefits forpassengers from having competing airports. Airportsare in the private sector, and it is not conceivable thatwe, as the Westminster Government, would startsaying to an airport in Northern Ireland, “I think itwould be better if you closed and your competitorstarted to take all your customers”. I can see there isa body of opinion that would like to focus all trafficon a single airport in Northern Ireland. Of course,there are connectivity benefits potentially in doingthat, but it would require a degree of government orstate intervention, which not only goes against EU lawand property law, but is very much against the spiritof the approach taken by successive Governmentsover the last 20 years or so.

Q306 Chair: Of course, the reverse of it is that, nextyear, as was celebrated in the House of Lords lastnight, Londonderry will be the City of Culture. It isnot terribly easy to get there, though, at the moment,so it is also possible to view it that way round as well.Mrs Villiers: In what sense?Chair: One normally flies to Belfast. It is a two-hourdrive. It is not conducive to visiting the city, which,as we are coming up to that year of City of Culture,is probably not helpful, so rather than cutting downthe airport capacity in Northern Ireland, it might bean objective to increase it.Mrs Villiers: Certainly, a successful Derry Airportcould provide real economic benefits. As I said inrelation to Kris Hopkins’s question, we fully recognisethat well connected cities and regions can havesignificant jobs and regeneration boosts as a result.

Q307 Ian Paisley: Can I just ask a follow-upquestion regarding the issue of whether an airportshould close or not? If the airport owners—and weaccept they are private shareholders—were to decideof their own volition to enter into a partnership and toclose one of the airports, would that be subject to aMonopolies and Mergers investigation anyway, whichwould prevent it?Mrs Villiers: I think you are right. If there was avoluntary agreement to combine airports, or oneairport wanted to buy another, the only thing in theway of doing that would be competition policy andcompetition law, but each case would be judged on itsmerits. The relevant competition authorities—whetherthey were the domestic or the European ones—wouldlook at a particular case and decide whether any ofthe competition problems were present in those cases,and that might stop a merger going ahead. In othercases, however, it might be that there were nocompetition-law problems at all and a merger couldhappen.

Q308 Ian Paisley: Is that competition policy outwithyour responsibility? Would that be for anotherDepartment, if we were to pursue that line, just toget clarity?Mrs Villiers: Competition policy generally is coveredby BIS, and also the Civil Aviation Authority has arole in implementing competition policy for airports.That role is about to be expanded by the CivilAviation Bill. BIS is in the lead but the Civil AviationAuthority has a role at the moment, and that role willbe strengthened with the Bill.

Q309 Ian Paisley: On getting people to our airports,I do not see airports voluntarily closing, especially ifthey are healthy and competitive businesses. Is therea desire to have an incentive or an initiative where youcan incentivise public transport links to our airports inNorthern Ireland, or improve public transport linksand road links? Can that be done at the national levelor is that for Northern Ireland exclusively?Mrs Villiers: Since surface access is devolved, that isreally a matter for Northern Ireland itself.

Q310 Ian Paisley: Is there no overarching policy thatwould incentivise that?Mrs Villiers: The policy we have, where these mattersare not devolved, is to be very supportive ofimproving surface-access links and particularly raillinks. We have a big programme of doing that:Manchester is getting its Metrolink extension; Lutonis getting a very important road improvement; wehave just embarked on Crossrail, one of theconsequences of which will be a connection toHeathrow; and our high-speed rail plans will seeBirmingham Airport connected to the HS2 scheme. Interms of connectivity and passenger experience, Itotally agree that surface access is hugely important.It is an area where the Government can providesupport and encouragement, but it would be theNorthern Ireland Executive in the lead on this,because of the way the devolution settlement works.Chair: We may come back to that in a minute.Kris Hopkins: I think you need to get a quicker carif it takes you two hours to get to Londonderry—thatwould be one point.Ian Paisley: You do not have his car.Kris Hopkins: No.Ian Paisley: It keeps breaking down.

Q311 Kris Hopkins: My question is a bit of afollow-on from what Ian was asking. Several peoplehave said we need a strategy; there needs to be a planabout Northern Ireland’s air provision. Once you havegot a strategy, you can start to spend money to supportit, and I understand that. It might be devolved, but,essentially, although we understand they are privateenterprises, with a limited amount of resources theyare going to invest in connectivity to international, orextend the runway or whatever, and, effectively, bypublic expenditure, they will give an advantage to onebusiness, possibly to the terminal detriment of theother. That is part of the dilemma about the spendingof public resources. I understand it is devolved, butwhat is your view about the choices that are availablethere, and the ramifications?




Mrs Villiers: Certainly, whether it is the devolvedGovernment or the Westminster Government, you doface tough choices when deciding how to allocatelimited resources for transport improvements, and,yes, those decisions can impact on the success orotherwise of an airport. What we have tried to do fromthe Westminster perspective is, where an airport isgoing to get a significant benefit from apublic-transport improvement, ask that they and theircustomers contribute towards the cost of that,although it varies. For example, at Southend, theybuilt their own station, so they completely funded avery important public-transport access route. In thingslike the Heathrow Express, there was a degree of jointfunding. That is one way that you deal with some ofthe competition and fairness issues in the decisionsthat you make on what public-transport access youcan fund.In terms of a strategy for Northern Ireland’s airports,it is entirely open to the Northern Ireland Executiveand the community to come up with a strategy thatcovers devolved matters. If they wanted to engage onmatters that are not devolved and start to constructtheir own ideas and strategy, we are happy to engageon that. We are very keen for ideas specific toNorthern Ireland to be fed into our aviation policyconsultation, as I said at the beginning of thediscussion. If there is something that the NorthernIreland Executive wants to do on aviation strategy thatthey feel, at the moment, they are constrained fromdoing, we are happy to listen to them to see how wecan help them take that forward.

Q312 Dr McDonnell: Thank you, Minister, fortaking the time to share some thoughts with us. Youare very welcome. I want to come at it from the otherangle. We have talked about how we make the airportswe have work better or how we get them to be morecohesive and efficient. If we were to start with a blanksheet of paper to build one single airport at or nearBelfast from scratch, with good surface connectivity,what sort of cost do you think we might be lookingat? Have you any estimate?Mrs Villiers: Without a bit more detail about the sortof project you are talking about, I do not think I wouldbe able to give you a number that was meaningful. Ithink we all know that these projects are never cheapand, in particular, one has to bear in mind, if you wantsurface-transport access city centre to airport, then,whenever you start thinking about building new roadsor railways through the centre of cities, that becomesextremely difficult and very expensive. Certainly, theprice tag would be a large one but it would depend onthe scale of the proposals and the routes chosen.

Q313 Dr McDonnell: What we are dealing with andworking around here are two airports that are veryuseful in some ways but each have their limitations,for different reasons. One of them is too far out, ifyou like; the other is too far in, in that it is affectingpeople and whatever. It strikes me—it may be not apractical solution—that trying to get something that isa little bit out in the suburbs that would manage notto disturb too many people might be an alternative.

Mrs Villiers: These kinds of issues are a familiarchallenge for governments the world over. Thebenefits that come with airports that are close andconvenient for cities very often come with a noisedownside. I think it is healthy for the debate to happenin Northern Ireland, though I think it is also importantto recognise that giving passengers and airlines achoice of airports generates benefits and has been partof the reason why people have access to a wider rangeof choices and lower fares than would have been thecase 20 years ago.

Q314 Naomi Long: Alasdair has already talkedabout the double-edged sword of having an airportclose by. It provides convenience for our constituents,at one level, who are in neighbouring constituencies,but it also obviously creates issues with noise anddisturbance, and so there are a number of planningconstraints around the airport development in BelfastCity Airport to try to control that, one of which isthe cap on passenger numbers travelling through theairport, which is a proxy for the noise anddisturbance—some would argue not a great proxy but,nevertheless, it is the one that was used at the time.It has been claimed that removing that cap on thenumber of passengers using the City Airport wouldcreate about 350 new jobs. It has also been put to usby a number of people who have given evidence thatlater flights to City Airport would assist the businesscommunity. Those initiatives may well be of benefitto consumers, but they could also be to the detrimentof local residents who live nearby. If a dispute arosein those sorts of circumstances, would the DfT or theDepartment of Environment in Northern Irelandintervene in order to resolve it? If similar disputeswere happening in England, for example, howhands-on would DfT be in those circumstances interms of shaping agreements around airports anddealing with noise issues and so on that would affectlocal residents in the context of maintaining capacityand connectivity?Mrs Villiers: As, essentially, a planning matter, thesekinds of decisions in relation to airports in NorthernIreland are devolved and would therefore be taken bythe relevant authorities in Northern Ireland. No doubt,they would face the same difficult balancing act as weface in relation to airports in areas that are notdevolved, namely, carefully assessing both thepotential connectivity and economic benefits thatexpansion can deliver, and the quality-of-life andenvironmental downsides that it can cause, the mostimportant and significant of which is noise, but airquality is a factor in some areas as well.In terms of what would happen if there was a bigdebate and dispute about a potential change inNorthern Ireland, I do not see that it would either befor Defra or DfT to get involved in that. I think itwould depend on the nature of the dispute but, as adevolved matter, I think this would be for theNorthern Ireland authorities to determine, though, inthese cases, there is inevitably judicial review in thecourts as the background. If this kind of issue arisesin England, it depends which airport you are talkingabout. At Heathrow, Gatwick and Stansted, the nightnoise is regulated nationally and there are also certain




other constraints that are subject to nationalregulations, so there would be DfT involvement there.At most airports, though, these matters are dealt withby the local authorities, so it would be generallythrough the planning process that decisions wouldultimately be made, without direct involvement fromthe DfT.

Q315 Naomi Long: In that context, would DfT havea view in such disputes, or would they be willing totake a position in disputes where they felt thattransport links between the regions were beingcompromised by planning decisions that were beingtaken locally, or is it simply that you would view thoseto be planning decisions that should be taken locallyand that DfT would have no involvement with them?Mrs Villiers: Yes, I think we would be very unlikelyto take a position on that kind of matter, as one thatwas devolved. I am trying to think. This is a Defracompetence, so I am not quite clear, but we do haveobligations under the EU Air Quality Directive. Isuppose that, if an expansion plan were to makesolving those more difficult, conceivably there wouldbe a role for Defra as the sponsoring Department, butI think you would probably need to check with themon that. I can think of very few instances where youwould involve Westminster Departments in the sort ofquestions that you have raised.

Q316 David Simpson: The three airports that wehave in Northern Ireland—in Antrim, Belfast andLondonderry—are all heavily dependent on oneairline, albeit now they are all different airlines. Is thatsituation usual right across the United Kingdom?Mrs Villiers: Certainly, my understanding of theproportion of traffic by a single airline at NorthernIreland’s three airports is that it is above average.There are one or two airports such as, for example,Southampton and Exeter, which also have a very highproportion of flights run by one airline. However, it iscertainly not something that, in terms of the airportsin question, we have noticed people coming to us witha serious concern about, but I would be interested tohear your thoughts on whether the heavy usage byone particular airline is causing a problem at any ofthese airports.

Q317 David Simpson: Has your Department beeninvolved at any stage to try to lobby on behalf of theairports in Northern Ireland to get other operators togo to them?Mrs Villiers: Not as far as I know—not directly. I donot know whether any of my colleagues in theNorthern Ireland Office have been engaged in thiskind of activity. It is not something that Ministersnormally get directly involved with. What we do,though, is energetically pursue liberalisationagreements with overseas countries to see if we canopen up potential new markets. If we can concludethose trade agreements, it means that overseas airlineshave the option of coming and flying into UK airportsand providing new routes that way, so there aregeneral across-the-board policies that we pursue, oneof the results of which, we hope, could be a widerrange of airlines and flights from our regional airports.

I cannot, however, think of an instance where aMinister has been involved in actively lobbying for aparticular airport, because they are private-sectorentities, as are airlines, operating in a commercialenvironment.

Q318 Oliver Colvile: First, Mr Chairman, Iapologise for being late. Unfortunately, I was sittingon a delegated legislation committee talking aboutHillsborough, so please forgive me. Minister, thankyou very much for coming to see us. You may wellhave already dealt with this question, in which caseplease forgive me for asking it, but to what extentdo you think that Northern Ireland airports are full tocapacity as far as the amount of air traffic they candeal with, or do you think that there is more roomwhereby they could end up by taking more passengeractivity?Mrs Villiers: I have to say, off the top of my head, Ido not know how full the three airports are, but I amassuming that, as is the case with airports outside thesouth-east of England, almost every airport other thanHeathrow and Gatwick has considerable sparecapacity. My expectation, then, would be that, interms of adding new flights and more choice forpassengers from airports in Northern Ireland, theproblem is not shortage of capacity but how acommercial case could be built to attract airlines tocome and fly more routes from Northern Ireland.

Q319 Oliver Colvile: Do you have a view on howthat might compare also with airports in SouthernIreland? What is unique about Northern Ireland is thatit is the only part of the United Kingdom that sharesa land border with another country and, therefore,there is the idea that some air passengers could flyinto Northern Ireland and then travel south, and viceversa. If you cannot answer that, will the officials inyour Department have a look at that and write to us?Mrs Villiers: It would be no problem to supply youwith figures on the spare capacity currently atNorthern Ireland airports, and I am sure it would notbe a problem to do a comparison with spare capacityat airports in the Republic of Ireland. Again, myoverall knowledge of airports and the aviation sectoracross Europe leads me to think that there wouldcertainly be spare capacity in the Republic of Irelandas well. We also recognise that we need to take onboard the fact that Northern Ireland has that landborder, and one of the reasons why the Chancelloracted swiftly, when problems arose in relation to theNewark flight, to reduce air passenger duty, wasbecause of the competitive pressure from Dublin, witha lower air passenger duty rate. That is one of themain reasons why we have done for Northern Irelandwhat we have not done for the rest of the UnitedKingdom.Oliver Colvile: Thank you very much indeed for that.If you were able to come back to us on some of thatstuff, I would be very grateful.Mrs Villiers: In terms of the numbers on currentcapacity levels at airports across Ireland, I would behappy to supply you with some figures on that. I amsure we can come up with some.




Q320 Kate Hoey: Thank you, Minister. I want to goon to APD and ask just a few questions on that.Obviously, we are all very grateful about the Newarksituation. Clearly, this Committee would like to gofurther. You said yourself that flying to NorthernIreland is not a luxury; it is a necessity and so on.Mrs Villiers: Yes.

Q321 Kate Hoey: Is it just about money that HerMajesty’s Government will not look at reducing APDfor internal flights to Northern Ireland? Indeed, youwant to put it up in 2013, when other countries, asyou know, such as the Netherlands, increased it andthen took it down when they saw the effects. Are weplugging away at a completely impossible situation oris there some light there that, because of the particularsituation in Northern Ireland, we might be able to geta reduction for people who have to fly?Mrs Villiers: You will appreciate that my first wordsare, “This is a matter for the Chancellor, not me”. TheChancellor and the Treasury are always happy to hearrepresentations, whether from Select Committees,individual Members or Assembly Members fromNorthern Ireland. We think, as a Government, that itis fair that the aviation sector makes a contribution tothe Exchequer. It does not pay a fuel duty, so airpassenger duty is the primary means by which theaviation sector contributes to the public finances. Aswe all know, the public-finance situation at themoment makes tax reductions extremely difficult. Inan ideal world, I am sure there are all sorts of taxesthat the Chancellor might like to reduce, but it is notan ideal world. We have a major deficit to deal withand, therefore, it is right that the aviation sector andpeople flying play their part in addressing that deficitproblem.As to whether it is worth continuing to lobby on theparticular circumstances in Northern Ireland, as I sayI am sure the Chancellor will be happy to continue toengage with colleagues on these kinds of matters, butwe continue to be constrained by what is affordablein the light of the public-finance situation.

Q322 Kate Hoey: Do you understand the nature ofthe injustice to Northern Ireland people, bothbusinesses and people who just want to visit relativesor work in England and commute back and forward?It is not viable to go any other way, really, other thanspending a very, very, very long time travelling to getfrom Belfast to, say, London.Mrs Villiers: In an ideal world, we would all love tobe paying lower taxes, but we have to deal with thedeficit. The alternative to dealing with it would becatastrophic, potentially. We have seen the problemsfaced by other member states in Europe. It is vital thatwe repair the problems with the public finances, andthat means that reductions in air passenger duty are,ultimately, very difficult to deliver for the moment. AsI have made clear, the Chancellor has alreadydemonstrated that he takes on board factors such asNorthern Ireland sharing a land border with a countrywith a different level of air passenger duty, and Ithink, in terms of what further changes might bemade, it is probably better for you to invite a TreasuryMinister to respond to your questions.

Q323 Kate Hoey: I do not think we are going to giveup on that. Just finally, you obviously were one ofthe people, like many of us, who wanted to keep theRoutemaster and, of course, the new bus in London.Are you pleased now that the new bus was made inmy honourable Friend’s constituency over there?Have you seen it yet?Mrs Villiers: I have not seen it in person. I have seenthe pictures, but, yes, I am delighted that it is goingto be made in the United Kingdom.Kate Hoey: You can jump on and off again.Mrs Villiers: As a great fan of the old Routemaster, Iam delighted that the Mayor is delivering the new one,and the fact that it is built in Northern Ireland iseven better.Ian Paisley: Just for the record, it is Wrightbus. Theylike you to say that quite a lot.Mrs Villiers: Wrightbus. I shall remember.Chair: Just in support of what Kate said, we all feltvery really pleased with ourselves as a Committeebecause we helped secure the reduction in theinternational flight duty from Northern Ireland. Thewitnesses we have had before us have welcomed thatbut really stressed that a vast majority of people, whileaffected by that, take internal flights, where they arestill paying the duty. All the witnesses we have hadbefore us have raised it with us quite seriously, sohopefully they will respond to your consultation aswell.

Q324 Mr Anderson: Minister, the draft CivilAviation Bill is almost law now. What do you seeas being the most important aspects of that Bill? Inparticular, how would you respond to some of thecomments from the Transport Committee that the Billshould not impact adversely, particularly on smallerairports in relation to things like public informationrequirements and security changes?Mrs Villiers: I am happy to respond to that. One ofthe biggest changes delivered by the Bill focuses oneconomic regulation of airports to make it moreeffective, more targeted and much morepassenger-focused. For the foreseeable future, that isnot likely to be terribly directly relevant to NorthernIreland, because none of its three airports are subjectto economic regulation, but we hope that it willprovide benefits for passengers from Northern Irelandflying into the regulated airports in the south-east,because we are confident that it will help improve ourairports, improve the quality of service and improvethe nature of the investment that goes into thosesouth-east airports.You are right that there is the other element of theBill, which covers collection of information. We areintroducing that to enable the CAA to collect andpublish information to help consumers comparequality of service at different airports, and also to helpconsumers have more information on theenvironmental impact of their choices. An obviousexample is certain airlines fly much greener, newerplanes compared with others, and we think consumersshould be able to have a clear picture, when they maketheir travel choices, just so that they know a littlemore about the relative carbon-emissions impact ofthe different choices.




We fully accept that, in the way the Civil AviationAuthority uses those powers, it is very important forthem to consider the impact on regional airports andon airports in Northern Ireland, for example, as well.That is why the Bill is very clear that the CivilAviation Authority has to have regard toproportionality, and has to consult on the way itchooses to exercise these powers. All regulators aresubject to what are known as better regulationprinciples, thanks to legislation that was passed by theprevious Government, which requires them to act in aproportionate manner and have regard to the costs andbenefits of what they do.I think that what we are proposing will be good forpassengers, it will help us address the environmentalimpact of climate change, and we are confident it canbe done in a way that does not have an undue orunreasonable cost impact on airports in NorthernIreland or elsewhere in the UK.

Q325 Nigel Mills: Minister, we have shared manyhappy hours on the Civil Aviation Bill Committee. Doyou have any information yet when that is likely tobecome law? Is that going to get Royal Assent beforethe summer?Mrs Villiers: Our target date for seeking Royal Assentis spring next year. Things are going pretty well interms of timetabling in the House of Lords. We havehad Second Reading and the indications are theCommittee stage will start very soon. I think we areexpecting the Report stage to be after the summerrecess, but again it is not impossible that that mightbe done before the summer recess starts. I am veryencouraged by the progress we are making but, no, Icould not guarantee that we would have Royal Assentin the summer. It looks very good currently forkeeping on track for Royal Assent in the early part ofnext year, hopefully in the spring.

Q326 Naomi Long: Most of the witnesses who havegiven evidence to our inquiry were broadly supportiveof the Bill. However, last week, I think, we had theBritish Airline Pilots Association here, and they raiseda number of concerns. Firstly, they said that they feltthat the scope of the Bill was too wide and it wastrying to do too many disparate things in one measure,but also that, as a result of that, they felt there wasnot a sufficient focus on safety, which they feel shouldbe the priority when dealing with issues around civilaviation. Do you want to take the opportunity, maybe,to address those particular criticisms or concerns?Mrs Villiers: Yes, I would be delighted to. I do notthink the Bill is overambitious in the range of subjectsit covers. In particular, I am aware of BALPA’sconcerns about safety and I agree with BALPA thatsafety must be paramount. They appear to be makingthe point that they do not feel that combining safetyregulation and economic regulation in the same placeis the right way to do things, but the reality is that isalready the case. The Bill will not change that. Whatthe Bill will do is introduce certain responsibilities inrelation to the regulation of security, and vest them inthe CAA.I have every confidence that the CAA will continueto be a top-class regulator. It has a reputation,

particularly on safety, which is pretty much second tonone globally. They are a world leader on what theyhave delivered on aviation safety, and I believe thatthe reforms that we are introducing to economicregulation and the additional responsibilities that wepropose to give them in relation to security regulationwill not in any way impair their ability to continuethat really strong record on safety. I think that,sometimes, vesting responsibilities in a singleregulator can have real advantages; for example, someof the methods that the CAA have pioneered on safety,which have made our airlines amongst the safest inthe world, can usefully be learned in the securitycontext as well. We think that there are benefits,potentially, in terms of the quality of outcomes, andwe think the quality of outcomes could well beimproved by combining safety, security and economicregulation in the one regulator.

Q327 Chair: I do not know a lot about it, but is theresome dispute between BALPA and new regulationsregarding pilots’ hours or something?Mrs Villiers: Yes. That is not in the Bill. What isunderway is a review of pilot flying hours, which isbeing conducted by EASA, which is the Europeanbody that is tasked with looking at aviation regulatorymatters, and our representations to them are led by theCivil Aviation Authority. Our aim is to ensure that theproposals that are put forward by EASA, andultimately adopted by the European Commission,generate just as safe and as high quality anenvironment for safety as our current rules in the UK,because EASA and the Commission are seeking toharmonise safety rules across Europe, and we haveput a lot of work into that. We think that process hasgone well. There were certain concerns that we hadabout some of EASA’s early drafts, which have beenresolved in their most recent set of proposals, but theprocess is still underway. We do not yet know whatthe Commission’s final decision will be on that, butwe certainly would not vote in favour of anything thatwe thought jeopardised the high levels of safety thatwe currently enjoy in the UK.

Q328 Dr McDonnell: Thanks, Minister, for youranswers so far. You will probably know that LordEmpey has introduced a private Member’s Bill in theHouse of Lords that proposes that the Governmentshould take the powers to ring-fence landing slots atBelfast City to Heathrow. What is the Government’sview, or indeed your own personal view, of that Bill?Could you support it directly or could you somehowor other incorporate it into the Civil Aviation Bill?Mrs Villiers: I am afraid we are not able to supportit, because what it asks the Government to do is notpermitted under current EU law. However, weunderstand the sentiment behind it, and that is one ofthe reasons for the initiative that I have referred to acouple of times earlier in our discussions, namely,that, as part of the debate on what is known as theAirports Package, which the Commission has putforward to look at reforming how we deal withaviation and airport slots and certain other matters, wehave asked the Commission to look at this issue ofregional connectivity.




I have been in touch with the Commissioner—writtento him and also spoken to him—about whether wecould potentially introduce an amendment to thecurrent laws that govern this area, to see if it ispossible in the future to ring-fence certain slots forkey regional routes at our most congested airports. AsI said before, getting that change would be verydifficult, because it goes against the longstandingposition of most member states, but we are very keento ensure that the concerns expressed to us bycolleagues in Northern Ireland, but also in relation tothe Scotland routes as well, are properly ventilated inBrussels and we have a proper debate about what isgoing to be the best way to deal with this issue.

Q329 Dr McDonnell: Surely, dare I say, there couldand should be a case made to Europe, because thecircumstances in Europe, where you have multiplecountries with land borders, where you can pop overa land border to an airport in the neighbouringcountry, are very different. Northern Ireland, orIreland generally, is an island off this island, offEurope, where there are big bits of sea and, therefore,it is more difficult to travel. There is no reason why,in the likes of Belgium, you cannot go to a Germanor Dutch airport or all round the place. I think therecould be a case—and perhaps should be a case—fordefining a difference in the whole of the British Isles,because of the sea that happens to intervene betweenus and most other European countries.Mrs Villiers: I certainly think, in deciding on theAirports Package and whether any changes to thecurrent rules are needed, it is very important forproper consideration to be given to regions that do nothave land-border connections, and more remote areas.That is very important and is a point that I have madein discussions not just with the Commission but withother EU Transport Ministers in bilateral discussions.I have also made the point very clearly that there arepolitical issues that would be very significant, inNorthern Ireland in particular. With Northern Ireland,it is not just a matter of economics; of course, therewould be potentially very serious concerns about thepolitical and community-cohesion consequences of asignificant loss of connections between London andBelfast.

Q330 Oliver Colvile: First, I thank you very muchfor coming down to the West Country a couple ofweeks ago, and, indeed, for our train journey backfrom Plymouth to Exeter. If you are going to belooking at the matter, could I also put in a special pleafor the West Country, because we, obviously, haveissues with connectivity, and this seems to be a veryuseful opportunity to raise that once again with you?

Chair: On aviation, anyway, Oliver.Oliver Colvile: Aviation, most certainly. We have justlost, in Plymouth, our airport, as the Minister knows.Mrs Villiers: I enjoyed my visit down to Cornwalland my chat with your constituents.Chair: On aviation policy, does anyone else haveany questions?Dr McDonnell: Is Oliver suggesting that Plymouth issort of an isthmus?Oliver Colvile: We most certainly are a peninsula.Chair: Order. Any more questions?

Q331 Mr Hepburn: Does the Minister have anyviews on the introduction of a congestion tax, whichwould encourage inbound traffic coming to Heathrowto use more regional airports as a hub?Mrs Villiers: Do you mean an additional tax oncongested airports?Mr Hepburn: Taking away APD and introducing acongestion tax, whereby congested airports such asHeathrow would charge more than somewhere likeNewcastle or Northern Ireland, which, in theory,would encourage hubs to be created up in NorthernIreland and the north of England, and outsideLondon generally.Mrs Villiers: We have no current plans for a changeof that nature. There is the discussion about whether,in parts of the United Kingdom, it might beappropriate to have possible devolution. That is mostadvanced in relation to Northern Ireland but there isalso a conversation underway in relation to Scotland.As I say, we have not got any proposals on the tableto impose additional taxes at south-east airports atthe moment.

Q332 Chair: As you may know, we are going tointerview the UK Border Agency shortly regardingvisas particularly. Do you have any input into thatpolicy?Mrs Villiers: In terms of the Border Agency, notdirectly. We have certainly engaged with our HomeOffice colleagues on this issue but it is a matter forthe Home Office, who have competence over thesematters. They are the ones that take the decisions, sowe have provided input but it is their competence,not ours.

Q333 Chair: Do you have anything else you wouldlike to add to what you have said?Mrs Villiers: Just to say that it has been a very usefuldiscussion and I appreciate being asked to come andgive evidence to your inquiry.Chair: Thank you very much, Minister.



20 June 2012 Jonathan Sedgwick


Witness: Jonathan Sedgwick, International Director, UK Border Agency, gave evidence.

Q334 Chair: Mr Sedgwick, thank you very much forjoining us. Sorry to rush you into the hot seat a fewminutes early. Would you like to make a brief openingstatement before we get into questions?Jonathan Sedgwick: I am very happy to do that. Myname is Jonathan Sedgwick. I am the Director of theInternational Group in the UK Border Agency, so Iam primarily responsible for the overseas visa-issuingnetwork and for the upstream prevention activity,which is designed to prevent people unlawfully orillegally coming to the United Kingdom. Myunderstanding of the Committee’s interest particularlytoday is in relation to visas and the facilitation oftravel for tourism purposes and business, etc. Clearly,that is an extremely important issue for my Group inthe UK Border Agency.We put an enormous focus and effort on providing thevery best visa service that we can in terms ofaccessibility to the public and to those applying; interms of speed of turnaround; in trying to offer ascompetitive a visa product in terms of cost as we can,and in trying to improve the process. I do not thinkany of us would claim that we have the perfectprocess; I do not think any of us would claim that itcannot be improved further. I think, clearly, it can, butif you look at our performance on accessibility andturnaround times, we think we have one of the bestvisa services in the world. We are not complacent; wewant to improve it, but we think we start from quitea strong basis. Perhaps, to give you time to go intothe things that you are really most interested in, I willstop there.

Q335 Chair: Thank you very much. You presumablywork quite closely with the governments of the otherCommon Travel Area countries?Jonathan Sedgwick: We work very closely,particularly with the Republic, and I think, as theCommittee will be aware, in December last year,Damian Green and Mr Shatter in the IrishGovernment signed a very important agreement aboutstrengthening the Common Travel Area externalborder, as it were, which has enormous benefits, bothfor potentially facilitating travel within the CommonTravel Area, which will benefit tourism, etc, and inrelation to tackling abuse from those who would abusethe facilities of the Common Travel Area for theirown purposes.

Q336 Naomi Long: You are very welcome to theCommittee this afternoon. We took evidence recentlyfrom ABTA and, in their evidence, they said that thecost of a UK visa was considerably more, and theprocessing time was longer, than for a visa for aSchengen country. They said that that could act asa deterrent to people, for example, visiting NorthernIreland, which is the area that we have shownparticular interest in. Just for the record, how much isa UK visa for a visitor from, for example, China, incomparison with that same visitor getting a visa for aSchengen country?

Jonathan Sedgwick: A UK visa is £78; a Schengenvisa is €60, so there is clearly a bit of a differencethere. It is quite important to be aware, though, thatthe UK visa buys you multiple entry over six months;the Schengen visa is a single entry for three months.In some Schengen countries, they apply—rather asRyanair do—a number of compulsory extra chargeson top of that €60 for delivery or for couriering; thatis not all Schengen countries, but some certainly do.Whilst the headline numbers look unfavourabletowards us in relation to cost, we think that, taken inthe round, it is a competitive cost and a competitiveproduct.

Q337 Naomi Long: In terms of a visa for theRepublic of Ireland for a similar visitor, what wouldthe cost be? There is direct competition as to whetherpeople will enter Northern Ireland through London orthrough Dublin and that has an impact in terms offlights and other things.Jonathan Sedgwick: I must confess—I am sorry,because this is a very obvious question for you to askme—that I do not know, but I will endeavour toprovide that information for the Committee. It isexactly the kind of thing I should have made sure Idid know, but I apologise; I do not.

Q338 Naomi Long: That is fine. Can I just ask aswell: is there any consideration being given to try torationalise? You have mentioned, for example, that,on the surface, it may look like the UK visa is moreexpensive, but, when you add in additional chargesand restrictions, the Schengen visa may be asexpensive or of similar cost. Is there any discussionhappening about rationalising that so that they are, ifyou like, more comparable when it comes to someoneapplying for a visa?Jonathan Sedgwick: In setting fees for the UK, welook at a number of things: we look at what the costof processing to the Agency actually is; we look atthe benefits that the visa is conferring, which is whythings like, clearly, settlement visas or whateverwould be very much more expensive than the visitvisa; and we look at what others are charging, becausewe are aware that this is a competitive market, tosome extent, for visitors. We try to balance all thosethings, but we also have to take account of our costsand, at the moment, our visit visas do not cover thecosts of processing that particular item.

Q339 Dr McDonnell: Thank you for your answersso far. On that last point of Naomi’s, before I get ontomy own question, could I ask you: roughly how manypeople getting a visa want multiple entries, and howmany would be a single entry? It strikes me that 90%-odd—95%, 96% or 97%—would surely be a one-off.Is there much advantage in having a multiple-entryvisa for six months? It might be useful to have amultiple-entry visa for three years.Jonathan Sedgwick: That is an interesting point andI think, as we think about what products we should be




offering, that is clearly an important consideration.For some people, multiple-entry is important. Somepeople visiting family, maybe from China orwherever, may want to be able to visit mainlandEurope as well and come back into the UK, so I thinkthere will be people who value that enormously but,as you say, there would be many for whom the prioritywould be to come and go.

Q340 Dr McDonnell: Could I suggest that maybemore than six months might be a better target? If youare going to facilitate that market, or that section ofthe market, six months is a bit tight. I can understandit in the context of somebody wanting to go to Franceand then come back in again, but it just strikes me; Itravel occasionally to the States and rarely would Iwant to go twice in six months.We had a recent debate in the Assembly in NorthernIreland and it was suggested—and I want to clarifysome points that may have been misunderstood—that,if flights from non-EU countries come directly toNorthern Ireland, a visa would not be required foronward travel within the UK or, indeed, the Republicof Ireland.Jonathan Sedgwick: This is clearly quite a complexmatter but my understanding is that, once somebodyhas legitimately arrived within the Common TravelArea, no further entry clearance is required. There areno border checks within the Common Travel Areaand, therefore, the question of entry clearance to movefrom one country to another within the Travel Areadoes not arise. That is true but, to enter and to be inany of the countries legally, an individual has to havethe leave that they are seeking to enjoy. If a Chinesenational wants to come as a student or as a visitor,and they were to fly into the north and wanted to moveto the south to study or to visit, they would have tohave the relevant visa, and vice versa. There is, then,not a border check but you are required to have a visafor the purpose for which you are coming towhichever part of the Common Travel Area.

Q341 Kate Hoey: When you say “north”, do youmean the north of England or Northern Ireland?Jonathan Sedgwick: Sorry, I meant the north ofIreland, but the same would obviously apply to thenorth of England. Clearly, it is one country. The samewould apply whether the north of England or the northof Ireland.

Q342 Oliver Colvile: We have got the Olympicscoming up in a couple of months’ time, and if it is thecase that people can fly into southern Ireland, can theyautomatically come into Northern Ireland and can theythen automatically, having flown into southernIreland, come to the Olympics as well?Jonathan Sedgwick: They can without a bordercheck, because there is no border check, but, as I said,they are required to have leave. In fact, the IrishRepublic has introduced a visa-waiver scheme for 16countries, I think, for nationals who have UK visas. Ifyou have a UK visit visa, you are entitled to moveinto the Republic from the UK. That is something thatwe have not reciprocated, but you would be requiredto have the leave that you are seeking to enjoy.

Q343 Oliver Colvile: You could, then, fly intosouthern Ireland, go to Northern Ireland and thencome over here as well?Jonathan Sedgwick: If you were a visa national, youwould have to have a visa. It would not be checked atthe border, because there is not a border, but youwould be required to have a visa.

Q344 Oliver Colvile: How, then, are we going topolice this? We are not, are we?Jonathan Sedgwick: I think the most important aspectof this are the measures that both Governments areworking on to strengthen the Common Travel Area,as I mentioned, and I would be happy to give moredetail about what that work involves. Although we donot have border checks, we do clearly care aboutwhether people have the leave they require in order tobe in the United Kingdom, and just as, if you wereillegally in London or anywhere else in the UK, wewould, from time to time, mount operations to ensurethat people who are in a particular place have theleave that they are required to have. We mount thoseparticularly in relation to people maybe transitingbetween the north of Ireland and the mainland,because those are in-country immigration checks, notborder checks. We do from time to time, on anintelligence-led basis and on a risk basis, seek toidentify people who are unlawfully in the country and,where we identify them, we seek to remove them.Oliver Colvile: I have to say that I think NorthernIreland and southern Ireland are in a unique position,because we share a border. It is the only part of theUnited Kingdom that actually shares a border withanother country, and I have to say I am somewhatconcerned at the idea that people can come intoIreland and that we do not have any kind of policingmechanism. I can quite understand that it is arequirement but, to be honest with you, if you aredriving from somewhere in southern Ireland and justslip over the border, then frankly you can come overhere immediately. It seems that is something thatcould be happening.

Q345 Chair: On that point, when they arrive inIreland, obviously it is checked, but are the Irish visarequirements the same as the UK visa requirements?Jonathan Sedgwick: They are broadly, but notentirely the same. There are some countries for whichwe require a visa and they do not, and vice versa—itis a very small number but there are one or twodifferences. Some of the processing and the evidencethat is required and so on is different between the twocountries. It is precisely that that the two Governmentshave committed to working together on to harmonise,so that we are, if you like, checking the same thing.We think, in the UK, that we pretty much have a goldstandard of a robust visa process: we take fingerprintseverywhere; we check them against databases; wetake a lot of care and effort over verifying documents;and we take an awful lot of care over whether peoplehave previously been in the United Kingdom andcommitted criminal offences or whatever. We want tobe assured that any process that lets anyone into theUK is as robust as that, which is why we are workingclosely with the Irish Government to align our




processing and the evidential requirements andconditions for visas and so on. I think that bothGovernments have said they would like to worktowards the position where they could issue a joint,shared visit visa that would allow access to bothcountries. That was in the agreement signed inDecember last year.

Q346 Nigel Mills: If I was a Chinese national and Iflew into Dublin with an Irish visa, toured my way upinto Belfast, then crossed over to the mainland andtried to fly out from Heathrow, is there any sanctionif they then check my exit documents and find I neverhad a visa to be there in the first place, or am I justallowed out to fly off home?Jonathan Sedgwick: It is not impossible that ourin-country operations would identify you, particularly,as I say, on an intelligence-led basis, if we becameaware—

Q347 Nigel Mills: If I am here for two weeks, onholiday or something?Jonathan Sedgwick: It is perfectly possible that wemay identify you, and, in the most recent year, thenumbers of those identified as illegal have risen verysignificantly, because of our collaboration andcooperation. It is, of course, also possible that youmay have your holiday, get to Heathrow and exit, butthat would certainly be a difficulty in a subsequentapplication to the UK, if it were clear that you hadbeen in the UK—and that would be evident from yourpassport. It really is not advisable to disobey the law.The law is clear. We try to be clear about it in thematerials and the information that we provide, and wethink that the right thing to do is for people to havethe visas that they need. We have morevisa-application centres in China than anybody elseby a long way. We turn around most visa applicationsfor visitors and business visitors in five days. We thinkwe offer a very good service. It is very straightforwardfor such people to obtain visas. That is what theyshould do.

Q348 Oliver Colvile: Do you think that southernIreland is the softest way of coming into this country?Jonathan Sedgwick: Clearly, we think we operatepretty much a gold standard. We have been workingvery closely with Ireland. For example, we sharebiographic and fingerprint data in Nigeria, so that wecan identify where people are trying to play thesystem, who may have been refused in the UK andare trying to come in through that way. I do not thinkthere is any pretending that circumstances like thatare not a vulnerability. That is why we have put thein-country measures in place to tackle that issue, butthe ultimate answer, as both Governments haverecognised, is to make sure that the whole CTA hasthe strongest possible, consistent processing andcontrols. That is good for the security of all theterritories of the CTA, but it is also good forfacilitating travel within the CTA.

Q349 Kate Hoey: Can I just be clear? Someonecoming for a two-week holiday to the Republic ofIreland gets a visa. Are you saying, then, that, if they

drive over the border and go up to, say, Newry for theday, shopping on a Saturday, they are illegal?Jonathan Sedgwick: Someone who is from the UnitedStates does not require a visa; therefore, they wouldbe entitled to enter the UK for up to a month. A visanational, however, would be required to get a visa tocome into the UK, yes.

Q350 Kate Hoey: Someone coming to the UnitedKingdom for two weeks—although you always givethis ridiculous thing: even if they ask for two weeks,you give them six months, which is nonsense—wouldbe allowed to go to Northern Ireland, as part of theUnited Kingdom, and go over to the border and shopin Dundalk, perhaps. Would that be illegal?Jonathan Sedgwick: Again, if it is a visa-nationalcountry for the Republic, then they would have tohave a visa, but the Irish Government has introduceda visa waiver for 16 countries, which enables peoplewith UK visit visas to enter the Republic. That is aconcession that they introduced last year, I think, ona trial basis.

Q351 Kate Hoey: It is all a bit nonsensical, isn’t it?I travel back and forward. Occasionally, you seesomebody standing there and picking out some pooryoung man who is Irish or British, and asking him toshow identity or something, but there is absolutely nocheck whatsoever on people coming into the UnitedKingdom from the Republic of Ireland.Jonathan Sedgwick: That is not true. There is noborder check but there are in-country immigrationcontrols, which are particularly directed, obviously, atareas of abuse and people who we think are theriskiest, and the patterns that we think are the riskiest.That is increasingly effective. It is an effective andimportant part of trying to disrupt people-trafficking,for example. Clearly, both Governments think that,particularly for visit visas, there is room for a sharedvisa, and that is a clear objective for bothGovernments: to feel that they have the systems inplace to be confident that that will work. Visits aredifferent from the right to work, the right to study orthe right to settle, which imply, clearly, muchlonger-term rights in the country.

Q352 Kate Hoey: Has anyone ever been prosecutedfor illegal entry that way? How do you differentiatethat from the genuine tourist who did not understandthe history and came across the border?Jonathan Sedgwick: I believe that there havecertainly been prosecutions.

Q353 Kate Hoey: Could you give me a list of anyof those?Jonathan Sedgwick: Yes, I can.

Q354 Kris Hopkins: I think the question has beenanswered, actually. I appreciate you will not have thisinformation on you but can you let us have it? I wouldlike to know whether a disproportionate number ofillegal immigrants come in via this open border. Theremust be some assessment of somebody who is pickedup as to where their point of entry was. Are thererecorded data, and what is the comparator between




that effectively open border and any other part of theUK? All I am trying to do is identify whether it is aproblem or not.Jonathan Sedgwick: I think the Government is clearthat potentially there is a problem. That is why weare taking the measures we are taking with the IrishRepublic and they are starting to bear fruit. That iswhy we mount the in-country operations. We nowhave in the UK our e-Borders system, which meansthat we get 100% passenger data for every flight fromoutside the EU, so that we know who is coming andwho is going, which we are able to watch against ourdatabases. One of the most important aspects of ouragreement with the Irish Government is to look at howwe can extend that or have a shared or interoperablesystem—the Irish Government is keen to havesomething similar—so that we would have a veryclear sense of exactly who was coming and going, notjust into the UK but into the whole Common TravelArea.

Q355 Kris Hopkins: How does that go for thingslike data protection? Does that mean that my travel inand out of the United Kingdom is being given toanother sovereign state without my permission?Jonathan Sedgwick: It is not at the moment, but anyarrangements that we enter into to share data would becompliant with the terms of the Data Protection Act.

Q356 Kate Hoey: Would we need legislation?Jonathan Sedgwick: I do not think any furtherlegislation would be needed, but there would be arequirement to comply with the legislation. Any data,including the data that we currently share in Nigeria,are the subject of a memorandum of understanding,so it is clear that there is a legitimate purpose and thatthe principles of the Data Protection Act are beingcomplied with. That would be true in any subsequentarrangement that we enter into.

Q357 Kris Hopkins: I would appreciate someevidence to respond to this issue of whether it isdisproportionate. If somebody came in on a visitingvisa to Ireland from Nigeria, there is virtually no way,unless you accidentally bump into that person, oncethey have crossed the border, because you just get ona ferry and you become part of the mainland.Jonathan Sedgwick: As I say, we do mountin-country operations.

Q358 Kate Hoey: Where? I know you cannot go intodetail, but where, when and how? It strikes me thereis a little bit of complacency around, because youhave not been asked about this before, so hopefullyyou will go away, come back and give us a few moredots and commas.Jonathan Sedgwick: I can certainly provide moreinformation subsequently. I do not believe there iscomplacency. I think that the number of arrests andillegal offenders identified in 2011 was up about 70%on the previous year. It is an area of activity that weare really intensifying, because we can see there is arisk of abuse, so I do not think there is complacency.I think it is an area that we are very focused on, butclearly it has to operate within the law, and the law is

very clear that there is no border check. We may notconduct a border check but we may conductoperations in or around the border. If we are aware ofa particular coach company, for example, it would bepossible to stop and exercise legitimate powers thatwe can exercise anywhere in the UK to ensure thatpeople who are there have the right to be there. Wedo exercise those powers and it does result inoffenders being identified.

Q359 Oliver Colvile: Do we know how manyasylum seekers come into southern Ireland and howmany also come into Northern Ireland?Jonathan Sedgwick: We may know of individualswho, in their asylum interviews, would tell us that thatis how they entered the UK. I do not have thosenumbers to hand. I would certainly undertake to look.

Q360 Oliver Colvile: Could you have a look at thatand come back to us about it?Jonathan Sedgwick: I will have a look at that.

Q361 Oliver Colvile: I think, if I may say so, MrSedgwick, we have given you a rather difficult time—please forgive us for that—but I just think it would bevery helpful, because I have to say, before thisafternoon, I probably did not have any concerns, butnow I have very significant concerns about how weare managing it. It is not your fault; it is making surethat we have the systems right, in my opinion.Jonathan Sedgwick: It is worth saying, just in relationto asylum, that the number of those claiming asylumin the UK, partly because of the kind of measures Ihave been talking about—the visas, the biometrics andso on—across the board has very substantially fallen,and is certainly very much lower than in many otherEuropean countries, precisely because of the kind ofmeasures that I have been talking about.

Q362 Naomi Long: You have mentioned thepercentage increase in terms of detections and so onbut we do not have any handle on numbers. Is this asignificant problem? I have to say, as somebodyresident in Northern Ireland, I am not aware that it isa significant problem in terms of being a particulargateway. I understand the risk but I am not aware ofits being a significant problem and I would not wantus to be blowing something out of proportion relativeto the actual size of the problem, albeit that there is,of course, a risk. There is a risk at any point of entryinto the country, I would have thought.Jonathan Sedgwick: I think that precisely strikingthat balance is very difficult. It is a very significantincrease but we are talking about, I think, around 280offenders identified in 2011. I think I would probablyconcur with the sense that you have of it: that there issomething here that is important to be aware of andto take measures to tackle, but not something that weshould blow out of proportion.

Q363 Kris Hopkins: I understand what you meanabout trying to get some handle on the proportionalityassociated with this, and there is a danger that we driftinto areas that are not immediately associated with ourbrief, but they are related. Immigration itself is a huge




issue across the whole United Kingdom. If there is ahuge amount of effort being put in across the rest ofthe United Kingdom to make sure it is secure, butthere is a back door that is wide open, it somewhatblows the confidence in the process. It is about tryingto understand that. I do understand you said therewere only 200-odd, which, as a proportion, isprobably quite small—I would like to know thefigures on that—but if you do not have a mechanismthrough which you can process people, you mighthave 10,000 people coming through but you havestopped only 280. There is no way of seeing howmany people came through as a consequence of that.Jonathan Sedgwick: I think what you are describingis a border, and Parliament has been very clear thatthere should not be a border and that the CommonTravel Area has enormous benefits to all peopleswithin the Common Travel Area. Therefore, it is aquestion of trying to find a way of maximising thebenefits of the area whilst, at the same time, tacklingthe abuse, which is why I think that the measures thatthe two Governments signed in December—and,clearly, we are working very hard to implement thosemeasures—must be the solution to this challenge. Ifwe can ensure that no one can enter the Republic whowould not come into the UK, and vice versa, and thatthe same standard of checks is done—and, as I say,they are converging all the time—the more we can dothat, that must be the right way forward to tackle theabuse whilst preserving the benefits of the CommonTravel Area.Dr McDonnell: Just again to reassure colleagues,from my experience of travelling once every fewmonths. I might fly into Dublin from here and viceversa, and passports are checked and they drill downvery heavily on anybody who is outside the norm. Ifyou have an Irish, British or, indeed, EU passport,you are checked relatively quickly, but I see regularlypeople being held, stopped or investigated. The busesand trains—the public transport—across the borderare regularly visited and inspected, and there is aconstant inspectorate monitoring public transport.Equally, I know that the Border Agency has done alot of good work at the port of Larne, which is themain port between Northern Ireland and Britain.Indeed, some of us were concerned at one point andthought that ID was not going to be enough and that,in fact, passports were going to have to be required atLarne. I would want to congratulate the BorderAgency on what they have achieved, rather than worryabout what may still have to be achieved. Yes, thereis work in progress and there is work happening, and

I had quite a bit of dialogue with them, not in recenttimes but maybe a couple of years ago, and I foundthat the improvements that they have put in place inthe last few years are very satisfactory.This extends further because there were all sorts ofquestions three or four years ago around welfarefraud. There were people hopping back and forthacross, and claiming benefits in both jurisdictions,which was a big driver. From my perspective, Chair,while you could have been concerned three or fouryears ago, I think both jurisdictions are very keen, andI personally value the Common Travel Area. I find itparticularly helpful, so that is all I want to say.Kate Hoey: I have a lot of immigration cases in myconstituency, clearly, in inner London, and it is veryinteresting just how many, when you chat to people,have come via the Republic of Ireland. It may be thatthey are not ending up in your constituencies inNorthern Ireland, but they are certainly are ending upin mine.Oliver Colvile: I think the good news is that we haveflagged it up.Kate Hoey: Yes, it is very interesting.

Q364 Oliver Colvile: I am sure you have heard themessageJonathan Sedgwick: Indeed and, as I say, I hope Ihave been able to assure you that the things thatGovernment thinks are necessary in order to securethe CTA are very much in hand. I shall be meetingmy counterparts in the Irish Administration in two orthree weeks’ time to have some further intensivediscussions about exactly how we are going to do thedata-sharing and exactly how we are going to alignthe visa standards and so on, and there is a very greatwillingness to work together. It is just a very practicalfocus on getting something that will improve matters,both in terms of facilitating travel but also in terms ofsecurity and preventing abuse.

Q365 Chair: As you say, it is us on this side of thetable who make the rules that you implement, so wedo recognise that as well. Are there any furtherquestions, or are there any further points that youwould like to make, Mr Sedgwick?Jonathan Sedgwick: No, I think I have been able toget the key points across. Thank you very much.Chair: It has been very useful to us. Thank you verymuch indeed.Jonathan Sedgwick: Thank you.

cobber Pack: U PL: COE1 [SE] Processed: [28-11-2012 14:01] Job: 022723 Unit: PG06Source: /MILES/PKU/INPUT/022723/022723_o006_th_NIA Air transport strategy vi (4 July) - Corrected (draft).xml


Wednesday 4 July 2012

Members present:


Mr Joe BentonOliver ColvileMr Stephen HepburnLady HermonKate Hoey

________________


Witnesses: Arlene Foster MLA, Minister of Enterprise, Trade and Investment, Northern Ireland Executive,David Thomson, Head of Policy Group, Department of Enterprise, Trade and Investment, Danny KennedyMLA, Minister for Regional Development, Northern Ireland Executive, and Dr Andrew Grieve, Head of Airand Sea Ports, Department for Regional Development, gave evidence.

Q366 Chair: I welcome everybody to thisafternoon’s session. As you no doubt know, we areconducting an inquiry into aviation policy, withparticular regard to how it impacts on NorthernIreland in terms of tourism, business use and peopletravelling for pleasure. We are half or two-thirds ofthe way through the inquiry, which has been veryinteresting so far. You are very welcome. There are anumber of questions we would like to put, but can Iask the two Ministers if they would make very briefopening statements, and then we will get intoquestions?Arlene Foster: Thank you very much, Chair. I’mtaking ladies’ prerogative. Thank you for theinvitation to be here. It is something that we in theExecutive are very interested in as well. Before weenter into the subject matter of this inquiry, can Ithank you and the Committee for the very valuablesupport and work in your inquiry on air passengerduty, which was very timely and helped us in ourcollective effort with the Chancellor when he took thepositive step of devolving the long haul APD to theExecutive? It has been invaluable to us in relation tothe retention of the route to New York, and we hopeit will also assist us in bringing other routes into theairports.In respect of your current inquiry, good air links areessential for us in Northern Ireland, particularly in thetwo areas you have mentioned: economic growth andbringing more visitors to Northern Ireland. NorthernIreland is physically removed from the rest of theUnited Kingdom and, therefore, we are more relianton air links than any other region of the UK. We arenot able to avail ourselves of rail links or indeed anyother land-based transport options, so we need to haveair access. That allows us to do business with the restof the UK and to have those visitors from GreatBritain, our largest market for tourists in NorthernIreland. If we are to meet the challenging targets inour Programme for Government in respect ofeconomic growth and tourism, we certainly need tohave good air access and indeed to grow air access. Iam sure we will talk in our evidence about theimportance of Heathrow as a hub for us in NorthernIreland, not just for London and the south-east butalso onward to the rest of the world. That is key for us.

Jack LoprestiDr Alasdair McDonnellNigel MillsDavid Simpson

Can I finish my opening remarks on a very positivenote? Our new Titanic visitor centre, which has beenopen for business since the end of March, has hadtremendous success; it has had over 200,000 visitorsto date. For me, the key element is that visitors havecome from 80 countries right across the world. Thatis tremendous and underlines the importance of airaccess to Northern Ireland.

Q367 Chair: Minister, can I congratulate you inparticular on your achievements at Portrush last week?A number of us had the pleasure of being there, asyou know. It was a fantastic event that brought a greatdeal of pride to Northern Ireland. I was authorised bythe Committee earlier to work with you and whoeverelse to try to attract the Open Championship toNorthern Ireland, so we look forward to working withyou on that.Arlene Foster: That is tremendous. Thank you.

Q368 Chair: Mr Kennedy?Danny Kennedy: Thank you very much indeed, Chair,for the opportunity to speak to the Committee thisafternoon and to contribute towards your importantdeliberations about an air transport strategy forNorthern Ireland. Can I join with you incongratulating my ministerial colleague,Minister Foster, who did a superb job last week?Credit must go to the Northern Ireland Executive forthe very proactive way it was able to bring about thatevent and carry it through. I also want to pay tributeto my own Department, particularly Translink for thepark-and-ride system they employed. It was verysuccessful.I am sure that the Committee, especially thosemembers from Northern Ireland, recognise thatNorthern Ireland has a unique reliance on aviation,which is unlikely to change. In contrast to other partsof the United Kingdom, our geography means that wedo not and cannot rely upon land-based modes oftransport as a possible alternative to domestic airtravel. Our location and small population limits therange of direct international air links that can besustained from Northern Ireland, and this highlightsthe importance for Northern Ireland of having accessto a hub for connectivity to global markets and forinward tourism. Good air links are therefore vital to

cobber Pack: U PL: COE1 [O] Processed: [28-11-2012 14:01] Job: 022723 Unit: PG06Source: /MILES/PKU/INPUT/022723/022723_o006_th_NIA Air transport strategy vi (4 July) - Corrected (draft).xml


4 July 2012 Arlene Foster MLA, Danny Kennedy MLA, David Thomson and Dr Andrew Grieve

the rebalancing of our economy by enabling theprivate sector to develop its activity outside NorthernIreland and for facilitating growth over the long termin the number of visitors who come to enjoy whatNorthern Ireland has to offer as a holiday destination.As you will know, aviation policy within the UnitedKingdom is largely a reserved matter. The coalitionGovernment is committed to producing a sustainableframework for UK aviation to replace the “Future ofAir Transport” White Paper of 2003. It is thisframework that will set out the aviation policy for thewhole of the UK, including Northern Ireland, Scotlandand Wales. My priority is ensuring that the voice ofNorthern Ireland aviation stakeholders is heard, andthat those issues that are specific to our region arehighlighted during the consultation on a new aviationpolicy framework this summer. I have already pressedthe case with the Secretary of State for Transport thatthe new strategy being developed needs to address thelong-term security of access for Northern Irelandflights to the international hub at Heathrow. In themeantime, I will use the powers that are devolved tome, such as public transport and road access, to assistthe development of our economic gateways such asthe airports.

Q369 Oliver Colvile: At the moment, theDepartment for Transport deals with aviation policyas far as Northern Ireland is concerned because it is areserved matter. Do you think that is right, or shouldit be handed over to the Executive and Assembly?Danny Kennedy: I thank Minister Foster for her deftreference to me.Oliver Colvile: Very good sleight of hand, I have tosay.Danny Kennedy: I am not persuaded at this stage thatit would be wise for us to move in advance of thepublication of the new policy framework—we arekeenly awaiting the outcome of it. There had been asignificant lobby for a regional development strategyto be produced peculiar to Northern Ireland. I havepreferred to wait for the national one to be developed,to feed into that and carry forward representations onour peculiar needs. I think that has been widelyaccepted as a sensible approach.

Q370 Oliver Colvile: So, in anticipation, yes, butyou would like to make sure it all fits in and is donein a coherent manner?Danny Kennedy: Yes. It is important that it does fitin because, after all, we are part of the UnitedKingdom and it is important that we chime with therest of the Kingdom on it.

Q371 Oliver Colvile: When we took evidence fromthe Aviation Minister, she did not rule out thepossibility of further devolution but said that DfT didnot have a proposal from the Northern IrelandExecutive asking for further devolution. Is this amatter that the Executive may wish to pursue? Areyou thinking of putting something together as far asthat is concerned and having a conversation with theDepartment for Transport?Danny Kennedy: I think we are content to wait forthe policy framework to be developed and issued, and

we will make our response to it. As the Ministerresponsible and accountable to the Executive, I havetaken the view that that should be our approach. Ibelieve that is consistent with the current thinking ofthe Executive. If at a future stage the Executive wereto consider it, I would bring forward my ownproposals on it.

Q372 Oliver Colvile: Have you started workingwithin the DRD on some of this stuff?Danny Kennedy: Yes; we are working with theDepartment for Transport and within our ownDepartment.

Q373 Chair: Do you have anything to add, or areyou happy with that?Arlene Foster: I will defer to the DRD Minister onaviation policy. I think I would be overstepping themark, Chair, if I got involved in that.

Q374 David Simpson: You are both very welcome.I am going to start with the DETI Minister and thenwe will have a go at the DRD Minister at a later stage.The Executive set out a number of key targets forgrowing the economy in Northern Ireland. There area number of points I want to raise. First, how realisticare they? Secondly, we had a brief chat prior to thestart of the formal meeting on regional aid. TheCommittee has agreed, while we have MPs from rightacross the UK who have their own constituencies tolook upon, to support the cause for Northern Irelandto retain its 100% cover for regional aid. Minister, inanswering the question, with the economy attractinginward investment, I think it would be good if youcould outline the importance of regional aid toNorthern Ireland, or what it would mean if we lostthat.Arlene Foster: Thank you for that question, David.The first part of the question is whether I think thetargets are realistic. There is no doubt that the targetsare ambitious, particularly in the position in which wecurrently find ourselves in Northern Ireland, but theyare realistic with a lot of hard work. Invest NorthernIreland reached all its targets bar one during the lastProgramme for Government period. Therefore, wewant to stretch Invest Northern Ireland because weknow there is a need to bring more jobs and inwardinvestment into Northern Ireland. The reason for thatis to try to close the productivity gap betweenNorthern Ireland and the rest of the United Kingdom.At the moment there is a differential of about 20%.You mentioned regional aid. At the moment there isautomatic assisted status for the whole of NorthernIreland; we are 100% covered. It is a very useful toolfor Invest Northern Ireland, not just to help those whowant to come and invest in Northern Ireland fromoutside, but also for industries indigenous to NorthernIreland. In particular, the food sector, which has beena very strong one in Northern Ireland over pastrecessionary times, has continued to grow through therecession by 8% to 10% year on year. If the selectivefinancial assistance tool we have under regional aidwas taken away from us or reduced, that would have ahuge impact on particular sectors in Northern Ireland.

cobber Pack: U PL: COE1 [E] Processed: [28-11-2012 14:01] Job: 022723 Unit: PG06Source: /MILES/PKU/INPUT/022723/022723_o006_th_NIA Air transport strategy vi (4 July) - Corrected (draft).xml



We believe that the regional aid status should beretained. We acknowledge that we share ourworsening economic position with the rest of the UK,but we also have the land border with the Republic ofIreland, which has the corporation tax advantage thatwe do not have. We firmly believe that taking awaythe regional aid tool, at a time when we still do nothave clarity in relation to corporation tax, would leaveus with virtually no tools in our toolbox to assist thosepeople who want to grow their businesses in NorthernIreland. That is why we had the briefing with MPsfrom Northern Ireland this morning. We believe thereis a need to raise this issue.

Q375 David Simpson: From the briefing, it wouldseem that Brussels would be in favour of retaining100% cover for us. Would that be correct?Arlene Foster: Members of the European Parliamentmet the Commissioner and I think it is fair to say theywere largely sympathetic in relation to us retaining100% coverage. Therefore, we believe it lies with theDepartment for Business, Innovation and Skills as towhether or not they recommend the removal of thatstatus.

Q376 Oliver Colvile: How long do you think youshould have it? What is your aim?Arlene Foster: Our economic strategy is to rebalancethe Northern Ireland economy to become more privatesector-led. That is why we have the paper at themoment with the Treasury and are working with theTreasury in relation to corporation tax. When we havenot had clarity on corporation tax, it sends outcompletely the wrong message to say, “We areremoving your regional aid regardless.” I would liketo see more joined-up government between theDepartment for Business, Innovation and Skills andHer Majesty’s Treasury so that, if they are going tomake a positive decision in relation to corporation tax,it is done with regional aid in mind as well.

Q377 Oliver Colvile: Once that decision is made, forhow long do you think you might need it?Arlene Foster: It depends on what that decision is, tobe blunt. I do not think I can answer that question.

Q378 Oliver Colvile: Let’s be positive about it andsay that we think it could happen positively.Therefore, how long?Arlene Foster: I think that changes the situation inNorthern Ireland. Then we have a different tool in ourtoolbox. At the moment we are facing the prospect ofhaving no tools at all.

Q379 Oliver Colvile: So, you cannot give atimescale?Arlene Foster: I cannot until we know what theanswer is in relation to corporation tax.

Q380 Jack Lopresti: You touched in your openingremarks on the issue of airport capacity in thesouth-east of England. What is the Executive’s viewon the importance of expanding that capacity,particularly at Heathrow, in the sense of thedevelopment of your industry, tourism and the general

economy of Northern Ireland? How crucial is it thatthere is expanded capacity in the south-east ofEngland?Arlene Foster: It is vital that we have access to asmany airports as we can within the UK, but Heathrowin particular is very important to us because of theonward movement of traffic. We have set ourselvesthe target of growing our exports by 20% during thisProgramme for Government period, but of growing itby 60% to the markets of Brazil, Russia, India andChina. We have a huge imperative to get out and dobusiness in those areas, so we need to be able toaccess them. We know we will not have direct accessto all those markets, so we need to be able to get toHeathrow to be able to go out.

Q381 Dr McDonnell: Have either of you had anydiscussion with IAG—in other words, BritishAirways—to reassure yourselves that the Belfast Cityto Heathrow slots will not be relocated to morelucrative routes?Arlene Foster: We have been engaged with IAG andWillie Walsh in relation to the announcement thisweek that British Airways is taking over the Heathrowservice between Belfast City Airport and Heathrow.We are delighted that he has indicated he intends togrow that from six to seven services a day during thewinter months. We were very concerned when bmiindicated they were selling, and we wanted to ensurethat that service continued. According to last year’sfigures, that service carries 426,000 passengers a year,and that is 6% of all Northern Ireland passengers. AerLingus also plays a role at the International Airport;they carry passengers to Heathrow. If you take the AerLingus and now British Airways flights, they carryabout 10% of passenger traffic to and from NorthernIreland. They are very important flights for us, andthat is why we were very keen that BA would give uscommitments. Of course, they are personalcommitments, and that is where we stand.Danny Kennedy: I agree with that and would add thatthe takeover of British Midland International by IAGdid raise concerns. We welcome the public assurancesgiven by Willie Walsh, but that is not a reason in itselfto be complacent about it. I think “vigilance” wouldbe the watchword on behalf of the Northern IrelandExecutive on this issue.

Q382 Dr McDonnell: BA pulled out of Heathrow toBelfast in 2001. Other than verbal comfort and happytalk, are there any watertight issues that suggest theyare going to stay? One thing that scared me is the waythey have jacked up their prices. I do not see how theyare going to get seven rotations a day with a priceincrease, in my estimation, of 25% to 30%. The pricesI saw this week compared with last week were scary.I can go to New York cheaper than I can go toLondon. From where I am sitting, they may very wellmake all sorts of high-minded commitments but thenstarve people out financially.Arlene Foster: What prices are charged is acommercial decision for BA, and that may mean thatpeople decide to use other airlines to and fromLondon. As I said, we are flying from two airports toa range of airports in and around the London area. I




would not characterise it as “happy talk”, but, at theend the day, that service is carrying 426,000 people,so I believe it is a profitable route. Therefore, there isa commercial reason why people will want to investin Belfast City Airport and carry passengers fromthat airport.Danny Kennedy: I accept the point you make, but atleast it might be said that happy talk is better than anyother kind of talk. Vigilance is the key ingredient here.There are changes that it may well be said should takeeffect within Europe that would help our overallsituation as well. Keeping close control of thesituation, or at least monitoring it, is going to be thekey ingredient here.

Q383 Dr McDonnell: Pertaining to that, we talkedearlier to the Aviation Minister and took evidencefrom her. We asked about Lord Empey’s Bill to try toring fence slots. We were told we could not do thatbecause of European law. However, there was thesuggestion by the Aviation Minister that theGovernment understood the sentiment and would raiseit with the Commission to try to get a dispensation,for want of a better description, to allow something ofthat nature. I presume you would support somethingof that nature, but has any lobbying as such been doneto get a derogation?Danny Kennedy: Obviously, Lord Empey hascontinued to work on the issue. He briefed me thismorning on his most recent meetings. I think he haswritten to the Chair and Members of this Committeeoutlining what he envisages, or would seek to achieve.I think he has had some “happy talk”, to use yourphrase again, from sources within Europe, and thereis a clear indication as well that the Secretary of Statehere in Westminster would be prepared to support it,if there are favourable signals from Europe on thisissue, but there is an important role to lobby andcontinue to argue the case for the changes we need.

Q384 Lady Hermon: I apologise to all mycolleagues and particularly our witnesses today forcoming late to the Committee. There was an issuewith the Ulster Bank, and Mrs Foster’s partycolleagues very kindly included me in the meetingwith RBS. I do apologise, but it was a veryimportant issue.It is lovely to see you both here today. Can I ask fora little explanation as to how Willie Walsh and BAwere persuaded to come to Belfast City Airport? It isabsolutely wonderful they are there, and I amdelighted to see that commitment. Am I allowed tocall you Danny, having been a party colleague at onestage? I had better be formal. Mr Kennedy.Danny Kennedy: I find myself having been acolleague of some sorts to most people in this room,so of course you can call me Danny. I am not preparedto object at this stage to the “T” at the end of mysurname; it is a minor detail.

Q385 Lady Hermon: I did notice that. I thought itwas Ulster Scots, actually.My first question is directed to Mr Kennedy and thenI will come to Minister Foster. When I heard the radiointerview with Willie Walsh I thought very significant

reassurances were given about the long-termcommitment by British Airways to Belfast CityAirport. Did I misunderstand you, Mr Kennedy? Yousaid vigilance was still needed despite thesereassurances, and, I have down here, “changes inEurope that may affect the situation”. Have I conflatedtwo things? Could it be clarified for the record?Danny Kennedy: Thank you very much. It is lovelyto see you again, Lady Hermon. My understanding isthat the move to George Best Airport on behalf ofBA remains a commercial decision. Of course, we aresubject to commercial decisions in all of these matters.The public assurances given by Willie Walsh are to bevery much welcomed, but who knows what the futureholds? The point I was attempting to make is thatthere is a deal of work that needs to be carried out inEurope that will help protect Northern Ireland’sposition, even in a wider UK sense, from variancesthat may take place in the future as a result ofcommercial decisions. It is not in any way tounderestimate the commitment given by WillieWalsh—as I say, his words are very welcome—butwe will want to see additional measures to secure ouroverall position. Those are sensible and, hopefully,they would be supported.

Q386 Lady Hermon: Thank you. I have a relatedquestion for Mrs Foster. If my memory serves mecorrectly, in the newsletter on Monday there was awonderful photograph of Brian Ambrose, ChiefExecutive of Belfast City Airport; yourself; theSecretary of State, Owen Paterson; and Willie Walsh.That was the commitment and the opening of BritishAirways at Belfast City Airport. I think it was onMonday.Arlene Foster: Tuesday in the newsletter.

Q387 Lady Hermon: Time flies when you areenjoying yourself. Thank you for that correction. Forthe benefit of the Committee and the strategy we arelooking to develop for Northern Ireland in terms of airtransport, for reference purposes could we understandwhat input there was by the Department of Enterprise,Trade and Investment, and by the Secretary of State,in persuading British Airways? As air transport is notdevolved, I think the Committee would find it usefulto understand the roles of both the Secretary of Stateand you as the Minister for the Department.Arlene Foster: Thank you very much for yourquestion, Lady Hermon. It is one that I want to put onthe record. I know that, as well as myself and theSecretary of State, Members of Parliament were keyin lobbying Mr Walsh in relation to what was atakeover of bmi by British Airways. It was key thathe heard voices from all over Northern Ireland andindeed from outside it about the importance of thatroute to Belfast and Northern Ireland. I want to placeon record my thanks to the Members of Parliamentfor the work they did.In respect of my own Department, we were verypleased to see British Airways back. Dr McDonnellmade reference to the fact that BA left in 2001 and Ido recall there was much annoyance at that time. Theywere providing a very good service at that time, andthey left the International Airport. The importance to




us of seeing British Airways back is in relation toconnectivity. We believe that, if he is flying people toHeathrow from Northern Ireland, and indeed from theRepublic of Ireland, that gives us connectivity not justto the south-east and London but further afield. Forus, that is key in respect of exports and more touristscoming to Northern Ireland, so we were very pleasedwhen he made what I have to say were very publicassurances in relation to the route. I am sure there arenot many times when the chief executive of IAGcomes over to launch a domestic route, which is whathe did on Monday afternoon, and the photograph wascarried in Tuesday’s newsletter, so we were verypleased that he took time out to do just that.

Q388 Lady Hermon: It did not go unnoticed; it wasvery welcome indeed. What about the Secretary ofState’s role?Arlene Foster: The Secretary of State worked with usto persuade British Airways. I think it was a collectiveeffort. Things always work well when we havecollective efforts, as we did on air passenger duty andin relation to British Airways.

Q389 David Simpson: I have a simple question butthe answer might not be simple. Do the Executivehave a view on whether consumers would be betterserved by one airport rather than the two we have inthe Belfast area?Danny Kennedy: At the moment we have twoprivately operated and owned airports in NorthernIreland and one operated by a local authority. You andI may have a view as to whether or not a localauthority is the best body to run an airport, but that isnot the issue you posed. In terms of the twocommercial operations at George Best andInternational, I take the view, which I think is widelyshared—I cannot say it is unanimously shared aroundthe executive table because it has not been testedthere—that competition is the life of trade, and it is ahealthy situation not least for passengers that thereis a competitive edge particularly between those twoairports. It is possible to arrive at the situation where,rather than simply competing, all the airports arecomplementary to each other, and that would augurbest for potential passengers in Northern Ireland andfor the general economy.

Q390 David Simpson: Danny, in your Department,are there any plans to improve the rail links to BelfastCity? Of course, we have no rail link to International.Are there any plans to try to tighten that up?Danny Kennedy: This has been a consistent concernof a great many people. Let’s deal with George BestAirport. At the moment there is, as you know, a raillink relatively close by at Sydenham. The difficulty inpractical terms is that it is on the wrong side of theroad network. The cost of providing a rail link to itis approximately £10 million, but there are pragmaticdifficulties involved in that. At this point, there is nota proposal being developed to provide such a rail link.In terms of International Airport, the anticipated costof providing a rail link is in the region of £55 million,and in the tight economic climate we are currently in,

there are no proposals being carried forward at thisstage.Another issue that is not unimportant is that in orderto make such rail links viable, the number ofpassengers coming from a particular airport should bein the region of 10 million. Clearly, we are far shortof those numbers at both the two principal airports.While a lot of people see it as a solution if we werein an ideal world, awash with money and had theopportunity to do it, in order to justify its financialposition we would need more fare-paying passengers.The road links from both airports are very good. Thereis a shuttle bus between even George Best Airport andthe Sydenham link, as indeed there are direct linksinto the centre of Belfast from both George Best andInternational airports. Obviously, we are keen to seethat they are enhanced and maintained as much aspossible.

Q391 Chair: Could I just come in on that? We talka lot about the two airports. One of my concerns isLondonderry becoming the City of Culture next yearand the air links to City of Derry airport not beinggreat. Do you have any concerns about that?Danny Kennedy: We have taken the opportunity toupgrade the railway line and the link between Belfastand Londonderry, particularly the final stretchbetween Coleraine and Londonderry. The Executivewas able to make that announcement and work is dueto commence later this month on that project, whichwill be completed early in 2013 in time for most ofthe celebrations around UK City of Culture. That waswidely welcomed. Again, there are logistical andpractical issues in terms of improving the linkbetween the council-owned and run facility and therest of Londonderry, but there is a fairly effectiveshuttle and road service, which I very much hope willbe widely used for UK City of Culture.

Q392 Oliver Colvile: My understanding is that carparking is one of the biggest providers of money foroperating the airport. Do you know if there is anycompetition in the way of car parking prices? Do youknow what car parking prices are at the two?Danny Kennedy: As a Department, we do notinterfere; those are commercial enterprises.

Q393 Oliver Colvile: But do you know what the carparking charges are at the two airports?Danny Kennedy: I do not.

Q394 Oliver Colvile: Do you think you could writeto us about that?Danny Kennedy: We will provide that information,but they are commercial decisions made on behalf ofthe owners and operators of both airports.Chair: We have asked them about them as well.

Q395 Lady Hermon: Before we leave improvementsin infrastructure, I am thinking about BelfastInternational Airport at Aldergrove. You have quiteclearly ruled out, given the present economic climate,a rail link for the foreseeable future between Belfastand the International Airport, and we can understandthat. However, I did not hear you say anything about




improving the road up to Templepatrick. I speak assomeone who takes students and children up to thatairport to fly out of Northern Ireland. I have alwaysbeen concerned that there could be a very sensible,useful investment in improving the roadway up to theInternational Airport, because it is in the heart of thecountry and you have a lot of agricultural machinery.There is nothing wrong with farming. Being afarmer’s daughter myself, I am a huge supporter offarming. But if you get behind a slurry tanker ortractor on that road and cannot overtake safely, it is abit of a deterrent. Are there any plans afoot to upgradethe road to Belfast International Airport?Danny Kennedy: As recently as yesterday, I metsenior representatives from Belfast InternationalAirport pressing the case for an upgrade.Lady Hermon: That is what I was thinking about.Danny Kennedy: I think you should hear me out.Lady Hermon: Oh dear. I am sensing a “but”.Danny Kennedy: They were pressing the case for anupgrade there, and it is a case I have great sympathyfor. In the current economic climate and the financialposition we find ourselves in, priorities have beenestablished for the strategic road network. You will beaware of the announcement we have made in respectof the A5, A8 and A2, and we are carrying thoseprojects forward. There are other strategic roadnetworks that are ahead, if you like, of that stretch ofroad at this stage, but I have undertaken to bear inmind the arguments they have advanced in support ofit. We would be supportive of it and will seek to dowhatever we can as quickly as we can, butrealistically, given funding and the current range ofpriorities ahead of it, I do not see an early solutionto it.Lady Hermon: There was a “but”. Thank you for thatclarification, though it is disappointing.

Q396 Nigel Mills: I have a couple of questions onpassenger numbers for Belfast City. It is a pity thatNaomi is not here for the first one. One thing that hasbeen suggested to us is taking away the cap on thenumber of passengers that can use Belfast City. Is thatsomething the Executive have a view on? The secondone is whether allowing a later flight into Heathrowfrom Belfast City would be attractive. There could beissues for the residents living around the airport, butthe business community seems quite keen on theseideas.Arlene Foster: I think you have pointed out thetension that there is. As the economy Minister, wewould like to see more flights coming and going fromNorthern Ireland, but there is a tension, particularly inand around City Airport, related to residents who raiseissues about that. Belfast City Airport is a marvellousasset for us, because one arrives at that airport andwithin five minutes one is in Belfast city centre. Manyof our international visitors think this is a tremendousway to move people around. When they come in fromHeathrow they probably think they have a long wayto go to get into Belfast, but they are actually in thecentre of it. That sits in the city centre, and that iswhy we have difficulties with residents.As regards the issue of seats for sale, the Departmentof Environment has recognised that that is not really

the way to deal with environmental concerns. Thatwas one of the reasons it was brought in. I have beendiscussing this matter, as I am sure Danny has, withthe Environment Minister. He is currently looking atthe whole issue of seats for sale. I am not sure whenhe intends to make a decision on it, but I think it willbe soon.Danny Kennedy: I too have had discussions withMinister Attwood, Environment Minister. We wouldbe broadly supportive of seats for sale being no longerconsidered as one of the criteria. There are very finebalances in terms of the economic benefits for CityAirport against the environmental concerns of a greatmany residents, and Minister Attwood is carefullyconsidering his options before releasing any wayforward.

Q397 Nigel Mills: It seems that Aer Lingus might becoming to a similar view about the attractiveness ofBelfast City Airport. Do you have any views on thatmove, and also on the potential for another airlinetakeover that affects Northern Ireland—the apparentbid by Ryanair for Aer Lingus?Arlene Foster: I do not have a view in relation to thatmove. I am agnostic in relation to where airlines basethemselves; I just want to see more airlines basingthemselves at either Belfast International or BelfastCity. The Aer Lingus story, as I understand it, is stillspeculation, so I cannot comment on that any further.

Q398 Kate Hoey: I am absolutely delighted thatmoney is being spent on the rail link to Londonderry.It is long overdue and it is such a fantastic scenicroute; it could be part of the whole tourism strategy.That is brilliant and, with the greatest respect to mycolleague, is much more important than getting stuckbehind a farm lorry now and again, although that hashappened to me.I share Dr McDonnell’s concern about BritishAirways. I remember them pulling out. I do not havethat full confidence, and we all need to be very awareof that. All the airports in Northern Ireland are prettydependent at the moment on one or two airlines atmost to keep them going. There is a danger if one ofthose airlines decides to pull out. Is there a strategy tocontinually be trying to find more airlines? As yousaid, the more airlines the better. For example, thereused to be a great flight from London City to BelfastCity and that stopped. Is there anyone whose job it iswithin either of the Departments to be constantlyselling to other airlines the advantages of coming toNorthern Ireland?Arlene Foster: Of course, which airlines come is acommercial issue, and we find ourselves hamperedquite badly by European state aid legislation when wetry to assist airports to attract other airlines intoNorthern Ireland. That does not mean to say we arenot doing it; we are. In particular, we are looking atMiddle Eastern routes. We believe that from the pointof view of business there is a need to have that link.I was very sad to see the demise of the Canadianconnection, because there are very strong linksbetween Canada and Northern Ireland. We believe thatshould be looked at as well. My Department isworking on new routes and we are supporting the




airports as much as we can within the constraints ofEuropean state aid legislation.Danny Kennedy: I believe the entire Executive wouldbe supportive of any moves to encourage that. Onrecent trips to the Middle East, Minister Foster, alongwith the First Minister and Deputy First Minister,were promoting the virtues of airlines operating fromand using Northern Ireland as a destination.Arlene Foster: That was true not just for passengersbut also for cargo, which is a very lucrative part ofwhat we are selling, and, for the business community,the exports they could carry out. Danny is absolutelyright. We are taking the opportunities during trademissions to have much wider discussions in relationto airlines. We certainly hope that will bear fruit forus, particularly now that we have the tool of airpassenger duty being set at zero for long haul flights.It is a great tool for us to use.

Q399 Kate Hoey: We talk a lot about BritishAirways and British Midland, but one of the biggest,growing carriers is easyJet.Arlene Foster: Yes.Kate Hoey: Presumably, the Executive has a goodrelationship with easyJet?Arlene Foster: Yes, we do.

Q400 Mr Benton: I want to talk about the expansionof air routes to the benefit of Northern Ireland. If Ican refer for a moment to the written submission byDETI, it indicates that the priority markets forNorthern Ireland include Great Britain, mainlandEurope, North America, Australasia, etc. In answer tothe previous question, I heard reference made to theFar East and so forth. That is excellent, but the realpoint is: do you believe that the current range of directinternational air connections, even the ones you aretrying to achieve, are going to be sufficient tounderpin the economic objectives referred to earlier?The trade is so highly competitive. I am not saying itis an insurmountable task to acquire expansion inthese circumstances, but reference was made earlier toplans being ambitious. These are ambitious plans.What real progress is being made in this direction,given the highly competitive levels within the trade?It is a huge challenge. Reference was also made toCanada and the Middle East. Can you report anyfurther progress on that? I am not an economist, butin my simple view, expansion means expansion; it hasto be genuine. I feel that the objectives are right andthis is the right path to go down, but it is very difficult.Can you report on any further progress and exactlywhere we are up to?Arlene Foster: Thank you very much for thatquestion. There is no doubt that we are betterconnected than we were in the past. It is a truism, butthere is much more we need to achieve. I havementioned Canada. Invest Northern Ireland recentlyopened an office in Canada. We see it as an area forexpansion in terms of business contact, and thereforethe next stage is to have international access directlyinto Belfast. We have seen the huge benefit of havingdirect access to Newark from Belfast—the famousContinental flight that we all spend a lot of timelooking at. The US visitors who come on that flight

bring £7 million into the Northern Ireland economyevery year. That is a huge benefit to us. We have beenworking with the International Airport in relation tothe Canadian link. We are also working throughTourism Ireland with some airports, as one of ourpriority areas, to look at a direct link to a city inGermany. We do not have any direct links to Germanyat present and we believe there is a real need for thatone. As has already been mentioned, we are innegotiations in relation to a Middle Eastern route aswell. At present those are the three areas we arelooking at and working on. As you rightly point out,I am afraid to say it is a difficult time for aviation. Weneed to make sure that when we look at it we considereverything connected to it, including cargo, tourism,passengers and business passengers, and what we canoffer airlines to come into Northern Ireland.Danny Kennedy: My instinct is that it is a verysignificant challenge, but it is a worthwhile one. It ishighly competitive. We are aware that Dublin and theRepublic of Ireland are our major competitor in onesense too, but increasingly Minister Foster andExecutive colleagues when on international visits ortrade delegations take the opportunity to advance thecause of international air links. We will continue to dothat, and I think that has very substantial supportaround the Executive table.

Q401 Oliver Colvile: Going back to the issue of therailways, I quite understand that you do not have verymuch money and, frankly, nor does this Government.Do you think there are any European Union funds youcan tap into?Danny Kennedy: We have been exploring thatpossibility. We will avail ourselves of any source thatwill give us benefit.Oliver Colvile: You and I together.Danny Kennedy: Yes. I am not going to be over-optimistic at this stage. It is very much a work inprogress, but one of the changing pictures of Europeis that, rather than getting money for actualinfrastructure, we are more inclined to get moneysimply for a study for a particular project, and thereis a substantial difference there. As Minister, it issomething that my Department is actively pursuing.

Q402 Oliver Colvile: And you are making sure thatyour MEPs are on side, too?Danny Kennedy: Very much. I have had recent visitsin Europe, and our local Northern Ireland MEPs havebeen hugely supportive. We have also had supportfrom people like the Chair of the TransportCommittee, Brian Simpson, a Labour Member. At myinvitation, he is coming to visit Northern Ireland. Heis heavily into steam railways, so we are taking himto Downpatrick. That is not a lure or bribe.Oliver Colvile: Can I come too? I also like steamengines.Danny Kennedy: We will have you along too.Oliver Colvile: Thank you.

Q403 Mr Hepburn: When we were in NorthernIreland last week the disputed golf course at Runkerrywas brought to our attention by a number of sources.What is your view on that development?




Arlene Foster: I am hugely disappointed by thedecision of the National Trust to seek judicial reviewof this planning decision. The planning decision hastaken over 10 years. I think the Environment Ministerhas taken his time; he has been very robust in the wayhe has addressed all of the environmental issues. Hehas considered the issues at length. Yesterday I was atthe opening of the new Giant’s Causeway visitorcentre. It is an absolutely marvellous facility, Chair,which I hope you and Members of the Committee willhave the opportunity to visit. However, the Giant’sCauseway is only part of the plans for tourism on thenorth coast. We have the Causeway Coast and Glensmasterplan, which I helped launch yesterdayafternoon. We want to see tourism right along thecoast. There is a dearth of five-star accommodationalong the north coast, and this would certainly haveadded to our product along the north coast. Of courseit has to be sustainable and done in a way thatrecognises the World Heritage status of the Giant’sCauseway. It is the jewel in the crown as regards thenorth coast. But, having spoken to the EnvironmentMinister, I believe all those matters were consideredin his decision.Danny Kennedy: I agree with what Arlene has said. Ican understand concerns expressed by the NationalTrust, but the time to do that and the way to do it wasthrough the planning process, which in itself was avery lengthy one. I have been deeply disappointed bythe way the National Trust has behaved latterly inattempting to undermine the project in a very negativeway. It seems to me it is a card from the bottom ofthe deck, and it is very short-sighted of them. Theyhave lost a lot of respect in Northern Ireland, not justfor their view, but for the way they have carriedforward their tactics.

Q404 Mr Hepburn: If the development was giventhe green light, how soon would it be able to start?Arlene Foster: I think they intended to start verysoon. One of the issues was the fact that theEnvironment Minister imposed very stringentconditions as part of the planning permission inrecognition of the specialness of the area beside theWorld Heritage site, because of course the BushmillsDunes development sits outside the World Heritagesite. The complaint from the National Trust is that itwould still have an impact on the coastline. I thinkthey intended to start the development immediately.

Q405 Mr Hepburn: If UNESCO took away WorldHeritage site status from the Giant’s Causeway, wouldthat have an impact on any potential tourism in thefuture?Arlene Foster: I understand that UNESO has removedWorld Heritage status only twice in the history of theorganisation, and those were both very extremesituations. World Heritage site status is a long process;there would be a lot of negotiations. I think the threat,if you like, from some quarters that we are going tolose our status is one not founded in any reality; it isa red herring. A lot of buildings in London that haveWorld Heritage site status have been on the on-riskregister from time to time, but they have never goneany further. I think that is a red herring.

Q406 Mr Hepburn: It was suggested in somequarters that if this Committee made a positivestatement in favour of the development it would behelpful. Would it be?Arlene Foster: Obviously, that is for Members of theCommittee. I think it is fair to say, Danny, that all theparties that sit in the Executive are supportive of theBushmills Dunes development, because we can see itsstrategic importance for tourism for Northern Ireland.

Q407 Mr Hepburn: Are there any proposals to putforward any other sites in Northern Ireland for WorldHeritage status, for example the Londonderry walls?Arlene Foster: I did hear of that one when I wasEnvironment Minister back in 2007–08. There weresome conversations going on at that time that theymay be looking for World Heritage site status, but Ihave not heard anything further in relation to that.That application seems to have passed on. I do notknow of any other applications from NorthernIreland either.

Q408 Kate Hoey: We all welcomed the reduction ofAPD on long haul flights, and now the NorthernIreland Executive have the power, as I understand it,to reduce it even further if they wish. Is that likely,or do you feel that, in relation to the big barrier totransatlantic flights, what you have achieved is enoughat the moment?Arlene Foster: As I understand it, the Minister ofFinance and Personnel, with the backing of theExecutive, is setting the rate to zero in relation toband B long haul flights, so any long haul flight thatwe are able to attract into Northern Ireland will notpay any air passenger duty.

Q409 Kate Hoey: The next battle has to be the APDon the absolutely vital flights between NorthernIreland and the rest of the United Kingdom.Arlene Foster: Yes.

Q410 Kate Hoey: This Committee is very supportiveof that; obviously, people who have to travel back andforth a lot are. We raised it with the Minister, theSecretary of State and others. Are you working onthat?Arlene Foster: Yes, we are. I will defer to Danny ina second, but I think we all recognise that is part of awider discussion that needs to be had in relation toAPD throughout the United Kingdom. It is recognisedthat, for the nation as a whole, air passenger duty fortourists coming from wherever is quite high.However, from the point of view of Northern Irelandin particular, we certainly believe there is a case, givenour reliance on air transport, as I said in my openingremarks.

Q411 Kate Hoey: Perhaps you might mention theHighlands and Islands and their special situation?Danny Kennedy: There is a broad welcome for whatwe have achieved. There is another battle to be had interms of flights within the UK. My understanding isthat DFP are continuing to look at the issue.




Q412 Kate Hoey: We could end up in a situationwhere there is less tax on a flight to Newark—well,there already is—than to Newcastle or London.Danny Kennedy: It brings forward certaininconsistencies that are not terribly palatable.

Q413 Lady Hermon: Is it talked about in theExecutive that the Treasury could devolve to theNorthern Ireland Executive all power over APD,including on domestic flights, and the Executive couldbear the cost of that? For some reason, I have in myhead a figure of about £60 million. Is that activelyconsidered in the Executive? Surely, if it is around£60 million, that would be a cost well worth bearingby the Executive for the inward investment andcutting the cost of leaving Northern Ireland. At thepresent time, it is a very expensive part of the UnitedKingdom for families to reach and for students tocome and go to within the United Kingdom. Can it bedevolved? Is that actively being considered?Danny Kennedy: As in all things, the issue is one offinance. The Treasury giveth and the Treasury takethaway.Arlene Foster: Mostly the latter.Danny Kennedy: That is where the debate is focused.It would have an impact on the block grant andpotentially other frontline services within NorthernIreland. In seeking protection against those reductions,given the economic climate we are in, we would becautious about moving to that unless we had someguarantees or underlying support from the Treasury.

Q414 Lady Hermon: Would Mrs Foster like to addto that?Arlene Foster: This is linked, as you rightly say, tothe Azores ruling as well. If we use the power andreduce it, we pay the cost. I know that the FinanceMinister has looked at the cost and at present ourplans are not to reduce the APD for regional flightsbecause of the cost to the block grant, at a time whenwe are being squeezed in relation to other issues. It is,however, something that will remain on the agendafor further discussions. I am indicating to you that itis not a dead issue.

Q415 Lady Hermon: Can you confirm whether thefigure is about £60 million?Arlene Foster: I think you are right. I cannotcompletely confirm that figure, but £60 million issomething that is in my head as well in relation tothe issue.

Q416 Lady Hermon: The position at the presenttime, then, is that there is a willingness on the partof the Northern Ireland Executive to have the powerdevolved to them to set all air passenger duty. Theyhave it on international flights, but they want it ondomestic flights because that is where families aredeeply affected by all this. The cost on top of the costof a flight is horrendous. However, it depends on theTreasury somehow compensating for it, but of coursethey could not because that would be contrary to theAzores judgment.David Thomson: My understanding is that thelegislation going through at the moment will devolve

APD to the Executive in totality.1 The Azoresruling—which this Committee will have discussed atlength—and corporation tax would kick in if theExecutive was to consider any further easements onAPD.

Q417 Kate Hoey: On internal flights or externalflights?David Thomson: In any arrangements. Once it isdevolved, it is no longer a Treasury issue; it isdevolved to the Executive and it is up to the Executiveto decide. If the Executive decided to reduce a flowof tax, the Treasury would automatically—Arlene Foster: We are bearing the cost of long haul.David Thomson: We are bearing the cost of long haulat the moment, because it has gone down to band B.We will then bear the further cost, as that goes downto zero, on long haul, and the Executive would haveto consider, when it does its budget, whether it wantsany further easements.

Q418 Kate Hoey: Is that the reason why, when itcomes to support grants and so on, we would want theTreasury to look at the specific nature of NorthernIreland’s transport, and why it might have to bemore generous?Arlene Foster: No. They are giving us the power. Itis whether we can afford to reduce it any further.

Q419 Kate Hoey: Yes, but you would want to use it,only you would get less money?Arlene Foster: Yes.Danny Kennedy: It would cost more, yes.

Q420 Kate Hoey: But the principle we have to getover, surely, is that it is very difficult to travel toNorthern Ireland by anything other than air, if you arenot going to spend a day and a half travelling?Arlene Foster: Yes.

Q421 Kate Hoey: That should be taken into account,just as it is taken into account when you go to theHighlands and Islands.1 Note from David Thomson, received 5 July 2012: I provided

evidence to the Committee yesterday (Wednesday 4 July2012) in support of Arlene Foster MLA, Minister ofEnterprise, Trade and Investment, and am concerned that Imight have provided the Committee with incorrectinformation in respect of the devolution of Air PassengerDuty (APD) powers to Northern Ireland.During the discussion about APD, I advised the Committeethat all APD powers, i.e. the powers to set both short hauland direct long haul rates, will be devolved to NorthernIreland. However, whilst that was an option and wasconsidered, only the power to set direct long haul rates willnow be devolved.The current position is that the Chancellor plans to use theFinance Bill 2012 to devolve the power to set the rate fordirect long haul APD. Two pieces of Assembly legislationare also required. Firstly, a Legislative Consent Motion isneeded to confirm the Assembly’s willingness to accept thepowers being offered in the Finance Bill and this was agreedby the Assembly on 28 May 2012. Secondly, a Bill will beintroduced into the Assembly (once the Finance Bill receivesRoyal Assent) to reduce the rate of direct long haul APD tozero.I trust this clarifies the position and I would be grateful ifyou could pass on my apologies to the Committee and advisemembers accordingly.




Arlene Foster: But I think the issue for us would beto persuade Europe that we are a special case inrelation to the Azores ruling and why we should get aspecial dispensation on tax from the Treasury. If wewere to reduce APD in relation to band A we wouldbe hit in tax, but what we should be saying to theTreasury and Europe is that we are a special casebecause we are separate from the rest of the Kingdom.

Q422 Kate Hoey: Yes, that is what we need to uniteon. Then, when there is a referendum on Europe, thatcan come up.Arlene Foster: Absolutely.

Q423 Chair: Mr Thomson, are you sure that Azoreskicks in on this?David Thomson: Yes; Azores does apply.

Q424 Chair: Why didn’t it kick in when the UKGovernment reduced it for international flights? Oneof the criteria is that central governments should notdo it for one region, so why didn’t it kick in then?David Thomson: It has kicked in. The NorthernIreland budget has been reduced.

Q425 Chair: No, there are three criteria. Forexample, the UK Government cannot reducecorporation tax for Northern Ireland; it has to bedevolved. However, central Government did reduceair passenger duty in that respect, so why didn’tAzores kick in then?Arlene Foster: It did. They reduced our block grantby the amount.

Q426 Chair: No, but one of the things the UKGovernment cannot do is reduce corporation tax inNorthern Ireland to 12.5%; it has to be given to youto do it. Do you see the point?David Thomson: There was a discussion with theCommission, who agreed that this was just a matterof legislation to put through Westminster. It is goingthrough. Because there was a commitment given thatthe UK Government was devolving APD—

Q427 Chair: So it is a matter of timing as much asanything?David Thomson: It is purely a matter of timing. It isbeing included in the Finance Bill, which is currentlygoing through the House, but the Treasury adjustedthe Northern Ireland block.

Q428 Chair: I appreciate that, but it was because thewhole thing was going to be devolved in a matter ofa few weeks anyway.Arlene Foster: Yes.

Q429 Nigel Mills: Speaking of Bills going throughParliament, the Civil Aviation Bill is getting relativelyclose to its passage in the Lords. Are there anyparticular concerns or comments by the Executive onhow that will impact on air travel in Northern Ireland?Danny Kennedy: I responded on behalf of theExecutive. Broadly, we support the Bill because it willmodernise key elements of the regulatory frameworkfor civil aviation in the UK. There are certain security

functions and other aspects that we would need toconsider carefully whether we could afford to havethose powers, or whether they would be sensible in aUK setting, but in our response we have broadlysupported the main thrust of the Bill.

Q430 Nigel Mills: When we took evidence fromBALPA, the pilots’ association, they expressedconcern that the Civil Aviation Authority might loseits focus on safety as a result of the new powers it isgetting. Is that a concern you share, or are you quiterelaxed on that at this stage?Danny Kennedy: We are waiting to see the final detailof it, but clearly it is an important aspect that we couldnot overlook.Arlene Foster: The UK as a whole has one of thesafest aviation regimes throughout the world, and wewould not expect that to change as a result of thispiece of legislation. As someone who travels on behalfof the Executive, I think that is very much the case.

Q431 Oliver Colvile: Last time we met as aCommittee you may recall we ended up having quitean interesting conversation with the Border Agency.Do you think there is much evidence that peopletravelling to the Republic of Ireland with a valid Irishvisa are then coming into Northern Ireland, either bymistake or on purpose? Do you have a view on anyof this at all?Lady Hermon: These are obviously non-EU visas.For example, someone flying from America arrives inthe Republic of Ireland with a proper visa and,because there are no border police and there is not afence or a wall, then travels up to look at the Giant’sCauseway and perhaps joins as a member of theNational Trust.Arlene Foster: I am not aware of any specific cases,but I am quite sure it happens on occasion whenpeople arrive in Dublin with their Irish visas. It is oneof the reasons we have been having discussions withthe Minister of State, Hugo Swire, in relation to acommon travel area for the UK and Ireland. It is amatter that is raised with me when I go to China andplaces like that. When people want to come, we oftensay that if they go through a UK airport, such asBelfast, they can then go into the Republic of Ireland,but it does not work vice versa. There is a need tolook at this issue because, from the point of view oftourism, we would like to see more visitors comingfrom the Republic of Ireland to Northern Ireland.

Q432 Oliver Colvile: Have you spoken to the HomeOffice and Border Agency as well?Arlene Foster: I have not spoken to the BorderAgency, but I know the Minister of State has spokento them on our behalf.

Q433 Oliver Colvile: Is the issue of immigration,visas and things like that having an impact upon theNorthern Ireland economy?Arlene Foster: I think there are some tourists whomay otherwise come to Northern Ireland. If theofficial advice is that if they do not have the propervisa, they will probably not come to Northern Ireland.




Danny Kennedy: Chair, as you well know, I live closeto the border, as does Mrs Foster, and have done soall my life. There has been a fairly steady free flow ofgoods, people and products over the years, but I amnot absolutely convinced that it is a serious problem.

Q434 Oliver Colvile: Yes. Of course, SouthernIreland and ourselves are not part of the Schengenagreement, so that means there are issues. The issueof immigration, believe you me, is the very biggestone, certainly in my constituency.Danny Kennedy: Yes. It is one that should not beunderestimated, and I do not think it is. The necessaryauthorities are aware of the potential.

Q435 Kate Hoey: The point is that it is not thepeople who are coming over the border to be tourists;it is the people coming over the border who then cometo my constituency or other places and presentthemselves as needing help. There is an issue there,and I know that you are looking at it. Have you beendiscussing with the Irish Government a common UK-Republic of Ireland visa? I think that would be quiteinteresting politically.Arlene Foster: I have raised this issue with mycounterpart in Dublin, Leo Varadkar. The difficulty isthat the Republic of Ireland does not have biometricchecks. Until they get those, I do not think the HomeOffice would be minded to move in that direction.Therefore, this is a matter that will probably take anumber of years.

Q436 Lady Hermon: If I may pick up on the issueof UK Border Agency staff. As Kate mentioned, theissue is not the tourist who accidentally comes intoNorthern Ireland but those who come for much moresuspicious motives. If they come across the bordereasily from the Republic of Ireland and catch the ferryacross to Stranraer, I presume that there should be UKBorder Agency inspections and members of thepolice there.Arlene Foster: There are.Lady Hermon: At Stranraer?Danny Kennedy: Yes.

Q437 Lady Hermon: And presumably at the newport of Cairnryan as well?Danny Kennedy: And at the airports.

Q438 Lady Hermon: Have you any idea of thenumbers? We do not want Northern Ireland to becomethe soft belly of the rest of the United Kingdom.

Arlene Foster: I have no idea of the numbers.Danny Kennedy: I am not sure about numbers, butthere is certainly a presence to ensure we do notbecome the back door.

Q439 Lady Hermon: Of UK Border Agencypersonnel?Arlene Foster: Yes.

Q440 Lady Hermon: As well as police officers?Arlene Foster: Police officers, yes.Chair: Does anybody have any other questions theywould like to ask?

Q441 Lady Hermon: I made a remark about theNational Trust. We have to be mindful that there arethousands and thousands of members of the NationalTrust. Therefore, I get very nervous and quiteconcerned when I hear a remark about cards beingdealt from the bottom of the deck. I know you did notmean it to come across like that. I am sure it was notmeant to be a criticism in any way of members of theNational Trust.Arlene Foster: Chair, I should have declared myinterest as a member of the National Trust.Danny Kennedy: Chair, I have huge admiration forthe work done by the National Trust.Lady Hermon: Thank you. I do appreciate that. I justfeel there has to be a balance.Danny Kennedy: However, I do think that on thisissue the tactics that they have used are wrong.

Q442 Lady Hermon: Perhaps we should look at thelawyers then?Danny Kennedy: I very much hope that they do nothave unintended consequences for either the Giant’sCauseway or any of our facilities in Northern Ireland.Lady Hermon: All I am saying is that I think weneed to keep the balance on record of the very manydecent and honourable members of the National Trust.

Q443 Chair: With the exception of Lady Hermon,we are all members of political parties and do notalways agree with everything they do. That is thepoint.Danny Kennedy: That has been a key ingredient ofmy career, Chair.Chair: Thank you very much indeed for coming. Ithas been a very useful session, and we look forwardto seeing you again soon.

cobber Pack: U PL: COE1 [SO] Processed: [28-11-2012 14:02] Job: 022723 Unit: PG07Source: /MILES/PKU/INPUT/022723/022723_o007_th_NIA Air transport strategy vii (12 September AM) - Corrected (draft).xml



Members present:


Mr David AndersonMr Joe BentonLady HermonKris HopkinsNaomi Long

________________


Witness: Willie Walsh, Chief Executive, International Airlines Group, gave evidence.

Q444 Chair: Mr Walsh, thank you very much forjoining us. I know you are under great time pressuretoday, as you have to visit America to go to NeilArmstrong’s memorial service tomorrow. We greatlyappreciate you changing your schedule. Weunderstand that Mr Armstrong had links withNorthern Ireland at least, so it is very appropriate thatyou should attend. Say hello to the President for us;we understand he is going to be there as well. We arevery grateful to you for finding the time to come tosee us today.As you know, we are conducting an inquiry into airtransportation and aviation policy, particularly withrespect to the way it impacts on Northern Ireland, sowe are very grateful to you for joining us today. Arethere any brief remarks you would like to open with?Willie Walsh: Yes, thank you, Chairman, and thankyou for facilitating things for me this morning. Iappreciate you doing that, and I will make sure I passon your kind remarks when I get to Washington. Ihave just prepared a brief statement, Chairman. Iwon’t take too long. Many of you will have heard mesay this before. I am personally delighted to seeBritish Airways, both the brand and the aircraft, backin Northern Ireland, in Belfast, after an absence of 11years. I made a personal commitment when speakingin Belfast several years ago to making sure that BritishAirways returned to Belfast if we managed to acquireadditional runway slots at Heathrow, and theacquisition of bmi has given us that opportunity. It isgreat, both on a personal and a business level, to seeBritish Airways back in Northern Ireland, and I ampleased to have the opportunity to speak aboutaviation in Northern Ireland today.We are maintaining the previous bmi schedulebetween Heathrow and Belfast. In fact, as some ofyou know, we are actually increasing the schedulethrough the winter period this year, adding about 22%additional seats on the route, taking it up to about300,000 seats available during the five-month winterperiod.Belfast is now very much part of our global network,and you may—those of you who fly with us—haveseen in our latest High Life magazine we have afeature on the Belfast route and a lovely photographof the Giant’s Causeway. We have made acommitment to promoting Northern Ireland; we can’tpromote everywhere, but we will be promotingNorthern Ireland. The route now provides access toHeathrow and, via the British Airways network, 150

Dr Alasdair McDonnellNigel MillsIan PaisleyDavid Simpson

destinations in 75 different countries, and I know howimportant economically those connections are. Indeed,all the economic research that we do shows thatconnectivity at a hub airport is critical, not just to theUK economy in general, but to particular regionalareas of the UK.As you may know, bmi was unfortunately achronically loss-making airline, and our view was itcould never make any profitability. It lost about £200million on a turnover of £918 million in 2011. Thatis a massive loss and is clearly not sustainable. Theacquisition of bmi for IAG managed to save 1,500jobs in the company. Regrettably, jobs were lost—andthat is always sad to see—but we have been able tosave a considerable number of jobs and havehonoured our commitment to use some of those slotsto expand the British Airways network to growthmarkets in Asia with the launch of the new Seoulroute in Korea, starting in December this year.Heathrow traffic generally in the UK is beingundermined by air passenger duty. We pay the highestpassenger tax anywhere in the world, and I believethat this is seriously undermining the competitivenessof the UK in general and Northern Ireland, whichclearly you would be interested in. It is pleasing tosee that the Government recognised that APD washaving a serious impact on Northern Ireland when, inNovember last year, I think it was, they reduced theAPD charges to ensure that the United Airlines serviceto Newark, previously operated by Continental, wasrescued following a threat by Continental to close thatroute as a result of the high taxes.The difference now between flying direct from Belfastto Newark and connecting there or flying to Heathrowand connecting over Heathrow to points in the US isquite significant. There is a £52 difference in airpassenger duty, so if you want to look at a family offour travelling to Los Angeles over Newark versusHeathrow, they are saving almost £210. That is asignificant sum of money, so this is distortingcompetition and it is not an issue that should beunderestimated. I have made this point: while I fullyrecognise the benefit to Northern Ireland of thischange in APD, I believe that it is in everybody’sinterests for this tax to be scrapped, rather thanadjusted in the way it has been. I am almost finished,Chairman.This is a business that is fiercely competitive, and itmay have surprised people to see myself with theCEOs of a number of other airlines—Virgin Atlantic,

cobber Pack: U PL: COE1 [E] Processed: [28-11-2012 14:02] Job: 022723 Unit: PG07Source: /MILES/PKU/INPUT/022723/022723_o007_th_NIA Air transport strategy vii (12 September AM) - Corrected (draft).xml


12 September 2012 Willie Walsh

Ryanair and easyJet—coming together to campaign onthis. It is not often you would see the four of uscampaigning together; in fact, it is the only issue thefour of us have been able to agree on, and I think thatshould send a message to people. I believe this is anunfair tax, and I am pleased to say that over 250,000people have now written to their MPs. These arebusinesspeople, tourists and travellers in and out ofthe UK. They have written to their MPs campaigningabout this unfair tax, and I am glad to see so manyMPs are now joining the chorus of dissent against it.Finally, Chairman, I would like to congratulate thenew Secretary of State for Northern Ireland, TheresaVilliers. She was previously the Aviation Minister, orsome would say the Anti-Aviation Minister. Sheopposed the growth of aviation; in previous times, sheactually campaigned to have domestic flying atHeathrow suspended or stopped, so as to avoid theneed for additional runway capacity. I would hope thatthe new Secretary of State would now appreciate thevalue of aviation on her regular visits between Londonand Belfast. Thank you very much, Chairman.Chair: Thank you very much. Thank you for the extraworkload you have given MPs with the campaign onair passenger duty, but we will come to that questionin a minute.

Q445 David Simpson: William, it is good to see youagain. In relation to the point that you raised over theAPD, I know there are others who want to speak aboutthis later on, but briefly, can I read you out a three-line e-mail I received this morning from abusinessman? “See below e-mail exchanges that havetaken place between BA and the City Airport.Basically, it costs over £2,000 more to travel fromBelfast to the States via Heathrow when compared toleaving Dublin. This is in spite of using the sameflights from Heathrow. BA is welcome into BelfastCity, but we need to see affordable prices.” That is a£2,000 business-class differential between flying fromDublin on the one hand and, using the same route,Belfast on the other. Whenever we look at the overallprice structure, Willie, at the minute, in relation toeven premium economy for MPs or others to travelfrom Belfast to here, we are not far off £600. It is justgetting to the stage where it is crazy, but thatdifferential on the business side—that is frombusinesspeople—is massive. Is that all down to APD?Willie Walsh: No, it is not all down to APD; you willget differential pricing applied by all airlines acrosstheir network from time to time, and we would putemphasis on certain routes to stimulate traffic wherewe see an opportunity to do that. People will oftenlook at pricing on one day and reach conclusions as aresult of that. Pricing in the airline industry iscompetitive. We compete on every route that weoperate, whether directly or indirectly, and clearly wehave to make sure that we are competitive. We lookat the prices that Continental would charge fromBelfast to Newark and Belfast over Newark into otherplaces. We estimate, based on publicly available data,that about just over 40% of the customers flying onthe United flight, as it is now from Belfast, connectover Newark into other points in the US that areserved by British Airways out of Heathrow. So there

is competition both directly and indirectly, and pricingcan change; it is very dynamic. Our lead-in farebetween Belfast and Heathrow is £116.72—£90.72 ifyou take out the £26 of APD—so 22% of that fare isair passenger duty. We have fares from £116 return.There will always be higher fares, clearly, as a resultof capacity and demand, but it is a competitive anddynamic market, and we compete because it is theonly way we can ensure that we keep customers.

Q446 David Simpson: Can I ask one straightquestion to you, Willie, in relation to BA? Does BAhold any shares in Aer Lingus?Willie Walsh: BA does not, but I should, for therecord, say that I personally have shares in Aer Lingusfrom my time as an employee at Aer Lingus. I thinkit is about 10,000 shares. But BA does not hold anyshares or have any connection, other than a code-sharing agreement with them.

Q447 David Simpson: The cynics in NorthernIreland would say that with Aer Lingus now comingin October to Belfast City, it would be an idealopportunity for BA to pull out again.Willie Walsh: I’ve heard some of those cynicalremarks, and I am glad you said that they only comefrom the cynics, and not from the vast majority ofpeople in Northern Ireland, who are not cynical.We are absolutely committed to Belfast. The movefrom Belfast International to City by Aer Lingus wasanticipated by us. It was expected by the market. I canassure you that will not in any way impact on ourdecisions to return to Belfast. We are absolutelycommitted to it. We believe that this is a destinationthat can be a profitable part of the British Airwaysglobal network. As I said, I am personally reallypleased to be back in Belfast. I have made it verymuch a personal issue of mine, even more so thanDublin, to be honest with you; I am delighted that weare back there and I can assure you that we are goingto do everything we can to make that a great success,and I believe we can do just that.

Q448 Mr Anderson: Mr Walsh, we have takenevidence from trade unions who were involved inrepresenting the staff in Northern Ireland for thetakeover of bmi, and they paint a very sad picture ofwhat has happened to the individuals there. What isyour view in terms of the impact on those individualsand the potential impact on the Northern Irelandeconomy of the decision not to keep those people inemployment?Willie Walsh: Some of the people who were employedthere will have the opportunity to transfer to theground-handling company that we will utilise atBelfast City airport. A number of the employees therehave taken up the opportunity to transfer to the BAoperations at Heathrow, and a number of theemployees have taken the voluntary severance termsthat have been made available. As I said, bmi was asignificant loss-making airline. I think everybody atthis stage realises that Lufthansa would have shut thecompany had it not been for the bid by IAG to acquireit, and they made it very clear that they were not goingto continue to fund the significant losses that it was

cobber Pack: U PL: COE1 [O] Processed: [28-11-2012 14:02] Job: 022723 Unit: PG07Source: /MILES/PKU/INPUT/022723/022723_o007_th_NIA Air transport strategy vii (12 September AM) - Corrected (draft).xml



making, in which event all of the jobs would havebeen lost. I have made this point to a number ofpeople previously. Had all of the slots that bmioperated gone back into the slot pool on thebankruptcy of bmi, those slots would have, in the firstplace, been distributed to new airlines who were notoperating existing routes served by airlines atHeathrow, and given that Aer Lingus was serving theBelfast route, Belfast would not have been considereda new route, so the chances of any slots beingacquired by an airline that would commit to operateto Belfast would have been zero. The only way theBelfast Heathrow operation that bmi served could berescued was by the acquisition by IAG of bmi. Hadwe not done that, that service would have beencompletely lost. There is no question about that.While it is deeply regrettable that people have losttheir jobs, I can assure you that this acquisition of bmiwas the only way that the vast majority of the jobs inthat company could be saved, and we have saved1,500 of those jobs. I regret that there were peoplewho have lost their jobs but, given the financialperformance of bmi, I believe that was inevitable.

Q449 Mr Anderson: When we got evidence fromBALPA, they said it was quite clear throughout theseconsultations that there was no intention of preservingbmibaby; it was a legal tick-box to make sure therewas no legal exposure for BA from having gonethrough a bad procedure. Do you accept that or not?Willie Walsh: No, I totally reject that. We made everyeffort to seek a credible buyer for bmibaby. We spenta lot of time, effort and money on our part, seeing ifthere was interest in acquiring that business. We couldnot identify any. I think it is well known now at thisstage that Lufthansa had a significant financialincentive to sell bmibaby before we completed thedeal of bmi, so the headline purchase price, £172.5million, was adjusted to reflect the losses associatedwith bmibaby and bmi Regional. We successfully soldthe bmi Regional business that Lufthansa had not beenable to sell, and that company continues to operateunder new owners. We did not identify any buyers forthe bmibaby business. We made significant effort—itwas in our interests to do so, and it had been in theinterests of Lufthansa to do so—and I can assure youthat all of that effort came to nought because we couldnot identify a buyer who was interested in acquiringthe business.

Q450 Mr Anderson: We have receivedcorrespondence this morning from a member of theunion who had been involved in consultations, whoadvised us that she has had legal advice that the TUPEtransfer may not have been carried out properly, andalso that in terms of redundancy payments, differentpayments were made to people on different sites. Areyou able to comment on that?Willie Walsh: What I would say is if somebody hasreceived legal advice, I am sure they will act on thatlegal advice. I am very confident that we havehonoured all of our commitments legally and morallyto do this in the best possible way. We have excellentlawyers employed directly within British Airwayswho have advised us throughout this procedure, we

engaged external lawyers to ensure that we dideverything properly, and I am satisfied that we haveacted in a proper, fully legal manner at all times. I amsure if people find evidence against that they will takeappropriate action, but as far as I am concerned wehave done everything by the book.

Q451 Mr Anderson: Last one, and this is probablysomething that will help people in the immediatepresent. The staff who were made redundant got thefinal salary at the end of August. Within the salarywas their redundancy pay, which is not normal. As aresult of that, they paid additional tax. Can you askyour staff, as a matter of urgency, to try to work withthese people concerned to get that resolved?Willie Walsh: I am not aware of what the finalarrangement was, but I will certainly ask people tolook into it.

Q452 Naomi Long: You are very welcome to theCommittee. You mentioned people being cynical, andI suspect that one of the reasons was the swiftnesswith which redundancy notices were issued to thosein places like Belfast, and I think it created aperception—perhaps unfairly, as you would argue—that there was very little commitment to the route. Youwould obviously argue the contrary. You mentionedthat 1,500 jobs across bmi have been saved. Do youknow how many of those relate to staff who werelocated in Belfast?Willie Walsh: I do not have the exact figure, but myunderstanding is that a number of the engineers whowere based in Belfast will transfer to London. Thatwas, I think, five of the seven who were based there.The ground handling people will have TUPEopportunity as a result of the contracts that we willenter into to do ground-handling provision at BelfastCity, so there is an opportunity for some of them, andI know that some of the cabin crew have not yetcommitted, but have the opportunity, to transfer to ourmixed fleet operation at Heathrow. That process isongoing; I do not think it is finalised.

Q453 Naomi Long: Is that something you would beable to update us on later? For example, how many ofthe bmi staff have applied for the mixed fleet and howmany would be successful? That would be a usefulindicator for us as to how effective that process hasbeen.Willie Walsh: Yes. I don’t have the exact figures, butI do understand, and clearly, for somebody who isliving in Belfast, the option of living in Belfast andworking out of Heathrow does not sound veryappealing. It may surprise people to know that BritishAirways has hundreds, if not thousands, of peopleemployed at Heathrow but living in different parts ofthe UK, and indeed living abroad. So it is notuncommon to find a situation where we have peoplebased and effectively working from our Heathrowbase but living in other parts of the UK and, as I said,in other parts of Europe and further abroad. We havetried to accommodate people where we have hadopportunities to do so, but I would be happy to updatethe Committee at a later stage when the figures arefinalised.




Q454 Naomi Long: That would be really helpful.The other issue that has been raised, I suppose, interms of staff concerns, is the issue around theredundancy package that was offered. I think theirconcern was that in previous redundancy situations,staff in Glasgow and in Dublin had been offeredenhanced redundancy, whereas the staff in bmi werenot. Is there any particular reason why that is the case?Is it the economic circumstances, or is there anyparticular thinking from BA’s point of view aroundthat issue?Willie Walsh: I can give you a personal view. We haveat times, in the past, offered what I would consider tobe overly-generous redundancy terms, given theeconomic situation of the airline industry. We haveconsistently offered terms that are in excess of whatis required under statutory redundancy. The airlineindustry is not a profitable industry. IAG is notprofitable today. Our half-year results showed asignificant operating loss. British Airways made a tinyoperating profit in the first six months of this year; Ithink, from memory, it was €15 million. On anoperation the size of British Airways, that is tiny. Sowe have made terms available that I believe reflect theenvironment that exists today.We tried to do whatever we can to secure employmentfor the people involved, where there wereopportunities for people in other parts of the business.But we clearly have to take steps to turn bmi from achronically loss-making business into one that can beprofitable, and I make no apologies for that. Ourshareholders expect us to act to ensure that we aregenerating a return for them. The industry—not justBritish Airways/IAG—is challenged significantlytoday as a result of high oil prices, high taxation likeAPD, and other issues. But I believe we have beenfair and reasonable in the circumstances with theterms that we have offered.

Q455 Ian Paisley: You are very welcome here today.You said in your opening statement that you areabsolutely committed to Belfast. Following on froman earlier question, Aer Lingus, as you know, is goingto relocate from Aldergrove to George Best Airport inOctober. You have already indicated to us that you areincreasing your winter capacity in terms of seats. Doyou anticipate in the medium and longer term anychange as a result of Aer Lingus coming to GeorgeBest, Belfast? Do you anticipate any change in yourprofile at all, given that a number of those flightsconflict in terms of times and slots?Willie Walsh: No, I don’t. Our intention is to competewith Aer Lingus. We have a working relationship withthem and that has gone on for a number of years, butwe compete with them as well. I have made it clearto the people in BA that the change from BelfastInternational to City should not be seen as a threat,but seen as an opportunity to demonstrate how goodwe are relative to them. I am confident that we willbe successful in the face of competition from AerLingus, and I am confident that we will be able togrow the market and grow the number of passengersthat have been flying on the route. We have seen, withbmi, a decline in passenger numbers, not as a resultof passengers transferring from bmi at City to Aer

Lingus at Aldergrove. In fact, the total number ofpassengers in 2011, according to CAA statistics,showed an overall decline—there was a slight increasein passengers at Aldergrove by 5,000, I think, but thatis against a 45,000 drop in passengers from CityAirport.I think the competition will be good for us. I think itwill be healthy. I think it will be good for the routesand it will be good for business and consumers, andthat is an environment that I have always enjoyed, soI look forward to it, but we are committed to it.

Q456 Ian Paisley: I appreciate your enthusiasm forthe competition, and as a business and as a competitorwith a product, obviously, you want to show that yourproduct is better. From the consumer’s point of view,if you see a flight that is going at 3.00 and anotherone at 3.15, is there not some sense in the twoorganisations sitting down and saying, “Actually, wecan extend the level of service over the day to thepassenger so as there is a more regular flight pattern,instead of us being in direct competition for some ofthese actual timeslots”? I know it is not as simple asjust saying, “Pick your time”, but there must be adiscussion that you can have.Willie Walsh: No, competition law would prevent usfrom doing that. Before we could ever engage in adiscussion like that, we would have to get priorclearance from the competition authorities, and in fact,if we didn’t do that, we would be facing quite asignificant fine and potential criminal action, so wecannot do that. It would only be in the case where wehad applied for competition approval to speak to AerLingus that we could ever engage in anything likethat, and there is no intention to do that.

Q457 Ian Paisley: No intention whatsoever?Willie Walsh: No. The other issue, as I am sure youwell know, given the slot constraints at Heathrow, itis not that easy just to move slots around. In fact, it isquite difficult.Ian Paisley: I appreciate that.Willie Walsh: This is something that I know youwould be interested in. The timing of our flights isvery much influenced by the connectivity that thearriving and departing flights provide. We recognisethat there are a significant number of passengers whowill want to travel directly from Belfast to London,and there are opportunities to do that with otherairlines, as you know, to other London airports, butone of the critical issues around the connectivity atHeathrow is the international destinations that weserve. It is estimated that up to 30% of the passengerson the route will connect at Heathrow, so our timingsare very important to ensure that they providecustomers with the maximum number of connections,particularly into long-haul destinations, that areconvenient. People will not want to fly and sit aroundin Heathrow. Despite the fact that Terminal 5 is thebest airport terminal in the world, I don’t think peoplewill take kindly to having to sit there for five or sixhours. People look for efficient connections, and thatis why we time a lot of the flights to provide themaximum amount of connecting opportunities forcustomers without having too long to wait.




Q458 Ian Paisley: Can I go back to the issue ofstaffing, just very quickly? In terms of redundancypackages, when do you intend to have the redundancyissues completed with former bmi staff?Willie Walsh: We would hope to have issuescompleted by the end of October. It might go slightlybeyond that, but I think it is getting close to havingmost of those issues. There are some parts of theoperation, because of commitments made by bmi toother airlines, that will continue beyond that. Bmi isdoing some flying for other airlines and that activity—from memory—finishes at the end of October, so therewould be issues after that, but that is not driven byBA; it is driven by the fact that bmi had entered intoagreements with a couple of other airlines, and theywere agreements that we will honour until theyterminate at the end of October. Most of it, I think,will be the end of October.Ian Paisley: Okay; thank you.

Q459 Dr McDonnell: Thank you, Willie, for yourevidence so far. You have reassured us there that bmi’sBelfast to Heathrow routes are secure. There is a deepsuspicion, nevertheless, that the flights or the slots thatyou have here will somehow or other be reduced,through pricing or whatever. Let us speculate, forinstance, that it is pushed over to Aer Lingus at CityAirport; you co-share with Aer Lingus and, in turn,give up the slots or use the slots that are here for otherpurposes. The slots are very expensive, and they canbe much more lucrative if you were to run a flight tothe Middle East, South Africa or wherever. Is thereany truth in that?Willie Walsh: No. I think people often misunderstandhow an airport like Heathrow operates andmisunderstand how you can utilise slots. 70% of theslots that British Airways has are operated on short-haul destinations. I find this debate very interesting,because you have one lobby, if you like, who arearguing that the answer to the problems of the lack ofairport capacity in the UK is that short-haul flightsat Heathrow should be forced out. That is nonsense,because Heathrow cannot operate the vast majority ofthe long-haul services that are provided without theconnectivity of passengers that are provided by thoseshort-haul flights. 70% of our slots today are used onshort-haul, so we have plenty of opportunity, if wewanted to, to turn some of those into long-haul.The difference between long-haul and short-haulflying is that short-haul aircraft will typically use threeof those slots a day and a long-haul aircraft use one.What we have publicly stated is that, of the 56 slotsthat we acquired from bmi, 14 of those must be givenup to other airlines as part of remedy. That is an issuethat could impact on our schedules, because we don’tknow today and won’t know until probably mid-to-late December which of those slots we have to provideto other airlines to give them the opportunity to enterroutes that will be in competition with us. That leavesus with a net 42 slots. What we have publicly statedis that our intention would be to use probably amaximum of 30% of those slots for long-haul flying.What you have to understand here is that if we wereto use 30% of those slots for long-haul aircraft flying,it would require us to buy new long-haul aircraft.

Each of those slots that we would use would requirea new long-haul aircraft. These are very expensive,there is a long lead time, and it is not just a simpleissue of saying, “We are going to take those 42 slotsand now fly them with long-haul aircraft”. Those 42slots, if we were to fly all of them with long-haulaircraft, would require 42 new long-haul aircraft. Wecannot afford to buy 42 new long-haul aircraft. Thatwould represent an increase of almost over a third—a33% increase—in the number of long-haul aircraft inour fleet.So, yes, we will use some of the slots that we acquiredfrom bmi for long-haul, but the critical issue here isthe only way we can provide that extensive long-haulnetwork is if we are feeding traffic into our hub. Thisis where I have always argued that the interests ofBritish Airways and the interests of Northern Irelandare perfectly aligned, because we want to takecustomers from Northern Ireland over Heathrow intoour international network. That is what will make, orhelp to make, our international long-haul flyingprofitable. Your interests and our interests areperfectly aligned. I would argue we are the onlyairline where the interests of Northern Ireland and theinterests of the airline are aligned, because most of theother airlines have no interest in feeding traffic intothe Heathrow hub. All they are interested in doing isflying passengers from Heathrow into their hubs orflying passengers to their destination. We areinterested in bringing people—and that includes asignificant number of people from the UK regions—into Heathrow to give them connectivity into ourlong-haul network.We are not going to turn all of those slots into long-haul. It would not make economic sense. We cannotturn all of those slots into long-haul because thetimings of those slots would not necessarily fit withlong-haul flying. When you look at Heathrow, youwill see a significant number of short-haul flights.They are flights that are critical to the success ofHeathrow and critical to the success of BritishAirways, and that is the business model that we havetoday. That is the business model that we will have in10 years’ time, in 20 years’ time and in 50 years’time. That is the business model that I expect to see.We are going to continue to feed people into theHeathrow hub airport because by doing that we canoperate long-haul flying. Without that, I would argue,probably 50% to 60% of the long-haul network thatwe serve would not be sustainable.

Q460 Naomi Long: Just in follow-up to that, it issomething obviously that we are acutely aware of. Iraised in Treasury questions yesterday the issue of thelack of through-carriers from Northern Ireland, andthe impact that has, particularly in terms of APD andthe double-charging of that. Obviously, it is welcomethat BA is in a position, perhaps, to align thoseservices better so that for long-haul destinations,where there is a stop at Heathrow, it does notnecessarily cost either business or tourists quite asmuch to access other locations. I am just interested,because obviously you would be aligning yourservices on that basis, specifically to try to align withyour onward connections to international destinations.




This is the question we have asked the airport andother people who have given evidence to us—in termsof the balance, how important for you is the frequencyof flights, for example, out of City airport? That isvery important to business travellers, but notnecessarily as crucial to you; passenger numbersaligning with your onward connections may be abigger factor for you. It is just to try to get the balance,in terms of BA’s operations.Willie Walsh: That is again where I say I think ourinterests and the business interests of Northern Irelandare perfectly aligned, because a lot of thosebusinesspeople will not only want to fly to London. Ifyou look at it that way, you would argue that theflights that they would want are an early departure outof Belfast and a late arrival back into Belfast so thatthey can fly to London, do a day’s business and getback, which would then suggest that the flights inbetween are not that relevant. A lot of those flights inbetween are flights that will feed into long-hauldeparting flights or connect into arriving long-haulflights, so having that frequency of service isabsolutely critical for the business connectivity thatwe provide. That is why we often operate multiplesectors.People who criticise our industry for flying six orseven times a day to Belfast do not understand howimportant that connectivity is, because they think in avery simple, binary way that if you take those flightsout, you can operate long-haul flights. You cannot dothat. That frequency of service is very important, notjust for business, but for leisure, for people visitingtheir friends and their families, but it is absolutelycritical to make a hub airport work efficiently. Youneed what we call “banks” of flying, so that you havewaves of flights coming in that will connect withwaves of flights leaving, and that is how an efficienthub airport works.Heathrow is quite an efficient hub airport. It is thebusiest international airport in the world. Terminal 5has been rated this year as the best airport terminal inthe world. Heathrow ranks number 11 in the world, soit is not as bad as people try to make out. The problemwith Heathrow is it is full. The runways are full andthere is no additional capacity. That is why we alwaysget into this debate around, “Are you committed tooperating the short-haul flights?” But I say to you, allyou have to do is look at the activity that we do todayand the activity that we have always done. 70% ofour flying is flying on short-haul aircraft, and that isabsolutely critical to the success of our businessmodel and to sustaining the long-haul network thatwe operate.

Q461 Lady Hermon: Mr Walsh, it is delightful tosee you in front of us today as a witness. You havespoken with great passion about your commitment,and I presume BA’s commitment, to Northern Ireland.That being the case, do you regret the fact that BAleft Northern Ireland in 2001?Willie Walsh: I do. I was not there.Lady Hermon: I know you were not.Willie Walsh: 2001 was a terrible time for the airlineindustry, a particularly difficult time. I was runningAer Lingus at the time. Aer Lingus was facing

bankruptcy. We had to take very severe action tosecure the future of Aer Lingus, and I know fromtalking to Rod Eddington, who was the CEO at BritishAirways at the time, that he was facing a very similarsituation. The airline was forced to take decisions thatmaybe in other circumstances they would not havedone. Personally, yes, I regret it. I think the sensitivity,the importance of that connection, was maybe notfully appreciated by people who do not understandIreland, North and South, and for me, it wasregrettable. That is why I say it is great to be back. Iknow there are people who will say, “You abandonedus”, and they are the words that people have used. Ikeep saying to them, “It wasn’t me. The guy that wentbefore me made a lot of silly decisions”.

Q462 Lady Hermon: Yes. May I just translate that?Actually, this is your commitment to Northern Ireland.It isn’t just a commitment to Belfast City airport; it iswider than that. Is that correct?Willie Walsh: Yes, because Belfast serves NorthernIreland. It is not just serving Belfast. I have talked tothe people at Derry airport, Londonderry airport—Lady Hermon: City of Derry, I think, is technicallycorrect; that keeps everyone happy.Willie Walsh: It is a legendary airport, and they areclearly very interested in seeing connectivity. Thelevel of traffic going through that airport would notsustain or justify services into an airport likeHeathrow, where slots are at a premium. There justisn’t enough customer traffic that would justify theservice.Belfast is a big market. I think in 2011, just looking atAer Lingus and bmi into Heathrow, certainly 670,000people flew between Belfast and Heathrow. That is abig market, and that is why it can be served not justby one airline but by two airlines, and can be servedwith multiple frequencies. Unfortunately, Derry couldnot sustain anything like that.

Q463 Lady Hermon: Could I just confirm what youhave just mentioned, and mentioned earlier in yourevidence, too, and that is, “We are absolutelycommitted to Belfast”? You have just said Belfast isa big market. For clarification, because, of course, wehave two separate airports, Belfast City and BelfastInternational, when you say “Belfast”, it is a little bitconfusing, so can you just put on the record—Willie Walsh: George Best Airport.Lady Hermon: Yes. If you would just put on therecord a long-term commitment by British Airways toBelfast City Airport.Willie Walsh: We have looked at the demand and wehave spoken to customers and we have done a lot ofresearch, and Belfast International airport is a fineairport, but the vast majority of our customers want tofly from Belfast City airport into Heathrow, and thatis why we are operating into Belfast City.

Q464 Lady Hermon: Yes. Is that what persuadedyou to leave Belfast International, or were there otherreasons, or was it really customer demand?Willie Walsh: No. City airport was not developed tothe extent that it is today to allow the operations, andthe aircraft that we are operating today are different




from those that we were operating back in 2001. Ihave flown into both. I am not being critical ofInternational; we did see whether there was anopportunity to fly from there, but personally, I havealways felt that City airport is a fantastic airport. Ithink its location relative to the centre of Belfast isunbeatable, and for that reason we will operate to theBelfast City airport.

Q465 Lady Hermon: Long-term?Willie Walsh: Long-term, yes.

Q466 David Simpson: I will be very brief,Chairman, because I have to leave to get a BA flightnow. In relation to the point that I made earlier, Willie,I welcome your statement about the long-termcommitment, but there is still an issue around thepricing of flights from Belfast to Heathrow, orwherever. Where do you see the pricing going? It is amajor concern. We have illustrated Dublin with theeuro and everything else, and you are saying to peoplethat there are different prices at different times, butlong-term, where do you see the pricing of flights? Iillustrated what it costs to get from Belfast to here—where do you see that going over the next six to 12months?Willie Walsh: I cannot disclose the figures. I won’ttell you the average, but I know what the average faresthat we get at Belfast are compared to the rest of ourdomestic network, and of the cities that we serve inthe UK, Belfast ranks second from bottom in terms ofaverage fare. I know you very generously paid to flywith British Airways, but I can assure you the averagefare that we get is not by any means excessive, andwe are operating a competitive market. We competedirectly with easyJet and Flybe, who are flyingbetween Belfast and London, and also Aer Lingus issoon to be flying from City Airport to Heathrow, sothere is competition in the route. We know if we arenot competitive in price and service, people haveplenty of choice. I can assure you, prices will becompetitive. They are always competitive.The two biggest factors driving pricing today in thedomestic market are APD and fuel. After that, youhave the airport charges. Heathrow is not a cheapairport to operate from. They are the critical issues. Infact, there was a piece of research out today by oneof the major banks that has looked at how much ofthe fare actually goes to the airline, and an analysisthat they have done, and it shows that it is only a tinyproportion of the fare that we actually get. When youtake out APD, airport charges and other taxes, what isleft coming to us—and we then have to pay for fuel—is really small. That is why this is an industry that isnot profitable today. That is why at our half-yearresults we declared an operating loss of over €260million. We are going to be competitive on fares.Competition is going to increase with Aer Lingusmoving into City airport, so I can assure you we aregoing to be as competitive as we always have been,as bmi was. There is no difference in attitude. We aregoing to make sure that we are successful on the route.

Q467 Ian Paisley: Given what you have just saidabout the impact of APD and so on, is there any

possibility or opportunity for you to do internationalflights from our international airport, given that thereis demand and footfall, given that people who aregoing to George Best airport are going for throughputto Terminal 3 and Terminal 5, and given that youcould probably avail yourself, and they most certainlywould be able to avail themselves, of an APD tax thatis the lowest in the UK? Would you be able toconsider that as an opportunity?Willie Walsh: If you look at the one long-haul servicethat is provided from International, the United flightto Newark, that is operated on a Boeing 757 with 169seats—16 premium seats, 153 economy seats. Thesmallest of our long-haul aircraft is much bigger thanthat, and it has 24 business class seats, 24 premiumeconomy seats and, from memory, 156 economy seats.The smallest long-haul aircraft in our fleet issignificantly bigger than the current one, and if youremember, United said if APD wasn’t slashed, theywould withdraw that.There is a good market at Belfast, a good market forNorthern Ireland. It is too small a market to sustainthe size of aircraft that British Airways operate. Ouraircraft are configured for the Heathrow market,which is very premium-rich—most of our long-haulaircraft have more than 60 premium seats. There justisn’t that demand from Belfast, as you will see withthe United flight that is operating there.The other thing is that United can make that workbecause they are flying from Belfast into their hub, so40% of the passengers on that flight—based on thepublicly available data—transfer at Newark into otherUnited flights. If we were operating from BelfastInternational to a destination, we would be flying notto our hub but to what we call a spoke airport, so wewould not be able to rely on the transfer trafficbecause we would not have transfer opportunities atthe destination, so it would not work for us. We havetried to make it work at other airports outside London.We have failed to do so. I think Belfast can best beserved by airlines that are flying from their hub intoBelfast, and clearly that is something that we can tryto do, working with our world partners, and I havetried to see if there is any appetite at this stage to offerservices. I have not identified any at the moment. So,while United is a competitor of mine, and I ampleased to see that it was recognised that APD wasimpacting on the potential viability of that route, Iam disappointed to say that they have a competitiveadvantage over us, because a customer flying over ourhub at Heathrow is going to pay significantly morethan if they were flying with United. We haveestimated—if you look at the number of passengers—that is worth close to £2 million a year to United. Thatis a very big figure when you look at the profitabilityof these route.

Q468 Ian Paisley: That is not big enough to enticeyou into the market as a competitor?Willie Walsh: No, unfortunately not. No.

Q469 Ian Paisley: So it is poke their eye, but youare not going to compete with them.Willie Walsh: No. As I said, I am pleased for them,and we will compete with them, but we will compete




with them over at Heathrow, but no, we are not goingto compete with them directly over Belfast becausewe could not make it work for us.

Q470 Nigel Mills: Mr Walsh, you mentioned whentalking about the City of Derry airport that slots atHeathrow are at a premium. I might regret asking this,but presumably you think that expanding airportcapacity in the South-East is the critical thing to getmore flights into Northern Ireland and obviouslyelsewhere.Willie Walsh: I think the critical thing to getting moreflights is hub capacity, not runway capacity, in theSouth-East. There is plenty of runway capacity atStansted; it is not used and it will not be used becausethere is no demand for services there.What is critical to the UK economy is hub capacity. Ihave been critical of the Government, and indeedcritical of politicians, in relation to this because I don’tthink people understand just how critical an issue thisis. I am not defeatist or in any way a pessimist—infact, I am normally an optimist—but quite honestly, Ido not see any political will to address this thornyissue, so we are not campaigning for a third runway.I did my campaigning. I argued long and hard for it.I am not even going to enter the debate because, quitehonestly, I think the debate that is going on at themoment is pathetic and I am just going to watch andlaugh, because nothing is going to happen. You willhave independent commission after independentcommission, and I am sorry—it is my opportunity totalk to politicians—but you are not going to doanything about it. Fifty years from now, Heathrowwill still have two runways and BA will be operatingfrom Heathrow, and the UK will have suffered hugelyas a result of that, but we are going to run our businessas best we can.I am pleased, from a BA point of view, that we havebeen able to acquire bmi, because that does give usthe opportunity to use a small proportion of those slotsto expand our long-haul network, and that is what wewill do. We have an opportunity as British Airways toexpand our long-haul network. That will have somebenefit for the UK. I think a lot of my competitorswill say that is not great, because they would like toexpand their service and are not going to be able to.It is great to be able to say, “I told you so”, but thisis such an important issue. It is not just hugelydisappointing to see it, but quite honestly, I think it isscandalous to say that the Government does not havean aviation policy to deal with this issue.

Q471 Lady Hermon: The change in the Secretary ofState for Transport did not impress you?Willie Walsh: As I said, I have seen nothing that willmake a change. I think the fact that an independentcommission will report in 2015—an independentcommission looking at this could do it in ten minutes.I cannot see what they are going to do for a few years.Nothing is going to change in that period; it is onlygoing to get worse. My view is that, by the time youget to an independent commission report, the worldwill have moved on so far that any opportunities thatdid exist will be lost. We are going to try to run ourbusiness as effectively as possible. We are going to try

to do what we can to expand our long-haul network toensure that there is connectivity to the growth marketsthat are not currently connected to Heathrow, but thatis going to be a fraction of what should be done.As I said, I have participated in the debate, I havelistened to what everybody says, I listen to whatpeople say in private and what they say in public, andI see no evidence of a political will to address thisissue, so I am not going to waste any of my timedealing with this.

Q472 Lady Hermon: But presumably you do haveopportunities to speak to George Osborne, theChancellor, and also to the Prime Minister?Willie Walsh: No. Since his appointment asChancellor, I have never met him. I don’t think hewants to meet me, given the criticism that I levelledat him over APD.

Q473 Lady Hermon: Have you asked to meet him?Willie Walsh: I have offered to meet him.Lady Hermon: Have you asked to meet him?Willie Walsh: I have written to George Osborne. Thisis not just a criticism of the Conservative party;previously I wrote to Gordon Brown when he wasChancellor, about APD. I have never had a reply tothe letters that I have written on this issue, so I canonly assume that people did not want to—

Q474 Lady Hermon: Never had a reply?Chair: Have you written to George Osborne and nothad a reply?Willie Walsh: Four CEOs wrote together on the issueof APD. As you know, we have been campaigning foran independent commission on the issue of APD andits impact on the competitiveness of the UK economy.Not had a reply. I wrote to the then-Chancellor of theExchequer in December of 2006 and January of 2007,after he announced the doubling of APD, to highlightto him the negative impact that this would have. Inever received a reply. I raise it at every opportunitywith every politician I meet. You have seen what Ihave said publicly in relation to it. I think GeorgeOsborne is afraid to deal with the issue. We havechallenged him to hold an independent commission.Maybe this independent commission that has been setup to look at airport capacity could also look at theimpact of APD, because I am convinced that anybodylooking at this independently will recognise thatwhatever benefit the Exchequer gets from the revenuefrom APD is being more than offset by the loss ofcompetitiveness and the loss of business coming intothe UK as a result of these high levels of taxes.

Q475 Chair: Would you be happy for us to take thatup, the fact that you have not had a response?Willie Walsh: Yes.

Q444 Chair: Okay. You say you want a commissionon APD. I think we may come on to this in a minute,but you also appear to be criticising the commissionon transport.Willie Walsh: No. I am not.




Q445 Chair: Surely you know what the answer tothe APD is. Why do you want a commission on it?Willie Walsh: I know what it is, but people are goingto say, “Yes, but you would say that, wouldn’t you?” Ihave argued long and hard about this issue, and peopleclearly, and rightly, say I have a vested interest, whichI have. I am not in any way denying that. But whatwould have a much greater effect would be if it wasindependently investigated so that the arguments thatI make could be either verified or rejected, and Iwould be happy if there was an independentinvestigation and proof that I was wrong, to say that Iwas wrong.

Q446 Chair: Coming back to Nigel’s question, I donot think we can let you get away with that answer.Not enough business people go into politics. Imagineyou are the Secretary of State; what would you dowith regards to airport capacity? What would youranswer be?Willie Walsh: I do not think it is the Secretary ofState.Chair: Well, Prime Minister.Willie Walsh: It needs to be a Government decision,and probably needs to be a cross-party decision, to behonest with you.Chair: Well, what would your answer be?Willie Walsh: The answer is that the decision to goahead with a third runway back in 2009 should haveproceeded.Chair: With a third runway. Okay.Willie Walsh: Yes, but it didn’t, and the world hasmoved on, and we are now in 2012, and the process—

Q447 Chair: But the answer is still a third runway?Willie Walsh: Yes, it would have been. I campaignedfor it.

Q448 Ian Paisley: What do you say to BorisJohnson?Willie Walsh: I admire Boris. I think it is great to seesomebody like Boris in politics, and I agree with a lotof what he would say. I disagree with him on the issueof the new airport. Where I give great credit to Borisis on the fact that he, more than anybody, hasrecognised the importance of a hub airport. More thananybody, he has campaigned to have the issue of ahub airport addressed. His specific interest in buildinga new hub airport I disagree with, because I cannotsee how you can make an economic case to build thatnew airport.I think what is often forgotten in this debate is thattaxpayers’ money does not go towards thedevelopment of airports. Not a single penny oftaxpayers’ money goes to the development of airports.When I listen to the debate, I sometimes wonder if Ihave missed something. The way some politicians talkabout it, where they say it would be better to takethis money and put it into high-speed rail, this is nottaxpayers’ money. This is money that the aviationindustry and our customers—the people who areflying with us—are paying, because all airportdevelopment at Heathrow has been funded by airportcharges.

A new airport has no existing customers. Therefore, ithas no revenue stream. It will not have a revenuestream until the airport opens and goes into operation.The cost of a new airport would be massive. It hasbeen estimated at anywhere between £30 billion and£50 billion, or maybe even £60 billion, so you wouldhave to fund that from some other source, and I justcannot see how you can make the business case tospend that money without having any revenue, andthen the only way you could guarantee some revenueis if you force the closure of Heathrow and force allof the airlines operating at Heathrow to move there.We will not do that willingly, because it would bemadness from our business point of view to do that.Even if we did, if you were then to try to pay for allthe investment, I reckon that the charges at that newairport would be so high that it would deter peoplefrom operating there. You would have plenty ofcapacity, but it would be so expensive nobody wouldever want to use it, so I just don’t see how it can workfrom an economic point of view. I hope you didn’tregret asking your question.

Q449 Naomi Long: Very briefly, I do have a recentupdate, in that yesterday I asked whether they wouldset up a commission to study APD and review thewhole situation in terms of the impact on tourismaviation and the wider economic impact. The answeris unlikely to raise your expectations or indeed youropinion of politicians, because I think the answer wasthat no further studies are planned. But I have to saythat I would agree: I think that the impact of APD interms of suppressing growth and other things—we areparticularly aware of it in the Northern Ireland contextbecause of the added burden that it creates on businessand tourism—needs to be looked at. It is also a veryunfair tax in the way it is applied, and I hinted at thatearlier in what I said about the double-charging ofpeople travelling through hubs, so it is something thatI think we need to continue to push on, but I justwanted to update you that there are no studiesplanned.Willie Walsh: Thank you.

Q450 Kris Hopkins: It was going so well until thatone, wasn’t it? I was going to say there has been ahint of cynicism around here, but then youcomplemented that wave. This is a major Britishemployer and a great British marque, so thank you forgiving us some time to come and speak to us today.There have been reports in the paper saying that if thecap on the number of passengers using Belfast Citywas listed, it may potentially create another 350 jobs,and then if later flights were put on from Heathrow toBelfast, that might assist the business community.First of all, would you support those kinds ofinitiatives and try to develop those ideas? And if youwere going to do that, one of the other representationswe have had is from residents, that they would beconcerned about a greater number of flights. One ofthe things I was trying to tease out from other peoplewho have come to visit us is this: you mentioned thatthe change in aircraft design since 2001 has beenphenomenal. Do you want to comment on that?




Willie Walsh: Yes. We do not see any reason to lookfor a change in the operating hours or the limitationsthat currently exist at City airport, but I am awarethat there are other airlines that would, if there werechanges—if the runway was extended—operate fromCity airport, but are not operating today. For the sortof operation we are looking at between Heathrow andBelfast City, the runway length is fine, because it is ashort sector. The amount of fuel that is required to flyfrom City to Heathrow is well within the operatingparameters of the aircraft, and we are going to fly amix of Airbus 8319s and Airbus 8320s into Cityairport. If you wanted to fly much further from Cityairport, you would have to carry more fuel, and fuelhas weight, so you end up with what we call weightpenalties and you probably have to restrict the amountof passengers on the aircraft, which is clearlyinefficient from an airline’s point of view. From a pureBritish Airways point of view, we do not see any needto change the existing arrangements, but I do knowfrom comments that other airline CEOs have madethat they would increase the number of flights theyoperate there if there was a longer runway, andpotentially if the operating hours were extended. Youare probably asking the wrong person, but I can assureyou that others I have spoken to have made that point.

Q451 Lady Hermon: You are not the wrong personat all, Mr Walsh. Just to make sure, on those whowould wish to extend the runway, you would not, andBA would not, be giving them support?Willie Walsh: I would not oppose it.

Q452 Lady Hermon: You would not oppose it, butyou would not also support it?Willie Walsh: We do not need it, but I can see anargument for the Northern Ireland economy. If youseparate me from my strict business interests, I wouldsay that I think there is significant job opportunity andgrowth opportunity if the runway was extended, butBritish Airways does not need a runway extension orchange in the operating hours.Ian Paisley: The court case is in November anyway,so we will soon find out.

Q453 Kris Hopkins: Going back into the technologyside of it, I think the industry has a huge piece of PRwork to do about demonstrating the change intechnology, and it is not done. There is a whole voidin that conversation, and I think you can give residentssome great confidence about that change.Willie Walsh: Yes, I think it is a fair point. I think theindustry has been slow to identify the changes thathave taken place and the progress that has taken place.Aircraft flying today are significantly quieter than theyused to be, and will get quieter still with thedevelopment of new engines and new airframes. Theyare much more fuel-efficient, and therefore there is aneffect on the environmental impact in terms of CO2

and issues like NOx, which impact on local air quality.The aircraft and engine performance is very differenttoday; engine manufacturers and airframemanufacturers are very much focused on this issue, asare all the airlines operating today. We put a lot ofpressure as an airline on manufacturers to continue

to improve their performance, because we recognise,particularly in the UK, that noise—Heathrow iscertainly at the centre of that—is a major issue. Thereare new operating techniques that are available thatcould help the situation. The real benefit will comefrom the entry into service of new aircraft that aresignificantly quieter than the aircraft that are in ourfleet today, and that will happen. British Airwaysstarts taking delivery of the Airbus 8380 from themiddle of next year, 2013, and the Boeing 787Dreamliner from around the same time next year.These are quieter, more fuel-efficient aircraft withbetter environmental performance. There are evenfurther developments in train that will help to addressthis issue. I would like to think that we will be ableto get recognition for that, but I do accept your pointand I think it is valid: as an industry, we have notbeen very proactive in identifying the changes thathave taken place and the changes that will take placeto improve the environmental performance of theindustry.

Q454 Lady Hermon: We are back to APD. Therewas a very curious word, which I have never beforeheard ascribed to the Chancellor, George Osborne.You actually used the word “afraid”. You thought hewas afraid to address this particular issue. Could youexpand on that? He is not here, and I just feel that infairness to him, if we know what he has to deal withand that he should not be afraid, let us hear what heis afraid of.Willie Walsh: My view on this is that the Chancellorand everybody who is in favour of APD will say,“Well, look at the revenue generated by this to theExchequer and look at the revenue we are going togenerate as we increase the rates”. They are lookingat it, they can measure it, they can see it, and they canfeel it. What I have been arguing is, yes, but whatimpact does that have? How many jobs are being lostas a result of the increase in these tax rates? Howmany people have decided, “I am not going to fly tothe UK”? How many businesses have said, “This isbecoming too expensive”? How many investors havesaid, “We are not going to invest here. We are goingto invest somewhere else”? The combination of anumber of measures, APD—which makes us muchmore expensive than other airports, other majorhubs—the policy on capacity, or the lack of a policyon capacity, and visa issues are discouraginginvestment in the UK.

Q455 Chair: Sorry, did you say visa issues?Willie Walsh: Visa, yes, and I know there is a lot ofdebate around that. We are definitely losing out interms of Chinese visitors and business to the UK, andI go to China three or four times a year, and I talk tobusinesspeople there, and they will tell you that oneof the things that discourages them from coming tothe UK is the complexity, the bureaucracy, the cost ofapplying for a visa to travel here when they can get aSchengen visa and do business in 26 countries inEurope, and it is a big issue. Over a million Schengenvisas were issued in 2011 to Chinese tourists. Thesewere short-stay visas. I think the figure that I haveseen from the embassy in Beijing was 193,000 visas




issued for the UK. There were over a million goinginto Europe and 193,000 coming to the UK. We arelosing out big time. It is a combination of thosefactors.On APD, we have argued that you should look at theexperience of the Netherlands, where they introducedan aviation tax and scrapped it after the first year,because although they raised revenue and they couldcount it, they did some research to understand theimpact of that tax. The impact on their economy wasfour times the revenue that they raised. I don’t thinkthe same multiple would apply here, but I do believethat the tax is discouraging jobs, discouraging touristsand businesspeople, and therefore destroying jobs thatexist and destroying the potential for the creation ofjobs, and that is my argument. Don’t look at whatyou can see, don’t look at the revenue; understandthe economic impact. The argument that there is noeconomic impact is nonsense. I am not an economist,but everybody can see that if you put up your pricesand your competitor doesn’t, you are definitely goingto have people who say, “Well, I am not going to buyyour product. I’m going to buy this guy’s product.It’s the same, but it’s a lot cheaper”. That is what weare arguing.

Q456 Lady Hermon: What BA, you personally, andin fact the CEOs of other airlines—because you saidthat on this one item you had all joined together—seek is the abolition of air passenger duty.Willie Walsh: Yes.Lady Hermon: Not a reduction.Willie Walsh: No.

Q457 Lady Hermon: An abolition. Just moving onslightly, when the route was confirmed to Belfast Cityairport, and it was confirmed that BA was back inNorthern Ireland, there was a great photograph: at thebottom of the flight of steps coming down from theairline, there was you, Arlene Foster, and I think BrianAmbrose, the Chief Executive of the airport.Willie Walsh: Yes.Lady Hermon: As you will be aware, the FinanceBill has devolved to the Northern Ireland Assemblythe power to set the long-haul APD. Have youcampaigned and spoken to Arlene Foster and otherNorthern Ireland Executive Ministers about theabolition of APD on domestic flights within the UK?In fact, the Northern Ireland Assembly could absorbthat cost. I know it is going to cost money, but thereis that potential, if APD is doing so much harm to theUK generally and to Northern Ireland in particular.Given your passion about Northern Ireland andboosting the economy and flights from NorthernIreland and so on, have those conversations been hadwith the First Minister and Arlene?Willie Walsh: I have spoken to Arlene. I think she hasdone a fantastic job.Lady Hermon: Thank you.Willie Walsh: I was delighted to see the support thatshe has provided to us, and I met her on a couple ofoccasions in Belfast. We have not had any big, formaldiscussion about this, but in the conversations I havehad with her, I have pointed out that the risk here is—my argument is you need to get rid of APD

completely—if there is APD over Heathrow intoBelfast, if the Northern Ireland Assembly is preparedto pay that bill, I can’t honestly see how you canafford to do that. I would love to think that it couldbe done, but I can’t see how it would happen. Just asa rough calculation, I reckon the passengers flyingwith bmi last year on City to Heathrow probablygenerated close to £5.5 million or £6 million for theExchequer, for George Osborne. It is a big figure.Given the challenges that the Northern IrelandAssembly would have, I don’t see how they couldraise the money. I am not going to argue that it shouldbe just Northern Ireland that does this. I think itshould be scrapped altogether, and I think the benefitto the UK economy would far outweigh the taxrevenue that George Osborne has seen.

Q458 Lady Hermon: Could I just do a PS? You havevery kindly complimented Arlene Foster on doing aterrific job, and she has done a terrific job in theNorthern Ireland Executive. Given your openingstatement about the new Secretary of State forNorthern Ireland, Theresa Villiers, could you just wishher well? It is a very responsible post.Willie Walsh: I thought I had sort of wished her well,but I do wish her well in her position, and as I said,I look forward to welcoming her aboard our BritishAirways flights. Maybe, as I said, we will see a slightchange in attitude, and I would hope that she wouldsupport the abolition of APD.

Q459 Chair: Mr Walsh, I think you have identified anumber of reasons why British airline companies arenot that profitable. I think you said earlier they arenot that profitable; are you suggesting they are moreprofitable in other parts of the world?Willie Walsh: The industry globally is challengedprofitably, but certainly the challenges that we facehere in the UK are probably greater than in otherjurisdictions, mainly because of APD and capacityissues and visa issues. When I look at theopportunities that other countries or other airlineshave over the industry here, there are certainly thingsthat the Government could do to make it a morecompetitive industry. People have said, “Well, youwant to be more profitable”. Yes, I do, because bybeing profitable I can invest, I can create jobs, I canbuy new aircraft, I can grow our operations. They arejobs that would be based here in the UK that areotherwise going to go to other major hub airportsaround the world.Nigel Mills: The exciting question of our times.Chair: We will finish on the most exciting thing.

Q460 Nigel Mills: The Civil Aviation Bill makesvarious changes to airline safety and airport regulationand all manner of things. Do you have any views onwhether they are going to be positive for the industryor negative?Willie Walsh: I do not think we have any major issueswith the Civil Aviation Bill. We have looked at it. Iam satisfied that it does not in any way reduce thefocus on safety, which is clearly an important issuefor all of us, so I don’t have any major issues as aresult of the Bill.




Q461 Nigel Mills: Do you think, overall, there mightbe some help for airline capacity if Gatwick andStansted ceased to be economically regulated andwere free to compete completely with Heathrow?Willie Walsh: They are free to compete, in that airportregulation merely imposes a cap. It does not requirethe airport to charge at the cap. In other words, theairports are free to charge below the cap, so the onlything that economic regulation does is prevent themgoing above a certain level. I think there is sufficientscope for Gatwick and Stansted airport to operatecompetitively within the economic regulation. I havenot heard any argument that would convince me thatthey should not be regulated in terms of imposing acap, but as I said, there is nothing there that forces theairport to charge up to the maximum that they cancharge under the cap.

Q462 Lady Hermon: Just one final question: on theCivil Aviation Bill, in response, I think it was, to MrAnderson’s questions about the TUPE regulations andthe legal advice, you mentioned that you have a greatteam internally of lawyers. When legislation like theCivil Aviation Bill is going through the House ofCommons, does it go automatically to your lawyersand would you seek legal advice? Would you gothrough it with them? How does it work?Willie Walsh: Yes, we have a team of people who willlook at it and try to assess any impact on our business,

and we have not just a legal team doing that but aGovernment affairs team who would regularly consultwith politicians and assess the issue. I think we spendquite a bit of time and effort ensuring that ourconcerns, but also concerns that we think would beshared by the industry, are identified and brought tothe attention of politicians.

Q463 Lady Hermon: Are those letters replied to, doyou think?Willie Walsh: Yes, generally. Yes, I believe so. I don’twrite many letters, to be honest with you.

Q464 Chair: Is there anything else you would like totell us that we have not asked?Willie Walsh: No, Chairman, just to thank you for theopportunity; I have enjoyed exchanging my viewswith you, and as I said, I look forward to celebratingthe success of British Airways’ return to Belfast andNorthern Ireland with all of you.Chair: Indeed.Dr McDonnell: I think we should put on the recordour deep appreciation for the very forthright answerswe got.Chair: It was a very useful session.Lady Hermon: Thank you for your time today.Chair: Have a good trip to America, and thank youvery much for joining us.Willie Walsh: Thank you.

cobber Pack: U PL: COE1 [SO] Processed: [28-11-2012 14:02] Job: 022723 Unit: PG08Source: /MILES/PKU/INPUT/022723/022723_o008_th_NIA Air transport strategy viii (12 September PM) - Corrected (draft).xml



Members present:


Mr Joe BentonLady HermonKris HopkinsNaomi Long

________________


Witness: Kate Sherry, Deputy Director of Route Development, Ryanair, gave evidence.

Q497 Chair: Welcome to the Committee. Thanksvery much for joining us. We are starting a little bitearly—I hope that is okay. As you know, theCommittee is looking at air transportation and airstrategy, with particular respect to the way it affectsNorthern Ireland, so we are delighted to welcome youto the Committee. I understand you are going to do abrief presentation.Kate Sherry: Yes, if that is okay.

Q498 Chair: That is perfectly okay. Please, off yougo.Kate Sherry: Thank you for your time. I will startwith a short introduction. I am Kate Sherry, DeputyDirector of Route Development for Ryanair. I manageand negotiate Ryanair’s relationship with existing andpotential new airports across the bulk of Europe.Together with two of my colleagues, we manage over200 existing and potential airports. As well as the UK,Northern Ireland and Ireland, I look after Scandinavia,Germany, Belgium, Greece, Cyprus, Ukraine, Austria,the Baltic states and eastern Europe. As you said, Ihave a presentation to give. I thought I would just putit in some context before I start. Please feel free toask any questions as I go along or at the end, howeverthat suits.We are talking about aviation in Northern Ireland.Many countries recognise the value of aviation as adriver of economic growth. In particular, low-costcarriers stimulate demand and passenger numbers,which, in itself, initiates economic growth andprosperity. Therefore, there is extensive competitionfor low-cost air access across many airports in Europe.Air access is particularly critical to island regions.Aviation links of island economies must be enhancedand optimal, and it is no coincidence that Ryanairstarted in Ireland, where aviation links to Europe areof critical importance.Air travel is also a commodity. Price is the onlydetermining factor in the passenger’s decision,especially on short-haul routes, such as the majorityof those to Northern Ireland, so the low fares thatRyanair offers uniquely serve to stimulate demand.Tourism, however, is not a commodity. It is not afunction of the price paid. Tourists delivered byRyanair spend as much as those delivered by otherairlines, and destinations that have well developedtourism industries tell us that our passengers are equalin terms of the value that they bring to their economy.They save money on the airfare, which is spent in thelocal region. Tourism is vitally important to Northern

Jack LoprestiDr Alasdair McDonnellNigel MillsIan Paisley

Ireland, and the correlation of low fares, air access andtourism growth is well established, both by SouthwestAirlines in the United States and by Ryanair andeasyJet in Europe. Also, of course, aviation links arevital for business development. Low-cost air accessallows face-to-face meetings, new markets to beexplored, presences to be established in new markets,and also the development of business relationships.Ryanair’s purpose is to remunerate our shareholders,but that overlaps with the public interest in tourism.The key ingredient for both of these aims is lowairport costs, and reducing airport costs in NorthernIreland would provide a commercially attractiveoperating environment. That, in turn, would deliver amassive increase in passenger numbers, which woulddrive tourism revenue. I will get into my presentationshortly but I just want to make the point that, oncecosts are reduced, the demand is elastic for air travel.Reducing costs in Northern Ireland—or in anyeconomy—would increase passenger numbers, andthose passengers would then spend money in theeconomy.On this basis, as an example, we have delivered 1.5million additional tourists per year to the CanaryIslands since 2008 following the Government’sdecision to introduce discounts for growth. TheGovernment of the Canary Islands then concluded thateach extra tourist who was delivered under thisscheme spent €1,000 in the local economy, which wasthe best return on investment for any initiative thatthat Government could have taken. The total boost tothe economy of the Canary Islands has been €1.8billion since 2008. We have a common cause todevelop aviation in Northern Ireland, which, in turnwould drive visitors and benefit the tourism andbusiness sectors of the economy.On page 2 of my presentation, I just have somebackground information on Ryanair. We have thelowest fares in Europe and this makes us uniquelyable to stimulate demand on both new and existingroutes, but for this offer to be sustainable in the longterm, the lowest costs are also necessary. We have nofuel surcharges, despite escalating fuel costs, whichthen puts the pressure on the rest of our costs and ourbusiness as well. Our traffic this year is forecast to be80 million passengers, up from 76 million in 2011,and our network also continues to grow. It nowcomprises 170 airports, 1,500 routes, and 51 basesacross Europe. This is a unique network. It allows usto create these connections, which are valuable to the

cobber Pack: U PL: COE1 [E] Processed: [28-11-2012 14:02] Job: 022723 Unit: PG08Source: /MILES/PKU/INPUT/022723/022723_o008_th_NIA Air transport strategy viii (12 September PM) - Corrected (draft).xml


12 September 2012 Kate Sherry

economies that we serve. I have some moreinformation about it that I will present shortly.We are also number one for customer service and weare very proud of those facts. We have over 90%punctuality, the fewest lost bags and the fewestcancellations. We recognise the value of this for repeatbusiness and to our passengers, but it is also vital forus to keep costs low. Delays cause cost, and we havea reputation as a reliable and efficient airline as wellas a low-cost airline. On that basis, Ryanair has grownfor 27 years and we continue to expand our routenetwork. Continuing to keep fares low allows us toexpand, because we create that incremental demandthat only low fares can do. As I said, the demand iselastic, so we create the demand by offering the lowestfares on new routes and on existing routes. We arenow the number one international scheduled airline inthe world.

Q499 Kris Hopkins: Can I just ask a question?Kate Sherry: Yes, please.

Q500 Kris Hopkins: You mentioned the fact thatairport costs need to be as low as possible, and thataffects yours. You mentioned this elastic bit. Are youactually paying anything for landing and taking off inNorthern Ireland?Kate Sherry: I suppose there are two issues. I am notable to reveal all the commercial details of our dealwith City of Derry Airport, but there are airport costsas well as air passenger duty. The cost that we payfor passengers in Northern Ireland is out of line, eventhough there is a competitive situation and good dealson offer in Northern Ireland.

Q501 Kris Hopkins: Are you talking about airpassenger duty, not airport costs?Kate Sherry: I am talking about both. There is acompetitive aviation market in Northern Ireland;however, £13 per passenger is an expense that we donot have to bear in other European countries.

Q502 Kris Hopkins: You don’t have to tell us thefigures but I would imagine that major carriers likeyou—the three principal, large low-cost carriers—arenot paying anything to land. If they are payingsomething to land, it is very small.Kate Sherry: We still have to pay air passenger dutyon every passenger.

Q503 Kris Hopkins: That is what I am saying. I amjust trying to get the separation between airport costsand air passenger duty. You are saying it is about bothand I am saying I don’t think you pay anything, or thelow-cost carriers pay very, very little to land anaircraft.Kate Sherry: It is the combination of both of thosethat add to our costs. Even with low airport costs, ifyou separate that from air passenger duty, we stillhave high costs to bear.

Q504 Kris Hopkins: The reason I mentioned it wasthat the models that low-cost carriers went intoairports with and the reason why you got good deals

out of airports was that you brought mass numbers ofpeople in.Kate Sherry: That is right.

Q505 Kris Hopkins: Rather than just 50 people onone flight and people paying a high tariff to land, youbrought mass volume there, so they went to the retailshops and into the car parks, which is where airportsmake their money. The deal was they reduced thetariff for you to land, because they wanted you tocome, and that is why you find that one of the carrierswill take one airport and another one will take anotherairport, because those are the deals that are done.Kate Sherry: That is partly true, but also we dooperate in some very busy airports, where there aremany other airlines. We are a flexible and efficientairline, so our 25-minute turnaround and ourscheduling efficiency allow us to operate in airportswith other airlines where we can operate off-peak. Asyou say, we bring in a large volume of passengers, wehave high load factors, and we are efficient in termsof how we move the passengers around. Yes, wedeliver non-aeronautical revenue as well asaeronautical revenue to those airports.Our route network, as I explained, has 51 bases and170 airports. We are able to operate, from this basenetwork, many unique routes and, as I said, our low-fares offering is what stimulates the demand on manyof these routes that are not operated or are of nointerest to many other airlines. For that, however, thelow costs are a necessity.We add incremental passengers to the airports that weserve, building on your point. As an example, inMilan since 2009 the total Milan market has grownby 4 million passengers. Of those passengers, 1.3million are Ryanair, so we add incremental passengerswithout cannibalising the existing market in theairports that we serve. Our efficient operations and ourflexibility allow the airports to work with us at lowcosts. As you said, we develop the non-aeronauticaloffering in those airports as well.A small amount of information about our passengernumbers: we will grow to 80 million passengers thisyear, and it is only low-cost airlines that are growingand only in the right environment. You will find thatlegacy airlines are generally consolidating andreducing capacity in the face of high costs and thedifficult operating environment. It is only low faresthat can—

Q506 Chair: Sorry, we are going to have to go andvote, so we will have to suspend the sitting for 15minutes. Sorry about that. May I make it 15.49 whenwe reconvene? Sorry about this.Sitting suspended for a Division in the House.On resuming—

Q507 Chair: Sorry about the interruption. We willcarry on but we have lost some time and we havequite a few questions to go through, so I wonder if Icould politely ask you to speed up as quickly as youcan, please.Kate Sherry: Yes, by all means. I will just movequickly on, then, to page 5, and there is just a pointabout our lowest fares of €40, which are the cheapest

cobber Pack: U PL: COE1 [O] Processed: [28-11-2012 14:02] Job: 022723 Unit: PG08Source: /MILES/PKU/INPUT/022723/022723_o008_th_NIA Air transport strategy viii (12 September PM) - Corrected (draft).xml



in Europe. These low fares can only be sustained withlow costs, and we cannot sustain an average fare of€40 and generate passenger growth while funding a$70 million aircraft, paying our captains €120,000 ayear, $110 a barrel for oil, and £13 per departingpassenger APD, as well as airport charges. As well asbeing unsustainable, this is just out of line with othercomparative offers. Reducing those airport costswould create the conditions for an upsurge in tourism.There is just some background information then onpage 8. It is only low-cost airlines that have deliveredany traffic growth between 2008 and last year, so allgrowth in UK and Irish aviation was delivered by low-cost carriers. As I said earlier, air travel is acommodity, so the demand is elastic and low-costsdeliver an increase in demand. It is like the mobilephone example, I suppose: when mobile phones werenew, it was incredibly expensive to make a telephonecall and, as a result, people made very few calls ontheir mobiles, whereas now it is just pence to make atelephone call, but there are thousands of multiples ofcalls and texts made every day. So, the total revenuehas increased, despite the lower unit price, because ofthe elasticity of demand. Conversely, when the priceis increased, the demand falls again, and the exampleis exactly the same for aviation. This explains whypassenger numbers in the UK are falling while theyare growing on the Continent, because of theadditional cost burden placed on airlines.I wanted to address comments made by BALPA thatonly one airport is necessary in Belfast, which westrongly disagree with. It is our opinion that Belfastis blessed with having two airports. It has genuinecompetition and does not need artificial regulation.The competition that exists reduces costs and wouldhelp to stimulate growth, and those airports in Belfastare competitive, not just in Northern Ireland but inEurope, because of the presence of the other one.Those airports are already built. The owners andoperators of those airports want to maximise thereturns from those fixed assets.On the next slide, I just elaborated a little more—I amaware you want to ask some questions—on cities withone main airport, the examples being Prague,Budapest, Dublin, Madrid, Athens and Edinburgh,compared to cities that have two or more competingairports. The trend is for passenger growth wherethere is competition in an aviation market. In the citiesthat have one main airport, they have failed policiesof high and increasing airport charges. The 6% inBudapest since the collapse of Hungary’s nationalairline Malev has now turned into a 4% decline. Thereis no low-cost-carrier growth in these airports, and thelegacy airlines are not growing, so they maintain aminimal presence. Cities that have competitiveaviation can grow; however, as you can see from thechart, Belfast and the UK are lagging behind. TheAPD is an inhibiting factor, at a cost of £13 perdeparting passenger one way and, on a domesticflight, £26 per departing passenger. Additionally—

Q508 Lady Hermon: I wonder if I might justinterrupt on APD before you move on to anothertopic. What efforts has Ryanair made to date to seekthe abolition of air passenger duty? Letters,

presumably, have gone to the Prime Minister and tothe Chancellor.Kate Sherry: That is right.

Q509 Lady Hermon: Have you had replies, as amatter of interest?Kate Sherry: I do not believe we have, no. Our ChiefExecutive has participated in a campaign with theChief Executives of easyJet, British Airways andVirgin to highlight the impact of air passenger duty.The response of the Government has been to increaseAPD again this year, and it has increased by 330% inthe last six years. We have had an ongoing campaignto highlight the issue of APD and the detrimentalimpact on passenger numbers in the UK. However,APD continues to increase and this is the reason forno growth in UK aviation.

Q510 Lady Hermon: What nature has that campaigntaken? Is it just an email campaign?Kate Sherry: No, we have participated in theconsultations that the Government have undertakenand that the Department for Transport haveundertaken. We and the airports that we deal with areheavily involved with the Fair Tax on Flyingcampaign, which involves mobilising people to sign apetition—it has a lot of signatures—urging theGovernment to review air passenger duty. We havebeen very active, both formally and informally, andwith the airports that we deal with. However,especially following the introduction of the ETS levy,the Government appears to have concluded that APDis not an environmental tax; it is just a revenue-generation scheme.

Q511 Ian Paisley: Kate, could I just ask you afollow-up on that? If APD were to be removed acrossthe whole of the UK, which was, I think, part of thecampaign that you joined with Virgin, BA and others,subsequently would the airports that you operate outof increase their charges to you as an operator? Haveyou considered that and the impact that that may havethen on your operations, and would that be passed onto the consumer?Kate Sherry: Firstly, we do not pass charges on toconsumers, because it is our low fares that serve tostimulate the demand. As an efficient airline, we flyfull aircraft. Our model is to price the tickets at theprice that they will sell. The issue, particularly forlow-cost carriers, with APD is that it cannot just bepassed on to the passengers. In many cases, it isactually funded by the airlines, hence my commentthat the airports themselves then becomeuncompetitive, because they are higher-cost.

Q512 Ian Paisley: I understand that. What about thefirst part then? If APD was scrapped, do you believe,strategically, the airports would increase their chargesto you?Kate Sherry: No, I do not believe they would.

Q513 Ian Paisley: Is there a commercial deal inplace to sustain that?Kate Sherry: Yes, we have commercial deals in placewith most of our airports. For that reason, I do not




believe the airports would increase their charges.There is really no basis for that anyway, because theairports do not receive the APD income and it doesnot go into funding aviation development in any way.Additionally, the airports themselves also bear theimpact of reducing passenger numbers in the UK. Theairports are as supportive as Ryanair and all airlinesin the campaign against APD, because it is detrimentalto the airports as well. As I was saying about theairports in Belfast—but this is also true for airportsacross the United Kingdom—these airports arealready built, and the owners and operators wish tomaximise that asset by increasing passenger numbers,developing aeronautical and non-aeronauticalrevenue, and achieving the best return possible fromtheir fixed costs. We have delivered no growth in theUK this year; however, Ryanair is growing by 5%.Creating a more competitive or commerciallyattractive operating environment is within the interestsnot just of the airlines but also of the airports.

Q514 Chair: In view of the time, with theCommittee’s agreement, we can take away the rest ofthis and read it. We have a number of questions andwe have to finish by quarter past four. I do apologisefor that. Can we move into more general questions?Kate Sherry: By all means.Chair: Thank you for the presentation so far. Joe, canyou come in?

Q515 Mr Benton: Yes. Good afternoon andwelcome. I was intending to ask you to give a viewon BALPA. I am now looking through your preamble,which I had not got to. I was going to ask whatBALPA would mean, or what would you interpretthem to mean, when they said to us, at a previousevidence session, Ryanair is not a recognisedcompany with BALPA. That is the original question Iwas going to put to you. Could you elaborate on thator what you think it means? Having now read yourdocument, you have listed quite a number of things,and it has become quite evident to me—and, no doubt,the rest of the Committee—that the relationships withBALPA are not all that they should be. I hope I amnot saying that too strongly. These headings that youhave listed: for example, BALPA are a BA union,when, according to their evidence, of course, theyhave members in other companies right across theboard, as I am reading here; language like ‘hankersafter the oldie days, high costs, low PAX, nocompetition’. Can you elaborate on these? It seemsthat they are not working at all in harmony with you.That is how it strikes me. What is the reason for it?Kate Sherry: The reason for it is that Ryanair is alow-cost airline and we believe in fair competition andstimulating passenger numbers or traffic through theoffer of low fares. Our experience with BALPA is thatthey are mainly a BA union and that their interest isin protecting what we would call outdated and gold-plated terms and conditions for their members, which,in turn, restricts the competitiveness of the airlines. Apertinent example, although an old one, is possibly theDublin-London route. Until 1986, there were 1 millionpassengers on the Dublin-London route, and it wasexclusively the preserve of Aer Lingus and British

Airways. Average fares were approximately £300.Ryanair challenged this and commenced flying on thisroute; today, there are over 4 million passengers perannum and the average fare is just €99. Interestingly,Aer Lingus carries three times as many passengers asthey did before that route was liberalised.We have a difference of opinion with BALPA in termsof generating passenger numbers at very low costs andopening up markets, whereas BALPA’s approach is toprotect their routes and their monopoly on certainroutes in order to protect their own terms andconditions for members. That delivers nothing fortourism, business links or economic growth. Tourismnumbers in Ireland are around 7 million visitors peryear, which contributes to job creation and theeconomy. There have been two attempts by BALPAto secure union recognition in Ryanair, which, as youwill have seen, has been defeated following theopposition of our own Ryanair pilots.

Q516 Mr Benton: Can I just ask one more questionon that point? I was going to come to that point aboutthe unsuccessful attempts. I take it when you say‘opposition by your own staff’, you mean airlinepilots. What were the reasons; were they the reasonsthat you are giving here?Kate Sherry: I was not involved very closely with thisat the time; however, we have a structure at Ryanairof employee representation whereby our pilots and ourcabin crew represent themselves, and this works verywell. I believe that our pilots understand Ryanair’smethods, policies and how we work as a company,and we feel that they may have felt that BALPA hadpossibly not necessarily bought into that model.

Q517 Mr Benton: Does that mean that they chose tobe non-unionised, for want of a better phrase, so itwould not matter whether it was BALPA or anyother union?Kate Sherry: Effectively.

Q518 Naomi Long: Just to clarify, that is a choicethat the pilots made, that there would be nounionisation and they would represent themselves.Kate Sherry: Yes.

Q519 Naomi Long: Are all of your staff withoutunion representation or just the pilots?Kate Sherry: I believe it is all of our staff.

Q520 Dr McDonnell: On page 4 of yourpresentation, you mention a ‘non-IATA airline’. What,dare I ask, is a ‘non-IATA airline’? Surely, everyairline is tied into IATA.Kate Sherry: I don’t know the answer to that, I’mafraid. I can find out and come back to the Clerk, ifyou wish.Chair: If you could write to us, thank you.

Q521 Dr McDonnell: My understanding is thatevery airline had to be licensed, insured and bondedand all the rest through IATA.My question is very simple: my focus in this questionis on the City of Derry Airport, where you are, in fact,the dominant airline.




Kate Sherry: That is right.

Q522 Dr McDonnell: Do you have any intention,plans, hopes or aspirations to increase your trafficthere by creating other new routes, or, indeed, on thesame question, do you have any intention ofexpanding your capacity in or out of any of theBelfast airports?Kate Sherry: I will take Derry first, if that is alright.We are the majority—we deal with approximately375,000 out of around 400,000 passengers a year—inDerry. Northern Ireland is a difficult operating market,as I was explaining, with the APD. Although NorthernIreland is part of the UK, its operating environment isthe island of Ireland, and it shares a land border withthe Republic, where APD is just €3 per passenger.Unfortunately for us, Northern Ireland is anunattractive commercial proposition as long as theAPD is in place. We are happy with our operations inDerry but, in terms of any large-scale expansion orchange to our routes, we would require a change inthe commercial environment.However, if I take both Derry and Belfast at the sametime, if the APD was to be scrapped in NorthernIreland, that would create a much more attractiveenvironment. As well as in regional UK, our approachwould change and, along with the competition thatexists between the airports, we would be much morelikely to consider expansion in those airports. In termsof the Belfast airports, we closed our base in BelfastCity in 2010. We were operating domestic routes, with800,000 passengers per year. The short runway meantthat we operated those routes with payloadrestrictions, so some seats on the aircraft had to beflown empty to allow take-off and landing to be safeon that runway. For international routes, obviously itis further and you have to carry more fuel, so thepenalties were too great for us to be able to operateinternational routes. After five years of planningreview, there was still no decision on extending thatrunway and, unfortunately, we had no choice but toclose our base.We are in discussions with both airports in Belfast,and we are pleased with how the discussions areprogressing. Confidentiality prevents me fromelaborating; however, as I said, we are in discussionwith over 200 airports as well in Europe, and wecontinue to seek the best options for our continuedexpansion.

Q523 Dr McDonnell: Would it be fair to ask: couldthe public of Northern Ireland expect anannouncement by the last quarter of this year aboutpotential developments at, say, Aldergrove, the otherBelfast airport?Kate Sherry: I don’t think that is something I cancomment on, I’m afraid. We are in discussions, as Isaid, with the airports, but I am not in a position to beable to comment publicly on that at this stage.

Q524 Naomi Long: Just on this point, you have saidreasonably clearly that you are not looking to expandin the Northern Ireland market because of the impactof APD. If you are in discussions with other NorthernIreland airports, is that by way of relocating your

Derry operations? Others will get into more detailaround your bid for Aer Lingus, but if you are notlooking to expand significantly, surely a takeoverwould be a form of expansion. I realise there is alimited amount you can tell us in terms of the detail,but it seems to be a conflict with how you areoperating. You are discussing with other airports andyou are looking at a takeover of an airline thatoperates out of Northern Ireland, but at the same timesaying you are not wishing to expand your operations.I am just trying to understand better where you arecoming from on that.Kate Sherry: I am, unfortunately, unable to commentat all on the Aer Lingus bid. That is undergoinganalysis within the European Union and I am unableto make any comments on that at all. There will be adecision on 14 January, until which—I apologise—Icannot comment. In terms of moving capacity fromDerry to Belfast, I suppose the point is we are indiscussions with over 200 existing and potential futureairports at any one stage. We have a large presence.We are the third largest airline in the United Kingdom,despite the air passenger duty. We also fly domesticroutes from Derry. It is an ongoing discussion that theAPD prohibits a large-scale expansion into NorthernIreland, to the detriment of the tourism industry andbusiness connections; however, we continue ourdialogue with the airports.

Q525 Naomi Long: I understand the issue with APD,because I have done a lot of work around APD andits impact. I simply do not understand: there seems tobe a direct conflict. There are two ways this can go:you are either talking to other airports to move yourexisting operation somewhere else, or with a view todoing that or thinking about doing that; or you aretalking to other airports with a view to expanding yourservices. You are saying that the situation as it stands,with APD as it stands—and the Government saidyesterday they had no further announcements orconsiderations to make on that—would mean that youwould not expand your services. That is what I amtrying to get to the bottom of. In some ways, yourdescription is of an airline that says it cannot expandbecause of APD, and yet acts as though it is lookingto. I am trying to reconcile that in my mind.Kate Sherry: We have not said we cannot expandbecause of APD; we have chosen not to expand, andto expand at lower-cost and more attractive airportsacross Europe. However, as I said, we have a presencein the UK, where we pay APD, and we continue totalk to both of the airports. It may appear to be aconflicting situation; however, I suppose there is adifference between large-scale expansion of the sortthat we could deliver in Belfast and Northern Ireland,which would deliver real value to the economy, anddiscussing with the airport about opportunities thatmay come up.

Q526 Jack Lopresti: I will just have another go atthe question, which you said you were not very happyto go into any detail on. We know that the EuropeanCommission has blocked two bids already for you totake over Aer Lingus. Are you able to say here one ortwo reasons why you think you will be more




successful this time, as far as the European Uniongoes?Kate Sherry: Our Chief Executive has stated thatthere is an inevitable consolidation within the airlineindustry, and he feels that now is the right time tomake another bid. In terms of this bid, I am afraid Iam really not able to discuss any aspect of it at allwhile it is under consideration. We publish any newsor press releases pertaining to the bid on our websitebut, at the moment, there is nothing we can really add,I am afraid.

Q527 Ian Paisley: Thank you very much for yourpresentation; it has been very helpful and beneficial, Ihope, to us and our inquiry. Are you able to tell usanything with regard to your bid to acquire a 25%stake in Stansted and the impact, if you are successful,that may or may not have on your operation in Belfastand Londonderry?Kate Sherry: Yes, I suppose it is less of a bid for 25%of Stansted. The process of the sale of Stansted hasbeen kicked off after repeated failed appeals by theBAA. We have stated that we would like to become a25% minority stake in any new holding of the airport.Our position with Stansted is that the charges inStansted have been doubled since 2007, and this hasled to a complete collapse in the airport’s traffic, froma high of 23.9 million passengers in 2007 down to just18 million last year. Ryanair’s share has increasedfrom around 60% to 68%, so, whilst we haveaccounted for handling the bulk of the reduction inpassenger numbers, other airlines have also desertedStansted. Until those charges are reduced and returnedto more competitive and more appropriate levels,there will be no growth in Stansted, because thecharges are simply too high. However, if Stansted’scharges were halved, then the airport could return togrowth.There is already a Stansted service from Belfast witheasyJet; however, like any route, the costs are afunction of the viability of the route, so lower costswould make any route from Stansted more attractive.At the risk of repeating myself on APD, we wouldstill have the issue of £26 per passenger on a routewhere our average fare would be €35 to €40. As Imentioned earlier, we pay our captains and our crew;we pay for our aircraft; fuel is $110 a barrel; and thereare still airport charges at either end, even though wewould like to negotiate an attractive deal. In thatcontext, at £26 for a return flight on an average fareof €40, it is not a particularly attractive prospect;however, reducing charges at Stansted would allowus to grow further and make route expansion a moreattractive prospect.

Q528 Lady Hermon: Could I just clarify somethingabout Belfast City Airport? When Ryanair pulledout—very abruptly, it seemed to me—of Belfast CityAirport, the main reason that appeared to be given wasthe runway. In your evidence, you have also indicatedthat, in fact, it is far too short for the size and the fueland all the rest of it.Kate Sherry: That is right.

Q529 Lady Hermon: Was that the only reason or didAPD or other factors enter into it as well?Kate Sherry: APD was already in existence at thetime, although it was continuing to be increased. TheAPD was an issue in terms of the short runway,because the payload restrictions on the short runwaymeant that we could only operate domestic routes,which made the APD burden twice as much. If therunway extension had gone ahead, we would havebeen able to operate international routes, as wasalways our plan, and develop the passenger numbers.It is difficult to say now. There may have been someconsolidation such as we have seen at other airportsin mainland UK; however, that would not have beenthe reason for closing the base entirely.

Q530 Lady Hermon: If, tomorrow—and this is mostunlikely, we all know that—APD were to be abolishedacross the UK, is it the case that Ryanair would notcome back to Belfast City Airport because there is notan extension to the runway?Kate Sherry: It is difficult for me to say that fordefinite.

Q531 Lady Hermon: You seemed to make a greatplay of the fact you did not get a runway extension,and your Chief Executive had waited such a long timeand, therefore, very abruptly—because it affectedhundreds and hundreds of passengers, including myson trying to get to university—the decision causedan enormous amount of inconvenience to people. Ijust want to know what Ryanair’s attitude is. If APDseems to be an excuse used for a lot of things—whyit is not going to expand etc—let you be clear, please:is it just Belfast City Airport’s runway being tooshort?Kate Sherry: APD is not an excuse for anything. It isa genuine cost that we cannot bear and that makesNorthern Ireland and the UK uncompetitive. I don’tthink we have ever sought to use APD as an excuse;it is a genuine and real issue. The base at Belfast Citywas closed because the extension of the runway didnot go ahead. As I said, we remain in discussions withboth Belfast airports. If APD was not a factor ondomestic routes, the payload-restriction issue maybecome less of an issue; however, to operate perhapsanother base or an expanded presence from what wehad previously, the runway extension would benecessary, because the penalties are too great oninternational flights. However, there are two airportsin Belfast, and Aer Lingus has decided to move toBelfast City. As you will have seen from mypresentation, we believe that Belfast is blessed withtwo airports, because it creates a competitive situation.APD is not our excuse for not growing, but it is a realfact and a real cost.

Q532 Lady Hermon: That is very helpful. Inresponse to my colleague, I know that, in fact, it iscommercially sensitive and, therefore, you cannot gointo the negotiations and we don’t expect you to aboutthe potential takeover of Aer Lingus. Just as areminder to the Committee, Aer Lingus is nowproposing to move from Belfast International toBelfast City. If the outcome were to be that Ryanair




did take over Aer Lingus, would Ryanair stay atBelfast City or move back to Belfast International?Kate Sherry: I don’t wish to be difficult but I reallycannot make any comment on that at this stage.

Q533 Lady Hermon: It’s alright; I needed to askyou. I can perfectly understand your reply.Kate Sherry: Thank you.

Q534 Nigel Mills: At the risk of being a little cheeky,Ryanair are not always famed for the best customerservice in terms of the booking experience, withcharges. There are also the rumours about takingtoilets off planes. Can you just dismiss all thoserumours and confirm how you are going to take credit-card charges forward for people who do fly Ryanairto City of Derry Airport?Kate Sherry: Card charges are now included in alladvertising. We comply with all regulation pertainingto advertising and we still have the lowest fares. Idisagree that we are not famed for customer service,but I think what our passengers tell us is important tothem is having a low fare, being on time, arriving ata convenient airport, and not having their bags lost ortheir flight cancelled. In terms of those measures thatare important to passengers, our customer service isexcellent. There are some unfortunate high-profileincidents that reached the media, where the majorityof our passengers become misrepresented at theexpense of maybe one incident. Our terms andconditions at the time of booking—and they are issuedto the passenger via email on many occasions—arevery clear. It is a lot of our terms and conditions thathelp keep our costs very low, and it is this thatstimulates the passenger numbers.

Q535 Nigel Mills: Are there no plans to cancel freetoilets on planes? That is just a myth, is it?Kate Sherry: Our Chief Executive never said hewould take the toilets off. He floated a plan—that wasunfortunate—he suggested a plan to charge for thetoilets that would allow the removal of one. As of yet,however, that has not gone anywhere with Boeing.

Q536 Naomi Long: I have just two points ofclarification, and this feeds into the previous question.It is with regard to your presentation. You mentioned


Witness: Paul Simmons, UK Director, easyJet, gave evidence.

Q542 Chair: Welcome, Mr Simmons. Thank youvery much for joining us. I don’t know if you were inat the beginning of the last presentation. I wasbasically saying that we are looking into the wholeaviation policy and, in particular, how it affectsNorthern Ireland, so we are very pleased that you areable to join us today. Would you like to make a verybrief opening statement?Paul Simmons: Yes. I don’t have a presentation, butif I can make a few opening remarks, that would begreat. First of all, it is a pleasure to appear before theCommittee again. Whatever we can do to help, we are

that you have the fewest lost bags of the airlines. Asa proportion of overall luggage carried, how much ofit ends up in the hold in comparison to other airlines?Kate Sherry: Our passengers carry 0.3 bags perpassenger, so there is one bag, roughly, for everythree passengers.

Q537 Naomi Long: In the hold?Kate Sherry: In the hold; that is right. It depends onwhich route you are on. I flew from Dublin to Stanstedthis morning, and there were a lot of businesspassengers and people who were travelling for a shorttime. There were very few bags. However, if you flyfrom Malaga back to Dublin, every passenger willhave a bag. Paying for bags has changed passengers’behaviour, undoubtedly, and it has reduced costs.Everybody used to check in a bag at the airport, andnow only people who need to check in a bag do so,which means that those people who do not need tocheck in a bag can save money.

Q538 Naomi Long: Just the other clarification: youspoke about your average fare. Is that total fare,including everything—all the add-ons?Kate Sherry: That is right, yes. It is a one-way farethat includes all the unavoidable charges.

Q539 Naomi Long: But not all the other charges thatpeople pay; for example, if you check in a bag, thatwould not be included in the €40.Kate Sherry: That includes our average bag revenue.

Q540 Naomi Long: That is, basically, if you like, theaverage comparable fare with an airline, for example,that would offer a free hold bag.Kate Sherry: That is right, yes, but it is our belief—and passengers voted with their feet as well—that theywould prefer to pay for a bag if they need to than haveto pay a high fare that includes a hold bag that theymay not need.

Q541 Chair: I think we will have to move on, butthank you very much for your information andpresentation. We will take this away and have a goodlook at it. Thank you very much indeed.Kate Sherry: Thanks very much.

always here to answer questions that I am sure youwill have. Just in terms of some numbers, easyJet hasbeen operating out of Belfast now since September1998, with our first route being Luton. Since that date,we have now flown 34.2 million passengers in and outof Belfast International. In October this year, weexpect that number to hit 35 million in and out, andthat makes us comfortably the largest carrier inNorthern Ireland. In terms of the last 12 months, wehave flown 3.1 million in and out of BelfastInternational—2.4 million of those, or 78%, weredomestic, and 700,000 were international. We operate



12 September 2012 Paul Simmons

23 routes at the moment; a 24th is due to start inOctober, Belfast-Birmingham. In our next financialyear—and our financial years run from October to theend of September—so our financial year endingSeptember 2013, we expect passenger numbers to riseto 3.5 million. The increase is primarily attributableto the Birmingham route, a full year of running theSouthend route, and also Manchester, which is a newroute we started recently.In terms of our share of the total Belfast market—adding International and City together—we have a46% share by volume within the year up to September2012. For comparison, on capacity, Flybe is at 25%,Aer Lingus at 8%, and if you add bmi and BAtogether, it is 7%. In terms of the history, clearly wehave a commitment to Northern Ireland. We have seenother airlines come and go—notably Ryanair exitingin October 2010. By the way, they are not an IATAairline, just to answer their question for them.Bmibaby, as we know, left in June 2012, ratherabruptly, following its acquisition by BA. The AerLingus move to City will involve five routes beingdropped. So, in terms of us and Northern Ireland, wefeel committed to the country and committed tocarrying on and growing our share as we develop.In terms of London specifically, we have four airportsin London now, so we fly to Gatwick, Luton, Stansted,and now Southend. Southend is now designated as aLondon airport. The frequencies vary every day, butif you look at Friday 2 November, just to take arandom date, we will have 13 services to London onthat day. Aer Lingus will have six, BA seven andFlybe four. In terms of employment, we employ 238people, 170 being cabin crew and 68 pilots, butobviously there are several hundred other associatedroles in terms of ground operations in the airportwhich are employed through other people indirectly.In terms of the key issues, APD is our key issue interms of the Northern Ireland aviation market,primarily as a function of our route network, which,as I have indicated, is 75–76% domestic. Getting hitat both ends is a real barrier to the development oftourism, business and just general visiting of friendsand family. If you look at the growth of our airline inother areas and other bases around Europe, the growthin Belfast has been lower than it has been elsewhere,and I would attribute a lot of that to the fact that APDacts as a restraining force in terms of making traveleasy and affordable. EasyJet’s mission is to maketravel easy and affordable for passengers, and we feelthat APD is a big barrier to that.In terms of what we have done about it, we have beenvery active in terms of lobbying the Government, bothbefore and after the election. We continue to lobby theGovernment. We continue to be part of the four-airlinealliance that you have heard about in terms of callingon the Government to have a clear, Treasury-commissioned study on the impacts of APD, becausewe believe that study would show that it is a brakeand it is a tax which has a disruptive and negativeimpact. No one is really going to know until someonedoes the empirical study, and we cannot see a reasonwhy they would not want to do an empirical study.That is our clear call: let’s get on with it, let’s havethat empirical study and let’s see what is really

happening with APD. Our view is it is a negative taxdoing the wrong thing.Just a couple of things: in terms of recent changes,we welcome the appointment of Theresa Villiers, asSecretary of State for Northern Ireland. We had a goodrelationship with her when she was at Transport andwe look forward to continuing that workingrelationship. In terms of responses on APD, there wasa question I heard you ask earlier in terms of what wehave heard from the Treasury. We have had no directresponse to our call for an independent impact studyon APD.

Q543 Lady Hermon: Can I just pick you up, MrSimmons, on the response that you have just giventhere, that you have not had a direct response to yourcall for an empirical study? Have you had anacknowledgment? Have you actually written? Haveyou spoken to the Prime Minister? Have you spokendirectly to the Chancellor? Is this just an emailcampaign? I know it is very lively; there are certainlylots of emails, and I welcome all of that.Paul Simmons: No, it is not an email-only campaign.We have had private meetings with Ministers aboutthis, and it is putting the case as to why we believethat this tax is counterproductive. It always comesdown to a matter of opinion. In the overall economicenvironment, it is clear that APD is a reasonably easytax to collect, because the airlines just pay it over. Youcan argue that no one really gets hurt because it is atax on an expenditure, but our argument back, clearly,is that that is acting as a brake on economic growth,and it is acting as a brake on development, particularlyin a place like Northern Ireland, where air links arevital. Those two arguments tend to get nowhere—theycounter each other—and the only way we can see tobreak that deadlock is to have an independent study.

Q544 Lady Hermon: I was pleased to hear youcompliment the appointment of Theresa Villiers as thenew Secretary of State. Presumably, this is aconversation that you will be having or seeking tohave early with the new Secretary of State.Paul Simmons: Yes, I have already written to her,actually, asking for an early appointment.

Q545 Lady Hermon: To discuss APD?Paul Simmons: Yes.

Q546 Lady Hermon: So, if you were explaining theissue to her, as you are going to explain it to us, interms of Northern Ireland and air strategy, just identifythe key impacts that you see on the Northern Irelandeconomy from the detrimental effect of APD.Paul Simmons: I think the issue, basically, is theproportion of tax to the proportion of the fare. Ouraverage fare is around £45; it will be slightly lowerfor domestic flights. If you look at the APD beingnearly £26 for the return journey, it does act as a brakeon people travelling. It acts as a brake on peoplehaving face-to-face business meetings, going to sellsomeone something; it acts as a brake on people interms of commerce and shopping, and all the otherreasons that people travel. So, it is very hard toquantify, without this kind of study, exactly what




proportion of trips are not being taken as a result. Ifyou just look at the proportion of tax as a proportionof total cost, it is very high. Therefore, our view isthat it is acting as a major brake on economies.

Q547 Chair: You said you have met variousMinisters. You have presumably not met theChancellor or Treasury Ministers.Paul Simmons: I have met Treasury Ministers.

Q548 Chair: You have.Paul Simmons: I also believe my colleagues have metmore senior Ministers too.

Q549 Lady Hermon: Could I just ask you a verydirect question? Given that Aer Lingus is in theprocess of moving to Belfast City Airport, and thatBritish Airways has, thank goodness, come back intoNorthern Ireland but has based its operation at BelfastCity Airport, does easyJet have any plans to move toBelfast City Airport?Paul Simmons: No. We tried Belfast City Airportwith our Luton route two or three years ago. Wemoved it from International to City and we said at thetime, as we were in the process of doing it, that wewere moving because we believed there may be anupside in terms of customer satisfaction and, frankly,there may be an upside in terms of the fare that wecould achieve. We ran it for a year and we sawneither; we measured it quite closely in terms ofcustomer specification and also the yield, or the fare,that we achieved, and neither moved, so we revertedback to International, because we could see no upsidein our operating from City. To have your operation inone base is just slightly move convenient as well, soeveryone goes through the same base and engineeringand everything else. So, it is just a matter ofcoalescing around where we think is better for us, andclearly we have a longer-range programme as well,going into Europe, which could not operate out ofCity.

Q550 Lady Hermon: Could you translate “longer-range programme”?Paul Simmons: Sorry. Yes, things going into Europe.The analysis that we did on our type of aircraft meantthat we could operate to places like Amsterdam andParis from the City Airport, but not much further.Given that we have a number of flights that go furthersouth than that from International, we could not justtransfer them to City. We would have to drop them.

Q551 Lady Hermon: That was very clear. Thankyou very much indeed. You did mention in yourpresentation that you are proposing shortly tointroduce this new route that you have announcedbetween Belfast International and Birmingham.Paul Simmons: Yes.

Q552 Lady Hermon: Are there any other new routesto be opened up with other airports in the UK?Paul Simmons: There is nothing we haveannounced—across the UK or just generally?

Q553 Lady Hermon: UK first and then you can letus into the secret of beyond the UK. I would be happyto receive all of the information.Paul Simmons: All I would say is we do try to keepthe route network fresh. We added Malta about 18months ago and, as I said, we added Manchester. So,we will be looking to add extra routes as and when.What we try not to do is churn, so, if we add a route,we try to do quite a deliberate study to make sure itis going to be there for the long term. So, we may notopen as many routes as some of our competitors but,when we do, we try to stick with them and make sureit is a long-term, viable route. It is a long answer toyour question but I do not have a specific to give youtoday. However, I can say that we continue to look atnew routes from Northern Ireland.

Q554 Lady Hermon: Into both the UK and beyond.Paul Simmons: Yes.

Q555 Ian Paisley: First of all, thank you for yourcommitment to Northern Ireland in general.Lady Hermon: Yes, indeed.Ian Paisley: In particular, thank you for yourcommitment to Aldergrove. As a person who usesAldergrove regularly, I am not paying lip service tothat. I am grateful because it is meaningful toconstituents who work at that airport and use thatairport, and I thank you for that. Earlier today inevidence, we heard that Theresa Villiers was “the anti-aviation Minister” when she was in her previous role,and that certainly does not bear reflection in the tributethat you have paid to her today. Am I right to assumethat that characterisation was grossly unfair?Paul Simmons: It is not one that we would recognise.We have had extensive dealings with her in herprevious role and, as I said, we always had very goodand constructive relationships, so I would notrecognise that description. If I was to speculate, it mayrefer to views on Heathrow.Ian Paisley: I think, to be fair, that was the context inwhich the remark was made.Paul Simmons: As we do not fly to Heathrow andhave no plans to fly to Heathrow, it does notparticularly bother us.

Q556 Ian Paisley: Because you were in the publicgallery, you heard the evidence session from Ryanair,and I asked them a question about Stansted and their25% bid to acquire part of that airport or become ashareholder. You fly to Stansted from Ulster.Paul Simmons: Yes.Ian Paisley: Do you see that as a direct challenge toyourselves? Do you see that as having an impact, ifthey are successful in that bid, on easyJet’s business?Paul Simmons: It would certainly be something wewant to take a very close look at. We have, as acompany, talked to and are engaged with all of themajor bidders, as every other major airline, I am sure,at the airport is, and I think we just have to wait andsee how things pan out. Whether it is another ‘£1 touse the toilet story’ or not, we will have to wait andsee.Ian Paisley: Yes—see how it flushes out.Lady Hermon: Please.




Q557 Ian Paisley: In terms of the evidence that wehave heard, it is actually quite encouraging to see thatthere is quite a considerable competitive marketoperating in Northern Ireland.Paul Simmons: It is an incredibly competitive market,driven by the two-airport scenario. Quite often, youcan see, when the capacity goes from one of theairports, the one that has lost makes a pitch to theother airlines to come in and fill the void, whichcreates a very competitive situation. The downside tothat is: how sustainable is it? We have seen quite a bitof churn in terms of airlines coming and going, androutes being launched and then dropped, so I thinkcompetitiveness is great but there needs to be a good,sustainable service for the public as well, and that iswhat we try to deliver.

Q558 Ian Paisley: I was going to ask you specificallyabout why, commercially, you would chooseAldergrove over, say, Belfast City, but I think youhave answered that in your earlier contribution. MrChairman, following on from the comments that havebeen made by Mr Simmons, we should considerwriting to the Chancellor and asking why there hasbeen a slowness in response from the Treasury andfrom the Chancellor in particular to address the issue.It clearly affects this very important business.Chair: It is something we will take up, yes.

Q559 Naomi Long: I had asked a question myselfyesterday of Treasury Ministers with respect towhether or not they would commission that researchand, unfortunately, the answer will not warm yourheart, because it was that they had no plans to do that.Obviously, there will be more campaigning and morequestions will be asked about it. The City Airport isin my constituency, and we would be very consciousof the impact that APD has just on business generallyin terms of the extra burden that people have to carryin order to be able to travel internationally andnationally. So, that is something we would want tofollow up.Could I just ask: you had mentioned, I suppose, thecompetitive environment. We have had conflictingviews in terms of the benefits of having two airportsin Northern Ireland. Some people have come and saidit is a good thing and others have come and said that,no, there should just be one. Do you have a view, asan airline, as to whether or not it is good for aviationin Northern Ireland to have two airports or whether itwould be better were there just one? I should say threeairports, because actually there is also the City ofDerry Airport.Paul Simmons: If you take City of Derry away fromthis direct question, because it is a slightly differentmarket, an observation would be that it is veryunusual for a market the size of the Belfast catchmentarea to have two airports. If you look at cities aroundthe world of a comparable size, it is fairly unusual tosee two airports. Without wishing to repeat myself, thepros of having two are that it does create competitionbetween the airports and also between the airlines; thedownside could be that it creates too much uncertaintyand churn because people get maybe suckered in; theycould launch something, basically, on a deal, the deal

disappears or the deal is not as good as they thought,and they have to stop doing it. I cannot think who Iam referring to on that, but those things do happen ifyou have this scenario.

Q560 Jack Lopresti: As far as your route betweenBelfast International and Southend is concerned, isthat doing well and do you foresee that expanding indue course? If it were to, would it be a redistributionor would it be an increase in the number of services?Paul Simmons: First off, it is doing pretty well. Wedo not see it as a redistribution; we see it as justadding to the choice coming into the London market.I think we still have a job to do in terms of persuadingpeople as to why it is a good entry point. Withoutwishing to go into ad mode, it is the same distance bytrain from Liverpool Street to Stansted. It is a reallysmall, purpose-built, brand-new airport, where theplane literally draws up in front of the gate, you walkthrough a few hundred yards, and you are at a new,purpose-built train station and off to London, goingstraight past the Olympic site and the shoppingassociated with that. For many people, it will be anattractive entry point. We just need to carry on makingthat case, and we are. In fact, our advertising effortsand other marketing efforts are continuing in NorthernIreland to make that case. But it is up and running andwe are pleased with how it is going.

Q561 Mr Benton: I think you were present, MrSimmons, when the previous witness was talkingabout relationships with BALPA.Paul Simmons: Yes.

Q562 Mr Benton: Do you share her thoughts onBALPA?Paul Simmons: No, we have a very positive andconstructive relationship with BALPA, and have donefor a number of years.

Q563 Mr Benton: So, have you had no experienceof, shall we say, the fault-lines that she described?Paul Simmons: No, I did not recognise that.

Q564 Chair: As a general question, you will beaware of the importance of connectivity: people inNorthern Ireland flying here, then maybe flying on toChina or wherever. I know you do not use Heathrowyourself but do you have a view on the third-runwayproposals? How do you see the expansion should takeplace, or should it not?Paul Simmons: Clearly, not being directly involvedin Heathrow, we are not too vocal on this point, butthere is clearly a constraint in the London market andI think, on balance, we can see the arguments for athird runway as being something that would be netpositive for the UK economy in general and for theLondon aviation market in particular. But as we arenot a direct stakeholder in that debate, I do not wantto go too much further on that, but it would be a netpositive as and when it comes along.

Q565 Nigel Mills: While we are on the subject ofsouth-east airports, what are your views oncompetition between airports in the London market?




It looks like we will still have all three main Londonairports being regulated. Do you think that is asensible position or do you think Gatwick could beleft to run its own affairs?Paul Simmons: We believe that the airports still havea dominant market power and that, therefore,regulation is the right way forward. It is a systemwhich has worked and we believe it should continueto work in terms of the benefit of the customer overall.

Q566 Nigel Mills: Any plans for a Belfast-EastMidlands route?Paul Simmons: Shall I break it to you gently? No, wehaven’t. We see the Birmingham initiative as servingthat market, although I appreciate it is slightlydifferent.

Q567 Chair: Have you any views on the rail linksand connectivity in Northern Ireland betweenairports?Paul Simmons: Clearly, we would like the groundlinks to be improved. I think, realistically, probablyworking on arterial roads is the main way forward,particularly thinking about Aldergrove. If we couldget that through it would deliver a great improvementto the travelling public. That would offer someimprovement there, but we are not particularlypushing for rail.

Q568 Ian Paisley: Not pushing for rail?Paul Simmons: I think only on the basis that we aretrying to be realistic in terms of what is likely to beforthcoming.

Q569 Lady Hermon: If I understood correctly, whileyou are saying that, in the present economic climate,it is not sensible to talk about a rail link, what youreally would like to see is some improvement in theroad connections, certainly through theTemplepatrick bit.Paul Simmons: Yes, particularly that bit. In themedium-to-long term, clearly rail links would makesense for a major international airport but, insequencing them, I think the road infrastructure couldbe best upgraded first.

Q570 Lady Hermon: Could I just ask: we haveunderstood that you do not particularly have easyaccess to meetings with the Chancellor himself,though with some Treasury officials. In NorthernIreland, with the Devolved Assembly, do you haveeasy access to Ministers—to the First Minister, to theMinister, Arlene Foster, at Stormont, about trade?Paul Simmons: We do. We have extremely goodaccess, actually. I have met the First Minister myself,as have my colleagues, and the other Ministers too.Having access to Stormont politicians is not a problemfor us.

Q571 Lady Hermon: Has it been a benefit?Paul Simmons: I think it has been a benefit becausewe are the largest carrier and we are extremely proudto be the largest carrier and just explaining ourposition and also taking any feedback from the otherside is extremely positive, so we value thoseconnections.

Q572 Lady Hermon: I am just curious, and thereason I ask is, in fact, before the summer, when wetook evidence from Arlene Foster as the Minister forDETI, and also from the Regional DevelopmentMinister Danny Kennedy, we did specifically ask atthat stage if there were any plans for the railconnection, and that was ruled out. But there was notmuch warmth shown towards the suggestion from theCommittee that there should be an upgrade in the roadlink between the international airport and Belfast City.Paul Simmons: We do not always agree on everythingor have exactly the same set of priorities, but we havevery good relationships.

Q573 Lady Hermon: So, it is ongoing lobbying thatyou are conducting.Paul Simmons: It is not just lobbying; it is dialogue,and it can come from either side. But we do have veryfrequent and regular meetings.Lady Hermon: That is very encouraging.Chair: That was very useful. Thank you very muchfor your evidence.

cobber Pack: U PL: COE1 [SE] Processed: [28-11-2012 14:02] Job: 022723 Unit: PG09Source: /MILES/PKU/INPUT/022723/022723_o009_th_NIA Air transport strategy ix (24 October) - Corrected (draft).doc.xml


Wednesday 24 October 2012

Members present:


Mr David AndersonOliver ColvileMr Stephen HepburnLady HermonKate HoeyNaomi Long

________________


Witnesses: Dr Liz Fawcett, Chair, Steering Group, Belfast City Airport Watch, Jenny Simon, Sydenhamresident, Barney Gadd, Belfast City Airport Watch Steering Group/Old Stranmillis Residents’ Association,and Joe McGlade, Belfast City Airport Watch Steering Group/Park Road and District Residents’ Association,gave evidence.

Q574 Chair: Thank you very much for joining us.We are carrying out an inquiry into aviation policy,with particular respect to the impact on NorthernIreland in terms of business, tourism, families and soforth. You are very welcome; we are delighted to seeyou here. Could you quickly introduce yourselves andtell us very briefly about the work you do and thework you have done in the past?Dr Fawcett: My name is Dr Liz Fawcett. I am Chairof the Steering Group for Belfast City Airport Watch.Jenny Simon is a resident from Sydenham and amember of ours. Joe McGlade is a member of ourSteering Group and represents the Park Road andDistrict Residents’ Association in South Belfast.Barney Gadd is also a member of our Steering Groupand he represents the Old Stranmillis Residents’Association, which is also in South Belfast.First of all, we would like to thank the Chairman andmembers of the Committee very much indeed forbeing good enough to hear us today. We would alsolike to say that we really welcome the inquiry you areholding. We feel it is a very important topic.Our group, Belfast City Airport Watch, is an umbrellaorganisation. It has 20 affiliated organisations.Nineteen of those are residents’ associations andcommunity groups, which represent areas that areunder or close to one of the two flight paths in and outof City Airport. We also have 585 associate members.We have been campaigning about the issue of airportnoise, which has a serious impact. As you may beaware, City Airport is one of just three airports thathave been designated by the European Union ashaving city status. It is recognised that it is very closeto a built-up, urban, residential area and therefore islikely to have a serious noise impact. We thought itmight be helpful if we say a little bit about theindividual impact of aircraft noise on family life inour areas and then a few words about our case andwhy we want to see the Committee today. Is thathelpful or not?

Q575 Chair: It would be helpful, but I am concernedabout the time. Can I suggest that we ask questions,and then if there is time at the end and you feel wehave not covered anything, I will ask you to comeback in? Is it okay if we do it that way?

Jack LoprestiDr Alasdair McDonnellNigel MillsIan PaisleyDavid Simpson

Dr Fawcett: That is absolutely fine.

Q576 Naomi Long: You are very welcome; it is goodto see you at the Committee this afternoon. Inparagraph 3.4 of your written submission you mentionthat pilots prefer to fly into the prevailing westerlywinds, so that “most flights take off and land over ahuge swathe of east and south Belfast”. Do you haveany evidence for that assessment and what is yourestimate of how many flights take off and land overthose areas and how many take off and land overBelfast Lough?Dr Fawcett: Belfast City Airport keeps statistics andpublishes them on its website. They try to keep it to amaximum—I think it is usually about 55%—of flightstaking off and landing over the lough, and 45% overthe city. I cannot remember which way around it is,but they do publish those statistics. The preferencecomes from aviation sector websites, which talk aboutwhat pilots prefer. It is knowledge ascertained fromwebsites.

Q577 Naomi Long: Further on that point, we tookevidence early in the session from BALPA, the BritishAirline Pilots Association, who raised the issue ofdirection of travel in and out of the airport. Theyargued that taking off into the wind, or not with a tailwind, is not done as a matter of preference but as amatter of safety. To fly against or with the wind is notan option that they can explore; they have to take offinto the prevailing wind. Therefore, do you feel thatthat is a measure of the airport or simply of the safetyissues around flying generally, so it is not a preferenceof the pilots but something they have to do for safetyreasons and therefore it cannot be interfered with toenable the balance to be achieved?Dr Fawcett: It is hard to know whether, with thecurrent balance achieved for the airport, every singleone of those that goes in and out over the city is donefor safety reasons or not. I totally accept your pointand take on board that there are safety issues there andpilots would be conscious of those. From our point ofview, the strategic argument is important, which yourCommittee is looking at, and particularly the DraftAviation Policy Framework, which is being produced

cobber Pack: U PL: COE1 [O] Processed: [28-11-2012 14:02] Job: 022723 Unit: PG09Source: /MILES/PKU/INPUT/022723/022723_o009_th_NIA Air transport strategy ix (24 October) - Corrected (draft).doc.xml


24 October 2012 Dr Liz Fawcett, Jenny Simon, Barney Gadd and Joe McGlade

by the Department for Transport. There are big issuesaround regulation and noise.Belfast City Airport is in an unfortunate locationgiven that a fairly large proportion of flights do haveto go out over the city, for whatever reason. At thesame time, we want to stress the importance of robust,external regulation. We believe that noise pollutionfrom aircraft noise should be seen like other forms ofpollution, such as air and water pollution, and indeedother forms of noise pollution. We are not experts inhow these other forms of pollution are regulated, butwe do know that they are regulated in a more robustfashion than airport noise currently is.

Q578 Lady Hermon: It is very nice to see all of youhere this afternoon. I am going to follow on fromNaomi Long’s point about adverse noise. In particular,I would like to tease out a bit more detail from yoursubmission. Paragraph 4.3 says that, at present GeorgeBest Belfast City Airport has a “serious adverse noiseimpact on tens of thousands of local residents” andthis is expected to grow. How do you measure the tensof thousands of local residents for whom there is a“serious adverse noise impact” from George BestBelfast City Airport?Dr Fawcett: There are two ways of measuring it.There are the airport’s own figures, which come fromthem commissioning a company to do noisemonitoring every year on their behalf. So there arepublished statistics from that. Our issue with that isthat the actual benchmarks used in that monitoring arenot sufficiently representative of the full impact ofnoise on residents living under or close to the flightpath. To total up the numbers, we looked at thepopulation in each of the electoral wards under orclose to the flight paths; then we worked out whatproportion were under or close to the flight path. Ourestimate is that about 38,000 residents in the BelfastCity Council area live under or close to the flight pathand would therefore be impacted by noise.

Q579 Lady Hermon: In the past year, how manyletters of complaint have you received from peopletalking about “serious adverse noise” from BelfastCity Airport? Those can be letters of complaint, e-mails of complaint or telephone calls of complaint.Dr Fawcett: The complaints would not be directed tous as a residents’ organisation. We do not know howmany complaints City Airport have had this year. Lastyear, I think they said there were 41, but that wouldneed to be checked.

Q580 Lady Hermon: Just 41?Dr Fawcett: They have argued that this shows veryfew people are concerned about the issue. We are toldthat, first of all, people do not know how to complainto the airport or do not realise that they can. Thosethat have often find it quite a disillusioning experiencebecause nothing appears to be likely to change as aresult. Generally, the airport will write and respond tothem—I do not know if they always do but theygenerally will—and they will explain why somethinghappened but that they are allowed to do it. So it isnot really having an impact.

There are indications of the numbers concerned aboutthe issue other than from complaints. The Departmentof the Environment held a public consultation earlierthis year on proposals put forward by the airport for anoise cap, which would permit much more noise thanexists at the moment. There were over 1,300responses to that; they are all on the DOE’s website.The vast majority of those that we saw objected tothe proposals.

Q581 Lady Hermon: That is very helpful. Thewording is “A serious adverse noise impact on tens ofthousands of local residents”, and I wanted to knowwhat the evidential base was for that claim.Dr Fawcett: There is an issue in terms of the airport’sown figures and the metrics that are accepted by theGovernment at the moment. This is one of the issuesthat goes back to the Draft Aviation PolicyFramework. The Department for Transport is askingconsultees, including this Committee, whether thecurrent benchmark the Government uses of 57 LAeqaveraged over 16 hours is satisfactory as a recognitionof where serious community annoyance kicks in.There is a lot of detailed evidence in the appendix toour submission that there are serious impacts at lowerlevels than that. We do not feel it is satisfactory. Ifyou look at that specific metric, last year about 6,000people, according to City Airport’s monitoring, wereaffected at that level. In 2010, it was about 11,500.Between 2007 and 2010, the rates jumpedconsiderably from about 3,500 to 11,500. About24,000 were impacted in 2010 at a lower, 54 LAeqlevel. Sorry, this is all getting highly technical.Lady Hermon: Yes it is.Dr Fawcett: What we are saying is that even theairport’s own figures show that, as recently as 2010,tens of thousands were being impacted.

Q582 Oliver Colvile: Have you noticed what hashappened to house prices? Have they gone down?Joe McGlade: Well, they have gone down anyway.

Q583 Oliver Colvile: Generally, do you think thisissue has affected house prices at all?Joe McGlade: It is difficult to put a figure on thatbecause there has been very little house movement inthe past years anyway. When attending a recent annualgeneral meeting of the residents’ association, somepeople told me if they had known how bad the noisewas they would not have moved in there.

Q584 Oliver Colvile: I have a house in Battersea andI get woken up at 5 o’clock in the morning by aircraftcoming into Heathrow.Barney Gadd: In response to your question, peopledo not think it is worth while to write in about thenoise because it is the same every day; it is a constant.Joe McGlade: I used to complain in writing and Iwould get any one of a shortlist of standard answers.The last time I phoned, on a Sunday afternoon, I wasleft on the switchboard for ages, and eventually whensomeone did come back to me, they said that theoffice dealing with complaints is closed at theweekend and I should phone back the next day.

cobber Pack: U PL: COE1 [E] Processed: [28-11-2012 14:02] Job: 022723 Unit: PG09Source: /MILES/PKU/INPUT/022723/022723_o009_th_NIA Air transport strategy ix (24 October) - Corrected (draft).doc.xml



Q585 Lady Hermon: I do not want the exact addressbut whereabouts in Belfast do you live?Joe McGlade: I live in South Parade, which is on thecentral line of the flight path and about two miles fromthe end of the runway.Lady Hermon: I should explain my curiosity. As theMember for North Down, I am on the flight path,which comes over my home in Donaghadee and pastBangor. What is interesting and curious to me is that,since coming to this post in the 2001 generalelection—and I am not inviting people to do this—I have noticed that the number of complaints to theconstituency office has gone down. Mr McGlade andMr Gadd have both said that people do not feel it isworth their while to complain. It is always worthwhilecomplaining to an MP.Chair: Our e-mail boxes suggest that people still lovecomplaining about things, but we are half way throughour half hour already, so perhaps we could move ona bit.Dr McDonnell: Could I suggest that some of youwrite a few letters of complaint to Sylvia because sheis feeling left out. It is not fair that I get complaintsand Naomi gets complaints but she does not get any.Lady Hermon: I was just curious.

Q586 Dr McDonnell: You are getting double valuehere today because you have the Committee listeningto you formally and a heavy contingent from theAssembly behind you, so your words will be doublyeffective. In your submission, you refer to the failureof the Northern Ireland Executive to establish andimplement robust noise controls, despite having thepower to do so. What discussions have you had withthe Executive about this and what reasons have theygiven?Dr Fawcett: We met the Environment Minister andwe have also met the Minister for RegionalDevelopment. The Environment Minister decided thatthere should be a public inquiry into the currentairport proposals for the amending of its planningagreement, which are on the table and I referred toearlier. We really welcome that move. We met theMinister for Regional Development because theDepartment for Regional Development, like theDepartment for Transport, does have powers toinstitute noise control measures. In theory, DannyKennedy, the Minister for Regional Development,could decide tomorrow that he will do whatever hewishes to ensure the noise is under greater control.Part of our submission to the Department forTransport with regards to its consultation on the DraftAviation Policy Framework is saying that thesepowers should be used, both by the Department forTransport and the Department for RegionalDevelopment. The current system is that noiseregulation is being largely left to planning agreements.We have seen a previous Environment Minister try toget rid of one clause of the agreement, and it is alsosubject to whether or not it will be enforced; not everyclause of the planning agreement is currently beingenforced. You have a Draft Aviation PolicyFramework saying the way ahead is more consultationbetween airports and local communities. That isbrilliant, but the owners of airports can change

tomorrow. We would like to see the issue of noisepollution in terms of aircraft noise being taken asseriously and treated in the same way as other formsof pollution. We would like to see a consistentapproach. It could go right across the UK, and itwould be good if the Republic of Ireland could bebrought in as well. We do not feel it is fair to residentsto simply depend on the goodwill, or otherwise, oftheir local airport.

Q587 Dr McDonnell: You have indicated a numberof meetings, but do you have any formal feedbackfrom the Executive?Dr Fawcett: After our meeting with the EnvironmentMinister last November, we did get a letter from him.We followed up on two issues, one of which was thatwe would like to see the late flights clause in theplanning agreement enforced. There are not supposedto be flights after 9.30, except in exceptionalcircumstances; in fact, there were hundreds of lateflights last year and there have been every year formany years now. We are in further correspondence onthat matter. He agreed at that meeting that he wouldlook at that issue. We await his response because wehave now analysed more closely the reasons given bythe airport. I do not want to get too detailed for othermembers of the Committee not so familiar with theplanning agreement, but there is another clausecurrently being enforced and which we hope willcontinue to be: the seats for sale clause. Those areongoing issues.The Minister for Regional Development wrote us aletter a few days ago thanking us for our submissionon the Draft Aviation Policy Framework and sayingthat he retains an interest. We do not have a specificwritten response from the Department for RegionalDevelopment on the issue of how they would viewtheir legal powers.

Q588 Dr McDonnell: What depth of discussion haveyou had with the airport itself, or the airportmanagement, about your concerns? I know fromexperience on the ground that they have very differentobjectives from you. Allowing for that, do you feelsatisfied with the response you have had from them?Dr Fawcett: We held a public meeting in 2010, andwe invited the airport chief executive to come alongand address that meeting. He declined our invitationand did not say that that date did not suit, nor did hesay that he was more than happy to meet up at someother time. So, although we have met him informallyon one occasion, it was not on any formal basis. Theairport has a consultative committee. Belfast CityAirport Watch has not sought to be represented as abody because we are concerned that then otherresidents’ groups might be denied the opportunity. Wefeel it is more beneficial to encourage individualresidents’ associations to sit on that. Two of ouraffiliated associations do sit on the airport forum. Theairport regards any consultations done as goingthrough that body. When Mr Ambrose declined ourinvitation two years ago, he did state in the letter thatthe forum was there, as far as I recall. That is how theairport sees its consultations.




Q589 David Simpson: Do you accept that not onlyMPs but the heavyweights that were sitting in here amoment ago from the Assembly—and I am notreferring to their physique—and the Executive have avery difficult job to do? We are in a recession. We aretrying to grow the economy of Northern Ireland. Weare trying to encourage businesses to come from allover the world and encourage inward investment; weraised that today in Northern Ireland questions. Doyou not think it will have a detrimental effect if wecontinue to tell businesses in Northern Ireland thatthey can come into Belfast but only at half nine atnight and not after that? We understand there is abalance to be done on this, but do you accept thatdifficult decisions have to be made within the industrytoday? If you do not provide the infrastructure, theflights or the facilities that other countries have, whichthey want to see in Belfast, that could have adetrimental effect on the overall economy and onresidents living in that area because the jobs will notbe there.Dr Fawcett: We absolutely understand where you arecoming from. We would say that you have to look atthe bigger economic picture. This point has been madeto your Committee, in a slightly different way to howwe would make it, by BALPA. You have a region thatis not that large with three airports at the moment. Wehave no issue about City Airport existing and being adomestic and business oriented airport. We do havean issue about international flights being added. If youare looking at the wider economy, you are looking ata situation where between 2007 and 2010 the numberof passengers coming through City Airport doubled,but the number of passengers at International wentdown. There is an undoubted tension there. The moresuccessful City Airport is and the more it gets intothe international markets, the worse news that is forInternational Airport.That is typified most strongly by the move of AerLingus from International to City Airport. That causesmore of a noise issue for residents because they intendto have international flights. In the short term, it takesa Heathrow route away from International, leaving themain airport in Northern Ireland without a Heathrowconnection. It also removes what we understandwould have been one of the best possible futureopportunities for long-haul, because Aer Lingus wasbeing touted as being one of the airlines able to addto the one long-haul flight the International Airportcurrently has. For noise reasons, as well as otherreasons, it is not ever going to be able to operate long-haul out of City Airport.Looking at the nature of the international routesoperated out by City Airport, Aer Lingus will bestarting up with two destinations: Faro and Malaga.How many people are going to come in from there?They are essentially seaside bucket and spadedestinations. While bmibaby was operatinginternational flights, it had eight routes out of CityAirport, six of which were in that category. Theyactually had big billboards tempting people to comeout. International Airport has those sorts of routes aswell, but what is that doing for the local economy?The more people are tempted to spend their holidays

elsewhere, the less money there is for the NorthernIreland local economy.We would ask the Committee to scrutinise carefullythe claims any airport is making about overall benefitsto the economy. We are particularly concerned aboutinternational flights at City Airport because theyrequire more fuel, heavier planes, and they do seemto be noisier. It so happens that those noisier flightsare mostly the bucket and spade type, which are notreally benefitting the local economy.We totally take your point. We can understand it isirritating for people if they are diverted toInternational after 9.30 and want to fly back to City.We would say to those 100 people in the plane: thinkof the thousands, if not tens of thousands, of residentswho are being impacted in terms of their sleep. Wewould also say: please look at the bigger economicpicture.

Q590 Naomi Long: Could you define the late nightflights for members of the Committee who may notbe familiar with how that works? I know there is awindow within which, in exceptional circumstances,you are permitted to land and then beyond that youcannot.The other thing I would challenge you on is that whenwe had evidence from ABTA or the Northern Irishassociation of travel agents, their argument was incontrast to yours. They said outbound tourism is asignificant part of the Northern Ireland economy.There are people who book it, arrange it and it isprovided by people working in the tourism industry.It is actually quite a significant thing. It is somethingthey have challenged Government about as well: thatwe should not only be focusing on inbound tourism,which is part of the package, but outbound tourismcreates jobs, employment and economic growth. Doyou have any comment to make on that? And couldyou clarify for other members what the issue is aroundlate night flights and the rules and regulations aroundthat?Dr Fawcett: I will deal with the late flights issue in amoment. We would not dispute the point about travelagents at all. What we would say is that those jobs aregoing to be there whichever airport people fly out of.To the extent that they contribute to the economy, itdoes not matter whether those flights are going out ofCity or International.We are not economic experts and this is for theCommittee to decide, but if the viability ofInternational Airport has been or is in the futureimpacted by the continual growth of City, then youhave to look at the overall picture. Those travel agentsmight be benefitting from International beingpermitted to grow in international flights rather thanCity.For the information of some Committee members, itis important to bear Dublin Airport in mind. That isthe real competitor for International Airport, and is aserious competitor for City Airport as well. Lookingat this from the outside, and as affected residents, youhave International and City trying to get the same typeof passengers and airlines. Who benefits from that atthe end of the day? Who is steadily growing in themeantime? Dublin. That is partly where BALPA




might have been coming from. We would not go sofar as to say that there should just be one airport forNorthern Ireland, but it does create a strategicchallenge and one that, no doubt, exercises theCommittee.What it says in the airport’s planning agreement aboutlate flights is that there should be no flights after 9.30at night until 6.30 the following morning, except inexceptional circumstances. In exceptionalcircumstances, they can go on up to midnight. Ourissue is over what exactly are exceptionalcircumstances. We are in correspondence with theMinister about this at the moment. Our analysis wouldsuggest that the vast majority of late flights do not fallinto those exceptional circumstances.Chair: We are going to run over a little bit as we haveone or two more questions to cover, but we will haveto be brief.

Q591 Nigel Mills: You just mentioned BALPA. Whatthey said to us when they were here was that BelfastCity has the ideal location and Belfast Internationalhas the ideal runway. One way of fixing that wouldbe to extend the runway at City Airport. I will not betoo surprised if you tell us that is not what you wouldprefer to see as the solution to that quandary.Dr Fawcett: Coming back to the Department forTransport’s Draft Aviation Policy Framework, wewould really like to see the Government taking astrategic approach. We are not the only airport in theUK. There are a few others, aside from Heathrowobviously, that are really seriously impacted. It is avery difficult choice to make. Just because you areone of 100 residents somewhere affected badly by anairport, it does not make you feel your case is any less.We believe that if the Government or Civil AviationAuthority started to do external monitoring andmapping and then took some strategic decisions aboutwhere growth might be encouraged or where airportswould be asked to reduce noise levels, that would bereally helpful. The situation that exists in NorthernIreland is perhaps particularly ironic and absurd inmany ways.Joe McGlade: I would state it differently. We see theCity Airport as the ideal business airport and theInternational Airport as the ideal international andleisure airport.Jenny Simon: To be fair, traffic in Belfast is not bad;it takes 25 minutes within the speed limit to get to theInternational Airport. It is not far for anybody.

Q592 Oliver Colvile: You say in paragraph 2.2 ofyour submission that the International Airport “shouldbe considered to be of strategic regional interest” and“if any further expansion of aviation capacity is totake place in Northern Ireland, it should be at BelfastInternational Airport and certainly not at Belfast CityAirport”. Do you want to see all commercial flights atCity Airport ended and an end to the expansion offlight numbers there, or some other outcome? Whatare you looking for?Dr Fawcett: We do not wish for further expansion atCity Airport. We are not asking for an end to allflights. There is a qualitative difference there.

Q593 Oliver Colvile: Do you think there has alsobeen some academic research done into the impact ofthe airport on the local economy as well?Dr Fawcett: The airport, as part of its proposals forthis noise cap, has put forward an economic case thatwould be subject to scrutiny at the public inquiry. Wehave not done detailed economic analysis ourselves,but we can say that the airport very recently talkedabout being responsible for 1,400 jobs. It haspreviously claimed 1,500. When it was claiming1,500, we got one of the residents’ associations on theairport forum to write to the airport and ask on whatbasis these figures were put together. We discoveredthat, at the time, in 2011, the airport was onlyresponsible for 90 jobs directly. It only directlyemployed 90 people. Some of the others were in moreindirect employment, and some of that figure was anassumption about how many spin-off jobs were likelyto be created. Our point would be that, given howclose City and International Airport are, many of thosepeople if they were not employed at one airport wouldbe employed at the other. When Aer Lingus moved,they said that everybody employed by them atInternational was going to be employed at City.

Q594 Oliver Colvile: I may be mistaken, but I thinkDavid was saying that actually this is a message thatwill be sent to the international market as to whetherBelfast and Northern Ireland is open for business.Dr Fawcett: Obviously, we totally support NorthernIreland being open for business, but we are saying thatwould be assisted in both economic terms and residentnoise issues by the Department for Transport—because they have the relevant power at themoment—and also the Northern Ireland Executivetaking a strategic approach to this. They could decidethat the biggest airport, which is on a greenfield siteand impacting only on hundreds of people throughnoise, according to the figures we have seen, shouldbe the one where growth is permitted.Barney Gadd: It can operate 24 hours.Dr Fawcett: It has a spare runway that is not beingused at the moment. It has two runways.Barney Gadd: There is plenty of scope there.

Q595 Jack Lopresti: Aircraft are getting quieter astechnology improves; they are getting quieter all thetime. Can you see a situation in the short or mediumterm where aircraft technology increases so much itwill enable noise levels to either be eliminated orbrought down to acceptable levels for local residents?Do you see technology in the future as being theanswer?Dr Fawcett: Potentially, it could be. Ourunderstanding is that technological developments arenot getting ahead terribly quickly in that area at themoment. At the end of the day, any airport is acommercial entity. It is going to operate within theparameters set by Government. The biggest incentive,within the UK, would be if the UK Government putsome robust noise controls in place. There is one ideathat I would like to draw to the Committee’s attention.We are not experts, but we were particularly interestedin a study sponsored by the EU that has developed amodel of tradable noise permits for airports. We are




asking that the Government should give that seriousconsideration. Maybe that would have to be on anEU-wide basis, but I bet the airlines would quicklyfind quieter aircraft if they had to.

Q596 Jack Lopresti: I know there are alreadypressures in that direction and it is happening; it isabout whether it is happening quickly enough tosatisfy your residents.Barney Gadd: It is not entirely noise, though. Thereis an elderly couple near me who told me that theywould be in their garden and would hear a roar andthe next thing just over the hedge would appear a hugeAirbus. They said they just feel intimidated. It is notsolely noise, but the size and closeness that they seemto be on Malone Ridge, which is slightly higher thanthe rest of Belfast, so they get it immediately.

Q597 Ian Paisley: I would like to outline whatsuccess would look like. It would not be unfair to saythat, if you drove more business to Aldergrove, Iwould share your view of success, not that it is in myconstituency, but it is on the route to my constituency,so there would certainly be spin-off. If you weresuccessful in reducing the amount of business at City,which is essentially what you are saying, and pushingthat business to maximise the benefit at Aldergrove,would there then be an orchestrated campaign byresidents in Antrim, Lisburn, Dunadry, Templepatrickand other hamlets and villages similar to your own,who would then say they did not want that amount ofnoise coming over their villages and their houses? Doyou see that that might be a follow on? Can you giveus a guarantee you would not be leading andchampioning that campaign? As a person who is aconsultant but also an environmentalist I assume thatpart of your view is based on an environmentalargument to all of this. Is this ultimately an anti-airport argument we are hearing?Dr Fawcett: No, it really is not. We do not get intoother environmental issues beyond the impact onresidents and the Government’s commitments. We arenot saying there should be a further reduction at CityAirport. We are not talking about taking flights out ofthere. As you know, it had gone the other way a bitwith the Aer Lingus move. It is about taking astrategic approach. We have every sympathy withthose impacted; we probably all know people affectedby noise at International. If you look at the publishedfigures, the International Airport is affecting far fewerpeople. Belfast International had nearly 2,500 affectedat 55 LAeq and above in 2007. I think there is amisprint here but I think it was 897 at 57 LAeq orover. I do not want to be too precise, as all this isbeing published, and we can get the figures we havefor the Committee.1 Those figures come from theInternational Airport’s Noise Action Plan.These numbers are tiny compared to City Airport. Youhave a really built up, residential area. People oftenturn around to us and say, “You should not havechosen to live there.” Well actually, most people livedthere a long time before there started being a noise1 Correction from witness: Belfast International had 202

affected at 55 LAeq and above in 2006 and 562 at LDen andabove.

issue with the airport. Those inner East Belfast areasthat are affected are very deprived and alreadysuffering from a lot of other issues. Jenny was hopingto speak about her local school in East Belfast, whichwe were not going to name, where, from herperspective and that of a teacher, there are seriousissues that impact on the teaching of children. Thereis international educational research to back this up.They are already suffering from issues to do withdeprivation and are now further disadvantaged by theimpact of aircraft noise.

Q598 Ian Paisley: Can I just push you again on theAer Lingus move? Are you saying if that was simplya business move with flights from Belfast City toHeathrow you really would not object because it is inthat business run, but it is the additional Aer Lingusflights from Belfast to Faro that are causing the mostobjections?Dr Fawcett: That is what would give us concern. Forthe short period when we had eight internationalroutes operated by bmibaby, the feedback we weregetting and our own personal experience was that theyseemed to be an awful lot noisier. It is very difficultbecause we do not have our own noise monitoringequipment. One thing we would like to see put inplace as a regulation is not just about averages butsomething that captures the individual noise event.The airport itself has said that if its proposals go aheadon this noise cap, it has named 21 schools that wouldbe affected. If you look at the research, it is aboutindividual noise events, unsurprisingly. It might bethat an airport has an acceptable overall average noiselevel, but that is not much help to the teacher standingthere trying to conduct a lesson.

Q599 Mr Anderson: I would like to raise a coupleof issues about numbers. You have cast doubt onwhether it is 1,400 or as low as 90 people employedat the airport.Dr Fawcett: That was directly by the airport.

Q600 Mr Anderson: Do you have any idea howmany jobs are dependent on the airport?Dr Fawcett: City Airport most recently told BelfastCity Council that there were 1,400 jobs. They werepreviously saying 1,500. Something we would likeapplied to all UK airports is more transparency onhow those figures are produced. It was a bit of a shockto us to discover the airport only directly employed90 people, of which only 16 came from East Belfast,as we were told. We are just saying we would likemore evidence. The evidence they provided to theforum was not sufficient to say that we are satisfiedthere are obviously 1,400 jobs there.

Q601 Mr Anderson: We fly in and out of Belfast ona regular basis. On any individual time we go throughthe airport, we would probably see 90 people working.There will be 20 taxi drivers standing outside thebuilding. Have you any idea how many members ofBCAW are employed at the airport or have jobsdependent on the airport?Dr Fawcett: We are not aware of anybody who has ajob dependent on the airport. Having said that, it is




not a question we ask when people apply to join us. Iwould be very surprised if there are not some with atleast indirect connections with the airport.

Q602 Mr Anderson: I will be devil’s advocate here.In your opening remarks you said about the“unfortunate position” the airport is in. Right acrossthis country, there are people in unfortunate positions.People live next door to nuclear power. I myself livenext door to one of the biggest coal mining pit heaps,which has been there for almost 200 years. The realitywas that that was to help the economic developmentof the country. Is that not something that has to belooked at very seriously by people? We need to lookat the impact of what will happen if we do not developthis airport either through longer hours or extendedrunway capacity and whether that will have a negativeimpact on the economy.Dr Fawcett: We are not here as flag wavers for BelfastInternational, but something we hear time and againfrom residents who are affected is that there is aperfectly good airport up the road. If there is to befurther airport development, why can’t it happen atBelfast International? We are talking about an airportthat is just a 30 minute drive from the centre ofBelfast.

Q603 Mr Anderson: People do not want to use it.They vote with their feet and they prefer not to use it.Dr Fawcett: I would take issue with that.

Q604 Mr Anderson: You can ask the people aroundhere who go there every week.Dr Fawcett: I would have to take issue with that.EasyJet is on the record as having tried a route at CityAirport and then pulled back to International. Theyactually publically said at the time that they foundno benefit in passenger numbers from being at CityAirport.2 The competition between airports is forairlines. It is about where airlines feel they can get thebest deal. You would have to question InternationalAirport and City Airport about their views on landingfees and other charges. At the time of the Aer Lingusmove, it was being asserted, and it would hardly be asurprise, that City Airport had been offering lowerlanding fees than International were charging.

Q605 Mr Anderson: Do you know that for a fact?2 Note from witness: They publically said that they found no

benefit from being at City Airport, we can assume thatreferred, at least in part, to passenger numbers.


Witnesses: John Rooney, Rooney Fish, Vice Chair of the NI Assembly and Business Trust and RegionalLiaison Officer, Federation of Small Businesses, and Glyn Roberts, Chief Executive, Northern IrelandIndependent Retail Trade Association, gave evidence.

Q609 Chair: Sorry about the delay. You heard myintroduction earlier, so there is no need to go throughit again. Would you like to briefly introduceyourselves and make a brief opening statement? Therewill be a vote at 4 o’clock and I do not propose to

Dr Fawcett: No. I think either Aer Lingus or CityAirport denied that, so it may or may not be true. It ishard to believe it did not come down to a degree ofcommercial interest and that they would not havedone it for commercial reasons. Aer Lingus seemed tobe perfectly popular up at International. All we aresaying is that the airports are in a market for theairlines primarily.

Q606 Kate Hoey: As someone who does avoid CityAirport when I can—like my colleague over there Imuch prefer International—I want to ask a verysimple question. Do you all never fly from CityAirport? Do you always avoid it? Have you everflown from City Airport?Dr Fawcett: Yes. We all flew from there this morning.

Q607 Kate Hoey: So you are not against it.Dr Fawcett: No, we are totally not against the airport.

Q608 Kate Hoey: So what are you against? You areflying from City Airport during the day and sayingyou do not want fewer flights. Are you saying youwant some flights from City Airport? It seems to methat you are not quite clear what you want. I thoughtyou were going to come along and say you think thereshould be one airport in Belfast.I have Vauxhall across the way. There are hundredsof people complaining about noise. I visited a schoolin Windsor the other week where every 10 minutes orso they have to literally stop while the aircraft go over.As my colleague said, we all have things in our area.What is so special about City Airport that you thinkthere should be special arrangements?Dr Fawcett: No, this is an issue that applies to all UKairports at the moment. One of the big problems withthe Department for Transport’s Draft Aviation PolicyFramework is that it differentiates between threedesignated airports—Heathrow, Stansted andGatwick—and the others. It is saying that all the otherairports can deal with their local communities and weshould leave it at that. That is an over-generalisation,but that is essentially what is in there at the moment.We are saying no; we think all UK airports should besubject to proper, robust regulation. We are not sayingwe want to see City Airport close.Chair: We are going to have to finish. We have peoplewaiting to speak and we have a vote at 4 o’clock.Thank you very much indeed.

bring the Committee back after that, so we shouldbear that in mind.John Rooney: I am John Rooney. I have a seafoodexporting business in Kilkeel, Northern Ireland. I am



24 October 2012 John Rooney and Glyn Roberts

Vice Chair of the Assembly and Business Trust andLiaison Officer for FSB Northern Ireland.Glyn Roberts: I am Glyn Roberts, Chief Executive ofNorthern Ireland Independent Retail TradeAssociation. I am a Board member of the Assemblyand Business Trust.Ian Paisley: Can I declare an interest? I have eatenmany of John’s products.Lady Hermon: And enjoyed them.Ian Paisley: Very much so.Naomi Long: I have already declared my interest inGlyn. I do not want that to sound salacious, but he isthe chairman of our party.

Q610 Mr Hepburn: To what extent are yourbusinesses involved with or affected by air transport?John Rooney: I export all over Europe, and we arebranching out into Asia. The only place with freshseafood—and frozen, too, but mainly fresh—that I canwork from is Dublin. They have built up a hub, so wecan put our stuff into storage in Dublin and then itgoes from there to Dubai. Dublin has two flights aday: one to Abu Dhabi and one to Dubai. Dubai is thebetter hub at this moment in time, but it will change.When it goes to Dubai, they have another hub, whichis second to none, so it can go anywhere in Asia. Thisis what they have built up for the Irish market. Weexport to Dubai and China, but we have to go throughDublin. If customers want to fly into Northern Ireland,nine times out of 10, they fly into Dublin. They stayovernight in Dublin and then, whenever they go back,they may stay overnight in Dublin again. Soeverybody is losing out on hospitality, but mainly weare losing out on time. To customers, time is money.

Q611 Mr Hepburn: That is your particular business.What about other members of the businesscommunity; how reliant are they?John Rooney: They are reliant on it for flying todifferent destinations in the world. Invest NI at thismoment in time are trying to push us to go furtherafield, which all businesses in Northern Ireland aredoing. My son has come home from Hong Kong withInvest NI and a group of people who they flew outthere. There is no direct link; you cannot fly direct.We have one direct flight to the USA. It is crazy thatNorthern Ireland has only one direct flight out there.I think Dublin has 10 flights a day out there—to NewYork JFK or somewhere like that. We only have one,so we need a better airline system.They talk about inward investment. We are lookingfor people to come into the country to invest. Again,they either have to go to Dublin or London and takea link over to Belfast. They are going to try and takethe quickest link they can get, which is into Dublin.We have to have more streamlined flights to suit. Evenflying home from the UK, we only have maybe oneflight a day coming here, so you cannot get home ifyou are at a meeting.On Friday morning, I have to go to Cardiff to meetthe Agriculture Ministers. I have to fly to Bristol earlyon Friday morning, hire a car and go up to Cardiff. Iwould not get to the meeting if I was waiting on aflight from Belfast to Cardiff. Then getting back homeagain, I would only be in the meeting for two hours

and would have to leave and get a flight back. That iswhere the impact is. That is impacting on everybodywho flies into the EU. Everybody is losing time, andtime is money. Businesses cannot afford that.

Q612 Mr Hepburn: Apart from the actual flights,what sort of business is there and how important arethe airports to the local economy and generaleconomy in Northern Ireland?John Rooney: They are quite important. Statisticsshow we have 360,000 visitors coming to Belfast;150,000 arrive by air. The more flights you have, themore visitors you would have. Dublin has taken awayfrom Northern Ireland, because they have that goodhub of an airport for ordinary passengers and goodstransport. It does not matter what goods you aretravelling with, all goods nowadays are sent by flight;you have to work with it. That is the impact. We needa better system in Northern Ireland.Glyn Roberts: To answer Mr Hepburn’s question, Ihave an opening submission that may give a bit ofcontext.Chair: Very briefly please.Glyn Roberts: Yes, I will skim it down. Firstly, wewelcome this inquiry. Many of the written and oralsubmissions members have received show that airconnectivity, as my colleague John has said, is crucialto the long term future of our economy. It has beensaid that aviation unlocks the key of foreign directinvestment. We have always taken the view thathaving two airports is a good thing for NorthernIreland. Firstly, it offers more competition, and itoffers consumers more choice. We want to see bothairports developed to their maximum potential. Withthe Executive looking to expand the number ofexports to BRIC countries, having an expanded airroute network is absolutely essential. That isparticularly true if we are looking to develop tourismto £1 billion by 2020. We need to see continuedexpansion of air routes.Some of the figures you have from the NorthernIreland Chamber are that one in 10 jobs depend onforeign investment and foreign tourists spend£195 million in Northern Ireland. From a retailperspective, that is crucially important. This boilsdown to some basic facts. The more tourists we get,the more customers and more shoppers. If we aregoing to build a retail sector in Northern Ireland thatis one of the key ways we are going to do it. Weshould not forget that our retail sector in NorthernIreland is our largest sector. We need to build on that£195 million. We also need to develop a morecoherent strategy to develop business tourism. We arevery supportive of the new convention centre that ishoped to be built in Belfast.The regional connectivity to Heathrow is absolutelyessential. As Members know, Heathrow is a world huband our links there are absolutely essential. On thequestion of air passenger duty, we have made someprogress on this in long-haul. We do need to makebetter progress on short-haul. I know Dr McDonnellreferred to that in PMQs today. There will be asignificant cost to the Executive. I think it issomething the Executive certainly should look atbecause, given the vast majority of flights in Northern




Ireland are short-haul and we are at a competitivedisadvantage with the Republic of Ireland, who arewell on the way to phase out air passenger duty in thevast majority of flights. We do need to make surethose people are flying through both our airports.I do not agree with the approach of your lastcontributors. I believe that having two strong airportsthat compete and contribute is something positive. Iwant to see the City Airport developed to itsmaximum potential. We are on record supporting theextension to the runway. I am sure the two BelfastMPs on this Committee will agree with me on this:we do not want to see shops vacant. Belfast has onein four shops vacant. We need to see more tourism,and we need to develop the City Airport and theInternational Airport. The Assembly and the FinanceMinister need to take a long serious look at reducingair passenger duty to short-haul flights. Yes, theremight be a cost, but there is a parallel with corporationtax. There is a short-term loss for long-term gain. Bothare essential for building our FDI base and forbuilding the long term potential of our economy.Chair: Thank you, that is very useful.

Q613 Dr McDonnell: Mr Roberts, I am somewhatshocked that you appear to be welcoming aeroplanesflying over the chimney of your house and not gettingdisturbed by it. There we are; I will leave that for themoment. Evidence we received from DETI earlier setout a number of key targets for the Northern IrelandExecutive to consider as necessary for growth. Whatin your view are the main obstacles preventinggrowth? Is it a lack of regional or internationalconnectivity; is it air passenger duty, corporation tax,something else, or all the above?Glyn Roberts: It is all of those. Air passenger duty issomething that we need alongside corporation tax. It isabout developing a long-term vision for the NorthernIreland economy. At times, we have looked at theeconomy too much through short-term fixes. Boththese things are essential for developing our exportpotential and our FDI potential. Then there is thequestion of enterprise zones. Northern Ireland is theonly part of the UK that does not have enterprisezones. That is something we would like to see theExecutive look at. Perhaps they could do somethingbold and different and not a straight cut-and-paste jobfrom the rest of the UK.Yes, I am a resident of Sydenham, a long-termresident, and I live right beside the airport. I listenedto the previous speakers and wondered if they aretalking about the same part of East Belfast that I comefrom. I do not recognise much of what they say. I livein that community. My daughter goes to AshfieldGirls’ High School. My parents live even closer to theairport, and I do not hear any of these complaints fromanybody in the local community. I have no doubt thereare issues there, but they are not in the same way yourprevious witnesses were describing. I think they mustbe talking about a different Sydenham to the one Ilive in.Lady Hermon: That is a very interesting comment,Mr Roberts, thank you.

Q614 Nigel Mills: What are the most commonpatterns for flying amongst your members? Is it flyingelsewhere in the UK, international short-haul orlong-haul?John Rooney: Short-haul or long-haul. They arecoming from all over the UK and the world. We hadpeople from Dubai three or four weeks ago. We hadpeople from China and Hong Kong. There are peoplecoming from everywhere. From Europe, they arecoming in from Italy and France. On Monday, I hadsomeone come in from France. He flew into Dublin,hired a car and drove up on Sunday night. If he hadcome over on Monday morning, he would have lost aday. He was going back to the South of Ireland to visitanother customer of his, but he still had to fly intoDublin because he could not get a direct flight intoBelfast that suited him.

Q615 Nigel Mills: Do you sense that most peoplearriving in Northern Ireland on business are comingfrom the rest of the UK or the rest of Europe?John Rooney: It is getting to be more so from the restof Europe. It used to mainly be the UK. A lot ofEurope’s hub would have been in the UK, with theirhead offices there. Now, because of the downturn,they have downscaled on their offices and are usingtheir own offices to come over directly and visit.Glyn Roberts: To illustrate that point further, one ofthe things we are very keen to see the tourist boarddevelop is Northern Ireland as a weekend shoppingdestination. I look in envy at other cities likeBirmingham, Manchester and Liverpool who havesuccessfully done that. They have significant retailoffering and are attracting shoppers from across theUK and Ireland. I want Northern Ireland to be aweekend shopping destination. There are a lot ofpositive things. We have world-class food; ouragri-food sector is a very strong performer. We haveworld-class tourism events. Coupled with that, we aredeveloping an increasingly modern retail offer inBelfast and many other towns. Yes, we have ourproblems, but we need to do more in terms ofdomestic tourists from the UK and the island ofIreland. There is a lot of potential there. Yes, withinthe UK we have a better variety of flights, but weneed to build on that. We need to build within WesternEurope. We have no air links to Germany either. Thereare a lot of things we need to get right. Air passengerduty is essential to that.John Rooney: As I said, my son was in Hong Kongfor a few weeks with Invest NI. Because of theconnection of flights, he had a six-hour stopover—I am not sure at which airport in London—to get aconnection back to Belfast.

Q616 Ian Paisley: I think it is important to underlinewhat you said right at the beginning. You are probablyso used to doing it that it is water off a duck’s back,but you harvest from our seas around Northern Irelandand you export to China and the Middle East. Is thatcorrect?John Rooney: Yes.Ian Paisley: Very few companies in Northern Irelandexport to China and Middle East, so it says somethingvery important about our product.




Q617 Lady Hermon: The only other thing I wouldask is if you could just elaborate on the quantities.I am really fascinated by what you said at the verybeginning, but could you give us an idea of quantities?John Rooney: It is a market that is generally building.The South of Ireland have captured that market. I havebeen doing exhibitions in Dubai for the past threeyears and exhibiting every year in February. Now theyhave a dedicated seafood show in Dubai thisNovember. We have been working on that. It is slowbut sure and it is coming. The South of Ireland, Iwould say, put out at least 25 to 30 tonnes of freshseafood every weekend.

Q618 Ian Paisley: You will know, from working inthe agri-food sector, that export of our product beyondthe British Isles is not unusual. Pork products are ahuge seller in the Middle East, and the Far East inparticular. Poultry product is a huge seller in theMiddle East. If that is the trend of where our marketsare going, are you saying you want to see a decisiveeffort made to get a carrier to operate out of NorthernIreland that looks east and carries product and peopleeast?John Rooney: Yes, that is what we are looking for.It is not just for fresh product or seafood. There arenumerous things. Take airline seats: B/E Aerospacesends them to London and then they are sent on theChina, or wherever else, to be fitted out. There is nodirect link for them. Agricultural people send out beef.There is a variety. People send out cheese. We havethat and we have the industry in Northern Ireland todo that. We could sell them numerous items, but wejust do not have the infrastructure to get it out there.

Q619 Ian Paisley: Would you say a decisive effortneeds to be made to recognise that and attractinvestment?John Rooney: If we are trying to attract inwardinvestment to Northern Ireland to grow the economy,we need something to back it up. If you are in Asia,it does not matter where—Hong Kong, China, Dubaior Abu Dhabi—you need to get here as quickly aspossible and get home as quickly as possible. FromDubai, they can fly in to Dublin and back home anddo the trip within 48 hours. If you go to London andhave a stopover in London, you lose half a day. Thenyou have to do another link-up. You cannot do it in48 hours; we have done that in the past. It is not justEurope; we need more direct links to Northern Irelandfrom the UK.

Q620 Mr Anderson: Can I just confirm what MrRooney’s just said? They started running a servicefrom Newcastle to Dubai about five years ago and sawan amazing impact on the place, because you avoidhaving to go to London or Amsterdam.Mr Hepburn: They are putting an extra one on.Mr Anderson: As Stephen says, they are going toextend it to two services.John Rooney: It has to be built on what is there.

Q621 Naomi Long: We heard evidence earlier in thisinquiry from the CBI. They said that larger businessesrely very heavily on transport and attach a higher

importance to use of the international connectionsthrough Heathrow. Would that also hold true tomembers of the Assembly and Business Trust and thebusinesses represented there? Are the Heathrowconnections crucial for those businesses, as theywould be for those represented by the CBI?Glyn Roberts: Firstly, the Assembly and BusinessTrust takes in people from small businesses to verylarge businesses, so it is a very diverse membership.Northern Ireland only has a population of 1.8 millionand the fact we have that link to a major internationalhub in Heathrow is absolutely crucial. It is absolutelyvital that we build on that and expand on that.You asked the previous speakers what route they flew.We all flew from International at a very early hour. Wewant to see both airports developed to their maximumpotential. Too much has been talked about doing oneairport down at the expense of another. I think thereis potential for developing both and having realcompetition. Oxford Economics have done some veryvaluable work on this. They made it very clear thataviation is the key to unlocking more FDI. Assumingthat the Prime Minister gives the okay for corporationtax and in the long term we get more foreign directinvestment, having an expanded suite or expandednumber of international flights is absolutely crucial. Ifwe are really serious about raising our game andattracting more FDI, we simply need to build ourinfrastructure.Air infrastructure is an essential part of that. There areother things we need to do as well, but the bluntreality is that we cannot walk from Northern Ireland.We have some fantastic ferries as well, which areparticularly fantastic for Scotland, but we have nochoice: air is absolutely vital for us, whether you arethe very smallest business or the very largest business.John Rooney: If you are in the UK, for example inScotland, you have a train service. We do not havethat. We do not even have that in Belfast to get fromthe airport to Belfast. You cannot go from one airportto the other. Trying to link a train service to eachairport is another item.

Q622 Oliver Colvile: Which is better for theNorthern Ireland economy: a third runway atHeathrow or second runway at Gatwick?Glyn Roberts: I would be tempted to say both.Oliver Colvile: That is greedy.Glyn Roberts: I know that probably is a bit of a copout answer. The expansion of Heathrow is an issue thecoalition Government may decide in the next term.Oliver Colvile: Hopefully, it will not be a coalitionGovernment.Mr Anderson: Hopefully, it will not be.Oliver Colvile: It will be a Conservative Governmentin its own right. Let’s just make sure we get the factsright.Glyn Roberts: Let’s say the next Government ofwhatever colour has to make a serious judgment callon that. If we are serious about developing the UKeconomy and building air links with the BRICcountries, we need to expand at Heathrow. That maybe an unpopular thing, but we need to look at thelong-term economy in the UK. A third runway issomething that should not be ruled out, nor should an




extension of City Airport’s runway. In both of our ownairports, perhaps we do need to look at betterconnections between Belfast and those two airports.There are rail links very near to them. I know theMinister for Regional Development has ruled that outin the short term, but perhaps we need to revisit thatat some point because our infrastructure is in seriousneed of overhaul, particularly in the west of theProvince. If we get all these new tourists coming in, Iwant to ensure they do not just stay in the GreaterBelfast area, but visit many areas west of the Bannas well.

Q623 Oliver Colvile: Mr Rooney, what do youthink?John Rooney: I do not fly to London that much. Withmy FSB hat on, I would fly in to London Gatwick, orwhichever one suits my flight. Really and truly, it doesnot make an awful lot of difference to me.

Q624 Oliver Colvile: What about your members atthe FSB?John Rooney: The membership we have in NorthernIreland are mainly small to medium-sized. They arein their own hub. If they are going to London, theyare not going every week but maybe going once amonth. It is those going every week or twice a weekthat it impacts on. It depends where they live and whatthe nearest point is. There are a lot of factors that theyhave to build in.Oliver Colvile: I should declare an interest as amember of the FSB as well.

Q625 Naomi Long: You earlier mentioned the issueof air passenger duty, and I wanted to explore that abit. There has been some work done on long-haulAPD but, as you say, that affects one flight only;although, if we were able build on that one flight, itmay be more beneficial. If the UK rate of APD waseither reduced or removed from short-haul flights,what impact would that have on small businesses inNorthern Ireland and independent retailers? Wouldyour members be able to change their business modelby employing more people, reducing their prices orbringing other benefits to their customers? How doyou think it would impact on how they were able todo business?John Rooney: A lot of goods are brought in by airlink. If you have customers coming over to visit, theywould come to visit more. I would not say the goodswould get much cheaper, but you would be able to goand see people more. The duty for me coming overhere was something like €39 on one flight. Ifsomebody was going to a show every week to buytheir goods as cheaply as possible, that is £400 a year,roughly. It is all money.Glyn Roberts: The Executive have set some veryambitious targets on tourism, and rightly so. If we areto achieve that £1 billion in terms of net contributionto the Northern Ireland economy by 2020, we canonly do that by an expanded amount of air routes. AsI said at the outset, more tourists means moreshoppers. Not only that; it is good for our hospitalitysector as a whole. We have to focus on that and anexpanded number of air routes is absolutely essential.

The dynamic in all this is that the Republic of Irelandare close to removing air passenger duty from all theirflights. That would put Northern Ireland at a seriouscompetitive disadvantage. There are comparisons withcorporation tax on this in so many ways. Let us notforget that the Republic of Ireland’s economy ismoving out of recession fast—it is bouncing back—and 12.5% corporation tax is a major reason why theyare still attracting more FDI than Northern Ireland isby a long way. It is all about the long-term vision forthe Northern Ireland economy.I realise that the Finance Minister in Northern Irelandhas ruled this out in the short term, but I think itdeserves serious consideration. I know the Chairmanon the ETI Committee in the Assembly is fullysupportive of that there. He talks about us reachingmaximum potential. The question the Executive needsto ask itself is whether this is a price worth paying.There has been talk about figures of £50 million. Wedo not know the exact amount it would cost, but if itmeans that we reach £1 billion in tourism potential,that is a long-term investment we should beseriously considering.John Rooney: Seafood was always a brilliant productin the South of Ireland. In Northern Ireland, it isstarting to become more so. The more tourists youhave, the more money they spend and the more foodthey eat. A lot more seafood is being eaten. This iswhere the economy would benefit from tourists aswell. That is where your tax comes in.Glyn Roberts: We are not fulfilling the potential ofbusiness tourism; particularly, there could be moreconventions and conferences in Belfast. That is whywe welcome Belfast City Council’s commitment toopening a convention centre. There is a lot of potentialthere, because you could run a decent conference inNorthern Ireland very effectively. We are onlyscratching the service of the potential of that.

Q626 Lady Hermon: It is very nice to see the twoof you here today. It is very nice to see Mr Robertsback from the North Down constituency.Glyn Roberts: It is always a delight to be back.

Q627 Lady Hermon: Can I just slightly clarify yourremarks about air passenger duty? Am I right inthinking that, just as you would be in favour of alower corporation tax in Northern Ireland comparedto Great Britain, you are saying you want to see APDscrapped for domestic flights from Northern Ireland,as compared to the rest of the UK, or do you want tosee APD scrapped totally, as in the Netherlands,Belgium and other European countries? Can I justclarify which version you and your members support?Glyn Roberts: Concerning corporation tax, we arepart of the Grow NI coalition of businessorganisations that wants to see devolution of that anda rolling rate towards 12.5% corporation tax. APD issomething the Executive needs to have another lookat. We need to see what the short-term cost would beand weigh that against the long-term gain. The realityis that Northern Ireland is the only part of the UK thatshares a land border with another EU member state.That member state is fast moving out of recession,while the Northern Ireland economy is still very




sluggish in its recovery, if there even is a recovery. Ibelieve that if we are to develop to our full potential,we need to be looking at long-term investments. Thatmeans corporation tax, and it may mean air passengerduty as well. We welcome that there is progress there,particularly as at one point we were in real danger oflosing that New York flight, which would have beena big blow. One thing we need to look at is whetherwe want to make the long-term gain.

Q628 Lady Hermon: Could I just pin you down onthis: are you in favour of APD on domestic flightsbeing removed for Northern Ireland compared to therest of the UK, or does your association believe thatAPD should be scrapped across the country?Glyn Roberts: We would like to see Northern Ireland,given its reliance on air, have a much reduced APDthat puts us on a level playing field with the Republicof Ireland.

Q629 Lady Hermon: Interestingly, earlier today, wehad Northern Ireland questions and this issue of APDcame up; I do not know whether you were present ornot. What was interesting was that in the responsefrom the Minister of State, who is new to this portfoliobut very competent indeed, he said on two separateoccasions that there had not been a request to theGovernment from the Northern Ireland Executive.Can I ask whether either of your associations haveformally requested from the Executive at Stormontthat APD for Northern Ireland should be scrapped?John Rooney: FSB have discussed it in Stormont. Ihave not been there, but they have discussed it withthe Executive. Coming back to the issue of airpassenger duty, corporation tax would be a bigadvantage, but air passenger duty would be a biggeradvantage to the small to medium business that wouldnot be paying corporation tax anyway. They will beusing flights. Like I said, Northern Ireland is goingfurther afield. In my mind it needs to be scrappedevery place to give the small to medium-sizedbusiness that extra push.

Q630 Lady Hermon: I agree with that line. Sorry,Mr Roberts?

Glyn Roberts: I have no problem with that, but I thinkit is something the Executive needs to seriously lookat.

Q631 Lady Hermon: Has your association askedthem to do so?Glyn Roberts: Not as yet. We are always looking atnew policy and new policy priorities. This is about along-term issue. We are engaged with the Executiveall the time. At our next meeting with the FinanceMinister, that is something we will be raising.

Q632 Lady Hermon: On a completely differentsubject, in response to an earlier question from acolleague, you were scathing about the evidence wereceived, just prior to your taking your seats aswitnesses, from Belfast City Airport Watch as a group.Was that because you felt their evidence was notsufficiently based on fact or reality? What was it thatyou found most objectionable about the evidence theygave to us as a Committee?Glyn Roberts: I would not say I was scathing, but Iwould say I fundamentally disagree with what theysaid. I recognise the huge contribution the CityAirport makes to the economy of East Belfast and thewider economy. I have to say, and this is me speakingpersonally as a resident in East Belfast, that I do noteven notice those flights. I do not see peoplecampaigning or chomping at the bit to do down theCity Airport or complaining all the time. Obviously,it is for them to justify that, but I do not seecomplaints at the same magnitude that they are talkingabout. I am not saying there are not genuine concerns,but I think the airport has made real efforts in recentyears to try and address some of the residents’concerns. They have formed a community forum toengage on this. I just do not recognise the scenariothey are painting. I have no doubt there are somegenuine concerns, but I do not even notice thoseflights as they fly over.Chair: There is a vote being called, so we will haveto finish the meeting there. Thank you very much forcoming.

cobber Pack: U PL: COE1 [SE] Processed: [28-11-2012 14:07] Job: 022723 Unit: PG10Source: /MILES/PKU/INPUT/022723/022723_w022_michelle_AS22 - Belfast City Airport.xml


Written evidence

Memorandum from the Consumer Council

1. Introduction

1.1 The Consumer Council is an independent consumer organisation, working to bring about change tobenefit Northern Ireland (NI) consumers. Our aim is to make the consumer voice heard and make it count.

1.2 We have a statutory remit to promote and safeguard the interests of consumers in NI and we havespecific functions in relation to energy, water, transport and food.1 These include considering consumercomplaints and enquiries, carrying out research and educating and informing consumers.2

1.3 The Consumer Council is also a designated body for the purposes of supercomplaints,3 which meansthat we can refer any consumer affairs goods and services issue to the Office of Fair Trading,4 where we feelthat the market may be harming consumers’ best interests.

1.4 In taking forward our broad statutory remit we are informed by and representative of consumers in NI.We work to bring about change to benefit consumers by making their voice heard and making it count. Torepresent consumers in the best way we can, we listen to them and produce robust evidence to put theirpriorities at the heart of all we do.

1.5 The Consumer Council for Northern Ireland has statutory responsibility under the General ConsumerCouncil (Northern Ireland) Order 1984 to represent the interests of passengers travelling to, from and withinNorthern Ireland.

1.6 In addition, the Consumer Council has been designated to handle passenger complaints made underRegulation (EC) No 1107/2006 (the Access to Air Travel Regulation) relating to an airport in Northern Irelandor a flight departing from an airport in Northern Ireland by the Civil Aviation (Access to Air Travel for DisabledPersons and Persons with Reduced Mobility) Regulations 2007 (SI2007/1895). The Consumer Council alsohandles passenger complaints made under Regulation (EC) No 261/2004 concerning the rights of passengersin instances of flight delay, cancellation and denied boarding.

1.7 In its response to the Department for Transport’s March 2011 consultation on its Developing aSustainable Framework for UK Aviation: Scoping Document the Consumer Council stated that in addition tothe importance of the UK Government recognising the unique needs of Northern Ireland passengers in itsaviation framework, the Northern Ireland Executive should also produce a strategy to guide development ofthe region’s aviation sector.

1.8 A Northern Ireland air transport strategy is required to assist the sector develop in a manner that bestserves the long term interests of Northern Ireland consumers by:

— Promoting competition and choice for consumers and the development of sustainable routes.

— Ensuring proposed service and infrastructural developments at Northern Ireland airports are assessedrigorously and promptly with full consideration afforded to all relevant economic, social andenvironmental impacts.

— Addressing issues concerning surface access to airports and public transport links to towns and citiesacross the region.

— Ensuring the NI Executive promotes the unique aviation needs of Northern Ireland consumers inorder that they are fully recognised at UK Government level.

2. Regional and International Connectivity

2.1 Northern Ireland passengers are dependent on air travel to access GB destinations and further afield. Inits report Air Passenger Duty: implications for Northern Ireland, the Northern Ireland Affairs Committeerecognised “that for many people in Northern Ireland travelling by air is not a luxury, but is an essentialelement of family and economic life”.5

2.2 The high level of dependence on air travel amongst Northern Ireland consumers is highlighted by theConsumer Council’s examination of 2011 transport statistics. In 2011 UK airports handled6 219 million1 The Consumer Council undertakes its specific functions in relation to food recognising the role of the Food Standards Agency

(FSA). The FSA has responsibility for the development of food policy and for the provision of advice, information and assistance,in respect to food safety or other interests of consumers in relation to food. Therefore, to ensure good value and use of publicmoney, the Consumer Council and FSA have a memorandum of understanding and the Council’s strategic focus on food isprimarily in relation to food prices and customer experience.

2 The General Consumer Council (Northern Ireland) Order 1984, 1984 No. 1822 (N.I. 12),http://www.legislation.gov.uk/nisi/1984/1822/contents

3 The Enterprise Act 2002 (Part 9 Restrictions on Disclosure of Information) (Amendment and Specification)http://www.legislation.gov.uk/uksi/2003/1400/schedules/made

4 The OFT is the UK’s consumer and competition authority. Its mission is to make markets work well for consumers. It is a non-ministerial government department established by statute in 1973 http://oft.gov.uk/about-the-oft/

5 House of Commons Northern Ireland Affairs Committee Air Passenger Duty: implications for Northern Ireland (July 2011).6 Civil Aviation Authority passenger statistics

cobber Pack: U PL: COE1 [O] Processed: [28-11-2012 14:07] Job: 022723 Unit: PG10Source: /MILES/PKU/INPUT/022723/022723_w022_michelle_AS22 - Belfast City Airport.xml


passengers.7 Passengers travelling on domestic services account for 17% of all UK passenger movements.By comparison, Northern Ireland airports handled 6.9 million passengers during 20118 and passengerstravelling on UK domestic services account for 75% of all Northern Ireland passenger movements. These arejourneys which GB consumers are not required to make by air given they can access GB destinations by roador rail. Northern Ireland’s domestic air services are therefore vital in terms of enabling mobility between NIand GB.

2.3 In addition to the importance of facilitating regional connectivity, air links to Heathrow Airport areessential because they enable Northern Ireland passengers to access worldwide destinations by travelling onconnecting services.

2.4 In light of the UK Government’s decision not to permit development of a third runway at Heathrow, theConsumer Council believes it is essential the Government takes action to ensure slots are reserved for airlinesoperating regional services from areas from which it is not practicable to access Heathrow by road or rail.

2.5 The Airports Amendment Bill, a Private Members’ Bill sponsored by Lord Empey, proposes amendingthe Airports Act 1986 to give the Secretary of State for Transport the power to direct an airport operator totake action considered to be in the interests of ensuring sufficient national air infrastructure between hub andregional airports. The Bill also proposes amending the Airports Act 1986 to require that the CAA has regardto the need to ensure adequate services between hub and regional airports. The Bill is awaiting examination atCommittee stage on the House of Lords.

2.6 Our air links, both international and domestic make an important contribution to the region’s economicgrowth and social well-being. Our air services support trade and inward investment and are also essential tofacilitating tourism.

2.7 In order to increase consumer choice, CCNI would also welcome the development of additional servicesto European hub airports to provide improved options for interlining. Currently Northern Ireland has onlypoint-to-point services to European Hub airports.

3. Implications of the Proposed Takeover of bmi by IAG

3.1 Currently Northern Ireland is served by air routes to Heathrow operated by bmi from Belfast City Airportand Aer Lingus from Belfast International Airport. In 2011, approximately 10% of passenger traffic throughNorthern Ireland airports was to or from Heathrow.9

3.2 CCNI is concerned regarding the potential impact on the service operating between George Best BelfastCity Airport and London Heathrow following the acquisition of bmi by IAG, and has brought its views to theattention of the European Commission and IAG.

3.3 bmi’s Belfast City—Heathrow service is the busiest service operating from Northern Ireland. bmioperates seven return services on weekdays and carried 426,000 passengers in 2011, accounting for 6% of allNorthern Ireland passengers that year.

3.4 Acquisition of bmi gives IAG ownership of bmi’s 56 daily slots at Heathrow, which represent 8.5% ofthe take-off and landing slots at the airport. There is a danger that IAG may reallocate the slots currently usedby bmi for services between George Best Belfast City Airport and Heathrow to more profitable routes.

3.5 Such a move would significantly diminish the frequency of services between Northern Ireland andHeathrow, disadvantaging Northern Ireland consumers by limiting access to the UKs hub airport. Willie Walsh,IAG Chief Executive, has commented publicly that IAG’s acquisition of bmi will give security to those whodepend on the Belfast—Heathrow link, however, despite repeated requests, IAG has not provided the ConsumerCouncil with an assurance that the takeover will not result in the current level of provision being reduced interms of either frequency or capacity of service.

4. Tax Policy

4.1 The Consumer Council welcomes the proposed devolution of APD rates for direct long-haul flights tothe Northern Ireland Assembly as prescribed by Schedule 1 of the UK Finance Bill 2012.

4.2 The Consumer Council believes however that the planned devolution of APD bands B, C and D to theNorthern Ireland Assembly falls far short of adequately addressing the APD burden borne by Northern Irelandconsumers. Given Northern Ireland consumers’ high dependence on air travel, APD, in its current structure, isunfair as it financially disadvantages NI consumers in comparison to their GB counterparts. Not only does theduty impede NI consumers, it represents an additional cost to business and tourism, discouraging trade with,and foreign investment into Northern Ireland.

4.3 The Northern Ireland Executive Minister for Finance and Personnel has explained10 that approximately£60 million will be raised in APD from passengers departing Northern Ireland airports in 2012–13,7 Approximately 38 million travelled to a domestic airport, approximately 115 million travelled to an EU airport and approximately

67 million travelled to a non-EU international airport.8 Approximately 5.2 million travelled to a UK airport and approximately 1.7 million travelled to a non-UK airport9 In 2010 751,214 passengers travelled on Northern Ireland’s Heathrow services.10 Response to AQW 5487/11–15

cobber Pack: U PL: COE1 [E] Processed: [28-11-2012 14:07] Job: 022723 Unit: PG10Source: /MILES/PKU/INPUT/022723/022723_w022_michelle_AS22 - Belfast City Airport.xml


approximately £5 million of which will come from passengers departing on direct long haul flights. Therefore,elimination of APD on long-haul flights, whilst welcome, will fail to address the significant burden APD placeson the majority of Northern Ireland passengers.

4.4 The Consumer Council welcomed the Northern Ireland Affairs Select Committee’s recommendationmade in July 2011 that APD should be abolished on all flights operating to and from Northern Ireland’s airportsin recognition that for many people in Northern Ireland travelling by air is not a luxury, but is an essentialelement of family and economic life.11 The Consumer Council believes the Northern Ireland Executive shouldcontinue to press HM Treasury to take action to reduce the unfair burden of APD on Northern Irelandpassengers. Air travel is essential to enable Northern Ireland consumers to access GB destinations and domestictravel accounts for the vast majority of Northern Ireland passenger journeys. It is therefore unfair that NorthernIreland consumers face taxation for essential domestic travel that other UK consumers avoid. In recognition ofthe requirement on Northern Ireland consumers to travel by air to access GB it is essential any reduction inAPD for flights to and from Northern Ireland is not accompanied by a subsequent reduction in the NorthernIreland Block Grant.

4.5 Furthermore, Northern Ireland is unique because as part of the UK it has the highest rate of aviationduty in Europe but also has a land border with another Member State, the Republic of Ireland (ROI), thatcurrently charges Air Travel Tax (ATT) at €3 per person per flight. This disparity in terms of aviation dutymay serve to undermine the Northern Ireland aviation sector with passengers incentivised to travel via airportsin ROI in order to save money.12

4.6 Decreased demand for air services from Northern Ireland’s airports could lead to a decline in the numberof services and routes operated, reducing choice, convenience and competition for consumers living in NorthernIreland. Moreover, an increase in the number of Northern Ireland passengers travelling via ROI airports ratherthan Northern Ireland will result in a loss of revenue for HM Treasury, Northern Ireland airports and theregion’s economy.

4.7 HM Treasury exempts flights departing from airports in the Scottish Highlands and Islands from payingAPD. The Consumer Council believes this establishes a precedent for flexible application of the rate at whichAPD is set and given the high dependence of Northern Ireland consumers on air travel as a result of theregion’s peripherality, the Consumer Council believes HM Treasury should further consider the needs ofNorthern Ireland passengers in determining the rate of APD levied on flights operating to and from the region.

4.8 The UK Government has committed to invest in high speed rail to reduce dependence on domestic airtravel. DfT estimates the total infrastructure capital cost of the HS2 Y network including a link to Heathrowwould be around £32.2 billion and that it would generate overall benefits including Wider Economic Impactsof between £40 billion and £47 billion.13 Northern Ireland consumers will not benefit from the developmentof high speed rail in GB and so to ensure equality of access with other UK regions the Consumer Councilbelieves HM Treasury should remove APD for flights to and from Northern Ireland to benefit the region’sconsumers and its economy.

5. The Implications for Northern Ireland of the Civil Aviation Bill

5.1 The Consumer Council welcomes the Government’s intention to replace the Civil Aviation Authority’s(CAA) current multiple priorities with a primary focus on furthering passengers’ interests via the Civil AviationBill. Additional information is required, however, to explain how the CAA’s new focus would be implementedby detailing how the CAA intends to further the interests of passengers’ in instances where they conflict withthe interests of the aviation industry. Of particular interest is whether the flexible licensing regime proposedby the Bill will enable the CAA to intervene where airport charges disadvantage particular passenger groups.

5.2 It is essential that the CAA consults with passengers on a regular basis to identify areas of need forpassengers and prioritises the order in which these issues will be addressed based on the information providedby passengers. It is equally important that the CAA communicates information to passengers concerning thework it is undertaking in furthering their interests and how any forthcoming developments will impact uponthe protection they are entitled or their travel experiences.

6. Public Transport Links to and between Northern Ireland Airports

6.1 Consumer Council research published in 201014 indicates the number of Northern Ireland passengerstravelling to airports by public transport is low. Most passengers prefer to travel to and from the airport by car,either getting a lift from family or friends (43%) or driving and parking at the airport (38%). Only five% of11 House of Commons Northern Ireland Affairs Committee Air Passenger Duty: implications for Northern Ireland, July 2011.12 Flights and Rights: A Consumer Council research report into passengers’ knowledge of their rights and attitudes to air travel

(May 2010) identified that passengers from Newry and Enniskillen feel it is more convenient to travel to Dublin airport by busthan it is to either of the Belfast Airports and with the recent road improvements through to the Republic of Ireland, DublinAirport is a viable alternative for many Northern Ireland consumers.

13 Department for Transport, February 2011, Economic Case for HS2 The Y Network and London—West Midlands14 Flights and Rights: A Consumer Council Research report into passengers’ knowledge of their rights and attitudes to air travel

(May 2010).



passengers made their most recent journey to the airport using a Translink service (bus or rail) and three%travelled with a private bus company.

6.2 The research identified a number of reasons why so few people travel to Northern Ireland’s airports bypublic transport.

— Passengers from Newry and Enniskillen feel it is much easier to access Dublin Airport by bus thaneither of the Belfast airports.

— Translink services require passengers from areas outside Belfast to travel into Belfast and take aseparate bus to either George Best Belfast City Airport (GBBCA) or Belfast International Airport(BIA), significantly increasing journey times and distance travelled.

— The frequency of public transport to City of Derry Airport is low. A greater frequency of services,more closely aligned to flight times, would increase the number of passengers travelling by publictransport to the airport.

— Passengers believe the rail service to GBBCA requires improvement and would welcome theintroduction of a rail link to BIA.

6.3 The report recommended the Northern Ireland Executive further improve public transport to providepassengers with direct access to Northern Ireland’s airports from major towns and cities.

April 2012

Memorandum from Belfast City Airport Watch

1. Introduction

1.1 We welcome the initiative of the Northern Ireland Affairs Select Committee in examining the issue ofan air transport strategy for Northern Ireland. We believe there is an urgent need for both the Department forTransport (DfT) and the Northern Ireland Executive to take a much more strategic approach to the developmentand regulation of airports in Northern Ireland.

1.2 Belfast is one of the smallest cities in Europe to be served by two airports. In the 10 years to 2010, thenumber of passengers handled by one of those airports—George Best Belfast City Airport—more than doubled.But that expansion was, in part, at the expense of the other airport—Belfast International, which lost a fifth ofits passengers within a three year period.

1.3 Yet, while Belfast International sits in a rural location with plenty of spare capacity and easy accessibilityto most of Northern Ireland, including Belfast itself, Belfast City Airport is located right by a major urbanresidential area. Some 38,000 people live under or close to one of its flight paths in Belfast alone, and theairport’s own figures show that, in 2010, more than 11,000 people were affected by aircraft noise at a leveldeemed by the UK government to cause “significant community annoyance”. That latter figure had trebled inthe three years since 2007, and is far higher than the 1,400 affected by aircraft noise at the same level nearStansted and the 2,850 people who experience aircraft noise at that level near Gatwick.

1.4 Moreover, Belfast City Airport has recently submitted proposals to the Department of the Environmentin Northern Ireland which, according to its own projections, would result in a massive increase in both theamount of noise emitted by aircraft flying to and from the airport, and in the numbers affected at the abovesignificant noise level.

1.5 Below we outline a series of recommendations with regard to an air transport strategy for NorthernIreland. This is followed by background information which provides a rationale and context for theserecommendations, more specific information on the available evidence about the impact of aircraft noise onlocal communities, and brief information about Belfast City Airport Watch.

2. Recommendations

2.1 At present, responsibility for aviation strategy lies with the DfT and the government has made clear thatit has no intention of devolving this power in the immediate future. We have, therefore, presented our proposalsfor a more effective air transport strategy for Northern Ireland within the context of the UK-wide SustainableAviation Framework which is currently being developed by the DfT. As the issues of noise pollution andduplication of routes from nearby airports are not confined to Northern Ireland, we believe these issues shouldbe addressed in an integrated and consistent fashion through the Sustainable Aviation Framework on a UK-wide basis.

2.2 Our key recommendations, which we have already submitted to the DfT’s Sustainable AviationFramework consultation, are as follows:

— Belfast International Airport should be considered to be of strategic regional interest for three keyreasons:

— it is the only Northern Ireland airport which has the capacity to serve long-haul routes;



— it has a relatively small environmental impact in terms of noise, given its location in a lightlypopulated rural area; and

— it has a location accessible to most people in Northern Ireland and one which could be optimisedfurther to/from Belfast by means of a direct rail link.

— If any further expansion of aviation capacity is to take place in Northern Ireland, it should be atBelfast International Airport and most certainly not at Belfast City Airport for the reasons outlinedabove.

— The DfT should conduct a mapping/scoping exercise for all UK commercial airports which measuresand publishes the following:

— the routes offered by each airport;

— the extent of any duplication of services at regional airports within one hour’s drive of eachother;

— purpose of trip data for each airport;

— noise contours, with maps and details of the affected populations, at the following noise levels:>50 LAeq, >54 LAeq, >57 LAeq, >60 LAeq, >63 LAeq and >72 LAeq—and which alsoincludes measurements which allow for and properly reflect the greater annoyance, disruptionand health risk experienced by residents in the evening, night-time and early morning, andmeasures which reflect noise pollution caused by particularly noisy individual aircraft events;and

— details of all schools within the >57 LAeq contours.

— The DfT’s Sustainable Aviation Framework should use this data to identify those regional airportswhich are affecting a significant population (eg greater than 10,000) at >54 LAeq and above and/or any schools at >57 LAeq or more, and which are duplicating services provided at another airportnearby. The Framework should clearly state that no further growth in traffic is permitted at thoseairports unless the airport operator in question is able to prove that any planned growth will notresult in an increase in noise pollution.

— The DfT and, in Northern Ireland, the Department for Regional Development (DRD) should usetheir existing legal powers to require all airports which cause significant noise pollution (ie whichare affecting a large population at >54 LAeq and above (eg greater than 10,000) and/or any schoolsat >57 LAeq or more) to meet specified targets for reducing those levels of noise over a five yearperiod. The precise requirements for each airport would depend on the strategic importance of thatairport as measured by the indicators (routes, duplication of services, purpose of trip) as outlinedpreviously. All airports which fail to meet these targets should be subject to significant fines,commensurate with the scale of their revenues.

— The data outlined above should be collated and published on an annual basis. The DfT and DRDshould review this data after five years and set targets for all airports which meet the above criteriaand/or which have failed to meet targets which were previously set. If an airport operator fails tomeet these targets on more than one occasion, its licence should be revoked.

— The UK government and the devolved administrations should require much greater transparencyfrom national and regional airports about their claimed employment figures.

3. Background

3.1 Northern Ireland has three commercial airports handling scheduled flights—Belfast International Airport,George Best Belfast City Airport and City of Derry Airport. Belfast International Airport was designed to servethe needs of the whole of Northern Ireland. It is situated in a lightly populated, rural area just 16 miles and 30minutes’ drive from the centre of Belfast, and is easily accessible from the whole of the greater Belfast area.Belfast International is also easily accessible for all but the far west of Northern Ireland, being one hour 20minutes’ drive from both Derry/Londonderry and Omagh, and is much more accessible to those living in thewestern counties than Belfast City Airport. Belfast International is supplemented, on a small scale, by the Cityof Derry Airport which serves the north west of Northern Ireland/Ireland.

3.2 Since 1983, Belfast City Airport has operated commercial services, making Belfast one of the smallestcities in Europe to be served by two airports.1 For most of that time, Belfast City Airport has focused on aniche, business-centred, domestic market. However, in recent years, it has expanded its operations significantlyand is now entering the international market, targeting people in Northern Ireland who want to take a cheapholiday abroad. In the 10 years to 2010, the number of passengers Belfast City Airport handled more thandoubled—from 1.2 million in 2001 to 2.7 million in 2010.2

3.3 This expansion has been, in part, at the expense of Belfast International Airport which is now onlyregularly operating one of its two runways, and lost a fifth of its passengers within three years. Thisdevelopment, combined with the lack of a strategic approach by government towards sustained futuredevelopment of Northern Ireland’s air transport network, has left Belfast International much more vulnerableto competition from Dublin Airport which is now under two hours’ drive from Belfast, thanks to improvedroad links.



3.4 However, Belfast City Airport is situated right by a major residential area in east Belfast. As theprevailing winds are westerly and pilots prefer to fly into the prevailing wind, most flights take off and landover a huge swathe of east and south Belfast. The airport is one of just three to be designated by the EuropeanUnion as a “city” airport because of its proximity to a large urban area with a dense population where:

…a significant number of people are objectively affected by aircraft noise and where any incrementalincrease in aircraft movements represents a particularly high annoyance in the light of the extremenoise situation.3 Directive 2002/30 of the European Parliament and of the Council of 26 March 2002on the establishment of rules and procedures with regard to the introduction of noise-relatedoperating restrictions at Community airports, Article 2 (b).

3.5 We estimate that nearly 38,000 people in the Belfast City Council area alone live under or close to theflight paths which traverse Belfast. Many of them live in areas of social and economic deprivation. In addition,thousands of people in Holywood and Cultra in north Down are also badly affected by noise from flights whichtake off and land over Belfast Lough, but which fly close to the coast.

3.6 The noise problem was recently so severe that consultants’ reports commissioned by the airport showthat, in 2010, 11,422 people suffered from a level of aircraft noise deemed by the UK government to cause“significant community annoyance”—more than treble the number in 2007, when it stood at 3,522 (measuredas 57 LAeq or over, averaged over 16 hours).4 By contrast, official figures show that only 1,400 people sufferfrom noise at the same level close to Stansted airport, and 2,850 experience this level of noise near Gatwick.5

3.7 The same consultants’ reports show that, in 2010, 23,810 people living near Belfast City Airportexperienced noise at 54 LAeq or over, averaged over 16 hours—a higher level than that recommended by theWorld Health Organisation (WHO)—compared to 12,084 in 2007. (In fact, WHO recommends a level no morethan 50 LAeq but that level is not measured by the Belfast City Airport data).

3.8 This perverse situation—where an international airport in a rural area, designed to serve the whole ofNorthern Ireland, is losing passengers at the expense of a competitor airport in a built-up urban area creatinga noise problem for tens of thousands of people—is due to two key factors:

— the failure of the Northern Ireland Executive to establish and implement robust noise controls, despitehaving the power to do so; and

— the lack of any strategic framework for the development of the aviation sector in Northern Ireland.

3.9 Recently, the previous Northern Ireland Environment Minister, Edwin Poots, made a controversialdecision to remove one of the key aspects of the weak planning agreement which constitutes the only realprotection which residents currently have against noise pollution. At the request of the airport, Mr Pootsremoved its seats for sale or passenger limit, enabling a higher proportion of larger and noisier aircraft to useBelfast City Airport.

3.10 His decision was eventually overturned by the High Court in Belfast. However, the airport has nowsubmitted proposals for revising the current planning agreement in a way which would, according to its ownprojections, permit a massive increase in both noise levels and in the number of people suffering from noiseat the level deemed by the UK government to cause “significant community annoyance”. While the proposalis to be subject to both a public consultation and an Examination in Public, the eventual decision will be thatof the Environment Minister and could be overturned by a future Environment Minister. The decision will alsorequire the agreement of the airport, unless the Northern Ireland Department for Regional Development usesthe legislative powers at its disposal to impose an effective noise management regime at the airport.

3.11 We therefore believe that, rather than continuing to encourage City Airport’s ad hoc expansion andInternational’s resultant contraction, it would be far more sensible for the UK government and the NorthernIreland Executive to give strategic priority to the development of Belfast International airport as the primarygateway airport for Northern Ireland. It is perfectly possible for airlines to compete on the same routes fromthe same airport—and this competition happens at other UK airports. Thus, any decision to impose strategicdirection on the development of Northern Ireland’s airports will not preclude competition between airlines onprofitable routes to the benefit of passengers.

4. The Impact of Aircraft Noise for Local Communities

4.1 Undoubtedly, the most significant negative impact of aviation for local communities is noise and theproblems that this causes in terms of its detrimental effect on public health, children’s’ educational attainmentand quality of life. The impacts include:

— lack of sleep—

— in a survey carried out by Belfast City Airport Watch in 2009, more than three-quarters (78%)said that aircraft noise affected their sleep, with almost 1 in 5 (19%) stating that they weren’tgetting enough sleep;6 and

— of those respondents with children, nearly half (46%) said their children weren’t getting enoughsleep because of aircraft noise.



— adverse effect on blood pressure—in 2003–05, a major EU-funded international study investigatedthe impact of aircraft noise on blood pressure. The Hypertension and Exposure to Noise near Airports(HYENA) study examined the impact of aircraft noise on 5,000 individuals, aged 45–70 years, livingclose to six major European airports. The study found that night-time aircraft noise, including thatoccurring in the late evening or early morning, caused a significant increase in blood pressureamong participants.7

— heart problems and abnormally high blood pressure—in 2007, a German study found night-timeaircraft noise increased the prevalence of prescriptions for antihypertensive and cardiovasculardrugs, irrespective of social class.8

— negative impact on educational attainment—

— in a survey of schools, under or close to the Belfast City Airport flight path over the city,undertaken by Belfast City Airport Watch in 2008:

— 12 schools said pupils’ concentration was adversely affected by aircraft noise;

— nine schools said aircraft noise disrupted teaching and/or classes;

— 11 said aircraft noise made outdoor activities in school grounds less pleasant; and

— eight said aircraft noise made their school a less pleasant place to work in.9

— a major international study, carried out in 2002, found that exposure to aircraft noise is relatedto impaired performance in reading comprehension and recognition memory in schoolchildren.The RANCH Project—which involved an international team of researchers from the UK,Sweden, the Netherlands and Spain—found that exposure to aircraft noise was correlatednegatively with children’s reading ability, even when other factors were taken into account.10

— a follow-up study to the above research, carried out in 2008, obtained preliminary findingswhich indicated that children who attended primary schools exposed to aircraft noise were morelikely to have poorer than average reading comprehension at age 15–16 years, and that childrenin secondary schools exposed to aircraft noise were more likely to have poorer readingcomprehension that average.11

— stress and negative impact on quality of life—the BCAW residents’ survey found that:

— three-quarters of respondents (75%) said they often had to stop talking when a plane flew overbecause they couldn’t be heard;

— 71% said aircraft noise made their gardens less pleasant to be in;

— more than two-thirds (68%) said they often couldn’t hear the TV and/or radio when a planeflew over;

— 66% said aircraft noise made their homes less pleasant places to be; and

— nearly half (49%) said aircraft noise made their lives more stressful.

— annoyance—annoyance also causes stress. A major study, commissioned by the DfT and publishedin 2007, indicated that at least 30% of an affected population is likely to be “very annoyed” if it isexposed to aircraft noise levels at 50 LAeq and above, averaged over 16 hours.12 As noted previously,the World Health Organisation recommends that communities should not be exposed to a levelgreater than 50 LAeq.

5. About Belfast City Airport Watch

5.1 Belfast City Airport Watch is an umbrella group of 20 residents’ associations and community groups,and one trade union branch, opposed to further expansion at George Best Belfast City Airport.13 It also has afurther 550 individual associate members.

Website: www.belfastcityairportwatch.co.uk E-mail: [email protected]

13 April 2012

References

1 George Best Belfast City Airport analysis, August 2010, anna.aero—airline network news and analysiswebsite. See: http://www.anna.aero/2010/08/18/belfast-city-is-one-of-the-best-airports-in-the-uk/

2 Figures from CAA.

3 Directive 2002/30 of the European Parliament and of the Council of 26 March 2002 on the establishment ofrules and procedures with regard to the introduction of noise-related operating restrictions at Communityairports, Article 2 (b).

4 These figures are taken from annual noise contour reports commissioned by Belfast City Airport. Thegovernment’s guidance on aircraft noise levels is available at: http://www.caa.co.uk/default.aspx?catid=68&pagetype=70&gid=69&faqid=27



5 The figures for Stansted and Gatwick are available in the following Department for Transport reports,published in January 2012 and covering 2010 (see 3.1 in each report).

— Stansted: http://assets.dft.gov.uk/publications/noise-exposure-contours/noise-exposure-stansted-2010.pdf

— Gatwick: http://assets.dft.gov.uk/publications/noise-exposure-contours/noise-exposure-gatwick-2010.pdf

6 The survey was carried out by BCAW between March and June 2009. 412 respondents were questioned in adoor-to-door survey. Each respondent was from a different household. Of the 412 respondents, 281 lived ineast Belfast, 99 respondents were from south Belfast, while 32 were from Holywood. All respondents lived inareas which are either under or close to flight paths in and out of George Best Belfast City Airport.

7 EC News Alert Issue 103. Available at: http://ec.europa.eu/environment/integration/research/newsalert/pdf/103na1.pdf. See also Haralabidis, Alexandros S. et al. (2008) “Acute effect of night-time exposure to aircraftnoise on blood pressure in populations living close to airports” in European Heart Journal. Available onlineat: http://eurheartj.oxfordjournals.org/cgi/content/full/ehn013v1

8 Greiser, E, Geiser, C and Janhsen, K “Night-time aircraft noise increases prevalence of prescriptions ofantihypertensive and cardiovascular drugs irrespective of social class—the Cologne-Bonn Airport study” inJournal of Public Health, Vol. 15, pp. 327–337.

9 35 nursery, primary, post-primary and special schools responded to the survey. All are situated under or closeto City Airport flight paths. The survey was carried out in June 2008. 45 schools were sent postal survey forms.Non-respondents were followed up by telephone.

10 Further details of the RANCH project can be found at: http://www.wolfson.qmul.ac.uk/RANCH_Project/Ranch%20Project/Background%20Aims%20and%20Objectives.htm and in a published journal article at:http://aje.oxfordjournals.org/cgi/reprint/163/1/27

11 Clark, Charlotte et al (2009). RANCH follow-up study: the long-term effects of aircraft noise exposure onchildren’s cognition: Full Research Report ESRC End of Award Report, RES-062–23–1165. Swindon: ESRC

12 MVA Consultancy (2007) Attitudes to Noise from Aviation Sources in England, Fig. 7.2 published as Erratumin Nov 2007.

13 The list of BCAW’s organisational affiliate members is as follows:

— East Belfast groups highlighted in red

— South Belfast groups highlighted in blue

— North Down groups highlighted in green

1. The Bridge Community Association

2. Carew II Family and Training Centre

3. Connswater Community Centre/Connswater Community Group

4. Cultra Residents’ Association

5. Dee Street Community Centre/The Klub

6. Dee Street Computer Group

7. Dee Street Mums and Tots Group

8. East Belfast Healthy Living Project

9. East Belfast Toddler Group

10. GMB Trade Union Branch 252

11. Hampton Park Residents’ Association

12. Holywood Airport Action Group

13. Lagan Valley Group Residents’ Association

14. Lower Woodstock Community Association

15. Marlborough Park Residents’ Association

16. Newtownards Road Women’s Group Ltd.

17. Old Stranmillis Residents’ Association

18. Park Road and District Residents’ Association

19. Ravenlink Residents’ Group

20. Ulidia Residents’ Group

21. Wise Men of the East Network (network of nine affiliated east Belfast men’s groups)

April 2012



Further memorandum from Belfast City Airport Watch

I am writing on behalf of Belfast City Airport Watch to thank the Committee for its kind invitation to giveoral evidence with regard to its inquiry into an Airport Transport Strategy for Northern Ireland on Wednesday24 October, and to provide the Committee with supplementary information to our initial written submission tothe inquiry.

When we made our previous submission to this inquiry, the Department for Transport had not published itsDraft Aviation Policy Framework. We are very concerned about two aspects of the Draft Framework document:

— It fails to adequately address the issue of aircraft noise.

— It fails to properly address how the best use can be made of existing capacity at airports inNorthern Ireland (and, indeed, existing capacity at all airports outside the south-east ofEngland).

These matters are of particular concern to us because the Department for Transport still has the statutoryresponsibility for aviation strategy in the UK. Therefore, we feel that the Draft Aviation Policy Framework isof central importance to the matters being investigated by your Committee.

We have enclosed a copy of our submission to the Transport Select Committee’s current inquiry into AviationStrategy which elaborates on our concerns with regard to the Draft Framework document.15 We would askthat your Committee accept the enclosed document as supplementary evidence to our initial submission to yourown inquiry. For ease of reference, this submission has an Executive Summary.

October 2012

Supplementary memorandum from Belfast City Airport Watch

On behalf of Belfast City Airport Watch, I just wanted to express our very sincere and warm thanks to theCommittee for taking the time to hear from us yesterday. We really appreciated the opportunity to answer theCommittee’s questions and to hear members’ thoughts on some of the points which we made.

We felt it would be helpful to provide the Committee with further, more specific information in regard tothree issues on which we were questioned. This includes a correction with regard to the first of these issues,and clarifications with regard to certain points we made relating to all three issues.

Noise Impact of Belfast International Airport and George Best Belfast City Airport

With regard to the above, I misread my notes and inadvertently considerably overstated the noise impact ofBelfast International Airport, as reported in its Noise Action Plan. This document states that 897 people wereaffected at 50 LAeq 16h or above, but only 262 people were affected at 55 LAeq or above. The UK governmentcurrently considers that significant community annoyance commences only at 57 LAeq 16h or above, althoughthere is much research and evidence to indicate that this threshold is too high and too simplistic.

For the purposes of comparison, Table 1 overleaf outlines the figures which are provided in the current NoiseAction Plans produced by Belfast International and Belfast City airports respectively. (In neither instance is itclear to which year or period the figures refer—possibly 2006 for International and 2008 for City). It shouldbe noted that the Lden measure is weighted to take account of the additional adverse impact of evening andnight flights.

Table 1COMPARATIVE HISTORIC NOISE IMPACT OF BELFAST INTERNATIONAL AIRPORT AND

GEORGE BEST BELFAST CITY AIRPORT (SOURCE: NOISE ACTION PLAN FOR EACH AIRPORT)

Noise threshold Belfast City Airport Belfast International Airport

50 LAeq 16 and above 17,500 89755 LAeq 16 and above 3,200 26250 Lden and above 16,600 2,46955 Lden and above 2,300 562

I also said that I thought approximately 24,500 people were affected at 54 LAeq or above in 2010 by noisefrom Belfast City Airport’s operations. The actual figure was 23,810, according to the airport’s noise monitoringreports. Table 2 summarises the number of people affected at both the 54 LAeq 16h and above, and at the 57LAeq 16h and above thresholds, in each year from 2007, according to the airport’s annual noise monitoringreports. The table also includes the airport’s maximum projection for the number of people which could beimpacted by its current noise cap proposals.15 This submission was published by the Transport Committee and is available on their website



Table 2NUMBERS AFFECTED BY NOISE LINKED TO GEORGE BEST BELFAST CITY AIRPORT AT 54

LAEQ 16H AND 57 LAEQ 16H (SOURCE: AIRPORT’S ANNUAL NOISE MONITORING REPORTS)

Year 57 LAeq 16h 54 LAeq 16h

2007 3,522 12,0842008 7,819 18,8592009 9,574 21,8332010 11,422 23,8102011 6,195 17,412Under airport’s noise proposals Up to 26,000 Up to 46,000

Employment Related to George Best Belfast City Airport

Further to the above issue, on 23 February 2011, the airport told its consultative Airport Forum in a writtenstatement that it directly employed 90 people, of which 16 people came from east Belfast, and of which 84posts were full-time. At the time, the airport had publicly asserted that it was responsible for a total of 1,500jobs. When asked how it accounted for the other 1,410 jobs within its “jobs total”, it provided further writteninformation to the Forum on 23 March 2011 as follows:

— The airport attributed a total of 880 full-time equivalent jobs (including the 90 posts referredto above) to employment which was based either within the airport or within a 20-minute driveof it, and which was “wholly or largely” related to the airport’s operations. No detailedbreakdown of these jobs was provided to the Forum, nor was any figure provided with regardto how many of these jobs were actually based at the airport.

— The airport said it assumed that a further 340 jobs were created indirectly and a further 230induced by its activities. However, the Forum was provided with no evidence for or basis onwhich these specific figures were calculated.

— The airport said it kept no record of where the individuals holding those jobs lived, other thanthose it employed directly.

Flight Direction

The Planning Agreement 2008 between George Best Belfast City Airport and the Northern IrelandDepartment of the Environment stipulates that the airport should “maintain a bias and use all reasonableendeavours to maximise use by aircraft of approaches and climb-outs over Belfast Lough”. In both July andAugust of this year, 43% of flights went over Belfast city, while in September, 46% of flights went over thecity, according to the airport’s published statistics. We would point out that flights going over the Lough dogenerally impact on residents in north Down, particularly in Kinnegar which is close to one end of the runway.

We trust that this further information is helpful. Please don’t hesitate to let me know if the Committeerequires any further information from us.

October 2012



Further supplementary memorandum from Belfast City Airport Watch

Further to our letter of 25 October, it has come to our attention that Glyn Roberts of the Northern IrelandIndependent Retail Trade Association took issue with some of our evidence. In essence, he said that, as a long-term resident of Sydenham in east Belfast, the flights did not bother him and that he was not aware that aircraftnoise was a significant issue locally, although he appreciated our concerns were genuine.16

We respect his right to express his personal view on this issue and are glad that aircraft noise does nottrouble him. However, we would ask the Committee to bear in mind the following points.

The Committee may recall that one of our delegation was Jenny Simon, a resident from Sydenham. She waskeen to tell the Committee about her family’s experience of aircraft noise, and the experience of her neighbours.Had there been time and an opportunity to do this, she had planned to say the following:

Living near the flight path in east Belfast impacts a lot on family life. Doors and windows need to be keptshut if we want to be able to talk without pausing in our conversations. This is particularly a problemaround evening family meals when communication is important.

Time in the garden is relentlessly interrupted as flights pass during busier periods of the day. We can’ttalk to our friends and neighbours in the street without pausing to let the noise subside.

Peaceful time in our local park [Victoria Park] is decimated by the severe noise of low flying aircraft, thesmell of fumes and reduced bird life. This is in our much needed green area which we, as ratepayers,should be able to enjoy and which we, as city dwellers, need.

Many of my neighbours do not need an alarm clock, they wake up with the first flight. I can’t imaginethis is convenient for everyone.

Our local school which my children go to is affected; teachers privately report having to stop mid-lessonand pause whilst the flight goes over—and this is indoors with double glazing.17 Out in the playground,where city children need to spend time moving for PE lessons and playing in break times, teachers cannotbe heard for much longer spells as planes fly over.

It does concern me that my children are subjected to these interferences in their lives. Moving is not anoption for many families in this area.

For the Committee’s information, of the 19 residents’ associations and community groups affiliated to BelfastCity Airport Watch, 10 are based in east Belfast. 247 of our 585 individual associate members live in eastBelfast, including 120 in the BT4 post code area which covers Sydenham.

Of the 1,320 public consultation responses to the airport’s current noise proposals published on theDepartment of the Environment’s website, 380 are recorded as having been submitted from an east Belfastpost code address, and 230 as having come specifically from a BT4 post code address. As we stated, theoverwhelming majority of submissions to the consultation appear to have objected to the airport’s proposals.It should also be noted that approximately 200 submissions contained postal addresses with no post code, andwe are sure some of those would also have been from east Belfast.

We trust that this further information is helpful. Please don’t hesitate to let me know if the Committeerequires any further information from us.

16 Mr Roberts is recorded in the uncorrected transcript as stating:Yes, I am a resident of Sydenham, a long-term resident, and I live right beside the airport. I listened to the previous speakersand wondered if they are talking about the same part of East Belfast that I come from. I do not recognise much of what theysay. I live in that community. My daughter goes to Ashfield Girls’ High School. My parents live even closer to the airport, andI do not hear any of these complaints from anybody in the local community. I have no doubt there are issues there, but they arenot in the same way your previous witnesses were describing. I think they must be talking about a different Sydenham to theone I live in.And later:I would not say I was scathing [about the evidence of Belfast City Airport Watch], but I would say I fundamentally disagreewith what they said. I recognise the huge contribution the City Airport makes to the economy of East Belfast and the widereconomy. I have to say, and this is me speaking personally as a resident in East Belfast, that I do not even notice those flights.I do not see people campaigning or chomping at the bit to do down the City Airport or complaining all the time. Obviously, itis for them to justify that, but I do not see complaints at the same magnitude that they are talking about. I am not saying thereare not genuine concerns, but I think the airport has made real efforts in recent years to try and address some of the residents’concerns. They have formed a community forum to engage on this. I just do not recognise the scenario they are painting. I haveno doubt there are some genuine concerns, but I do not even notice those flights as they fly over.

17 For clarity, the school to which Jenny refers is not the school to which Mr Roberts referred. We prefer not to name the schoolas we appreciate that some schools may be concerned that families could be deterred from sending their children to a particularschool if it becomes widely known that aircraft noise is an issue there.



Memorandum from ABTA

Introduction

1. ABTA welcomes the opportunity to submit views to the Northern Ireland Affairs Committee on behalf ofour Members based in Northern Ireland and across the UK.

2. ABTA—The Travel Association was founded in 1950—and is the leading travel trade association in theUK, with over 1,200 members and over 5,000 retail outlets and offices. In Northern Ireland, ABTA has 39members and 133 retail outlets and offices. It is estimated that our Northern Ireland members employ around1,000 people. Members range from small, specialist tour operators and independent travel agencies throughto publicly listed companies and household names, from call centres to internet booking services to highstreet shops.

3. ABTA Members provide 90% of the package holidays sold in the UK as well as selling millions ofindependent travel arrangements. The provision of quality, efficient and competitively priced passenger airtravel is vital to the business interests of Members.

The Implications of Current Air Links for Northern Ireland/Regional and InternationalConnectivity

4. The Government has recognised that aviation plays an important role in the UK economy. ABTA believesthat air transport plays a vital and unique role in providing the international and regional connectivity that theUK, as an island nation, fundamentally needs. The challenges of the volcanic ash cloud in April 2010 and thewinter snowfalls of 2010–11 have shown just how dependent the UK is on aviation.

5. The Committee has acknowledged the February 2012 information from the NI Chamber of Commerceand BAA showing the importance of aviation to Northern Ireland. Northern Ireland is heavily reliant upon airlinks to access the rest of the UK, particularly to the constrained London airports, as the region has no directrail links with the rest of the UK and a limited ferry infrastructure. With the lack of direct long-haul flightsfrom Northern Ireland, onward air links to other parts of the world are equally important.

6. Connectivity not only creates the conditions for economic growth and investment in the UK, but alsocreates the conditions under which the British public can travel for both business and leisure purposes.

7. In February 2010, the consultation for the draft Tourism Strategy for Northern Ireland to 2020 highlightedjust how important tourism is to the economy of Northern Ireland. It is understood to support over 40,000 jobsin Northern Ireland, representing 5.6% of the total workforce, bringing new facilities to towns and cities, andcreating opportunities in rural areas. These people are employed in every constituency and at every skill level.Tourism is a driver of economic growth, contributing £1.49 billion to Northern Ireland GDP.

8. The value and potential of the UK tourism industry to help rebuild and rebalance the UK economy hasbeen repeatedly recognised by the current Government. Moreover, it also made clear how critical efficient andaffordable air travel is for citizens in their regular activities.

9. ABTA strongly believes that the aviation and tourism sectors (domestic, outbound and inbound) couldhelp to rebalance, strengthen, and stabilise the UK economy in this time of economic difficulties. Instead, thecapacity of these sectors to deliver growth is being limited by the current block on the necessary airportexpansion, particularly in the South East of England. It may seem odd but ABTA Members in the UK’s regionsoften cite capacity constraints in the South East as one of their most important concerns. The policy of theGovernment to ban expansion in the South East removes the ability of the regional economies to develop airlinks with London and through airports in London to other destinations worldwide. These policies will beginto suppress demand, risking the future of international and regional airport routes and the economic benefitsthat they bring, while making the UK an unattractive destination for incoming tourism and internationaldevelopment. Access to international markets has long been a key driver of success for the UK economy andgood transport infrastructure is critical to tourism.

10. ABTA believes that if the issue of additional aviation capacity is not addressed, there will be seriousimplications for the UK’s economic growth and relative position in a more globalised world, vis-à-vis ournearest economic competitors.

11. ABTA believes that investment in strategic infrastructure projects should be a fundamental pillar of theUK’s long-term economy recovery planning. We welcome the Government’s commitment to some aviationprojects in the recent National Infrastructure Plan but note that this enthusiasm and recognition of the meritsof infrastructure spend and improvement is not currently applied to aviation capacity, but rather to surfaceaccess to airports. This is, undoubtedly, an important area but does not address the key concern of a lack ofaviation capacity. ABTA believes that it is important that projects are undertaken now to provide for futuregrowth when it is needed, rather than postponing these projects indefinitely into future years.

Lack of Public Transport Links to and between the Northern Ireland Airports

12. Airports are keen to encourage passengers to travel by public transport to access airports. This is anapproach that ABTA supports. Passengers being able to use public transport to their local airport, particularly



if it gets them off the roads, is sustainable, good for the environment, good for local communities, and shouldbe encouraged.

13. ABTA recognises that the Belfast City and City of Derry airports are easily reachable by passengersfrom those cities. We support the provision of a rail link for Belfast International Airport.

14. This is an area where Government should be doing more and it requires a modal shift that onlyGovernment investment in infrastructure can deliver. The National Infrastructure Plan makes a start at this butmore needs to be done.

Implications for NI of Civil Aviation Bill

15. ABTA welcomed the Civil Aviation Bill. ABTA supports the Government’s commitment that the Billwill put the passenger at the heart of the aviation experience. As an organisation with a strong consumerpresence we support measures that add to the passenger experience.

16. Key to the consumer experience is confidence, and financial protection is central to improving consumerconfidence in travel products. For that reason, ABTA is particularly interested in Section 94 of the CivilAviation Bill—the reform of the Air Travel Organisers’ Licencing (ATOL) scheme of financial protection.Section 94 will enable the Secretary of State to include holidays sold by airlines and arrangements made onan “agent for the consumer” basis within ATOL protection. ABTA welcomes this extension of the Secretaryof State’s powers and we believe this to be a major step in the right direction for consumer protection.

17. The airline-led unprotected flight holiday market is substantial and a solution that excludes airlineholidays beyond the short term can neither be effective in terms of consumer protection, nor can it be faircompetitively. Consumers will continue to be confused as the system will not offer clarity to consumers buyingsimilar products—their level of financial protection will continue to vary; furthermore, with travel agents andtour operators facing regulation when selling a holiday that airlines are also selling unregulated, the marketdistortion is glaring. ABTA believes it is essential that all customers buying similar products should be entitledto clear, comprehensive and similar protection—therefore, airlines selling holidays must be included within theATOL regime.

18. Extending consumer protection and resolving concerns about the current ATOL scheme remain one ofthe key issues for ABTA Members in Northern Ireland. ABTA has given evidence to the House of CommonsTransport Select Committee on this matter and we would be happy to share that submission with the NorthernIreland Affairs Committee if that would be helpful to the Committee’s work.

Implications of the IAG/bmi Takeover

19. ABTA has always supported a vibrant and competitive airline sector. We also support growingconnectivity for passengers. We have been keeping track of the IAG/bmi takeover and, at present, cannot offerfurther comment until the full implications are understood. We understand the importance to Northern Irelandbusinesses trading on a global basis of direct flights to Heathrow and are pleased that British Airways hasagreed to maintain these. We acknowledge the potential reduction in jobs in Northern Ireland if the serviceis reduced.

Tax Policy

20. ABTA is one of the leading organisations in the Fair Tax on Flying campaign. This industry initiativepresented a common set of principles and challenges to Government on the reform of APD and called for thelevel of APD to be frozen; the system of banding reformed; premium economy not to be classed the same astravel in first class; a call for income from the EU Emissions Trading Scheme (ETS) to be offset against totalAPD revenues; and an investigation of the impact of APD on overseas destinations as well as the UK. Wewere very disappointed that these issues were not taken up following HM Treasury’s March 2011 consultation.

21. ABTA believes that the high levels of aviation tax are putting UK businesses at a competitivedisadvantage compared to our European neighbours and are damaging the position of the UK as a hub forglobal air travel. This impact is being felt especially in Northern Ireland which is unique in that it is the onlypart of the UK to share a land border with another state—the Republic of Ireland. This is particularlyproblematic for our Members and their customers as aviation taxation in the Republic is considerably lower.

22. In ABTA’s response to the HM Treasury consultation and indeed to the Northern Ireland AffairsCommittee, we suggested that consideration should be given to treating Northern Ireland as a special case andrecommended that APD be removed in its entirety in order that the economy of Northern Ireland was notseverely disadvantaged on air taxation in contrast to the Republic of Ireland.

23. We were encouraged by the September 2011 decision to reduce the APD rate for passengers travellingon direct long-haul routes departing from airports in Northern Ireland to the Band A rate, effective 1 November2011, and subsequently to devolve APD rates for direct long-haul routes to the Northern Ireland Assembly.

24. The UK aviation sector is competing in an international market place where the burden of taxation hasa very real impact on economic growth. The correlation between the two has been widely recognised in Europe.



In the Netherlands, their version of APD was abolished within a year of its implementation because of thecompetitive disadvantage it brought to the Dutch economy. Belgian plans for a ticket tax were not implementedfor similar reasons. A Danish tax was quietly withdrawn due to adverse effects on the economy and the tourismsector in particular. Germany’s aviation tax is charged at a significantly lower level than the UK’s and theGerman government agreed to offset ETS revenues against its tax.

25. Since March 2011, the Irish government’s air travel tax has been levied at a single rate of €3 perpassenger. The Irish government announced in 2011 its intention to eliminate its air travel tax to further bolsterits air service network in order to assist further inward investment and tourism growth.

Table 1

COMPARATIVE AVIATION TAX RATES FOR A FAMILY OF FOUR TRAVELLING FROM THE UK

To Europe To the USA*# To Australia*

From the UK £52 £260 £368From Germany £30 £90 £164From Austria £30 £90 £127From Ireland £11 £11 £11From France £4 £14.5 £14.5From other European Countries 0 0 0

*further increase scheduled for 1 April 2013

#other than direct long-haul flights from Belfast which are charged at the European rateequating to £52

26. Further, the Irish government reduced VAT from 13.5% to 9% for hotel accommodation and restaurantseffective 1 July 2011, increasing further the differential between visitors to Northern Ireland and visitors tothe Republic.

27. Thank you for taking our comments into consideration.

April 2012

Memorandum from the Department for Transport

Policy Context

1. Aviation policy remains largely a reserved matter in the UK. Policy responsibility rests with the UKDepartment for Transport and the Civil Aviation Authority (CAA). Reserved matters include safety regulation;aviation security; competition issues; consumer protection; air traffic management and international aspects ofaviation policy.

2. Although aviation policy is generally a reserved matter in the UK, the Northern Ireland Government hasdevolved powers relating to airports in terms of land use planning and airport surface access issues.

3. The UK Government recognises the vital contribution the UK’s regional airports—including those inNorthern Ireland—make to local and regional economies. A key part of the Government’s approach to aviationis to seek to create the right conditions for regional airports to flourish, and we are considering regionalconnectivity and regional airports policy as part of its development of a sustainable framework for UK aviation.The Government will consult publicly on a new policy framework during summer 2012. Alongside theconsultation, the Government will publish a separate call for evidence on the options for maintaining the UK’sstatus as an international hub for aviation. This is an important issue and the Government will consider a rangeof suggestions for how to maintain the UK’s hub connectivity in a cost-effective and sustainable way. TheGovernment will put the final policy framework in place by spring 2013.

Implications of Current Air Links for Northern Ireland, Specifically the Economy

4. The Committee already have information released by the NI Chamber of Commerce and BAA on 14February which stated that…

— One in ten jobs in Northern Ireland depends on foreign investment, and half of those companies canonly reach their home market through a hub airport;

— Aviation supports £1bn of exports from Northern Ireland;

— Foreign tourists spend £195 million a year in Northern Ireland and account for 360,000 visits—150,000 of whom arrive by air;

— Northern Ireland benefits directly from having a global hub in Britain, with Heathrow directlysupporting 1,000 tourism jobs and 900 airport jobs in Northern Ireland.



5. These figures have come from Oxford Economics who cite the Office for National Statistics as theoriginal source.

6. The UK Department for Transport makes the following specific comments on the quoted figures:

“Aviation supports £1bn of exports from Northern Ireland”

7. There are some issues with quantifying the economic value of aviation. For instance, if aviation did notexist then some consumption, trade and economic activity could switch to alternatives (eg: rail, shipping,domestic goods and services, videoconferencing) which would continue to generate gross value added.

“Foreign tourists spend £195 million a year in Northern Ireland and account for 360,000 visits—150,000 of whom arrive by air”

8. The value of tourism is a complex issue. More Northern Ireland residents travel abroad than overseasresidents travel to Northern Ireland (evidence from the International Passenger Survey suggests that NorthernIreland residents made around 880,000 visits abroad [ie outside of the UK] in 2010 and spent £520 million. Alarge majority of these visits, estimated at around 800,000, were made by air). However, outbound tourismsupports UK-based jobs in the travel and airline industry, and boosts high street consumer demand before tripsare made.

9. Overall, the “tourism deficit” question is a complex one, and the Committee may wish to note that it isnot possible to conclude that a decrease in the number of Northern Irish residents flying abroad for theirholidays would benefit the Northern Irish economy.

10. An alternative measure of the contribution of a sector such as aviation to the Northern Irish economy is“Gross Value Added” (GVA), measured in terms of the value of the outputs created by the industry (measuredby income generated), minus the cost of the inputs. All sectors’ GVA adds up to the national Gross DomesticProduct (GDP).

Regional and International Connectivity

11. In relation to all air services between Belfast and London, there are more than 18,000 flights per yearbetween the two Belfast airports and the five main London airports. These flights handled nearly two millionpassengers in 2011, of which over a third were between Belfast and Heathrow (handling over 700,000passengers).[Source: CAA Aviation Statistics—Full year 2011]

12. In 2011 Northern Ireland airports operated services to:

— 39 domestic UK destinations (Belfast City 22; Belfast International 12; City of Derry 5);

— 22 EU-27 destinations (Belfast City 2; Belfast International 18; City of Derry 2); and

— three other European destinations (from Belfast International)[Source CAA: Airport destinations with at least a weekly direct service during 2011]

13. One long-haul, transatlantic service operates from Northern Ireland—from Belfast International Airportto New York (Newark) Airport, operated by US airline United-Continental Airlines.

Public Transport links to, and between, Belfast International, Belfast City and City of DerryAirports

14. The issue of public transport links to and between Northern Ireland airports is a matter for the devolvedNorthern Ireland Administration.

Implications for Northern Ireland of the Civil Aviation Bill

15. The Civil Aviation Bill was introduced into the House of Commons on 19 January 2012. The SecondReading of the Bill took place on 30 January.

16. On 13 March the Public Bill Committee concluded its clause-by-clause scrutiny of the Bill. CommonsReport Stage and Third Reading will follow before the Bill begins its passage through the House of Lords.

17. The Bill extends to England and Wales, Scotland and Northern Ireland, although the amendments, repealsand revocations made by clause 76 and Schedules 8 and 9, including the revocation of Part 4 of the Airports(Northern Ireland) Order 1994 (SI 1994/426) (N.I. 1)(economic regulation of airports), have the same extentas the provisions amended, repealed or revoked.

18. The Bill contains measures intended to modernise the regulatory framework for civil aviation in the UK.Key features of the Bill include:

(i) Reforming the framework for airport economic regulation, by providing a more flexible and targetedset of regulatory tools (including a licensing regime and better regulation principles) and grantingthe Civil Aviation Authority (the “CAA”) concurrent powers with the Office of Fair Trading toenforce competition law in the airport services sector.



(ii) Modernising the CAA’s governance and operations by, amongst other things, giving the CAA a rolein publishing information for the benefit of users of air transport services and on the environmentaleffects of aviation and enabling the CAA to use civil enforcement powers across a broad range ofits activities.

(iii) Conferring certain aviation security functions on the CAA, including the review of aviation securitydirections, advice and assistance to industry and compliance. Responsibility for aviation securitywould remain with the Secretary of State.

(iv) Powers to allow the Secretary of State to broaden the scope of the ATOL scheme, which protectsconsumers whose holiday includes a flight when a travel company fails.

Implications of BMI’s sale to International Airline Group

19. Following reports in September 2011 that Lufthansa was considering selling its loss-making subsidiaryairline BMI, DfT Ministers received a range of representations—including from Members of the NorthernIreland Assembly and business groups and individuals from Northern Ireland—expressing concern about thepossible reduction or loss of air services between Northern Ireland and Heathrow.

20. These concerns were restated following the announcement in December 2011 that International AirlineGroup (IAG: owner of British Airways) had agreed a binding deal to buy BMI from Lufthansa. The essenceof the concerns was that should IAG’s acquisition go ahead, British Airways would in the medium/longer termseek to cut back or discontinue BMI’s former domestic routes from Heathrow—including its 78 services perweek to Belfast City Airport—and use BMI’s slots at Heathrow for more long-haul routes. Concerned partiesfrom Northern Ireland asked UK Government Ministers to take action to protect the Heathrow-Belfast Cityservice.

21. IAG’s proposed acquisition of BMI was formally notified for investigation by the EuropeanCommission’s competition authority on 10 February 2012. On 30 March the Commission confirmed itsconditional approval for the acquisition, subject to implementation of certain competition remedies. Completionof the deal was expected to take place during April.

22. At the time of the Commission’s announcement, IAG confirmed that in terms of BMI’s regional airservices to Northern Ireland, British Airways will continue to operate BMI’s existing services to Belfast.

23. In response to the concerns raised in the context of the BMI sale, the UK Government has highlightedthe issue with the European Commission and is seeking the introduction of measures, as part of the EuropeanCommission’s Better Airports Package, to help protect the ongoing provision of air services between UKregions and congested London airports. However, it should be recognised that the prospect of securing suchamendments may be limited, as the introduction of a mechanism to protect routes which are at present wellserved by economically viable air services would necessitate a fundamental change to the existing applicableEU law.

Aviation Taxation Policy

24. The UK Government accepts that the economic climate has been challenging both for consumers andthe UK aviation sector, hence the decision at the March 2011 Budget to freeze Air Passenger Duty rates fora year.

25. However, the Government has been consistent in believing that the aviation sector should continue tomake a fair contribution towards reducing the deficit and restoring the public finances, and therefore madeclear that Air Passenger Duty would rise this year. The increase in Air Passenger Duty rates from 1 April 2012is necessary to meet the Government’s fiscal requirements for the coming year.

26. The UK Government is committed to rebalancing the UK economy across the regions. As made clear inthe 2011 National Infrastructure Plan, the Government is also committed to maintaining the status of the UKas an international hub for aviation, with excellent connectivity to both developed and emerging markets. TheGovernment will continue to work with interested parties to examine the role of the tax system in support ofthese objectives.

27. During summer 2011 United-Continental Airlines indicated to the UK Government that they wouldwithdraw their Belfast International to Newark NJ service (the only long-haul service operating from a NorthernIreland airport, and which, according to United-Continental, operates at a loss) from September 2011 unlessthe UK Government was prepared to cover the shortfall, either through an exemption from Air Passenger Dutyor via other means.

28. Following consultation with the European Commission, on 27 September 2011 the Chancellor of theExchequer announced that from 1 November 2011 Air Passenger Duty would be cut for passengers travellingon direct long-haul routes departing from airports in Northern Ireland. The direct long-haul rate of APD wouldfall to the lower short-haul rate—currently £12 per passenger in economy and £24 for business and firstclass passengers.

29. Announcing the move, the Chancellor said:



“The Government has taken proactive measures to protect the only direct long-haul service operatingfrom Northern Ireland and with it the jobs of those who serve the Belfast route. Northern Irelandfaces a unique challenge in attracting traffic—including very valuable business customers—into itsairports. By announcing this immediate cut and our intention to devolve aspects of APD, the UKGovernment is renewing its commitment to stimulating and rebalancing the Northern Irelandeconomy.”

30. The Chancellor also said that Northern Ireland’s airports operated in unique circumstances within theUK. The land border with the Republic of Ireland, with its differential rates of air passenger tax had threatenedto make long-haul flights from Belfast uneconomic. The APD reduction would give Northern Ireland a freshopportunity to develop other long-haul air routes.

April 2012

Memorandum from City of Derry Airport

1. City of Derry Airport

Derry City Council acquired the airport in 1978 with a vision that it would become a central piece of regionalinfrastructure for the North West.

— City of Derry Airport is now a well-established regional airport serving the North-West of the islandand provides real competition in the aviation market in Northern Ireland.

— The Airport contributes to the expansion and development of the regional economy in itscatchment area.

— City of Derry Airport, with its modern facilities, plays an important part in improving the perceptionof Derry/Londonderry and the region, its amenities and its accessibility.

— It plays an important role as a gateway for both inbound and outbound business, tourist and VisitingFriends and Relatives (VFR) traffic.

— The airport produces Gross Value Added (GVA) of £14 million per annum and supports 380 jobs.

— The airport handles more than 400,000 passengers per annum and with 20% year on year growthwas one of the fastest growing UK airports in 2011.

— The airport is considered essential in attracting and supporting inward investment and in the growthof indigenous industry through the provision of transport links for customers and staff and vitalaccess to markets.

— The airport also plays a significant role establishing and enhancing the image of Derry/Londonderryand the North West region as a place to live, work, visit and do business.

— The airport reduces the peripherality of the region and provides vital connectivity to GB and beyond,as well as enabling cross border co-operation.

— Over 600,000 live within the one hour catchment of the airport and benefit from significantly reducedsurface access travel times when flying from the airport.

The 2003 White Paper The Future of Air Transport recognises the importance of all three Northern Irelandairports to the ongoing development of air transport in Northern Ireland.

2. Current Air Links

From a regional airport perspective the most important air links for City of Derry Airport are to the mainpopulation centres in GB. These links account for more than 80% of traffic to and from Northern Irelandairports as a whole whereas for City of Derry Airport that percentage is around 90%.

This traffic is essential to the local economy generating more than £6.5 million spend per annum locally.

These links are essential for tourists, workers, businesses, university students, leisure travellers and forfamilies.

Tourism represents about 1.9% of Northern Ireland’s total economy, earning in excess of £420 million GVA(NITB 2007). However when Northern Ireland tourism is compared to its closest comparators, Scotland (2.8%)and the Republic of Ireland (3.5%), it still has significant ground to make up. Indeed if it was to match theROI percentage it would add a further £270 million in GVA and create a further 11,000 jobs in NorthernIreland. Low fares aviation has meant that visitors to and from Northern Ireland have much better air accessto the tourism product with more people being able to fly more often.


At a regional level Northern Ireland probably places more importance on air transport than any other regionof the UK. There is a much higher dependence on air travel in Northern Ireland due to its island status withinthe UK and one of the highest number of air trips per head of population of any UK region. Access to rail and



road connections are practically non-existent with the only access via sea ferries. In order to give NorthernIreland citizens the same level of connectivity as other UK citizens air travel is the only viable option. It mustbe cost-effective and convenient.

Whilst links to Heathrow are important to Northern Ireland, the route network has grown and will continueto develop to support point to point routes as well as connectivity to hub airports. Whilst it is important to UKplc for Heathrow to maintain its position as a global hub, it is equally important that Northern Ireland continuesto develop connectivity with other European hub airports to provide a range of hub connections to the inter-continental and long haul networks rather than a complete reliance on Heathrow. Indeed, it may be consideredthat as Heathrow becomes more congested point to point traffic from Northern Ireland to London should beencouraged to use airports other than Heathrow. However, the long term vision of GIP, the owners of Gatwick,could be of concern as they intend to develop a competing hub to Heathrow for Middle East and Far Eastdestinations and are actively increasing charges to short haul, small aircraft (up to 110 seat capacity) to controldemand. This development could reduce the viability of a high volume route between Northern Ireland andGatwick.

Tourism is a major industry in Northern Ireland and needs appropriate air links to grow and develop. Touristsvisiting GB have a choice of transport modes to visit all other UK regions except Northern Ireland. Loss ofair routes or visitors choosing to fly into the Republic of Ireland impacts negatively on inbound NorthernIreland tourism.

Business travellers need continued direct connectivity into the three Northern Ireland airports. They requireconvenient point-to-point links to the main GB located business centres. They also need through-connectivityvia the main hub airports in the UK ie Heathrow, Gatwick, Manchester etc.

Unlike other regions of the UK air transport for Northern Ireland is a necessity—not a luxury.

Northern Ireland direct international destinations are primarily to sunshine or city break destinations noneof which are more important than another. However the Belfast International to New York service operated byContinental is essential for Northern Ireland. It not only serves as our only direct connection with NorthAmerica it portrays the positive image that Northern Ireland plc is open for business. It is important on a sub-regional level that Derry/Londonderry and the North West of the island are able to do the same.

A number of other vital routes could be established from Belfast to further enhance connectivity and to putNorthern Ireland on the world stage these include an eastbound service perhaps direct to the Middle East—Dubai, Abu Dhabi, Bahrain or Doha for onward connections to the Far East and the new commercialpowerhouses in India, China and Australasia. Also another North American connection probably into Canada.However, these will always be “thin routes” due to population density and whilst there could undoubtedly bean economic case for perhaps one or two more long haul routes, Northern Ireland will always be reliant onhub connectivity for the full range of long haul routes.

Visitors to Northern Ireland from continental Europe mainly come from Germany, France, Scandinavia, Italyand Spain. All of these links can be provided by low cost airlines into any or all of the Northern Irelandairports including City of Derry Airport.

4. Public Transport

Road access to City of Derry Airport has recently been upgraded to dual carriageway standard from Derry/Londonderry. Belfast City also enjoys decent road access; however Belfast International has very poor accessprimarily utilising single carriageway “A” roads.

Public bus transport has been poor at City of Derry Airport for many years with Translink providing stopsat the airport on scheduled bus services that pass the airport. No dedicated bus service existed between theairport and Derry/Londonderry. That has recently been rectified by a private operator who operates a dedicatedservice from the city centre to meet all scheduled arrivals and departures.

Rail access to the airports is non-existent despite all three airports having main railway lines very close tothe airfields. At City of Derry Airport the main Belfast to Derry/Londonderry railway line passes throughairport property within metres of the end of our main runway. All attempts to look at development of stops atthe airports has been met with officials quoting UK guidelines that railway access to airport terminals can onlybe justified when passenger numbers reach 10 million per annum. That instantly rules out all three NorthernIreland airports. This should be looked at more objectively given the relative closeness of the railway lines tothe airports and the relatively poor current public transport provision.

5. The Civil Aviation Bill

The Civil Aviation Bill has the potential to deliver better more effective and streamlined aviation regulationgoing forward. It is essential that the legislators and the civil servants take account of—

— The need for the industry to be fully involved in the development of the new regulatory framework;

— The need for full consultation on the development of airport licences;



— The need to ensure changes to the security regime to encompass more than administrative savings;and

— The need to avoid unnecessary bureaucracy.

The prospect of a more efficient, less bureaucratic, risk-led approach to safety and security regulation willbenefit all UK airports including the three in Northern Ireland. However, in order to achieve this, a lot of effortwill need to be focussed on the delivery mechanisms needed to establish the new regulatory framework.

6. IAG Takeover of BMI

City of Derry believes that the acquisition of BMI by IAG will be neutral for Northern Ireland as weunderstand that IAG will continue the operation of the route under the BA flag and indeed this could bebeneficial providing a significantly larger route network with through ticketing via their Heathrow hub.

7. Tax Policy and Route Development Support

Northern Ireland is a peripheral region, situated off-shore on the western edge of the UK and the Europeancontinent. Air access is therefore vital for the positive development of the regional economy. Northern Irelandis the only part of the UK separated from its primary home markets and key business centres by a sea corridor.

The issue of UK APD levels applying in Northern Ireland is compounding the challenge for airport operatorsto grow and develop air access corridors to this region, all the more so when set alongside strong, proactivemoves being undertaken by the Republic of Ireland (ROI) Government to further bolster their comparativelystrong air service network in order to assist further inward investment and tourism growth. This includes amuch more favourable aviation taxation regime and has attracted volume from the Northern Ireland market toDublin and other ROI airports. This position is unfair, unsustainable and places Northern Ireland at an obviouseconomic disadvantage as well as reducing overall taxation yields with significant numbers of passengers nowusing ROI Airports.

Northern Ireland must be enabled to play on a level playing field with the Republic of Ireland and not heldback by a regressive tax. The current level of APD makes Northern Ireland a less attractive place in which todo business, compared with its neighbour sharing the same land mass.

Northern Ireland is in a unique position within the UK in that it is separated from the rest of the UK by sea.Other options for travelling to GB are very limited; therefore people have little choice but to travel by air. Ofthe 7.1 million passengers who flew into and out of Northern Ireland in 2010 over 75% of them travelled to/from UK destinations—some 5.34 million passengers. Unlike their mainland counterparts, these passengerscannot avoid the tax by jumping on a train or taking the car—they have to fly.

This is reflected in the fact that Northern Ireland people have the highest propensity to fly of any UK regionoutside of London.

Northern Ireland and its economy are therefore taxed for air travel at a disproportionately higher levelcompared to any other UK region. This affects growth, prosperity, competitiveness and the ability to recoverfrom recession.

The current proposal on the devolution of APD to the Northern Ireland Assembly looks likely to transferpowers only in relation to long haul flights. This is welcome as it provides Northern Ireland with the means tosafeguard economically-significant air routes and extend our reach to important source markets for tourism andbusiness globally. However it is only dealing with part of the problem—APD is now directly affecting thegrowth and development of low cost services between Northern Ireland and GB. Low cost airlines have clearlyindicated that a return tax of £26 on flights between Northern Ireland and GB is not sustainable and is makingdevelopment of existing routes and the introduction of new routes more and more difficult.

The disproportionate effect of APD in Northern Ireland needs to be addressed and if it is not possible foreither the UK Exchequer or the Northern Ireland Assembly to remove Band A (short-haul) APD, some othersteps must be taken to encourage airlines to develop and grow existing and new routes.

To this end, the three Northern Ireland airports are currently working together to put a proposal to theNorthern Ireland Government for a scheme to support route development on strategically important routes forthe region.

8. Other Factors

The tax differentials between Northern Ireland and ROI are clearly having an impact however the fact thatNorthern Ireland is the only part of the UK with a land border to another EU state has other competitiveimplications as well.

Some of the ROI airports, primarily Dublin and Ireland West (Knock) have catchments that include all orpart of Northern Ireland. They actively advertise in the Northern Ireland market and it is estimated that 1.5million passengers from Northern Ireland use ROI airports each year. The standard industry multiplier indicates



that one million passengers support one thousand jobs; therefore 1,500 jobs are lost to the Northern Irelandeconomy because of passenger leakage to ROI airports.

The reasons for this leakage are complex but it is clear that the ROI government are generally more aviation-friendly and they support airports with lower APD, safety and security capital grant aid, route developmentinitiatives and marketing support. This then means that in the ROI there is greater choice, better flight timingsand better prices. All of these factors encourage airlines to operate from ROI rather than Northern Irelandputting Northern Ireland airports at a competitive disadvantage. Any air transport strategy for Northern Irelandmust take account of these competitive factors.

As part of our response to the consultation on the Sustainable Framework for UK Aviation we suggestedthat a separate strategy for Northern Ireland air transport should be incorporated within the overall UKframework. This was to take account of the unique circumstances affecting aviation here ie the physicalseparation from the rest of the UK, the competitive disadvantages posed by the ROI and widening taxdifferential between the two states.

April 2012

Memorandum from the International Airline Group

1. Introduction

1.1 International Airlines Group (IAG) welcomes the opportunity to contribute to the Northern IrelandAffairs Select Committee inquiry into air transport strategy for Northern Ireland.

1.2 IAG is one of the world’s largest airline groups with 348 aircraft flying to 200 destinations. In total, thegroup carries more than 50 million passengers each year. It is the third largest airline group in Europe and thesixth largest in the world, based on revenue.

1.3 Formed in January 2011, IAG is the parent company of British Airways and Iberia. It is a Spanishregistered company with the corporate head office located in London. Shares are traded on both the LondonStock Exchange and Spanish Stock Exchanges. By combining the two leading airlines in the UK and Spain,IAG enables them to enhance their presence in the aviation market while retaining their individual brands andcurrent operations. The airlines’ customers benefit from a larger combined network for both passengers andcargo and a greater ability to invest in new products and services through improved financial robustness.

2. Summary

2.1 It is vital that Northern Ireland retains its air links to the Heathrow hub in order to be able to competeeffectively in the global marketplace.

2.2 Heathrow urgently needs more runway capacity in order to retain and develop a broad range ofinternational and regional UK services.

2.3 Air Passenger Duty is the highest aviation tax in the world and is damaging UK competitiveness, jobs,inward investment and growth. The industry is calling for the abolition of the tax.

3. The Implications of Current Air Links for Northern Ireland, Specifically the Economy

3.1 As one of the world’s leading trading economies, it is vital that the UK has extensive connections to allof the major global growth markets. Air links provide that connectivity, for business, tourism and freight. It isequally important that all of the regions of the UK are connected to these growth markets—either by directflights or through the Heathrow hub. Such connectivity facilitates inward investment, job creation and export-led economic growth. It is important that Northern Ireland maintains its existing connectivity to the hubs atHeathrow and Newark and seeks to encourage further growth.

3.2 The Northern Ireland Executive’s economic vision for 2030 is to “compete effectively within the globaleconomy and be internationally regarded as a good place to live and do business.” Aviation has a crucial roleto play in translating this vision into reality.

3.3 Recent research by Oxford Economics has outlined the importance of current air links to the economyof Northern Ireland. For example, 31% of the total exports of goods from Northern Ireland are transported byair. These exports contribute £490 million to Northern Irish GDP which equates to 2% of the total output fromthis region of the United Kingdom.

4. Regional and international connectivity

4.1 As outlined above, international connectivity is a key influencer, determining economic growth. Aviationensures that the whole of the UK can attract investment, do business with, export to and benefit from theglobal economy.



4.2 Hub airports are the most efficient generators of connectivity. Heathrow, the UK’s hub airport, andBritish Airways, the UK’s only hub network airline, are essential providers of this connectivity. Transfer trafficat Heathrow is vital to the Northern Ireland economy. This can be demonstrated by the fact that, according toresearch by Oxford Economics, 60% of exports transit via a hub to their final destination. Without this hubmodel, connections from Northern Ireland (and other regions) to many international routes via Heathrowwould not be viable. They are essential to the UK’s global connectivity, increasing passenger choice and UKcompetitiveness. Almost all international services from regional airports have a hub airport at the other end ofthe route. The mix of transfer and point-to-point passengers enables these services to remain viable.

4.3 Customers in Northern Ireland should have as broad a choice as possible when it comes to air services.Connections to London and particularly to the hub at Heathrow are vital if this choice is to be retained. Theopening of Terminal 5 at Heathrow has enabled British Airways to offer an excellent connecting service toover 152 destinations in 75 countries for our Northern Ireland customers. We are seeing record punctuality andbaggage performance and are also ideally located to provide excellent connecting times to many continentsincluding Africa, South and North America and Asia. Terminal 5 was recently named the world’s best airportterminal by Skytrax. Heathrow was ranked 11th in the world’s top airports ranking.

4.4 Heathrow Airport is currently operating at 98% of its capacity and has been operating at or near capacityfor many years. Other major economies recognise the vital role that air links play in the future growth in theireconomies and as a result are investing heavily in new airport infrastructure. The UK risks being left behindif decisions regarding future capacity are not addressed as a matter of urgency. There is no doubt that thecontinued lack of capacity will impact the UK regions and the ability to serve new growth destinationsincluding the BRIC countries.

5. The Lack of Public Transport Links to, and between, Belfast International, Belfast Cityand City of Derry Airports

5.1 British Airways supports the provision of integrated transport links at major airports in order to improvethe transport experience for customers.

6. The Implications for Northern Ireland of the Civil Aviation Bill

6.1 We are not aware of any specific implications for Northern Ireland.

7. The Implications of the Proposed Takeover of bmi by IAG

7.1 IAG completed the purchase of bmi from Lufthansa on 20 April 2012. Bmi mainline will be integratedinto British Airways and consultation has already begun with bmi mainline staff and their trade unions.Bmibaby and bmi regional are not part of IAG’s long term plans and will not be integrated into British Airways.IAG is pursuing options to exit these businesses.

7.2 The purchase of bmi mainline gives IAG a unique opportunity to grow at Heathrow and use slots moreefficiently. Over time, British Airways will look to launch new longhaul routes to key trading nations, whilesupporting its broad domestic and short haul network.

7.3 In strengthening Heathrow, one of Europe’s key hub airports, British Airways would be able to competemore effectively with other global airline groups and begin to win back traffic from competing global hubs.As a result, UK business will undoubtedly benefit from this deal and will be able to maintain their global reachat a slot constrained Heathrow. The UK’s competitiveness will be strengthened as new trade links with emergingmarkets such as Indonesia will be created.

7.4 Were British Airways not able to make use of the extra capacity that the acquisition of bmi brings, it islikely that short-haul and domestic routes would have come under increasing pressure from the need to maintainand develop long-haul links to new markets.

8. Tax Policy

8.1 Air Passenger Duty (APD) is an unsustainable tax. It is damaging tourism, hindering export-led growth,affecting jobs and discouraging inward investment across the UK. APD, which is the highest aviation tax ofits type levied anywhere in the world, distorts the international aviation market and puts UK airlines at a uniquedisadvantage to international competitors. The UK Government should abolish APD at the earliest opportunity.

8.2 IAG and BA are active in a number of industry coalitions, including the “Axe the Tax” campaign andthe “Fair Tax on Flying” alliance. These are broad coalitions and include a range of participants, includingbusiness organisations, airlines, airports and trade unions. The coalitions are actively seeking more membersto support the campaign.

8.3 We believe that the focus on tax should be on its complete abolition, rather than on changes to thestructure of the tax affecting the regions. Such changes will result in competitive distortion and otherunintended consequences.



8.4 It is claimed that lower levels of APD may, in the short-term, enable Northern Ireland to retain directservices to some long-haul destinations. However, there is a substantial risk that artificial incentives to start orretain long-haul services will, in the longer-term, undermine the viability of connections between NorthernIreland and the mainland UK by encouraging passengers in Northern Ireland to choose to reach destinationsvia hub airports on other continents. A decline in the appeal of London as a transfer point for Northern Irelandpassengers would therefore endanger links to the UK capital from the region.

Example of Competitive Distortion as a Result of Differential APD Rates

The following examples are based on a family of four travelling from Belfast to Los Angeles via a) a UShub; b) a UK hub.

Belfast to Los Angeles via NewarkEconomy Class £52Business Class £104

Belfast to Los Angeles via HeathrowEconomy Class £260Business Class £520

In the example above, passengers are incentivised to avoid the Heathrow hub and instead use a US hub foronward connections.

April 2012

Memorandum from the Department of Enterprise, Trade and Investment (NI)

1. Introduction

1.1 This memorandum submitted by the Department of Enterprise, Trade and Investment (DETI) addressesaspects of the Northern Ireland Affairs Committee inquiry into an air transport strategy for Northern Ireland inrespect of the implications of current air links for Northern Ireland, specifically the economy; and regional andinternational connectivity.

2. Role of DETI

2.1 DETI’s role includes responsibility for formulating and delivering economic policy in Northern Ireland.DETI sponsors a number of agencies, established as Non-Departmental Public Bodies, including Invest NI andthe Northern Ireland Tourist Board. DETI also acts as a co-sponsor to two organisations set up under theBelfast Agreement—InterTradeIreland and Tourism Ireland Ltd.

3. Implications of Air Links for the Northern Ireland Economy

3.1 Rebalancing the Northern Ireland Economy

3.1.1 Northern Ireland’s location, as part of an island on the periphery of Europe, means that it is heavilyreliant upon air links to access Great Britain (GB), mainland Europe and other important markets. There areno direct rail links with the rest of the United Kingdom and ferry infrastructure is limited (there are currently5 sea routes/ferry crossings available). Both business and tourism travellers depend heavily on air travel andthe development of the NI economy is therefore very reliant on accessibility.

3.1.2 The importance of air access to NI must be considered in the context of the need to rebalance andgrow the NI economy. This rebalancing is the aim of the NI Executive’s Economic Strategy which seeks toimprove the competiveness of the NI economy and of NI’s ability to compete globally.

3.1.3 The NI Executive is seeking to increase levels of FDI, exports and R&D and investment spending, aswell as increasing numbers of international tourist visitors. Direct access to key markets, especially internationalmarkets is therefore essential. Key targets for growing the economy include:

(i) between 2011 and 2015, Invest NI aims to secure a total of £1 Billion of investment in the NorthernIreland economy; this includes attracting £375 million of investment from new inward investmentand through encouraging existing inward investors to expand further. This is expected to generatearound 5,900 new jobs and will lead to the generation of an additional £145 million in new wagesand salaries;

(ii) an increase in exports of 20% with a 60% increase in exports from emerging markets; and

(iii) increasing visitor numbers and revenue to 4.5 million and £1 billion respectively by 2020.

3.2 Air Passenger Trends

3.2.1 Historically, the three scheduled service airports in Northern Ireland (Belfast International, George BestBelfast City and City of Derry) have carried small numbers of international scheduled services, for example,



in 1987 there were only 22,000 passengers on scheduled international flights (0.06% of the UK total). Almostall international passengers would have been required to fly to an airport in GB first, or have made an overlandjourney to Dublin Airport or a sea journey to a GB airport.3.2.2 The air access situation has improved significantly in recent years (in 2001 there were routes from NI to20 destinations in five countries whereas in 2011 there were regular services to more than 40 destinations in13 countries) and this has brought real economic benefits.3.2.3 While passenger traffic through NI’s airports reached a peak of more than 8 million in 2008, the globaleconomic downturn has had a negative impact with passenger numbers falling to 6.9 million in 2011. Howeverthe historical trend has been one of positive growth (passenger numbers at NI airports increased by 53%between 2000 and 2011) and a key priority for Government is to increase the business and inbound tourismtravellers using NI’s airports.

3.3 Business and Tourism

3.3.1 Ease of access to Northern Ireland is a key factor in respect of attracting Foreign Direct Investment(FDI). FDI makes an important contribution to the NI economy and air transport connections are also vital inrespect of providing access for NI goods to export markets (NI exports approximately £1 billion (31%) ofgoods by air).

3.3.2 Direct, convenient and competitive air access is also critical to achieving tourism growth, especiallygiven the tendency of tourists to remain close to the airport of arrival, particularly for short breaks. To put theimportance of air access to tourism in perspective, in 2011:

(i) almost 0.8 million visitors departed NI via a NI airport;

(ii) 83% of these visitors were from GB, with 63% of GB visitors visiting friends and/or relatives; and

(iii) of the remainder, 9% were from other European countries, 4% were from North America and 4%were from other overseas countries.

3.4 Border with the Republic of Ireland

3.4.1 When considering NI air access and connectivity it is important to note that, unlike other regionaleconomies in the UK, Northern Ireland shares a very porous land border with the Republic of Ireland (ROI)and, with no rail link to Great Britain or Mainland Europe, both economies are very dependent on air accessas a means of transporting overseas visitors to and from the island.

3.4.2 Northern Ireland’s position vis a vis the ROI presents both opportunities and challenges in respect ofair access. An important positive factor is that visitors to Northern Ireland can use airports in the ROI to accessNI, this is referred to as “via traffic”. For Summer 2012 air capacity to Northern Ireland is estimated to be100,000 seats. The total air capacity to the ROI will be 328,000 seats with Northern Ireland representing arounda quarter of the total capacity to the island of Ireland.

3.4.3 While direct traffic into NI fell by 5% in 2011, traffic via ROI grew significantly (+29%). Overall NIdirect traffic is estimated to have fallen from 72% to 66% of total traffic, with traffic via ROI up to 34% from28% in 2010. In effect this means that the rapid growth in visitor numbers accessing NI via ROI helpedto compensate for the reduction in visitors arriving directly to NI to achieve an overall growth in visitornumbers there.

3.4.4 However, while via traffic is beneficial and important, it is also important that NI has direct access tokey business and tourism markets and this can only be achieved by maintaining, and increasing, the numberof routes operating from NI’s three main airports.

3.4.5 A major challenge faced by NI as a result of its border with the ROI relates to differing air passengertax regimes ie the UK’s Air Passenger Duty and the ROI’s Air Passenger Departure Tax. This presentedsignificant difficulties in 2011 when the disparity between the rate of air passenger taxes applied to long haulpassengers in the ROI (€3 per passenger) and the UK (£60 per passenger for lowest class of travel and £120per passenger for other classes) threatened the continuation of NI’s only direct link with the US, the ContinentalAirlines service between Belfast and Newark.

3.4.6 Following extensive engagement with the Chancellor of the Exchequer by the NI Executive (withvaluable support from the NI Affairs Committee and others), the Chancellor announced on 27 September 2011that the rate of direct long haul Air Passenger Duty (APD) applied to NI would be reduced to Band A ratesand that the process of devolving direct long haul APD to the NI Assembly would commence. The powers todevolve direct long haul APD are included in the Finance Bill 2012.

3.4.7 The importance which the NI Executive places on the maintenance of NI’s direct link with the US(and making NI a viable option for other long haul destinations) is reflected in a Programme for Governmentcommitment to reduce APD on direct long haul flights to zero as soon as possible following devolution.




4.1 DETI’s Role in Air Access

4.1.1 Convenient air access (preferably direct) to the GB and overseas markets is essential for NorthernIreland’s economic growth. However the scope for Government to assist airports and airlines has beensignificantly limited following the introduction in 2005 of Community Guidelines on the Financing of Airportsand Start-up Aid to Airlines Departing From Regional Airports. Government intervention in respect of airroutes is limited to exceptional circumstances such as the designation of a route between airports as a PublicService Obligation.

4.1.2 The Commission has been consulting on the aviation Guidelines and the NI view is that the currentGuidelines are not appropriate as they do not take into consideration the economic difficulties faced byperipheral disadvantaged regions such as Northern Ireland.

4.1.3 The degree to which DETI can influence air route development is therefore extremely limited. Howeverthere is scope to influence airlines for example by pro actively marketing NI as a tourist destination in keymarkets, thereby demonstrating through increased visitor numbers that existing routes should be maintained(and possibly the frequency of services increased) and that new routes to NI could be viable.

4.1.4 Tourism Ireland therefore promotes Northern Ireland prominently in its marketing campaigns across22 key overseas markets. It also carries out specific, additional marketing activity for Northern Ireland,particularly in the five key markets for tourism to Northern Ireland—GB, the US, France, Germany andAustralia.

4.1.5 Tourism Ireland invests in co-operative marketing activity with airlines (as well as ferry operators,airports and other tourism interests) to drive demand for services from key overseas markets to NorthernIreland and to promote NI’s vital network of routes. All of Tourism Ireland’s co-operative marketing initiativesare undertaken on a 50:50 basis with matching investment from the air or sea carrier. For example, DETIrecently invested £1 million to further boost Tourism Ireland’s co-operative marketing activity with air and seacarriers with the aim of maximising inbound seat and ferry capacity during this special year of ni2012. Thisinvestment was matched by a further £1 million from the air and sea carriers involved.

4.2 Priority Markets

4.2.1 Priority markets for Northern Ireland include the following:

(i) Great Britain

Visitors from GB remain the most important source of visitors to NI, accounting for some 66% ofall visitors to NI in 2011. The GB market is heavily dependent upon air access with air services toGB serving a dual function, firstly they provide vital connectivity to Britain for tourism, leisure andbusiness purposes and secondly they provide hub connectivity, via Heathrow, to Mainland Europeand other destinations including North America and the rest of the world.

The GB short-break market is of particular importance to the Northern Ireland tourist market. Ofthose visitors to NI, exiting through a NI airport, 83% of visitors were from GB, 58% of visitorswere in NI to visit friends/relatives and 85% of visitors from GB were in NI to visit friends/relatives.To maximise the potential of GB, Tourism Ireland carries out extensive marketing in GB and alsoengages in targeted co-operative marketing campaigns with airlines to highlight ease of access andgood value fares on direct GB services to NI.

In 2011 the Department for Transport (DfT) consulted on a Scoping Document in respect ofDeveloping a Sustainable Framework for UK Aviation. The Scoping Document recognised theimportance of air access for Northern Ireland and stated (paragraph 2.8) that “air transport plays avital role in providing connectivity for the UK, both internationally and regionally. As an islandtrading nation, it is self-evident that the UK needs to be well connected. It is also clear that someparts of the country, such as Northern Ireland, will always be heavily dependent on air links. Regionalconnectivity throughout the UK is a very important issue for overall transport strategy to address”.

In responding to the consultation the NI position was clearly stated it would be essential that anyUK policy on aviation took into consideration NI’s unique position and heavy reliance upon airaccess. In particular, it was highlighted to DfT that as the UK Hub airport, Heathrow plays a veryimportant role in facilitating onward connectivity to and from Northern Ireland and the continuationof NI access to Heathrow is essential.

(ii) Mainland Europe

Only a small number of direct air services from NI to Mainland Europe are of relevance to theinbound tourism market, in particular the only direct services to main European cities—Paris,Amsterdam and Barcelona and, to a lesser extent, the twice weekly service to Pisa. As with airlineswhich operate services from GB to NI, Tourism Ireland engages in co-operative marketing withairlines in respect of the routes between NI and Mainland Europe of tourism merit, highlighting easeof access and good value fares.



A key objective for DETI is the opening of a direct service between NI and a major city in Germany.This would be highly desirable from a business and tourism perspective. Tourism Ireland thereforemaintains contact with, and case makes to, carriers about the possibility of a direct route fromGermany to Belfast.

(iii) North America

Direct access to North America, and most importantly the US, is a key priority for NI. This isdemonstrated by the contribution made to the economy by NI’s only current scheduled long haulflight, the Continental Airlines service which operates between Belfast and Newark. This service,which commenced in 2005, has brought significant business and tourism benefits to NI.

Since its introduction in May 2005, the Belfast/Newark route has provided a crucial strategic accesspoint for business and commerce, enhancing the relationship between Northern Ireland and NorthAmerica in terms of both trade and investment. It provides a very important gateway for inwardinvestors seeking to establish or expand business operations in NI. Specifically many FDI clients,including the New York Stock Exchange, have expressly stated that their presence here was onlypossible on the basis that access to the Eastern Seaboard capital markets was readily available.

The US is expected to remain the number one source country for investment into NI, accounting fornearly 40% of projects in NI from 2011–15. A key element in attracting US business is that NorthernIreland is easily accessible to all parts of the US due in part to the direct air route via Continental’sNewark hub. This direct connection with east coast US is an important credibility factor in buildingthe NI brand in America. In marketing Northern Ireland to potential inward investors, accessibilityis deemed essential in the decision making process.

In addition to the importance of the Belfast/Newark route to trade and business, it has also benefitedthe tourist industry in Northern Ireland. It is estimated that the US visitors who travelled on theBelfast/New York flight contribute more than £6.6 million per annum to tourism in NI.

With regard to Canada, there has been a decline in the number of visitors to Northern Ireland sincethe loss of direct access from Toronto and Vancouver from a high of 44,000 in 2007 when there wasa direct service from Vancouver and Toronto to just 27,000 in 2010, although there is preliminaryevidence of an increase to 32,000 in 2011. This helps to illustrate the contribution a reinstated routeto Canada could provide. Tourism Ireland therefore closely monitors the Canadian market andengages with Canadian Airlines re the possibility of the reintroduction of a direct route to Canada.

(iv) Australasia and BRIC (Brazil, Russia, India and China)

Easy access to North America and Mainland Europe is very important for business and tourism.However, to assist the growth of the NI economy further there is a need to further increase NI’sinternational connectivity, in particular to markets such as Australasia and the BRIC countries ieBrazil, Russia, India and China. Access to markets such as Australasia, India and China could befacilitated via linking to a hub such as the Gulf region of the Middle East.

While the majority of overseas visitors to Northern Ireland come from the core markets of GreatBritain, North America and Mainland Europe, it is important that NI expands its focus beyond thesemarkets and looks to the long-term opportunities presented by the BRIC countries in particular.Nurturing these markets and adapting to the diverse needs of their travellers is essential.

The BRIC economies will play an increasing role in the future of the travel, tourism and businessgenerally. In particular they will play a greater part in helping NI to grow tourism from overseas in2012 and beyond.

The importance DETI places on these markets is reflected in the fact that Tourism Ireland has officesin China (Shanghai and Beijing) and India (in Mumbai and Delhi). Invest NI also looks to thesemarkets to maximise trade and inward investment opportunities.

To use Tourism Ireland as an example, a snapshot of the Tourism Ireland’s activities in the BRICcountries includes:

— a programme of promotional activity in China and India which involves co-operative campaignswith airlines and influential tour operators, to ensure we feature prominently in itineraries andtravel brochures;

— hosting familiarisation visits for Chinese travel agents and tour operators around the islandof Ireland;

— undertaking travel trade missions in to new markets including to Russia (Moscow and StPetersburg), the Middle East (Dubai, Abu Dhabi and Kuwait) and India (Mumbai and Delhi),meeting with key tour operators and travel agents; and

— initiating a new strategy to attract more high-spending visitors from the emerging tourismmarkets of Brazil and Russia.



5. Summary

5.1 Northern Ireland’s air connectivity to key markets has improved considerably in recent years. However,the network of air services from Northern Ireland is still not as developed as other regions of the UnitedKingdom. Key priorities for NI in terms of air access can be summarised as:

(i) ensuring continued access for Northern Ireland to Heathrow, as the UK’s hub airport (NorthernIreland Ministers have stressed the importance of this route to the Department of Transport and willseek to ensure that NI’s unique access position within the UK is properly reflected in emerging UKaviation policy);

(ii) maintaining NI’s direct link with the US and extending NI’s direct links with other key long hauldestinations. The commitment of the NI Executive in this regard is demonstrated by the pro-activeapproach taken to the devolution of direct long APD. Tourism Ireland can also assist by identifyingpotential routes and case making to carriers; and

(iii) increasing NI’s direct connections to key markets in Mainland Europe, and as above, Tourism Irelandwill maintain contact with potential carriers and make the case for new direct links to NI wherepossible.

5.2 Increasing the numbers of visitors to Northern Ireland (both business and tourism) will help to sustainNI’s existing air links and will encourage carriers to consider opening new routes. Maintaining NorthernIreland’s existing links, and developing links with international markets, will help to improve NI’scompetitiveness and will ultimately benefit the promotion of business linkages, enterprise development and in-bound tourism.

May 2012

Memorandum from CBI Northern Ireland

Introduction and key issues

1. CBI Northern Ireland welcomes the opportunity to contribute to this inquiry. CBI Northern Ireland is anindependent, non-party political organisation funded entirely by its members in industry and commerce andspeaks for some 240,000 businesses which together employ around a third of the UK private sector workforce.Our membership includes businesses from all sectors and of all sizes. Our role is to promote the conditions forcompanies to compete and prosper for the benefit of all.

2. Aviation plays a crucial role in supporting the Northern Ireland economy and providing business withaccess to both Great Britain and global markets, while providing a key means of access for tourists. NorthernIreland is geographically isolated from the rest of the UK, meaning that it is particularly dependent on strongair transport links—for many journeys viable alternatives do not exist. At the same time we are the only partof the UK with a land border with another EU member state. To achieve the necessary re-balancing of theNorthern Ireland economy air transport will become even more important. If we are to achieve the goals setout in the Economic Strategy and draft Tourism strategy:

— Exports will need to increase substantially—by 20% by 2015–16 and much more in the mediumterm. (The CBI and seven other business organisations published the “Jobs Plan” in early 2011identified the need to increase exports to £8.2 billion by 2020 from a 2010 level of £5.6 billion)

— Tourism revenues will need to double to £1 billion by 2020 with a short term target of achieving£676 million revenue by the end of 2014 (with visitor numbers increasing to 4.2 million)

3. This will only be achieved if the appropriate air services and air access are developed, with a continuingneed to improve Northern Ireland’s connectivity, notably from key source markets for tourism, inwardinvestment and export trade. Between 2002 and 2008 there was a significant improvement in air servicesavailable from Northern Ireland’s three airports, building on the existing good links which existed to GreatBritain airports. Since 2008, with the onset of a deep recession there has been some loss of flights as annualpassenger numbers have fallen by 1.25 million—this was not a total surprise as the sustainability of certainflights had been questioned with the proliferation of low cost operators which entered the market over thatperiod—unfortunately a disproportionate number of the routes withdrawn were more business focused. Clearlythe downturn in the aviation industry is not unique to Northern Ireland—Dublin has lost over five millionannual passengers during the same period as a result of their severe economic downturn, while Central Scottishairports have lost 3.5 million, UK Midlands airports have lost three million and North East airports have losttwo million.

4. In overall terms, we would summarise the current position of Northern Ireland air services as follows:

— Northern Ireland continues to have good access and frequency of services to a wide range of GBairports.



— There is good access to Heathrow, the UK’s major hub airport, (from both the George Best BelfastCity Airport and Belfast International Airport), and good access to other London airports, though alack of service to London City airport is seen as a disadvantage by the growing number of financialservice firms in Northern Ireland (and it will be several years before Crossrail project will becompleted).

— While Manchester and Birmingham were expected to become more significant international “mini-hubs” over the last decade, this has not materialised.

— A number of direct European services exist (some initially supported by the Route DevelopmentFund, which we strongly supported), though some key European cities (and hub airports) still do nothave direct/regular flights—there are a significant number of direct flights with an outward bound“sun” destination focus including a variety of charter services.

— We have one strategically important direct long haul service to the USA—the United Airlines flightto/from Newark, New York—although recent Band B taxation changes will create potential tobroaden this base.

— Fares remain broadly competitive with a good mix of low cost airlines operating within the market—though Ryanair’s withdrawal from the George Best Belfast City Airport in 2010 was adisappointment—planning delays and the lack of ability to develop appropriate infrastructure led tothis withdrawal. The recently announced decision to stop BMIBaby services is a further blow. Witha greater dependence upon airlines of this nature and the very competitive airline market whichexists today there are increased risks and uncertainties. There is also an increasing concern at theimpact of rising Air Passenger Duty which has become a much more substantial part of the totalairfare, especially for low cost airlines.

— Reliability on flight times is generally not a major problem.

— Dedicated air freight services are significant for a region of our size, with all four major globalintegrators serving the market—DHL, UPS, TNT and Federal Express. Moreover, given our islandlocation, the air freight market is ripe for expansion as the economy grows.

— Lack of critical mass relative to Dublin airport, particularly as Northern Ireland has two main airports(in Greater Belfast) with duplication of certain costs and the range of services provided.

— Northern Ireland residents do have access to Dublin airport which does provide a significantly greaterrange of European and International flights (especially to the USA and more recently to the MiddleEast).

5. There are increasing concerns that the benefits of aviation are now under threat, particularly from capacityconstraints in the southeast of England, and the risk that Northern Ireland air services to the UK’s hub airport,Heathrow, may come under threat. It is recognised that airlines will act in a commercial manner, continuing toserve viable markets with appropriate capacity. While Heathrow will remain critical, given the increasingconstraints and demands on the airport, it may be prudent to broaden Northern Ireland’s horizons to evaluateservices into other international hubs.

6. We know that access to markets is one of the most influential factors influencing investment decisions,and Foreign Direct Investment will be a key part of achieving a re-balancing the Northern Ireland economy.Any risk to Northern Ireland’s connectivity with Heathrow and access to sufficient feeder capacity atappropriate times will have a significant impact on Foreign Direct Investment, as well as the development ofexisting businesses.

7. In the following paragraphs we respond to the specific issues raised in the Committee’s call for evidence,with a particular focus on the aviation aspects.

The Implications of Current Air Links for Northern Ireland, Specifically the Economy;Regional and International Connectivity

8. With Heathrow operating at 99% capacity there is clearly tension between the demands of increasinginternational routes (in/out of Heathrow), particularly to fast growing, developing markets, and maintaininggood regional access, particularly important to a small and geographically isolated region such as NorthernIreland. The status quo is unacceptable and uncertainty on aviation capacity will hold back growth and jobs.Tough choices are required with innovative thinking to remove this key impediment to growth. All of thisrequires action urgently—delivering in both the short and longer term requires decisions to be made now.

9. It means balancing support for thriving point-to-point airports across the UK with measures that addressthe impact of capacity constraints at the UK’s hub airport, Heathrow, and deliver for passengers and for freighttraffic. It also means balancing short-term measures to address capacity constraints at Heathrow with a clearplan to sustain growth in the medium and long term.

10. The CBI is seeking urgent action to meet demand now and in the medium and long term. The followingactions are required:

Short term



— maximise the capacity of existing assets with more flexible “mixed mode” operations atHeathrow, increasing capacity by c10%, and by exploring potential flexibilities in the nightflight regime in the South East.

— Restrain future increases to air passenger duty.

— Improve the customer service and processing speed for visa applications to support tourist andbusiness travel to the UK.

Medium term (to deliver in the 2020s)

— A new runway to serve the south of the UK—at Heathrow, Gatwick, Stansted, Birmingham orelsewhere—subject to an urgent review of the most feasible option to address current constraintsat Heathrow.

— A strategy to increase public transport access to UK airports from 40% to 60% by 2030, toease local environment impacts and increase airports’ “license to grow”.

Long term (to deliver from 2030)

— Explore all options, including the development of a new hub airport for London, to ensure wehave the capacity to meet long-term demand for passenger and freight traffic, and to supporttrade growth with emerging economies

— The characteristics of a successful hub for the long term should include:

— sufficient runway and terminal capacity to accommodate future demand projections withheadroom to ensure resilience;

— excellent connectivity to London and the wider UK transport network, including motorwayand high-speed rail links; and

— capacity to accommodate passenger and freight traffic on a single site.

11. At a UK level the Chancellor has rightly focused on the importance of growth and in particular ofdoubling UK exports to £1 trillion a year by 2020. The UK has used its transatlantic geography over the lasthalf century to put itself at the centre of the international air network. But as the global economy moves eastand south, constraints at Heathrow, now running at 99% capacity, are preventing airlines from meeting demandfor flights to growth markets in emerging economies.

12. To highlight this challenge, take access to China. There are now seven major cities in China served bythe airports in Frankfurt, Paris or Amsterdam that aren’t served by direct flights from the UK. Germany nowhas 60 direct air links a week with China, twice as many as the UK.

13. This risks undermining the UK’s image as a global hub for trade, as an international centre for financeand as an open destination for overseas investment. It threatens our ambition for the UK as a centre formanufacturing in high-tech, high-growth industries. And it hits the export potential of individual businessesacross the UK.

14. Clearly at the same time it is essential that Northern Ireland continues to have access to Heathrow,otherwise our economic potential will be undermined. We cannot become obsessed by a polarised debate thatseeks to present development of the UK’s hub capacity and growth at other UK airports as mutually exclusiveoptions; they are not. An effective hub should be complementary to a network of thriving regional airportsproviding direct links to the most popular destinations in Europe and beyond.

15. The Northern Ireland air transport market is relatively unique on a number of fronts—a small populationbase served by a number of airports, operating under separate ownership; a challenge (arising from a legacyof our recent history) of attracting large numbers of international visitors in the short term; and the only regionof a sterling-zone sharing an open land border with a Eurozone state

The Lack of Public Transport Links to, and between, Belfast International, Belfast City andCity of Derry Airports;

16. Ensuring good surface access, including appropriate public transport services, to the three NorthernIreland airports is important, notably road linkages from the gateways to principal tourism venues andinvestment locations. Public transport services to the two Belfast airports is good—with bus services every 15minutes to the International and every 20 minutes to City airports from Belfast City centre. Derry City Airporthas less frequency services (from Londonderry/Coleraine), but this reflects the relatively small number flightof arrival/departures per day.

17. We are not aware of significant demand for transfers between the airports—and certainly not a demandwhich would substantiate the need for a regular and viable public transport service. There will be isolatedtimes (for a variety of reasons) when an individual might return to a different airport and need to get to anotherNorthern Ireland airport—this can be achieved indirectly (by perhaps two bus journeys) or alternatively bytaxi. This has not been raised as an issue with us by any of our members. Airporter, a private bus operator,does provide services to Derry/Londonderry and also provides a bus link between the two Belfast airports,typically every two hours or so.



The Implications for Northern Ireland of the Civil Aviation Bill

18. The Civil Aviation Bill makes provision about the regulation of operators of dominant airports; confersfunctions on the Civil Aviation Authority (CAA) under competition legislation in relation to services providedat airports; makes provision about aviation security; and addresses other administrative issues. There are twonotable prospective implications of this legislation for Northern Ireland. Firstly it allows for a general thrust toincrease charges levied by the CAA. Secondly, it transfers surveillance responsibilities in relation to aviationsecurity from the Department for Transport to the CAA, a function which the CAA would then plan to re-charge for. Typically, for an airport of the size of Belfast International, this would apply additional annual costsof £100,000–£120,000 per annum, costs which would have to be passed on, via airlines, to the passenger.

The Implications of the Proposed Takeover of BMI by IAG

19. Access to Heathrow is critical from a Northern Ireland perspective. While over the last decade moredirect European routes have developed, as well as the strategically important Newark/New York service,Heathrow remains an essential route for interlining with international destinations. As we seek to grow NorthernIreland’s exports (a central theme of the recent Economic Strategy) including to high growth developingeconomies, the importance of good and reliable access to Heathrow is likely to increase. However, a failure toaddress ongoing constraints at Heathrow, may mean the pursuit of additional international hub access willbecome increasingly relevant.

20. The recent acquisition of BMI by the International Airline Group, has created uncertainty with regard tothe future of the strategically important Heathrow route. Re-assuring statements from the Chief Executive ofIAG that the new owners are committed to retaining the route are encouraging and there has been a short termcommitment to maintaining existing service provision, notably the summer schedule, though cost reductionsare being sought. However IAG has made clear that BMIBaby operations do not form part of its plans so therehas been uncertainty about the future of these services—indeed on 3 May IAG announced that all BMIbabyServices from Belfast will cease on 11 June. This has the potential to reduce Northern Ireland’s connectivityand could mean less choice for consumers. Hopefully on some of these routes, existing or new operators maysee this as an opportunity to step in.

21. Links to Heathrow are a key concern. Commercial decisions by airlines to reduce capacity on routesbetween Northern Ireland and Heathrow present an important risk for the Northern Ireland economy. Whatremains critical for passenger and cargo facilitation is that adequate Heathrow capacity remains available fromBelfast at key times throughout the day.

22. We do of course have an equally important service from Belfast International Airport to Heathrowprovided by Aer Lingus (three services each way daily). There could clearly be an option for Aer Lingus tostep in and supplement their services to Heathrow (assuming slots can be secured at Heathrow) if BMI’s newowners decided to reduce their service frequency.

Tax Policy

23. CBI Northern Ireland provided evidence to the NI Affairs Committee in June 2011on the issue of AirPassenger Duty. We have welcomed the decision to reduce air passenger duty on direct, long distance flightsfrom Northern Ireland airports and to devolve these powers to the NI Assembly, who in turn, under theProgramme for Government, have committed to reduce such taxes to zero on completion of the devolutionprocess. This initiative reflects the substantial differential in air taxes which exists with the Republic of Ireland,and the increasingly uncompetitive position which services from Northern Ireland faced within the islandof Ireland.

24. This initiative reflects the substantial differential in air taxes which exists with the Republic of Ireland,and the increasingly uncompetitive position which services from Northern Ireland faced within the island ofIreland. There is concern within the Northern Ireland business community that as APD increases ourcompetition with the Republic of Ireland becomes an even bigger issue.

25. The CBI is concerned about the increasing burden of Air Passenger Duty, which is now the highest ofany EU country—indeed a number of countries have opted to remove or reduce their air taxes in recent years.Furthermore, under the forthcoming EU Emissions Trading Scheme (ETS), being levied across all Europeanairlines as the vehicle for taxing aviation-related emissions, Germany has undertaken to hypothecate its airpassenger tax against the ETS to create one net charge. It is therefore vital that the UK government restrainsfuture increases to air passenger duty. In Northern Ireland the views of the business community would be evenstronger, with a view that existing APD levels for domestic/European flights are already too high, underminingthe aviation industry, and businesses more generally.

26. However, it is important that the Government, in considering future variations to APD, should takeaccount of how any changes which may serve to undermine the viability of crucial links to Heathrow byincentivising passengers from Northern Ireland to reach onward destinations via competing hubs such as thosein North America or competing European hubs. Over the long-term, substantial differentials in APD ratesbetween Northern Ireland and the rest of the UK may well serve to endanger the commercial viability offrequent links to the UK’s hub airport.



27. On a separate though related issue the change in structure in airport charges introduced at Heathrow inApril 2013 has resulted in increased passenger charges for domestic flights, as they fall under the new “EUdestination” category. As a result of the new charges, the passenger charge for a Heathrow-Belfast passengerhas increased by approximately 60% (from £13.43 to £21.80). Previously a lower charge applied to UKdomestic and Republic of Ireland flights due to the lower passenger processing costs eg no passport/immigrationcontrols. This increase together with the effect of APD has significantly increased the costs associated withtravel to Heathrow.

May 2012

Memorandum from the British Air Line Pilots’ Association (BALPA)

The British Air Line Pilots’ Association (BALPA) has been asked to give written evidence in order to assistthe Committee with its inquiry into air transport strategy for Northern Ireland. We understand that theCommittee is especially concerned with the potential impact on air links between Northern Ireland and LondonHeathrow as a result of the takeover of bmi British Midland by International Airlines Group (IAG) and theimpact on job losses as a result of the same. BALPA’s main concerns relate to the second of these two concerns.We will also provide some information about the bmi pensions scheme which will have an impact on bmi staffmembers across the UK.

Background

There are three airlines within the bmi stable of companies: bmi British Midland (herein referred to as bmiMainline); bmi Baby and bmi Regional. bmi Mainline and bmi Baby currently maintain a presence and a baseat George Best Belfast City Airport.

Lufthansa had been the sole owner of all three airlines until 20 April 2012 when ownership transferred toInternational Airlines Group (IAG), the parent company of British Airways.

BMI Mainline

bmi Mainline has one aircraft and nine pilots based at George Best Belfast City Airport. IAG have announcedits intention to integrate bmi Mainline into British Airways and have committed to retaining the Belfast City-Heathrow route.18 However, British Airways intend to close the existing bmi mainline base at Belfast City.This route would then be operated by Heathrow-based crew and aircraft.

The impact of this decision is that the nine bmi pilots based at Belfast City were warned that they are facingredundancy. BALPA is working closely with IAG to try and mitigate any redundancies and together we haveput together a package of proposals to avoid compulsory redundancies. We have balloted our bmi members onthat package which includes voluntary unpaid leave, temporary part-time working and permanent part-timeworking across the bmi pilot body and this was accepted. As a result, these mitigation procedures will now beimplemented by British Airways.

BMI Baby

bmi Baby is the low-cost arm of the bmi company. It currently operates to 10 UK and European destinationsfrom Belfast City and has two aircraft based at the airport. Four crews are rotated through Belfast from EastMidlands and Birmingham Airports to fly those aircraft.

During purchase negotiations IAG made it clear that they had no wish to acquire bmi Baby as they did notsee a future for the company within their operations (ditto for bmi Regional). However, Lufthansa were notable to identify a purchaser for the company before the purchase by IAG was completed. As such IAG acquiredbmi Baby and bmi Regional and received a significant reduction in the purchase price as a result.

IAG has announced its intention to close bmi Baby as it has so far been unable, and is not confident offinding a buyer for it. Routes from Belfast will be suspended from 11 June. BALPA is still keen to work withany potential buyers for the airline, even at this late stage, in order to save the airline and the jobs. However,we are making plans to support those pilots who will be affected by the closure of the airline and will be doingwhat we can to help them find alternative employment.

BMI Regional

For the sake of completeness, although it does not directly affect Northern Ireland, note that bmi Regionalhas been sold with Sector Aviation Holdings of Aberdeen and we are currently in negotiations with them.

BMI Pensions Entering Pension Protection Fund

IAG made clear that it did not intend taking on the pension deficit as part of its purchase of bmi andLufthansa said it did not wish to be held responsible over the long term. The upshot is that pilots’ pensions18 http://www.bbc.co.uk/news/uk-northern-ireland-17857534



will be hit—dramatically. After years of hard work and paying considerable sums into the scheme some pilotshave built up significant pensions. One example is a pilot who has worked for bmi for 24 years and wasexpecting a pension of around £43,000 but this will now be capped by the PPF at around £25,000 (althoughLufthansa are intending to top this up by an as-yet uncertain amount). That is an £18,000 differential anddependents’ pensions and pension increases in retirement will also be significantly reduced.

In the sale of bmi to IAG, Lufthansa retained responsibility for bmi’s closed Defined Benefit (DB) pensionscheme.

The way in which the pension scheme has found its way into the pension protection is shrouded in mysteryand we have raised our concerns about this issue with the Chair of the Work and Pensions Select Committee,Dame Anne Begg MP

I hope this information is of interest to the Committee. We would be happy to provide any other informationthat we can.

June 2012

Supplementary memorandum from the UK Border Agency

Following my evidence session at the Committee on 20 June 2012, I am pleased to be able to offer theadditional information that I promised to provide.

Cost of a Republic of Ireland Visit Visa

The Committee asked what the cost of a Republic of Ireland visit visa was. The cost of a three month singlevisit visa is €60.

Enforcement Operations at the Irish Border

I told the Committee that the UK Border Agency undertakes enforcement operations around the Irish borderto identify and remove those who seek to abuse the Common Travel Area. I can confirm that for the 2011–12financial year our Local Immigration Team in Northern Ireland conducted around 300 enforcement operations,resulting in over 360 individuals being removed. Because of the way that these statistics are recorded it is notpossible to confirm exactly how many of these individuals entered the UK illegally via the Republic of Ireland.

All in-country enforcement operations in Northern Ireland are intelligence-led and planned through thefortnightly Tasking & Co-ordination Group meeting which assesses incoming intelligence and the viability ofany subsequent operation. Enforcement operations are undertaken at residential premises, commercial premisesto tackle illegal working and at airports & seaports targeting domestic UK travel routes in order to preventabuse of the Common Travel Area.

In the last year, the UK Border Agency has increased its enforcement presence in Northern Ireland and hasbuilt a short term holding facility at Larne to strengthen its approach to tackling immigration abuse. Weare becoming increasingly effective in strengthening our internal immigration controls. In 2011, detection ofimmigration offenders increased by over 60% compared with 2010, with nearly 300 people interceptedattempting to abuse or facilitate abuse of Northern Ireland ports as a means of illegal transit across the UK.Over 70% of these offenders have been removed from the UK.

Furthermore, operations focused around the border in the last six years have resulted in over 3,500immigration offenders being detected, with more than 60% of these removed from the UK. Close working withthe Police Service of Northern Ireland (PSNI) has delivered more than 250 prosecutions and resulted in theseizure of over £250,000 under the Proceeds of Crime Act over the last two years.

Asylum Seekers

The Committee asked how many individuals claiming asylum in the UK entered the country via the Republicof Ireland. Whilst the UK Border Agency published a range of asylum statistics it is not possible to provide afigure for the number that entered the UK via a specific country or method without conducting manual checksof each application.

I should however point out that under the terms of the Dublin Regulation asylum seekers should have theirclaim considered in the first safe European country that they passed through. Therefore any asylum seeker whohad passed through the Republic of Ireland in order to enter the UK should be returned to the Republic ofIreland in order to have their claim considered there. Over the last three years around 100 asylum seekers ayear have been returned to the Republic of Ireland from the UK under the Dublin Regulation.

I trust you find this response useful. We would be very happy to provide any further information to theCommittee.

July 2012



Memorandum from Ryanair

Below is a copy of the presentation provided to Members at the meeting on 12 September 2012.

Lowest Fares/Lowest Seat Costs in Europe

No fuel surcharges….Guaranteed!

No. 1 Traffic – 80m

No. 1 Cover – 1,500+ Routes and 51 Bases

No. 1 Custr Service - Most on time flights

- Fewest lost bags

- Fewest canx

27th Year of strong growth

No. 1 Intl. Sched. airline – “World’s Favourite”

51 bases

170 airports

28 countries

1,500+ routes

290 B737-800’s

N’est fleet (av 3y)

80m pax p.a.

Source: IATA published statistics



Low

High

No.1 for Lowest Fares

Av. Fare % > Ryanair

Ryanair € 40

Easyjet €88 +110%

Aer Lingus €91 +127%

Lufthansa €244 +510%

Air France €254 +535%

British Airways €255 +520%

Source: RYA to 30 June 2011 & Latest published Company Year end Information

No. 1 for Traffic Growth

PAX M’s

10

30

50

70

03 05 07 09 11 13FY

Ryanair - Europe’s largest airline

Country RyanairPassengers ’11

Position

Spain 34.0m No. 1Italy 28.1m No. 1Ireland 9.2m No. 2Portugal 3.8m No. 2Poland 3.8m No. 2Belgium 4.8m No. 2UK 27.4m No. 3France 7.3m No. 3



Only low cost airlines deliver traffic growth

Source: IATA published statistics for 2010 compared to forecasted Ryanair traffic for FY11

Air travel is a commodity – price is the determining factorDemand is elastic and low costs are a necessityOnly low cost airlines are growing traffic and expanding networksOnly low cost airports can grow traffic and tourism in NI

Tourists on low cost airlines spend the same as those on high cost legacycarriers

2008 2011 VarRyanair 58.6 76.4Easyjet 43.7 55.5

102.3 131.9 29.6

British Airways 34.6 34.0Aer Lingus 10.0 9.8Jet 2 3.5 4.2Thomson 12.2 11.0Thomas Cook 8.3 8.0BMI (+ Baby) 10.0 7.7Flybe 6.9 7.1

85.5 81.8 -3.7

Total 187.8 213.7 25.9

Pax carried (m)

Belfast needs 2 airports

Genuine competition in Belfast is good for NI:

Competitive (low) prices to airlines

Airlines can offer low fares and choice for passengers

Stimulate traffic growth and tourism revenue

Improved service quality and efficiency

Maximise fixed assets by developing traffic

All European airports compete for passengers

Legacy airlines are reducing capacity

10

Cities with 2 airports deliver more pax growth


Cities with one main airportPax '08 Pax '12 Var

Prague 11.64 10.85 -7%Budapest 8.10 8.56 6%Dublin 20.50 18.55 -10%Madrid 48.27 46.19 -4%Athens 16.23 12.8516 -21%Edinburgh 9.04 9.19 2%

Cities served by 2 or more competing airportsPax '08 Pax '12 Var

Brussels (CRL / BRU) 20.93 25.70 23%Paris (BVA / CDG / ORY) 85.61 93.40 9%Milan (BGY / LIN / MXP) 33.00 37.00 12%Rome (CIA / FCO) 38.57 41.90 9%Gothenburg (GSE / GOT) 4.42 5.80 31%Stockholm (ARN / BMA / NYO) 20.54 24.70 20%Belfast (BHD / BFS) 7.16 6.60 -8%London (LCJ / LGW / LHR / LTN / STN) 130.13 134.50 3%

Belfast:1. Ryanair inhibited by runway length, closure of BHD base in 20102. APD – high proportion of domestic routes = £26 APD per rtn



Belfast needs 2 airports

*exiting through a NI port. Source: NI Dept of Enterprise, Trade and Investment


One airport:

Lack of competition in NI

Barriers to new entrants esp low cost airlines

High prices and declining traffic

No choice for passengers

Route reductions

Less tourists

Pax leakage to Dublin and other better value European destinations

It does not “concentrate resources”

BALPA do not care about NI aviation or economy

BALPA are a BA union – only interest is in Belfast-London route

Defending monopoly and preventing competition

Maintaining high fares and protecting outdated gold-plated t+c’s

Detrimental to prices, passenger choice, tourism and business

Hankers after the olde days: high costs, low pax, no competition

2 unsuccessful attempts at securing union recognition in Ryanair

- defeated following opposition by Ryanair pilots

13*exiting through a NI port. Source: NI Dept of Enterprise, Trade and Investment** According to tourism offices of Greece, Tuscany and Canary Islands

The value of tourism


973k overseas visitors* spent £263m in NI in 2011

5 million nights stayed in NI by overseas visitors

£270 spend per person per trip

Only 8% were from Europe (excl UK) yet were of higher value:

7.8 nights per trip, and £370 spend per person

Only improved air connectivity can increase tourism numbers

ACI: 1,000 direct jobs are sustained per million pax

Low fares stimulate tourism

Pax on low fares spend as much as on high fare airlines**

NI is not well connected to Europe

More passengers = more tourists



The value of tourism

Direct flights deliver increased tourists

Belfast is unserved from Germany, Belgium, Lithuania, Latvia,

Sweden, Norway, Estonia

Increasing air connectivity will increase tourists

Low fares will stimulate demand on new and existing routes

Visi�ngtourists (m)

Touristspend (€m)

Direct jobs APD

France 75 €37,500 75,000 €0Ireland 8.3 €6,391 8,300 €3Denmark 6.3 €4,851 6,300 €0Finland 6.1 €4,697 6,100 €0Norway 4.3 €3,311 4,300 €0Scotland 2.3 €1,771 2,300 €15N. Ireland 0.9 €316 900 €15

APD is destroying UK aviation2008 2011

pax (m) pax (m) % change

UK 238 222 -7

France 138 143 +4

Italy 133 148 +11

Germany 191 201 +5

Spain 202 204 +1

Netherlands 50 54 +7

Portugal 27 29 +10

UK / NI IS CLEARLY LOSING OUT

£13 per dep pax compared to €3 in Ireland

Airlines cannot absorb this increase or pass it onto passengers

NI is uncompetitive with Europe, restricting pax and tourism development

Netherlands: APD scrapped after 1 year and cost of €700m

Scrap APD in NI

Return to growth

APD is destroying NI aviation

Pax 2011(m)

Ave. fare Profit perpax

Ryanair 76.8 €40 €6.63BA 34.3 €255 €15.12Aer Lingus 9.5 €91 €8.87Easyjet 54.5 €88 €4.55



Belfast is blessed with two airports:

Competition = low costs

Stimulate pax growth and tourism revenue

Scrap APD in NI on all routes

Help airports to attract passenger growth:

Let NI compete with rest of Europe for tourists and business

Air travel is a commodity

Demand is a function of the price

Lower prices = traffic growth

Optimal aviation links will develop tourism

Reducing costs will deliver £270 boost per tourist

An Air Strategy for Northern Ireland

September 2012

Memorandum from Basil Hutton

Northern Ireland is in dire need of a coherent strategy for air transport. We must develop facilities for therapid transportation of goods and people in and out of our country. For too long we have endured the spectacleof two half airports competing for a finite pool of business and the only winner has been Dublin Airport withits fast and efficient links to Northern Ireland. It has siphoned off about a quarter of our potential traffic andhas become an increasingly attractive departure point because of the choice of destinations it has to offer.

My wife and I returned recently from an extended holiday in South East Asia. We flew into Kuala Lumpur(pop. 7 million one airport) on to Hanoi (pop 6 million, one airport) on to Hue (pop 2 million, one airport)next to Saigon (pop. 12 million, one airport) and finally to Bangkok (pop 7 million, one airport). We flew homethen to Belfast (pop 500,000, two airports) We drew some very obvious lessons from our experiences there.

Malaysia, Vietnam and Thailand have one common pressing need and that is to secure a large and growingtourist business. They are doing this by concentrating their resources on building large modern airports withexcellent road and rail links. Comfortable seating and cheap or free wifi and internet facilities are the norm.We need one International Airport operating 24 hours per day with sufficient capacity to cater for any potentialincrease in traffic for the foreseeable future. It needs good road and rail links both to the east and west ofNorthern Ireland. The ony airport that can satisfy these criteria is Belfast International and all futuredevelopment should be based there.

Belfast City airport is small, crowded and will never have the room to do what BIA can do and anydevelopment based there is at best a distraction and at worst damaging to the only airport that can deliver forus. It is also quite difficult for people outside the Greater Belfast area to reach and BIA is much more centralfor the vast majority of our population. BCA has proved also to be a very mixed blessing for Belfast residentswho live under its flightpath and have had, in recent years, to suffer an increasingly intolerable level of noise.We have listened to the absurd claims about the numbers of jobs it has created (in reality job transfers fromBIA) and to the promises of wealth creation from its expanding international operations. The hollowness ofthese assertions is shown by the fact that its first direct flight is a “bucket and spade” destination, Faro. Thisroute is already served by Aer Lingus, Easyjet and Jet2 from BIA and by Ryanair from City of Derry!

Northern Ireland is too small to support two International Airports. Let’s put our money where it will domost good. We must build proper road and rail links to BIA and develop the airport as an impressive andwelcoming doorway into Northern Ireland.

April 2012



Memorandum from Sheilah Bradley

Dear Sirs, As a resident of Holywood, Co Down, living directly under the flight path of most of the airplanescoming into and out of George Best Belfast City Airport, I welcome the initiative of the NI Affairs SelectComittee in examining the issue of air transport strategy for NI.

Although I am happy to make use of the City Airport as a gateway to the rest of the UK, I cannot understandthe benefits for our community in having two international airports. The Belfast International Airport atAldergrove was designed to be just that, and as it sits in the middle of a lightly populated rural area there islittle significant environmental impact.

The effect of noise from planes coming from and going to Belfast City airport cannot be overly emphasised.Especially during the spring and summer months it is virtually impossible for me to have my windows open,as normal communication in the house is so adversely affected. Equally, when in the garden all conversationwith neighbours etc has to cease when a plane is overhead. Thankfully we have so far been protected fromdisturbed sleep between the hours of 9.30 pm and 6.45 am, although there have been increasing numbers ofdelayed flights up to and sometimes after midnight.

One of my main concerns is that if the City Airport is encouraged in its ad hoc expansion it will bring inflights from further afield which will necessarily require larger planes carrying more fuel, and consequentlyincrease the noise pollution.

If there is to be a strategic plan for air transport in NI it would seem only sensible for priority to be givento the development of Belfast International airport as the primary gateway airport for NI, leaving the CityAirport as the provider of regional routes within the UK, as I believe was originally envisaged.

April 2012

Memorandum from Lagan Valley Group Residents’ Association

1. We live in south Belfast, in a prime area just outside the noise contour bands for Belfast City Airport. Weare concerned that, although the adverse effect of aircraft noise on residents is documented within the vicinityof BCA, it is perhaps not fully appreciated that residents in other areas of Belfast at a greater distance fromthe airport are also adversely affected by aircraft noise.

— Sleep is disturbed by early morning flights.

— Listening to TV/radio when windows are open is difficult.

— Conversation in the garden has to stop while the aeroplane is overhead.

— Aircraft noise spoils the enjoyment of gardens.

— Noise from constant daily flights is both an irritant and an annoyance.

— Detracts from the pleasure of walking in Lagan Valley Regional Park, Lagan tow path, Barnett’sDemesne, Belvoir Forest Park etc.

2. We need the economy to grow in Northern Ireland. To continue to expand Belfast City Airport to thedetriment (and possible demise) of Belfast International airport will be a very serious disadvantage to thegrowth and economy of this part of the UK.

— Belfast International airport is more easily accessible to all and especially those who live in the westand north of the province, compared with access to Belfast City Airport.

— To take long haul flights, we must first travel to London Heathrow or to Dublin in the Republic ofIreland. This is an additional and unnecessary expenditure in terms of money and time. BelfastInternational already has an excellent capability to cope with long distance flights and this ought bedeveloped and expanded to the advantage to Northern Ireland, not allowed to die. An improved roador railway system to provide a quick and efficient route to Belfast and to the north and west wouldalso add to the growth of the economy.

— The detrimental affect on residents is less serious at Aldergrove International, situated as it is in arural area with a smaller population. The population of Belfast will grow when the economy picksup and thus even more residents will be adversely affected by the close proximity of an airportwithin a built-up conurbation.

— We all know that flight is the safest form of travel but sadly, accidents do happen. There have alreadybeen three crashes this month (9 April in Tanzania; 6 April in Florida; 2 April in Tyuman, Russia[with 31 fatalities]. All these accidents were on take-off). Consider the safety of vast numbers ofresidents around Belfast City Airport.

April 2012



Memorandum from Mr A R Hobson

1.1 I am a private individual who lives near to the western side of Belfast City Airport, in East Belfast, butnot directly under the main flight path.

1.2 I am also employed in a freight forwarder business at Belfast International Airport.

2.1 I am strongly against further increases in noise pollution at this airport which has recently beenexacerbated by an increased number of medium-sized commercial jets operated by BMI Baby on an increasingnumber of routes. The fact that BMI Baby recently moved their base of operations from Belfast InternationalAirport and is now targeting holiday destinations and the “cheap flight” market means that Belfast City Airporthas moved away from a business flight hub to attempting to become the major air hub for Northern Ireland.

2.2 As Belfast International Airport is based in a highly rural area, around 30 minutes’ drive from BelfastCity Airport, surely any development of routes should be focused on this airport and not one which is causingstress and bewilderment to tens of thousands or residents in East Belfast, Cultra and Holywood?

2.3 Successive agencies and government bodies have ignored Belfast International Airport’s strategicimportance to the detriment of the Northern Ireland economy which I believe it is losing out to Dublin Airportwhich has become more accessible to the Northern Ireland population following recent improvements in themajor motorway between Banbridge and Dublin.

2.4 Considering the Lisburn-Antrim mothballed railway line is only three quarters of a mile from the mainairport terminal at Belfast International Airport, and that even local journalists have voiced opinions on thelack of a service when the line is already so convenient, why have local and national bodies not undertakenand published feasibility studies regarding this issue?

2.5 While Dublin Airport and Belfast City Airport have the luxury of a main dual carriageway linking themdirectly to the areas they serve, both main access roads to the Belfast International Airport (throughTemplepatrick and Nutts Corner) are served by single-lane roads subject to mixed Agricultural, Commercialand Commuting traffic.

2.6 While Republic of Ireland authorities are planning new links and better infrastructure for Dublin airport,local government and DfT seem to have ignored the plight of Belfast International Airport. Services for cargoat Belfast International Airport have dwindled so much since the withdrawal of the British Airways shuttleservice some years ago and the more recent move of BMI Heathrow services to the City Airport that perceptionof periphery to Europe and the World in the freight community is more tangible than ever.

3.1 Regarding the takeover of BMI by the holding group IAG; the fear among the business communitywould be the loss of a direct link into the British Isles through use of the Heathrow slots for more profitablepurposes. It is imperative that some of these slots are ring-fenced and the codeshare that operated between BAand Aer Lingus in the past be encouraged and coordinated to ensure business flyers can still use Heathrowpreferably from a newly linked Belfast International Airport.

April 2012

Memorandum from Kevin McLaughlin

I am perhaps too late to give my feelings on this. But I want to as a disabled person (Registered blind withsome sight) who travels regularly between England and Northern Ireland.

Belfast International—Poorly connected Airport which has a train line running close to it, but fails to utilisethis as a viable transport connection option. It is also a terrible airport when it comes to trying to getinformation. After security there is no central point for information on flights and delays. This is particularlyfrustrating for someone with limited sight as visual display monitors are not located at an accessible height. Iexperienced this last Monday when taking a flight to London Gatwick in the evening which was delayed formore than two hours. I also spoke to other passengers on my flight who agreed that this was an issue.

Belfast City Airport—Also has a train line close to it which is not utilised properly as a transport option. Iuse this airport a lot when flying with BMI (BA) and although it has improved there is much more that couldbe done to make it better.

City of Derry—Despite being from Derry I rarely use this airport. Again an airport with a rail line close toit which is not utilised. The lack of destinations and operators using this airport make it an unattractive choicefor me. I would rather fly from Dublin or Belfast despite the additional road/rail travel.

I have previously worked as a consumer journalist in the BBC Consumer Unit (Watchdog and UKs Worst).And so have very strong feelings about the importance of air connections between Northern Ireland and therest of the UK and Ireland.

April 2012



Memorandum from A Dunwoody

Dear Mr Robertson

I appreciate your efforts to improve our transport links with the rest of the United Kingdom.

Extending the time-limit for flights at the City Airport from 9.30 pm to 10.30 pm to allow a later flight fromHeathrow would help to secure the route and assist the business community.

The Stormont Executive has failed to respond to calls for improvements to the infrastructure at BelfastInternational Airport based on major upgrade of the approach roads to the Airport, which deter investment.

May 2012

Memorandum from Andrew Ellis

I understand that you are inquiring into Northern Ireland air transport on Wednesday 20 June. This is a verypertinent issue indeed and I wanted to express some of my concerns with you beforehand.

The geographic position of Northern Ireland, in between a foreign country and the Irish Sea, makes uscrucially dependent on air and sea links. It is worth remembering that in comparison with England, Scotlandand Wales, the absence of road or rail links to the rest of the United Kingdom, puts Northern Ireland at a uniquedisadvantage. In my view, our development is held back enormously because of our geographic isolation.

We need to have a far wider variety of direct air links, and not be dependent on connecting at London,which is very costly, complicated and time consuming. What is happening because of the dire provisionscurrently in place is that people are travelling in huge numbers across the border to the Irish Republic andflying from Dublin airport. This is not just because of the APD issue, which is clearly a contributory factor inreducing ticket costs, but it is also due to the very poor selection of destinations currently available directlyfrom either of Belfast’s airports.

Air transport needs to be given a high priority because it is our lifeline to the rest of the country and indeedthe rest of the Europe. The only alternative, the ferry to the mainland, is out of the question for most peoplebecause of the high charges being applied to Irish Sea crossings. I note that it costs only a quarter of the priceto take your car from Dover to Calais as it does from Belfast to Stranraer. This makes us depend all the moreso on air, while the ferry companies are clearly exploiting our isolation.

It is clear that we need to have rail links to both Aldergrove airport and the City airport. It strikes me asparticularly absurd that there is a rail line in operation only for training purposes that runs from Lisburn toAntrim via Aldergrove. I cannot understand why this line is not being used to connect people from Belfast citycentre to the International airport by rail. Secondly, there is already a train halt near the City airport, Sydenhamstation, although it is virtually inaccessible to the airport itself. Sydenham station needs to be physicallyconnected to the City airport.

In my personal situation, I would very much like to see better connections to cities in Europe, mostparticularly, Vienna. There is currently no direct flight to any city in Austria from Northern Ireland or evenany city in any neighbouring county that would be reasonable to travel on to Vienna by land. Strategically,Vienna is placed in the centre of Europe and is within reach from several major European cities. Currently,there are only two flights per day from Dublin Airport and at very inconvenient times, 6:40 am and 7:00 am(Ryan Air and Aer Lingus). It takes three hours to travel by bus to Dublin Airport from Belfast.

I sincerely hope that the Northern Ireland Affairs Committee will be successful in proposing andimplementing major improvements to the current air transport situation in Northern Ireland.

June 2012

Memorandum from David Donnelly

1. Regular Traveller

As a weekly business traveller to mainland UK for over five years it is important that that experience ispassed onto the committee. There have been many submissions from various bodies and organisations. Noneof these submissions mention how it actually is to be a traveller who uses these airports regularly. Thisexperience has gradually gotten worse in that time with flights becoming more expensive, the choice of flightsbeing greatly reduced and travel to and from the airports still restricted to use of private car as public transportlinks are inadequate.

2. Runway Extension

The runway extension at George Best Belfast City Airport must been seen as an infrastructure priority.BALPA have their opinion in regards of there even being two airports in Northern Ireland so close together.Neither airport alone is capable of handling the flights and passenger numbers that we need now and in the



future. The two airports basically equate to one airport with two terminals. The benefit is that we have one anda half runways.

This extension is vital to attract airlines for two main reasons:-

2.1 Competition—we need more airlines competing to bring prices down and be as competitive aspossible. As it stands there is one main airline flying to mainland UK and prices have risenaccordingly.

2.2 Increased Destinations—we need more direct links so that we do not have the cost and burden ofhaving to travel via a mainland UK airport or choose instead to fly out of Dublin. This includestransatlantic travel. Northern Ireland is under the transatlantic corridor. There must be opportunitiesfor creating a hub.

3. Taxation

As an island the air links are vital. The number of links, the destinations of those links and the cost to usethose links are vital. Thus the taxation that is put upon the cost of flights puts Northern Ireland at an evengreater disadvantage because the only way NI can do business is via these vital air links. If it is too expensiveto travel here in comparison to other business destinations, then NI will lose. The Exchequer is putting NorthernIreland at a competitive disadvantage. NI is one hour further flying time from Europe than London. The minorsuccess regarding the United Airlines Belfast—Newark flight is only a tiny victory. It is not enough. TheUK government has a duty to do all it can to make Northern Ireland competitive due to the fall out fromrecent history.

Northern Ireland cannot afford a carbon tax on its flights. Northern Ireland must be immune to this illthought out and inappropriate idea for taxation. If mainland Europe wants to put itself at a competitivedisadvantage compared to Asia and the United States, let it make that mistake. Northern Ireland must do all itcan to get out of those plans.

5. Public Transport and Tourism

The failure to have train stations connected to the airports is a major flaw. This is basic all over the world.The train station at Sydenham needs to be moved back towards the new terminal, not that it is that newanymore and a covered walkway put in place from the terminal to the station. That being said, at least GBBCAhas a train station of sorts. For tourists coming into Northern Ireland and there being no rail link at Aldergrovemust be considered an embarrassment. Further to that the fact that there is no dual carriageway road to theairport is a further embarrassment. When Dublin first started building motorways, the first place it went to wasDublin Airport. Businessmen want and need fast travel, to speed in and out of airports, whether by road orrail, with as little hold up as possible. That is not possible travelling to Aldergrove.

June 2012

Memorandum from Eric McGreevy

I read with interest that the committee is looking into the present state of affairs with regard to travel toNorthern Ireland.

Can I offer this small piece of information.

I work as a consultant and travel extensively throughout the Middle East and Africa.

Recently I was asked to do some work in East Africa and as part of this I was asked to make a journey toFrankfurt in Germany for one day to consult with my employers. In order to do this I was required to have atleast a full working day with them. My contact within the organisation (which is worldwide) suggested a timeand date and said he would arrange travel. He then came back to me and asked me why was travel fromBelfast so expensive. In order to get me to Frankfurt, the proposed flight would be Belfast to London and thenLondon to Frankfurt with a return journey. The cost was in the region of £900 and he considered this exorbitantas did I.

I then informed him I would try to source something at a more reasonable cost or indeed cancel the businessmeeting. This turned out not to be an option.

I then fortunately sourced a direct flight from Dublin to Frankfurt direct which cost around £200 return.

This was booked.

Now the interesting bit comes in!

The meeting was on a Thursday so the day before (Wednesday) I carried on as normal—rose at 8 am andwent about my life throughout the day and evening. I then made my way to Glengall St to get the coach toDublin airport at 2 am on the Thursday morning (awake now for18hrs). The coach trip was very pleasant andsmooth arriving at Dublin at 5.30 am in time for me to catch my 7 am flight to Frankfurt.



I arrived in Frankfurt at 9 am and after taking the S-Bann to my destination I began my meeting whichlasted until 4.30 pm. I then left the venue and made my way to Frankfurt airport for my return flight whichwas due to depart at 7 pm. This I did arriving back at Dublin at around 9 pm. I then caught the Belfast coachto return to Belfast arriving home at about 1.30 am Friday morning. (Now awake for 41 hours). Consider aEuropean business man attitude to this!!!!

It is a necessity that N. Ireland has a direct flight to at least one European hub airport as a matter of urgencyif we wish to attract and maintain business to the province. I would suggest Frankfurt or Amsterdam whichare both international hubs. London is unfortunately at the whim of our local carriers and is used as a meansto increase costs. It is also very inconvenient for travel beyond the UK especially for Europe or the newevolving economies.

June 2012

Memorandum from the Northern Ireland Chamber of Commerce

Introduction

1. Northern Ireland Chamber of Commerce (NICC) welcomes the opportunity to submit views to theNorthern Ireland Affairs Committee on behalf of our Members based in Northern Ireland and across the UK.

2. Northern Ireland Chamber of Commerce has a membership of over 1,000 encompassing the full spectrumof business from micro enterprises to large manufacturing companies. One of the leading businessorganisations, the Chamber has been pro-active in representing the views and deep concerns of its membershipon the performance of the economy; the shortcomings that must be addressed; the practical steps that can betaken to aid recovery and the role the Northern Ireland Executive and Assembly must play in unison with theGovernment if it is to achieve a re-balancing and re-building of what can only be described as a precariouslocal economy.

3. The Chamber wishes to acknowledge the recent work that was done by the Northern Ireland Executive,the Assembly and the Secretary of State in securing the commitment to devolve Air Passenger Duty (APD) onlong-haul services. Without the active involvement of Ministers and others, Northern Ireland’s only currenttransatlantic service would have been lost. The gravity of this position was fully recognised, and we freelyapplaud the wholehearted and determined manner in which the campaign was conducted.

The Implications of Current Air Links for Northern Ireland/Regional and InternationalConnectivity

1. The Committee has previously acknowledged information provided to them from NI Chamber ofCommerce and BAA in February 2012 which highlighted the importance of aviation to the Northern Irelandeconomy.

2. This research stated that one in 10 jobs depends on foreign investment, and half those companies canonly reach their home market through a hub airport.

3. It also stated that aviation supports £1 billion worth of exports from Northern Ireland, and 150,000 foreignvisitors arrive by air into Northern Ireland each year.

4. Therefore the maintenance and development of good air access to GB, Europe, direct major long hauldestinations and alternative international hubs will be the cornerstone of Northern Ireland’s economicdevelopment ambitions—for exports, investment and tourism—over the forthcoming 10–20 years.

5. These are central objectives within the NI Executive’s Programme for Government, and significant growthis being targeted in all three areas in the short term, as exports, FDI and higher value tourists are likely toincrease quality employment.

6. The Executive, for instance, is aiming to grow exports to emerging markets such as Brazil, Russia, Indiaand China, markets most readily accessed through Heathrow, by 2015. Furthermore there is a desire to createincreased and better paid employment through FDI and see tourism output escalated to £1 billion annually by2020, from the current level of £529 million.

7. These are ambitious but achievable targets, provided, of course, that adequate global air connections aresustained, and ideally diversified and expanded.

8. The importance of our connection to London Heathrow Airport is evidenced by statistics showing thatlocal businesses rely on this air corridor to ship almost £1 billion of goods worldwide, representing almost onethird of manufacturing output—and visitors arriving in Northern Ireland through Heathrow contributed over£21 million to the local economy and supported 1,000 jobs.

9. This recognition underpins the Northern Ireland Chamber’s campaign to safeguard Heathrow airconnections, at present operated by British Airways and Aer Lingus from George Best Belfast City Airport.Heathrow offers access to a wide range of global destinations air network and plays a key role in the drive toexpand exports, Foreign Direct Investment (FDI) and tourism.



10. At present FDI companies within the local economy provide one-in-twenty jobs, wherein travel betweenparent and subsidiary location requires access via a major international hub, such as Heathrow. Some of thesecompanies also require top executives to travel frequently and often at short notice to head offices for meetingsand training.

11. Research also shows that companies find it easier to win business if they meet potential customers in-market and therefore crucially depend upon air travel. Studies by FDI experts also show that ease of air accessis a key factor contributing to investment decisions. Thus international companies need to find it as easy aspossible to access Northern Ireland.

12. Having recognized our need for efficient worldwide connectivity, however, it is important to rememberthat, by some distance, Great Britain remains our key market, and, while Heathrow is numbered as one key airroute, other air services into London and the principal UK commercial and population centres play an equallyimportant role economically and socially for Northern Ireland. Indeed the general air connectivity availablefrom Belfast City, Belfast International and City of Derry airports is vital to Northern Ireland’s economicdevelopment and employment—both with regard to passenger and cargo movement.

13. While international connections are essential for our presently restricted number of bigger and locally-owned companies as well as existing FDI businesses, Great Britain is crucially important for most smaller andmedium-sized enterprises, which continue to account for the vast majority of activity and employment withinthe province.

14. Food companies, for example, are heavily dependent upon the British markets. GB is also the marketoffering the greatest and most easily accessible opportunities for growth, due to the fact that Britain importsfood worth £18 billion annually from international suppliers.

15. Direct air access from lucrative long haul markets represents an important strand of support for theExecutive’s economic development objectives. We believe it is imperative to see the restoration of services toToronto, and new ones to the United States market and the Middle Eastern hub airports to provide connectivityto China, India and Australia, from whence much of the future tourism and investment opportunity is likely tobe sourced.

16. In February 2010, the consultation for the draft Tourism Strategy for Northern Ireland to 2020 highlightedjust how important tourism is to the economy of Northern Ireland. It is understood to support over 40,000 jobsin Northern Ireland, representing 5.6% of the total workforce, bringing new facilities to towns and cities, andcreating opportunities in rural areas. These people are employed in every constituency and at every skill level.Tourism is a driver of economic growth, contributing £1.49 billion to Northern Ireland GDP.

17. Belfast’s airports support jobs. Research by Oxford Economics revealed that Nearly 900 airport-relatedjobs in Northern Ireland are dependent on Heathrow.

18. It is therefore vital that a strategy is in place to protect the above routes and jobs.

Lack of Public Transport Links to and Between the Northern Ireland Airports

1. In comparison with other international gateways such as Dublin, Northern Ireland lacks high-qualitysurface connections.

2. Airports are keen to encourage passengers to travel by public transport to access airports. Passengersbeing able to use public transport to their local airport, particularly if it gets them off the roads, is sustainable,good for the environment, good for local communities, and should be encouraged. Belfast City and City ofDerry airports are easily reachable by passengers from those cities.

3. NICC does however support the provision of a rail link for Belfast International Airport. The roads systemaround the International Airport is urgently in need of development.

4. This is an area where Government should be doing more and it requires a modal shift that onlyGovernment investment in infrastructure can deliver. The National Infrastructure Plan makes a start at this butmore needs to be done through the implementation of an air strategy for Northern Ireland.

Tax Policy

1. Air Passenger Duty (APD) is sending the wrong message to investors and exporters and acts as adisincentive. APD is damaging businesses and makes our country less well connected. It penalizes businesseswho need to fly to establish trade links and export their goods, especially when our businesses are operatingin an ever more competitive and hostile international market.

2. A zero rate of Air Passenger Duty will ensure the economic development of Northern Ireland particularlyin the three areas pinpointed in the Executive’s Programme for Government—exports, investment and tourism.

3. Simply, if Northern Ireland is to export its way out of recovery and encourage investment it needs to beon an equal playing field with the Republic of Ireland.



4. It is recognised that the cost of absorbing “Band B”/Long Haul APD, according to DFP, may be up to £5million per annum. It is worth reminding the Committee that the benefit derived from seven years ofContinental-United service from New York is well in excess of £100 million. Few, if any, Foreign DirectInvestments could produce a return of that magnitude within that limited timeframe. To broaden the horizonsomewhat, should Northern Ireland attract three new carriers which enjoy similar levels of passenger traffic onlong-haul rotations, the impact economically could be between £300–400 million, generating thousands of newjobs in aviation, tourism and downstream sectors. The general rule of thumb is that for every additional onemillion passengers, a total of 1,000 new jobs are created. On its own, this more than justifies bearing theburden of APD, and illustrates just how significant a contribution aviation could make to the regional economy.

5. Should the APD derogation be extended to short-haul flights? Airlines say “yes”, and we share that view.According to DFP, such a measure could cost around £60 million. Our position is simple: anything that createsa more favourable position in relation to our main competitor on the island is a good thing. If the total cost offlying from Dublin is less expensive as a result of their taxation policy, and therefore draws support across theland border from passengers in our natural catchment area, then that is harmful and regressive to NorthernIreland’s economy.

6. In real terms Northern Ireland has lost 1.25M annual air passengers since the economic boom years of2007–08. This is a significant shortfall, but is mirrored by losses in other neighbouring regional economies(Dublin -5M passengers/Central Scotland -3.5M passengers/UK Midlands -3M passengers/North East England-2M passengers). The impact of the economic slowdown has been universally damaging. However, we havean opportunity to compete on a reasonably level playing field with appropriate regional taxation relief, thussecuring a greater proportion of the available market. In turn this will be directly reflected in returns to thepublic purse.

7. Northern Ireland Chamber of Commerce has welcomed the Assembly’s support for a Bill proposed bythe Finance Minister Sammy Wilson which will set a zero rate of Air Passenger Duty for direct long-haulflights departing from Northern Ireland.

November 2012

Memorandum from Belfast City Airport

We appreciate the opportunity to comment on noise data that has been supplied to the Northern IrelandAffairs Committee.19

It is perhaps useful to make some points with regards to the noise impact of Airports in general. BelfastCity Airport was acquired by an International Investor in 2008 and fully expect to be governed by the nationalstandards that apply to all UK Airports. The UK government as you will fully appreciate have a nationalstandard for example for security and Belfast City Airport fully comply with the Department for TransportNational Aviation Security Programme which applies uniformity to airports from London Heathrow to smallregional airports like Belfast City Airport. Likewise, the Civil Aviation Authority establish clear operationalguidelines in their CAP 168 publication which again applies to all airports.

When it comes to noise management again there are clearly established guidelines where for example anyhousehold exposed to an average noise exposure in excess of 63 LAeq is entitled to mitigation measures paidfor by the relevant Airport Authority. There are currently zero properties exposed to this level of noise adjacentto Belfast City Airport.

If the Northern Ireland Affairs Committee are seeking to come to an informed view on Noise then I wouldrespectfully suggest that the relevant comparator is UK national standards and not a comparison betweenBelfast City Airport and Belfast International Airport or City of Derry or any other isolated example. If thiswere to be the context of the analysis then the following facts would emerge;

— Airports in the UK and elsewhere are typically located close to large population masses,otherwise they fail to attract the sufficient passenger volumes required to be economicallyviable.

— Belfast City Airport is typical of other UK airports with regards to proximity to housing.

— Taking a UK wide sample, a few airports in more rural settings will have a lesser noise impactand many airports located in more populous cities than Belfast will have a greater noise impact.

— Belfast City Airport already have some of the most constrained conditions applied to itsoperation of any Airport in the UK. Operating hours are restricted to 0630–2130 for scheduledflights. Belfast City Airport do not operate any freight flights or night flights. Belfast CityAirport do not operate any wide-bodied aircraft.

19 This memorandum is a response to Belfast City Airport Watch’s supplementary memorandum (Ev 128)



With regard to the second and third sections of the letter on employment and flight direction, it is not clearas to what point is being made. Within this context we have no specific comment to make on the paperpresented by this lobby group.

If the NI Select Affairs Committee have any specific questions on noise we would be delighted to providedetailed responses.

November 2012

Printed in the United Kingdom by The Stationery Office Limited11/2012 022723 19585