Air Transport Services in Northern Ireland

House of Commons Northern Ireland Affairs Committee

Eighth Report of Session 2004–05

Volume II

Oral and written evidence

Ordered by The House of Commons to be printed 6 April 2005

HC 53 - II [Incorporating HC 1254-i, Session 2003-04] Published on 14 April 2005 by authority of the House of Commons London: The Stationery Office Limited £18.50

The Northern Ireland Affairs Committee

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 Michael Mates, MP (Conservative, East Hampshire) (Chairman) Mr Adrian Bailey, MP (Labour / Co-operative, West Bromwich West) Mr Roy Beggs, MP (Ulster Unionist Party, East Antrim) Mr Gregory Campbell, MP (Democratic Unionist Party, East Londonderry) Mr Tony Clarke, MP (Labour, Northampton South) Mr Stephen Hepburn (Labour, Jarrow) Mr Iain Luke, MP (Labour, Dundee East ) Mr Eddie McGrady, MP (Socialist Democratic Labour Party, South Down) Mr Stephen Pound, MP (Labour, Ealing North) Rev Martin Smyth, MP (Ulster Unionist Party, Belfast South) Mr Hugo Swire, MP (Conservative, East Devon) Mark Tami, MP (Labour, Alyn & Deeside) Mr Bill Tynan, MP (Labour, Hamilton South)

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.

Publications 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/parliamentary_committees/northern_ireland_affairs.cfm

Committee staff The current staff of the Committee are Dr John Patterson (Clerk), Hugh Farren (Attached Clerk), Dr Aileen O’Neill (Committee Specialist), Tony Catinella (Committee Assistant), Julia Kalogerides (Secretary).

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 2172/3; the Committee’s email address is [email protected]

Witnesses

Wednesday 10 November 2004 Page Sir Roy McNulty and Mr Alex Plant, Civil Aviation Authority Ev 7

Monday 29 November 2004 Mr Herbert L McCracken and Mr Robert Barnett, Cultra Residents’ Association, and Mr David Babington and Mr Roger Watts, Kinnegar Residents’ Action Group Ev 29

Mr Alan Walker and Mr Eddie Lynch, General Consumer Council Ev 39

Tuesday 30 November 2004 Mr Richard Sterling and Mr Garvan O’Doherty, Londonderry Chamber of Commerce Ev 46

Mr Kieran O’Brien and Mr George Johnston, Stop Eglinton Airport Evictions Group Ev 55

Mr John Devine, City of Derry Airport, and Councillor John Kerr, Derry City Council Ev 65

Wednesday 15 December 2004 Mr Mike Rutter and Ms Sara Randall-Johnson, FlyBE Ev 75

Wednesday 12 January 2005 Mrs Doreen Brown and Mr Brian White, Department for Regional Development, Mr Robin McMinnis, Department of Enterprise, Trade and Investment, and Mr Harry Baird, Planning Service, Department of the Environment Ev 80

Wednesday 19 January 2005 Mr Brian Ambrose, Mr Alan Young, Mr Brian Carlin and Dr Chris Lundy, Belfast City Airport Ev 95

Mrs Barbara Anderson and Mr Denis Galway, Confederation of British Industry Northern Ireland Ev 106

Wednesday 23 February 2005 Mr David McMillan and Mr Chris Cain, Department for Transport Ev 116

Tuesday 1 March 2005 Mr Albert Harrison and Mr Uel Hoey, Belfast International Airport Ev 131

Rt Hon. John Spellar MP, Minister of State, Northern Ireland Office, Mrs Doreen Brown, Department for Regional Development, Mr Robin McMinnis, Department of Enterprise, Trade and Investment, and Mr Harry Baird, Planning Service, Department of the Environment Ev 145

List of written evidence

Page

1 Civil Aviation Authority Ev 1 2 Civil Aviation Authority, supplementary memorandum Ev 17 3 Cultra Residents’ Association Ev 24 4 Kinnegar Residents’ Action Group Ev 26 5 General Consumer Council Ev 36 6 Londonderry Chamber of Commerce Ev 45 7 Stop Eglinton Airport Evictions Group Ev 51 8 Stop Eglinton Airport Evictions Group, supplementary memorandum Ev 59 9 City of Derry Airport and Derry City Council Ev 61 10 FlyBE Ev 73 11 Department of Enterprise, Trade and Investment Ev 88 12 Belfast City Airport Ev 91 13 Belfast City Airport, supplementary memorandum Ev 93 14 Confederation of British Industry Northern Ireland Ev 102 15 Department for Transport Ev 110 16 Belfast International Airport Ev 122 17 Belfast International Airport, supplementary memorandum Ev 128 18 Department for Regional Development, Department of Enterprise, Trade and Investment and the Department of the Environment Ev 142 19 Ulster Unionist Party Ev 150 20 Councillor Ken Robinson MLA Ev 152 21 Mr Billy Armstrong MLA Ev 152 22 Dr Esmond Birnie MLA Ev 153 23 Antrim Borough Council Ev 156 24 Royal Society for the Protection of Birds Ev 157 25 InterTradeIreland Ev 161 26 London Redhill Airport Ev 162 27 Mr Trevor Evans, Donnybrewer Residents Ev 163 28 Jet2.com Ev 164 29 EasyJet Ev 166 30 Bmi Ev 168

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Northern Ireland Affairs Committee: Evidence Ev 1 Oral evidence

Taken before the Northern Ireland Affairs Committee, Northern Ireland Affairs Sub-Committee

on Wednesday 10 November 2004

Members present:

Mr Tony Clarke, in the Chair

Mr Adrian Bailey Mr Eddie McGrady Mr Gregory Campbell Mark Tami Mr Iain Luke

Memorandum submitted by Civil Aviation Authority

Summary

1. The Sub-Committee’s examination of air transport services in Northern Ireland concerns: — The development of capacity at existing airports; — Specific challenges facing Northern Ireland as a peripheral region of the UK; —TheeVectiveness of the Route Development Fund; and — The potential impact for Northern Ireland of wider air transport issues on the island of Ireland. 2. This submission addresses these points in the context of what the CAA sees as the main issues facing the Northern Ireland market. Our comments below are based on factual statistical data, experience of the aviation market over many years, and the messages emerging from a visit we recently made to Belfast as part of a wider study of services at regional airports. The principal points the CAA makes are as follows: — Northern Ireland is clearly more dependent on adequate air links to the rest of the UK than most other UK regions because of the lack of a suitable surface alternative. — The evidence suggests that the market is currently providing adequate, frequent air services between Northern Ireland and the UK, including London, without the need for external intervention which could impose high and hidden costs. — However, the network of international scheduled services is very limited at present. In the main this would seem due to the relatively small catchment areas which the Northern Ireland airports can draw upon, but some limited intervention may be justified in bringing forward direct international scheduled services through the use of a carefully controlled Route Development Fund so as to share the risk between airline, airport and those directly benefiting from the service. The use of such a fund should also ensure that only routes with a reasonable prospect of long-term viability are funded.

Introduction

The CAA’s role

3. The Civil Aviation Authority (“the CAA”) is responsible to the Secretary of State for Transport for duties in the areas of aviation safety regulation, airspace policy, consumer protection and economic regulation. 4. The CAA’s Economic Regulation Group (ERG) regulates airports, air traYc services and airlines and provides advice on aviation policy from an economic standpoint. Its aim is to secure the best sustainable outcome for users of air transport services. ERG’s main tasks are to promote liberalisation through the removal of Government-imposed restrictions to entry to the airline market and to facilitate the optimal supply and regulation of aviation infrastructure. ERG acts as expert adviser to the Government and collects, analyses and publishes statistical information on airlines and airports. 3022631001 Page Type [E] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Ev 2 Northern Ireland Affairs Committee: Evidence

Visits to Belfast 5. ERG is currently putting together a study of regional air services in the UK, which it hopes to publish early in the new year. As part of our research, on 21 September 2004 we visited Belfast and spoke to the Managing Director of Belfast International Airport, the Chief Executive of Belfast City Airport, and representatives from Invest Northern Ireland and the Northern Ireland Chamber of Commerce. There were diVering opinions on some points, but there were other areas where a consistent message came across.

The Development of Air Services in Northern Ireland

TraYc in 2003 6. There are three airports in Northern Ireland which report traYc statistics to the CAA. In the calendar year 2003, these three airports had a total throughput of 6.2 million passengers, comprising 4.0 million at Belfast International, 2.0 million at Belfast City and 0.2 million at the City of Derry Airport. 84% of the total were passengers on domestic flights, 14% were international charter passengers and 3% were international scheduled passengers. The bulk of the international scheduled passengers flew on the Belfast International–Amsterdam route, but there were also services during the year between Belfast International and Toronto and between Belfast City and Cork. Nearly one million passengers at Belfast International were on international flights but Belfast City is essentially a domestic airport at present.

TraYc development 1993–2003 7. Over the last 10 years the Belfast airports have grown at an average annual rate of 7.9%, higher than the UK average of 5.9%. The growth rate at Belfast City (8.8%) has been greater than that at Belfast International but even the latter at 6.1% has grown faster than the UK average (Figure 1 and Table1).

Figure 1: TraYc at Belfast airports 1993–2003

4 Belfast International

4 Belfast City

1 Terminal passengers (millions)

0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 3022631001 Page Type [O] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Northern Ireland Affairs Committee: Evidence Ev 3

Table 1

TRAFFIC AT BELFAST AIRPORTS 1993 AND 2003

Average 1993 2003 growth rate % Belfast City Domestic 845,359 1,960,352 8.8 International scheduled 0 9,959 — International charter 919 3,725 15.0 846,278 1,974,036 8.8 Belfast International Domestic 1,629,462 3,003,698 6.3 International scheduled 60,558 119,666 7.0 International charter 489,989 831,068 5.4 2,180,009 3,954,432 6.1 City of Derry Domestic — 162,025 — International scheduled — 28,974 — International charter — 14,506 — — 205,505 — Total Domestic 2,474,821 5,126,075 7.6 International scheduled 60,558 158,599 10.1 International charter 490,908 849,299 5.6 3,026,287 6,133,973 7.3 Total Domestic 82% 84% International scheduled 2% 3% International charter 16% 14% 100% 100%

Source: CAA airport passenger-related statistics.

8. However, underlying these relatively similar growths at the two Belfast airports there have been some signiﬁcant gains and losses by each airport. These are summarised in Table 2 which shows the domestic traYc at the two airports in 1993 and 2003.

Table 2

DOMESTIC TRAFFIC AT BELFAST AIRPORTS 1993 AND 2003

Domestic passengers between: and: 1993 2003

London Belfast International 1,255,987 1,060,533 Belfast City 169,418 1,026,880 Other UK Belfast International 431,849 2,054,471 Belfast City 671,939 940,421

Source: CAA airport passenger-related statistics. 9. In 1993 nearly 90% of the passengers travelling to/from London used Belfast International; by 2003 this share had fallen to 50%. In contrast, over the 10 years Belfast International’s share of the passengers to other regional UK airports rose from 39% to 69%. 10. Underlying these changes are two important developments; a change in the way the London market is served and the entry of low-cost carriers, which ﬁrst emerged in the mid-90s following the liberalisation of the EU air transport market. 3022631001 Page Type [E] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Ev 4 Northern Ireland Affairs Committee: Evidence

The Link to London

Recent market developments

11. Until 2001, British Airways and bmi British Midland both oVered services between Belfast International and Heathrow (six and eight per day respectively). Their combined traYc was around 1.2 millon passengers a year. However, these services were said to be unprofitable. In August 2001 bmi announced it was moving its service to Belfast City as from the winter season. Following the eVects of September 11, BA decided to withdraw its service altogether,1 also eVective from the winter season. Consequently bmi maintained a limited additional service at Belfast International to replace BA, until the summer 2003 season when it withdrew altogether, leaving Belfast International without a Heathrow service. Since these changes bmi has increased frequency at Belfast City to eight per day and now uses larger aircraft (Airbus A321). It carried just under 0.8 million passengers in 2003 and the route is reportedly a good performer. CAA origin and destination survey data shows that in 2003 some 37% of bmi’s Heathrow passengers were connecting to other flights. 12. It would, however, paint an unbalanced picture to say there had been a reduction in service to London. Low-cost carriers entered the BelfastıLondon market in 1998 (easyJet to Luton) and 2000 (Go to Stansted).2 Having absorbed Go and introduced Gatwick services in 2003, easyJet now oVers five services per day to Luton and Stansted and four per day to Gatwick. In addition, British European, which (as Jersey European) began operating to Gatwick in 1993 (and between 2001 and early 2003 to London City), re- branded itself as a low-fare airline, Flybe, in 2002. Figure 2 shows how the BA and bmi Heathrow services dominated the London-Belfast market in 1992, and how easyJet has increased its presence in the market since 1998. Note that easyJet’s traYc to London now exceeds 1 million passengers, and is approximately equal to the carryings of bmi and Flybe put together.

Figure 2: TraYc on London–Belfast routes by airport-pair 1992–2004

2.5

2 Gatwick-BHD - Flybe

Gatwick-BFS - easyJet 1.5 Stansted-BFS - easyJet

Luton-BFS - easyJet 1

terminal passengers(m) Heathrow-BFS - BA & bmi Heathrow-BHD - bmi 0.5

0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Year to Jun 04

13. When visiting Belfast, the CAA asked about customers’ perception of these non-Heathrow services. The consensus was that London was well-served, with a choice of airports at each end, a choice of airlines, and, most signiﬁcantly, value for money that was lacking a few years ago. No longer did business passengers regard other London airports such as Luton and Stansted as inferior substitutes for Heathrow; indeed rail links from those airports could be more convenient than Heathrow for meetings in the City of London. Nor were business passengers deterred by the “no-frills” service to those airports. The overriding factor, given

1 BA’s press release of 27 September 2001 said that the Belfast–London route had a history of unproﬁtability and that over the previous four years losses on the route totalled £38 million. 2 There were Luton and Stansted services by other airlines prior to this. 3022631002 Page Type [O] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Northern Ireland Affairs Committee: Evidence Ev 5

a convenient and frequent schedule, was cost. As a result of the competitive changes in the market and consumer expectations, bmi also now oVers lower fares to Heathrow without the restrictive Saturday-night stay and other conditions that previously denied those fares to business passengers (a typical business trip would previously have required a fare well in excess of £200 return). 14. Our conclusion is that services have developed such that airlines are delivering products well attuned to the demands of the market. Although Belfast International clearly would like to see a Heathrow service reinstated, it is not apparent to us that there is evidence of “market failure” and we see no obvious call for government intervention in this market, at least at present.

Access to the global air network 15. CAA origin and destination survey data for 2003 shows that 37% of passengers departing Heathrow for Belfast on bmi’s service were connecting from another flight. About two-thirds of those were connecting from services from the USA. The survey also reveals that the vast bulk of business passengers who were connecting at London did so at Heathrow; indeed, they outnumbered the total of the other London airports combined by more than two to one. 16. The message we derived from our visit to Belfast backed up these figures. The Heathrow service was there for those who needed connectivity.3 That didn’t mean that airports like Stansted and Luton were not used for connections, but Heathrow was the more obvious choice. EasyJet, for example, does not oVer a connecting flight service, and requires two separate tickets; it will presumably not accept responsibility if the connection is missed because the first flight is delayed, and recommends a minimum two-hour connection time because baggage is not through-checked (ie passengers need to check-in again for the second leg). Similar considerations apply to other connecting possibilities involving low-cost carriers at regional UK airports such as Liverpool or Manchester. 17. Our visit to Belfast also revealed that flying from Dublin was likely to be a feasible alternative to connecting at Heathrow. This would depend on the destination, and the usual considerations of price and schedule, but one noteworthy development was Aer Lingus’ re-structuring as a low-fare airline and recent network expansion. Dublin was only two hours’ drive away, and this would soon be reduced further by road improvements. There could, therefore, be a saving in both time and convenience by cutting out the connecting flight.

Links to Other UK Airports 18. Belfast is also linked by air to other major UK business centres. Our visit to Belfast made it clear that these links can be just as important to Belfast businesses as London, and potentially more important to them than say a direct service to a European destination that might primarily cater for outbound tourism. The link is particularly valuable if low fares allow a relatively cheap day return that can potentially generate new business without signiﬁcant travelling costs. The current UK links from Belfast are to Aberdeen, Birmingham, Bristol, CardiV, Edinburgh, Exeter, Glasgow, Leeds/Bradford, Liverpool, Manchester, Newcastle, Nottingham/East Midlands, Southampton and Teesside, as well as Guernsey/Jersey and the Isle of Man. Seven diVerent airlines are oVering services, those with multiple routes being Flybe (10), easyJet (5) and bmibaby (4). Eastern Airways, Air Wales, British Airways CitiExpress and Jet2.com operate a single route each. In other words, the bulk of services are now operated by low-cost carriers. A number of these services are operated from both Belfast airports in parallel, with a choice of airline, and some city-pairs enjoy a relatively high combined frequency of seven or more per day.

Links to Points in Europe 19. The links from Belfast to international destinations are, by comparison, relatively sparse. While KLM’s service to Amsterdam has been replaced by easyJet, currently oVering a daily service, Sabena’s service to Brussels has not been replaced. There is no service to Germany. There was no Paris service for some years, until June this year, when easyJet, with assistance from the Northern Ireland Route Development Fund (RDF), started a daily service to Paris and also to Nice (four per week). At the same time, but without RDF assistance, easyJet has begun services to Alicante and Malaga (each ﬁve per week), and also this year another low-cost carrier, Jet2.com, based in Leeds, has begun daily services to Prague and Barcelona. 20. These new services are to be welcomed, but there is likely to be a limit to the extent that the Northern Ireland market can be expected to sustain direct services to international destinations. With Northern Ireland’s population of around 1.7 millon, plus perhaps catchment from Donegal and other areas of the Republic close to the border, there has to be some limit to the amount of traYc stimulation that even a low- cost carrier can generate.

3 And of course for those point-to-point passengers for whom Heathrow was the more convenient or preferred London airport. 3022631002 Page Type [E] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Ev 6 Northern Ireland Affairs Committee: Evidence

21. One scenario to be avoided is where an airline begins a service, perhaps to much fanfare, only to withdraw it because it is unviable in the long term (or the airline itself fails). Businesses may have set up contracts and links that depended on the service. On our visit to Belfast we were given the example of BelfastıCork, where a service by JetMagic was discontinued when the airline failed after less than a year. The service was in the event replaced by Aer Arann, but with an awkward gap in service in between. 22. With Dublin reasonably accessible from Northern Ireland by road, there is likely to be a degree of overlap. If a destination is already only supporting a relatively low frequency from Dublin, it would seem questionable whether a service to the same destination would be viable from Belfast.

Policy Developments 23. Two Government policy initiatives concerning regional air services that were mentioned in the December 2003 Future of Air Transport White Paper are of particular potential relevance to Northern Ireland.

Route development funds 24. The above analysis suggests that the air services from Northern Ireland that may warrant assistance are those on international scheduled routes. The CAA notes that the Northern Ireland Air Route Development Fund has been used to launch services from Belfast to Paris and Nice, and from Derry to Birmingham and Manchester. The CAA sees certain circumstances where using RDFs could be justified, if the market is reluctant to oVer a new air service because of risk aversion or the lack of awareness of potential for example. The CAA also recognises that there may be positive externalities connected to the provision of regional air services, and because these may not be captured through the decisions of carriers based solely on the profit motive, this may justify short-term financial support. The CAA believes that the support should be provided by those benefiting from the positive externalities arising from the service (ie regional stakeholders) so that they will accurately price the value of the service and expose what they are truly willing to pay for. 25. The CAA does, however, urge caution. There is a need to avoid a proliferation of subsidies because of the potential distortion this creates in the market. Decisions need to be taken against the backdrop of strong growth in unsupported regional services, which suggests that the market can work well. Any support should be based on non-discriminatory criteria and open to any carrier, and should be no more than is necessary to kick-start a route and support it for a short period while it becomes established. In other words, it should accelerate development of a route that might otherwise have been a marginal decision at present but which would be viable in the medium term, with the risk shared between airline, airport and those directly benefiting from the service. 26. Airlines are now much more sophisticated in the way they deploy aircraft, and airports in Northern Ireland find themselves in competition with other European airports to secure a new route. In other words, with all the prime markets already served, there is a so-called “European league table” of lesser routes that have varying profit potential for, say, a low-cost airline. We understand that the availability of RDF support moves the route up the table, thus bringing forward when it will operate. 27. However, we would not want to see public sector funds being used to encourage airlines to operate routes that are not actually commercially viable in the longer term, such that when the funding ends the route is discontinued or the airline’s financial position is more precarious. Any RDF policy should seek to minimise these downside risks and, clearly, be compatible with State Aid rules. 28. The CAA recognises the success so far of the Scottish RDF and will follow developments with this and the much more recent Northern Ireland RDF with interest.

Using Public Service Obligations to protect services to London 29. The Government is currently consulting on the criteria that it should use to trigger consideration of whether and how to maintain an adequate service on existing regional routes to London using Public Service Obligations (PSOs). A PSO must meet the criteria set out in European law. The consultation document states that in assessing “adequacy” it is necessary to consider the link provided between two cities or regions, not between a city or region and a speciﬁc airport. Therefore a reduction of service to Heathrow, for example, will not be enough to trigger the consideration of a PSO as long as it is considered that there is an adequate service provided by the combined services oVered to other London airports. It should be noted that, under European law, factors such as interconnectivity opportunities or the ﬁnal onward destination of passengers are not relevant to the consideration of adequacy. 30. The CAA recognises that there may be instances where PSOs are a necessary and useful tool for delivering air services to regional points. However, we believe that any proposals need to be seen in the context of what the market has delivered already, and the impact the imposition of PSOs would have on market development. The CAA’s view is that PSOs are primarily designed to protect “lifeline” services such 3022631002 Page Type [O] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Northern Ireland Affairs Committee: Evidence Ev 7

as ﬂights in the Scottish Highlands and Islands. A PSO on a London route would potentially allow landing and take-oV slots at congested London airports to be ring-fenced for those services which would impose a high and hidden cost on the airline industry and on the economy generally. 31. The CAA’s formal response to the Government consultation will explain our position in more detail.

Airport Capacity 32. At present the annual number of air transport movements (ATMs) to/from Belfast City’s relatively short runway is limited to 45,000, and there is also a limit on the annual number of seats that can be provided which restricts the passenger throughput to around 2.2 million passengers a year. The airport also has a night curfew of 9.30 pm. In contrast, Belfast International’s runway is capable of supporting long-haul services and the airport has adequate space to cope with foreseeable demand levels. 33. The CAA supports the sustainable development of regional airports and of local solutions to local environmental problems. However, given the existing operational restrictions at Belfast City and the night curfew, from an economic perspective the CAA is unsure what purpose is served by having both a cap on seats oVered and a limit on total movements. We would support the Government’s proposal that the form of the planning “cap” should be reviewed if and when the operator of Belfast City so requests.

Competition Between the Airports 34. If both airports are profitable we see no economic reason why the two Belfast airports should not operate in competition with one another, and indeed with the City of Derry airport where catchments overlap. This should act in the interest of consumers in promoting competition and providing a choice of airports. There is an argument that competition between the airports exists only to the extent that they compete for short-haul airlines for the best deal to operate there; once the airlines are established, competition is then between airlines rather than airports. But maintaining a choice of airports and therefore the ability of a short-haul airline to switch airports would seem a preferable situation to creating a monopoly position. 35. Equally, we welcome competition between the Belfast airports and Dublin. As noted above, residents in Northern Ireland appreciate the ability to fly from Dublin to destinations which may never be viable from Belfast and which save them the inconvenience of having to take a feeder flight to London and of making a connection there. 29 September 2004

Witnesses: Sir Roy McNulty, Chairman, and Mr Alex Plant, Head of International Aviation Policy, Civil Aviation Authority, examined.

Q1 Chairman: Welcome to the Committee. We have and you have come up with that conclusion, that decided to start a little earlier than perhaps was competition is better than a monopoly in respect of originally forecast. I take it that you are ready and the two airports. Could you explain that a little prepared and that is not a problem. further to us. Sir Roy McNulty: We are as ready as we ever Sir Roy McNulty: If I may on that, as I will probably will be. on most subjects, defer to Alex Plant who is doing that study but I might add a few comments of my Q2 Chairman: Thank you very much for attending own at the end. the Committee and helping us with our inquiry. You Mr Plant: Just to give a little background about the are the first witnesses to come before us in respect of study, essentially we launched that partly because we the inquiry into air transport services in Northern felt that, as the CAA, we could usefully improve our Ireland and it does seem that the CAA is the place to own evidence base about what was happening in start in terms of taking your views and testing those regions across the UK and of course Northern against the other interested parties and others who I Ireland is an important part of that. Also, because of am sure will want to talk to the Committee. I this Committee hearing, we actually advanced the wondered if I could start the questioning by asking Northern Ireland part of the process earlier to give a number of general questions, my first being that I us some helpful information that hopefully meant see you have indicated in your submission that you that we could give you a more informed response in are undertaking a study of regional air services our written reply. To answer your question throughout the UK and, as part of this, you have specifically on the airport point, we spoke to both looked at the existing services in Northern Ireland. airports and talked to a number of interested Can you elaborate on your conclusion that having stakeholders in terms of how one or two airports competition between the two main airports in would aVect the consumer benefit arising from air Northern Ireland is preferable to there being a services to and from Northern Ireland and our monopoly position because obviously that is one of conclusion on it really was driven by the fact that we the issues that is going to repeat during the inquiry actually saw a situation where both airports could be 3022631003 Page Type [E] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Ev 8 Northern Ireland Affairs Committee: Evidence

10 November 2004 Sir Roy McNulty and Mr Alex Plant profitable, and this seemed to be the case from our Sir Roy McNulty: I agree, you could argue that, but conversations while we were in Northern Ireland. In equally every airport lives with the balance between general in that sort of situation, and taking account economic drivers and environmental drivers and the of the economic principles which we try to adhere to eVect that these have on the community around in most of the policy work that we do, we would see them. City Airport was developed under a series of competition as driving some benefits in terms of constraints including the curfew on night flights; it there being more price competition, increases in has a limit on the number of aircraft movements and quality, and driving a slightly more diverse set of it has a limit on the number of seats oVered. I think routes that will be available from two rather than it is arguable that the latter two constraints duplicate from one airport. We thought that would all act in each other to some extent and, if the constraints on the interests of, in the end, the final user in terms of movements and/or on the number of passenger seats the air passenger travelling to or from Northern oVered were lifted, then potentially there is a little Ireland. That broadly was our conclusion on that more competition but I think ultimately people will point and we saw the evidence of what was be cognisant of the importance of living within that happening in Belfast particularly as showing that community in a reasonable environmentally friendly there were benefits in having both airports. But and reasonably neighbourly friendly manner. perhaps, Sir Roy, you would like to expand on that. Mr Plant: My perspective when in Belfast and Sir Roy McNulty: The brief comment I would like to discussing this issue particularly with City Airport add to that—and I should perhaps declare a past was that particularly the cap on seats struck me as interest in having worked for Short Brothers and being an odd restriction to have in place if the main Bombardier Aerospace in the period in which concern was about the environmental impacts of Belfast City Airport was started up again in the early increased services. Clearly, capping the number of movements of aircraft is something that achieves 1980s—is that I think it is true to say that, at the time V the City Airport was restarted, Aldergrove had that desired e ect of minimising noise disturbance and so forth, but planes are not necessarily noisier among the highest landing charges of any airport in just because they are bigger. So if, in a sense, you are Britain. Competition radically changed that; I just not allowing more passengers to come in, I could would not say that Belfast International has always not see what purpose the seat cap was really serving. appreciated it but, for sure, competition did lower Sir Roy McNulty: It is possibly a historic relic, so to the landing charges ultimately to the benefit of speak, in the sense that I think the limit on seats was consumers and the airlines. applied at the time when the passenger terminal facilities at City Airport were somewhat less deluxe Q3 Chairman: The reason I ask the question is that than they are today. I think the Committee would want to know how real the competition is given that both airports have a Q5 Chairman: Our Committee members who travel V di erent approach in terms of Belfast International frequently on that route I am sure would want to has its emphasis very much on low-cost services, comment. The Committee always welcomes figures charter flights, whereas City Airport tends to and facts that show that the economy in Northern concentrate more on scheduled services within the Ireland is growing and we just talked about the UK. So, you are two airports that are really oVering number of seats and one of the things that is quite two diVerent products and yet we are saying that clear is that the number of people flying to and from they are in competition. Is there not a confusion Belfast Airports is on the increase and is increasing there as to whether or not it is real competition or it at a greater rate than would be the case of the UK is managed competition by the fact that they are average. You pointed out that the UK average chasing diVerent parts of the market? growth rate was 5.9% whereas, within the Belfast Sir Roy McNulty: I agree with your analysis that airports, we had a growth rate of 7.9%. Could you that is the way in which it has ended up but, in a just open that figure up a little more for us in terms sense, City Airport is more an airport for business of saying whether or not that 7.9% is reflected across people, it has the services into Heathrow; both airports and also why you think there is such International has all the charter, it has quite a lot of an increase and a faster growth rate than the rest of regional services into other places in the UK. But I the UK. am certain that the competition is real, I am certain Mr Plant: I can perhaps partially answer that. We that it has a significant eVect on the landing charges did look at what the growth rates were at each that either of the airports is able to levy because, if airport and City has had a greater level of increase they hike charges suYciently, the airlines can move than International, but both are actually ahead of and that has proved to be the case in the past, and the UK average. So, in terms of the contribution to indeed in the not too distant past. the total growth, you see City as a bigger contributor than International. The story about the total Belfast traYc increasing at a rate faster than that of the UK Q4 Chairman: Similarly, there are at present average I think partly actually just reflects the restrictions on Belfast City Airport. How big a general story on regional air services which we are factor is that in reducing competition because surely picking up. I should add that we are midway through if we are suggesting that open competition is better the study, so some of this reflects emerging than any monopoly, then if the restrictions were conclusions. The general view is that regional lifted, that would be real competition, would it not? growth is outstripping London growth quite 3022631003 Page Type [O] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Northern Ireland Affairs Committee: Evidence Ev 9

10 November 2004 Sir Roy McNulty and Mr Alex Plant substantially. So, part of the story is simply that one area around Derry and you would expect the would argue that there has probably in the past been customers’ first choice would be to travel from Derry an under-supply of regional services to some extent, if they possibly can. It is diYcult to draw a precise which has now been stimulated perhaps more by the parallel but there are perhaps parallels with smaller low-cost carriers particularly where you do not have airports in other parts of the UK which have a larger the capacity constraints that, say, Heathrow Airport airport within their reasonable catchment area. It faces in terms of growth. We have regional airports does not mean that those airports cannot develop across the country which were able to grow and then and in fact the generalised growth of air transport, did grow, as low-cost carriers came in oVering a if you believe any of the forecasts suggests that, yes, diVerent sort of product which stimulated people smaller airports can take part in that and actually who had previously not flown before or perhaps not provide services to customers who did not flown as often before. So you are seeing regions previously travel simply because it is the first picking up part of that very strong underlying preference if you live near that airport. However, it demand growth and I think what we are seeing here will always be, I suppose, limited to some extent at Belfast is part of that story. I suppose the other simply by the population around it and the presence element which perhaps is always the case when you nearby of a bigger airport. are looking at Belfast compared to maybe other regions is that lack of suitable surface access alternatives drives the air transport services slightly Q10 Chairman: And the transport links as well I harder than if you are looking at, say, the north west should imagine. of England where essentially there are train Mr Plant: Yes. connections to other parts of the UK. But, if you are looking at Belfast, you have to fly if you want to get Q11 Mr McGrady: To what extent does the CAA to London, Manchester or wherever. I mean that view Dublin as a complementary airport to the realistically—obviously there are some sea services Belfast airports? but eVectively it is an air travel journey. I think they Sir Roy McNulty: I am not sure that the CAA has a would be some of the factors that I would pick out very definite view on that. Obviously, our focus is on in terms of the underlying growth drivers. UK aviation. I think it is a fact of life that Dublin is a sizeable international airport, more so than Belfast Q6 Chairman: Is there any significant diVerence International. It has a bigger population catchment between the growth at the two airports? area than anyone in Northern Ireland can have and, Mr Plant: The figures we had was that City was with improved road links down to Dublin, it clearly growing at 8.8% and International at 6.1%. So, it is makes access to services from Dublin that bit more adiVerence. attractive to people from Northern Ireland. Dublin is a little competitive and, to an extent, I suppose you Q7 Chairman: So, International is growing about at could argue that it is a little constraining to growth the UK average. in the Northern Ireland airports, but it is a fact of life Mr Plant: Slightly higher but yes. and I think our general view would be that the more services that are available to a given population the Q8 Chairman: And City is quite a bit higher. better, so services from Dublin are available as well Mr Plant: Yes, stripping ahead. as services to Heathrow and beyond.

Q9 Chairman: The other issue that the Committee is Q12 Mr McGrady: Perhaps I did not emphasise the determined to take seriously is the role that perhaps word suYciently. I was asking if you viewed Dublin City of Derry Airport can play in the future of air as complementary not competitive to Belfast and, if transport within Northern Ireland. We shall be you do, would that in some way impact on the visiting Derry Airport as part of the inquiry. Do you attitude of Government in terms of funding have any views on the services currently provided at supporting the Belfast airports? City of Derry and could you give any views as to Sir Roy McNulty: If you are talking about what will happen if we get the proposed extension of the attitude of the Northern Ireland Regional the terminal and runway? Government to route development funds, I am not Mr Plant: We did not visit Derry as part of our visit sure that we have a view on that. To try to answer which perhaps is regrettable; it was simply that we your question more accurately than I did the could only devote a day to the trip and it was diYcult ﬁrst time round, I think that Dublin is to ﬁt all the meetings we had in Belfast in and get both complementary and competitive. It is over to Derry and back, so we did not explore it in complementary in the sense that there will always be as much detail. Clearly, there is an element to which a range of particularly international services the catchment areas are constrained. So, what City available from Dublin which is greater than any of of Derry could realistically be expected to do may be the Northern Ireland airports can oVer, but it is also constrained by the fact that there will always be competitive and constraining in that there is a bit of somebody, particularly on the eastern edge of the demand that goes to Dublin which, if it could only city, who will be willing to travel across to Belfast get out through Northern Ireland, might give you a and that Belfast, as a bigger airport, will always be slightly better service. On the whole, having lived in able to sustain a broader choice of routes and so Northern Ireland, I would view the access to Dublin forth. Nonetheless, there is a substantial catchment as a gain rather than as a loss overall. 3022631003 Page Type [E] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Ev 10 Northern Ireland Affairs Committee: Evidence

10 November 2004 Sir Roy McNulty and Mr Alex Plant

Q13 Mr McGrady: I think that just flows into my elements are going to have some eVect potentially on next point. The Northern Ireland CBI have airline decisions, I suppose, if they were really indicated to us that all airports lose over 500,000 genuinely thinking about a marginal choice—you potential customers a year to Dublin and you have could run a service from Prague to Belfast or could referred to the better and therefore quicker road run a service from Prague to Dublin, I am going to route to Dublin Airport but the CBI seems to argue do one or the other—maybe some of those things tip that because of that better road communication, we the decision, but I think they would be marginal should be able to entice more customers from the rather than the main driver of decisions. Republic to the Northern Ireland airports. Do you have any view on that? Q15 Mr McGrady: Even though it is marginal, do Sir Roy McNulty: I think it is a fact that, because of you think that governments should create a more the much larger population around Dublin, Dublin level or level playing field between the two sectors, will always have a better range of services than Belfast and Dublin, by somehow equating the tax Northern Ireland airports could have even if you not upwards but downwards? shut the border and did not allow anybody to go Sir Roy McNulty: I think that is way beyond the south. Given that there is a bigger range of services Civil Aviation Authority’s remit or competence to from Dublin, it will always be more attractive to comment on! people living in the south than travelling up north to Mr Plant: My background is in the Treasury and the go through Belfast International or Belfast City. So, Inland Revenue, so I definitely concur with Sir Roy’s I tend to think it is just a fact of life that Dublin will view on that! be a rather more attractive outlet for people in the Mr McGrady: If the tax rate issue was so persuasive, south than anything Northern Ireland can oVer. I cannot believe that Mr O’Leary would have so Mr Plant: Dublin is clearly a hub airport of sorts. It much of his operation in Stansted. is not as big a hub as somewhere like Heathrow or Frankfurt or Charles de Gaulle. Nonetheless, it has Q16 Chairman: I apologise for bowling you a couple those hub characteristics which are partly driven by of bouncers there in terms of questions on Dublin the catchment area. Given that, essentially, there is but I just remind the Committee that part of the generally only room for one hub in a geographical inquiry’s remit is to look at the potential impact for area, it is very hard to have a duplicate hub, even in Northern Ireland of wider air transport issues on the the south east of England with the very large island, so it is very important to us to take account as population in that region, Heathrow is the hub to what is happening in Dublin and, as Mr McGrady really. Other services develop from other airports said, try to understand why, if the transport routes but if you look at somewhere of a similar distance are so good, the transport and the traYc does not away from a hub airport such as Birmingham, that flow in both directions and maybe there is an issue will always be constrained by the network eVect that there in terms of how airports in the north of Ireland is available at Heathrow and which cannot be can make themselves more attractive and try to replicated. Therefore there will be some services that recapture some of those lost customers. may otherwise have gone to Birmingham directly Sir Roy McNulty: If I may slightly restate what I said which will instead come via Heathrow. From the earlier, I think in the end, within a certain reasonable point of view of the people living in Belfast or in the range of prices at diVerent airports, it is the variety West Midlands, the ability to access a kind of multi- and frequency of services that will aVect passenger airline/multi-destination hub is a plus rather than a choices most. I do not think it is driven by £5 here or minus. So, the better the connection services £10 there. If there is a three times a day flight to New between Dublin and Belfast I suggest would be York from one location and you have to make a something to be welcomed rather than to be connecting service from Heathrow from another suspicious of. location, the answer is pretty obvious.

Q14 Mr McGrady: Just as a supplementary to that, Q17 Mark Tami: Can I turn to passenger surveys. In as you know, I am concerned about the diVerential your submission, you report on customers’ in taxations between the south and the north of perceptions of non-Heathrow services and state that Ireland and I think there is no air passenger tax in the the consensus was that London was well served and Republic and certainly the value added tax rate that no longer did business passengers regard other seems to be lower. Do you think that has any real London airports such as Luton and Stansted as and signiﬁcant impact upon the travelling public in inferior substitutes. Can you tell us what the basis of terms of where they are going to exit from? that survey is. Was it taken from airlines or the Sir Roy McNulty: Alex, you are an economist, so airport operators or was it a survey of passengers? will you please answer that! Mr Plant: What you have just read out was some of Mr Plant: I think that is what is called a hospital the evidence we received when we went over in pass! It probably has some marginal eVect. I would person and talked to people like the Chamber of come back to saying that there is a basic kind of a Commerce and the development agency about how fact of life argument here which gives Dublin the speciﬁcally they perceived it from their perspective edge in many cases ahead of anything that Belfast is and those were the sort of messages we had back. In likely to be able to provide in the future, but when looking at our passenger survey, we did do work in you do have 10% corporation tax rates in the south looking at passengers on routes from Belfast to the compared to 30% in the north, then that plus APD UK who were actually then going on to a connecting 3022631003 Page Type [O] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Northern Ireland Affairs Committee: Evidence Ev 11

10 November 2004 Sir Roy McNulty and Mr Alex Plant service and how they were connecting and, despite Edinburgh give you more inbound tourism traYc the fact that Heathrow clearly has by far the biggest upon which you can rely, it makes the whole route range of connections because of the hub element, more viable because you can fill it both ways. It what was quite interesting was that the figures that would appear from the statistics that Belfast is came out showed that, of connectors coming from under-performing to some extent in terms of that Belfast if you see what I mean, people travelling inbound tourism market. mostly on to international services, which in the year we looked at in 2003 were around about 650,000, Q21 Mark Tami: I think I am correct in saying that there were about 325,000, about half the total, using you do not survey people at the Belfast airports Heathrow as the connection, Gatwick taking up themselves but rather it is the other end, it is where about 126,000 and the other UK airports, which people might go. would include Luton, Stansted or indeed places like Mr Plant: No, we do run surveys at the Belfast Manchester that would have some connection, were airports but not every year. picking up about 224,000. So, that seemed to back up some of what was being said to us. If you just Q22 Mark Tami: Are you doing it this year or not? want to come to and from London on a business trip, Mr Plant: I cannot remember our schedule. I will the connections in and out of London, though it have to come back to you on that. We have a rolling depends where you are going, in some cases may be schedule where we cover the regional airports. much better from, say, Stansted, than they are from Heathrow if you are meeting in the City of London Q23 Mark Tami: It says “no” down here. for example, but also that people were using places Mr Plant: That must be right. I am sorry. I can like Stansted to connect from an easyJet flight confirm that but I just do not have at my fingertips coming into Stansted to another easyJet flight flying the order of airports at which we are carrying out to Nice or wherever. That may be the case given the surveys. quite wide range of destinations available at least in Europe from that airport. Q24 Mark Tami: I am just interested on where you are getting the initial findings from. Q18 Mark Tami: Was it mainly passengers? Mr Plant: The ones I was actually quoting from are Mr Plant: Yes with regard to the survey I just our kind of CAA surveys which we did at regional talked about. airports and London and I think that was back in 2003 but it may be picking it up from the London Q19 Mark Tami: It was not the airlines themselves? end rather than the Belfast end. There is a slight Mr Plant: That was a passenger survey data field and problem in that we do not cover every airport every the questions we were asking of the folk we spoke to year, we simply could not sustain that. in Belfast were again a sort of passenger perception question, not an airline perception. Q25 Mark Tami: You do not have a strict policy. Mr Plant: No, quite the opposite. I am pretty sure Q20 Mark Tami: Did the survey reveal anything that Belfast is on the list but may be it has not been else? That is a bit of a catch all question. done for a while, so I will have to come back to you Mr Plant: The thing for me that was the most on that. striking element of the passenger survey—and actually we can set some matters out in more detail Q26 Mark Tami: I will wait until the next time for you in writing if it is helpful regarding looking at someone hands me something at the airport! what the passenger survey said—was this sort of Mr Plant: Yes, when you are in Belfast. I will check rather more diverse range of connecting airports and come back to you and tell you what the order is. that passengers were using compared to perhaps what the story would be from other destinations, Q27 Mr Bailey: Can we just cover links with which I suppose fits with the greater diversity of low- Heathrow. Concern has been expressed to us about cost services available from Belfast into various the maintenance of the links with Heathrow over the airports. Again obviously coming back to the basic medium and longer term and there is a view that data, the other factor I would look at is the overall action should be taken to safeguard or ring fence the growth being quite strong. It is a very wide question slots. We recognise that travellers have alternatives but the one other thing that I think stands out when for point-to-point journeys into the London area but you look at the figures is that it demonstrates that you note in your evidence that some 37% of the the inbound tourism element coming into Belfast is passengers on this route connect to or from a flight not particularly strong when compared to other beyond Heathrow. Do you think there is a case for regional centres such as Edinburgh, for example, PSOs to protect slots at Heathrow? and I suspect that would be the case if you compared Mr Plant: We have published our own response to it with Dublin. What that means is that from an the Government’s consultation on this issue of airline’s perspective, the yield you are going to get on which you will be aware. This looks at the whole any particular route is reduced because again, if we issue of services to and from London and the come back to the choice, if you are a Czech airline possibility of using PSOs to protect them. What we and you are deciding to run a service and you have say in that response is that we note that essentially one aircraft and you have a choice of running it to PSOs are very much designed, in our opinion, in the Belfast, Edinburgh or Dublin, because Dublin and European legislation to protect true lifeline routes 3022631003 Page Type [E] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Ev 12 Northern Ireland Affairs Committee: Evidence

10 November 2004 Sir Roy McNulty and Mr Alex Plant and, if you look at their usage traditionally, they Mr Plant: There is a limit to the extent to which we have been around ensuring that places like the can really obtain it. I suspect that the Department Orkneys and Shetland Isles have connections to the for Transport may have looked a little more deeply mainland. And that is true if you look at the way in into this than we have, given that they will be which they are used in Norway and other countries ultimately making a decision on PSO consultation. as well. The Government’s consultation raises an Or indeed the European Commission should have interesting issue about the connection to London the information. It is not something that we would and broadly our position is that we can see that if a necessarily see as a priority for our own work peripheral region had no service to London—and I programme at the moment in terms of diverting a lot stress London here rather than a particular of resource in trying to get hold of this information, airport—then that would seem to be potentially an albeit that I can see the interest in it from the point argument for saying, yes, you need a PSO to ensure of view of whether this law is being applied fairly that you have those services available. In fact, they across the piece and of course what we would like to become lifeline at that stage. We concur with the see is a consistent application of principles across Government’s own consultation in limiting it to Europe. It is not helpful to have a situation where London rather than a particular airport partly one country bends the rules. Clearly, if that were to because we see there being risks attached to ring happen, that is not a positive development. fencing slots in particularly congested airports because there is a sort of hidden cost in there if you Q30 Mr Bailey: In eVect, you are saying that we are ring fencing something that could be used for should be able to obtain this information via other another service. So, we agreed with the Government routes more easily. in restricting it in that way. Just coming back to Mr Plant: I do not know. whether there is a threat to the Belfast/Heathrow Sir Roy McNulty: I would think there are better service, we did try and touch on that with some of the sources than us. people we interviewed and it would appear that the bmi service which runs City to Heathrow is a pretty Q31 Mr Bailey: Obviously we understand and good earner, from what we could glean, and does not recognise that we have to uphold European law but look to be particularly threatened. Of course, the do you consider that exception should be made due best scenario is if essentially the market can sustain to the particularly peripheral nature of Northern that route, that is great and that provides benefits, Ireland and, to paraphrase your evidence, where the but we would be a little nervous about using PSOs in externalities are more important than the profit an extensive way. We see them rather as a last resort motive? I suspect from your previous comments that rather than something you should default to as a I know your answer but I am asking it anyway. first option. Mr Plant: I think the position of Northern Ireland, because of the lack of service access alternatives, Q28 Mr Bailey: We certainly provide it with enough changes the nature of the question and that must be trade! Just to continue, you say in your submission, recognised when you are thinking about these issues “under European law, factors such as and I come back to what I said at the beginning. If interconnectivity or the final onward destination of there were a scenario where essentially there were no passengers are not relevant to the consideration of services from Belfast to London, that would strike adequacy”—and that is a classic case of report me as being a very good argument for imposing a speak—which is one of the tests for PSO PSO to ensure that there were services to London designation. Are you aware of any routes in Europe and actually that would be a stronger argument than where, despite this restriction, the route is funded by I think would be the case if you were thinking about a PSO to sustain that interconnectivity? Manchester where there would be a rail service. So, Mr Plant: I do not have information to hand as to yes, it does change it but I am not sure that it takes what is happening in other European countries in you to a diVerent conclusion in terms of whether you relation to PSOs and whether there are some PSOs ring fence slots at Heathrow, for example. in other countries where that has been the case, I am afraid. We have concentrated more on the principles Q32 Mr Campbell: I just want to continue with the around PSOs in our response. It is actually quite question of your input into the consultation hard to get information out from other European regarding the protection of regional air services to countries about exactly what is happening. We did London. In part of that input, you had suggested ask the Commission for some information on this that it would be worthwhile to consider whether but they equally have not been particularly market-based solutions might provide possibilities forthcoming. So, we have some idea about some of for regions to secure access at congested London the services that are PSO’d, just purely the routes airports. I am just wondering how that might work that are around, but as to whether they have in an environment where it is the economic return somehow ignored these or included these factors from the route in question that is really the central which we consider are excluded from European law, issue, the main issue, rather than whether or not a I just do not know. slot is available. Mr Plant: I think essentially what we have long Q29 Mr Bailey: I appreciate the diYculties in proposed is that there will be benefits in having a sort obtaining this information but is there any chance of of secondary trading market for slots at very at least getting the information you can get on it? congested airports and this being a better way of 3022631003 Page Type [O] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Northern Ireland Affairs Committee: Evidence Ev 13

10 November 2004 Sir Roy McNulty and Mr Alex Plant achieving an eYcient allocation of what essentially is thirds of them were connecting to or from the USA. a very scarce resource rather than that being decided Are you able to provide us with a more detailed through administrative allocation purposes. So, we breakdown for the traYc across Heathrow and, in proposed that and I think we will continue to particular, the initial origin or ultimate destination propose that in our response to the European depending upon the direction of the flow as well as Commission’s consultation on what to do about at other mainland airports? slots which is due to be completed later this year. Mr Plant: Possibly but not now. I think it will be Potentially, there are market-based solutions for useful to have the question in writing. I can then go securing services from regions which currently do back and talk to my team who do a lot of work on not have a service because the airline is not prepared the data analysis interrogation and try to answer it. to run it because it either does not see it as profitable at all or sees it as insuYciently profitable given the potential use of its Heathrow slot to fly to New York Q35 Chairman: The Committee is hungry for facts or something which may give you a bigger yield. and statistics. I am sorry to cut across you Mr Luke What we have considered possible was that, if you but, when we started, we talked about the growth had a market in slots, and if it was the view of a rate in respect of the Belfast airports being greater development agency for a particular region that than UK and I noted that we also spoke about the there was such added value in terms of the economic City of Derry Airport and I noted that, last month, value of the service above and beyond the their passenger numbers increased by 22.9%, which commercial value of the service to the airline in is a colossal increase. I wondered if you had done question, if you see what I mean, essentially there any analysis including the increase in growth of would be a way in which the region could buy a slot Derry to add to that in Belfast which would give us and then invite airlines to come and operate from a larger figure than that which is currently here. I do that slot that it held at Heathrow. If essentially the not want to suggest or put words into your mouths calculation from the region was that there was but, if that data were available, that would be very suYcient value in it for them to do that, why should helpful to us. there by any reason to not allow that to happen? Mr Plant: Certainly I am very happy to go back and That is what we were referring to when we talked see what we can sensibly extricate. We have about market-based mechanisms potentially reasonably good data on airport statistics and the oVering a solution to these issues. CAA database is probably the best available. So, in terms of both how far we can drill into exactly what Q33 Mr Campbell: Turning to the issue of the is happening on the US market and indeed what the suggestion that changing to a mixed-mode operation story is on Derry, by all means we will endeavour to at Heathrow would increase the number of available give you the facts for which you are hungry. slots by 30%, are you aware of any progress on that proposal? Sir Roy McNulty: I think that mixed mode is Q36 Mr Luke: This is a much less statistic-driven currently being worked on in the aftermath of the question. What impact do you think the White Paper. The White Paper said that the introduction of direct flights, which I welcome, by Government would like BAA and NATS, the air Continental Airlines from Belfast to New York Y traYc services provider, and ourselves to look at this starting next year will have on the tra c through issue and, if we thought it sensible, to come forward Heathrow? with proposals which Government would then Mr Plant: I suspect what will happen now is that if consider. It is an extremely complicated problem, there is a direct service available, depending on the not only from an aviation operational angle, but it frequency and so forth, what you will see is a also brings into issue a lot of environmental aspects diversion of particularly business traYc away from around Heathrow because the present pattern of a connection via Heathrow and on to New York to operations, the Cranford Agreement and a number take the direct service. It is a more attractive of other understandings and agreements as to how product. Again, if you look at what has happened aircraft will come in and out of Heathrow, could with the direct services that have been supplied from, possibly need to be changed if mixed mode were say, the two main Scottish airports, both to the US introduced. That work is currently in progress. I and indeed other long-haul operations, those think that, probably within the next year or so, services are doing extremely well. They are getting Government will be seeking to come to some very high load factors, numbers of seats occupied, conclusion on it when they have balanced all the on the aircraft and inevitably they will take traYc aspects. We are looking solely at the operational that formerly used to connect via Heathrow and it aspects and the implications for the environmental will be replaced on to the direct service. The other issues. Government, in the end, have to arrive at a thing that you tend to get is some stimulated balance between those. demand; people who previously would not have travelled because of the undesirability of going via a Q34 Mr Luke: You have highlighted the importance connecting point such as Heathrow who would of Heathrow in providing onward connecting actually be newly attracted, particularly on the flights. You state in your report that 37% of leisure market. Clearly, business tends to be more of passengers using the bmi service to Belfast were a forced journey so they may travel whatever, but I connecting from another flight and that some two suspect you will see some of those passengers, indeed 3022631003 Page Type [E] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Ev 14 Northern Ireland Affairs Committee: Evidence

10 November 2004 Sir Roy McNulty and Mr Alex Plant many of those passengers, who previously went via its own basis, as a commercially viable route, to get Heathrow using the direct service. It depends on that happening earlier. They have tried to think frequency. through ways of ensuring that you are not wasteful of money from that point of view and that it is truly Q37 Mr Luke: You refer to links to other UK additional as well. I think that they tried to address airports and, not being London base, I travel to these in their appraisal framework which the Belfast City from a variety of airports—I have flown Department for Transport is trying to look at to from the Isle of Mann with British European which consider what messages there may be for all regions was an experience as well as Glasgow and who may be interested in using this, firstly to say, can Edinburgh—but you state that these links can be you get the appraisal as right as you can? My own just as important to Belfast business as London. view is that you can never extinguish risks of wasting Another dimension of these routes is that they might money—it is impossible; there is always a risk oVer an alternative to London to transfer at least on there—but can you minimise the risk as much as a number of key routes. Has the CAA examined this possible? I think the work that the Scots have done alternative? is helpful in identifying some of the indicators that Mr Plant: We have not gone into it in too much you would want to think about. The second element detail but it was a point that came across again in our that the work that the Department for Transport is visit to Belfast, firstly just in terms of the point-to- doing, which again is helped by the work that the point services, for certain industries, it may be that Scots have already done, is making sure that you do the natural home and the better business connection not fall foul of state aid law, for example, in terms of was, say, Manchester, given the particular sector unjustifiable subsidies which would be ruled illegal involved, more so than London, and actually that by the European Commission. The Scots did a lot of was an interesting point that perhaps was new to us work, as I understand it, to make sure that what they were doing and the way in which they were in terms of the conversation. You are absolutely V right that the connection services are not just a addressing this did not o end European law. So, London story but, other than the figures I gave you again, good messages there about making sure that, a little earlier on when I said that the other UK if you are going to go down this road, you do not trip airports figures, which I think in terms of up on European legislation. Those are positive connections would include of course Luton and messages and there are things to learn from the Stansted, were higher than perhaps is normal on experience of Scotland and indeed hopefully the other sort of routes, we have not yet drilled down department will be promulgating some of this itself into that figure to see how much of that other UK in the coming months. airports is, say, Manchester or Glasgow as opposed Mr Luke: I think this is especially true regarding to Stansted or Luton, but I think it is something that Londonderry given its peripheral situation in we could probably do quite easily and again come Northern Ireland and comparing that to some of the back to you on that particular question. I do not developments in Scottish airports and Inverness want to promise something that I cannot absolutely specifically which have done reasonably well. definitely guarantee but I think that we must be able to get from that aggregate figure of other UK Q39 Mr McGrady: I want to go on to the loftier airports down into how they are made up, I subject of Open Skies, no pun intended. It seems to think . . . be that this item has gone down the international Chairman: We hope you are right! political agenda somewhat because of the US Mr Luke: I was interested to see in your report that elections and indeed the failure yet to appoint an EU you were talking about the success of the Scottish Commission, but no doubt it is going to come on to route development fund. I represent a constituency the screen very soon again. Have you any idea of which has a small airport, Dundee, which we want to what the likely time and indeed possible crystal ball build up. We have an international departure lounge outcome might be and how a fully liberalised but no international flights. The departure lounge transatlantic regime would impact on the regional was funded by the European Union. We are chasing services? obviously route development funds and have not Sir Roy McNulty: Again, could I ask Alex Plant to had that much success through the Scottish comment on that because he has been a member of Executive. Are there any lessons for Northern the UK and European team; he has been involved Ireland from the Scottish experience? with this, and is reasonably close to it. Mr Plant: You are absolutely right that we have Q38 Mr Campbell: Positive ones. been in a hiatus as a result of both the US election Mr Plant: What Scottish Enterprise and the various and indeed the new Commission being appointed. people who have worked on the Scottish route What has happened most recently is that there have development fund have done is to attempt to work been some technical discussions between the through all the issues you would want to be negotiating teams on the US and the EU side, but considering before you decide to give public funding resuming the talks in earnest I suspect will not to something. So, they tried to address issues such as, happen until late spring. That is my guess, it may be is this sustainable? You do not want to give money earlier, but it will be some time next year. Predictions to an airline that disappears after three years because about an outcome are very, very diYcult to give you. that is a waste. The point is that you are trying to There are a host of issues, very diYcult issues, about bring something forward that will be sustainable on the extent to which the US is actually willing to 3022631003 Page Type [O] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Northern Ireland Affairs Committee: Evidence Ev 15

10 November 2004 Sir Roy McNulty and Mr Alex Plant embrace the kind of open aviation concept that the others and it is very diYcult to predict exactly what Commission, supported by Member States, has been would happen in that scenario. I would come back keen to pursue. What essentially that means is to the point that there is actually an underlying need almost like adding the US to the current single for some feeder traYc to make these things viable. I market in aviation that we have in the EU, so you suppose another question is whether direct services sweep away all nationality rules and all restrictions to the US which are operating from regional points on frequencies and essentially just have a free market would somehow be converted into Heathrow operating between Europe and the US. That has services because the yield is bigger and I think there some diYcult issues for the Americans in it. Some of would be some risk of that. I cannot speak for the the American demands on the other side are diYcult airline, but If bmi could fly Heathrow/New York, for the Europeans. Whether there is the political would they then do that and not fly Belfast/New willingness, perhaps particularly on the US side, to York? They may do except for the fact that go far enough for the Europeans to accept that the Heathrow is still going to be a congested airport. deal being framed is something that is of mutual Belfast is not and it may that the route itself stands benefit and of suYcient benefit to the EU is very, up on its own commercial viability. I am speculating very hard to judge. So, I am loath to give you a to some extent here about some of the things that prediction on when you will get some conclusion may be in the minds of airlines but ultimately the other than to say that there is willingness on both decision is going to be down to how the airline views sides to come back to the table but it is impossible to its commercial success. tell you when. If I come to the second part of the question, let us assume that we got there or we got Q40 Mr McGrady: Could I just pursue one point to some greater level of liberalisation of EU/US you were making there which is probably my main services perhaps that stopped short of an open concern. You did mention that bmiBritish Midland aviation area, which is the more likely outcome—it would be one of the airlines seeking to avail is more likely that we will get a phased deal and there themselves of the new Open Skies policy. They have will be something in a first step which will remove a limited number of slots in Heathrow and you some of the restrictions but not get all the way. That indicated in your last answer that presumably they is the way in which the negotiation is being framed would buy more slots. My fear is that they would not at the moment, but if you removed restrictions on buy more slots and that they would simply transfer who can fly to and from Heathrow and so forth, some of the Belfast/Heathrow slots to the Heathrow/ what I suspect you will see is that those airlines that US routes and thereby deprive us of that much currently are not able to service the US from London needed feeder route to Heathrow. will seek to do so because some of the routes are Mr Plant: I cannot speak for bmi at all. I understand incredibly attractive and clearly the rules at the the fear but the one thing I would say is that bmi has moment restrict that market, say Heathrow to JFK, a very healthy slot holding at Heathrow: they have which can only be operated by Virgin and British 12 to 14% of slots at Heathrow; they are the second Airways from the UK side and United and largest holder after British Airways. Given that American from the US side. If you get rid of those relative wealth in terms of their slot holding, they rules, you will see more competitors come into that have all sorts of options that they can play with route, both US and other UK carriers but indeed which means that there may be less immediate possibly other European carriers if you remove the pressure on the removing of the Belfast service or rules on nationality and so forth. What does that do indeed another regional service partly because that for regional services? It is diYcult to judge. To some still brings some feed for them. Essentially, their extent, the worry would be that everything will just strategy at the moment is that they run primarily go to the US and then you do not get any regional short-haul services. Who knows what they will do in services anymore. That is one extreme. I think that the future. They will have to either buy more slots or, is unlikely to happen not least because the viability if your surmise is right and they simply rejig the slots of a lot of the routes actually depends to some extent they have, they have enough to be able to maintain on having the connecting traYc coming in. So, you services and perhaps they will pull some of their cannot turn Heathrow into a point-to-point US/UK European regional services and translate them into service because actually, to make the whole thing long haul. It is hard to know but their large slot work, you need to be bringing feed traYc in from holding in some ways reduces the risk. If they only other points including from the UK regions. had 1% of slots and they were serving Belfast, clearly Potentially, if you combine it with slot trading, it there would be a greater risk of Belfast losing out. gives UK airlines the possibility of buying of a greater portfolio of slots which may actually in some Q41 Chairman: Earlier on, Mr Luke asked a ways ease the pressure on some of the regional question in respect of the Route Development Fund. airlines. If the result is that, say, bmi gets another I notice from your submission that you give a 10% of slots, which is unlikely, but if they increase guarded welcome to the use of a Route Development their slot holding by some extent, they have more Fund. You talk about it being used only for routes slots in total and they need to have some of the with a reasonable prospect of long-term viability. regional services coming in to satisfy their feed The emphasis in the objectives of the Fund is to requirements if they were then operating US services encourage the development of new air links, for example. So, I think the eVects are potentially particularly with continental European centres. Yet positive in some ways and potentially negative in two of the first four new routes funded are within the 3022631003 Page Type [E] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Ev 16 Northern Ireland Affairs Committee: Evidence

10 November 2004 Sir Roy McNulty and Mr Alex Plant

UK. There is City of Derry to Manchester, City of Q43 Chairman: I think we saw something similar in Derry to Birmingham. Do you think that is an France, did we not, over the last few years? appropriate use of the Fund? Mr Plant: This is on the extension of Orly services? Mr Plant: I would not necessarily exclude domestic services. This is very much a personal view. I cannot Q44 Chairman: The regional services, yes. I wonder really give you a CAA view. To some extent, there is if you can help us a little more in respect of one of a lot of work going on in the Department which may your comments that talked about the use of the clarify what they deem to be the right answer to that Fund. You say, “. . . because [routes] may not be question—which I am anxious not to preclude. To captured through the decisions of carriers based my mind, if you accept that Route Development solely on the profit motive, this may justify short- Funds are a potentially beneficial thing to have in term financial support”. So we are talking there terms of promoting new services, what you are about front-loading or putting money in to try to saying is that you can bring forward things that are make a route profitable. Can you elaborate a little of economic value to that region, which are not more on the argument you make there? happening at the moment but which will be viable in Mr Plant: The idea we had in mind was that it is like the future. If the view is that Birmingham is an kick-starting something. Essentially, if there is a incredibly important route for Derry, I would not route that, in time, will be able to stand on its own necessarily think that would exclude it. I understand two feet and not need the public money to get it what you said about the objectives of the Fund being going; but if the Fund can be made to work properly, more about connecting continental centres, but if you can bring forward the time at which that thing what you are about is, for example, boosting the starts and help it through the start-up years. business links between a particular region and Traditionally, it is harder for airlines to make money another European region, if Birmingham happens to in the first few years on a route. If you look at the be something that is of great value, then maybe. I standard profitability of airlines, it looks like this— think you have to judge it against the same sort of it sort of dips down, and takes oV in year three. If, criteria that you would if you were saying, “We think therefore, you can get yourself to a position where Frankfurt is important”. What I would say is clearly you were convinced that it was going to bring not appropriate is, essentially, leisure tourist additionality, something that would not happen as destinations. Clearly somewhere like Alicante would early otherwise, then it could be that that short-term not seem to be something that would warrant the funding is something that would be potentially a spending of public money on creating a service, good use of public money—because it brings because it is hard to justify what the economic forward the time at which the services happen, and development benefits are from sponsoring an then you can withdraw the funding and allow the Alicante service, for example, thing to continue in the future. What you have done is help to create a sustainable route for the future, Q42 Chairman: I think you read my mind, because I and perhaps advance the time at which it starts. notice that easyJet has received Development Fund That, potentially, is a good use of funds; but it would support for its route to Paris. While Paris is have to be judged against what else might you spend obviously a European economic centre, it is also a this money on. Maybe you want a bus station. These tourist destination. Given that, do you consider that things should be considered in terms of what is the a case could be made to support services from best use of the funding available to most benefit the Belfast to places like Brussels and Frankfurt? region concerned. Mr Plant: I think that essentially a case could be made on a Route Development Fund basis for that Q45 Chairman: I shall look forward to seeing how being potentially something that brings economic Hansard record your hand movement! Gentlemen, benefits to the region, because of the importance— you have given us an hour of your time. I think that in the case of Brussels, and indeed of Frankfurt—of the members are content in terms of their questions. those centres in terms of business links and, Are there any questions that you expect us to ask particularly in Brussels, the political and you but which we have not? government links as well. Potentially, that is Mr Plant: I do not think so. something which might get over the hurdle in terms Sir Roy McNulty: No. If, digging further into the of does this justify the spending of public money, data as we promised to do, we come across because of the additional benefits it brings to the something else that we think would be of interest, we region. You are right to give it a cautious welcome, will certainly send it forward. because of some of the reasons I outlined earlier. There are diYculties here. There are potential Q46 Mr Campbell: Could I ask one supplementary distortions you throw into the market. You could question? It is just something that occurs to me in your end up with a race to the bottom, in terms of questioning ofour witnesses, Chairman. Iam thinking competing regions trying to out-subsidise each in terms of Route Development Fund projects. I do other. If you follow that to its logical extreme, you not know whether we have been supplied with end up with everybody throwing lots of money in to information. Maybe you can help us in terms of subsidise air services, which might be quite good looking at that. Would there be any possibility of any news if you are an airline or indeed an airport, but it statistics, whichyouwouldobviouslyhavetosupplyat is not necessarily great news for the European a later date, in terms of whether it is two years or five taxpayer. years after the various Route Development Fund 3022631003 Page Type [O] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Northern Ireland Affairs Committee: Evidence Ev 17

10 November 2004 Sir Roy McNulty and Mr Alex Plant projects have taken place as to their success or Mr Plant: As far as I am aware, no, but, given the otherwise? That might help us to look at, for example, boundaries of the consultation that the Government the two mentioned by the Chairman—the set out, which said there has to be an adequate Londonderry to Manchester and Birmingham service to London, and given what is actually routes—and other routes, in some of which I suspect happening in terms of, particularly Belfast at least, there are varying degrees of success, but it might be services to London—Belfast just would not seem to helpful if there were statistics like that available. be close to a position where a PSO could be Mr Plant: I think that this is something where, as I considered. “No” is the answer, to my knowledge. said, there is work going on at the moment within government, trying to look at the protocol and Q48 Mr Luke: On the point of Londonderry, appraisal framework that might be sensible in this. however, I think there has been, in the Scottish Clearly we do not have much experience of it so far. context, quite a considerable discussion about the The Scottish Route Development Fund has been up PSOs between Scottish airports, peripheral airports, and running for a while; the Northern Ireland one is and London Heathrow. You may know, if you have relatively new; and there are a couple of others. been involved, that there has been a change in Monitoring it is something, if I remember rightly, outlook by the Ministry of Transport towards— that the Government said they would seek to do as Mr Plant: That is true, except that I would say again part of the White Paper, when they were thinking that the Department’s consultation very clearly talks about this area of work. At the moment we do not about “There must be an adequate London service”. necessarily, in our own statistics, distinguish a Route It almost excludes the possibility of deciding that Development Fund route from another route. So it there has to be a service to one particular airport in may be that the statistical data that you are talking London. It talks about there being an inadequate about, which I agree is very important and would be service to the capital city. That counts Heathrow, interesting, might be something that will be Gatwick, Luton, Stansted, City—all ﬁve. developed rather from government as opposed to Chairman: Gentlemen, you have been very generous the CAA. It might be worth pursuing that perhaps with your time, your answers and your submission. directly with government. I think that it has been an excellent start to the inquiry. We have laid down a few pointers as to areas Q47 Mr Luke: I have one more supplementary. We that the Committee will be looking into. Any talked about PSOs earlier on in some of the assistance or help you can give us in follow-up questioning. Have there been any discussions at all statistics and data will be very much welcomed. On on the prospect of securing a PSO for any ﬂights behalf of the Committee, can I thank you for taking between Northern Ireland and London? the time this afternoon to be with us?

Supplementary memorandum submitted by the Civil Aviation Authority Growth Rates 1. As noted in the CAA’s submission,4 over the last 10 years Belfast International airport has grown at an average annual rate of 6.1% and Belfast City at 8.8%. However, from a low base, the City of Derry airport achieved an average annual growth of 20.8% between 1993 and 2003, from 31,000 passengers in 1993 to nearly 206,000 in 2003. 2. Table 1 shows the composition of traYc at the three Northern Ireland airports and the annual growth rates of total traYc since 2000. Monthly traYc levels are shown in Annex 1. Over the period covered by Table 1 the average annual growths have been 8.5% at Belfast International, 13% at Belfast City, and 10.2% at City of Derry. However, there have been signiﬁcant variations in the growth rate from year to year. Table 1 highlights the strong growth at Belfast City for 2002, an increase which began in November 2001, the beginning of the winter 2001–02 season (see Annex 1). However, there were a number of particular changes in 2001 and 2002 that had signiﬁcant eVects on both Belfast airports, including BA’s withdrawal of its Belfast International–Heathrow service and bmi’s transfer of many of its services from Belfast International to Belfast City.

4 The CAA’s submission stated that the average annual growth rate at the two Belfast airports taken together was 7.9% a year. During the preparation of this supplementary paper, it was noted that this was an error and that the correct ﬁgure is 7%. 3022631004 Page Type [E] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Ev 18 Northern Ireland Affairs Committee: Evidence

Table 1

TRAFFIC GROWTH AT NORTHERN IRELAND AIRPORTS

Domestic Int Schedule Int Charter Total Belfast International 2000 2,225,528 105,491 797,225 3,128,244 2001 2,613,872 250,609 738,221 3,602,702 15% 2002 2,682,555 182,114 686,434 3,551,103 "1% 2003 3,003,698 119,666 831,068 3,954,432 11% Year to August 2004 3,148,294 179,208 888,373 4,215,875 11% Belfast City 2000 1,282,108 5,558 2,636 1,290,302 2001 1,188,229 842 2,902 1,191,973 "8% 2002 1,885,622 1,081 2,989 1,889,692 59% 2003 1,960,352 9,959 3,725 1,974,036 4% Year to August 2004 2,001,120 16,132 688 2,017,940 2% City of Derry 2000 157,972 1,624 3,108 162,704 2001 152,550 30,036 4,933 187,519 15% 2002 166,383 23,984 8,779 199,146 6% 2003 162,025 28,974 14,506 205,505 3% Year to August 2004 178,029 30,067 24,223 232,319 15%

Source: CAA Annual Airport Statistics for 2000, 2001, 2003 and CAA Monthly Airport Statistics for the year to August 2004.

CAA Survey Data on Connecting Passengers in 2001

3. The CAA last surveyed the Belfast airports in 2001 and the next survey is planned for 2006.

4. In 2001 the passengers using the Belfast airports categorised by their country of residence and journey purpose were as shown in Table 2. The table indicates that foreign residents made up a relatively low share of the total and many foreign residents arrived by a connecting ﬂight over a UK airport.

Table 2

PASSENGERS AT BELFAST’S AIRPORTS IN 2001

Foreign Foreign UK Business UK Leisure Business Leisure Total Belfast International Domestic Local 651,000 1,515,000 21,000 66,000 2,253,000 Connecting 57,000 213,000 36,000 73,000 379,000 Int Sched 29,000 88,000 31,000 61,000 209,000 Int Charter 3,000 693,000 1,000 31,000 728,000 Belfast City Domestic Local 482,000 549,000 14,000 20,000 1,065,000 Connecting 42,000 124,000 13,000 43,000 222,000 1,264,000 3,182,000 116,000 294,000 4,856,000

Source: CAA OD survey at Belfast, 2001.

5. The 2001 survey indicated that about 600,000 passengers used the domestic services at the Belfast airports and then took an onward connecting ﬂight at another airport in the UK. 3022631004 Page Type [O] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Northern Ireland Affairs Committee: Evidence Ev 19

CAA Survey Data on Connecting Passengers in 2003 6. In 2003 the CAA surveyed 11 UK airports with a service to one or both of the two Belfast airports, namely Birmingham, Bristol, CardiV, Nottingham EMA, Liverpool, Manchester, London City, Luton, Stansted, Gatwick and Heathrow. The surveys recorded about 680,000 passengers connecting at these airports between a Belfast ﬂight and another, usually international, ﬂight5. Table 3 categories these passengers by their country of residence and journey purpose. Heathrow and Gatwick were the main connecting airports but they were not perhaps as dominant as might have been imagined.

Table 3

CONNECTING PASSENGERS ON ROUTES FROM BELFAST TO THE UK IN 2003

Foreign Foreign UK Business UK Leisure Business Leisure Total Share

Heathrow 38,795 163,074 51,342 73,430 326,642 48.3% Gatwick 10,390 102,409 4,004 9,214 126,018 18.7% Stansted 11,230 54,291 4,842 7,224 77,587 11.5% Luton 5,912 26,653 4,418 8,613 45,596 6.7% Manchester 6,711 27,395 4,216 4,001 42,323 6.3% Liverpool 824 21,693 929 4,548 27,994 4.1% Birmingham 697 17,251 847 3,439 22,234 3.3% Nottingham EMA 433 2,312 0 438 3,183 0.5% London City 1,315 160 208 63 1,747 0.3% Bristol 0 1,352 0 0 1,352 0.2% CardiV 0 940 0 0 940 0.1% Total 76,308 417,532 70,805 110,970 675,615 100%

Source: CAA OD Surveys at UK regional airports and London, 2003. Note: The connectors shown above are the average of an estimate based on arrivals from Belfast and an estimate based on departures to Belfast. The accuracy of the estimates depends on the sample size and the estimates for airports such as CardiV must be treated with caution. 7. Table 4 summarises the main destinations which Belfast passengers were connecting to or from. It should be stressed that the confidence intervals around the survey estimates become wide when the data is examined at this level of detail. Perhaps the main conclusion that should be drawn is that the flights with which the Belfast passengers connected were to a large number of destinations and the traYc was quite widely spread. The development of “self-interlining” between the flights of the no-frills scheduled airlines is interesting to observe, for example the flow between Belfast and Malaga over Liverpool in 2003.

Table 4

MAIN DESTINATIONS OF PASSENGERS FROM BELFAST CONNECTING IN THE UK IN 2003

BHX BRS CWL EMA LCY LGW LHR LPL LTN MAN STN Total

Malaga 0 236 110 0 0 2,669 2,022 14,599 1,084 15,593 2,003 38,315 Paris 110 0 0 479 0 71 20,054 5,032 9,763 1,231 0 36,741 Barcelona 2,364 94 0 0 0 3,136 5,637 556 8,465 166 4,741 25,160 Alicante 6,035 578 0 155 0 1,270 1,710 1,778 1,926 276 4,756 18,484 Nassau 0 0 0 0 0 13,065 367 0 0 0 0 13,432 San Francisco 0 0 0 0 0 0 13,432 0 0 0 0 13,432 New York 0 0 0 0 0 0 12,699 0 0 555 0 13,254 Munich 120 0 0 0 0 119 7,763 0 0 73 4,672 12,748 Singapore 0 0 0 0 0 3,112 9,634 0 0 0 0 12,747 Toulouse 360 0 691 0 0 8,043 2,409 0 0 371 0 11,873 Nice 0 0 0 257 0 1,982 3,890 1,109 3,371 417 595 11,620

5 It should be noted that the CAA survey only interviews departing passengers. It is usual practice to examine the characteristics of passengers on this basis. Thus the proportion of connecting passengers of the Belfast City–Heathrow service quoted in the CAA submission was based on the proportion of passengers departing from Heathrow to Belfast City who had arrived at Heathrow by air. Since the ﬂow of connecting passengers (say, passengers from Belfast to Paris via the UK as compared with passengers travelling from Paris to Belfast via the UK) might be directionally diVerent, a more complex estimate has been made here by taking the average of the normal estimate and one based on the number of passengers on all other routes at the interview airport who had ﬂown in from a Belfast airport. This gives a slightly higher number of connectors at Heathrow than the one based purely on departures to Belfast. 3022631004 Page Type [E] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Ev 20 Northern Ireland Affairs Committee: Evidence

BHX BRS CWL EMA LCY LGW LHR LPL LTN MAN STN Total

Madrid 0 0 0 0 0 215 4,756 156 5,804 125 0 11,057 Toronto 0 0 0 0 0 2,324 8,019 0 0 481 0 10,824 Chicago 0 0 0 0 0 0 9,466 100 0 782 0 10,348

Source: CAA OD survey at UK regional airports and London, 2003. Note: The connectors shown above are the average of an estimate based on arrivals from Belfast and an estimate based on departures to Belfast. This data is subject to sampling error and at this level of detail should be regarded as indicative. Key: BHX—Birmingham, BRS—Bristol, CWL—CardiV, EMA—Nottingham EMA, LPL—Liverpool, MAN—Manchester, LCY—London City, LTN—Luton, STN—Stansted, LGW—Gatwick and LHR— Heathrow. 8. These figures do not include those passengers who travel by surface to Dublin to take a flight. 9. Although it would be possible to split each of the above flows by residence (UK/Foreign) and by journey purpose (business/leisure), in practice the estimates would be subject to such a large sampling error as to be worthless. 10. Since 2003 the network at Belfast has expanded (see Table 5). Then there were non-stop services to Amsterdam, Toronto, Cork and, for a time, Dublin. Now, new routes have been introduced which will have captured some of the major short-haul connecting flows shown in Table 4 for 2003.

Table 5 SCHEDULED PASSENGERS ON INTERNATIONAL ROUTES FROM BELFAST (YEAR TO AUGUST 2004)

Belfast International Jet2 Prague 16,178 EasyJet Malaga 14,640 EasyJet Alicante 14,436 EasyJet Amsterdam 86,462 EasyJet Paris 19,527 EasyJet Nice 10,826 Belfast City Air Transat Toronto 17,449 AerArann Cork 18,851 BA(a) Paris 1,717 Jet Magic (a) Cork 8,541 Source: CAA Airport Passenger-related Statistics, year to August 2004. Note: (a) No longer operated. (b) Only routes with more than 1,000 passengers in the period. (c) Other than the Amsterdam and Toronto services, these are new routes and so the numbers do not represent full year ﬁgures. (d) A new Jet2 service to Barcelona commenced in September 2004.

Connection Possibilities from UK Airports other than Heathrow—Further Information 11. The suitability of UK airports other than Heathrow for connecting passengers depends on the richness of the network at that airport in terms of destinations, frequency, schedules and airlines. 12. Airlines may be an important element of this mix for the following reasons. If a passenger transfers between the services of two full-service airlines, these airlines should normally have an interline agreement that will allow travel on a single ticket (probably at a through fare that may be lower than the sum of the two sector fares). This also allows baggage to be through checked, and some back-up to be provided should the first flight be delayed and the connection missed. 13. There may be additional benefits to the passenger if he or she transfers between the services of the same full-service airline, or between two full-service airlines within the same alliance, as there is a greater likelihood that a lower fare will be available than for two diVerent full-service airlines not within the same alliance. 14. If one or both sectors of travel is instead on a no-frills airline, then the passenger may need to travel on two separate bookings, at two separate fares.6 Thus they may lose some of the benefits in terms of checking baggage through and other convenience (although they may benefit from a lower overall fare from the no-frills airline).

6 This may depend on the airline in question—for example Flybe, although considered a “no-frills” airline, does allow for interlining. 3022631005 Page Type [O] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Northern Ireland Affairs Committee: Evidence Ev 21

15. By way of illustration, the following table shows the options available on interlining airlines for a passenger travelling from Belfast to Milan on Thursday 25 November 2004:

Table 6 UK AIRPORT CONNECTION POSSIBILITIES FOR PASSENGERS TRAVELLING BELFAST TO MILAN

Travel via First airline Second airline Total journey time Arrival time in Milan Birmingham Flybe Alitalia 3 hours 55 minutes 1930 (Malpensa) Manchester BA BA 4 hours 20 minutes 1820 (Malpensa) Heathrow bmi BA 4 hours 25 minutes 2045 (Linate) Birmingham Flybe Alitalia 4 hours 35 minutes 1245 (Malpensa) Heathrow bmi BA 4 hours 45 minutes 1645 (Malpensa) Manchester BA Alitalia 5 hours 00 minutes 1300 (Malpensa)

Source: Worldspan Computer Reservation System—17 November 2004 for travel on 25 November 2004. Note: There are also likely to be other options using other no-frills carriers, such as easyJet from Stansted to Linate, and Ryanair from Stansted to Bergamo, some 30 miles or so from Milan (total journey time Stansted to Bergamo: 5 hours 15 minutes). However, because these services are generally not displayed in Computer Reservation Systems such a journey requires the passenger to construct the journey manually. 16. These options are of course only possible because Milan is served from UK airports other than London. A trip to Johannesburg, say, would require a connection at Heathrow or a non-UK hub, because it is not served from other UK airports. Travel to Singapore by contrast would be possible via Heathrow or Manchester for a roughly comparable total journey time.

Fares Paid by Connecting Passengers 17. In the CAA survey, a subset of passengers are asked about the price of their air ticket. Because of the diYculty of obtaining reliable responses to this question from passengers travelling on multi-sector journeys, only passengers who are starting their air journey at the interview airport and who are making a simple point-to-point journey are asked the question. Unfortunately therefore, there is no fares information on the passengers shown in Table 4. 19 November 2004

Annex 1 MONTHLY TERMINAL PASSENGERS AT NORTHERN IRELAND AIRPORTS

Monthly air passengers at Belfast International airport 2000 2001 2002 2003 2004 January 192,026 197,342 215,536 254,210 254,734 February 200,402 209,270 223,850 272,178 297,538 March 223,109 235,384 266,408 293,563 315,794 April 239,577 270,081 258,366 292,592 337,929 May 276,734 324,080 328,392 350,312 357,144 June 306,099 353,848 346,361 369,580 403,403 July 364,588 418,527 404,170 425,866 492,874 August 345,559 415,708 389,726 416,868 477,196 September 291,854 375,091 308,578 363,692 October 253,975 344,974 291,458 345,238 November 218,848 234,949 261,726 296,341 December 214,566 223,448 256,532 273,992 Change 2001 2002 2003 2004 January 3% 9% 18% 0% February 4% 7% 22% 9% March 6% 13% 10% 8% April 13% "4% 13% 15% May 17% 1% 7% 2% Jun 16% "2% 7% 9% July 15% "3% 5% 16% August 20% "6% 7% 14% September 29% "18% 18% 3022631005 Page Type [E] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Ev 22 Northern Ireland Affairs Committee: Evidence

Change 2001 2002 2003 2004 October 36% "16% 18% November 7% 11% 13% December 4% 15% 7%

Source: CAA Monthly Airport Statistics. Monthly air passengers at Belfast City airport

Change 2000 2001 2002 2003 2004

January 86,936 87,849 123,424 133,256 137,191 February 93,216 85,241 130,714 133,618 142,121 March 102,027 94,975 155,256 157,568 154,710 April 104,922 98,226 147,089 168,985 175,467 May 107,672 92,390 158,271 163,788 171,036 June 116,549 95,608 163,996 175,813 179,233 July 121,682 96,330 176,938 196,328 202,199 August 134,747 103,656 188,705 197,927 209,230 September 114,275 81,922 171,251 174,995 October 110,964 86,775 168,281 167,946 November 97,737 136,085 154,207 152,368 December 97,437 132,916 151,560 151,444 2001 2002 2003 2004 January 1% 40% 8% 3% February "9% 53% 2% 6% March "7% 63% 1% "2% April "6% 50% 15% 4% May "14% 71% 3% 4% June "18% 72% 7% 2% July "21% 84% 11% 3% August "23% 82% 5% 6% September "28% 109% 2% October "22% 94% 0% November 39% 13% "1% December 36% 14% 0%

Source: CAA Monthly Airport Statistics. Monthly air passengers at City of Derry airport

2000 2001 2002 2003 2004

January 9,683 11,425 13,023 12,778 13,623 February 9,751 13,337 13,955 12,742 14,120 March 12,093 13,583 14,948 14,192 16,672 April 13,687 15,398 14,339 15,977 16,322 May 11,478 16,576 17,700 17,183 20,256 June 13,902 16,335 18,150 17,792 22,794 July 17,755 20,943 20,803 22,715 29,394 August 17,672 21,681 21,147 23,104 30,116 September 15,052 17,605 17,740 18,461 October 15,882 16,501 16,873 18,518 November 12,552 15,197 14,733 15,622 December 13,197 8,938 15,735 16,421

Change 2001 2002 2003 2004

January 18% 14% "2% 7% February 37% 5% "9% 11% March 12% 10% "5% 17% April 13% "7% 11% 2% May 44% 7% "3% 18% June 18% 11% "2% 28% July 18% "1% 9% 29% August 23% "2% 9% 30% 3022631006 Page Type [O] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Northern Ireland Affairs Committee: Evidence Ev 23

Change 2001 2002 2003 2004 September 17% 1% 4% October 4% 2% 10% November 21% "3% 6% December "32% 76% 4%

Source: CAA Monthly Airport Statistics. 3022631007 Page Type [E] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Ev 24 Northern Ireland Affairs Committee: Evidence

Monday 29 November 2004

Members present:

Mr Tony Clarke, in the Chair

Mr Adrian Bailey Mr Stephen Pound Mr Roy Beggs The Rev Martin Smyth Mr Stephen Hepburn Mark Tami Mr Eddie McGrady

Memorandum submitted by Cultra Residents’ Association Cultra Residents’ Association welcomes the Committee’s inquiry into Air Transport Services in Northern Ireland as there has been a need for some considerable time for a searching independent review of air services in Northern Ireland to achieve the maximum economic benefit for the region. Cultra Residents’ Association represents over 200 families in the Cultra area of North Down. The Association is also working closely with residents in Kinnegar Sydenham and East Belfast. The latter groups represent many thousands of residents living in the areas of high density housing in close proximity to Belfast City Airport. All the resident’s groups are gravely concerned with the intensification of use of Belfast City Airport which is having a significant detrimental eVect on their environment. Noise pollution is already widespread throughout the area (which incidentally contains approximately 39 schools) and the introduction of larger aeroplanes at the City Airport since British Midland moved its scheduled flights to Heathrow has noticeably intensified the pollution. Noise experts instructed by our Association inform us that noise levels being experienced at Kinnegar and East Belfast are already double and in some cases quadruple the levels of noise as shown in the indicative contours being published by Belfast City Airport and accepted by the Department of the Environment for Northern Ireland. It is clear that any growth at the City Airport will be a risk to public health and noise levels will be experienced which will be in excess of the World Health Organisation’s guidelines. It is not diYcult therefore to anticipate situations where there will be grounds for legal proceedings claiming compensation for injury to health and clearly thousands of householders will be justified in seeking grants for double glazing. As a result of our Association’s concern about the City Airport’s detrimental impact on its environment we have been in lengthy correspondence with the Planning Department and the Department of Regional Development for Northern Ireland since 13 September 2001, and a number of matters have been revealed in this correspondence which cause us to look closely at the future of air transport in Northern Ireland and its relationship to the well being of the Northern Ireland economy. Why are there two civil airports within a few miles of each other and in keen competition with each other but dependent for their trade on a small catchment area with a population of approximately 1.7 million? In a small region like Northern Ireland, it is not rational to have two substantial airports in close proximity, bearing in mind the high cost of airport infrastructure and the relatively limited resources available. It just does not make economic sense. Geographically, there is really only one site in Northern Ireland for an “international airport”. This is Aldergrove. The site was first selected in 1917 as a military airport by Major (later Marshall of the Royal Air Force) Sholto Douglas. At the same time, Sholto Douglas selected the site at Collinstown which is now Dublin Airport for an airport serving Dublin so that his judgment of sites for airports in 1917 seems to have been very farsighted. In 1958–59 it became necessary to decide on a site for an international airport for Northern Ireland and careful consideration was given by the UK Government of sites at Aldergrove, Belfast Harbour Airport, and wartime airfields at Ballyhalbert, Bishops Court, Millisle, Long Kesh, and Langford Lodge. On 29 July 1959 an announcement was made at Westminster that Aldergrove had been selected and the decision was favourably received in Northern Ireland. Since 1959 Aldergrove has grown extensively and some £50 million pounds in Government and EEC grants have gone into its development. It is an airport situate in open countryside and almost unique to the United Kingdom it does not create any environmental problems whatsoever. It is the only airport in Northern Ireland that can possibly rival Dublin for international destinations and it is clearly suitable for further extensive development. If Aldergrove is not developed to its full potential it is very obvious that many Northern Ireland citizens will be obliged to use Dublin Airport which is already successfully increasing its international connections and is now benefiting from the recent improvement in the road infrastructure between Belfast and Dublin. Why is Belfast City Airport in competition with Belfast International at Aldergrove and is this competition detrimental to the economic growth of Northern Ireland? These are two questions which have to be looked at in an historical context so that it can be appreciated how the situation developed, largely by default and by the lack of strategic thought and firm control at Government level. 3022631007 Page Type [O] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Northern Ireland Affairs Committee: Evidence Ev 25

Prior to 1983 the City Airport was only used by Short Brothers for test flights and for air taxies. However, in 1983 Short Brothers, then one of Northern Ireland’s largest employers obtained permission to fly passenger services from the City Airport. On 5 January 1983 their spokesman made the following statement: “We are not at all interested in competing with Aldergrove which with something like 1.5 million passengers per year throughput is clearly the Province’s major gateway airport. Rather our primary objective is to exploit sales of our commuter aircraft and thus help safeguard thousands of jobs at Queen’s Island which are so vital to the Province, by stimulating our customers’ growth opportunities”. This alleged principle of safeguarding jobs was clearly a powerful and persuasive weapon and was eVectively exploited by Short Brothers. As the poet declaims: “Tall oaks from little acorns grow”. However, with the continuing growth of the City Airport there was growing public concern about the Airport which is situate only 2.5 miles from the centre of the City and is surrounded by well established residential areas. It is not surprising that the City Airport is now one of only four airports in Europe designated as a “City Airport” therefore allowing the imposition of more stringent noise-related operating restrictions. Faced with the growing public concern about the unexpected development of the City Airport and at the same time pressured by Short Brothers to obtain more flights the Department of the Environment included the issue of the future of the City Airport as one of the relevant issues in a major Public Inquiry which opened on the 23 October 1990 and closed on 14 January 1991. The Report on the Public Inquiry by Mr F J Warke, the Principal Professional Commissioner, was accepted by the Planning Appeals Commission on the 24 June 1991 and the conclusions of the Commissioner were adopted by the Department of the Environment in an Adoption Statement 1991. Policy AP1 in the Adoption Statement states: “The Department will establish indicative noise contours against which reasonable growth of airport operations will be assessed”. Policy AP3 in the Adoption Statement states: “The Department will seek to maintain the airport’s present role and character as a regional airport”. In clarification of Policy AP3, the Adoption Statement also provided as follows: “Since the introduction of passenger services in 1983 Belfast City Airport has fulfilled an important role alongside Belfast International Airport (Aldergrove). Aldergrove is Northern Ireland’s major airport—the trunk route and international gateway. Belfast City Airport operates mainly as a regional airport serving other regional centres in the United Kingdom with short haul aircraft. The Department considers that airport operations within the framework of indicative noise contours will not alter the character of the airport so long as the operators adhere to the following environmental and operational constraints: — the use of quiet aircraft (to be defined by reference to current practice and standards); — operating services between 6.30 am and 9.30 pm; and — the maintenance of the present bias in favour of the main flight path over Belfast Lough. The Department will seek to establish a basis for local consultation and monitoring can be regularly and reliably assessed against the environmental and operational constraints”. One would have thought that Policies AP1 and AP3 set out so lucidly in the Adoption Statement 1991 issued by the Department of the Environment were not open for misconstruction or misunderstanding. It was therefore with shock and surprise that the Association learnt from correspondence between its solicitors and the Planning Department and the Department for Regional Development that the Departments had never implemented Policy AP1 and that the planners had watered down the provisions of AP3 by entering into private agreements with Belfast City Airport Limited and Short Brothers plc whereby (inter alia)the airport was permitted to allow flights to arrive between the hours of 9.30 pm and 11.59 pm if aircraft were delayed by “exceptional circumstances”. Not surprisingly this concession has been exploited and the Association has now learnt that on average more than 50 flights per month are arriving after the 9.30 pm deadline. This is now a major issue between the Residents’ Associations and the City Airport. In 1993, Maurice Buckby the City Airport’s spokesman told the first meeting of the Belfast City Airport Forum—“We won’t be bringing in noisy jet aircraft and we won’t be operating at night, for instance”. He also said—“We don’t have a lot of extra space to do much more development on this site so our priority is to keep standards of service up with the growth”. Despite the 1993 Statements by the City Airport’s spokesman, growth has continued at the City Airport to the detriment of its environment and it appears to the Residents’ Associations that the Department of the Environment has failed to honour its obligations to the public as envisaged by the provisions of the Adoption Statement 1991. 3022631007 Page Type [E] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Ev 26 Northern Ireland Affairs Committee: Evidence

It is interesting to note that when it was established by our solicitors that the Departments had in fact failed to establish “indicative noise contours” as promulgated by Policy AP1, the Department of Regional Development engaged Professor Callum Thomas of Manchester Metropolitan University to review “Noise Monitoring at Northern Ireland Airports”, and although Professor Thomas duly produced two lengthy documents which he entitled “A Good Practice Guide to the Assessment and Management of Aircraft Noise Disturbance around Northern Ireland Airports” he did little to advance the operation of Policy AP1. The thread running through his discourse was that it was necessary in the present age to trade oV damage to the environment against economic beneﬁt for the community. This conclusion may be true for the majority of airports in the United Kingdom, but it is certainly not appropriate to the situation at the City Airport which will always be limited in its growth by the adjoining housing while 25 minutes away by motor vehicle there is another larger airport with no environmental problems whatsoever. It would appear to the Association that in Northern Ireland in recent years Civil Servants have decided for their own reasons that it is in the public interest to have two competitive airports and in stressing the beneﬁts of competition for the public to the exclusion of all other considerations they have overlooked the major fact that it is wholly impracticable to have two substantial airports within a short distance of each other serving a catchment area of only 1.7 million people. It does not make commercial sense. It is also ironical to note that a recent parliamentary question has revealed that Civil Servants themselves travelling between Northern Ireland and the rest of the United Kingdom have spent the following amounts on air travel at the City Airport and Aldergrove as follows:

Belfast City Belfast International

2002–03 £3,983,798.00 £239,348.00 2003–04 £3,154,379.00 £210,216.00

It should be recorded that tickets from Belfast City would cost two or three times the cost of tickets from Belfast International. The actions of the Civil Servants in their daily activities do not appear to support their proposition that competition between the two airports is of major beneﬁt to the travelling public. It also has to be noted that in the recent purchase of the City Airport the price must have reﬂected the existing planning constraints on the airport and that any purchaser in its due diligence enquiries would have been fully acquainted with the limitations on its purchase. Finally, the Cultra Resident’s Association would wish the Sub-Committee to conclude that because of its situation, with no possibility of further major development, the City Airport must accept that it can only have very limited growth (if any) and that in the interests of the Northern Ireland economy the development of a truly international airport can only proceed at Aldergrove. 23 September 2004

Memorandum submitted by the Kinnegar Residents’ Action Group

Introduction 1. The Kinnegar Residents’ Action Group was established as a direct consequence of developments at Belfast City Airport (BCA). The Group works to protect the quality of life of residents principally in the Kinnegar, Holywood and North Down areas from the negative eVects of the airport’s operations. The Group works by engaging with BCA, lobbying local representatives, Government Departments and businesses, and forging links with the growing number of residents groups concerned about BCA’s operations. 2. This submission addresses the issue of “development of capacity at existing airports” as stated in the invitation to respond to the Committee, with particular reference to BCA. It aims to set out the views and feelings of many in the local community who regard BCA as having reached, and in some cases over`stepped, the limits of reasonable expansion. Within this context the Group fully appreciates BCA has a right to operate as a private company. Many members of the Group are private businessmen/women and acknowledge the importance of air travel to Northern Ireland’s economy.

Background 3. BCA is located in Northern Ireland’s most densely populated area and is only 25 minutes by car from Belfast International Airport (BIA). In 1983 Shorts gained permission to start scheduled passenger services; prior to this the airstrip was used for occasional test ﬂights connected with the aeroplane factory at Shorts and for air taxis. 3022631008 Page Type [O] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Northern Ireland Affairs Committee: Evidence Ev 27

4. The introduction of scheduled passenger services into the middle of an inner city residential area caused genuine concern amongst residents (and the Planning Service) and in 1990–91 a major Public Enquiry addressed the issue at length. The Enquiry faced demands for more ﬂights from Shorts/BCA and demands for respect of the pre-existing residential area from residents. The Inspector settled on a compromise that was articulated in the Adoption Statement. Residents were to be protected in the following ways; (a) a pre-deﬁned noise climate limit with access for residents to authenticated information about air movements and noise exposure; (b) a limit on operating hours of 0630 hours to 2l30 hours; (c) the establishment of a basis for local consultation and monitoring to ensure the operation of the airport was regularly and reliably assessed against the above environmental and operational constraints; and (d) the airport was to be regional in character serving other regional centres in the UK with short haul aircraft.

Current Issues 5. The Group strongly believes the Department of the Environment (DoE) and its successors have not properly enforced the terms of the Adoption Statement. Areas of concern are:

(a) Noise — The noise climate is only being estimated using computer simulations (of perfect take-oVs and landings by theoretical aircraft). The regime laid down in the Adoption Statement can only be meaningful if there is secondary radar to plot actual aircraft ﬂight paths and heights together with ground monitoring equipment to continually measure actual noise in residential areas. Residents must have access to this information in a timely and intelligible form. — Recent independent research has shown that actual noise levels surrounding BCA are well outside those permitted by the Public Enquiry in 1991. For example, noise levels in the Kinnegar area are 3dB over, or double those permitted. Maximum noise in Mersey Street Primary School in East Belfast is well outside World Health Organisation (WHO) guidelines. — BCA has been requested to install real time noise monitoring equipment in areas below the ﬂight path but has so far refused on the basis of cost. Residents are disappointed that such a large multi`national company with substantial resources, as Ferrovial, is unable to agree to commit to the relatively modest investment required.

(b) Late Flights — In two (unpublished) Planning Agreements in 1994 and 1997 between Shorts and the DoE, a facility for delayed flights up to 2,359 hours was introduced for “exceptional circumstances”. It is the Group’s belief that this facility is being routinely abused with late flights increasing in number year by year (currently around 600). There is no improvement in sight. BCA knows which airlines and which flights are consistently causing these problems. The Planning Service is so far unwilling to enforce this part of the Agreement.

(c) Governance of BCA/Transparency — BCA is now being use for trunk routes (to Heathrow) in contravention of the Adoption Statement. The move in 2001 of the bulk of BMI’s operations from BIA to BCA is stark evidence of the failure to evolve a proper air transport strategy. Shorts/BCA attracted BMI’s London Heathrow service away from BIA; this was a business decision. (At the time, BCA claimed this would not lead to requests to extend the curfew after 2130 hours but remarks in the press by Michael Bishop of BMI strongly suggest the granting of an extension was expected). There is now a vibration problem and intimidation problem due to the much larger size of Airbus aircraft. — The Group, and others, met at length with DRD in October 2003 to highlight issues of noise and late ﬂights yet no progress has been made. Commitment was given to an “Action Plan” to help provide some reassurance to residents that issues might be resolved, but to no eVect. — There is no eVective local consultation and monitoring of BCA’s operations. To date BCA has refused to implement key parts of a best practice guide that would have real impact. The EU has recognised the environmental sensitivity of BCA and such “designation” means it is subject to more stringent environmental regulations. — An Airport Environmental Consultative Forum is in place but this is run by BCA, who do not pre-consult about any substantive issues and it has no executive powers. It has never had suYcient information or expertise at its disposal to monitor noise exposure. 3022631008 Page Type [E] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Ev 28 Northern Ireland Affairs Committee: Evidence

(d) The Department of Transport Consultation in 2003 — In this exercise on the future of air transport in the UK it was made clear that the planning restrictions of BCA were not part of the discussion in the consultation. There was no indication that views on the planning regime were being requested. Notwithstanding this approach the Department’s conclusions included the suggestion that there should be a review of the BCA Planning Agreement if so requested. This conclusion shocked and concerned residents not least because there was no consultation about it and it was outside the terms of reference.

(e) Surveys/Local Opinion — A recent Community Survey commissioned by BCA emphasises the environmental impact with some telling statistics; over 75% of residents polled in North Down and East Belfast perceived aircraft noise to be a problem and 25% claimed it disturbed their sleep. — There was a unanimous resolution by Belfast City Council in 2003 opposing any extension of operating hours. The East Belfast Observer and Irish News newspapers have both categorically stated there should be no more development at BCA. Local elected representatives have also expressed grave concerns over such issues as late ﬂights and safety.

(f) Safety — Large aircraft, such as the Airbus, are operating at their limits at BCA. It is not a true all-weather airstrip and pilots are required to make judgement calls as to whether to land in bad weather and the frequent cross winds in winter months. Last minute turn-arounds and diversions to BIA are an indication of this problem. A misjudgement by a pilot at BCA could sadly have catastrophic eVects in residential areas surrounding Belfast compared to a similar situation surrounding BIA.

(g) NI’s Economic Prosperity—Certain strategic issues emerge, namely: — Potential travellers to Heathrow, including the business community, living west or north of Belfast have much greater diYculty accessing the service at BCA. This is a deterrent to those people, arguably from areas of greatest economic need, from accessing the flights to Heathrow. — Any expansion of BCA will create public expenditure requirements for more capacity on approach roads. There is already greatly increased pressure on the approach roads to Belfast from North Down. Any further growth of BCA will make very substantial expenditure unavoidable and this will have to come out of public funds. BIA has good access roads and was given approximately £50 million in Government and EEC grants to create fully comprehensive facilities in open countryside. — Competition from Dublin Airport will continue to suck passengers from Northern Ireland. Splitting passengers between two airports has prevented Northern Ireland from having an airport with enough critical mass to have any chance of competing against Dublin. Estimates from the Department of Transport in 2003 suggest that up to one million seats are being lost to Dublin from Northern Ireland. — An examination of the use of the two airports shows a huge bias towards the more expensive services operating from BCA by civil servants. This preference suggests a bias in oYcial circles towards BCA, which may be influencing decision-making. Recently published figures have shown that £3.9 million was spent by civil servants travelling through BCA, compared to approximately £200,000 through BIA, in a recent 12 month period.

Future 6. The Kinnegar Residents Action Group recommends that: (a) If any changes are contemplated to the Planning Agreement at BCA there needs to be another Public Enquiry. Logically the 1991 compromise was arrived at after a Public Enquiry and much has changed since in terms of air travel and the built up areas surrounding BCA. Its terms of reference would need to be set so that it can examine the shortcomings of the current regime as well as any potential relaxation of the existing rules being sought by the owners of BCA, Ferrovial. (b) Government ensures a meaningful and verifiable system of governance is put in place at BCA that enjoys the confidence of the community. This would include a verifiable noise regime with permanent noise monitoring, tracking of aircraft and sanctions for aircraft that break existing regulations, such as the 2130 hours curfew. Similar conditions exist at other airports. (c) Northern Ireland needs an Air Transport Strategy that serves all parts of the community, provides consumer choice and encourages economic prosperity for all. Not to have such a strategy risks losing business to Dublin and prolonging wholly unacceptable environmental damage. 3022631008 Page Type [O] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Northern Ireland Affairs Committee: Evidence Ev 29

Members of the Group would welcome the opportunity to present themselves to the Committee to present their views and to answer questions.

Witnesses: Mr Herbert L McCracken, Committee Member, and Mr Robert Barnett, Committee Member, Cultra Residents’ Association; Mr David Babington, Secretary, and Mr Roger Watts, Committee Member, Kinnegar Residents’ Action Group, examined.

Q49 Chairman: Thank you all for coming. Thank study for you. I am afraid we have not got the you for coming to give evidence to the Committee. scientist who did it with us but you will see from that By way of general introduction, the Committee is that the noise levels in Kinnegar, for example, tasked with looking at the development capacity at according to these tests, are outside the levels that all of the existing airports. We want to look at issues were set down in the adoption statement in 1991. such as the eVectiveness of the Route Development They are approximately twice as high as the figures Fund and we want to look at the impact of wider air produced by the airport are suggesting. Experts transport UK issues on Belfast and Northern diVer, as you will know, and this is a possibility but Ireland in general. We have got a pretty wide brief. we have here figures showing that they are well One of the things that we are very keen to do is to outside the amounts that the airport thinks they are make sure that from the start we take on the views and they are outside the planning limitations. not just of those who operate within the industry but those who are aVected by the industry. You are very Q53 Chairman: Just for clarity, Mr Barnett, the welcome as representatives of community groups document that you are have handed round, if I was and we very much look forward to what you have to turn to table 7.2 on page 164— got to tell us. I know that you are a mixed group Mr Barnett: Yes, you would see there— from Cultra and Kinnegar. Perhaps when you first speak, if you could inform us which group you are Q54 Chairman: Could you just run through those in from, that would help our shorthand writer who is at terms of the three columns so that Members can the end. familiarise themselves with the scale of the problem? Mr Watts: Would it help if I made the introductions Mr Barnett: Again, I am not an expert in this but the now, Chairman? left-hand column is the measured levels, the middle column is the planning permission levels and the Q50 Chairman: That would be very helpful, thank right-hand column is the computer modelled levels. you. We are on average noise over 16 hours here. Mr Watts: I am finding it very hard to pick you up, the air conditioning is right over my head. I cannot Q55 Chairman: I suppose this would answer the speak for my colleagues. other point that you made in your submission that Mr McCracken: I am having diYculty too. noise levels in Kinnegar are three decibels over or double those permitted? Q51 Chairman: We will speak up until such time as Mr Barnett: Yes. we can turn the air conditioning oV. It should be going oV now. If I raise my voice, is that better? Q56 Chairman: That is as outlined in those columns. Mr Watts: Yes, that is better. David Babington and Where we read 62 plus, 62.7 and 62.8 as opposed to I are from the Kinnegar Residents’ Action Group. 60, that would be the three decibels over? Kinnegar is the area of Holywood which is Mr Barnett: Yes. overflown by the flight route directly from aircraft taking oV towards the Belfast Lough side of the Q57 Chairman: Thank you for that. I know it is very airport. Robert Barnett and Mr McCracken are diYcult to describe three decibels to an extent, but members of the Cultra Residents’ Group. how much of a nuisance is three decibels? Mr Barnett: It is a doubling of noise. As far as we can Q52 Chairman: Let me start with a general question. make out, 57—not 60—is the onset of significant In the submissions to us it was suggested that any noise. That is the figure which is used at other growth at City Airport will be “a risk to public airports but for some reason that we do not health” and the World Health Organisation understand 60 was used as the indicator for Cultra guidelines were mentioned. There was a comment here, so we are already talking about a level higher that the noise levels experienced would be in excess than would be acceptable in the rest of the United of those guidelines. Could you elaborate a little bit Kingdom. Apparently, 57–60 is a doubling and more on how you feel the current noise levels diverge 60–63 is another doubling. from those set out in the WHO guidelines? Mr Barnett: We are not noise experts around this Q58 Chairman: Help me in terms of I am sitting in table, so we commissioned a study which we will put my front room in Kinnegar and a noise level of 57 is in as evidence—we only have one copy with us—to what, detectable but not a nuisance? take some actual measurements around the airport. Mr Barnett: It is a nuisance, it is the onset of This was because we felt that the computer derived significant noise. figures, which are what are normally used, were not what was originally intended and not what should Q59 Chairman: I am hearing it in my living room in have been created. We have got an extract of that Kinnegar, am I? 3022631009 Page Type [E] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Ev 30 Northern Ireland Affairs Committee: Evidence

29 November 2004 Mr Herbert L McCracken, Mr Robert Barnett, Mr David Babington and Mr Roger Watts

Mr Barnett: That is outside now. If you open your received 842 responses. The responses came from window you will hear that. people as far away as Enniskillen and Antrim, which were used as control areas, and also people as far Q60 Chairman: Please do not feel there is any afield on the North Down coast as Donaghadee and trickery in these questions, I am just trying to help people as far away as CarryduV, I think, towards the the Committee in terms of getting an understanding Belfast direction. It was quite a wide spread. They of the level of real nuisance for residents rather than produced their report to us in January. talking in decibels. Tell us in terms of what impact it has on your lives. Q65 Rev Smyth: You say you did not partake, I can Mr Babington: Chairman, being able to tell you understand that as a committee but the survey precisely what happens at what decibel level is included people in your area. impossible. Perhaps I could give you a general feel Mr Babington: Yes, I believe so, but it was totally and a general impression. Certainly the prospect of anonymous so I really could not comment on exactly standing outside your front door and having a who responded. conversation is not an option if planes are going past. If children are playing in the garden, etcetera, Q66 Rev Smyth: Thank you very much. Of course, trying to talk to them or telling them to come in is you have indicated that you would wish to have data not possible. Certainly on summer evenings when on noise and aircraft track and, no doubt, track your windows are open and planes are going past, deviation. Could you tell us how many aircraft a day you are not going to get to sleep. If you are asleep you believe fly directly overhead? You did say you may get woken up, not every time, it depends on overhead in Kinnegar. My understanding of the what type of aircraft and exactly what decibel level Lough is that they come down, not overhead. I may it is. Holding conversations in the garden, moving be wrong on that flight path but I am trying to around the house, talking in the house with the understand the nature of the evidence and what is windows open, is very diYcult. happening. Could you give us some guidance as to how many aircraft a day you believe fly directly Q61 Chairman: So it is an intrusion into your private overhead, or whether most fly over Belfast Lough, lives, particularly during the summer months when and is it lateral noise that is the noise rather than the you have got the windows open? overhead? Mr Babington: Particularly, yes. Mr Watts: If you draw a straight line down the Chairman: Thank you for that, that is helpful. middle of the runway you will find it crosses Kinnegar. The Lough is bending and, if you are Q62 Rev Smyth: On the question of noise talking about aircraft landing, they all overfly monitoring, I understand you have been in Kinnegar if they are approaching from that side. conversation with the airport authority here on this There is a requirement for the airport to maintain a issue discussing noise monitoring equipment. Have bias of flights over the Lough, so the majority of you an estimate of how much it would cost to install flights are coming in or taking oV over the Lough. such equipment? What would the airport say is their With aircraft taking oV there is most definitely more estimate? flexibility, they can and are able to turn six degrees Mr Barnett: We do not have an estimate but the view out over the Lough and that does make a diVerence. we take is that any reasonable sized airport should However, the one exception to that is the use of have noise monitoring equipment. What matters is Airbus, which is very intrusive on takeoV. Whether the actual noise on the ground as measured. We they deviate or not, they are very intrusive on understand this equipment is in position at Dublin takeoV. and a number of other airports and we say it is a cost of doing business, I am afraid. Q67 Rev Smyth: Thank you. If you had the data, what would you want to do with it? How would it Q63 Rev Smyth: Dealing with the expert who did the aVect your campaign or is it for long-term usage? report for you, did they give you any guidance at all Mr Watts: The establishment of reliable, measured as to that level? data would let us know exactly where we stand for Mr Barnett: No, we do not know what the cost of the first time. We believe that it would indicate that that is. the airport is operating outside its permitted parameters. Q64 Rev Smyth: You refer to a recent community survey which was commissioned, as I understand, by Q68 Rev Smyth: As to where you stand, you would the airport. Can you elaborate on the findings of that know where the airport stood but what do you survey? Did your groups participate in the survey intend doing with it? and do you know how it was carried out? Was it by Mr Watts: The situation at the moment is the noise postal survey or door-to-door? How many regime is being largely computer modelled or households were surveyed? estimated and the research that is being brought to Mr Babington: If I may answer that. The report, as your attention today by Cultra residents tends to you say, was commissioned by the airport and confirm our suggestion that it is markedly independent consultants did it on their behalf, Faber underestimated. If the Cultra research is correct then Maunsell. We did not take part in that survey. They they are in breach of the noise guidelines and we sent out forms to a snapshot of individuals and would be asking for the airport planners to take 3022631009 Page Type [O] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Northern Ireland Affairs Committee: Evidence Ev 31

29 November 2004 Mr Herbert L McCracken, Mr Robert Barnett, Mr David Babington and Mr Roger Watts normal enforcement action in relation to that. In I notice in this document you are concerned about other words, the airport would be required to take the noise levels on children’s learning abilities in the measures to bring itself back to within the permitted schools aVected. noise envelope. The principal outcome of the 1991 Mr McCracken: I would see that there could be a public inquiry was that operating within a proper possibility that parents of children attending Mersey noise climate was to be the principal planning Street School could have a claim against the control of this airport. education board for permitting children to remain in buildings which are being subjected to pretty high Q69 Rev Smyth: In other words, get the airport to levels of sound on a pretty continuous basis. Sadly, draw back on its operations and not so much seek we are a pretty litigious lot on this side of the Irish compensation for what is perceived to be noise Sea. pollution aVecting homes? Mr Pound: Not exclusively. Mr Watts: If we had proper real time noise monitoring in the residential areas then we and the Q74 Mark Tami: Are there other eVects other than airport would all reliably know what climate they the school issue? Are there any other eVects that you are operating in. If that vindicated the airport’s could see? position that it is operating within its limits then they Mr McCracken: That seems the most obvious one would be vindicated. If it vindicated our position and perhaps one where we should be most concerned that we believe they are operating outside the because it aVects children. I think in our little survey constraints then we would ask that action be taken. we discovered there were about 39 schools in the Principally we are looking to preserve the amenity of area. Mersey Street is in the most prominent our lives and our neighbourhood; we are not looking position so far as the airport is concerned. I gather to take compensation or money oV people. from World Health Organisation research that there Mr Pound: Sorry to talk across you but this picks up is a realisation now that high levels of sound are a point that Mr Watts made. A thing called the East quite detrimental to health, both to hearing and to Belfast Environmental Noise Measurement Site has general health. been referred to, particularly in the case of the Mersey Street School. Where is that? Is that a Q75 Mark Tami: What do you think would be the statutory noise monitoring site? Do we have any chances of a successful case being made? I am not access to that data? aware of any such case, but bearing in mind noise levels around Heathrow Airport that are extremely Q70 Chairman: I would imagine that we could access high. the data, could we not? This would be the same site Mr McCracken: We are very capable of creating that you used, would it not? precedents over here ourselves. Mr Watts: At the moment the airport does not monitor data anywhere as far as we know. What it Q76 Mark Tami: It would be on that basis? You are does is it computer models and then authenticates in not basing this on some previous case? some way that I am not clear about. There have been Mr McCracken: No. For example, I think in the one or two ad hoc studies, but that is the size of it. middle of our troubles when our streets and footpaths were not being looked after to the full Q71 Mr Pound: What is the East Belfast extent there was a real epidemic of tripping cases. Environmental Noise Measurement Site? Once these things start— Mr Barnett: It is on the playground at Mersey Street. Chairman: We shall refrain from commenting on It is the King George VI playground. We put this your litigious nature on the basis that it could end up into evidence. Measurements were taken on this in a law suit. playground and inside Mersey Street School. If you look in the extract you will see the measurements Q77 Mr Pound: As someone who lives in the same taken on the playground show that they are ratio to Heathrow Airport as you live to Belfast City, marginally conforming to the planning regulations I have been noting these points with great interest, in East Belfast but the noise is greater than is particularly as I have got RAF Northolt behind me measured by the airport. and Heathrow in front of me. Can I just follow up a point that the Cultra Residents’ Association Q72 Mr Pound: I am sorry, sir, I confuse myself mentioned in their submission when they said sometimes, but is the site monitored by the Jackson “thousands of householders will be justiﬁed in Report authors or is it Belfast City as a statutory seeking grants for double glazing”. Could you give environmental agency? us some idea of how many households and how Mr Barnett: The Jackson Report. many homes we are actually talking about? Mr Pound: Thank you very much. Mr McCracken: Pretty well the whole area of East Belfast. Q73 Mark Tami: You suggest in your evidence that “it is not diYcult therefore to anticipate situations Q78 Mr Pound: The whole of East Belfast? where there will be grounds for legal proceedings Mr McCracken: Yes. Again, in Northern Ireland we claiming compensation for injury to health”. Other have a separate Order, the Airports (Northern than noise itself, what do you really see as the likely Ireland) Order 1994, which provides under Article eVects or what you would look to actually claim for? 22 that the DoE may also adopt schemes requiring 3022631009 Page Type [E] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Ev 32 Northern Ireland Affairs Committee: Evidence

29 November 2004 Mr Herbert L McCracken, Mr Robert Barnett, Mr David Babington and Mr Roger Watts airports to make grants contributing to the 17. It does vary. We did our own research last year installation of insulation in properties aVected by and we counted 16 in one weekend over Friday, their activities. Perhaps at the moment the decibel Saturday and Sunday nights, but the following level is somewhere around 63, so we are getting very weekend there may have been only two or three. It close to it and, indeed, there is now an argument in does vary with weather conditions, the airlines, favour that that decibel level should be 57 and not perhaps air traYc control further aﬁeld, not just in 63. Northern Ireland but perhaps the South East of England or even Europe. It is hard to deﬁne a Q79 Mr Pound: Have there been any double glazing particular trend but particular airlines do stand out installations that you are aware of? as being worse oVenders than others. Mr McCracken: No, not to our knowledge. Q84 Mr McGrady: From that list that you are Q80 Mr Pound: Can I ask each of you in turn, just holding in your hand there, which we would like to for the record, how many residents does the Cultra look at at some stage, you have the capability of Residents’ Association represent? naming names, as it were? Mr McCracken: It is about 200 households which Mr Babington: Yes. are about 400 or 500 people.

Q81 Mr Pound: And Kinnegar? Q85 Mr McGrady: In your opinion, is this a Mr Babington: In Kinnegar we have about 215 consequence of maybe one airline setting unrealistic households. However, we also have people in the time schedules which I think you referred to in your wider Holywood area who come to us through report also? various other associations, such as the Holywood Mr Babington: Yes. Conservation Group and, indeed, I am empowered by other groups in Belfast who are aware that you Q86 Mr McGrady: Are there any real reasons for are sitting today and have said they very much these delays that you can observe? support what we are doing and would like us to Mr Babington: I may as well say it is public represent their views as well, and that stretches to knowledge that the worst oVender is Flybe, they places such as South Belfast and various councillors have the largest number of flights through City wrote to me on Saturday to make sure that their Airport but quite clearly they are ranked top. If I can constituents’ concerns were made open in this give you an example: in the month of August they forum. had 59 late flights. Consistently they are the worst oVender. We put to the airport at various forum Q82 Rev Smyth: Pressing you a little bit further on meetings that if they know they are systematically that, have you any recollection because there is going to be late— I think you are aware in the something in the back of my mind that says there Planning Agreement planes are allowed to arrive were cases taken to find legal authorisation for after hours in exceptional circumstances but we double glazing and so on? Are you aware of that and believe allowing so many late flights is a loose did anyone succeed? interpretation of that legal agreement and a number Mr Babington: I do not think we are, no, we are not of late flights are coming in on a systematic basis I aware of any cases. believe from Birmingham, which is a bad oVender in terms of location, and there may be one or two Q83 Mr McGrady: Good morning, gentlemen. We others as well. That would stand out as the worst come on to late flights now. Do you accept at all that oVender, Flybe from Birmingham. on certain occasions there would be a necessity for late flights coming in probably after the 9.30 pm deadline? I note from your submission to us that you Q87 Mr McGrady: Just to continue on from that count at least on average 50 such flights a month that theme, you have an Action Plan and I wonder if you arrive after the 9.30 deadline. Are these spread can elaborate slightly on your Action Plan in evenly over the month or do you think there are relation to the noise and late flights? Perhaps particular flights that are consistently late, or do they afterwards you would be prepared to share your all arrive consistently late at the same time? Is there Action Plan with the Committee. a pattern here? Mr Watts: The term “Action Plan” needs to be used Mr Babington: The airport at each forum, which carefully. The DRD commissioned a report into happens every quarter, provides us with details of current best practice and out of this was to emerge which flights are late and from that one can work out an Action Plan. It has been in preparation between what trends are developing. To answer your the DRD and the Airport for a year now. We have question about how we identify particular flights, seen nothing other than a checklist of ticks against there are certain airlines that stand out, it would be subject headings. We have not seen this Action Plan. fair to say, as worse oVenders than others. That is We made a submission to DRD as to what we probably because they have got a larger number of thought ought to be in it and we would be delighted flights in the first place. Likewise, in terms of the to make that available to you. The two principal airlines it is also a seasonal issue as well. If I can take requirements are real time noise monitoring in this year, for instance, in August there were 83 late residential areas and secondary radar that can flights, in April there were 30 and in May there were actually track the aircraft as to height and line so 3022631009 Page Type [O] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Northern Ireland Affairs Committee: Evidence Ev 33

29 November 2004 Mr Herbert L McCracken, Mr Robert Barnett, Mr David Babington and Mr Roger Watts that they too, if oVending, can be slapped on the Mr Watts: I have to say, that at their peak they were wrist. At the moment we are told that the Airport operating 38,000 ATMs and they were down after does not have that capability. 9/11 to 32,000, 33,000 but are up now to 36,000 Mr McGrady: Perhaps the Chairman can pursue ATMs, and if the people in our area of Holywood what stage this Action Plan is at and possible thought there was going to be scope for a 20% outcomes. growth over the current level there would be despair. Chairman: Certainly we will, it is perhaps something That is an extremely generous measure. we can do during the Committee’s deliberations. Thank you, Mr McGrady. Q91 Mr Bailey: There is scope, but are you all in despair? Q88 Mr Hepburn: Just one question concerning the Mr Watts: There are several limits on the airport’s procedure of go-arounds. Can you tell us how growth. At the time when the public inquiry was held frequent this happens? and the current regime was put in place, the Planning Mr Babington: It probably aVects us mostly in Appeals Commission was looking at a maximum Kinnegar. A go-around is basically the aircraft growth to 1.5 million passengers and at the moment turning around at very much the last minute before it there are 2.2 million. They were looking for a is about to land. It is an occasional thing, how many maximum growth up to 31,500 ATMs and there are times a year the Airport will probably have the exact 36,000 ATMs. At the time the public inquiry took figures, but I have seen four or five myself in the most recent past. place there were half a million passengers flying out of this airport, so there has been a four-fold growth since 1989 and the ATMs have doubled. What that Q89 Mr Bailey: Airport expansion: in your evidence tells you is that this airport has completely changed you suggest that the airport has “reached and in in character. It was operating small aircraft, maybe some cases overstepped the limits of reasonable 50 seaters. Our group formed and became concerned expansion”. Could you explain your interpretation when we had 100-plus seater aircraft flying in at 350 of the term “reasonable” against the background of feet over our heads. This was never envisaged, it goes the Government’s White Paper on Aviation which against the declared idea in the planning policy suggested that the airport could accommodate Y statement of it being a regional hub airport. The more tra c? other measure, apart from 45,000 ATMs, is 1.5 Mr Watts: As a matter of operational physics, of million seats for sale and in our understanding they course it could, but what I would like to get across to are currently breaching that level as well because we your Committee is that this is an exceptional airport think they are oVering over 1.5 million seats for sale. that you are looking at. This airport is in the middle Mr Babington: Over 1.7 million. of a very major conurbation. Northern Ireland only has a population of 1.7 million and it is in the extraordinary position of having two airports within Q92 Mr Bailey: That is because in eVect the number 20 miles of each other. One is largely in agricultural of flights has been reduced or not increased at the land and has the larger facilities and almost no same level because of the larger capacity of the environmental constraints on its operation. It could planes that have been landing here? handle the whole of Northern Ireland’s air traYc Mr Watts: Yes. Instead of small Skyvans flying over requirements with ease. We have here an airport our heads, we have now got Airbuses. That is the which is right in the middle of Belfast, a major city, reality. If that limit is lifted, there is no way with the to the extent that it was designated in European way it is going, there are going to be more Airbus legislation as one of the few city airports, and I am 737s flying in. That kind of traYc was never sure you are aware of this, whereby the European envisaged when that planning inquiry took place. Directive contains a definition of “city airport” where “a significant number of people are objectively aVected by aircraft noise and where Q93 Mr Bailey: Can we just talk about the vibration any incremental increase in aircraft movement problems that could be related to the Airbus aircraft. represents a particularly high annoyance in the light In your report you talk about “intimidation” due to of the extreme situation”. If you turn to the lists of larger Airbus aircraft. Do you not think that is a such airports in the European Union, you will find particularly strong term? that Belfast City is in the glorious company of Mr Babington: If I may answer that one, speaking as London City Airport, Stockholm Bromma, and someone living in Kinnegar. The aircraft fly over us Berlin Temple HoV, which I understand is about to at about 300, 350 feet. An A321, which carries, 200 close. Belfast is a small city compared to those other people, is a very large size of aircraft looming over cities. It is vital that the Committee grasps that this you. The tone of the engine is a lot lower than some airport is in a particularly sensitive area and, of the others, such as a 737 or, indeed, a 146. The therefore, our argument is that the opportunities for windows and the doors do rattle and some of the growth of this airport compared to other airports is residents who live very close have said that they very limited, if not non-existent. believe their houses are vibrating. One person has claimed, and it is only anecdotal, that part of her Q90 Mr Bailey: Would you accept that the current ceiling fell down but I cannot confirm that. Certainly planning level of 45,000 flights a year should be TVs are interfered with as well. The sheer size of maintained? the aircraft going across is very intimidating, 3022631009 Page Type [E] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Ev 34 Northern Ireland Affairs Committee: Evidence

29 November 2004 Mr Herbert L McCracken, Mr Robert Barnett, Mr David Babington and Mr Roger Watts particularly if you have children out playing in the Q97 Mr Beggs: You use the answer to a garden. You have the physical manifestation, as I Parliamentary Question to suggest that “the actions say, of windows rattling and doors rattling as well. of the civil servants in their daily activities do not appear to support their proposition that competition between the airports is of major benefit Q94 Mr Beggs: Good afternoon. Could we focus on to the travelling public”. Could you expand on this the issue of two competitive airports. You suggest view since fares alone are not the reason why that “in recent years civil servants have decided for travellers choose a particular airline and airport. their own reasons that it is in the public interest to There are also issues of where the journey to the have two competitive airports” and that the airport starts from as well as the ultimate existence of two competitive airports “does not destination, there are also issues of the time of the make commercial sense”. Could you explain your flight, the frequency and the flexibility of the ticket reasons for your conclusion that having two airports which is considered an important feature for does not make commercial sense when both are business travellers. privately owned and reported to be profitable? Mr Barnett: We do not know the reasons for the Mr Barnett: There are only 1.7 million people here. travel patterns of the Civil Service, we just can see We have divided that catchment area between two the parliamentary answer on that point which airports and now there is one in Derry as well. These appears to be a bit one-sided but we do not know the two are so close together and there never was, and is reason for that. not now, any requirement to create environmental damage in order to create economic benefit. We get all the economic benefit we require from the large Q98 Chairman: Our inquiry is timely in as much as airport which was specially constructed for this the Minister, Angela Smith, has just announced an purpose at Aldergrove. I think we should also open public consultation on the airport’s request for remember that the site of City Airport was a review of its current planning agreement and has considered at the time as what became the indicated that she will decide on the need for a public Aldergrove site and that was rejected. We do not inquiry when submissions have been received. think there is any sense in dividing the catchment Would you like to comment on that public area. There is a place in the market for City Airport consultation? Are you happy with the way that it has at a size but we seem to have two full blown airports been set out? Do you have any concerns over the of nearly equal size, which is not very clever. We question in consultation? Do you feel that you will have to compete with Dublin and I have brought for be able to put your reservations through not just this you the Dublin winter timetable, for those of you Committee but through that consultation exercise? who do not carry it around with you in your pockets. Mr Watts: We have some reservations about it. First There are 53 direct European destinations from of all, it is running through to the middle of January. Dublin and nine to North America. That is what we It is very diYcult for residents’ groups like ours to are up against. They have a lower rate of respond to this kind of material because it is very corporation tax. We have got a problem. It will be detailed, it is very hard to comprehend and none of only an hour and a quarter away from South Belfast us work in aviation, we have no natural background when the Dundalk bypass is completed and we will in this area. Secondly, we do not know, but we will get all the competition we can possibly require, and enquire, exactly when this period kicks oV.Allwe probably more than we can handle, from Dublin. have seen at this stage is a very short summary from the airport asking for a review. We do not know at this stage whether that represents their case or their Q95 Mr Pound: I am very, very interested in the opening shot, so we do not know what we have to statement you have just made about the initial respond to. We have those kinds of concerns. Our comparison between airport sites. Are we going feeling is that to some extent the rules are being made back to Sholto Douglas in 1917 or is it more recent up as they go along. What they are seeking to do is than that when the decision was made? to amend the Planning Agreement. I do not believe Mr McCracken: The decision was made in 1958–59. there is anything in our planning legislation that says That was a decision by the UK Government. They how that should be done. Given our express views looked at the City Airport, Aldergrove, Nutt’s that the airport currently are not observing the late Corner and three or four of the old wartime sites like night flights situation, which the planners will not Langford Lodge and at that time they settled on take action on because of this review, because we Aldergrove. Sholto Douglas in 1917 seems to have think they are breaching the noise levels and not been particularly perceptive in picking Collinstown operating correctly on the number of seats for sale, as well. we believe that they should be bringing fresh planning applications. There should be an Environmental Impact Statement and we believe if Q96 Mr Pound: Nutt’s Corner closed down in 1958, planners look at that they should come to the did it? conclusion that they must then have a public inquiry Mr McCracken: Once Aldergrove opened, Nutt’s and that public inquiry would have in front of it a Corner closed down. fresh application and all the information that we Mr Pound: I am just trying to get the picture. Thank would input. We believe that is the way the matter you very much. should be handled. 3022631009 Page Type [O] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Northern Ireland Affairs Committee: Evidence Ev 35

29 November 2004 Mr Herbert L McCracken, Mr Robert Barnett, Mr David Babington and Mr Roger Watts

Q99 Chairman: That is helpful to us. services in 1983, Belfast City Airport has fulfilled an Mr McCracken: I would come in heavily in support important role alongside Belfast International of that on behalf of Cultra. We would be wholly in Airport. Aldergrove is Northern Ireland’s major favour of a public inquiry. I am responsible for a airport, a trunk route and international gateway. couple of books of correspondence with the Belfast City Airport operates mainly as a regional Planning Department largely and with the airport serving other regional centres in the United Department for Regional Development and I am Kingdom with short haul aircraft”. The Residents’ proposing to leave those for the Committee’s benefit Association were perfectly happy with those two if anyone wants to look at them. Mr McGrady will policies and would have no fault to find with them if appreciate that at times it is very diYcult to get they had been implemented but it is the lack of information out of a body which is not very willing implementation that has caused us quite a lot of to provide it. We have had a great deal of diYculty surprise and shock. in getting information from the planners and that is Mr Watts: If I could pick up on one point on that as very, very self-evident in the correspondence. It took well. The Planning Agreement they are looking to about 15 months before it was conceded that they modify has more recent origins, 1997. We hear had not put policy AP1 into operation. It has never sometimes from our uncharitable friends and been put into operation. That is a fairly simple neighbours, “You bought a house near an airport, statement: “The Department will establish you knew what you were buying”. Ferrovial bought indicative noise contours against which reasonable this airport knowing exactly what the rules and growth of airport operations will be assessed”. That framework are and no doubt the price they paid for has never been done. They have relied on simulated it reflected the environmental constraints that information from City Airport on computers. As airport was expected to operate to and now, within you gentlemen are probably aware, there was a a year of ownership, they want to change the rules Department for Transport inquiry at Heathrow of the game. There will be a vast windfall profit for where actual tests on 747s coming in discovered that Ferrovial if they are allowed to do that. the noise level was double the level being shown by Mr Babington: If I could just add one point. I said computers in a simulated situation. We say it is before that I have come with a focus for the other absolutely essential to have measurements on the residents’ groups who are not present here now and ground. certainly they would view it with great concern if there was not a public inquiry in respect of the Q100 Chairman: Rest assured that we shall be current seats for sale restriction possibly being lifted making the Minister aware of the need to look at the or not. There is a perception that deals are being evidence that is submitted to our Committee and to done behind closed doors, that things are not open take an interest in our deliberations. Can I say to and transparent. If I can give you an example: only both residents’ groups that you have provided to us last year we received a letter from the acting Chief quite extensive written representations which are Executive of the Planning Service in respect of issues very helpful to us, but is there anything in our concerning the restrictions at the airport and now he questioning this morning that we have omitted? Are is on the Belfast City Airport Board. Facts like that, there questions you expected us to ask you but we that are open and public, do not give us a degree of have not or are there any further points that you confidence that things will be looked at in an wish to put to us because we have reached the objective way. conclusion of our questions and we do want to make Chairman: I do hope you will have some confidence sure that as residents’ groups you feel that you have in the Select Committee. We have a reputation for had the opportunity to express all the points that being robust and searching in our questions and you would wish to put? certainly we shall look for no favours in order to get Mr McCracken: I would just like to make the point answers to the questions that we will put to the that the public inquiry was quite a lengthy public Government. I do hope you can take some comfort inquiry. It started on about 23 October 1990 and that the concerns you have raised with us will be finished in January 1991 and, admittedly, while it taken very seriously and will be reflected in the was not concerned with the airport all the time, quite report that we write. Can I thank you very much for a lot of time was devoted to the situation of the City attending. I am afraid we never really got the noise Airport. As a result of that inquiry two policies were level sorted out with the air conditioning. Also, can produced. The second one was policy AP3: “The I thank those residents at the back of the room who Department will seek to maintain the airport’s did not participate but who have taken the time to present role and character as a regional airport”. be with us and listen to our deliberations. Thank you Then it goes on: “Since the introduction of passenger for your attendance. 3022631010 Page Type [E] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Ev 36 Northern Ireland Affairs Committee: Evidence

Monday 29 November 2004

Members present:

Mr Tony Clarke, in the Chair

Mr Adrian Bailey Mr Stephen Pound Mr Roy Beggs Mark Tami Mr Stephen Hepburn

Memorandum submitted by General Consumer Council

1. The Development of Capacity at Existing Airports

The Government White Paper, The future of Air Transport, published in December 2003 — Supported the development of Belfast International Airport within its existing boundaries to serve forecast demand. — Recognised Belfast City Airport faces signiﬁcant constraints and it invited the Northern Ireland authorities to review the form of the planning “cap”, if and when the operator asks them to. — Advised the Northern Ireland authorities to consider the future requirements of City of Derry Airport carefully, together with the Government of the Republic of Ireland. The General Consumer Council believes that the Department for Regional Development should consult further to promote informed debate and devise a strategy on how Northern Ireland airports can facilitate the proposed growth over the next 25–30 years. This should review all airport facilities, infrastructure and opportunities and consider what changes may be required at Northern Ireland’s three main airports, particularly Belfast City and Belfast International, to best meet the need of Northern Ireland passengers and the region as a whole in the future. This consultation should take into account all issues, interests and concerns including those of consumers, residents, business and environmentalists. All have an important contribution to make to help achieve the right balance needed for the future beneﬁt of Northern Ireland. Until decisions are made on the development of Northern Ireland airports it is not possible to judge what improvements are required. Belfast City Airport has currently limited scope to attract any new services given that it is very close to the cap on the number of seats available for sale from the airport, which has led to the recent request to review this aspect of their planning agreement. City of Derry airport is currently limited in the aircraft that it can attract while Belfast International at present has both the capacity and runways to facilitate any new route development.

Airport “competition” or “complementarity”

In recent years Belfast City Airport has become the focal point for Northern Ireland’s full service airlines. In contrast Belfast International has emerged as a signiﬁcant airport in terms of “no frills” carriers. As a result of direct competition between airports, and improved facilities at all three, the two Belfast airports have become complementary in many ways. However, Belfast City can no longer compete to attract new business from “full” or “semi” service airlines without breaching its current planning constraints. The General Consumer Council has long held the view that both Belfast airports should remain in separate ownerships—a view endorsed by the Monopolies and Mergers Commission in 1995. As a result, any move towards cooperation or common ownership should be considered further by the relevant competition and regulatory authorities to determine if it would be in the passenger interest. All these issues makes further internal Northern Ireland consultation, led by the Department of Regional Development, important to decide on the best way forward so we can plan to meet the anticipated future aviation needs of the region. 3022631010 Page Type [O] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Northern Ireland Affairs Committee: Evidence Ev 37

2. Specific Challenges Facing Northern Ireland as a Peripheral Region of the UK

Northern Ireland has a land border with just one other country (Republic of Ireland) and is geographically isolated from the rest of the United Kingdom and the European mainland. The result is that consumers living here are exceptionally dependent on adequate air transport.

The 1.7 million people living in Northern Ireland have a multitude of business, educational, family, social and sporting links with the 59 million7 people of Great Britain, and with people in Europe, North America and beyond. To travel in pursuit of these links Northern Ireland business people, students and others must cross the Irish Sea either by ferry or by plane. Ferry travel adds greatly to travel times and there is a risk of lengthy delays or cancellations especially outside the summer months.

Air services oVer the only sensible way for the residents of Northern Ireland to access London. Rail plus ferry and road plus ferry alternatives are not viable for a community reliant on links to its capital city and onwards to the world.

Our special situation makes good air access essential for travel to the other regions of the UK and to the key connecting airports, especially London Heathrow. Access to the wider world is important but should be achieved within a framework that ensures good domestic links so that no part of the United Kingdom is isolated or disenfranchised. This is particularly important for Northern Ireland which does not have realistic alternatives to air travel.

Importance of Heathrow to Northern Ireland

The main issue for Northern Ireland consumers is access to the South East of England hub airports, and Heathrow in particular. This is particularly important due to Northern Ireland consumers not having realistic alternative forms of transport eg road or rail. — Main UK airport—In terms of national integration Northern Ireland and other regions should have access to the nation’s main airport, respecting their role as integral parts of the United Kingdom. — Interlining opportunities—Heathrow has unrivalled links to other international destinations. The interlining options provided at Heathrow mean that it remains the only realistic option for Northern Ireland consumers who have very little by way of International point-to-point traYc. — Northern Ireland Business Travellers—Northern Ireland companies depend on international links to do business given our high dependence on exporting the goods we produce. Because of our peripherality in terms of both the UK and Europe, Northern Ireland needs good access to do business throughout the world. Northern Ireland manufacturers spend £33 million per year of which 58% is on air travel, while 70% of business travel in the ﬁnancial and business sector and 93% in the construction sector is by air. — Northern Ireland Leisure Travellers—Leisure travellers want to travel to destinations throughout the world. At present Heathrow and to a lesser extent Gatwick are the main hubs for doing this. People here need good interlining opportunities because of a lack of point-to-point international options. — Northern Ireland Economy—The importance to Northern Ireland business has already been mentioned. However, Northern Ireland depends on a lot of inward investment. Lack of access to Northern Ireland via Heathrow could potentially have a negative eVect on inward investors deciding Northern Ireland rather than another UK region with better links or the Republic of Ireland. — Tourism—Northern Ireland has a low level of visiting tourists compared with the Republic of Ireland. Lack of interlining opportunities via Heathrow would constrain growth in this area or have a negative impact. Research carried out for the Department of Regional Development show that passengers coming into Northern Ireland are eight times more likely to use London Heathrow than any other airport, with 450,000 UK passengers using Heathrow to access Northern Ireland each year.

This highlights the necessity of a Heathrow link for Northern Ireland and why the UK Government should seek the necessary EU legislative changes to have Belfast-Heathrow designated as a PSO route.

7 OYce for National Statistics UK Population Estimates June 2003 show 59.6 million people living in England, Scotland and Wales. http://www.statistics.gov.uk/pdfdir/pop0904.pdf 3022631010 Page Type [E] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Ev 38 Northern Ireland Affairs Committee: Evidence

Slot capacity at Heathrow Airport Northern Ireland’s access to the key London hub airport at Heathrow should be protected in the interests of consumers and business and steps need to be taken to secure the existing 16 slots. The Government White paper, The Future of Air Transport, supported further development at Heathrow provided that strict environmental limits can be met, including the development of a third runway. A further shorter runway at Heathrow would provide additional capacity for ﬂights from Northern Ireland and all airlines operating scheduled services to and from here at present use aircraft that could use a smaller runway at Heathrow. A proportion of any new capacity created should be reserved and used to protect regional services. Northern Ireland and other regions should be given the right for reserved slots to ensure the continuity of regional air services. However, any new runway at Heathrow is likely to be at least 15 years away allowing for planning applications, inquiries, legal objections and construction. In the shorter term Northern Ireland needs guaranteed access to Heathrow.

Public service obligations (PSOs) and EU legislation The Council believes that Northern Ireland’s access to Heathrow in the short term can be protected through amended Public Service Obligation (PSO) regulations, or reserving slots for regional services. The continuing shortage of runway capacity in the South East needs to be addressed and the Council believes government should use the tools prescribed by the European Commission to help the nation’s peripheral regions compete in the wider world. The Council understand that existing Public Service Obligation (PSO) Regulations allow designations of City-City services (eg Belfast–London) rather than speciﬁc airport designations (eg Belfast City–Heathrow). Government should seek to have this changed for the beneﬁt of Northern Ireland and all other UK regions that need access to the nation’s capital by air. None of the other London airports compare with Heathrow (see Table 1). The Council will be outlining these issues in its response to the current Department for Transport consultation on the protection of regional air services to London.

Table 1

NUMBER OF DESTINATIONS FROM LONDON AIRPORTS AUGUST 2003

Heathrow Gatwick Stansted Luton London City

Total Destinations 168 126 100 28 20 Weekly Departures 4,506 1,804 1,572 502 445 Long Haul Departures 91 39 0 0 0

Reduction in air services The General Consumer Council for Northern Ireland and much of Northern Ireland commercial and business life is concerned that its air links to London are under threat. BA stopped its high-frequency service between Belfast International and Heathrow at very short notice in Autumn 2001. However, these slots were not made available to alternative carriers for a Belfast–Heathrow service. The Council is pleased to note that the Department for Transport (DfT) recognises these concerns, and has put out a consultation paper to consider the very real fears of those peripheral regions of the United Kingdom that are almost totally reliant on air services for their economic livelihood. However, the DfT assumes no responsibility for justifying the air services needed by the various peripheral communities of the United Kingdom, stating that it is the responsibility of the Devolved Administrations and the Regional Development Authorities in England. This currently puts Northern Ireland interests at a disadvantage, as there is currently no devolved administration in Northern Ireland, and the day-to-day administration is provided from London. The Council has consistently led the debate and campaigned for securing regional air service access to London for a number of years. It made a presentation to a seminar on the topic held at the House of Commons organised by Calum Macdonald MP in May 2004 and subsequently held its own seminar on the issue in Belfast in June. This resulted in a high level of interest and concern from business and community leaders to the real danger of loss of London links over time, without a rapid resolution of the runway capacity problem or securing slots through PSO designation. The Council also held a seminar on 22 June 2004 on the importance of securing Northern Ireland’s continued access to Heathrow Airport. The event was well attended by representatives from all ﬁve assembly political parties, business leaders, tourism representatives, airlines, airports, universities, government and other key stakeholders. There was strong agreement that this was an important issue that required action. 3022631010 Page Type [O] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Northern Ireland Affairs Committee: Evidence Ev 39

3. The Effectiveness of the Air Route Development Fund The Council welcomes the Air Route Development fund and the routes that it has been able to support. This has helped bring about a signiﬁcant increase in European destinations available to Northern Ireland consumers and also a recent agreement in principle for a north Atlantic route beginning in early 2005 from Belfast International. In welcoming the new routes the Council recognises that there is a limit to the number of routes that can be supported by such a scheme. Northern Ireland does not have the critical mass of people to secure access to all of the destinations required. Therefore, while we want to see more direct links developed there is a necessity for us to retain our links to Heathrow and Gatwick to provide access to wide variety of worldwide destinations available from these two hub airports.

4. Potential Impact for Northern Ireland of Wider Air Transport Issues on the Island of Ireland The Council believes that the Department for Regional Development needs to consider any other issues on the island of Ireland that could potentially impact on Northern Ireland air services as part of its consultation to devise a strategy on the future of aviation in Northern Ireland over the next 25–30 years.

5. Conclusion Expansion of air services is essential if Northern Ireland is to catch up to the levels of economic activity achieved elsewhere. It is also essential for Northern Ireland people to promote social inclusion and their ability to interact with the European Union and the wider global society. At the core of this is access to the UK’s major hub airport at Heathrow. The United Kingdom Government needs to take immediate action to secure access for Northern Ireland at Heathrow. Further investigation should take place on existing provisions to determine if slots can be reserved for Northern Ireland in this way. If not then the UK Government must seek changes to the PSO regulations that provide route and airport speciﬁc services to be given PSO status and slot reservations. Overall, increased air transport capacity in south-east England would help to accommodate the growth of our region. Northern Ireland’s limited choice of transport options highlights the importance of air services with good frequency and reasonable fares. However the comparatively small size of the population means that competition will not always provide the answer and thus regulatory protection in the absence of competition is very important. Given the potential growth forecast for Northern Ireland the Department for Regional Development, which has responsibility for airports policy, should take the lead on the further consultation needed to promote informed debate on how Northern Ireland airports can best facilitate and support forecasted passenger growth over the next 25–30 years. 27 September 2004

Witnesses: Mr Alan Walker, Head of Consumer AVairs, and Mr Eddie Lynch, Senior Consumer AVairs OYcer, General Consumer Council, examined.

Q101 Chairman: Gentlemen, let me formally particularly Heathrow. We understand that you welcome you although we met just a few moments recently held a seminar on that specific topic. Could ago. Thank you for taking the time to be with us. you elaborate on the outcome of that seminar? Today the Committee has met with representatives Mr Lynch: We held a seminar in June of this year from both Belfast City Airport and also from Belfast which was well attended by business representatives, International. You will know that the Committee’s airlines, airports and politicians. The aim of the terms of reference are pretty broad in terms of trying seminar was to raise all stakeholders’ understanding to get a grip on not just the issues related to of the importance that we feel Heathrow has in consumer choice but also in terms of competition particular for Northern Ireland and access to it. In and in terms of use of the Route Development Fund. 2003 there were over two and a quarter million We very much value the views of the General passenger journeys between Northern Ireland and Consumer Council acting as the voice of those the five London area airports, of which 810,000 of consumers who will use the two airports that I have these were to Heathrow. From a resident population mentioned and also City of Derry Airport, which we of some 1.7 million in Northern Ireland, we have an shall visit tomorrow. Could I ask you the first time exceptionally high propensity to fly to London you speak to give us your name so that can be airports and in particular to London Heathrow. We recorded. Could I start our deliberations by asking a believe that access to Heathrow is not just a general question. In the evidence that you supplied commercially viable link for Northern Ireland but it to us you suggested that the main issue for Northern is really an economic lifeline for the Province as it Ireland consumers is that you maintain and retain impacts significantly on the tourist, leisure and access to hub airports in the South East of England, business travel industries here and has a wider 3022631011 Page Type [E] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Ev 40 Northern Ireland Affairs Committee: Evidence

29 November 2004 Mr Alan Walker and Mr Eddie Lynch economic impact on the region as a whole. It impacts would like to seek changes to allow less profitable on business travel in terms of a lot of Northern routes to be guaranteed with an alternative use for Ireland businesses have a high dependence on those slots which would lead to a reduction in exporting their goods across not just to the UK but services to a region. For example, in Northern further afield to Europe and to the rest of the world. Ireland at the moment, after BA’s withdrawal in It is through Heathrow that we have the best 2001, we only have the one operator that provides us gateway to the rest of the world. Northern Ireland with that link. Finally, we feel the whole issue of can access 91 long haul connections from Heathrow capacity in the South East of England and the to the rest of the world compared to only 39 airports there needs to be looked at. We feel that the available at Gatwick and none of the other three UK Government should take the initiative in London airports provide any long haul destinations. working with all those involved in the enhancement It is for this reason that we feel Heathrow is of of airport capacity between BAA, NATS, the particular value. For leisure travel it is also a great airlines and airports to look at ways that airport interlining opportunity for Northern Ireland capacity could be increased in the South East of travellers to gain access to the rest of the world. England and a certain amount of slots could be ring- From an economic point of view, economic fenced to secure access in the longer term. investment would be negatively impacted if we lost that direct link. Speaking to a number of organisations on this, including business Q103 Chairman: In some ways you have pre-empted organisations and tourist bodies, they all agreed my next question. You have mentioned that you with us when we said that Heathrow is such an have called for changes to the PSO regulations and important issue. Some of the research that has come we understand the diVerence between protection to out of the Department for Regional Development London airports as opposed to protection to a shows that passengers coming into Northern Ireland specific airport in London, in this case Heathrow. are eight times more likely to use Heathrow than any What do you think your chances of a positive other airport. All of these reasons have a value. We outcome are for that? If it is not successful, how else held a seminar in June and at this conference we put might you look to protect slots at Heathrow? a number of resolutions to the attendees on the day Mr Walker: Alan Walker, Head of Consumer and we asked them for their agreement. We talked AVairs at the General Consumer Council. The through them and presented them to the attendees to simple fact of the matter is this is extremely ask for their support. Since then we have received important and in the working paper that the support from 13 of the local councils in Northern European Union have out at the moment for Ireland on these resolutions. We have received consultation, which is due for response on support from various Chambers of Commerce, the Wednesday, clearly they have said if market Federation of Small Businesses and other business mechanisms are introduced as they are proposing, organisations. We have received support from the there will be a diminution in regional services. This Northern Ireland Tourist Board and a number of the is a major concern that needs to be addressed now. local political parties. We have also received support The key to this is persuading the Department for from representatives of universities, transport Transport in London to move forward with this at companies and private individuals. We can forward EU level to press for the changes. If we cannot to the Committee a full list of the organisations that persuade our own national government to do that have given support on that. then the chances of it are much reduced unless other regions of Europe are experiencing similar Q102 Chairman: That would be very helpful. diYculties. One of the options that has been Mr Lynch: If I could just run through the four projected, but which we do not support, is in the resolutions that we proposed on the day that we feel advent of market mechanisms that regions could are very important. We feel that Northern Ireland buy slots. When one considers the state of Northern and other peripheral regions in the UK should be Ireland’s wider transport infrastructure I am not given the right to reserve slots at key hub airports sure that with slots passing hands at £10 million a and we feel that the UK Government should seek slot Northern Ireland could aVord an additional appropriate changes in the new slot reservation rules £80 million and possibly that would be over a 10 to allow this to happen. We feel that Northern year cycle depending on one of the options that is Ireland’s current access to Heathrow should be being proposed by the EU. I am not sure that would maintained. Currently we have 16 slots, eight from be a good use of public money in the advent of public Northern Ireland and eight to Northern Ireland. We transport needing more funding and other services feel that they should be secured as only one operator within Northern Ireland and in the face of increased operates those at present. We feel that the UK charges on households here. The other options are Government should seek changes to the EU Public not particularly attractive for us at this time. The Service Obligation rules. Currently we understand simple fact of the matter is we do not believe the that these rules do not allow for airport specific market is the appropriate mechanism to guarantee designation but city to city, so, for example, they our future access to Heathrow and that is why we allow PSOs to apply to secure Belfast to London but need the Government to take action, not only for not Belfast to Heathrow. That is one of the things Northern Ireland but for other peripheral regions, that we would like to seek changes to. Also, we such as the Highlands and Islands of Scotland. 3022631011 Page Type [O] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Northern Ireland Affairs Committee: Evidence Ev 41

29 November 2004 Mr Alan Walker and Mr Eddie Lynch

Q104 Chairman: I wonder if I can move on to a their point of view. We are not criticising them for connected but diVerent subject. We have just seen that but what we are saying is if we guarantee the Continental Airlines’ ticket oYce and they will be access aside from that then it does not actually operating a service to America, to New York, from interfere with the market mechanisms. next May. The CAA tell us that 37% of those using Chairman: Thank you for that. the bmi service from Belfast to Heathrow are doing so to connect with other flights and two-thirds of Q106 Mr Bailey: Can we just talk about Europe for those are connected to US flights. What impact do a moment. Throughout your evidence you seem to you think that having direct access to New York suggest that the scope for direct services from through Belfast will have on the two-thirds of that Northern Ireland to mainland Europe is limited. 37% of bmi’s business? Have you given any consideration to what Mr Walker: It will have an impact in three ways. additional destinations you believe it would be First of all, as has happened with all new routes out important to be served directly from Northern of Northern Ireland, it will create new business Ireland? where people will make a journey that they did not Mr Walker: I think we look at this in a strategic way. do before directly from Belfast to New York. There are key links. In terms of all of our transport Secondly, it will draw people away from interlining policies we keep talking about key locations. In via Heathrow, but if we look at the options of those terms of the routes we do not have served at present going to Heathrow, it is in the high teens in terms of you would look at the likes of Brussels, the capital of America, so not everyone will be going in the New the Commission, and indeed the Parliament sits York and North America direction, so that would there sometimes, and indeed one of the other options need to be taken into account as well. The third would be to Germany perhaps in terms of the group of people are those who currently travel not to banking and financial infrastructures that they have London but travel down the motorway and there. That is in terms of the business capacity. In developing the roads infrastructure to Dublin, terms of other routes, what we have said is Northern therefore, is going to prove attractive to those. Ireland has a population of 1.7 million people and, Equally, the service will prove attractive to people even taking into account the border communities of who live in the border counties of Southern Ireland the Republic of Ireland, we have a limited catchment to open up New York as an opportunity to them area so, therefore, there is a limited number of routes from Belfast as opposed to Dublin. that can be sustained on a long-term basis. What we want are sustainable routes for the future, not just Q105 Chairman: One slightly confusing aspect of the routes that exist for a small number of years with written evidence you gave us is that there was a support and then disappear again in the future suggestion within that that almost by definition because there are not sustainable travel patterns on additional capacity at Heathrow would result in them. additional flights to Northern Ireland, yet surely we are in a situation where it does not matter how much Q107 Mr Bailey: What you have said is reinforced by additional capacity there is at Heathrow, there is the CBI who single out Brussels and the Frankfurt/ only the same number of people within Northern Cologne routes. Do you think there is a case to be Ireland who will want to travel to and from made for PSO support for these areas, as in the case irrespective of the capacity at the other end. of Paris? Mr Walker: In terms of clarity, what we meant was Mr Walker: In terms of PSO Route Development additional capacity at Heathrow should be ring- Funding? fenced for regional services. We do not believe it is fair that airlines that have been loyal to the regions do not benefit. In this case that is bmi because BA Q108 Mr Bailey: Yes. throughout the 1990s had always wanted to pull out Mr Walker: In terms of those, our view on the Air of Northern Ireland because they claimed the route Route Development Fund is that is a very welcome V was not making money, although we would argue step to help get routes o the ground and, indeed, it that was down to their accounting principles and not is generally accepted that in the aviation sector it necessarily that the route itself did not make money. takes three years to establish whether or not a route There may have been a slight over-saturation in the can operate profitably. In terms of the routes that market but what we are saying is any additional have been supported to date under the Fund to capacity could be used to ring-fence and guarantee mainland Europe, there seems to be a rationale there regional access which could then be operated by any and they have not gone for five a day services to airline whereas at the moment we are really Paris. We need to get a sensible pattern of flights that dependent on bmi and in terms of last year’s enables them to be sustainable in the longer term so negotiations between bmi and Virgin, had that that we do not end up losing them in the future which alliance gone through, it could have put regional would have a detrimental impact in a number of services at risk because it is obviously much more ways. attractive to fly an A380 to the United States or, indeed, to Australia than it is to fly an Airbus 320 or Q109 Mr Hepburn: How important is the Route 321 to Heathrow. The airlines and the airports Development Fund in developing new routes to would make more money out of that principle, so it Europe? How can we ensure that these routes do not would be a much more economic use of slots from fold when the money is withdrawn? 3022631011 Page Type [E] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Ev 42 Northern Ireland Affairs Committee: Evidence

29 November 2004 Mr Alan Walker and Mr Eddie Lynch

Mr Walker: I think the key to it is that there has to complementarity in terms of the way that they be an overall strategic approach to how we take operate but there is direct competition also and there forward aviation in Northern Ireland. We have to is nothing to stop either airport poaching operators look at this in the whole when we are making these from the other, with the exception that Belfast City decisions, that they are based on a rational business is approaching the limits of its capacity. case that in the longer term they can be sustained. We need all of the partners and, indeed, the Route Development Fund has pulled together most of Q112 Mr Beggs: How big a factor in reducing those partners in terms of the tourism sector and the competition are the present restrictions on Belfast business sector and the board of the Fund itself, so City Airport? Would you support the City Airport’s they will need to be working in partnership because current bid for an increase in the limit on the number if we are going to make this work in the longer term, of seats sold? we can always get people to leave Northern Ireland Mr Walker: The limits on the airport have been well because of these other destinations but we need to known for a long time so, therefore, that was the get people visiting Belfast. That may be helped by market they entered into and they were well aware of the fact that Dublin is becoming more expensive as that. In terms of the application that was made, in a city in terms of hotel accommodation and general principle we do not have a diYculty with the expenses. We do need to be seeing ourselves as an application because we now live in a diVerent market alternative destination, so instead of the tourism in terms of aviation. The average size of aeroplanes profile we have at the moment where people come to to make a route sustainable is larger than it would Dublin and visit Belfast, what we want to look at is getting people to come to Belfast and maybe visit have been in the past. On the face of it, there does not Dublin. seem to be a proper match between the number of seats for sale allowed and the number of air transport movements. Certainly on the basis of not Q110 Mr Hepburn: We are informed that one of the having had the opportunity to consider the current objectives of the Route Development Fund is to consultation in full in terms of the planning forge links with Europe. We are also informed that consultation, in principle we do not have a diYculty two of the new routes are particularly within the with extending the seats for sale arrangement UK. provided that it does not aVect the ATMs. On the Mr Walker: Yes. The issue there is the two airports other side of that there are clear issues to do with in question—Manchester and Birmingham—were City Airport that cause concern to other groups, already served from both Belfast International such as local residents and environmentalists, which Airport and Belfast City Airport, so the additional need to be taken into account, particularly in benefit to Northern Ireland consumers could very relation to the number of late night flights after the well have been limited. That is not to say that there Y is not a right to have a third route out of Northern 9.30 o cial closure time. That is a very important Ireland to those airports but whether or not it is in issue that needs to be addressed from the residents’ the wider interests of Northern Ireland to support point of view but, in principle, we do not see seats for those services and maybe not an additional sale as being a major obstacle. European service, if they meet the conditions of the Air Route Development Fund either there is something wrong with the conditions or there is Q113 Mr Beggs: The Minister, Angela Smith, has nothing wrong with the application. just announced an open public consultation exercise on this request by City Airport for a review of the current planning agreement and has indicated that Q111 Mr Beggs: Can we look at competition she will decide on the need for a public inquiry when or complementarity. You have highlighted the submissions have been received. Have you any diVerent markets of the two Belfast airports and concerns about how this consultation exercise is have concluded that they are complementary in being carried out? many ways. How important is it for consumers that they also retain an element of competition? Mr Walker: I understand there is a consultation being carried out in accordance with the planning Mr Walker: I think it is very important. If you look Y at the bmi situation in relation to Northern Ireland, guidelines and, indeed, one of the di culties is the four years ago bmi operated from Belfast timing of the consultation in that it takes in the International Airport and what you find now is that Christmas period. From our point of view, any they have moved to Belfast City for commercial consultation on the changes, because of the reasons. Therefore, competition is alive and well particular objections in that area, should take between the two airports. Indeed, last year Flybe, account of all views and there should be given one of the main operators at Belfast City Airport, adequate time to do that. That should be the were in discussion with Belfast International Airport views of the airports, the airlines, consumers and concluded that it was in their best interests to and their representatives, including ourselves, stay at Belfast City. Competition does exist between environmentalists and, indeed, local residents so the two Belfast airports and the Council has long that all interests can be considered and a balance held the view, and it is well documented, that we achieved in moving forward so that we have a support the retention of two airports in the Belfast sustainable and competitive aviation industry in catchment area. From that point of view there is Northern Ireland. 3022631011 Page Type [O] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Northern Ireland Affairs Committee: Evidence Ev 43

29 November 2004 Mr Alan Walker and Mr Eddie Lynch

Q114 Mr Pound: Good afternoon, gentlemen. me in the same coin. Can I just ask you a final Earlier on you referred to the City of Derry Airport question: receiving evidence from the CBI we were in the context of Manchester and Birmingham and told that Northern Ireland loses about half a million I have to say the economics of that airport present passengers a year to Dublin Airport. Obviously you something of a challenge to some of us. We are not have a slightly diVerent perspective here because the entirely sure how it works. Currently they are Consumer Council has a diVerent view from local seeking public funding to enable the terminal and business people and local politicians. Do you think runway to be expanded. From your consumer that the strength of Dublin Airport is a good thing in perspective, how important do you think it is for terms of providing competition and complementing business people in the North West and for the the services from Belfast airports and provides a development of the local economy for there to be a better choice for consumers in Northern Ireland, or North Western airport? do you feel that there is a problem there? Mr Walker: In terms of the City of Derry Airport, it Mr Walker: As a consumer organisation we would provides an important service to those people in not see competition as ever being a problem. their view. What we have in Northern Ireland is two commercially owned airports which operate on a Q118 Mr Pound: Good. profitable scenario. In terms of the City of Derry Mr Walker: Certainly for people who live in the Airport its profitability appears marginal at best. border communities of Northern Ireland, with the road improvements south of the border, Dublin has Q115 Mr Pound: It is subsidised, is it not? to be a very attractive option if there are routes that Mr Walker: It is highly dependent on one operator are either direct from there or, indeed, comparable in addition to that in relation to Ryanair. From this routes from Belfast. Equally, if Northern Ireland point of view that is why we strongly believe that in provides those services then it is equally competitive terms of the White Paper, in terms of Northern the other way for people who live south of the border Ireland, we need to have a further discussion on the to look at Belfast as an option. Yes, we do see Dublin impact of the White Paper and how that can be as a competitor in the field but it is competition both taken forward on a more local basis including more ways and Belfast, in terms of its two airports, has to of the detail. Because of the diVerences in the way oVer alternatives if it is to attract people in the airports are governed—obviously they were a opposite direction. devolved matter during the process of the White Paper—we believe that further discussion on the Q119 Mr Pound: The road being principally the East outcome of the White Paper and how it is moving Coast route? forward in Northern Ireland is necessary to take Mr Walker: Yes, in the main. account of all of the interests and that will allow us Mr Pound: Dublin, Drogheda, Dundalk, Newry, to consider the future of all the airports in our wider Lisburn. It used to be called the M1, I cannot aviation strategy and, indeed, what role City of remember what it is called now. Derry Airport plays in that. At the moment it is subsidised by the people who live in the City of Q120 Chairman: It is still called the M1, I think. Derry area and those people may not wish to Mr Walker: There was a major significant continue that in the future. Equally, others could improvement last year south of the border and there argue that it may not be the best use of public funds is a further improvement which is due for to support the extension of the runway or the completion early next year and it will reduce journey development of the airport when there are more times to Dublin Airport. Obviously in terms of pressing transport needs throughout Northern railway access, there is no direct railway access to Ireland. Dublin Airport as we speak but it is an option for the future, so you are not getting a lot of people Q116 Mr Pound: From your perspective, do you feel travelling that way. The road improvements do that it is an important facility? make Dublin an attractive proposition but, equally, Mr Walker: From our point of view, we believe that they make it easier the other way, for people to get discussion needs to happen on how we take forward to Belfast and make Belfast a more attractive the White Paper in Northern Ireland. We need to proposition. ensure that Northern Ireland has a sustainable and Mr Pound: I have to say that our Prime Minister competitive aviation industry. If that includes City would love to hear you say that competition is never of Derry then we will support that. We do not have a bad thing. Thank you very much indeed. the evidence at this point in time either way and that is why we believe that more discussion is needed Q121 Chairman: You have just prompted me to ask between the Department, consumer representatives, a supplementary question. We talked earlier on the airports and the wider interest groups, so that we about a flight from Belfast International putting can get the information to enable us to reach a under threat some of those passengers who currently conclusion on what is best for Northern Ireland. use Heathrow as a fly-through. Surely as the road improvements to Dublin happen and Dublin Q117 Mr Pound: That is an answer which combines Airport itself grows and oVers more routes and erudition and diplomacy magnificently. I do becomes more attractive—I think they want to be congratulate you on that. I was going to probe you the fourth largest airport in Europe somewhere further but I suspect you will keep coming back to around Schipol, Amsterdam size—there is a threat 3022631011 Page Type [E] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Ev 44 Northern Ireland Affairs Committee: Evidence

29 November 2004 Mr Alan Walker and Mr Eddie Lynch that people will just use Dublin as an alternative to ensure that we have a sustainable aviation industry Heathrow and, again, would be a threat to some of for the future and we do not lose many of these new that traYc from Belfast to Heathrow? services that have come to bear in the last few years. Mr Walker: There are around ﬁve million people on the complete island of Ireland and there is a limit to Q123 Chairman: One of those complexities in terms how many routes can be sustained out of the island of who is doing what and who is suggesting what, I of Ireland. It will never be on the scale of having 91 suppose, is that you are right in your evidence to us destinations but if there are destinations that are to say that the DRD needs to take seriously its complementary, particularly to North America responsibility for airport policy but, of course, with which is where the main long haul routes are out of the suspension it is this Committee that is currently Dublin, then of course people from here should having to conduct the inquiries. We are very serious consider it and they should go to the one that oVers about ensuring that should we be successful this them the best deal, the best price and, indeed, the week in getting the Assembly back on track they can correct interlining facilities because as we have take the evidence from Westminster and that they moved more to point-to-point travel in Northern have not wasted time in terms of taking on the task Ireland we have lost the guaranteed link-ups that will be set them. Your written evidence to us was between services which are normally provided by very clear and certainly it assisted the Committee to full service airlines. the extent that probably it limited the questions that we were able to ask you verbally. As we often do, could I ask you if there are questions that we have Q122 Mark Tami: I note that you state that “The not asked you that you expected, and therefore give Council believes that the Department for Regional you the chance to answer them even though we have Development needs to consider any other issues on not asked them? the island of Ireland that could potentially impact Mr Walker: I am not aware of any others and you upon Northern Ireland air services as part of its can guess that it was deliberately written in that way consultation to devise a strategy on the future of to limit the questions you could ask us. Certainly I aviation in Northern Ireland over the next 25–30 believe that the Committee’s intervention is timely in years”. What does that mean? It is very catch-all, is terms of the representations that we have been it not? What do you mean by “other issues”? making this year and in terms of the recent Mr Walker: In layman’s terms it means we need consultation with the Department for Transport clear deﬁnition of what the White Paper means for and, indeed, the developments at European level as Northern Ireland, we need more discussion on that we currently speak. I look forward to seeing what so that we all know in a clear and concise way how results in terms of the report of the Committee. we are going to take this forward in relation to Unless my colleague has anything that he feels has Northern Ireland, and that should include any issues been missed out, there is nothing. such as the impact that Dublin may have, the impact Chairman: Do feel free to supplement and that road improvements may have, or, indeed, the complement the evidence you have given us, should development of a second large airport in the you feel you wish to. Can I thank you on behalf of Republic of Ireland if Shannon was to develop the Committee. We are looking to publish around further, for example. I am not aware of plans to do February time, which is our target, maybe slightly that at this point in time but we need to consider all earlier, but that will depend on a number of factors. of the options so that we can then move forward to We are very grateful for your input, thank you. 3022631012 Page Type [O] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

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Tuesday 30 November 2004

Members present:

Mr Tony Clarke, in the Chair

Mr Adrian Bailey Mr Stephen Pound Mr Gregory Campbell Mark Tami Mr Stephen Hepburn

Memorandum submitted by The Londonderry Chamber of Commerce The Londonderry Chamber of Commerce has recently received the attached communication from the Northern Ireland Chamber of Commerce and Industry (NICCI) on the above subject. I should like to point out that NICCI is not a representative body of Chambers of Commerce in Northern Ireland, if your objective has been to solicit views on the above subject from Chambers of Commerce here. It is in fact a stand-alone Chamber, based in Belfast. While it is the largest of the Chambers of Commerce in Northern Ireland and may claim membership across the province, it is regarded by many, to all intents and purposes as the Belfast Chamber of Commerce. A number of Chambers of Commerce will of course be members of NICCI. The Londonderry Chamber of Commerce (LCC) is the second largest Chamber here, and also has membership from across Northern Ireland, and indeed from the Republic. It prides itself for the information, advice and guidance which it oVers to its members, but also for the extensive lobbying undertaken on their behalf. It is well regarded by Ministers and senior oYcials for the work that it does, and is undoubtedly one of the pre-eminent Chambers of Commerce in Ireland. I feel it is important to bring this matter to your attention, as City of Derry Airport (CODA) is the smallest of the three airports located in Northern Ireland. NICCI, being Belfast based, could conceivably adopt a Belfast-centric position, particularly since both Belfast airports are members of NICCI, and CODA is not. I should also point out that political parties across Northern Ireland have supported CODA and its plans for development, reinforcing the beneﬁts of the project for the region.

The Development of Capacity at City of Derry Airport Prominent amongst LCC current activity is participation in a Steering Group established recently at the instigation of the Secretary of State for Northern Ireland to consider the case for a new strategic development framework for CODA. The Steering Group comprises senior oYcials from several government departments, senior local authority oYcers and the Londonderry Chamber. Ownership of CODA has remained with Derry City Council for the last 20 years or so, and it has generally operated in deficit. While I understand that some UK and Dublin government funding may have been made available in the past, it is acknowledged that the deficit is largely funded by the ratepayers of the Derry City Council area. Neighbouring local authorities do not make a contribution towards the costs of operating CODA. Derry City Council has recently stated that it is not in a position to sustain this continuing loss indefinitely, and the current exercise will obviously consider the commercial position of CODA as well as its value to the region. The objective of the owners is to sustain existing routes, encourage the development of new ones while creating a longer term business strategy for CODA going forward. Several new routes have been established in recent years and the growth in passenger numbers is quite impressive. As well as scheduled services to GB and to Dublin, CODA services a growing number of holiday destinations. The catchment area for those using the airport—either coming or going—covers a large part of Northern Ireland, as well as the north west of the Republic. Most importantly, CODA is recognised as an important tool in the drive to improve social and economic conditions in the North West sub region, where tourism in particular is a sector for which significant growth is predicted.

Peripheral Region While CODA is of course located in Northern Ireland, it is very close to the border with the Republic. This must create diYcultly for UK finance and treasury OYcials given that they would find it diYcult to place value on benefits which might accrue to that part of the North West region which lies beyond Northern Ireland. This particular diYculty will constrain any consideration of access issues for the area. It is obvious therefore, as would be the case for with any peripheral region which is divided by an international boundary, that innovative arrangements involving each government need to be developed to allow this important piece of infrastructure serving this important sub region to be developed in a way which optimises the opportunity for the whole region. These new arrangements then need to be supported from within each jurisdiction. 3022631012 Page Type [E] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

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Route Development A Route Development Fund has recently been adopted in Northern Ireland, and similar funds have been in operation in the Republic for some time. In the north west, we have more experience of the Dublin–CODA flight route which is supported in this way. This flight operates twice daily and is well used by business and leisure travellers. Past initiatives to develop this route, which operated without intervention, failed. This route is now growing and we see evidence that the NW region is opening up to various types of travellers who would be unlikely to visit or invest in the North West without air access. While County Donegal residents, and visitors to that part of Ireland, constitute a substantial share of passengers on this route, Londonderry is also deriving economic benefit through the presence in the city of major recent investments from the Republic, including two new 4 star hotels. This trend of investment from the Republic will undoubtedly grow with the availability of this route. Dublin of course is also an international hub airport. Without route development support providing the catalyst, development of the obvious opportunity which this route presents would not happen.

Other It is anticipated that, if an appropriate case is established for a revised development framework (supported by the UK and Dublin governments) CODA can begin implementation of the ﬁrst phase of its plans quite quickly. One thing that this Chamber and many others is quite clear about is that the current owners do not have the skills and resources required for the strategic development of CODA. Derry City Council has recently declared a completely open mind about future governance arrangements for the operation of the airport, which is promising.

Witnesses: Mr Richard Sterling OBE, President, and Mr Garvan O’Doherty, The Londonderry Chamber of Commerce, examined.

Chairman: Good morning, gentlemen. Thank you purposes it is the Belfast Chamber of Commerce and for spending some time with us and agreeing to give it is misnamed the Northern Ireland Chamber of evidence. Before we start, Gregory has got an Commerce. It is a Chamber of Commerce in its own interest to declare. right, as is the Londonderry Chamber of Commerce. Mr Campbell: I just want to declare an interest. I am The two airports in the Belfast area are members of a member of the City Council and was formerly a the Northern Ireland Chamber of Commerce and member, some 10 years ago, of the Airport City of Derry is not, therefore if the Northern Committee on the council. Ireland Chamber is Belfast-centric, one would expect it to be pro those airports and perhaps not necessarily helpful towards the case of its non- Q124 Chairman: Gentlemen, we have got three member, which is why we thought it was important evidence sessions and they are probably going to last to draw out the distinction. about half an hour each. As I said, you are very Mr O’Doherty: If I could further expand on that welcome and we are grateful to you for taking the point. One of the great concerns for us in this area is time. The Committee is trying to take an all- when we look at the GDP make-up in the North and encompassing look at air transport in Northern we see that the GDP percentage is 67% skewed Ireland and it would be impossible for us to do that towards the public sector, and when you look at the without having a very good picture of what is public sector and see that in excess of 60% of those happening in terms of City of Derry Airport. If I can public sector jobs are based in the Greater Belfast ask the ﬁrst question. When we looked at your area, you can understand why we have a right to feel written evidence we were, let us say, not surprised V that we have a case to make of our own and we that the Chamber would take a di erent view from should stand on our own. Then when you factor in that of the national Chamber. I think you have the cross-border element of our position and the described concerns that the Northern Ireland synergies between the two and factor in the fact that Chamber “could conceivably adopt a Belfast-centric the Northern Ireland Chamber is not the national position”. We understand perhaps why you have chamber, you can see why we are painted as the ones said that but, for the beneﬁt of the record, could you putting the wrong argument across when, in actual inform us as to how you think your view as a local V fact, we are putting the right argument from our Chamber would di er from the view that was put perspective. forward by the national Chamber? Mr Sterling: Good morning, Chairman. It was not clear in the communication that we received from Q125 Chairman: What links do you have in terms of the Northern Ireland Chamber whether they business links in terms of Donegal? Are they feeding had had a direct approach from the Northern into your discussions? Ireland AVairs Committee. It is a common Mr Sterling: There is the North West Chambers of misunderstanding and, indeed, you have already Commerce Initiative which is a grouping in the made it this morning, calling the Northern Ireland North West of the Chambers from Derry, Strabane, Chamber the national Chamber. To all intents and Limavady and Coleraine, and on the other side we 3022631013 Page Type [O] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

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30 November 2004 Mr Richard Sterling OBE, and Mr Garvan O’Doherty have Letterkenny and Gweedore and others will join demonstrate that with empirical evidence of cases in in due course. This is a voice for business in the the past. If you look at the history of airports across North West. It recognises that there is an the UK and look at the growth patterns, if you look international boundary that divides this economic at Manchester Airport and track its growth over a region but the economic region does speak period of years, one of the reasons it has grown has increasingly with one voice on issues such as been because the infrastructure and facilities have infrastructure and economic improvement. been in place and the routes have been developed that are meeting consumer demand. The key for all Q126 Mr Bailey: The number of passengers using of us is meeting consumer demand. We are very the airport has increased significantly over the past bullish about being able to drive further passengers 10 years, admittedly from an extremely low base, in and we can demonstrate and provide evidence in and I believe there has been further growth with the due course. We will follow our presentation with a introduction of new routes. What is your view of hard copy report to you. potential growth? Mr Sterling: It is not the market opportunity or the economic viability of the route that is causing Mr O’Doherty: Well, the airline industry itself is set Y for a five-fold growth over the next 20 years in terms Ryanair to have some di culty with its plans here, of volumes of passengers. One of my interests is on it is really that they are moving to larger aircraft and, as I have already mentioned, there are some the tourism side. One of the key issues for us is Y getting people into this area and also the people who di culties with the future development of this travel to this area want easy means of access. I can airport that are constraining Ryanair’s plans. As tell you that from the tourism sector, the growth Garvan has said, the opportunity is there and the potential is enormous. From the experience of the demand is there and once the demand is there the airline industry, the statistics are there to show that operators will follow through. they are expecting an unbelievable growth in their industry. We have got to have the attractions and the Q128 Mr Pound: Mr O’Doherty, you just referred to infrastructure in this area to drive the passengers in. some data that you were going to submit, some In terms of the tourism industry and the base that we empirical evidence, but I have to say I was almost are establishing here with increased hotel rooms and caught up short with what you said. It seems to me the walled city being one of the five signature like build the baseball field and they will come, or projects of the Northern Ireland Tourist Board, on a provide and then people will follow. Is this micro-economic planning perspective we are getting absolutely the case, that you have got data that says very well placed and we will expect the airport could if you provide the routes, provide the slots, that hit optimistically, on the right routes, up to 800,000. usage then follows? Certainly if it was solely a private sector operation Mr O’Doherty: Yes. The GDP percentage in the that is a target that the private sector would be North in terms of tourism is circa 2%, down South setting for the airport. it is 6 to 8%, in the Caribbean it is 80%. What am I Mr Sterling: If I could just add that there has been trying to say to you? I am trying to say that tourism impressive growth particularly over the last five will be one of the biggest growth sectors in the years where we have seen at this airport more than North. If the peace process and the work that is double the number of travellers. The catchment area going on delivers the result that we require, or we has expanded very considerably, particularly with wish, then the tourism sector per se will be one of the the Dublin route coming on, which is seen as being drivers of the Northern Ireland economy in the strategically important. There is no doubt that future and we will demonstrate to you how we can previously untapped markets have been opened and grow the tourism industry. The Tourist Board’s five demand via this airport undoubtedly exists and signature projects approach to the North is spot-on operators are responding to that demand. One of the and is one of the ways to bring people in. Within Y di culties of chasing further expansion is that there Ireland itself, the American tourists and other UK are constraints which block the future development and ROI tourists have seen the Killarneys, the of the airport and we hope those are in the process Kerrys, the Dublins, they are looking for a new of being resolved. experience. From the tourism perspective, we can demonstrate to you that there will be enormous Q127 Mr Bailey: That is a fairly bullish assessment, growth in people physically to this part of Ireland. In if I may say so. At the moment current proposals terms of other airports, we can demonstrate to you seem to be heavily predicated on Ryanair’s how they have grown their volumes of passenger commitment to expansion of services from the traYc by increasing consumer demand and also airport, but there is some doubt over that. How providing the routes that consumers want. concerned are you about the dependence on one low Mr Sterling: Derry is situated in an area at the centre cost airline? of a part of Ireland that is an Area of Outstanding Mr O’Doherty: If we had the right infrastructure in Natural Beauty. You have got the Causeway coast, place within the airport itself, we are very confident and “the Causeway coast and the Glens” is another that there are airlines other than Ryanair and we one of the five signature tourism projects, right would not want to be dependent on Ryanair per se across to the west coast of Donegal. Through the to develop the airport. From an industry airport we are seeing people who have chosen to perspective, we can assure you that if the routes are live here and commute to the UK mainland. there the passengers will take up the routes. We can Increasingly this is an attractive place to live. There 3022631013 Page Type [E] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

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30 November 2004 Mr Richard Sterling OBE, and Mr Garvan O’Doherty are new industries that are developing here, there are desire to locate either back oYce jobs or industrial expansion plans by new investors and out of that is jobs in this area. We are dealing with one client at the being spawned a tourism market continuously that present time who wants to bring 200 jobs here on an is very impressive. inkjet processing £30 million project. One of the critical factors for him in making the decision will be Q129 Mr Pound: Do you work with Bord Failte on the airport to bring in scientists. Also, we are dealing this? with three firms in Dublin and London who want to Mr Sterling: Tourism Ireland, which is the Northern bring back oYce jobs here and airport access is a key Ireland Tourist Board and its counterpart in the driver for the projects. That is only from my own South, are working together on an all-Ireland business’s perspective. If you look at one interesting tourism product. factor in terms of business, if you look at the work of the core cities group, which probably you will be Q130 Mr Pound: Thank you very much indeed. You familiar with in England, eight cities of England participated in the steering group which has been set have bunched together and basically they are trying up to consider the strategic development framework to plot the way forward and Sir Michael Parkinson for the airport. Is it possible to ask your view on the from John Moore’s University, one of his findings is current proposals for terminal infrastructure, that for a city to be recognised it must have two expansion and runway? things: it must have a university and it must have an Mr Sterling: The steering group was set up following airport. We are trying to demonstrate to you that the representations to the Secretary of State recognising airport is vital in terms of the business sector also that there are constraints on future development of and we can demonstrate that we have investors who the airport and the need to overcome those. There will locate in this area. From the business are a series of complex issues and we needed to bring community there is a very bullish attitude towards clarification to those issues. It was agreed, with the the airport because it allows us to go to London or help of the Secretary of State, that a steering group Dublin, do our business and come back and vice would be formed involving public servants, that is versa. senior oYcials from the OYce of the First and Mr Sterling: If I could just add from my own Deputy First Minister from the Department for business interests. I am Managing Director of Regional Development and from the Department of Coolkeeragh Power Limited which owns and Finance, as well as the Strategic Investment Board, operates the power station several miles from here. Londonderry Chamber of Commerce and Derry Recently we had a major expansion of the activity City Council. The group was chaired by the town there with an investment jointly with ESB, the clerk from Derry City Council. It is a confidential Electricity Supply Board in the Republic of Ireland. report which has been submitted to the Secretary of It is a £200 million investment and the new power State and we are awaiting a response to that. It does station is almost completed. The construction was identify the issues quite clearly with helpful overseen by a major Austrian company, VA Tech, suggestions on how a number of those might be one of the largest corporations in Austria. The taken forward. The report is a confidential report at airport greatly facilitated the whole construction V this stage. e ort and the overseeing of the management of that construction project. Particularly the direct route Q131 Mr Pound: I am not trying to press you on this, from Dublin was strategically important to the but is it possible to give us a general indication on a senior team within ESB allowing them to have easy scale of warmth as to whether by and large you access into the area but also the team who will be would be in favour of the expansion of the airport? taking forward the operation of the power station, I rather get the impression that you are, if you do not which will be led from Dublin, can get here in the mind me saying so. morning and go back in the evening. That avoids a Mr Sterling: I think what I can say is— four to five hour car journey each way. What we have seen is a considerable spin-oV from that where not only do we have access to senior people from Q132 Mr Pound: The recalibration. that particular major semi-state corporation but Mr Sterling: What I can say is that the steering also their friends and families are coming for group, which is a very unusual public-private weekends and for visits and we are seeing a lot more partnership, if you like, did approach the subject people than we expected. with a “can-do” attitude. We were all looking for positive conditions in which the further development of this airport could be taken forward Q134 Mr Pound: Shortly we will be seeing a group of and I think we have found them. people who are opposed to airport expansion and last night a small group of us forced ourselves to do Q133 Mr Pound: What do you think is the general a number of informal face-to-face interviews with feeling in the business community and amongst local people during an investigation into the hospitality residents as to the proposals? provision in the City of Derry and virtually Mr O’Doherty: In terms of the business community, everybody we met was absolutely up for the airport: it is important that you broaden out the demand that they loved it; they valued it; they felt it was incredibly we see for the airport rather than just the tourism important to them as local residents and as citizens sector. We do a number of property developments of this city. This is an unfair question but I will ask and we are actively dealing with clients in terms of it anyway. Do you think that view is more widely 3022631013 Page Type [O] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

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30 November 2004 Mr Richard Sterling OBE, and Mr Garvan O’Doherty representative? Do you think that we actually felt the Mr Sterling: I think the first step would be the pulse last night, as much as we were still capable of establishment of something like a shadow board feeling anything at one o’clock in the morning? which would bring in business involvement and, Mr O’Doherty: I think so. When you look at the indeed, business practices to help with the strategic charter travel that was available this year and you development of the airport rather than more of a look at the uptake, the consumer is saying they want focus, as I think tends to happen at the moment, this product here, they want to use the airport, it is which is more operational, exploring ways in which very accessible to them and it is important that we in the deficit could be reduced and perhaps the airport Northern Ireland, we in the UK, look at the broad made more attractive to other investors in the future. range of what society needs rather than our own I think it would have to be a relatively measured individual experience of the eVect of any change in process whereby we go to a first step of establishing society. What you have seen is clearly a reflection of an interim board and allow that board with the society in this area saying “We need and we want wider interests to take forward the best way in which the airport”. the airport can be developed in the future. Mr Sterling: We have had a loud and clear message from our members in the Chamber of Commerce Q137 Mr Campbell: Just one final question. which is that the closure of City of Derry Airport Obviously if there was a greater private sector would cause considerable damage to investment interest in the view of many people it may well make projects in this region, to the confidence in the region the airport much more competitive and increase and to the momentum building up around the throughput, which is what I presume it was designed airport. Easy access to and from the North West, not to do. Given that there have been a number of local just at the airport but in terms of road and rail, issues from people who we will hear from in the are important factors for decisions for business future regarding objections to the extension of the investment in this region. airport, how would you see the reconciliation of the Mr Campbell: I have had to put up with quite a few private sector element, which obviously would be things throughout my political career but competing very much commercially driven, with the greater with a British Airways’ jet is a new one. need of trying to address the problems that local Mr Pound: My money is on you, Gregory. people feel the expansion of the airport oVers? Mr Sterling: Clearly there are issues for the local community here and people who may well be Q135 Mr Campbell: The Chamber has indicated that aVected by the further expansion of airport activity the airport has been operating at an increasing and those issues need to be dealt with very sensitively deficit for some time. Also, you have indicated that and we presume through Council and through there are a number of innovative arrangements and government there are processes and protocols that I think you were hinting at some of them in your will deal with that. Our view is looking at the social earlier answers. Could you elaborate on what you and economic and, indeed, physical development mean by those “innovative arrangements”? going forward for this city and for this region, the Mr Sterling: First of all, from what I have learned airport is a very important tool in opening that from my involvement with the steering group, it is whole process up. It is worth mentioning that both not unusual for regional airports to operate at a governments have recognised this city and this deficit. While the beneficiary for this airport is the region, the city in particular, as being the regional wider region, a very wide region, the deficit is carried capital and the transportation hub of the North by Derry City Council, and they are to be West corner of Ireland. To allow that to be fulfilled, commended for that. It is obvious that with diVerent it is clear that the airport is a major economic tool. governance arrangements which could more easily Mr O’Doherty: If I can just add some further points. exploit the wider opportunities that are available in There is no doubt about it, the private sector and around the airport—there are some commercial operates diVerently from the public sector and we opportunities that are pending at the moment which have an urgency and a drive and a “will-do” attitude we are all very excited about at the moment—and if about us and that is what the airport needs in terms those kinds of activities could be taken away from of maximising the resource. In terms of the Derry Derry City Council and run with a diVerent board area, we have one of the youngest populations in structure, with freer opportunities to make Europe. We have a duty to provide opportunities for investment decisions and encourage new investment those young people to stay here, be they Catholic beyond the remit of the Council operating an or Protestant, we have to provide employment airport, then we believe that would be very opportunities and the airport is integral in playing its important in terms of finding ways to reduce the part in allowing us as citizens to deliver a future for deficit. I understand that Derry City Council are well our young people. There may be individuals within V disposed to such examination. the area who su er and that is regrettable but it may well be a price that we, as society, have to pay if we are to develop society for the benefit of all. We have Q136 Mr Campbell: If I could take that a bit further. to get this in context correctly. In business itself the In terms of private sector involvement, you have Chamber has diVerent firms on its books who indicated that the Council are well disposed towards support the Chamber. From time to time that but how might you envisage that happening competition comes in from outside and we cannot over the next few years? say we cannot encourage this person to come in or 3022631013 Page Type [E] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

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30 November 2004 Mr Richard Sterling OBE, and Mr Garvan O’Doherty not because of the current set-up, business is about Q141 Mr Hepburn: My question has more or less hardnosed, hard edged, leading edge perfection and been covered, but what I would be interested to that is what we have to be with this airport also. know is has there been any co-operation between the Mr Sterling: Can I just add a supplementary to that. Chamber and similar bodies across the border to As part of this whole drive to improve the sub- promote job creation? I think you have more or less region, government has established the only urban covered what function the airport plays in that. regeneration company in Northern Ireland in Derry, Mr Sterling: I have already mentioned the North and that is Ilex Ltd, the urban regeneration West Chambers of Commerce initiative where the company. They will drive through the regeneration Chambers of Commerce do work together to of the city over the next 10 years or so. promote investment and encourage investment. One of the sad things about the region is that it is a social Q138 Mark Tami: The Dublin to Derry route is and economic entity but it is divided by an currently supported by a PSO and I understand international boundary and over seven or eight that the Manchester to Birmingham route has generations now we have found that those also received subsistence through the Route communities have been sitting back to back rather Development Fund. How important are these routes than co-operating. The business community is very to the business community? anxious to redress that as quickly as possible. What Mr Sterling: I have already mentioned the Dublin we are already ﬁnding is that in the travel to work route, which is opening up the North West as a area from this city, which includes Letterkenny and potential investment location, not just for the Buncrana in County Donegal, there are already business I have mentioned, which is the electricity constraints in the labour market that need to be generation business, but there are two major hotels addressed on a joined-up basis between Dublin and that have opened in the city, both with interests from Belfast. There are issues and infrastructures the Republic, and there is a major gas pipeline which that need to be addressed on a joined-up basis is being developed across Northern Ireland bringing between Dublin and Belfast, likewise on natural gas to the city here developed by a major telecommunications, broadband and other high semi-state in the Republic. The Dublin route has speed telecommunications. The Chamber is working gone from zero to almost 30,000 passengers at the with sister chambers but also with IBEC, the Irish end of 2003 and continues to grow. Without the PSO Business and Economic Council, through its North from the South that just would not happen because West oYce in Donegal town, to work together with having two ﬂights a day, being able to get up and both governments to point up the need that if this down, that availability would not be there. Through sub-region is going to be developed in line with a similar scheme that is now operating in Northern government policies to improve the inadequacies Ireland, these new routes to other locations are and the deprivation and high unemployment that available and we expect to see exactly the same thing exists in this region then such a joint approach is happening there. needed and the airport and other access and infrastructure issues do need to be addressed as part Q139 Mark Tami: Do you see that as a long-term of that. Those business interests are very solidly thing? focused on those access issues. Mr Sterling: The only model that we can look to is the model in the South. The Republic have been Q142 Chairman: Gentlemen, we have kept almost using the PSO scheme for some time to support exactly to the 30 minutes that we put aside. regional airports, and there are quite a number of However, we are always conscious that there may be them on the island. This is the only one in Northern questions that we have not asked you that you were Ireland and critically important to development in expecting and wanting to give an answer to, so this future. is the opportunity where you can answer those questions even though we have not asked them. Is Q140 Mark Tami: Bearing in mind what you have there anything else that you wish to add? said about those routes, are there other routes that Mr O’Doherty: I think we are content that we have you think would need to be supported in order to made a good case. help business? Mr Sterling: My view would be that is an issue that Q143 Chairman: Thank you for coming and giving would be taken forward as part of the strategic evidence, it is appreciated. development of the airport. Undoubtedly, there will Mr Sterling: We would like to leave with you a be other routes but I cannot identify them for you. I summary of the evidence that we have given today know there is some interest in a direct route to that we will be making public and, as Garvan has mainland Europe. The potential opportunities that said, we will follow up with some further exist for such routes would need to be examined but information. we have not done that. Chairman: Thank you, gentlemen. 3022631014 Page Type [O] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

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Memorandum submitted by Stop Eglinton Airport Evictions Group Stop Eglinton Airport Evictions is a group made up of people opposed to the proposal by Derry City Council to extend the City of Derry runway in a westerly direction and also carries the opinions of people in the wider council area concerned at the airport’s annual cost to the ratepayer. Most of the documents quoted in this submission were those apparently used by Derry City Council on or prior to 23 October 2003 when the council formally decided to proceed with the westerly extension and other associated development at City of Derry Airport. This group believes that the Northern Ireland AVairs Committee should examine City of Derry Airport and that no ﬁnding be made available or any development take place until the Inquiry publishes its conclusion.

The Development of Capacity at Existing Airports This is obviously the most relevant heading within the inquiry given that Derry City Council have already decided to proceed with development of the airport subject to availability of central Government funding. Before dealing in detail with the physical issues of the development it would be important for the committee under the other headings of this inquiry to establish City of Derry’s role within Northern Ireland, its necessity in the first place and the need, if any, for an increase in size of the airport infrastructure. Derry City Council apparently considered all options in relation to the expansion or otherwise and found that they must develop and enlarge the airport. Having reached this decision they also had to decide the direction of the runway extension. There were three possibilities, extend east, extend west or construct a new runway pivoted to the north of the existing runway. The council decided on recommendation from Donald Robertson an “aviation expert” that the only option was to extend the runway in a westerly direction. This extension as proposed by Derry City Council would necessitate the acquisition of land and the demolition of at least 17 homes and businesses in Doneybrewer Road and Kee Road area. Several other homes will be severely blighted by this proposal even though they will not be demolished and some farmers would be aVected by loss of land and loss of access etc. The removal of beautiful countryside scenery will impact on the lives of many people in the area. Within this area there would be significant loss of established trees, hedgerows and natural habitat. An alternative pivoted runway has been suggested and the land on which this would be built is reclaimed land, which has much fewer hedges and possibly no established trees so the environmental impact would be much less. No homes would be aVected and only a few industrial type steel framed buildings would have to be removed, most of which are old wartime hangars. In light of this the current westward proposal does not appear to be consistent with the government aviation white paper, which states that where airport expansion is necessary (and it is doubtful if this is necessary) “landscape and built heritage should be protected where possible”. The three options analysed by PWC, summarised in the Executive Summary, all have positive Net Present values but the other two (extend to the east; pivot and replace runway) do not appear to have been investigated thoroughly: In particular, the third option (pivot and replace the runway) has been dismissed on a tenuous argument concerning electricity pylons. The City Council had three runway options to consider. Page 3.13 of the Donald Robertson report shows the criteria used to evaluate the options, however, the table on page 3.15 shows this applied to only two of the options, the pivot runway does not appear to have been given the same consideration as the east and west options. The pivot option has been rejected on the basis that two electricity pylons are too high and that it would be more expensive and therefore diYcult to get public finding. In dealing with these two issues it is important to remember the date that the council took their decision was 23 October 2003 and that the technical report was presented to council in June 2003. Londonderry Port and Harbour have confirmed to us on 28 October 2003 that no approach was ever made to them in relation to the possibility of lowering the pylons and Donald Robertson confirmed at residents meeting on 24 October that no contact had ever been made with Northern Ireland Electricity regarding lowering or removing the pylons. The harbour did also confirm that the channel does have suYcient depth to allow the cables to be placed on the seabed. ME have confirmed that surveys of the sea would be necessary before assessing the feasibility although we understand a similar project was completed under the Lagan near Ravenhill/Stewart Street a few years ago. These facts prove that the first argument by Derry City Council regarding technical reasons for not selecting the pivoted runway has not been properly researched. As for the financial argument, the above information proves it was impossible to cost this option, so straight away any basis for a proper financial study is flawed. The report does seem to suggest that it would be obvious that a new runway would be more expensive than an extension. This is possibly true in the short term, however, a look at the long term issues surrounding the project is necessary to make a proper judgement. The Robertson report states clearly on page 3.11 that the present runway “would have to be strengthened” but that has not been taken into account on any financial projection we are aware of. The report gives a cost of extending the runway but does not include the cost of land and property purchase. The land for the pivot option would, considering that no houses are involved, probably be less valuable than that of the current proposal. There has been some mention of acquiring land for industrial development around the airport, specifically that land to the north of the runway where the new pivoted option would be located. If this land were to be used for industrial use a new access road would be required as the existing Station Road would be unable to carry industrial traYc. 3022631014 Page Type [E] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

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If on the other hand the council were to move the runway they could use land to the south of the present runway for development which could be accessed from the main A2 road thus saving on road construction. Another consideration is that Robertson states that a partial parallel taxiway will be required as the passenger numbers rise. The current runway, which he refers to as having to be abandoned, could serve as part of this taxiway, again saving on future construction. In the long term when all factors are considered the pivoted runway may not be as expensive as the technical consultant had envisaged. In addition to the above there are other factors that do not appear to have been considered. The electricity cables leaving Cookeeragh power station in the opposite direction to those previously mentioned cross the current flight path and they rise over high ground near Carnmoney, which is much closer than the pylons at Culmore. If the runway is extended west then it comes even closer to these cables and the gradient required to clear them becomes steeper. We find no account of any calculations of this in Donald Robertson’s report. Another factor is that the current flight path is directly over the built up area of the city over which we believe there is an air space height restriction with the exception of military aircraft. The line of the new runway would take aircraft away from this restricted area and away from built up areas both in the city and in the locality. Again we find no mention of this in the report. The Council also had an option to extend east but disregarded this because legal issues would not be resolved within the time frame. We find no evidence of a time frame other than the one imposed by Ryanair and this was very evident on the front page of the Derry Journal on 19 September 2003 shortly before the council took their decision. In relation to the eastern extension the RSPB have confirmed that only one meeting lasting less than one hour took place with Mr Robertson and that most of the content of that meeting related to matters of the 1999 extension. The council have confirmed that no minutes of this meeting exist. It appears from correspondence with the RSPB that not all possibilities have been explored in detail and we have also contacted the Crown Commissioners who own the land and they have confirmed that they have never been approached about an extension. Just as in the case of the pivot runway option no detailed design has been produced for an easterly extension and therefore no costing was possible. The estimated capital costs presented to Derry City Council by Donald Robertson Associates (October 2003) are £18 million !/" 20%—these costs exclude the cost of land and properties. Previous experience (see below) suggests that there will be substantial overrun and the eventual cost will be in the range of £25–£30 million. It seems strange that the report gives projected costs for the extension but excludes the cost of property, which in this case is likely to be a significant figure in relation to the overall project. From all of the above information it appears that the western extension is the only option to have been costed and indeed the only option to have been given serious consideration. On this basis we have formed the opinion that the technical report did not look objectively at all possible scenarios in relation to the long- term solutions at City of Derry Airport. We have asked for a copy of the brief given to the Consultants but Derry City Council have refused to make this available. We have noted that the current runway at City of Derry airport is actually 23 metres longer that the runways at Belfast City Airport and Aberdeen Airport. The statements made by Derry City Council that the runway needs to be extended to increase the passenger numbers are not consistent with the figures for Belfast and Aberdeen. It appears that Ryanair also operate at Aberdeen however there are no plans to extend the runway there. Even if Derry were to achieve their target of 800,000 passengers they would still be operating at only 30% of Aberdeen’s present capacity. We find no evidence to prove a longer runway will improve the financial situation at City of Derry. Independent consultants have concluded that 737–800 aircraft could operate safely and eYciently from the existing runway. Belfast and Aberdeen have both confirmed that 737–800 has been operational from their runways which calls into question the necessity for this extension in the first place.

Specific Challenges Facing Northern Ireland as a Peripheral Region of the UK The argument by Derry City Council in favour of this project often mentions the peripheral location of the North West and the need to have air links to other regions of Europe. This appears to contradict the Government White paper on aviation, which states that Belfast International should be supported in an eVort to connect Northern Ireland as a region with Europe. City of Derry Airport is located less than 60 miles from Belfast International and it is not clear if Northern Ireland can support two international airports. The decision to expand City of Derry airport was based on projected passenger numbers which were highly dependent on Ryanair. The passenger numbers on which the Net Present values were based were “829,000 based on Ryanair operating a number of European routes by 2010” (PWC p 13). Even if the extension were completed today, to get from the present (claimed) 217,000 passengers to the projected ﬁgure would require an annual increase of just over 25% per annum. But “no commitment has been given by Ryanair to expand their existing service or introduce new routes” and “if none of these routes and no additional Stansted rotations are established, the Net Present Value of the main options becomes negative” (PWC p 9) that is to say it becomes a Net Present Cost and the ﬁnancial burden on the public becomes much heavier. A recent survey has shown that the dramatic increase in the low cost airline sector may have reached its peak and therefore the phenomenal growth predicted by Derry City Council may be more diYcult to obtain. 3022631014 Page Type [O] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

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Derry City Council claims that the airport brings huge financial benefits to the North West ranging from £12 million to £24 million per annum. No evidence is available to support these claims but the PWC appraisal does address this issue. PWC found the amount to be only £8.5 million per annum but since only 20% of passengers would not have made the trip if the route (Derry-to-Stansted) had not existed, only the 20% additional spend has been estimated to amount to currently £1.7 million per annum (PWC p 2). We have been told by supporters of the airport project of the necessity of the airport for economic prosperity and the creation ofjobs. The airport has been in existence for 25 years but little proof appears to exist of the actual jobs in the North West that would not have been created if the airport had not existed. The PWC report shows that 59% of businesses surveyed do not find the airport even “useful”, and of the other 41% who do, the report does not tell us what percentage find it “vital” as opposed to just useful. It has been mentioned that directors of companies travelling between sites in diVerent countries would use the airport. This may well be the case but does evidence exist that company directors actually use the low cost services such as those provided by Ryanair. A more likely case for company directors is that they would use the more frequent business services such as those available at Belfast or they might travel by small private charter aircraft, but these would not require a longer runway. The financial benefit quoted in the PWC report from what we have seen only gives inward spend and does not take account of any outward expenditure. For example by oVering cheap fares to London people may go on shopping trips to spend money that would otherwise have been spent in shops in the North West. Likewise promoting more foreign package holidays may detract from holidays and breaks taken in the locality, but it appears no survey of this was undertaken. It is also interesting to note that some of the figures in this report were “advised by Ryanair”.

The Effectiveness of the Route Development Fund

This group is not in possession of the facts of what route development fund is currently used at City of Derry. We do believe that the Dublin route operates under some sort of public service obligation and receives funding for this. The Derry⁄Dublin route has operated for short periods with various carriers over a number of years. It appears that throughout the years the route was not sustainable in the absence of public subsidy and there is apparently no commitment from the current operator to continue long term in a normal competitive market. Indeed this asks the question that if the airport had to run without subsidy from the ratepayer and charge the normal market prices how many routes are really viable in the long term. It must be remembered that Northern Ireland’s other airports are required to make profit as they are privately owned and do not benefit from the same public subvention as City of Derry. The ratepayer subsidy to the airport is currently in excess of £1.2 million per annum. Nothing in the PWC report suggests that this will decrease after the proposed extension because “there is a risk that the expansion to current routes and passenger numbers that have been projected will not be realised” (PWC p 9) In the PWC report around 600,000 of the predicted 800,000 passengers are attributed to Ryanair. Historically Ryanair has generated very low revenue at the airport. From Ryanair’s current business model and their ongoing, much published, deliberations with other airports in Europe nothing would suggest that any further deals with them will provide the revenue needed to make this airport economically sustainable. We note from the budget for this incoming year that the subsidy from Derry City Council to the airport is in excess of £1.5 million. Since these reports were produced the changes in the market will not enhance the situation either. Ryanair have announced that they are to withdraw some of their services from Derry in October 2004. It is noted on p 10 of the PWC report that the city ratepayers will be “unable to finance all of these revenue and capital commitments”. It mentions alternative funding and in press statements Councillors have suggested funding from neighbouring Councils. We now note from the minutes of the Strabane District Council meeting at which the airport manager Mr Seamus Devine gave a presentation on behalf of Derry City Council it was stated that other Councils should not be expected to fund the airport and funding should be made available from central government. Given the circumstances surrounding the previous management of the airport by Derry City Council, we see nothing to suggest that they can manage a project of this scale in the fashion necessary to make the airport sustainable. Previous experience suggests that a worst-case scenario, in terms of both costs and benefits, must be assumed. The last extension to City of Derry runway (1998–2000) resulted in a 60% overspend on an initial contract of just under £2.5 million. It also resulted in a report submitted to Derry City Council (15 May 2000) by the then acting Town Clerk and Chief Executive. He recommended several changes in management and in particular he wrote: “In order to tighten up the management of the Airport and to prevent anything of a similar nature occurring again, the role of the Airport Manager must be examined critically and confined to the airport operational sector of management” (Report to Council p 41) So far as we can discover, none of the recommendations have been put in place and, the Airport Manager is currently behaving in exactly the same manner as he did during the last mismanaged extension to the runway at City of Derry. The Chairman of the Airport Committee, William Hay, has admitted that the 3022631014 Page Type [E] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

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Council have taken the airport as far as they can and has also stated that the airport should be in the hands of the private sector sooner rather than later (Londonderry Sentinel 28 January 2004). He has also stated that the current deal between City of Derry Airport and Ryanair is legally “water-tight” (Derry Journal 13 February 2004). This would seem to be a rather presumptuous statement from the Airport management considering that the European Commission have not investigated this case yet. Another issue of concern to us is that Mr Hay openly stated in the Council Chamber and on BBC Radio Foyle (24 October 2003) that “he welcomed a legal challenge” from the residents. Ironically, the Council would be using public money to defend such an action while we as private individuals and ratepayers will be funding our own legal case.

The Potential Impact for Northern Ireland of Wider Air Transport Issues on the Island of Ireland As mentioned earlier the Committee must establish if there is a viable long term place for City of Derry Airport within Northern Ireland and then perhaps within Ireland as a whole. The airport apparently serves part of North Donegal even though Donegal has its own airport at Carrickﬁnn. Some observers have stated that if the North West is to have a viable airport this would need to be located in Donegal at either LiVord or Letterkenny given that towns in South Donegal are as far from City of Derry as City of Derry is from Belfast International. The January 2004 PWC report to Derry City Council warns that the proposed infrastructure investment takes place in a “highly competitive air transport environment” and that “actions taken by competitors . . . could result in delays and a negative impact on the development of the business”. (p 10) On 22 March 2004 Easyjet announced four new services from Belfast International Airport to Paris, Nice, Alicante and Malaga. That development cannot be said to enhance the prospects for a ﬁnancially viable extension to City of Derry. As well as the issues mentioned in relation to new services from Belfast, which were earmarked for City of Derry Airport in the PWC report, we note from the PWC report in page 2 that City of Derry will be dependent on “displacement from other airports”. The government’s White Paper makes reference to this by stating that the extension gives “rise to a number of technical, economic and competition issues”. Again the government must balance the continuous public subsidy of one airport and the needs of the other airports that it will adversely aVect. There appears to be an urgent need to improve the road and rail network to the North West. This will obviously improve travel for those commuting to work, the transport of products and raw materials by road and onward by sea, the movement of tourists arriving on the island of Ireland in the east either by air or sea and the general day to day travel of the inhabitants in the North West. Not only this but improving the road and rail network will also reduce the travel time to the Belfast airports where a wider variety of destinations and more frequent services will always be available.

Conclusions This group feels that City of Derry Airport has developed over the past 25 years without any clear strategy. The management have reacted to situations as they arose with numerous short-term fixes. Our main concern is that, on the basis of what is in our opinion a seriously flawed project, if funding is made available now, part of the Doneybrewer community will be destroyed forever and the citizens of Derry loaded with an ever-increasing rates burden. Using the data from the PricewaterhouseCooper report to Derry City Council, we have grave doubts about the financial viability, the costs and benefits, the projected passenger numbers on which viability is based and the competence of the existing management to manage eVectively a project of this scale. We have serious concerns regarding the planning issues surrounding this development. Council have indicated at the resident’s meeting that it will do “everything possible to influence the planning authorities” in relation to planning permission for residents. Our concern is that, as the Council are the developers of this project, they may also have “influence” in the planning decisions for the extension. We are resolutely opposed to the existing proposal and would ask that if Government funding is to be made available, it be given on condition that an alternative direction for the proposed runway extension is found. 3022631015 Page Type [O] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

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Witnesses: Mr Kieran O’Brien and Mr George Johnston, Stop Eglinton Airport Evictions Group, examined.

Q144 Chairman: Good morning to you, gentlemen. cost of having the airport. Originally when we had On my list I have got a list of three potential the first meeting of the people in homes immediately witnesses and I can see Mr Johnston and Mr O’Brien around the area when this news first broke there are here. Originally I had Mr Brian McLaughlin on were about 40 homes represented. We then called my list. two public meetings. There was a meeting in Mr O’Brien: He is unable to attend this morning. Eglinton in the village hall last November which was full to overflowing and we estimated something in the region of 400 people attended that. There was no Q145 Chairman: Thank you. You are very welcome. dissenting voice, no-one speaking in support of the Previously you have heard how the Committee airport extension at that time. At a further meeting conducts its business. We have set about 30 minutes in Derry City, that was more representative of for this session. Also you will have heard the people concerned about the extra cost to the evidence that has been given and we have tried to ratepayer. keep abreast of the issues ourselves following them in some of the local newspapers, so the Committee does not come to the issue without some knowledge. Q146 Chairman: There was a suggestion in one of We do appreciate you taking the time to talk us the newspapers, and I have tried to find it, that there through the concerns that you have got. I wonder if were 17 rather than 21 and the numbers still opposed I could ask a general scene setting question in as were very small, and I think it mentioned three. Of much as in the evidence that you presented to us in the 17, it was suggested in one of the articles that written form you informed us that your group is there were only three homes that were still opposed. made up of people opposed to the proposal to extend Mr O’Brien: Unfortunately, that has been the line the runway but also is part of a wider group of of propaganda used by Derry City Council. people in the wider council area concerned at the This weekend, in anticipation that that line of airport’s annual cost to the ratepayer. There were propaganda would come forward here, we managed two issues in there, the issue related to expansion and to get signed signatures, which I can make available, then the issue related to cost to the ratepayer. Could of 13 property owners who fully support the you give us some breakdown in terms of the number presence of this group and their eVorts to stop the of people involved in terms of those who are in the westward extension of the airport. Unfortunately, group, those you are representing, so we have got an we do not like to be using those figures broken down idea. This is not a question to trick you and say “that as to who is for and who is against in the way that is a very small number, is it not”, or whatever, it is to some of the people connected to Derry City Council try to help the Committee to understand how many have done, we see this as a divide and conquer tactic people are aVected, how many people are in the being used as a type of intimidation. Some people group and what the balance is in terms of the have even described it as psychological warfare by campaign to either stop the evictions or because of Derry City Council against its own citizens. the wider issues related to the ratepayer and the cost of the airport. Q147 Chairman: I appreciate how diYcult it is for a Mr O’Brien: Firstly, the group is opposed to the group without resource, but have you been able to westward extension of City of Derry Airport, not carry out any general surveys in terms of what opposed to the extension full stop. The group has people’s feelings are towards this issue? proposed what they see to be the best solution if the Mr Johnston: The only way we have been able to airport requires expansion, which is to build a new gauge it is there have been two public meetings, one runway. The council had the option of a westward in Eglinton and one in the city, and there is another extension, an eastward extension towards Lough system for considering people’s opinions known as Foyle or a new runway slightly pivoted to the north the citizen’s jury and we had a citizen’s jury on this away from where we are sitting now. We are where you have people speaking on a jury deciding opposed to the westward extension which will aVect which is the strength of the case. At none of those the homes. We believe around 21 properties would meetings did anybody suggest that they were have to be purchased by Derry City Council to anything other than in favour of the Doneybrewer complete that westward extension. We do not speak residents, although, as Kieran said at the beginning, for all of those people as there would be a few within a lot of that within the city is a sympathetic vote that group willing to sell their property. Outside of because the main concern in the city is the the immediate proposed boundary there would be £1.5 million a year subsidy which, if the proposed somewhere in the region of about 30 other homes plan goes ahead, will increase and it is admitted whose owners would consider themselves to be within the Summary Report from blighted, both their home and family life blighted by PricewaterhouseCoopers, which is the document on the proposal to extend the runway there. Within which we rely and on the council’s website, that if the Eglinton Village and surrounding areas there are a proposed expansion takes place, whichever number of people who would be concerned about direction it goes, whether they choose to miss the the increased air traYc and noise and pollution that Doneybrewer houses or not, that will increase to £2 would be associated with that. In the wider City million or £2.5 million running costs a year. That is Council area, ratepayers, there are people who, the concern within the city and certainly the concern while sympathetic to the cause of people who may of a lot of people in Eglinton itself even though they lose their homes, are more concerned about the are sympathetic to the Doneybrewer Road people. financial burden to the ratepayer of the continuing What they see in Eglinton is a milch cow for rates 3022631015 Page Type [E] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

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30 November 2004 Mr Kieran O’Brien and Mr George Johnston with very little public service provided within the Mr Johnston: Absolutely. now vastly expanded village of Eglinton from what it was when we came here 25 years ago. They are very Q152 Chairman: If it helps the Committee, in our angry about the fact that the third highest element in evidence from the CAA, which I think will be the rates goes to subsidising what they see as a published, that 20% increase is the average annual failing airport. growth between the years 1993–2003. Just for clarity, in 1993 there were 31,000 passengers and in Q148 Mr Campbell: Chairman, that answer from 2003 there were 206,000 passengers. The 20% is a 10 Mr Johnston leads me on to my question. The Civil year growth from 31,000 to 206,000. To give you a Aviation Authority has supplied figures to the flavour in terms of more recent figures, the 15% that Committee which would indicate that the you quoted for this year, Mr Campbell, is also throughput to the airport has increased from an confirmed and is made up of increases in all three admittedly low base about 10 years ago year on year categories: domestic, international scheduled and by about 20% and the figures for the current year international chartered. That may be the best way of appear to indicate something of that order for 2004, looking at those figures in terms of looking at the although obviously we are only in November. Does CAA’s figures. I do take the point that you may want your group accept that there has been an increase of to question the CAA as to how they arrived at that magnitude at the airport? those figures. Mr Johnston: We do not, because if that was the case Mr Johnston: There are a lot of questions we would Derry City Council would be proclaiming it from the have about the figures. We have to rely on the rooftops. The figure of 20% that appears in the CAA PricewaterhouseCoopers’ report. The figures that evidence is based on the three summer months of last are presented there, on which this expansion plan is year. The growth in 2003 was 217,000 passenger based, answer some of the questions that you were movements from 204,000, a 6% increase. It is on asking earlier. The viability of this proposed Derry City Council’s website. That is the annual expansion, whichever direction it takes, in the increase. The 20% figure is based on the holiday PricewaterhouseCoopers’ report is passenger traYc. In terms of growth, the 6% figure appears in movements of 829,000 by 2010. 619,000 of those the PricewaterhouseCoopers’ Executive Summary. I would be shifted by Ryanair, 330,000 of them to do not know where this figure is coming from. I also Stansted, 103,000 each to Hahn, Charleroi and know that if you went to the CAA website at the Paris. The figures are all in there. One of the beginning of this year you would discover that their concerns that I would represent within this group is figures did not say 217,000, they said 203,000 the dismay that I feel about the way that this airport passenger movements. The CAA said that and in has been developed. None of the estimates but all of their figures year on year they said that was a 0% the expansion plans that have taken place since the growth rate. That is the CAA’s figure. European Regional Development Fund back in 1991, 1992 and 1993 have ever been met. The figure Q149 Mr Campbell: The figures that the Committee of 211,000 to make it viable should have been have got would appear to indicate something of the reached by 2000 but it was not reached until 2003. order of 20% year on year from 1993–2003. Do you dispute those figures? Q153 Mr Campbell: I think I am in for more Mr Johnston: Absolutely. competition here from the aircraft. Given the figures Mr O’Brien: I disputed those figures with the CAA of your group, do you have a corporate outlook or in February of this year and on two occasions have a diversity of views about the future of the airport, written to the CAA to ask them to clarify those about what should happen not only to the people in figures but, as yet, the CAA have admitted that they V the immediate village area of Eglinton or even the are unable to clarify the di erence between their Londonderry area as a whole but the wider North website and Derry City Council’s website. West? Do you have a view as to what the future should hold five years from now for this airport? Q150 Mr Campbell: Like Stephen Pound’s, this may Mr O’Brien: This group is saying two things. Firstly, be an unfair question but I have to ask it anyway. we are opposed to the westward extension and we Would you have any suggestion about to whom we query the reasons given by Derry City Council to should go in order to get more verifiable figures? If arrive at the decision to have a westward extension. we are getting figures from the CAA that you think We believe if the airport is to be as successful as they are incorrect, who do you think we should go to to and others intend, continuing on a west extension get the correct figures? will bring further problems in years to come. We are Mr Johnston: Go to Derry City Council’s website. saying that if the airport is to be a success then the They are posting a 6.2% increase, from 204,000 to proper way forward is to build a new runway 217,000. I would imagine if it showed anything like pivoted to the north for the reasons which we have a 20% increase they would be blasting it from the given. We are not aviation experts, we are a small rooftops. group with little resources. This is what we are saying and we were saying that before the decision Q151 Mr Campbell: Forget about the figures for the was taken last October but we felt that no-one was last 12 or 18 months, do you accept that 10 years listening to us. This decision was taken and we still ago there was nothing like 200,000 passenger feel that our views have not been taken on board. I movements? have to point out that the only documents we have 3022631015 Page Type [O] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

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30 November 2004 Mr Kieran O’Brien and Mr George Johnston are the documents that Derry City Council used on, now understand that is not going to be available but or prior to, 23 October last year, we have not had what is required is extra money, smaller sums, to any information on the workings of the steering increase the safety of the airport. If that is true, that group or on any of the proposals put forward or any is grand, but it raises another question. The last research that has taken place since then. We are not major project here, which was in 1998–99, was to privy to any of that, we only have the documents improve the safety of the airport, a contract which prior to October last year. started out at 2.7 million but ended up at 3.59 million, a 60% overspend, and now they say they Q154 Mr Hepburn: My question has more or less have to do this for the sake of safety. What I imagine been answered but, simply, if Ryanair fails to is whatever money is made available for this expand, which obviously would have a big impact on supposed safety thing or for the expansion of the this place, what do you think the likely traYc runway further down Doneybrewer Road, there will through the airport will be in the future? be very determined resistance there and very long Mr Johnston: That is a very diYcult question. Again, court cases, serious, serious delays involved in that. we have to work from the Executive Summary from Kieran can speak for himself, he lives there. PricewaterhouseCoopers and they concluded in Mr O’Brien: I think George has summed it up. Also paragraph 21: “However, there are a number of there is the issue of planning, there is no planning uncertainties associated with the project. . . Ryanair approval for that. To give you an idea, from what we is the current main low cost operator at the airport gather from the DoE road service, part of the and no commitment has been given by Ryanair to Doneybrewer Road closed for the 1999 extension expand their existing service or introduce additional and full approval for that has not yet been finalised routes”. It goes on to say various things: “It is after all this time. I imagine there would be possible that an alternative operator could operate protracted deliberations about any further closures on these routes although similar infrastructure and planning applications that will go ahead with requirements may arise. However, at this stage there any movement to the west at all. is no evidence to suggest how likely this is”. All of the consultants’ reports carry that health warning, if you want to call it that, about the potential free Q157 Mr Bailey: In your submission you mention footedness of low cost airlines. All of the reports, the argument by the council in support of this going right back to the ERDF that gave us the proposal and it refers to “the peripheral location of facilities that we have now, carry the warning that there is no way the consultants can account for the North West”. Rather than developing Derry potential competitors’ movements as a consequence Airport you seem to be suggesting that the area of, say, City of Derry having a bigger share of the should look to Belfast International Airport. Do Northern Ireland market, which struck me as being you think this is a view generally shared in this area? very relevant to the thing that you are talking about. Mr O’Brien: There are other factors which were In a way, what expansion of this airport requires is mentioned earlier, such as the road and rail very careful consideration because, there is no infrastructure, which are lacking in this area. By doubt, were they to increase their share from eight to upgrading those, that will make the airports in 10 to 12 to 15% of the air market here, given that the Belfast much more accessible from this region. Bear catchment area here is 366,000, that is the up-to-date in mind we are less than 60 miles from the major figure given in the Executive Summary, and you international airport anyhow, I am not sure what want 829,000 passenger movements by 2010, the people class as being accessible. Is 60 miles classified only way you will get that is by driving into the traYc as not being accessible to an airport? The Civil from Belfast City Airport or Belfast International. If Aviation Authority evidence to yourselves last week you do that in any serious way, given that they are seemed to bear out something of what we have said. bigger organisations, given that they are profitable When asked about City of Derry Airport, one of organisations, what they will do is price you out of their statements was City of Derry would always be the market in a savage way and they will close the constrained by the population around it and the airport. presence nearby of a larger airport. I think that would bear out something of that. There is also the Q155 Mark Tami: If the Government went ahead factor that there will always be more choice of and provided public funding, what options would be destinations and times from a larger airport than left to you as a group? from a smaller regional airport, so there will always Mr Johnston: You mean what would happen if— be that type of draw from there. Also, we heard mention earlier about charter holiday flights and Q156 Mark Tami: If the public funding was asking people on the street do they support that. For available for the extension? a lot of people whose one and only flight in a year Mr Johnston: Before Kieran answers, because his would be their annual holiday, is an extra hour up family home is involved in that, the diYculty we the road all that much of an inconvenience, have at the minute is not knowing precisely what has especially if a lot of infrastructure provided in this been proposed by anybody. The original notion was airport is for holiday charter aircraft, and taking 25 million, or thereabouts, which did not include the people oV for a fortnight’s holiday to spend their cost of the purchase of properties. That was to money in some other country could not be argued in extend it westward down Doneybrewer Road. We any fashion to be good for the economy here. 3022631015 Page Type [E] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Ev 58 Northern Ireland Affairs Committee: Evidence

30 November 2004 Mr Kieran O’Brien and Mr George Johnston

Mr Johnston: Could I just add to that. In a way, that hope of a miracle, that something will happen if only is a core question. If you were to ask people that we pull oV the trick this time. If we pull oV the trick question, as I would, they would say, “We do not and get these 829,000 passengers we are flying, if we want this airport closed but we cannot see the can do that, grand. When I say it should be closed, justification for this expansion, it will lumber us with it should be closed because it is going to close itself even more debt”. The one question is what about the unless that miracle in which they have a confident status quo. Yes, we support that. We do not want to hope occurs. see those jobs disappearing. It has done its job and Mr Bailey: I must confess, I was not expecting it has not held up any of the major developments Phillip II of Spain to be quoted in support of but, more importantly, it has not prevented any of arguments on the future of Derry Airport. the economic disasters that have happened because Mr Campbell: We do go back far in Northern of the structure of industry in this part of the world. Ireland. Once you say to people, “Are you prepared to see another 25 million spent on this and, as a consequence of that, the closure of Doneybrewer Q161 Mr Bailey: Basically you want it closed or to Road” they say “No, all that is going to do is be continued, as I think you put in your own words, increase the rate subsidy”. There are two questions, as a failing airport? support for the airport but great hesitation over the Mr Johnston: Yes. proposed expansion. Mr O’Brien: Yes. The one thing about this group is we are not “not in our backyard”. The proposal which we have oVered, and there are more educated Q158 Mr Bailey: I must admit, following the gentlemen in this room than us who very much V di erent arguments that you have put forward, and support the expansion of the infrastructure of this I will try to summarise them, one is that you have airport, is an alternative runway and it is through V advocated a di erently aligned runway which farmland belonging to our own family and some of presumably would cater for an expansion, although our neighbours who have said to Derry City I think you said earlier even that would result in Council, “You can come and negotiate for that further subsidies from the local rate payers, which is farmland tomorrow morning”. It is not a case of an issue of concern. Secondly, you have talked about “not in our backyard”, this is a case of “we will have the expansion of Belfast International with it in our backyard but, please, not in our front appropriate improvements in the infrastructure, so garden and in our kitchen”. presumably that would make Belfast International more competitive. There does seem to me to be a certain logic in your arguments which would Q162 Mr Bailey: At a huge extra subsidy, I take it? actually lead to you saying that this airport should Mr O’Brien: Yes, but if the airport is going to be as close down, particularly given the rather frail basis successful as some of the people speaking in support on which the existing route network is underpinned. of it have claimed—One thing that is missing from Do you actually want it closed? the technical report which has not been mentioned Mr O’Brien: As a group we have not said that we yet is that the technical report states that the current would or would not. runway will have to be strengthened in the future but no cost has been allowed for that. What we were Q159 Mr Bailey: I am not asking you what you have saying in our submission was as a long-term view, said, I am asking do you want it closed? looking over the next 20 years, if you count the cost Mr O’Brien: Are you asking me personally? I am of re-strengthening that runway added to the cost of speaking here for a group of people. the extension of the runway, maybe in the long-term the subsidy may not be all that much diVerent even though it may be more in the short-term. Q160 Mr Bailey: There is no reason why you cannot tell us personally and, if you like, corporately. Mr O’Brien: Personally, because our family home is Q163 Chairman: We seem to have a battle which is right next to the fence, it would be the preferable a little bit more modern than that referred to earlier. choice for my family but as a representative of a It seems to be a battle of optimists versus pessimists: group that is not necessarily the view of the group. do we believe that this airport will be viable or fail. Mr Johnston: Purely as an individual, not I thank you very much for being with us and helping representing the opinions expressed at any of the us to take evidence which, hopefully, will enable us public meetings or what people say to me, I think it to try to oVer some advice as to which side we think should be closed because I think it will close itself. I is winning that battle. As I did with the last do not think any of the targets that have been set for witnesses, I am conscious that there may be things financial viability will be met unless—I am reminded you wish to say that you have not had the what the Duke of Medina-Sedomia said when the opportunity to say. Are there any other comments Spanish Armada set out and Philip II had made a that you would wish to make? mess of the whole thing. He said, “At least we are Mr Johnston: Yes. One of the major things, not to setting out in the confident hope of a miracle”, put too fine a point on it, that we get battered with whatever that means. I think that part of the when we argue against the current proposal is that problem with Derry City Council is they are we fail to recognise the economic benefits that flow confident and they are hopeful but there is from this airport. If you read the newspaper reports something of an oxymoron between confidence and from the very beginning, we were told that it was in 3022631015 Page Type [O] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

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30 November 2004 Mr Kieran O’Brien and Mr George Johnston excess of £12 million a year, that there were figures Mr O’Brien: Hearing the previous speaker talk to back this up and we were left to confront this. about extending the infrastructure and the length of There was no way we could do that sum—we could the runway, one point that has not come up is the produce arguments to say is it a net figure and how current length of the runway, which is longer than much goes out, that sort of thing—until we got the the runway at Belfast City Airport which has two summary report from PricewaterhouseCoopers. million passengers. The City of Derry, from the “The passenger survey carried out in November figures of the Chamber of Commerce, are proposing 2003 at the airport indicates visitors to Northern an optimistic 800,000 passengers. Aberdeen runway Ireland who use the airport generate a spend in the is also shorter and I believe there are no plans to North West region of £8.5 million per annum. extend it. I have good reason to believe that the However, the survey indicated that on average 20% Ryanair 737 0800 flight is currently operating on a of these passengers would not have made the trip flight from London Stansted to Hamburg Lu¨beck had the route not existed. Therefore, the 20% and Hamburg Lu¨beck runway is 50 metres shorter additional spend has been estimated to amount than City of Derry Airport. The flight distance from currently to £1.7 million per annum.” If you are Hamburg to Stansted is longer than the flight talking specifically about the Derry area, because a distance from Eglinton to Stansted. That is a very lot of traYc comes through from the Republic, strong argument as to why Derry City Council that splits 39/61 and if you do that sum it adjusts cannot grow the passenger numbers with the current down to £1.037 million. That is from PricewaterhouseCoopers. It is not until you get the length of the runway they have. I know the previous 829,000 passenger movements per annum that you speaker said that if they did have a bigger runway get anywhere near what they estimate to be an they could attract more customers to the airport but additional spend, because this is here rather than the PricewaterhouseCoopers’ report does say that using other routes, of around about £6 million. I just other operators may require some infrastructure want to make that clear because over and over again requirements, however there is no evidence at this we have said that where we get our figures from are stage to suggest how likely that will be. I think that what we have been given and if we were given the full is a very, very important point. report from Derry City Council, not just the Chairman: It will not have escaped your attention Executive Summary, we would be able to answer that we are taking the City Council and the Board of even more of the questions that have been posed the Airport as our next witnesses, so some of those to us. questions may be asked. Thank you very much.

Supplementary memorandum submitted by Stop Eglington Airport Evictions

After hearing the evidence to the inquiry at City of Derry Airport on 30 November Stop Eglinton Airport Evictions wish to comment on some further points as follows;

Q146 In relation to the number of objectors Kieran O’Brien produced a list of signatures representing 13 properties that Derry City Council propose to purchase in whole or in part for the runway extension project. This list is enclosed (App 1). It would be preferred if this list could be kept conﬁdential and not released to the public, press or to Derry City Council. The reason for this is that some residents may already feel stressed by the threat from the proposed expansion and do not wish their objection to be used by the Council in any way that could heighten these feelings any further.

Q171 In this question about the operating deﬁcit Mr Kerr said that his feeling was that the Council could no longer “continue to shoulder that type of expenditure” and also stated “we do not get any money from Ryanair”. These statements add some weight to many of the questions posed by Stop Eglinton Airport Evictions.

Q205 Mr Kerr stated that Derry City Council had organised public meetings. There is no evidence that any such meetings were ever held. As far as Stop Eglinton Airport Evictions are aware the contact between residents and council was as follows. A hand delivered letter signed by the airport manager on 17 October 2003 stating that the airport sub- committee had decided on 16 October to extend the airport in a westerly direction. This letter was delivered some hours after BBC Radio had broadcast the decision. 3022631016 Page Type [E] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Ev 60 Northern Ireland Affairs Committee: Evidence

After verbal and written requests two representatives were allowed to address the full council meeting on 23 October a which the council conﬁrmed the decision of the sub-committee of the 16. This opportunity to address the council consisted of a short formal address. No questions were permitted and no discussion was entered into. The residents at this stage were not in possession of any written evidence such as technical and ﬁnancial reports. This was an oYcial Council meeting, public were permitted to sit in the public gallery and it was open to the press, as is the case at many council meetings. This could in no way be described as a public meeting. On 24 October a meeting was held at the airport chaired by Mr Devine the airport manager with Mr Donald Robertson and a secretary in attendance. No senior council oYcials or any elected representatives attended. The meeting gradually descended into chaos and eventually was abandoned. The notes of the meeting as circulated by Derry City Council are enclosed (App 2), as is a further copy of the errors and omissions in these notes as agreed by Stop Eglinton Airport Evictions. These corrections were sent to Derry City Council but they did not circulate amended copies. On 10 November a meeting was held in the airport and again chaired by Mr Devine with representatives from the Valuation and Land Agency in attendance. Again no senior council personnel or elected councilors attended and only facts on valuation matters were presented. A public meeting was held in Eglinton Village community hall on 18 November 2003. The airport committee chairman was asked to attend or to send a representative but refused. A press copy making reference to council’s non-attendance is enclosed (App 3). A further public meeting was held in the Central Library, Foyle Street on 4 February, again the council failed to make anyone available. Press copy of Mr Hay’s refusal to attend is enclosed (App 4). Various letters have been received from the council with no important substance usually informing residents that a decision will be due shortly.

Q203 At the full council meeting on 23 October 2003 the consultant’s reports were not all completed. The PWC ﬁnancial appraisal was not presented until January 2004. A letter from the Chief Executive conﬁrming this is attached. (App 5).

Q187–190 Bearing in mind that a major runway and safety project was carried out in 1999 it appears strange that one-third of the present runway is not useable due to obstructions that were already there prior to 1999. In relation to safety improvements little evidence appears to exist that the CAA have demanded further extensions to the airport boundary for safety reasons. The CAA made no mention of this issue in their evidence to this inquiry on 10 November. As you will see from the residents meeting notes (App 2) the “leading aviation expert” Donald Robertson conﬁrmed on 24 October that extended RESA was simply a recommendation not a requirement. In relation to the houses causing the obstruction no new houses have been built since 1999 or indeed since 1994 when previous works were carried out by the airport authority. The question needs to be asked why previous extensions using public funding were undertaken when part of the completed project appears to be unusable. Another important fact is that the investigation on the 1999 extension by John O’Hara QC on behalf of Casey & Co solicitors (December 2002) may not have been aware of the fact that part of the newly completed runway was unusable. The report concludes that the project was a success and its continued use was a vindication of the project. It is not known at this stage if the government auditor was in possession of these facts either.

Q209 Mr Devine stated that the runway would not require any further strengthening however the “leading aviation expert” he refers to clearly states the opposite in section 3.3.1 of the Donald Robertson technical review.

Q177–178 Mr O’Doherty apparently supporting the private sector becoming involved states (Q126) that the airport could “optimistically hit 800,000 passengers” although Mr Devine states, “You need around one million passengers to cover operating costs.” Previously, he admitted that the success of the airport would depend on commercial activities, apparently something similar to a real-estate business. Some homeowners are concerned that Derry City Council may try to use vesting powers to obtain land for an airport that could later be transferred to the private sector. The statement in question 177, “The interest relates to the land associated with the airport”, adds further cause for concern. 3022631016 Page Type [O] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

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Q171 In relation to the operating deﬁcit of £1.3 million, page 24 of the most recent audited accounts (App 6) gives the net cost of service provision to be £3.26 million.

Q175 No member of this group was aware of the setting up of the shadow company or what individuals make up this company. We are also unsure of what exactly happens to the land when “legislation catches up with us”.

Q182–183 As far as we are aware the EU has not looked at the City of Derry/Ryanair case, as they will only examine individual cases if they are brought to their attention. Possibly they are not aware of this case at the moment. In light of Mr Kerr’s statement (Q171) “We do not get any money from Ryanair”, then the answer to Mr Bailey’s question should probably have been “yes it would have profound consequences.”

Q194–195 This brings to light the doubt over the long-term viability of the airport. At present, we understand there are daily scheduled services to six destinations and ﬁve of these are currently subsidised in some form. — Manchester—Route Development Fund — Birmingham—Route Development Fund — Dublin—P50 — Glasgow/Preswick—Airports Start-Up Discount Scheme — Stansted/Ryanair—“We do not get any money from Ryanair” Is any evidence available to prove how viable these routes would be in a normal commercial operation?

Memorandum submitted by City of Derry Airport and Derry City Council

1. Airport History The airport was built by the Ministry of Defence as one of four airfields on the North coast and opened as Eglinton Airfield in the early ’40s. The airfield was host to the RAF, Royal Navy and the American Eagles and with the other three airfields, Limavady, Ballykelly and Maydown, played a key role in the defence of the North Atlantic. The airfield closed in the early ’60s with the transfer of HMS Gannet to Prestwick Airport. Intermittent commercial operations took place from the airfield during the ’60s and ’70s with services to Glasgow by Emerald Airways and the local flying school, Eglinton Flying School who operated the airfield up until 1978, when the current Airport Authority, Derry City Council were approached to take on the ownership and management,in a role similar to that of other local authorities throughout the UK. Derry City Council opened the airfield towards the end of 1978, operating a passenger terminal from a number of portable buildings located on a disused runway. The first commercial scheduled flight commenced on 2 April 1979 to Glasgow, operated by Scottish Airline Loganair who has maintained the service over the past 25 years. This was the only scheduled service operated up until 1989 when Loganair introduced a service to Manchester, a new service was also introduced to Dublin. Passenger numbers had remained fairly constant from 1979 to 1989 at around 10,000 per annum. From 1989 to 1994 with the additional services to Manchester and Dublin passenger numbers had grown to 39,000 per annum. When the portable buildings were reaching the end of their operational life and had been outgrown by the increased passenger numbers. The Airport Authority applied for and secured funding from the European Regional Development Fund for the re-development of the airport. Upgrades and improvement were made in all areas of the airport including, new terminal building, fire station, access road, car parking, with upgrade to runways, airfield lighting and navigational aids. The new airport was opened in April 1994 and re-named City of Derry Airport. Jersey European Airways began a feeder service via Belfast City Airport connecting up to 16 destinations. Passenger numbers almost doubled from 39,000 in 1994 to over 75,000 in 1995. However, with the introduction of low fares airlines at Belfast International, passenger numbers declined over the next four years to 54,000. See annex one. The mid 80’s saw the launch of Europe’s first low cost airline, Ryanair. It quickly became apparent that low cost access could assist in the economic regeneration of the North West region with high unemployment, a shrinking manufacturing base, with an untapped potential for tourism development. 3022631017 Page Type [E] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Ev 62 Northern Ireland Affairs Committee: Evidence

Following the completion of safety improvement works, jointly funded by both the Irish and Northern Ireland Governments. Airport Management successfully secured an agreement with Ryanair who began scheduled services to London on 1st July 1999. Between 1999 and 2004 passenger numbers have grown signiﬁcantly with scheduled services to London, Birmingham, Manchester, Dublin, Glasgow and package holiday charters to Majorca, Salou, Lanzarote. See annex two.

Employment Contribution The airport currently provides employment for up to 120 staV on the airport site through direct and indirect employment and supports several hundred jobs in the North West economy.

Tourism Contribution The Airport Authority employed MORI to conduct a year long passenger survey in 2002. The survey indicated that the business and leisure spend in the North West region by visitors exceeded £12 million per annum. This excluded 4,500 corporate business passengers who accessed the region by company jet.

2. Strategic Development Plan With the publishing of the Government’s white paper on the Future Development of Air Transport, new safety requirements for Runway End Safety Areas, new regulations on Public Safety Zones and our customer airlines’ requirement to deliver infrastructure—the Airport Authority engaged specialist aviation consultants who produced a Strategic Development and Master Plan. The Airport Authority has applied to both the Irish and Northern Ireland Governments for joint funding and is currently awaiting the decision.

3. Corporate Governance, and Finance The City of Derry Airport is one of three commercial airports operating in Northern Ireland, with Belfast City and International serving the greater Belfast region and are both privately owned, with the City of Derry serving the North West region including Donegal in the Irish Republic, the airport is in public ownership through the local authority, Derry City Council, similar to a number of regional airports throughout the UK. The former Conservative Government introduced the Airports Act of 1986 and required local authorities to transfer airport undertakings to a public airport company. The intention was to produce an “arms length” relationship between these airports and their local authority owners in order to allow the airports commercial freedom. This permitted local authorities who owned airports such as Manchester, Birmingham, Liverpool, Luton, Exeter etc, to set up public airport companies to operate and commercially manage their airports. A number of these airports have seen major commercial development and growth and since been sold to the Private Sector, this includes central Government owned airports such as the British Airport Authority (BAA) and in Northern Ireland Belfast International Airport. The Airport Authority recognises the importance of the further commercial development of the airport and employed specialist aviation consultants the Symonds Group to carry out a strategic review of the current and future Governance and management arrangements. The consultants recommended that Derry City Council set up a Public Airport company to oversee and manage the airport and maximise commercial potential. The Airport Authority has made a number of requests to the Department for Regional Development Northern Ireland seeking powers to establish such a company, however the ’86 Airports Act has not been enacted in Northern Ireland with a change to legislation forecast to take up to two years. The Airport Authority continues to pursue this issue.

Finance The Aviation industry is highly regulated by both the Civil Aviation Authority and the Department For Transport, small regional airports of less than one million passengers are unable to cover the resulting high operating costs. Despite a substantial growth in passenger traYc over the past ﬁve years, airport revenues, particularly from low cost airlines do not cover operating costs, despite the airport being amongst the most eYcient and low cost UK airports of a similar size. See Annex three. The current annual deﬁcit of approximately £1.3 million includes approximately £600,000 repayment of capital and loan interest and is funded by ratepayers from the Derry City Council area. The Airport Authority does not receive any revenue funding from central government despite government receiving in 3022631017 Page Type [O] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

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excess of one million per annum in Airport Departure Tax (APD) from passengers who ﬂy to and from the airport. This is in contrast to the Scottish Airport Model where large self-funding airports operated by the BAA have been sold to the Private Sector, with the Scottish Assembly funding Capital and Revenue costs at small regional publicly owned airports throughout Scotland recognising the importance of transport in economic and tourism development in peripheral regions. This investment is in excess of £25 million per annum.

4. Airport Capacity Current airport capacity is approximately 500,000 passengers per annum subject to the frequency of ﬂights and the limits of infrastructure such as the number of check-in desks, which is limited to six and the physical space available in the departure area, which is limited to 180 seats. Forecast demand and capacity for the next 15 years is addressed in the Strategic Development and Master Plan.

Runway and Safety Issues The main runway is 1,852 metres in length, however up to a third of runway length for both landing and take oV is not useable due to the presence of houses and obstructions immediately beyond the airport boundary. New requirements introduced by the International Civil Aviation Authority and the Department For Transport requires Airport Authorities to provide Runway End Safety Areas and establish Public Safety Zones at runway ends. These areas allow aircraft in an emergency to over run a runway safely without comprising the safety of the aircraft or the public who live close to the runway. The Airport Authority is currently addressing this safety issue and proposes to purchase a number of properties in the interest of public safety. Until these safety issues are addressed operators are restricting or refusing to operate certain types of aircraft. This is aVecting our ability to attract new operators and expand current routes particularly in the low cost sector.

5. Route Developments and the Air Route Development Scheme Since January 2004 the Airport Authority has secured six new routes, three domestic schedule, one charter and two mixed charter/schedule:

Domestic Schedule — June 2004— Birmingham — June 2004— Manchester — December 2004— Glasgow Prestwick Both Birmingham and Manchester are supported by the Air Route Development Scheme. Both routes operate in the highly competitive low cost market and without the start-up support of the Air Route Development Scheme could not have been secured. The Glasgow Prestwick route has been rejected by the Scheme and will only receive support from the airport’s start up Discount Scheme.

Charter — May 2005— Faro, Portugal

Mixed Charter/Schedule — May 2005— Alicante, Spain — May 2005— Malaga, Spain 40% of the Alicante and Malaga routes are sold in the Spanish market to both tourism and business. Both routes were rejected by the Air Route Development Scheme. Airport Management ﬁrmly believes that the Air Route Development Scheme is an aVective tool when persuading an airline to operate a marginally viable route, by providing support funding oV setting up to 50% of airport charges in the start-up three years. This makes the diVerence between a route starting or not. However, it is important to note that the route must be commercially viable in the medium and longer term. In the past six years Northern Ireland has seen a dramatic shift from full service airlines to no frills airlines. With the low cost sector now exceeding three million passengers per annum, Airport Management ﬁrmly believe that this trend will continue for the foreseeable future with no frills airlines providing low cost access to the price sensitive tourism market. 3022631017 Page Type [E] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Ev 64 Northern Ireland Affairs Committee: Evidence

Annex One

1995 - 70,341 pax Introduction of 1989 - 35,455 pax Jersey European Introduction of services Manchester and Dublin 1979 - 8,121 pax Introduction of first scheduled service to Glasgow 8,121 10,252 12,563 12,625 13,211 13,056 9,658 10,023 10,500 10,968 35,455 23,568 25,642 27,658 38,557 39,864 70,341 68,321 61,461 54,808 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

Annex Two

1999 - 106,602 217,500 Introduction of 199,542 204,200 London Stanstead and Majorca 172,501

106,602

54,808

1998 1999 2000 2001 2002 2003 3022631017 Page Type [O] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

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Annex Three

Operating Costs on a Per Passenger Basis 2001/02

AIRPORT Annual Total Operating Unit Cost Passengers Costs £’000s £ per Passenger Operating Deficit

Teeside 732,000 8,269 11.30 City of Derry 167,000 1,951 11.68 Southampton 767,000 10,286 13.41 Humberside 362,000 5,263 14.54 2,802,000 Inverness 376,378 6,552 17.41 Exeter 287,000 6,774 23.60 1,620,000 Kirkwall 97,279 2,439 25.07 Bournemouth 304,000 7,806 25.68 1,501,000 Stornaway 90,018 2,411 26.78 2,619,000 Sumburgh 158,763 4,922 31.00 Norwich 339,000 13,259 39.11 Blackpool 90,000 3,910 43.44 829,000 Islay 20,357 980 48.14 1,306,000 Benbecula 35,918 1,764 49.11 1,406,000 Wick 30,535 1,873 61.34 452,000 Barra 8,425 559 66.35 641,000 Campbelltown 9,017 757 83.95 584,000 Tiree 5,450 666 122.20

Witnesses: Mr John Devine, Airport Manager, City of Derry Airport, and Cllr John Kerr, Chairman of Airport Committee, Derry City Council, examined.

Q164 Chairman: Gentlemen, first of all can I thank a 24 hour operation, and serves the charter market you for your hospitality. We feel a little bit rude in which could not operate from Belfast City. Where as much as we have taken over your boardroom and do we see ourselves? We see ourselves as sitting in the asked you to sit outside. We feel a little bit guilty, but North West serving the North West region, we are very grateful for your hospitality that is including Donegal and the Irish Republic. We see allowing us to meet in this room. You will have ourselves as slightly diVerent. We do not propose to heard the last two sets of witnesses. You will have a go to a 24 hour operation, we plan to serve both the good indication of the questions that we are going to domestic and European holiday charter markets. ask you, but I wonder if I could start, as I have done We have no great aspirations, we have not painted a previously, with a general question to try to open out picture that says we are going to take over the world our discussion. Previous witnesses have told us in and we do not intend to take over the world. It is a relation to Belfast City and Belfast International small catchment area, we intend to serve that Airport that there are two diVerent views as to catchment area for the greater economic benefit of whether or not they are in competition with each this North West region and for the social other or are they complementary to each other. We development of the North West region. have also had discussions about the leakage of Cllr Kerr: One of the problems about this region, passengers from Northern Ireland to the airport in and about where we are at the moment, is the lack of Dublin. We are very interested in your views on transport. We are hard to get to. We are hard to get where this airport fits within both the Northern away from as well. We are on the periphery of Ireland context but also the island of Ireland Europe and we are on the periphery of everywhere context. In your opening remarks, could you say else. We need transport infrastructure. This airport where do you see yourselves as an airport within is the jewel in the crown of Derry City Council and both a local regional and island of Ireland context? has been for the last 20 years. We feel that it does Mr Devine: I believe the two Belfast airports do make a contribution and will make a big complement each other in that Belfast City is very contribution to the whole economic regeneration of business oriented and its location makes it very the area, which you have heard about this morning. convenient for business traYc. Belfast International, From where we are, we have tremendous civic pride on the other hand, serves the greater northern part and the people of the area have tremendous civic of the island from a catchment point of view but, pride in the airport. Despite what they just said a more specifically, serves the freight operation, being couple of minutes ago, there is this overwhelming 3022631018 Page Type [E] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

Ev 66 Northern Ireland Affairs Committee: Evidence

30 November 2004 Mr John Devine and Cllr John Kerr view that we do need the airport, both for our own Coleraine much more accessible for passengers. sake in terms of our position as the second city in the From an airport perspective, the improvements that North of Ireland but also we want to grow and we we have seen in the local road network have made want to expand and we want to service our people. the airport much more accessible. The other issue is We are hopeful that the airport will continue and the Belfast east-west link. will grow. Cllr Kerr: The other thing about the airport here and the development of links with Manchester, Q165 Chairman: On the question of the air services Birmingham and Glasgow is it aVords the for the island of Ireland, how important is the opportunity for us to make contact with the greater Dublin link to this airport? How many passengers world, to make contact with the outside world, to are using this airport from the North West as a link make contact with Europe. For the numbers of Irish to the Dublin hub to use that as an international people, Derry people, Donegal people, abroad who airport? come back frequently and use the airport at the Mr Devine: The total route size over the last three weekend, it is a service to them as well. years is about 30,000 passengers a year. That is a split of 50/50, 50% being point-to-point for Dublin business and 50% onward through Dublin into Q169 Chairman: The Committee habitually moan Europe and North America. about the need for more infrastructure works to be Cllr Kerr: If you think, if I had to go to a meeting in done within Northern Ireland. I do not think we can Dublin it takes five hours to get there now, four to mention it often enough. We mentioned it yesterday five hours, and four to five hours back again, so the and we are mentioning it again. The rail services business people are looking to the airport to within Northern Ireland are probably some of the service them. worst in Western Europe and we only hope that John Spellar reads our transcript and some of the gain from the peace process can be that money spent Q166 Mark Tami: Is the expansion of the airport previously on security can now be spent on necessary because of the poor road routes or would infrastructure works to enable some of that you also say that if the airport does expand then improvement. Your points are well made and well something has to be done about the road system as rehearsed. well in order to cope with the increased traYc? Cllr Kerr: Not only are we arguing for roads but all Cllr Kerr: Which comes first, the chicken or the egg? of the infrastructure as regards sewerage and water and what have you, lots of things. Q167 Mark Tami: That is right. Cllr Kerr: Do we need a new rail service, a new road infrastructure or do we need the airport? I think we Q170 Chairman: Just for the record, can you tell us need all three of them. The question was put to me about Carrickfin Airport in terms of whether or not by the Northern Ireland OYce a couple of years that plays any role? It is a mystery to us. I have never back and they said “We have got £300 million to flown into Carrickfin, I do not know how many air spend, where should we spend it, the roads or the traYc movements there are, I do not know if there is railway?” and my answer was, “I think we need a service from here to there or if it is part of your plan money for all of them”. You cannot just say we or part of your local family? should spend it only on the roads. If we improve the Mr Devine: Carrickfin is a small airport right on the roads, yes, but would you cut the time down from an West Coast, it is just beyond the beach. There are appreciable four or five hours to half an hour in an boundary fences along the beach on the West Coast aeroplane? of Ireland. It has been in existence for about 10 years and serves a tourist market, a seasonal tourist Q168 Mark Tami: I suppose what I am saying is if market. In the summer time there are three flights a you improve the roads, would you need the airport? week to Glasgow Prestwick and on a daily basis they Mr Devine: As has been seen in the greater UK, have a PSO service to Dublin. That is about the where you build roads they are simply filled up by extent of their traYc. They play an expanded role in traYc and the overall traYc speed does not improve, that they serve as a search and rescue airport for the you are just providing more space for road traYc. North Atlantic. Yes, we do need improved roads and an east-west link to Belfast has been an issue for many, many years. The city here is the second largest city in Q171 Chairman: That is helpful. Operating deficit: Northern Ireland, the fourth largest city in the we heard a lot in previous evidence about the island, and the road network in the North West has operating deficit which you have indicated to us is been under-invested for many, many years, as has around £1.3 million a year funded by the local been the general infrastructure. Locally, the road ratepayer. We heard earlier from the Chamber of network has improved significantly. The bypass at Commerce on their view as to whether or not that Strabane/Newton Stewart makes it much easier now gives good value for money and what role it plays in for passengers to access the airport from the South terms of future investment. From your own West. There are improvements in Donegal, the link perspective, tell us whether or not you consider that down to Donegal Town, the link to Letterkenny, to be good value for money and talk us through those kinds of roads have made it much easier to get some of the wider economic benefits that you see to the airport. The bypass at Limavady makes from that public investment. 3022631018 Page Type [O] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

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30 November 2004 Mr John Devine and Cllr John Kerr

Cllr Kerr: It is true to say that the operating deficit problem with a government loan, some of them tie is a source of concern to the council and to the you into the loan at the rate of interest at that ratepayer and the fact that the ratepayer has borne particular time and some of the rates, if you think the brunt of the airport over the last 10–15 years or back five or 10 years ago, were very high indeed at more. There is an operating deficit of around 12 or 14%. £1.3 million, a bit less, £250,000 less this year because of other savings. It is something that we have to address but also it includes approximately a Q174 Mr Pound: For the foreseeable future there £600,000 repayment of capital and loan charges. We will still be that element of the City of Derry are making the point that in the Scottish experience, support? they do not have to do that. In the Scottish Cllr Kerr: Yes. experience they funded the capital and revenue costs Mr Devine: The majority of those loans are for about of the small regional publicly owned airports. We the next 15 years and would have a repayment of are looking for something like that as well. I do not about £600,000 a year regardless. think that Derry City Council can continue to Cllr Kerr: That is part of the burden. shoulder that type of expenditure. The fact is that we Mr Pound: We are just trying to get a grip on that. are now approaching being one of the highest rated councils in the North of Ireland. That £1.3 million is Q175 Chairman: We now have a very clear picture a source of concern to us. We are hopeful that this painted where there is obvious concern within the will show a diminishing trend and it is showing it by City Council at the size of the operating deficit and £250,000 this year. There are high costs to running there is a determination to reduce it. You have said an airport and we continue to look at that. If we are that you cannot continue along that path. Obviously fortunate enough to have a diVerent carrier within the airport, and that is a matter of negotiation at the you still carry some of that burden and, irrespective moment, it may be that we can change that around. of whether or not you close Derry Airport I am talking about the sorts of monies that we get tomorrow, you would still carry a lot of that debt. from people like Ryanair.1 If there is another carrier Talk us through the options you have looked at in that could make a better deal with us—I do not terms of alternatives for ownership of the airport, know if I can say this here but there are negotiations involvement of the business community and how, ongoing with another carrier—maybe that could other than simply reducing costs and bringing in change within the foreseeable future. I am very, very money from airlines, you can turn things around for conscious of the fact that it is a business arrangement the better. and I am conscious of the fact that the press are here Cllr Kerr: We have repeatedly asked the and I would not want to say anything that could Government here to— jeopardise any future negotiations with another Mr Devine: The previous government introduced airline. the Airports Act 1986 which required all local Chairman: We understand and respect the authority airports throughout the UK with a confidentiality of that and the reasons why you turnover of more than £1 million for two consecutive would not want to go into detail. years to be sold or set up as a public airport company. That piece of legislation has never been enacted here in Northern Ireland and prevents the Q172 Mr Pound: Just a quick point of clarification. airport from being moved into a company structure. You have talked about the repayment of the capital Very successful airports across the UK that are and loan components of the support given by the either currently owned or were formerly owned by City Council. How long does that run for? Is there local authorities have proved that to be the best an end date? method for developing the commercial aspect of the Mr Devine: Most government loans are 20–25 years airport. The one piece of legislation that we are depending on the piece of equipment that you have attempting to have put in place is the enactment of purchased. the 1986 Airports Act here in Northern Ireland. Cllr Kerr: In the meantime we have been operating Q173 Mr Pound: What is the case in this one? a sort of shadow— Mr Devine: On the loan repayments, the loans that Mr Devine: So that the company could be set up and have been taken out will all have diVerent end dates run along those lines we have already taken the first because they all started at diVerent dates. step to try to move towards that by setting up a Cllr Kerr: Some of our loans have been taken out at company, instead of having just the airport very high percentage rates, 14 or 15%, and now the committee run as a committee of the council, to run loan rates are at 3° or 4%. We are trying to in shadow mode until the legislation catches up encourage the Government to let us settle those with us. loans at 14% and buy in at 3 or 4%. This is a big

1 Commercial arrangements between the Airport Authority Q176 Chairman: I think that is a very important and any airline, including Ryanair, are commercially piece of evidence that you have just given us. What confidential. The details of which cannot be disclosed you are saying is that the legislation needs to be without the agreement of both parties. However, in relation enacted within Northern Ireland. to Ryanair, the Airport earns significant revenue from the airline and from the passengers which it brings to the Cllr Kerr: We cannot move without the Government airport. moving first. 3022631018 Page Type [E] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

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30 November 2004 Mr John Devine and Cllr John Kerr

Mr Devine: That is not to say that there have not about? Did you have to attempt to attract Ryanair been explorations of other methods of doing it. or did Ryanair approach you? Is the extended Councils have to be enabled to do things, they have runway essential to Ryanair’s future plans? to be enabled to set up a company, and at the Mr Devine: In terms of any operator, be it low cost moment there are issues with councils across or otherwise, that operator will only want to operate Northern Ireland setting up visitor and convention from a region if they can make money. The bottom companies, etcetera. There has to be a specific piece line for the airlines is that they want to make money of legislation that allows a council or local authority and will identify routes or regions throughout the to do something and that is not there at the moment. UK where they can serve and make money. The name on the aircraft is almost irrelevant in terms of Q177 Chairman: Has there ever been any interest how the aircraft is operated. A 737 or a 757 is from outside potential buyers for the airport? operated against the performance manual set out by Mr Devine: There has been interest but the interest the aircraft manufacturer, be it Boeing or Airbus, relates to the land associated with the airport. I do and the airlines simply apply the performance of that not think any of the operators when they came in aircraft to the runways that are available. In terms of carried out a due diligence exercise. There are two the development programme, the Government elements to the airport’s operating costs and those White Paper on the future development of air are the high fixed overhead costs which are largely transport challenged this airport and all airports to dictated by the Civil Aviation Authority or the look at their current capacity and look at future Department for Transport in security and the capacity and that was the start of us looking ahead Department for Transport in the way in which we to see what growth could be forecast in aviation over operate, but more by the Civil Aviation Authority in the next number of years and trying to align the terms of air traYc control, fire and the general infrastructure and the development of that operation of the airport. They fix our overhead infrastructure with those forecasts. Yes, within the costs. For an airport of this size, we are truly low plan there are a number of routes that are projected cost. We meet the regulations but we meet them in and those routes are projected by the airlines, not the such a way that if you compare us, you compare us airports. The airlines were spoken to by the to a low cost airline. We are truly a low cost airport. consultants and they said, “These are the types of If you look at our costs in terms of the costs per routes we would seek to develop given the passenger then truly we are a low cost airport. You marketplace”. will see in the evidence I gave to the Committee in appendix three, where we do some comparisons with Q180 Mr Bailey: Basically your answer is that they other airports, that on a per passenger basis we are approach you? amongst the lowest. If you look at the operating Mr Devine: It is a mix of them approaching us and costs at other airports, that is the costs disregarding us approaching them, it depends on the particular any income, we are significantly lower and are really route that we are talking about. truly low cost. When an airport operator looks at that, they say “There are obviously no savings for us Q181 Mr Bailey: What incentives have Ryanair to make there”. The whole success of the airport oVered, such as landing costs, advertising, ill depend on the future commercial activity maintenance? Has that been part and parcel of the of the airport, both passengers and related discussions that you have had? businesses established on the airport site, that is Mr Devine: No. We oVer a commercial arrangement commercial activities from hangars, maintenance to Ryanair and to other carriers on an equal basis. organisations, etcetera. We are always mindful of the recent Charleroi decisions as a good indication as to what will be the Q178 Chairman: So what you are saying, and you future and what will be allowed in the future. will correct me if I am wrong, is that the expansion of service at the airport is critical to turning the corner Q182 Mr Bailey: So you are satisfied that the deal, if financially. you like, does not contravene any EU regulations? Mr Devine: Given the overhead costs, airports of Mr Devine: As the deals were put in place then they this size find it extremely diYcult to cover their certainly did not contravene any regulations. That operating costs. Depending on whether the model was prior to Mme de Placio’s deliberations. What we has changed slightly because of the introduction of are seeking to do with all airport charges and all the low cost passenger and low cost airline, you need deals that we have with current airlines is to ensure somewhere around about one million passengers to that, depending on the outcome of the appeal from cover the operating costs. Charleroi, our deals will not contravene any European legislation, but we will have to wait and Q179 Mr Bailey: Can we look at future growth. see what the outcome of the appeal is. From your evidence it would seem that the safety improvements in 1999 helped the airport to secure Q183 Mr Bailey: That is very interesting. Could it an agreement with Ryanair. Also, it has been have profound consequences? suggested that current expansion plans are based on Mr Devine: It could have consequences, I do not projections which in turn are heavily reliant on know that they would be profound. In the securing further commitments from Ryanair. Can arrangements that we have with Ryanair and with you elaborate on how these latest proposals came other carriers we are streamlining in light of the first 3022631018 Page Type [O] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

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30 November 2004 Mr John Devine and Cllr John Kerr attempt at the Charleroi decision to make sure that the route was operating morning and evening was our charges are fair, equal, open and available to all, that 64% of the route was originating in London at and as to timescales. Timescale is the only issue we that time. would have had with any of our charges but as Europe has given an indication as to what they Q187 Mark Tami: In your evidence you indicated believe is a reasonable timescale, ie five years, that is that “up to a third of runway length for both landing the element we will make sure they are in line with. and takeoV is not usable due to the presence of houses and obstructions immediately beyond the Q184 Mr Bailey: If Ryanair decides not to expand its airport boundary”. Could you perhaps elaborate operations here, as seems to be expected in the PWC and give us a bit of technical detail on that? report, what plans do management have to replace Mr Devine: It has been said, and it was said in their expected growth? evidence earlier, that the runway is longer than a Mr Devine: There are two elements to the runway number of other runways. There is quite a marked and one is the safety improvements, the other one is diVerence between the physical length of a piece of the development of the runway. Without the safety tarmac and the amount of tarmac that is usable. The improvements to the runway, there is no possibility Civil Aviation Authority and the International of Ryanair or similar types of operators developing Civil Aviation Organisation—ICAO—lay down any route from the airport, in fact what we will see regulations for aircraft performance and published is the withdrawal of a certain number of routes. As runway lines across the world. This particular you have already heard, we have lost our business runway, because of these obstacles on the approach, day return service to London, our morning and some of the houses out there and chimneys out on evening service, and we are now left with more of a the approach, require aircraft to fly much higher leisure type route in the evening. Obviously that than that approach and, therefore, are not able to cannot be sustained because the region needs to be touch down at the beginning of the runway but have able to access London for business traYc. Currently to overfly a portion of the runway before landing. we are in discussion with a number of other carriers. There are a number of other low cost carriers out Q188 Mark Tami: Obviously there are the houses there that could provide a service. I go back to what that we have talked about but what else is there? I said earlier, that the types of aircraft the low Mr Devine: On the safety overrun areas, ICAO and cost carriers are currently operating but, more the UK Civil Aviation Authority are bringing in new importantly, will operate in the future in terms of regulations across all UK licensed airfields which fuel eYciency will be what dictate runway lines and require safety areas at the ends of runways to be put the safety overrun areas. in place. That is just an area where an aircraft can run oV at the end of the runway and not be damaged by hedges, ditches, fences or whatever and allows the Q185 Mr Hepburn: Following on a point on job fire vehicles to get to the aircraft. Those are the types creation, the Chamber of Commerce suggested of things that have to go in at the ends of runways. earlier on that future job creation in the region depended on expansion of the airport, yet in the PricewaterhouseCoopers’ report the future routes Q189 Mark Tami: Can I try to pin you down on the mentioned were not key business centres. Can you obstacles apart from the houses. Physically, what reconcile that? are they? Mr Devine: I think PWC focused on the main low Mr Devine: The majority of them are houses which cost carrier that was at the airport then, and have been built in the last 15 to 20 years. currently here, operating into secondary airports. I suppose if you consider Paris Charles de Gaulle as Q190 Mark Tami: It is the houses, not anything else? the main airport that would be considered viable for Mr Devine: The majority of them is the houses but business passengers to Paris then Ryanair operates there is one large chimney out there as well. to the second airport, such as Paris Beauvais. If you look at how Ryanair have developed into those secondary airports, they have developed them as Q191 Mark Tami: To take up Mr O’Brien’s point much for business as for leisure. We do not see that which he made earlier, about the fact that there are development to secondary airports being any great other airports, Belfast City and Aberdeen, that have hindrance to the development of business traYcon shorter runways and yet can carry on, is that purely those routes. because they do not have houses? Mr Devine: Because they can use all of their runway. I have to say that our runway is not longer than Q186 Mr Hepburn: Just on the London flight, can those other airfields because it is not operational and you give a breakdown of how many business you should perhaps discount it and compare like travellers are going to and coming from? How many with like, compare Belfast City’s operational originate in London and how many originate in runway with our operational runway, Aberdeen’s Derry going to London to do business? and Lu¨beck’s with our operational runway, and you Mr Devine: The airlines keep that as a fairly guarded will find that we are not longer, we are shorter. They piece of information because of the competitive have the safety overrun areas in place that exist at nature between them and other low cost carriers. the ends of their runways as well as the clear The last information we had about a year ago when approach areas. 3022631018 Page Type [E] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

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30 November 2004 Mr John Devine and Cllr John Kerr

Q192 Mark Tami: I just want to be clear on this region then you might have all sorts of European point. Are you saying that there is not the overrun issues coming in if you discriminate against one part that end because you end up in the sea, or are you of Europe as opposed to another. Perhaps that is saying there is not a safety overrun that way because why they are allowing other areas to develop. you end up in the houses? Mr Devine: There is a safety run almost complete at the eastern end of the runway on to the foreshore of Q195 Chairman: Earlier on we mentioned the Loch Foyle. Some 50 metres of a 90 metre overrun Dublin route and I understand that is supported by area is already in place at that end of the airfield. At a PSO. That is correct, is it not? the other end of the airfield, the current 90 metres is Mr Devine: Yes. That is a true PSO as opposed to the contained within the airfield boundary and a portion Route Development Fund. The Route Development of the runway was sacrificed to allow that to be there. Fund supports the reduction in airport charges and What the Civil Aviation Authority is bringing in this does not pay the airline. It gives up to an equal year is a much increased overrun area. Worldwide percentage in terms of reduced airport charges direct statistics show that over the past 15 years the to the airport, whereas a PSO goes out on a contract majority of accidents in the landing or takeoV phase basis to European airlines and invites European have been overruns where an aircraft touches down airlines to bid for a particular route and operate that on the runway, cannot stop and goes oV the end of route, probably at the lowest cost to the government, the runway. We have this box of 90 metres which the and the Irish Government currently operates six aircraft could stop on but it has been shown by all PSO routes from Dublin, this being one of the the accidents that have occurred that they have not six routes. stopped within this 90 metre box, they have carried on through the hedge. You will remember the one that came on to the M25 at Northolt because they Q196 Chairman: That was my next question in terms had this notional box at the end of the runway that of is it the Government in the Republic that is paying the aircraft should notionally have stopped in but for that PSO? did not. They are providing much larger overrun Mr Devine: Currently the Irish Government pays areas. Loganair to operate that route on their behalf and Air Arran, who operate the other five. We believe on Q193 Mark Tami: Do you think these will be issues the six routes they pay somewhere in the region of ƒ for Belfast City and Aberdeen? 20 million per year directly to the airlines to Mr Devine: They are issues for all the airports. At operate those routes. The Government does benefit Belfast City’s main runway where the majority of from that in that for every passenger who departs airliners are, they have an area of some 600–700 from this airport on the Dublin route, the UK metres at the end of the runway which an aircraft can Government earn £5 in airport departure tax run on to, but we do not. straight to the Exchequer.

Q194 Chairman: A few questions on the Route Q197 Chairman: Are there any other routes where a Development Fund and the PSO. You have got the similar case could be made? two new routes started recently to Manchester and Mr Devine: Europe is opposed to funding airlines Birmingham with support from the Route now. You will have seen government funding being Development Fund, although the Fund’s original withdrawn from the former flight carriers across intention was to develop air links particularly with Europe. There are still a few that they manage to Europe. At the same time there were two other persuade Europe to provide funding for. The French routes to Alicante and Malaga that were rejected by and the Spanish have a number of PSO routes that the Fund. Even though the Fund was set up to they operate directly, some of them cross-border support the development of European routes, the between France and Spain. I would not entirely two that have been successful are domestic flights. support the argument that PSO routes are the way to Do you think that the current tests that apply in the Fund are correct or not given that there seems to be go. I suppose I would support the way in which the a discrepancy in how the Fund is being used and Route Development Fund operates. The Route what the intention was? Development Fund is for a fixed three year period, Mr Devine: Yes, there are discrepancies between the it is an incentive-type fund to get the airline over the intent and how it is currently being used. I suppose hurdle of starting a new route. It should never be from a Northern Ireland sense, what is the diVerence seen as long-term or medium-term viability, it between a passenger coming into Northern Ireland should be seen simply as a pump priming exercise to from Manchester or Birmingham and spending a allow the route to operate. That is probably where few hundred pounds here and a passenger coming in you will see the Irish Government take the PSO from another part of Europe and spending a few routes, in that rather than simply pay the airline to hundred pounds here? I suppose they have operate a route, regardless of whether it performs reinterpreted the rules. A passenger is a passenger well or otherwise, you will probably see them and if they are spending money I suppose that was moving towards a system of pump priming, giving what the Fund was really set up for, to bring visitors them the incentive and reducing that incentive and into the region and they are all equally welcome. If encouraging the airline to build the business to a the Fund only applied to a particular European point of viability. 3022631018 Page Type [O] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

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30 November 2004 Mr John Devine and Cllr John Kerr

Q198 Mr Pound: In evidence earlier on we heard Cllr Kerr: When the consultants finished their about members of the Diaspora, returning visitors, reports the council had a public meeting to explain people coming back. I live in a part of West London to all the residents and to the public what was in the which is utterly dominated socially, culturally, consultants’ report. theologically, politically and economically by the Donegal Association who absolutely run my part of Q204 Mr Pound: The Stop Eglinton Airport the world, and yet all the Donegal families I know Evictions Group has referred to two public still fly Heathrow-Belfast and then drive, whereas meetings, one locally and one in Derry. people I know from the Midlands will fly from Cllr Kerr: Yes. Stansted to Derry. Have you done any sort of analysis on the amount of passengers through Derry Q205 Mr Pound: I think the figure of several who then make the further journey to Ireland? hundred people who were pretty unanimous was Mr Devine: Not specifically on how many people mentioned. Those are the two meetings they called actually come into this region. and you have called additional meetings, have you? Cllr Kerr: Yes. Q199 Mr Pound: And then go to Donegal basically. Mr Devine: We can give you statistics for the route at Q206 Mr Pound: Is this an ongoing process? Will Stansted. 42% of people who travel on the London you continue to do this? Stansted route who originated in the London area Cllr Kerr: Yes. We would welcome anyone who has were travelling in to Donegal. a problem to come to the Airport Committee for a hearing and to put their case. We have done that in the last couple of months. There is that facility. Q200 Mr Pound: Is that a consistent figure? Mr Devine: It was a figure in research carried out by Q207 Chairman: Thank you. There are two issues I the pollsters, MORI, for 2002. They carried out a want to clear up from earlier on. We heard some survey three days a week for 52 weeks. It was a fairly discrepancies in terms of growth figures for the good survey. airport both in terms of what the CAA were suggesting and what was on the council’s website. Q201 Mr Pound: Finally, we have heard local Which figures do you hold to? Which figures are community representatives speaking here today correct? but, for the record, could you tell us what form Mr Devine: We are still in discussion with the Civil of consultative mechanism you employed in Aviation Authority but we believe that they have consultation with the local community on possible only published the figures of the shadow passenger expansion plans? routes and have not included the figures for the Mr Devine: We have an Airport Transport Forum business executive aircraft that have operated. and on that forum we have the village association. Also, we have visited the towns around the area— Q208 Chairman: So those will be additional? Limavady, Strabane and Donegal—and given Mr Devine: Correct. presentations to the local authorities. We have visited Chambers of Commerce and given Q209 Chairman: The second question is there was presentations to Chambers of Commerce. I suppose some comment made earlier on about alternatives to one of the most diYcult things we had to do was to runway positioning in terms of new runways and/or meet with the families of the 17 homes that are reconfiguration. Would you have any comment at directly at the end of the runway and speak with this stage on viability? them to tell them what the plans are for the airport. Mr Devine: We brought in a leading aviation expert Cllr Kerr: We have aVorded those people who wish to examine the infrastructure that currently we have to come to the Airport Committee the right to come and to take a look at what we are forecasting to need and make their case to the Airport Committee and in the next 15 years. At no stage would he have listen to them, and that has happened. At any stage recommended going to an alternative runway. The the Airport Committee is quite willing to meet with last runway built in the UK was at Manchester anyone to talk about the airport expansion. Airport which only opened a few years ago. That was the first major runway built since the wartime at Q202 Mr Pound: So the public meeting in Derry that a cost of over £400 million. As you know, the great was referred to earlier on, that was called— debate that is coming in through the White Paper is Cllr Kerr: That was called by the City Council. where the next runway will be built in the South East, whether it will be Stansted, Heathrow or an upgraded taxiway at Gatwick, when the planning Q203 Mr Pound: That was called by the Council, regulations come in. Airports do not build runways was it? I got the impression that it was called by lightly. Of course we have looked at it from a Mr O’Brien. technical aspect and from a costing aspect and it Mr Devine: There were a number of meetings called would be a non-starter for the airport to build a by the residents’ groups in the city and in the village parallel runway replacing the existing runway here but the council itself had a full special council aVecting not only farmland but other properties, to meeting to which it invited the public and local shift it from one set of properties to another set of residents. properties, when there is a perfectly good runway 3022631018 Page Type [E] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

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30 November 2004 Mr John Devine and Cllr John Kerr there that does have the bearing strength and will not Q214 Chairman: Gentlemen, as we have done with require any future strengthening. It does have all the other witnesses, we do give you the opportunity to technical aspects, it has the approach lighting, it has answer all those questions we have not asked you, if the instrumentation, but what it does not have at the you see what I mean. Are there any other points that moment is the full safety overruns which are you wish to put to the Committee at this stage? We required in the interests of public safety, not only for are conscious that you have given us some written the aircraft but for the people living on the ground. evidence already which was very useful and, of We have a duty of care to the people who live in close course, we may need to correspond with you in proximity to the airport. There are 17 families who writing in terms of one or two points that may need live at the end of the runway and if an aircraft clariﬁcation, but is there anything you wish to add at this stage in a general sense? overruns, I do not want to be the person who Cllr Kerr: Just to say, it is very ambitious for Derry appears at the coroner’s inquiry to say why we did City Council to run an airport but they took this not have any emergency overrun. decision 20 years ago and they have been building it ever since and working at it ever since. There has Q210 Chairman: I wonder if you can help me with been a legion of people around the area who have made a contribution, little contributions and large just one or two technical questions. How much contributions. I hope we will take the airport longer does runway 26 need to be extended for further. One of the questions that were put was will safety reasons? the airport have to close and obviously that is an Mr Devine: It does not need to be extended for safety option. We looked at that as an option but we reasons. The safety improvements need to be put on looked at other options as well. I would like to think it for safety reasons. Even the physical length of that we will keep the airport open and, with your runway would remain as it is, but for safety reasons help and with the Government’s help, we will you build the overrun areas beyond the end of the continue to grow a facility which is necessary for the existing runway. The recommendation from the people of this area, for their own personal esteem technical people was not only do we have the existing because for so long we have been the poor relation physical length of runway but that we make that of everyone. For their own personal esteem and for physically longer and that is a diVerent argument. the beneﬁt of this region, I hope that they will help in order to keep this airport open. Thank you.

Q211 Chairman: This picks up the points that were Q215 Chairman: Thank you, Cllr Kerr. Mr Devine? made earlier about how much of the runway you can Mr Devine: Just a couple of points in relation to the currently use because of the obstructions. consultation process. The consultation process is Mr Devine: Yes. something that is ongoing. We have talked about the various meetings that we have had but also we had a special meeting where we convened an all-day Q212 Chairman: What is the distance between the session where all of the councillors and all of the end of the west end of the runway and the displaced representatives were able to listen to our consultants threshold on runway 08? present the case for why the airport should be Mr Devine: 122 metres. expanded, why the terminal buildings and the car park should be expanded. We have focused very much on the runway issue but there are other aspects Q213 Chairman: To accommodate the overrun on to it in terms of terminal buildings and car parks and 08, will you need to displace the threshold on 26? it would be wrong to focus purely on the development aspect of the runway and the safety Mr Devine: Displaced thresholds are not a function aspect of the runway. The public will have the of overruns. Displaced thresholds are a function of continuing opportunity to make representations to the approach surface. If you can imagine an aircraft both the council and to the planning service where coming into land—I hate to wave my arms around— planning is necessary. Those are all the points I it has to aim at a point on the runway which provides would like to make. it with a clear approach path. If you have not got Chairman: It has been a very fruitful morning for the that clear approach path then you have to displace Committee. Once again, thank you for your the threshold up the runway and say to the pilot, hospitality. The Committee is hoping to publish its “You must aim at that point as opposed to aiming ﬁndings in February and, no doubt, today’s evidence at the start of the tarmac”. will assist us in compiling that report. Thank you. 3022631019 Page Type [O] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

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Wednesday 15 December 2004

Members present:

Mr Tony Clarke, in the Chair

Mr Roy Beggs Reverend Martin Smyth Mr Iain Luke Mark Tami Mr Stephen Pound Mr Bill Tynan

Memorandum submitted by FlyBE

1. FlyBE. in Northern Ireland FlyBE. warmly welcomes the opportunity to respond to the Select Committee’s inquiry into Air Services in Northern Ireland. We believe that such an inquiry is timely, given the importance of excellent air transport links to Northern Ireland’s economic development. We are in a position to provide constructive advice and insight to the Select Committee’s inquiry, for the following reasons: — FlyBE. is the third largest low-cost carrier in the UK and is European’s largest independent regional airline, with a long-standing commitment to providing air links from Northern Ireland to mainland UK and continental destinations. FlyBE. is diVerent to other low fares airlines, as we oVer services from regional airports and operate on a point-to-point basis. In 2003–04, ﬂyBE. carried a total of over 4.5 million passengers. We continue to expand rapidly. — FlyBE., previously British European, has been operating out of Belfast City Airport (previously Belfast Harbour Airport) for more than 20 years. In terms of destinations served, we are now the largest airline ﬂying from Belfast City Airport. We employ 200 staV in Belfast, including 27 at our on-site engineering department, which are largely skilled engineering jobs. — FlyBE. expects to carry more than one million passengers in and out of Belfast in 2004, to and from 10 direct UK destinations (London Gatwick, Birmingham, Bristol, Leeds, Newcastle, Southampton, Exeter, Glasgow, Edinburgh, and Isle of Man), as well as London City (via Isle of Man) and 20 international destinations via our UK hubs.

2. FlyBE.’s Future in Northern Ireland Given flyBE.’s recognition of the importance of regional hubs, we see Belfast City Airport as an integral part of our overall region-based European route network. We are constantly looking at ways in which we can improve and develop our services from Belfast City Airport, in order to fully meet consumers’ preferences and demands. With no surface infrastructure connecting Northern Ireland to the rest of the UK and Europe, flyBE. recognises the value of accessible air travel to the economy, local enterprise development, and the cultural life of the region. We are keenly aware of the need to establish and maintain a comprehensive route network, with the maximum number of connections to key destinations, which serves the business community and Northern Ireland’s rapidly growing tourism industry. The economic development of Northern Ireland rightly remains a key Government priority and flyBE. welcomes the opportunity to make our contribution to this objective. Our recent expansion in Southampton and Exeter in the South of England demonstrates the tangible benefits which regular and aVordable air connections bring, not solely business travellers and the leisure industry, but also in terms of the indirect impact of investment flowing into regions. FlyBE.’s aim is to connect Northern Ireland with every key business and leisure destination in the United Kingdom. Glasgow, Edinburgh and Exeter are just the latest cities we have added to the route portfolio available to passengers from Belfast, and a new service to the East Midlands will be launched shortly. However, although flyBE. is willing to commit to providing such a service, a number of impediments need to be addressed if the full potential of improved transport connections is to be realised. FlyBE. believes that recognising and addressing these constraints should be a central objective of the Select Committee’s inquiry.

3. Addressing the Constraints Having served Belfast City Airport for more than 20 years, flyBE. has a unique insight into the airport’s future requirements if the development of air transport in Northern Ireland is not to be stifled. FlyBE.’s long-term, and growing, investment in the aviation industry in Northern Ireland has identified further growth in the province as a key strategic priority. To successfully build upon the success achieved to date, 3022631019 Page Type [E] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

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and to pass on these beneﬁts to the region’s economy, there are areas of policy where we believe progress has to be made if aviation (and thus tourism and inward investment) in Northern Ireland is to continue to develop and ﬂourish.

(a) Flights/Seats Restrictions As a low-cost commercial airline, flyBE. needs to optimise the use of its aircraft fleet. At Belfast City Airport there are currently two limiting factors to development. (i) Restrictions on night/early morning flights, after 9.30 pm and before 6.00 am. (ii) A cap of 1.5 million placed on the number of seats for sale from the airport. Extending opening hours would allow flyBE. to actively consider direct European routes using the last inbound aircraft of the day, with the return journey early next morning enabling the aircraft to be in place to begin the 7.00 am domestic service. FlyBE. takes its environmental responsibilities seriously, both in terms of emissions and in terms of noise footprint, and we appreciate the sensitivities and diYculties faced by local residents in the airport’s urban location. For this reason, we have invested heavily in the Q400 Bombardier aircraft, which is one of the quietest and most environmentally friendly aircraft on the market today. Recognising community opposition to the extension of opening hours which would provide an obvious means of expand air transport provision, flyBE. recommends a review of the airport’s capacity to support an expansion of flyBE.’s route network by increasing the seats for sale limit currently set at 1.5 million. Providing an artificial cap on demand does little other than stifle the potential economic benefit that could result, and such a restriction is actually damaging Northern Ireland’s economy. It should be reviewed urgently.

(b) Access to Belfast City Airport The accessibility of Belfast City Airport, and the time-saving achieved by regional air linkages, could be signiﬁcantly improved with the construction of a railway connection much closer to the terminal than the existing Sydenham station, which is currently the only viable rail option serving the airport. FlyBE. is keen to emphasise the urgency of this accessibility issue, and recommend that a timescale should be attached to its implementation.

(c) Government Taxes Despite the growth in low cost airlines and signiﬁcantly reduced fares, passengers in Northern Ireland are still disadvantaged by the amount of government tax paid on each sector. FlyBE. recommends that the same form of subsidy is introduced as that which operates under the Highlands and Islands Scheme, and we believe that the Government should address this issue as soon as possible.

(d) London Regional Slots Although ﬂyBE. is the leading regional carrier providing access to domestic and continental destinations from local airports, we continue to recognise the importance of maintaining routes serving London at both Gatwick and London City (via the Isle of Man), and the need to protect a regional presence at London Heathrow. FlyBE. therefore supports the retention of slots at Gatwick and Heathrow for dedicated regional operators to maintain and promote inward investment in the UK’s regions, including Northern Ireland.

(e) Route Development Fund FlyBE. does not currently benefit directly from the Route Development Fund, which was set up to encourage economic development in Northern Ireland through the promotion and development of new air routes. However, flyBE. is an enthusiastic supporter of the initiative and we share its objectives of allowing business to be transacted at a wider range of European cities, promoting business linkages with the continent, improving competitiveness by cutting travel times and encouraging inbound tourism to Belfast and the surrounding region. FlyBE. fully understands the importance of promoting a more extensive range of routes to Europe from Belfast, but still recognises that the majority of tourism-related income is derived from visitors traveling from England, Scotland and Wales. FlyBE. believes that the funding streams from this fund must be continually monitored and evaluated to measure the real economic benefits derived for the region as opposed to subsidizing holidaymakers from Northern Ireland, which was explicitly not an objective intended by the scheme. 3022631019 Page Type [O] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

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4. Conclusion Following the publication of the Government Air Transport White Paper, the Select Committee’s inquiry allows for a more detailed consideration of the issues facing the provision of air transport in Northern Ireland. FlyBE. believes that the people of Northern Ireland could beneﬁt considerably by the expansion of air transport links, both with other regions of the UK and, increasingly, with key European regional hubs. In order for this to become a reality and for the people of Northern Ireland to beneﬁt economically, key decisions must be taken to remove many of the current restrictions at Belfast City Airport. We call on the Select Committee to take this opportunity to recognise this case, and to examine how the regulatory environment could be reformed. September 2004

Witnesses: Mr Mike Rutter, Sales and Marketing Director, and Ms Sara Randall-Johnson, Head of Public Relations, FlyBE. examined.

Q216 Chairman: Mr Rutter, Ms Randall-Johnson, it Q217 Chairman: You have recently announced the is very good of you to be with us. Thank you for new routes to Liverpool and Norwich. Have you being patient with us: today was one of those been able to accommodate those without cutting occasions where we tried to mix Main Committee back on any of the other routes? and Sub-Committee business and we appreciate that Mr Rutter: We believe that the Liverpool and you have been sitting outside waiting for a Norwich ones take it right away up to the ceiling and prolonged period, so I apologise for that. Thank you to the cap and that anything else that was to take for agreeing to give evidence. We have only really place on top of that would push it over the cap, and just started the inquiry into air services. We have that would include any increase in frequency on any visited all of Northern Ireland’s airports and taken of the other routes, which is why the airport has evidence from those that are responsible for the moved to try and move that restriction as a priority. running of those airports. We have also spoken to community groups. However, it is important that we get the view of the industry and those that are served Q218 Chairman: I notice that your latest destination by those airports, in terms of those that fly in and out to Southend is serving Jersey. Are there any plans of them. Therefore, your evidence will be very to extend journeys from Southend to other valuable to us. I will start by asking a general destinations, or will you be concentrating on Jersey? question. Having read your submission, you quite Mr Rutter: No, we announced recently that we have rightly say that key decisions must be taken to a very clear east coast United Kingdom strategy, remove current restrictions at Belfast City Airport, having basically done the west coast of the United and you talk about the two most obvious Kingdom; and it would be fair to say that Southend restrictions. One is the restriction on night and early would play a near-term view in that, which would morning flights, and the other is the cap on the include services to Northern Ireland. Our business number of seats. Can you tell us this: if that open model is to join up the dots on our network, where consultation does not come up with answers, are you that makes sense; and that would potentially open saying that there is no scope at all to further grow up a new gateway into London, which would be your flights and services from the airport? If that is welcome, as well as to Essex. the case, if you introduced any new routes, would Chairman: Thank you for that. It was rude of me not they be at the expense of any routes you currently to ask you to give a general introduction, but we tend run? to find that through questioning most of the points Mr Rutter: I will deal with the restrictions you wish to raise are brought out; if not, please feel separately, first the seats restriction. That is a real free at the end to mention any of the points we do not restriction for the airport today. The routes that we bring out through questioning. are seeking to be able to operate in the near term, within the next 12 months, would take the airport beyond its existing planning agreements on those Q219 Reverend Smyth: We are aware of your seats. Therefore, there are only two ways that can be concerns to help local residents, because you dealt with if they are not removed: either we do not recognise their problem since it is really an urban fly those new services, which are largely to new UK situation. Can you elaborate to the Committee what destinations; or we cannibalise existing services and steps you have taken to try to meet the cries from the either reduce frequency or the number of locations residents, in relation to noise pollution and to which we fly. The night-time restrictions is a emissions? separate issue, and that is more about being able to Mr Rutter: We as an organisation are uniquely in the open up more destinations for services, or being able low-cost sector, and are Europe’s third largest low- to operate greater frequency and being able to cost in terms of dimensions. We are committed to manage the risk profile of new route start-ups, which the regional model, so as a business we concentrate I can explain in more detail. The seats issue is a real on flying region to region, and region to capital cities and present danger to providing low-cost services to is a very small part of what we do. As a result of that, Northern Ireland, which is very much part of the we have deliberately chosen a fleet strategy and a business model we operate. plain purchase strategy of choosing fleet which make 3022631020 Page Type [E] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

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15 December 2004 Mr Mike Rutter and Ms Sara Randall-Johnson us good neighbours in regional airports that tend not operations in the Eastleigh area, as opposed to and to have had a history of the intensity of flying that contrasted with some of the 737 charter operations some of the south-east airports in the UK have. As which provide more disturbance. a result of that, we took a strategic decision in April 2003 to purchase Bombardier Q400 aircraft, which, Q222 Reverend Smyth: We are aware that a as far as we are aware, based on scientific evidence, consultation is going on at the moment. If it should had the best profile in terms of noise footpath of any happen that there is a recommendation of the seat capacity of 50 and above in the aviation area, extension of the number of flights, that would and also has per seat, in terms of emissions and fuel increase the noise anyway; so what hope do you give burn, one of the best environmental profiles of to the residents in those circumstances? aircraft within that area. We have seven based Mr Rutter: At the present moment we are not aircraft in Belfast, of which five of them are Q400; seeking an extension in the number of air transport and eventually, over a period of time, most of the movements or flights, because in regard to the fleet will move from the regional perspective to ATM—air transport movement—the planning Q400. We believe that that profile will give us the limits of the airport are absolutely fine to cope with best opportunity of being very good neighbours to medium-term growth. The initial limits were set with the communities we serve. The feedback we get reference to smaller aircraft, and they no longer fit about the noise profile in particular, which tends to the circumstances of either the demand in Northern be the major issue for people living close to airports, Ireland or the nature of the low-cost industry that we has been very positive to date. The second thing we work in now, which is larger aeroplanes. We do not have tried to do is to be an active neighbour to the think there will be multiplication of flights, in terms people who live in the communities there. We have of increase in noise; what we are seeking to do is to been the most active participants in the airport users’ have purely the seat number changed, which would group and the airport neighbourhood groups. We allow us to match the aircraft capacity that now have attended since their foundation, and we have a exists. reasonable record of being there to meet their requirements. We are used, and very happy to do so, to working with restrictions in terms of turning and Q223 Reverend Smyth: That would be the position movement of aircraft that fit the best noise patterns of FlyBE. but it may not necessarily be the position and disturbance patterns, and we believe we have of other operators that want to come in. acted reasonably within the environment to make Mr Rutter: That may very well be the case. that happen. We would seek to continue to deploy that model, of good planes with low disturbance. Q224 Reverend Smyth: I appreciate your answer because we remember what 330s and 360s were in terms of size and noise. Can I ask about concerns Q220 Chairman: When you talk about the about the lack of a real approach for the city to the Bombardier Q400 being the quietest aircraft, can airport: is that a real problem for you? I am sorry for you quantify that in terms of decibels? the pun! Mr Rutter: Certainly. I have a chart here that looks Mr Rutter: I think Northern Ireland has benefited at relative performance of the various aircraft greatly from having two airports. The way in which available. I can circulate it, if you require it. The both the cost of air travel has reduced and the widest one looks at the benchmark 737/200/300 diversity has increased has been a strong driver of performance. As you get closer, the green one looks economic growth and regeneration within the at the 146 performance; the black area looks at the region. That is also replicated in other regions where performance of the top-of-the-range 737/700 A319 there has been such a benefit. Normally, an airport aircraft; and the yellow one, which is the important is given respect for what it has achieved in those thing relatively, is the performance of the environments, and there has always been a duality of Bombardier Q400. That is basically measuring the view between international and city. City is now a noise footprint of the aircraft from brake release, successful and vibrant airport that punches its own when it takes oV at the end of the runway, through weight in terms of its strength as a regional airport to its take-up pattern and its leaving of the airport compared with many regional airports within the arena. It is measuring it on an 85-decibel contour. I United Kingdom, and should have access to the would be more than happy to go through that in intermodal infrastructure that should be aVorded to more detail in a written answer, if that would be its size and recognition as a regional airport. beneficial. Movements towards access to the railway capability being extended into the airport would be recognition and would help in the long-term environmental Q221 Chairman: I wondered if a 747 was X decibels, impact in terms of reducing car journeys into the what would a Bombardier be? airport. I think the airport owners would say that Mr Rutter: The relative proportion is that a currently that would probably only account for one Bombardier Q400 versus say a 146 is about 20% of to 5% of journeys, but our experience of somewhere the noise footprint that leaves within those arenas, like Southampton is that you get a 2 to 3% increase which is why—and I can speak here more about per year in switching to other forms of public Southampton than about Belfast—there has been a transport once they are available; so I would see a lot of very positive comment about Q400 and its long-term benefit from that. 3022631020 Page Type [O] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

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15 December 2004 Mr Mike Rutter and Ms Sara Randall-Johnson

Q225 Mr Beggs: In your evidence you mentioned Q227 Mr Luke: You state in your evidence that that an extension of opening hours would enable FlyBE. does not currently benefit from the Route FlyBE. to actively consider direct European routes. Development Fund; it may be that all your routes How do the current opening hours prevent you from are profitable or that some of the criteria under considering European routes, and how much of an which the Fund operates do not suit your extension would you require to make this feasible? application. Can you give us any idea of applications Mr Rutter: The first and honest answer to the you have made? I know there is a commercial question is that it does not stop us completely from sensitivity in this, but I would like to know how you considering European routes, and it would be feel the Fund has operated, and if it has operated to dishonest to say that that would be a single factor in your benefit. doing it. The 9.30 is very restrictive. At the other end Mr Rutter: Our business model is very much about of the day, 6–6.30, it is less of a problem, but 9.30 by joining up UK regions, and in many cases that all standards of a regional airport is relatively involves joining up isolated regions with isolated restrictive. It means that we have a shorter working regions. We were initially concerned that the Fund day for our aircraft, and key to the cost of our perhaps was not taking into account the benefit of business is aircraft utilisation. Our ability to send that from the Northern Irish perspective. I am planes for longer flight hours per day reduces the pleased to say that since we submitted this evidence total costs of operation of an aeroplane. That allow we have been successful in an application to join up us to be able to consider slightly more marginal Norwich with Belfast. It joins up two parts of the operations like direct European services because the United Kingdom that have had fairly isolated links cost profile and risk profile, particularly to business historically, and certainly my colleague had the destinations tends to be higher than the things we benefit of trying to drive to Norwich to do the press traditionally do as an airline, which is to serve the conference for me to announce the route, and we can UK domestic regional marketplace. The other thing personally testify to the isolation of Norwich. I think it allows us to do is fit in business time rotation. We that has certainly answered that criteria. If you are would still be able to slip in four or five regional UK asking for general comments, we were initially destinations on the same plane; so we could send out unclear as to what the criteria were for the scheme, a plane to Munich or Frankfurt at 6 o’clock or 6.30 and our understanding was that it was focused upon in the morning, and it could return and do the European business routes, which we felt was morning rotation, and then it would allow us to fit restrictive, given the need for economic growth from in three UK sectors before it then departed to do an inside the United Kingdom inbound sources as well. evening rotation. The other benefit, if you want to We hope that the Norwich one proves that that test a market on a single daily, is that we could test model has been expanded, or it certainly has in it with a cheaper late-night flight that would leave that case. perhaps at 6 or 7 o’clock and then return in for 10 or 10.30. As an organisation, frankly, our belief in Q228 Mr Luke: I come from a region in the UK operating hours at Belfast City is that it should be a which is distant from Northern Ireland, and I travel staged approach, and we are much more interested to Northern Ireland through a variety of routes with in initially getting it moved to, say, 10.30 rather than FlyBE. from City of London via the Isle of Man to a vast extension from that perspective, just to make Belfast, but I can see that that would obviously be a both the operational capabilities and have the ability problem. I am glad to hear that you have had some to put in some extra flights. success. Has the Ministry of Transport been helpful in giving you advice on how to apply? Mr Rutter: Until this application, I think it would be Q226 Mr Beggs: What frequencies are you likely to fair to say that there was more disengagement rather oVer with these additional routes; and will they than engagement. We hope that that has now mainly be for business passengers? changed as a result of this one application, but we Mr Rutter: The profile will be similar as for our did find it very diYcult initially to find a way of flights now, which is that basically 60% of our engaging and steering around it and understanding passengers are leisure passengers of various the objectives of the scheme. With this one, we varieties, and 40% are business passengers. We have obviously found our way through, but we were the highest proportion of business passengers of any genuinely—until we said we would have a go at this low-cost airline; but 60% of our bread and butter is one—of the opinion that it was purely for European still paid for by leisure passengers. I would assume, business destinations, which obviously it was not! depending upon the profile, that you might see a 5% Obviously, as almost the largest airline in Northern fluctuation either way in terms of the city; but the Ireland, it should not be in that state for us; we are profile would remain largely the same in terms of normally reasonably good at engagement. routes. Direct potential routes for us would basically be to major cities in near Europe. Our economic range with our aircraft is between 1.5 and 1.75 hours, Q229 Mr Pound: Mr Rutter, I have to say that I am so we would not be looking to go to places like extremely impressed with the quality of the evidence Rome; it speaks more to France, Germany, you have given and the way in which you have and places close to Northern Ireland, within avoided the perils of obfuscation in what must be a that range. very commercially sensitive area. I am sure I speak 3022631020 Page Type [E] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

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15 December 2004 Mr Mike Rutter and Ms Sara Randall-Johnson for all my colleagues when I say we greatly Q232 Mr Pound: Originally you were Jersey appreciate the honesty and openness with which you European. If you reach the point where you are have responded to our questions. Having said that— above the 65% and starting to run up against Mr Rutter: There is always a “but”! capacity and slot problems, where would you seek to grow your business? What would be your next target area? Q230 Mr Pound: No, but I am really repeating that Mr Rutter: Obviously, as an organisation it is fairly caveat that Mr Luke placed on the record; that if we well spread. If we end up bumping up against are moving to the area of commercial sensitivity it is headroom in terms of planning requirements at entirely understandable if you prefer not to answer Belfast City, first of all we would seek to generally it. I have to say that the fact that at the moment you grow our business in other parts of the United have answered everything is to your credit. Have you Kingdom and abroad—because obviously we have considered that if the restrictions at Belfast City are many more options than purely Belfast to put both not changed, operation from Belfast International capacity and business. What would happen over the might be an option in the future? medium term if planning conditions stayed in place Mr Rutter: Obviously, a move to Belfast is that the more profitable routes would end up International—nobody rules anything out in cannibalising either the marginal routes or the less aviation, a bit like politics, I am afraid, and the profitable routes, because obviously at the end of the aviation industry changes at great speed, so I would day in a commercial business the route strategy never rule anything out. What I would say is that follows the money strategy, so if a particular route a movement to Belfast International would provides more money, then at the end of the day, definitively reduce the route choice that either gradually either by frequency dropping or total ourselves or Easyjet, the two largest providers of route dropping, you would find that those routes services in Northern Ireland, would have to make. would win in a planning-restricted environment. Let me give you an example of that: currently, That is why I think the movement of seats is not a Northern Ireland benefits—this is purely one big issue in terms of planning. The movement of air example; there are many others—with Belfast transport movements would not be a big issue, International to Glasgow and Edinburgh and although we understand that that would need to be Belfast City to Glasgow and Edinburgh. The result approached sensitively. The removal of the seat of that is that air travel prices between those areas legislation just deals with a historical anachronism have reduced very substantially, and as such about the way it was calculated when there were benefited the economy. We, and I think Easyjet, smaller aircraft around than today. would find it diYcult—and I am not saying which one would be the loser out of it, but one of us would Q233 Mr Pound: Can you remind me of the carrier be—to compete from the same airport to the same that flies into Derry? airport, because your competitive diVerentiator, Mr Rutter: Air Ireland and Ryanair. which provides you with an ability to be competitive in the market place, would largely disappear. You Q234 Mr Pound: Has that ever appeared in your would be literally down to saying it is 50 pence this targets? I do not mean Ryanair—I assume that you week for taxes and charges, or that it is 50 pence and are going to deal with them—I meant Derry Airport. then we pay the taxes or charges, in terms of the Mr Rutter: Ryanair frequently pop into our lives. market place. I would certainly see a near and medium-term reduction in services to Northern Q235 Mr Pound: And into your target? Ireland as a result of that. We would only want to Mr Rutter: Indeed. In terms of Derry, in the dim and operate a single station operation. We would not distant past we operated from there. I do not rule out want to put some services into Belfast City and some Derry Airport as a potential expansion area for services into Belfast International. The nature of the FlyBE. because it would suit our business model. It economics of our organisation means that base costs would have to be, though, part of a wider island are important to the financial health of the domestic strategy, which we as a company have not organisation, and the duplication of base costs yet put into our business plans but are researching would make many of the routes that we would and looking for. operate on the low-cost business model untenable from that perspective. If we had to pull the whole lot Q236 Mark Tami: In your evidence you say that you out it would fundamentally undermine the support the retention of slots at Gatwick and economics of Belfast City anyway, as I think we are Heathrow for dedicated regional operators; but probably now about 65–66% of the projected should we be worried that you may well use the slots numbers in 2005 of the airport, and we are about that you currently operate for Gatwick to Belfast 80% of the movements. City for other routes? Mr Rutter: You should not be worried on that score, certainly in terms of how we feel about it or our Q231 Mr Pound: I wanted to establish whether you commitment to Northern Ireland, which is fairly would consider Aldergrove in addition to Belfast large, with 13 routes out of Northern Ireland. We are City rather than replacement of? the largest provider of route networks out of Mr Rutter: We would only ever operate from one Northern Ireland. Under the proposals that we airport. made to go into the White Paper, we suggested that 3022631020 Page Type [O] 12-04-05 15:46:31 Pag Table: COENEW PPSysB Unit: PAG1

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15 December 2004 Mr Mike Rutter and Ms Sara Randall-Johnson for isolated and key regional communities there be Mr Rutter: Some people from Northern Ireland some basic guarantee of slot rights into key hub increasingly have used Dublin, and obviously the airports, and we would like to see that in places like start of the continental service will diminish some of Heathrow, where expansion takes place—that some the transatlantic traYc for both ourselves, Easyjet of the slots are kept, earmarked, for those and others further. communities that currently have limited access or require extended access. With the pressure on places Q241 Reverend Smyth: Does that 8% of onward like Gatwick, we would see limited safeguarding of travel include flights to Jersey and Guernsey? those slots—and we are talking about limited not Mr Rutter: Some of it would include flights to Jersey wholesale distortion of the market place—would be and Guernsey, some of it is intra-FlyBE. and some in the best interests of regional economic policy, and is BA or other airlines. have argued so. We do not have a company interest Q242 Chairman: You currently have a code share in Heathrow, but we do argue that case, because we arrangement with Continental Airlines. Of that 8% are a regional airline and our routes are in the region. how many transfer passengers through that code arrangement are in that number? Q237 Mark Tami: You say you do not have an Mr Rutter: The code sharing is a FlyBE. historical interest there and you have sold the slots; so do you anachronism relating to the days when it was a rule out using Heathrow as a possible route to traditional airline. It is a very small part of what we Belfast? Is that oV the agenda? do, and the starting of the Continental service out of Mr Rutter: No, we do not rule it out. We would go Northern Ireland will have little or no eVect upon us. into Heathrow as part of any general capability and ability to serve regions that we either now serve or Q243 Chairman: Given Continental’s new route from Belfast International, that will not have an would serve in the future. Frankly, we sold the slots V at Heathrow to fund the transition of the company. e ect. Mr Rutter: A minute eVect, but not one that would Being a private company we did not have access to seriously aVect our business model. funds from other areas and we had to transform it Chairman: That is helpful. from being a loss-making company into the profitable one it is today. When you do a business Q244 Reverend Smyth: Does FlyBE. still have that transition you need an amount of cash to get from A link with Delta? to B, and the Heathrow slots funded moving from A Mr Rutter: Yes, and the link with Continental. to B. Q245 Chairman: Due to a following wind, you will Q238 Mark Tami: Do you have any figures on the be pleased to know we have arrived ahead of number of passengers that use the Belfast/Gatwick schedule. Perhaps I should ask you to remain seated and keep your seatbelts on for just a little bit longer route and then go on to international destinations? and consider whether nor there are any issues that Mr Rutter: Basically, about 8% of our passengers are you have not given in your written evidence or that in some form of transition mode at Gatwick. have not arisen in the questions we have asked you, which you would wish to raise with the Committee! Q239 Mark Tami: How does that fit in with what Mr Rutter: I think the questions have dealt with you would normally expect? Is it high or low? most of it. Genuinely, we are very committed to Mr Rutter: It is about average for where we go to at Northern Ireland. We were the initial tenants of a major airport. It is not particularly big. Basically Belfast City and we helped transform that airport these days most of the flights tend to be point to from what it was to what it is, we believe. We are in point. The days of the multi-leg flights have a fairly healthy financial state and have a desire to diminished fairly substantially. continue to invest in Northern Ireland. We think we have the right planes to be good neighbours and would like the opportunity to continue to do that. Q240 Mark Tami: Those people use Dublin, Chairman: On behalf of the Committee, thank you presumably? for your time; we appreciate it. 302263PAG2 Page Type [SE] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

Ev 80 Northern Ireland Affairs Committee: Evidence

Wednesday 12 January 2005

Members present:

Mr Tony Clarke, in the Chair

Mr Adrian Bailey Mr Iain Luke Mr Roy Beggs Mr Stephen Pound Mr Gregory Campbell The Reverend Martin Smyth

Witnesses: Mrs Doreen Brown, Deputy Secretary, Regional Planning and Transportation, Mr Brian White, Director of Ports and Public Transport Division, Department for Regional Development, Mr Robin McMinnis, Head of Tourism and Agency Liaison, Department of Enterprise, Trade and Investment, and Mr Harry Baird, Planning Service, Department of the Environment, examined.

Q246 Chairman: Thank you for attending and for a view on, and how does that relationship work in being patient during the division. We are running respect of the formation of the White Paper and the very late. I do know that some of you are travelling impact of the White Paper within the Province? back this evening, so our intention is to get you away Mrs Brown: Civil aviation is a reserved matter and before six o’clock, which means that our questions therefore the Department for Transport is the lead will have to be very swift and your answers brief. department there. It has responsibility for Before we start the formal part of the evidence, I international agreements, for public service believe you wish to speak to us in conﬁdence about obligations in relation to air routes, for slot policy, the announcement on the Route Development for safety issues and for aerodrome licensing. It is Fund. responsible for preparing the Air Transport White Mr McMinnis: Thank you, Chairman, for the Paper. The Airports (Northern Ireland) Order 1994 opportunity to have this informal word with the gave functions to what was then the Department of Committee. I am Robin McMinnis, with the the Environment, and those functions covered land Department of Enterprise, Trade and Investment, use planning, assessment and mitigation of local and in addition I am a director of the air route environmental impacts including noise control at development. I am conscious that there will be a airports, surface transport and links to airports, and major investment announcement in Belfast the funding of aerodromes in public ownership, with tomorrow morning about additional direct ﬂights to the power to make bye-laws there. In terms of how European destinations. I did not want to come along we relate to the Department for Transport in the today and then you have to read about it tomorrow development of the White Paper, it has been an open in the papers. I have sought and obtained the consultative arrangement where we have had the approval therefore of the airport authority opportunity to feed in concerns or preoccupations concerned to share that information with you, but I that were peculiar to Northern Ireland, in the hope do stress that it is strictly embargoed until ten-thirty that they would be taken account of in the tomorrow morning. You may remember that just Department for Transport’s development policy on before Christmas we were successful in securing an a UK-wide basis. We continue to liaise with the Easyjet route to Geneva. Tomorrow we will be Department for Transport on how the Transport announcing two other routes, one to Berlin and one White Paper is being taken forward locally in to Rome, direct from Belfast International Airport, Northern Ireland. starting in July and working up to a full daily service within four months. That would bring it to nine the Q248 Chairman: Obviously, there is the added new routes introduced as a result of the Air Route problem of competition between airports within Development Fund a year ago. Northern Ireland and competition from Dublin. Who takes a view on that? Is that something the Q247 Chairman: That is excellent news. I am sure it Department would deal with, or the Northern will be widely applauded and welcomed, particularly Ireland OYce? by those at Belfast International Airport. I would Mrs Brown: I suppose both. The Air Transport appreciate it if people would remember that that White Paper looked at the airports in Northern information is embargoed until ten-thirty tomorrow Ireland, and it did not set out that there was a morning. We move on to the formal evidence. I problem in terms of competition between the would like to start with a very general question, just airports. It was certainly looking to the future and to assist the Committee. The Department for spoke of all three airports as having a role, although Transport has overall responsibility for the strategic in the case of City of Derry Airport it was perhaps framework for the aviation sector across the UK, less direct in what it might mean. It was certainly but uniquely I would imagine, given the role of envisaging a continuation and the expansion of both Northern Ireland, the Northern Ireland Department Belfast International Airport and Belfast City has a say and interest in the way in which policy is Airport. In relation to leakage, the impact of Dublin developed. Could you assist us in talking through Airport, it did comment on that, but leakage was how that relationship works: which issues do the going to be inevitable. There were some things that Northern Ireland departments tend to take more of could be done. It was never going to be possible to 3022631021 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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12 January 2005 Mrs Doreen Brown, Mr Brian White, Mr Robin McMinnis and Mr Harry Baird halt leakage because of diVerences in scale, but Mrs Brown: I will ask Harry Baird from the Planning actually it referred to the Air Route Development Service to pick up on this. Fund as a very powerful mechanism to counteract Mr Baird: I can confirm that when the City Airport leakage where that was going to be feasible, and operators made a submission to the department they where Northern Ireland could justify and support referred only to the seats for sale aspect. However, the development of new routes. when we went forward with our public consultation in November we indicated that we would accept Q249 Chairman: The reason I mention Dublin is that comments on that planning agreement but we many of our witnesses have talked about the emphasised that the City Airport at this moment in absolute fundamental importance of maintaining time was simply looking for a review of the seats for the Heathrow links from Northern Ireland in respect sale. To date we have had something like 14 of onward journeys and onward passages and trade. submissions and within those quite a number of Can you elaborate on the view that you have already issues have been raised. The other key issues within expressed on the PSO mechanism being used to the planning agreement, for example, the time slots, secure routes and necessary slots for Heathrow the air traYc movements, the flight routes, etc, have services? It is said that the Department of Transport all been raised and we will take account of that as we should be strongly urged to make representations to move forward. the European Commission to get rules relating to PSOs changed. Can you comment on those two Q252 Mr Bailey: Following the end of the issues? consultation what is the process that you will be Mrs Brown: We believe that under the European adopting and when do you expect to make a rules it is not possible to make a case for a PSO that decision? would guarantee slots at Heathrow. The PSO Mr Baird: In meetings with elected representatives, mechanism simply allows support for routes from and indeed in our correspondence with other city to city, so we could not, even if we were interested parties, we have indicated that our introducing a PSO mechanism, guarantee that that Minister, Angela Smith, will take a decision on the would reserve slots at Heathrow. The fact is that best way forward when we have received all the currently we are very well served with connections to representations. A couple of key parties have asked London, be it Gatwick, Stansted or Luton, and for an extension to the timescale, for example, although we only have one carrier currently going Belfast City Council, and indeed Antrim Council, so into Heathrow, when you take account of all the it is probably going to be early February before we other carriers going in to other airports, we cannot get in all the representations but at some time during make a case that we are badly served; so the PSO February the Minister will be taking stock and mechanism, in our view, does not come into play. deciding on the best way forward which may well That said, we have stressed on a number of occasions include a public inquiry. As I say, she has already to the Department for Transport, as have a lot of the indicated that to the elected representatives. regions of the United Kingdom, the importance that we attach to having slots at Heathrow, because of Q253 Mr Bailey: We have heard that eVectively the the interlining capability, which does not exist at the potential for future growth at the airport without a other airports. We therefore continue to make our change to the planning agreement is very limited. representations to the Department for Transport, Apart from the current consultation exercise what but ultimately we are in their hands analysis has been undertaken on the benefits and disbenefits that would arise from changing the Q250 Chairman: Obviously, we will report at the planning agreement and what are the conclusions of time, but it is important to place on record the this analysis? In particular, how do you achieve a unease that exists that even though London may be balance between the potential benefit to the wider well served—and it certainly is in terms of the other population against the disbenefit to those who airports—there is a huge risk that trade could be lost would be directly aVected by changes? to Dublin as it increases its international flights, and Mr Baird: When the last planning application was that those slots at Heathrow, which enable onward submitted for the new terminal building we travel, are very important to people within the employed independent expert advisers to the Province, and also for those companies that would department in dealing with that application. Since wish to service that onward travel. I will leave that that and since the review we have not taken any there, because I am conscious of the speed with further independent views but we do reserve the which we need to progress. right to bring on board independent experts as we move forward. Certainly if we go down the route of Q251 Mr Bailey: The planning agreement at Belfast a public inquiry it would be our intention to employ City Airport is out for consultation at the moment. consultants expert in the aviation field to advise us I understand that the airport management has asked on the issues that have been raised and the best way for an increase in the “seat sold” limit only, although to take those forward. FlyBE recently told us that they would like some extension of the operating hours in the evening to Q254 Mr Bailey: The White Paper in December 2003 enable them to consider European flights. Can you projected that passenger numbers at the City clarify whether the planning agreement is open for Airport could reach four million by the year 2030 consideration, or is it limited just to the seat issue? and encouraged a review of the planning agreement 3022631021 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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12 January 2005 Mrs Doreen Brown, Mr Brian White, Mr Robin McMinnis and Mr Harry Baird if this was requested. Would you accept that to outcome that was one of no change how would the achieve this projection would require a relaxing of overall policy objectives of air transport in Northern the current planning agreement? Ireland be met? Mr Baird: It is probably a little premature to give an Mrs Brown: It would appear that the City Airport outcome to the review that we are just embarking on. would not be able to develop in line with the The City Airport themselves, in the figures that they expectations of the Air Transport White Paper are putting forward, were talking about something because, given that it is coming close to the cap on like three million passengers to 2018 and in the seats for sale, there is little scope for further context of the 1.5 million seats for sale, which is both development there. Given that it is currently about into the airport and out, that at the minute is 2.2 million passengers a year, there would not be amounting to something like 2.2 million passengers, scope for it to reach the four million envisaged by the so as an indicator of growth certainly there is that White Paper. The impact of that I assume would increase there, but from the point of view of the mean that the extra demand would have to be outcome of the review the City Airport have asked displaced elsewhere, most likely to Belfast us to look at that. We are going to take on board the International and possibly some to Dublin, but I am comments that come in and probably take in expert only speculating on that. advice, perhaps even through a public inquiry process, so I do not think it would be right to pre- Q257 Mr Campbell: Has any research been done on empt the outcome of that. that? You speculated on Dublin but is there Chairman: You cannot say we did not try. anything more substantial to it? Mrs Brown: No, because we are awaiting the outcome of the current review. If there is a change in Q255 Reverend Smyth: The original numbers were the restrictions on City Airport the impact of that based upon the smaller 330 plane with a louder, would be taken into account. If there is no change noisier engine. The larger planes are much more then we will have to look at the impact of that but silent and can take far more people. Therefore, is until we have the review completed we do not know there a compensation factor involved? what scenario we are facing. Mr Baird: As I mentioned earlier, there were a number of other factors in the agreement but one of those is, as you say, air traYc movements. At the Q258 Mr Campbell: Perhaps I can move on to the time the 1.5 million seats for sale coincidentally issue of noise control which you are well aware is one that is raised on a regular basis. What action does the amounted to 1.5 million passengers because at that department take to monitor noise control and have time the payload was approximately 50%. Now I you any results to give us of recent monitoring? understand that is up to 70% and, as you say, Mrs Brown: The Belfast City Airport will have quite there are larger planes and there are 45,000 air traYc a lot of detailed information on that but I can tell movements allowed in the agreement, so it probably you from the Department’s perspective what we do. would make sense to take a look at both those The airport itself generates indicative noise contours factors. Indeed, I am aware and it has been raised on a regular basis and these are verified with you when the residents’ groups came, that independently by experts who also carry out on-the- if you go back to the Belfast Harbour Plan and spot noise checks and DRD in turn validates the public inquiry that was held then, the those findings every two years, I believe. We Commissioner, in making his report to the did commission Professor Callum Thomas, the department, indicated at that time that perhaps Professor of Sustainable Aviation at Manchester there was a better way of monitoring the operations University, to carry out a study for us in July 2003 rather than through passenger numbers which, as and he produced a report which can be made you say, at that time were limited because of the then available to the committee. It is on the DRD website building. Since then we have got a new terminal and it is really a good practice guide to the building and therefore in a sense there is another assessment and management of aircraft noise at criterion for the passenger numbers. The short Northern Ireland airports. Following on from that, answer after that explanation would be yes: both which pointed to the need for improvements to be issues would need to be looked at. made, BCA itself took some action. It formed a Mrs Brown: There is a lot of headroom in the air Noise Management Committee on which DRD is transport movement figure. Last year there were represented. It began to collate and analyse noise only around 33,000 ATMs at the City Airport. At complaints and, importantly, it developed an action the same time the seats for sale cap is close to plan to review its operating procedures in the light of being reached. the recommendations in this good practice guide. Chairman: Given the need to increase the numbers it Progress on that front is monitored at quarterly is leg room that most of us are worried about rather intervals. DRD, however, is also just about to than headroom, but that is a diVerent subject. launch a further review of the noise environment at BCA because we want to explore whether there are better, perhaps more sophisticated, ways of Q256 Mr Campbell: I will not ask anyone to approaching the measurement and monitoring of prejudge the outcome of the consultation exercise, noise and we are going to employ experts to measure let alone any public inquiry but, so that the what is going on at the City Airport through this committee can be clear, if we were to assume an summer and into the winter so that it is covering a 3022631021 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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12 January 2005 Mrs Doreen Brown, Mr Brian White, Mr Robin McMinnis and Mr Harry Baird wide range of weather and operating conditions. It addition we sent a small team to last year’s will advise us on what it finds and it will advise us International Routes Conference which was staged on alternative methods of going about noise in Madrid and we promoted Northern Ireland and measurement and monitoring for the improvement got people to think about investing in Northern of the situation at the airport. The Air Transport Ireland and air routes in Northern Ireland. Now and White Paper is very conscious of the need to be again, keeping our ear to the ground, we will try to sensitive to the environmental impact of airports identify opportunities. One such example is the wherever they are and the whole White Paper is success we had in securing the Continental route. We about a balance between commercial development went out to Houston to secure that deal. We brought and environmental impact which developing air them over to Northern Ireland, and sold them on the travel can have, so we consider this to be an idea of investing in Northern Ireland. So we do it in extremely important area to take forward, especially a number of diVerent ways. I was, I have to say, quite in relation to Belfast City Airport. surprised to hear that Flybe had not learned of the existence of this scheme until comparatively recently Q259 Mr Campbell: Just for clarity, to whom do you but I am glad to say that they have caught up. say we should go for the most recent statistics on noise control? The airport or DRD? Q263 Mr Pound: You mentioned Flybe. Flybe are a Mr White: If you are looking for things like very eVective, eYcient, entrepreneurial company, complaints and so on, those are statistics which are although they have slightly unusual taste in the developed and maintained by the airport and these football teams they choose to support. They said, are the things which would come forward to the and I know you are well aware of this, that they were airport forum on a regular basis. If it is more detailed not completely clear as to the criteria, although they information about the methodology for the absolute were later successful, I believe, in the bid for measurement of noise levels and the contours and so Norwich-Belfast. How would you respond to that? I on which my colleague was talking about, that appreciate you have already touched on it but I am would be to us. giving you the opportunity to elaborate. Mr McMinnis: I would just make this point: our Q260 Chairman: I know there is a lot of confusion relationship is with the airports. The airports’ and concern that most of the figures that are relationship is with their customer and I can quite presented seem to be computer generated and I understand that some airlines might not be as alive know that those who have concerns have said, “Why to this as others, depending on where the airline is on earth can we not just put somebody on the street based, for example, and because of the existence of and try to note the decibels recorded at ground level the cap and so forth at Belfast City. I have brought because that would be a better indication of noise with me and am happy to leave with the committee nuisance?”. Is that something that has been the brochure that was produced. The details of the considered? scheme are all set out in this and have been made Mrs Brown: Some of them are computer generated readily available to each airport authority in models but in validating that it is also tested through Northern Ireland. on-the-spot noise measurement. One of the reasons why we want to undertake this review that we are just embarking on is that we are conscious of the Q264 Mr Pound: The criteria that you establish in unhappiness with the computer generated approach your submission refer particularly to links with and we want to see whether there are better ways of continental Europe and the statement you made approaching the problem. earlier on clearly underscores that. Have the criteria Chairman: That is comforting. Thank you for that. changed because there have been inter-UK applications? Q261 Mr Pound: Turning to the Route Mr McMinnis: Let me be candid. When we launched Development Fund, how is it promoted or marketed this scheme we were unsure as to what the uptake (if that is the right word) to potential airlines? How would be. Just over a year ago we watched do you go about spreading the word on this? something like five routes leave Northern Ireland in Mr McMinnis: We started oV by launching the the wake of 9/11. We had only one international scheme and giving it a fair splash in doing so. In fact, direct service to Amsterdam. Frankly, we did not we brought all of the airports in and briefed them on know what the market was going to produce so we the operation of the scheme and the lessons that we did not want to rule anything out. We looked at each learned from Scotland. route on its merits and if there were routes to GB and gaps in the network we wanted to plug those but it was always conditional on there being a direct, real, Q262 Mr Pound: Sorry to interrupt—all existing economic benefit to Northern Ireland. We only airlines or potential airlines? support routes that deliver that economic benefit to Mr McMinnis: Airports. In addition, our Northern Ireland. consultants, who work directly to us, AviaSolutions, who have immense knowledge of the industry, meet regularly with all airlines, not just the existing Q265 Mr Pound: So routes like Derry-Birmingham airlines who operate out of Northern Ireland but and Derry-Manchester were considered on also European airlines, and continually keep check economic criteria rather than a policy criterion on their thinking and their development plans. In specifically aimed at continental Europe? 3022631021 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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12 January 2005 Mrs Doreen Brown, Mr Brian White, Mr Robin McMinnis and Mr Harry Baird

Mr McMinnis: Essentially on economic criteria. As Q269 Mr Luke: Stephen mentioned the UK flights. you know, the Manchester and Birmingham routes We have seen you create them and I am very were linked to the City of Derry Airport. It helped to supportive of the work you do in flights to the reinvigorate and regenerate growth at CODA, but United States as well as to Europe. Do you have a the Norwich route was identified as being one which proportionate balance between which one you are could deliver quite good economic benefits in terms giving the highest priority and funding to in order to of business linkages, allowing business people in develop them? Northern Ireland to conduct a day’s business in Mr McMinnis: No, we do not. We take them as they Norwich, in East Anglia, with savings in time travel come. We do not take them all and some of them and also helped us in terms of the growth of tourism fade away. Some we go after harder than others, in Northern Ireland which, as you know, last year hit depending on their value and worth. We look at each two million for the first time. In each case we look to one, as I said earlier, on their merits. I will not the economic benefits as being the reason for the pretend to you that the Norwich route is of the same investment. weight as, say, securing a direct route to Newark in Mr Pound: I thought you were going to say it was New Jersey or to Charles de Gaulle or, indeed, the going to economically benefit Birmingham for a most recent ones, to Geneva, Rome, Berlin and so minute, but that might be beyond your brief! Thank forth, but they are all important and each has been you very much indeed. demonstrated to be value for money and of real economic benefit to Northern Ireland. We are currently embarking on a review. We have to take Q266 Mr Luke: I would like to pick up some of the stock because we have committed most of the points raised by Stephen. When you drew together existing fund and, if I may, suggest Chairman, your plan of action you talked about “selected and that, having heard evidence from the various targeted routes”. Is there a list of what you would stakeholders, it was the view of this committee that currently consider priority routes? this fund remained of value to Northern Ireland, we Mr McMinnis: We started with a blank sheet and we would be very glad of your support. said, “Look: we have only got one route to Europe at the moment. Where should we focus our Q270 Mr Luke: But if you are thinking of spending attention?”. We came up with a kind of informal list it there might be a nice flight to Dundee to save me and Charles de Gaulle airport was very near the top, getting across every five weeks. if not the top, because it is a hub, and it helped to Mr McMinnis: We will try and arrange it. strengthen our direct linkages with Europe. But we never published it and we have relied on the airlines, the airports, the market if you like, coming forward Q271 Mr Luke: Going back into the analysis that with a proposal, at the same time keeping an eye you are doing, you have talked about the economic out, as I said earlier, for opportunities like the benefits. Has an analysis been done on the projected continental proposal. numbers of people you think are going to use the flight as part of the equation? Mr McMinnis: Yes. Most of the proposals that come Q267 Mr Luke: You have also got a flight to Nice to us do not really surprise us because we have been but you have turned down recently flights to Malaga working closely through our consultants who are in and Alicante? daily contact with the airlines and airports. But Mr McMinnis: Yes. They are not the same. I was when a proposal does emerge and a firm application interested in that point. I accept entirely that arrives with us we look at it on two levels. We look Alicante and Malaga are basically sunshine at it first of all against the published criteria which destinations. So is Nice but Nice has a number of are set out in this document which I will leave with added advantages. I do not know whether you know the Clerk. That looks at things like the technical it or not but certainly the economic appraisal that we ability of the airline to deliver, whether it hss slots, did into that route revealed that it was the second what size of aircraft, whether it has the handling largest French airport, handling between six and capacity, whether the airport has the capacity to eight million passengers per year. Also, the Cote service, what time the flights would come in at, d’Azur is the second largest conurbation in France. whether that is convenient for business people, that It has the largest, most significant science park in sort of thing. We also look at CAA data in terms of France, in fact one of the biggest in Europe. It is a whether there is a potential market there and what renowned centre for technological companies and, the prospects are for business traYc or inbound of course, we were trying to develop links with our tourism. We look at all of that initially and there is science park in Belfast. It also gave great scope for a negotiation then which might take place through inbound tourism from that part of France and the services of our consultants. The proposal then northern Italy, so there was a whole host of reasons, goes to the board and the board looks at it in none of which pertains to the two Spanish resorts principle and decides on the basis of that that were mentioned before. information whether it is worth exploring further. If it is we embark on a detailed economic appraisal which probes the kinds of things you are talking Q268 Mr Luke: There is also the Cannes Film about. That is done by PricewaterhouseCoopers Festival. quite separately from the consultants we use, so we Mr McMinnis: You could say that. have a robust system to ensure that taxpayers’ 3022631021 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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12 January 2005 Mrs Doreen Brown, Mr Brian White, Mr Robin McMinnis and Mr Harry Baird money is safeguarded. We also look at the extent of tomorrow’s announcement that will exhaust the the risk which the airport authority is running fund. We are taking stock of the situation and we are relative to the airline and relative to ourselves, looking around. We recognise that there are other wanting to make sure all the time that the risk to targets out there, Scandinavia, for example, the public sector is not out of kilter with that by the northern Germany, perhaps another North private sector. Finally, we want to make sure that American route, but we can only do that if we have the proposal would not have gone ahead without the the money. We have excited the market. It has been investment support from the Route Development very diYcult. There were three or four years, as Fund. many Northern Ireland representatives will know, when we had a very diYcult time. We lost the Q272 Reverend Smyth: As I understand it, the fund national carrier and so forth. Now that we have got is a compensating payment as a discount on landing that momentum going I personally believe that we charges that an airport operator may want to need to build on that. The world will not stand still, charge, particularly on certain routes. Can you the aviation market will not stand still. We have to explain how the contribution level is set? keep going to build those links and reduce Northern Mr McMinnis: Essentially it is a negotiation. We Ireland’s peripherality. know that there are published tariVs and then there are the actual tariVs that are charged to an airline. Q276 Reverend Smyth: Can you share with the That happens right across Europe. It is common committee how much of the initial budget has commercial practice. That is why we employ already been allocated on these new routes? AviaSolutions, to get behind the printed charges, to Mr McMinnis: All of it. get at the real truth of what the deal is between the airport and the airline. As you quite rightly say, it is Q277 Reverend Smyth: Would it be possible to based on aeronautical charges and the discount that provide in writing to the committee details of the V is o ered. We then ask the airport, “What in support provided or committed from the fund to addition are you doing to secure this particular date in terms both of routes and of passenger route?”, because those charges have been published numbers? for a very long time and have not brought in these Mr McMinnis: Yes, certainly. With your additional services, so the question is how much permission, if the Clerk would be kind enough to further are they cutting the charge to try and attract? drop me a note I would be happy to respond through We try to match that and it is very important indeed our Minister. that we get at the truth of the matter. Obviously, Reverend Smyth: We would appreciate your even when we get onto the same page, we then have response. I just make one caveat. When you talk a commercial negotiation. That is handled by our about consultants and auditors and keeping the consultants initially. The board stays slightly public sector at the level of the private sector, some detached from it so that we can take a clinical view of the private sector, with all their protection, have of what comes out of that process. not done terribly well, so we should not rely completely upon spending too much money on Q273 Reverend Smyth: Are you satisfied that from consultants. this perspective the scheme does not contravene EU regulations since we are all aware of Ryanair and Q278 Chairman: You have been very helpful to us in their problem at Charleroi? letting us know how you measure economic benefits Mr McMinnis: Yes, we are satisfied. Our scheme is and decide on which routes should be acceptable to modelled on the Scottish scheme. The Scottish the fund, but could you very quickly tell us about scheme relies very heavily, as you probably know, on how you continue the evaluation to make sure that the Manchester decision. I believe that the Scots did what you intended is borne out? In particular I am in fact make inquiries about it before they launched looking at issues such as the Charles de Gaulle/Paris their scheme. We took legal advice on the matter and route because if you look at it in terms of business of indeed consulted with the Department of Transport course it could be argued that it would be very good as well. for Northern Ireland but we would expect that a number of people would be using that route to Q274 Reverend Smyth: You did refer to the budget interline and go on to onward flights. How many that you have got, initially being about four million passengers do interline? Has that study been done? and it goes for three years, as I understand it. Would that form a basis on which you would Mr McMinnis: That is correct. evaluate whether or not the fund is working? Mr McMinnis: First of all, those kinds of questions Q275 Reverend Smyth: Is it likely that it will be were asked before the original investment decision renewed or was there a plea in an earlier response to was taken because we were able to trace that through make sure that it is and that it rises with inflation? the Civil Aviation Authority data. For example, a Mr McMinnis: Or perhaps a little bit more. The four number of people from Northern Ireland prior to million figure contained a small element for the introduction of the service to Paris were going to administration of the company and also for Heathrow or Gatwick and then going on from there, consultancy advice but, as I indicated earlier, the so there was information available. Once the route is scheme’s success has been quite remarkable. Those established we then monitor the route on a monthly funds are all committed and as a result of basis. We get statistics on passengers. This is 3022631021 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

Ev 86 Northern Ireland Affairs Committee: Evidence

12 January 2005 Mrs Doreen Brown, Mr Brian White, Mr Robin McMinnis and Mr Harry Baird information provided by the airline so it is quite Q280 Mr Beggs: Some of us have always suspected, separate as it were from our contractual Chairman, that those who paid for reports got arrangement with the airport authority, so we have results which they commissioned. Given the current no reason to doubt the information. In any case we operating deficit of around £1.2 million a year how also have access to the Civil Aviation Authority realistic is it to try to maintain the airport in public data. All of this information comes back to us. We ownership in the longer-term? know how many business people are travelling, Mrs Brown: This is a point that I could not answer which direction they are coming from, the extent of solely. It is a point, obviously, for Derry City the inbound tourism. Locally then, as you probably Council. At the moment Derry City Council is know, as you travel frequently through Northern meeting that operating deficit. Okay, the ratepayers Ireland airports, there are surveys conducted by the of the Derry City Council are meeting the operating Northern Ireland Tourist Board and there are deficit, and all the indications are that, while they surveys conducted by my own department, would love to be relieved of that burden if at all Enterprise Trade and Investment in terms of picking possible, they are still willing to make that up employment levels because one of the side contribution because of the importance that they benefits of this scheme has been direct and indirect attach to the continuing operation of CODA. job creation. Possibly as many as 500 jobs will result Clearly, the existence of an operating deficit is also a from the scheme. That was not one of the objectives factor which feeds into an economic appraisal of the of the scheme when we introduced it. Some of the case for development and tends to reduce any routes that we have been able to secure have been possible net present value to net present cost, but secured not directly because of the operation of the there is apparently the willingness to pay. scheme but because the scheme attracted the airlines and drew their attention to the prospects for Q281 Mr Beggs: What is the position on the current development in Northern Ireland and so the kinds of application for funding to develop the terminal and routes you mentioned in Spain, and indeed the extend the runway and when do you expect to reach Prague route, Barcelona, all came out of the side a decision? show which followed the introduction of the fund. I Mrs Brown: This will be a decision for the Secretary hope that helps. of State. He received early in November a report Chairman: It does indeed. from a joint steering group which comprised government oYcials and representatives from the Q279 Mr Beggs: I want to direct a couple of private sector in Derry as well as the Clerk of Derry questions in respect of the City of Derry Airport. City Council and the CODA manager. The What is the department’s view of the potential for Secretary of State, on reading that report, asked for growth at the City of Derry Airport and in particular some further work to be carried out to try to explore what conclusions have you reached on the further the economic benefits that might derive from PricewaterhouseCoopers report that the City further investment and any possible state aid issues Council commissioned? that could arise, and also, going back to your last Mrs Brown: On the PricewaterhouseCoopers question, which perhaps I did not say enough about, economic appraisal in relation to the long term to look at possible changes in the governance of the strategic development plan that the council drew up, City of Derry Airport for the future to give it a V a decision has not been reached yet. This has proved greater opportunity to operate more e ectively in a to have taken quite a long time to examine. It raised commercial context. That work is approaching Y a lot of quite detailed and complex issues. The completion and o cials hope that the Secretary Secretary of State and Ministers are currently of State will in a very short period of time, a matter considering the case but have not yet come to a of a few weeks, have all the facts and figures in front conclusion. In terms specifically of the PWC of him so that he can make his decision. economic appraisal, which I do not think is a published document but I know that the executive Q282 Mr Beggs: What are the current plans to summary appeared on the Derry City Council upgrade the road between Londonderry and Belfast website, looking at that from a government as this would not only reduce the time taken to get department point of view and from the point of view to the Belfast airports from the west but also bring of our economists, we did have some concerns about wider economic benefit? Is this an issue that is being the figure work in the appraisal, the main one being taken into consideration in the current application that we believed that the appraisal overestimated for funding? passenger figures. The appraisal chose a highly Mrs Brown: Not specifically in the context of the optimistic passenger forecast of 826,000 passengers current application for funding but there are by 2010. That is rising from currently about 200,000 documents being produced following the Regional passengers and that figure did not tie in at all with the Transportation Strategy and one of them, the figures which had been put forward in the Air RASTN TP, which is the transport plan which looks Transport White Paper. On that point therefore we at the trunk road network across Northern Ireland, had to make known to PricewaterhouseCoopers is dealing with the road from Belfast to Derry along that we did not believe that that forecast figure was with the other main trunk road links. There have credible. That therefore aVected the other figure been some improvements to that road already, most work in that economic appraisal because a lot of the recently the opening of the Toome bypass, and the benefits flowed from the high passenger figure. plan, which extends up to 2015, also includes 3022631021 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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12 January 2005 Mrs Doreen Brown, Mr Brian White, Mr Robin McMinnis and Mr Harry Baird provision for further dualling from Castledawson, recognised the fact that Dublin is an airport serving the Dungiven bypass and possibly further dualling a national capital with a much larger hinterland so close into Derry. Another factor possibly coming these were all factors taken into account. The White along is the Investment Strategy for Northern Paper also recognised that the Air Route Ireland which is only a draft document at the Development Fund which we have been discussing moment but if that were finalised and the funding this afternoon was a policy response to that issue. figures in that were achieved there could be a prospect of further improvements to the road in Q286 Chairman: You also suggest in your evidence quicker time. that there is the potential for the Republic of Ireland to impose PSOs on other cross-border routes. What Q283 Chairman: It is totally indefensible of me, potential do you consider there is for this and are given my role as Chairman, but I have a strange other routes currently under consideration? aVection for Derry Airport and one of the issues that Mr White: Not that I am aware of. Obviously, there I would raise is that it has shown some quite is a PSO currently on the route between Derry and remarkable growth figures until most recently. I Dublin. It would be a matter for them to deal with. I hope that when we do look at its future we do so not understand that there are five other routes in Ireland just in terms of the Northern Ireland context but which have PSOs but they are all to regional airports within an island of Ireland context because of course in the Republic. a lot of its passengers live in the north of the island across the border who rely very much on the City of Q287 Chairman: You have just raised the PSO Derry Airport for travel into GB. I do hope that we between Dublin and the City of Derry. Are you able take those matters into account. Also, it leads neatly to share with us what the cost of that is and does onto a couple of questions I have in relation to the Northern Ireland contribute? We are trying to get island of Ireland. In your submission you refer to the our head around whether or not it is totally funded 2001 study which said that the net loss of passengers by the Republic. through Dublin was 260,000. Has there been any Mr White: It is completely funded by the Republic. update on that figure since 2001? Chairman: Is there not a case that it should be partly Mr White: No, Mr Chairman, there has not been an funded by Northern Ireland given the economic update on that figure since then. benefits— Mr Pound: What a question! Q284 Chairman: Given that there have been road improvements between Belfast and Dublin, what is Q288 Chairman: I am not trying to give away the the current estimate of numbers using Dublin? government’s cash. I am just asking the question. Although there is not a study are there any estimates Mrs Brown: To my knowledge we have never been as to what the current numbers are beyond that approached by the Irish Government with any such 260,000? suggestion. In the absence of the suggestion we did Mr White: I am not certain that we do have an not feel we needed to make an oVer. Certainly the estimate of the figures of the passengers using Irish Government seems quite content to pay the Dublin. PSO for that route. Mr Luke: If you are looking at PSOs though I think Q285 Chairman: Overall, and this is a diYcult Dublin will be looking at the greater economic question to answer, do we view the eVect of Dublin benefit in that part of the Republic of Ireland as well Airport as positive in as much as it is giving more as Northern Ireland. choice to Northern Ireland travellers, or negative in terms of loss of economic benefit? Where do we Q289 Chairman: Yes, it is a confused picture, given stand? the proximity to the border, and also there is an Mr White: I think the Air Transport White Paper airport within the Republic at Carrickfin, but there took a fairly balanced view. I think it notes the fact you go. If my colleagues do not have any more that there was to a degree a disbenefit in terms of the questions are there any questions that you expected movement of passengers south and money that to be asked that we have not asked you? would otherwise be spent in Northern Ireland was Mr McMinnis: We have not been disappointed. being spent in Dublin but it also recognised that Chairman: I promised to get you away before six. It there was obviously a degree of choice available in is five to, so we have achieved that goal. Can I thank Dublin to passengers from Northern Ireland that you on behalf of the committee for appearing before would not otherwise be available. I think it also us. It is much appreciated. 3022631022 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

Ev 88 Northern Ireland Affairs Committee: Evidence

Memorandum submitted by the Department of Enterprise, Trade and Investment

REQUEST FOR FURTHER INFORMATION ON THE AIR ROUTE DEVELOPMENT SCHEME IN NORTHERN IRELAND

1. The Committee requested a breakdown of the overall budget over the three-year period including the administration element and costs of consultants advice and economic appraisals (showing actual expenditure to date and projected expenditure over the remainder of the period). This is provided in the table below.8

2003–04 2004–05 2005–06 2006–07 2007–08 2008–09 £000s £000s* £000s* £000s £000s* £000s*

Investment Support 0 428 1,530 1,200 440 65 Administration 17 12 5 3 2 2 Consultancy 111 130 15 4 3 0 Economic Appraisals 14 71 0 0 0 0

(*projected)

4. The Committee also sought details of specific and measurable benefits expected to accrue from two sample routes supported by the Route Development Fund, namely Belfast International—Paris and City of Derry— Manchester It should be noted that the primary objective of the Air Route Development Scheme is to improve the economic infrastructure of Northern Ireland by improving accessibility for the benefit of promoting business linkages and enterprise development. To that end, the creation of new routes is in itself the main benefit that the Scheme is seeking to realise. However, it is also the case that each individual route must pass a test of economic benefit in orfer to qualify for funding from the Scheme. Some of the benefits identified by economic appraisal for the two specified routes are set out below.

Belfast International–Paris

Journey Time Savings The Department of Transport’s aviation model (SPASM) assigns monetary values to the time taken to travel from one point to another. The direct air service from Belfast to Paris oVers considerable time savings over indirect services via London. The service is forecast to carry 90,000 passengers annually, of whom 40,000 will be originating in Northern Ireland. If this forecast is fulfilled, it is calculated that those 40,000 NI residents will have saved approximately £765,000 in journey time. This saving will recur for each year that the service operates. Similar savings are projected for passengers travelling in the other direction, but this benefit does not accrue to the NI ecomony and so is not included in the figure quoted above.

Air Fare Savings The introduction of a new direct air service also brings air fare savings as compared to indirect routes. If this service meets its forecast of carrying 40,000 Northern Ireland residents to Paris, it is calculated that those passengers will have saved approximately £2,000,000 in air fares. This saving will recur for each year that the service operates. Similar savings are projected for passengers travelling in the other direction, but this beneﬁt does not accrue to the NI economy and so is not included in the ﬁgure quoted above.

Business Links The European Cities Monitor, published by Cushman and Wakeﬁeld Healey and Baker, ranks Paris No 2 in its table of the top business centres in Europe. It greatly facilitates business linkages therefore for Northern Ireland to have a direct connection to such an important business location.

8 These ﬁgures reﬂect current assessments of the load factors which will be achieved on the routes supported, and are based on the assumptions that no currently funded route will cease to operate within the period of assistance and that no further routes will be assisted in the future. A review of the Air Route Development Scheme has been commissioned and this may lead the Department to seek alternations to the Scheme budget. 3022631022 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

Northern Ireland Affairs Committee: Evidence Ev 89

Hub Connectivity Connections to hub airports also beneﬁt business people by providing opportunities for global connections. The International Air Travel Association (IATA) maintains a Global Airport Connectivity Monitor which measures the degree to which each airport oVers connections to others around the world. The introduction of direct ﬂights to Paris Charles de Gaulle Airport has raised Belfast International Airport’s connectivity score from 50.49 to 80.80, an increase of 59%.

Social Connectivity This is a measure of a population’s access to diVerent destinations and has been shown to correlate with increased standards of living. It is expressed as a %age increase in the number of ﬂights. The introduction of direct ﬂights to Paris Charles de Gaulle Airport has raised the Northern Ireland population’s connectivity score from by 1.06%.

Direct Employment Information provided by easyJet suggests that the operation of this service will involve the creation of 10 jobs at Belfast International Airport.

Indirect Employment A standard rule of thumb used within the aviation sector is thaty one airport-related job is created for each 1,000 passengers travelling. On the basis of the total projected passenger number for this service (90,000), a conservative estimate is that it will generate an additional 50 jobs indirectly.

City of Derry–Manchester

Journey Time Savings This service is forecast to carry 15,000 passengers annually, of whom 7,000 will be originating in Northern Ireland. If this forecast is fulﬁlled, it is calculated that those 70,000 NI residents will have saved approximately £5,353 in journey time. This saving will recur for each year that the service operates.

Air Fare Savings If this service meets its forecast of carrying 7,000 Northern Ireland residents to Manchester, it is calculated that those passengers will have saved approximately £56,578 in air fares. This saving will recur for each year that the service operates.

Business Links The European Cities Monitor, published by Cushman and Wakefield Healey and Baker, ranks Manchester No 13 in its table of the top business centres in Europe. It is a significant benefit to Londonderry, therefore, to have a direct connection to such an important business location.

Hub Connectivity The introduction of direct ﬂights to Manchester Airport has raised City of Derry Airport’s connectivity score from 3.66 to 4.85, an increase of 32%.

Social Connectivity The introduction of direct ﬂights to Manchester has raised the Londonderry population’s connectivity score by 18.42%.

Direct Employment Information provided by Aer Arann suggests that the operation of this service will involve the creation of 10 jobs at City of Derry airport. 3022631022 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

Ev 90 Northern Ireland Affairs Committee: Evidence

Indirect Employment On the basis of the total projected passenger number for this service (16,000), a conservative estimate is that it will generate an additional 10 jobs indirectly.

5. The Committee asked what specific economic targets have been set for each of these routes, such as employment targets or targets for additional tourism spend, how these targets have been identified and how frequently they are monitored. The specific economic target which has been set for the scheme as a whole, and indeed each route, essentially is to strengthen Northern Ireland’s economic infrastructure by improving the Province’s connectivity to other regions of the UK, Continental Europe and further afield. In the final analysis the success of the scheme will be assessed in terms of the sustainability of those routes which have been secured by means of the operation of the Scheme. An assessment of journey time savings, improved connectivity, the potential for developing business linkages and promoting inbound tourism, as well as job creation, etc, all form part of the detailed economic appraisal of each prospective new route. These are factors which ultimately determine whether a route is supported, but do not in fact form economic targets in their own right. Passenger numbers are monitored monthly. In addition each claim for grant assistance is required to be supported by data on passengers carried, supplied by the airline concerned. This is quite separate from the surveys conducted by the NI Tourist Board. For example, as an early indication, NITB figures for the period June–September 2004 show that the number of French visitors who entered NI directly increased by about 21% over the same period in 2003. Moreover, about 28% of all French visitors who entered NI directly between June and September 2004 did so via the new easyJet Paris–Belfast route.

6. The Committee sought details of the information collected on passengers using the Paris to Manchester routes, both inbound and outbound and whether leisure or business passenger.

Paris Manchester Outbound Inbound Outbound Inbound

June 2,383 1,652 480 263 July 4,617 3,960 1,488 935 August 4,619 4,039 1,440 855 September 4,470 3,516 1,440 870 October 4,619 3,854 1,392 913 November 4,470 3,205 1,264 634 December 4,470 3,374 1,296 746 Total 29,648 23,600 8,848 5,216 Breakdown of business and leisure passengers is not available at this time. 22 February 2005 3022631023 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

Northern Ireland Affairs Committee: Evidence Ev 91

Wednesday 19 January 2005

Members present:

Mr Tony Clarke, in the Chair

Mr Adrian Bailey Mr Stephen Pound Mr Roy Beggs The Reverend Martin Smyth Mr Gregory Campbell Mr Hugo Swire Mr Eddie McGrady

Memorandum submitted by Belfast City Airport We welcome the opportunity to comment on air transport services in Northern Ireland. Having been recognised within the Regional Transport Strategy as “a key strategic gateway to the province,” we are committed to further developing a strong and vibrant route network at Belfast City Airport. I trust the Belfast City Airport viewpoint on the following sections will provide a useful input to your inquiry.

1. The Development of Capacity at Existing Airports The Government White Paper: The Future of Air Transport, December 2003, provided forecast ﬁgures on the potential demand at the Belfast Airports by 2030. We would broadly concur with these ﬁgures which show the majority of the growth being accommodated by Belfast International Airport, while Belfast City Airport will experience a more modest growth averaging between 3% and 5% per annum. Growth at City of Derry airport is likely to be restricted, due to its location rather than due to any competitive issues.

A debate that has been promoted over the past few years is the question of whether Northern ireland would be best served by only one or the current three airports. Any change in the current status would clearly have a potential bearing on the issue of developing capacity at existing airports. Belfast City Airport considers the question to be purely academic, as the two Belfast airports are both privately owned proﬁtable businesses. City of Derry Airport, in our opinion, is unlikely to be economically viable however, it is for the current operators to decide on the level of subsidy they are willing to bear going forward. The Sub Committee will be aware that the White Paper invited the Northern Ireland authorities to review the form of the Planning Agreement at Belfast City, if and when they are so requested by the airport operators. Having analysed the market demand for services from Belfast City, we have concluded that the current capacity restrictions would limit our ability to fulﬁl our strategic role within the province. We therefore in July 2004, submitted a formal request to the Department of Environment Planning Service of Northern Ireland for the form of the current planning agreement to be reviewed. The submission indicated that Belfast City Airport could achieve the required growth within the current operating hours and within the current permitted Air Transport Movements of 45,000 per annum. In essence, Belfast City Airport is seeking to remove the current restriction on “seats for sale” which relates to the capacity of the old terminal building, and has therefore no relevance to the new facilities which opened in June 2001. The current market segmentation is likely to be maintained with Belfast International dominating the cargo, charter and low cost markets and Belfast City focussing mainly on direct daily services to Great Britain.

2. Specific Challenges Facing Northern Ireland as a Peripheral Region of the UK Often seen as an “island oV an island”, connectivity, whether by air or sea, is of vital importance to Northern Ireland. We have considered this connectivity under three separate headings in order to focus on the most critical issues.

(a) Connectivity with hub airports If Northern Ireland is to compete in the “global market place” there must be frequent, easy accessibility to global air links. Some of these links will be possible by direct services however, it will always remain the case that the majority of overseas destinations will only be accessible through “interlining” to the ﬁnal destination via another airport. To this end, all links between Northern Ireland and hub airports which provide European and International interlining opportunities are of importance. 3022631023 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

Ev 92 Northern Ireland Affairs Committee: Evidence

Currently the key hub airports with frequent services for Northern Ireland to allow interlining are London Heathrow, London Gatwick, Birmingham and Manchester. Access to Heathrow in particular, being the airport oVering by far the greatest range of international connections, is therefore of particular importance to the economic development of the province. If frequent daily services were available to hub airports such as Paris (CDG) or Amsterdam, then this would provide potential alternative connectivity. Currently London Heathrow is served by eight-daily services carrying circa 800,000 passengers per annum. This is a material route connecting Belfast to London and for example, to compare another peripheral region, Aberdeen to London Heathrow has 500,000 passengers per annum. With a market of 800,000 per annum, this is a premium much sought after route with extremely good prospects for the future. If suYcient demand for a later connecting ﬂight were to be considered in the context of a supportive legislative environment, then there could be a future enhancement to the London Heathrow service.

(b) Connectivity to other GB destinations Northern Ireland is currently very well served for direct daily services to all major airports in Great Britain. As with all routes, market demand will dictate the type and frequency of service. This demand is determined ﬁrstly by the limitation of a province with a 1.7 million population and secondly by the demand from the serviced destinations. With the increased availability of lower fares, this can stimulate the market allowing for increased capacity and frequency to serviced destinations. The current services to Great Britain range from once-daily services by turbo-prop aircraft to regions of modest population such as Aberdeen to the 30 daily services from Northern Ireland to the ﬁve London airports.

(c) Connectivity to European or other International Destinations The opportunity for direct daily services to Europe or beyond has primarily been constrained by the size of Northern Ireland and its 1.7 million population. It has also been hindered over the past few decades due to political unrest and violence making Northern Ireland a demanding location to promote. With an improvement in the political environment and market stimulation by low cost carriers, the opportunities for direct daily services have much improved. It must also be recognised that the liberalisation of the market place in Europe has also created competition as well as opportunity. EVectively, when a Northern Ireland airport seeks to secure a service to a European destination, they compete with every other “city pair” in Europe. If an airline considers an opportunity on commencing a service from say Belfast City Airport to Brussels, they consider whether to allocate one of their aircraft to this service as opposed to say, Bristol to Toulouse or Southampton to Alicante. In our opinion, the generally improved market environment will enable Northern Ireland to secure a select number of direct daily services to mainland Europe. This will help reduce the negative aspects of being a peripheral region of the UK and Europe. Daily services to the likes of the United States will be limited and are not a target for Belfast City Airport. It is likely, in our opinion, that Belfast International Airport will secure some limited services to the United States, which will be welcomed.

3. The Effectiveness of the Route Development Fund Belfast City Airport welcome the establishment of the Route Development Fund which we believe will have a positive inﬂuence on attracting additional direct services to Northern Ireland. In general terms the fund is likely to help secure a route which is already under serious consideration. It could be the element that “tips the balance” in favour of the Northern Ireland opportunity where a competing route has similar merits. The Regional Development Fund cannot stimulate new routes if the underlying market demand does not exist or cannot be sustained, basically because airport charges are only one small element of an airline’s cost base. If the new routes recently established prove successful it will give the airlines conﬁdence to expand their network from Northern Ireland and the Regional Development Fund will continue to enhance this process.

4. The Potential Impact for Northern Ireland of Wider Air Traffic Issues on the Island of Ireland In the wider context, the daily services from Belfast City Airport to Cork is enjoying signiﬁcant growth and is now well established. 3022631023 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

Northern Ireland Affairs Committee: Evidence Ev 93

The impact of Dublin International Airport on the Northern Ireland airports is considered to be signiﬁcant albeit never, to the best of our knowledge, accurately determined. An estimate of the scale of the “leakage” varies widely but it is clear that a sizeable number of passengers travel to Dublin to avail of the services.

In making comparisons with Dublin a number of factors must be borne in mind. (i) Dublin is a major European capital with a very well established business and tourism market. (ii) The Republic of Ireland population is almost 2.5 times that of Northern Ireland.

With the much greater population in the Republic of Ireland, Dublin airport can serve a greater range of destinations on a daily basis. To give a simple example, if Dublin can support a destination with three-daily services, then Belfast should be able to support a once-a-day service. Given that Dublin is a more established destination for business and tourism, it could be expected that the above example would even be a challenge. There are currently only three international destinations with more that three-daily services from Dublin namely, Paris, Brussels, and Amsterdam, with an additional six destinations with three services per day.

The only way to reverse the trend of those passengers travelling to Dublin is to increase the range of destinations served directly from Belfast and ensure these services are competitive on price.

Belfast International Airport competes directly with Dublin in the charter market, where holiday package price will be the most signiﬁcant factor in airport selection.

While airports in Northern Ireland will continue to seek additional international routes, it is clear that Dublin Airport, serving a capital of a state within the European Union and drawing on a larger hinterland, will always support a more comprehensive international route network than, for example, the two Belfast airports. That said, it is important that Northern Ireland airports maintain a comprehensive and viable route network in order to facilitate and support the economic development of the province. 23 September 2004

Supplementary memorandum submitted by Belfast City Airport

Airport Extensions 2004

At the Airport Forum in January 2004, the issue of ﬂights beyond 2130 was raised as one of the greatest causes of concern to local residents. As a result the airport resolved to work closely with the airlines to target a reduction in delayed ﬂights.

Historically between 1% and 2% of ﬂights are delayed beyond 2130 hours and 2003 was a particularly challenging year with 1.92% of ﬂights extending beyond 2130 hours.

I enclose the attached statistics which provide data on delayed ﬂights since 1997 and include 2004 performance.

While delays are not totally controllable, as can be seen with the statistics for last August when adverse weather reversed a positive trend, I believe the improvement is not simply coincidental.

On an average week-day BCA handles almost 100 air traYc movements. The timely turnround of an aircraft requires eVective co-ordination between partner organisations, our Air TraYc Control team and the staV who process between 5,000 and 6,000 passengers every day.

In addition, the airlines have been very responsive to the issue raised by the local resident groups and have met regularly with the airport, attended Forum meetings and taken eVective action resulting in the improvements achieved.

A 20% improvement over 2003 is, I believe, highly commendable and I would like on behalf of Belfast City Airport to thank all who have contributed to the outcome.

As previously stated, delays are not fully controllable, however, the airport and its partner organisations are committed to achieving further improvements during 2005. 7 January 2005 3022631024 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

Ev 94 Northern Ireland Affairs Committee: Evidence

DELAYED ATMS AFTER 2130

1997 1998 Total 1999 Total 2000 Total 200l Total 2002 2003 2004 January 36 30 58 21 20 30 42 51 February2827262630432937 March2831182820342450 April 35 33 20 22 17 32 54 30 May2120142424376617 June 43 26 17 28 34 65 53 40 July3929221731748444 August 54 41 30 24 26 40 67 81 September 33 53 39 32 52 37 42 39 October 38 36 27 37 28 55 56 55 November 36 32 38 31 30 33 64 33 December 47 29 41 44 28 40 67 41 Totals 438 387 350 334 340 520 648 518

TOTAL ATM’S

1997 1998 1999 2000 2001 2002 2003 2004 January 2,721 2,807 2,593 2,502 2,616 3,245 2,690 2,807 February 2,406 2,540 2,495 2,574 2,306 2,925 2,448 2,605 March 2,688 2,853 2,835 2,989 2,724 3,281 2,549 2,899 April 2,803 2,922 2,683 2,655 2,690 3,258 2,563 2,935 May 2,894 2,928 2,702 3,026 2,714 3,480 2,840 2,985 June 2,872 2,987 2,769 2,948 2,842 3,342 2,936 3,015 July 3,050 3,066 2,856 3,003 2,924 3,671 3,137 3,053 August 3,019 3,504 2,912 3,062 2,904 3,487 2,974 3,036 September 2,901 3,309 2,981 2,936 2,574 3,319 2,922 3,072 October 2,979 2,891 2,904 3,006 2,759 3,315 2,895 3,004 November 2,769 2,709 2,678 2,626 3,518 2,836 2,683 2,923 December 2,825 2,624 2,545 2,378 3,058 2,738 2,708 2,804 Totals 33,927 35,140 32,953 33,705 33,629 38,897 33,345 35,138

ATM’S AFTER 2130 AS % OF TOTAL ATM’S

1997 1998 1999 2000 2001: 2002 2003 2004 January 1.32% 1.07% 2.24% 0.84% 0 76% 0 92% 1.56% 1.82% February 1.16% 1.06% 1.04% 1.01% 1.30% 1.47% 1.18% 1.42% March 1.04% 1.09% 0.63% 0.94% 0.73% 1.04% 0.94% 1.72% April 1.25% 1.13% 0.75% 0.83% 0.63% 0.98% 2.11% 1.02% May 0.73% 0.68% 0.52% 0.79% 0.88% 1.06% 2.32% 0.57% June 1.50% 0.87% 0.61% 0.95% 1.20% 1.94% 1.81% 1.33% July 1.28% 0.95% 0.77% 0.57% 1.06% 2.02% 2.68% 1.44% August 1.79% 1.17% 1.03% 0.78% 0.90% 1.15% 2.25% 2.67% September 1.14% 1.60% 1.31% 1.09% 2.02% 1.11% 1.44%˜ 1.27% October 1.28% 1.25% 0.93% 1.23% 1.01% 1.66% 1.93% 1.83% November 1.30% 1.18% 1.42% 1.18% 0.85% 1.16% 2.39% 1.13% December 1.66% 1.11% 1.61% 1.85% 0.92% 1.46% 2.47% 1.46% Average 1.29% 1.10% 1.07% 1.00% 1.02% 1.33% 1.92% 1.47% 3022631025 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

Northern Ireland Affairs Committee: Evidence Ev 95

Witnesses: Mr Brian Ambrose, Chief Executive, Mr Alan Young, Manager, Air TraYc Services, Mr Brian Carlin, Business Development Manager, and Dr Chris Lundy, Environment Manager, Belfast City Airport, examined.

Q290 Chairman: Gentleman, you are very welcome. only way that we can grow in passenger numbers It is good to see you again. Can I, first of all, thank is to fill in the empty seats that have currently being you for your hospitality when we came to the flown on the aircraft, and already we operate at airport to see you. As a consequence of our visit to quite a good load factor, averaging over 70% last the airport and the discussions we had there, you year, so it is diYcult to get beyond that on average, may find that a lot of the questions that we raise so I would say that any growth opportunities are and a lot of the points that we discuss have already very limited indeed. been covered in terms of that informal session. I think it is important that we get on record one or two of the issues that were raised in that important Q292 Chairman: The other thing, of course, which session, and so I apologise for any repetition. I we have discussed in the past, is not just issues wonder if I could begin the questioning by getting related to the number of seats you can sell, but we on record your views on what exactly we are have looked at the restrictions that operating hours looking at in respect of the relaxation of the current currently have; although at the same time we planning agreement and ask: do you consider that recognise that there is a lot of general opposition simply a relaxation of the seats-sold limit would to any extension. Could you talk us through what enable the airport to reach the objectives set out in addition to the operating hours you think would be the White Paper or would you need more than a helpful and what would be acceptable, taking into raising of the seats-sold limit to achieve those account this opposition? Are we talking here about objectives? a general extension or are we talking about certain Mr Ambrose: Currently on seats for sale we are flights being allowed to have some leeway in terms eVectively at our limit, so three million seats for of being able to come in late if that was the case? sale. In 2004 we oVered for sale 3,012,000, or What would be helpful without raising so much something of that sort. We were just marginally opposition that you know that you have little over the three million. That means that if there is chance of being successful? no relaxation on the current seats for sale, the Mr Ambrose: I will let Brian come in in a moment airport has reached its capacity and, basically, about the market. How we came to the position we cannot grow any further. As far as if that is are at the start of 2004: we consulted widely to try removed or relaxed, we see ourselves as having a and find out what is the position of airlines, local niche role within Northern Ireland. The White residents, each of the political parties, local Paper says that the majority of the growth over the councillors, the business community—what is their next 15, 30 years will go to Belfast International view of extending the operating hours. (and we would concur with that), so the CAP that Interestingly, there is quite a lot of support from, is aVected is the 45,000 movements; and we believe for example, the business community for an within that limit City Airport can grow to fulfil its extended day. There was a mixed view from the niche if the seats for sale was removed. If you try resident groups. I think in simplistic terms, the to project out, last year we had two million further they were away from the airport the more passengers, Belfast International had about four at ease they were with some relaxation. For and a half million. If you want to forecast out 15 example, we asked a question: what about one later years and see Belfast International with 10 million Heathrow coming in, say, at 10.30? There was some and the City with three, we are very relaxed with acceptance of that proposal. Other people clearly that scenario. said any extension at all, should it be one flight, will be strongly opposed. We took that on board and then we tested the market. If we were able to open Q291 Chairman: We are grateful for that. Also, the airport up, what is the market for later flights? could you tell us what eVects the existing seat limit Maybe I will ask Brian to come in on the kind of is having on your ability to market at the airport? response we got from the airlines. We asked them I am thinking in terms of new business, new about extending the working day. journeys and new destinations. There will be some Mr Carlin: When we spoke to the airlines we spoke destinations that are not going to be applicable to bmi and FlyBE, and both expressed a general from Belfast International which could operate interest and said it would be useful but they would from Belfast City, given the Route Development not be any more committal than that bmi, prior to Fund, or whatever. Is the limit on seats restricting moving to Belfast City, did operate a later your ability to market new routes, new flights, new Heathrow service. They had actually withdrawn business? that service before they moved to Belfast City and Mr Ambrose: Absolutely. We have gone to the there was a great vocal demand to have that flight point we have because the future is uncertain. reinstated, mainly from Members of Parliament. At Airlines can reduce frequency, just as they can add the time I think the sittings were at diVerent times, frequency. If we do nothing, there is a danger that and, in order to facilitate the MPs from Northern we will likely shrink in size, but, eVectively, if there Ireland to get back home, the late flight was is not a positive outcome from the current planning important. There has not been that sort of demand review, we do not need a marketing department. since, and the other airline, FlyBE, who also Brian is sitting beside me now looking very white, expressed a general interest in perhaps an extra but basically we are literally at our limit, and the hour in the day—and this was to bring in the 3022631025 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

Ev 96 Northern Ireland Affairs Committee: Evidence

19 January 2005 Mr Brian Ambrose, Mr Alan Young, Mr Brian Carlin and Dr Chris Lundy opportunity to extend the European flights or to agreement currently asks us to validate the output operate European flights—were not particularly of the model on a regular basis. That was last done committal on it other than a general interest. There in 2002 and is due to be done again, within the next was nothing more than that. few weeks, in fact. Verification of the model Mr Ambrose: If I could add just to look at it in requires active noise monitoring, both on the layman’s terms. Our market is direct services from airfield and oV the airfield. Belfast to Great Britain, and most people are of the view if one is going to Liverpool, Leeds or Q295 Mr Swire: Can you say a little bit more about Manchester for a day’s business you really do not the measures that the model requires, because I want to be coming back into Belfast at 11 o’clock think there may be a misconception but certainly a at night. You can do your day’s business, you can concern amongst the local residents that its noise conclude your meetings at five o’clock, 5.30, get to levels are not being monitored on a 24-hour basis, the airport in adequate time and, therefore, there or a daily basis, and that you are instead relying is not generally a demand for the extension of the on this model rather than actual on the ground hours, with the exception of a potential later monitoring. Can you enlighten the Committee on Heathrow. The reason we decided not to ask for a those points? later Heathrow was that it became pretty clear to Dr Lundy: Certainly. It is true that there is not us that that was one that would be strongly currently 24-hour monitoring on the ground. opposed and, if not impossible, they would make However, the model is verified through the act of it very diYcult for us to get an extended working monitoring on the ground in periods. What we day, and if it was not a major business need— I would say is that the mix of traYc that we have is think we tried to find a balance in what we are fairly standard, in that our daily and weekly trying to do. patterns of traYc do not actually vary to a great degree. Q293 Chairman: Obviously the question still lays on the table as to weighing up the economic Q296 Mr Swire: It is because there is a standard benefits to Northern Ireland against the impact that pattern of traYc rather than anything to do with an extension would have on local residents. Have financial resources or the personnel resources to you as a company, as an airport, done any analysis implement something? Can I put the question as to how those weigh up against each other in perhaps a diVerent way? If you had additional terms of the economic impact against residents’ resources or the resources to monitor on a daily concerns? basis, is that something you would do? Is that Mr Ambrose: Purely on hours. I think the economic something that other airports of similar size to you impact was going to be marginal. We had only one do, or do they on the whole also rely on models? airline even indicating they would put on one Dr Lundy: Certainly historically airports of similar additional flight, which was bmi. FlyBE talked in size have not all monitored. A number of them general terms about potentially opening up some of have modelled in the past. It is only with advances the northern parts of Europe. We had really in technology and software in recent years that the nothing that anyone was signed up to, and if you cost of monitoring certainly has gone down. A take a market of at the moment two million number of airports of similar size are now looking passengers, it was going to be a small percentage at this and, in fact, some have actually introduced of increase in that. We do recognise that everybody this monitoring. has an input, we are trying to work closely with the Mr Ambrose: I think it is worth adding, if I can, community around us, and that was the balance we at this stage—one of the related issues—the made. It was not a totally popular decision. Some residents were interested in active noise monitoring, of the business community felt we had lost an and they were also interested in some way of opportunity, but we figured we would rather move tracking the aeroplane when it leaves the airfield to forward on something that is sustainable and see does it go oV the airfield and turn as it is meant workable rather than fight for something that is to or does it discard that. Maybe I could bring Alan maybe not best advised. in at this stage, who is our manager in Air TraYc Services, because we are currently looking at Q294 Mr Swire: The residents groups told those of replacing our primary radar. It is a three, four us who were there about their concerns over noise million pound investment. Coupled with that, we levels. Can you elaborate on what monitoring of would consider moving towards secondary radar, noise currently takes place and what is the result of which we do not currently have. That then opens any recent survey you may have done? up the door for tracking monitors. Mr Ambrose: It sounds a technical one, so I refer to my right. Chris, would you talk us through the Q297 Mr Swire: Before you pass that question to noise contours. Why we do it and the results we Mr Young, can you answer a second part to the get? question, which is the question of monitoring and Dr Lundy: Yes, Chair, the regime in place at the the aircraft arriving after the curfew of 9.30 p.m. moment is based on noise modelling. The noise It has been suggested that there are more arrivals modelling in place at the moment is the INM after the curfew now than there were a year ago. model, which was originally developed by the FAA Can you tell us something about the monitoring in the Unites States and is now widely used. The you have done of late arrivals after the curfew, how 3022631025 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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19 January 2005 Mr Brian Ambrose, Mr Alan Young, Mr Brian Carlin and Dr Chris Lundy you are going to handle it and whether you share was purely a weather issue beyond anyone’s the concern of the residents that perhaps the curfew control. We may run now four or five days without has been broken already in full? a flight after 21:30. Mr Ambrose: We meet quarterly with the residents, Mr Ambrose: If it is helpful, we can make this the Airport Forum. In fact, this time last year at document available which is all delayed flights my first forum meeting—I was appointed a year beyond 21:30 from 1997 through to December of ago—it was very clear the strength of feeling about last year, so it will give you the trends and the flights beyond 21.30. We noted the concerns. As far patterns. It is a month by month total, and you can as breaking the curfew, we are not permitted to see the reduction on 2003–04. operate aircraft between midnight and 6.30 a.m. Chairman: That will be helpful. We may have allowed 1 or 2 flights in the last five years, generally with the acceptance of residents— Q298 Mr Pound: You talked about delay in flights a medical emergency or something—so we do not due to inclement weather. What was the time of the break the curfew. Flights between 9.30 (our last flight? scheduled closing time) and midnight, we would Dr Lundy: The last flight was an arrival at 22:17. have one or two flights a day on average, so between 1 and 2% of all of our movements. Clearly Q299 Mr Pound: Not that late? this time last year some residents were most Mr Young: No. unhappy, we agreed at that meeting to meet with the airlines, push it up our agenda, try and get to Q300 Mr Pound: I just wanted clarify that. I the bottom of why we have delays beyond 21:30 thought we might be talking about three o’clock in and see if we can achieve some improvement. For the morning? 2004 we achieved a 20% reduction on extensions, Mr Young: Absolutely not, no. as we refer to them, over 2003, and, again, I will maybe bring Alan in to comment, because the way Q301 Mr Pound: We are still talking about before that was achieved was getting out, meeting the 11 pm? airlines, dealing with specifics and trying to get Mr Young: Absolutely, yes. Under the planning action taken to find out why there are delays. The agreement we can operate delayed flights up until one caveat is that the weather is outside our 23:59. control, and obviously we can never totally Chairman: I am sorry, we shall have to suspend the eliminate delays in our industry, but a 20% Committee for 15 minutes. We will try to be back reduction on the 2003 level, I believe, is as a result as soon as we can. of some of the actions Alan might want to refer to, if that is helpful. The Committee suspended from 4.00 pm to 4.15 Mr Young: In terms of following what was pm for a division in the House identified as a rising number of delayed flights, that is flights outside the permitted hours in the Q302 Reverend Smyth: The Chairman asked me if restricted hours operation, we got the airlines he was late to carry on. You are aware of the together, tried to identify, firstly, their response to debate that has been going on as to whether that and also to give us an insight into what was Northern Ireland would be better served by a single happening and how it was happening. It was not airport rather than the existing three airports. I simply a point to point issue. For example, due to gather from what you were saying earlier, you have the crewing and rostering of aircraft, for instance, a particular perspective—would you like to share aircraft going Belfast, Manchester, Brussels, you it with us—as to the existence of the three main might pick up a slot in Brussels, return to airports at present as to whether they are Manchester and then that delay would knock on complementary or are in competition with each into the evening coming back into Belfast; and that other? is just a simple example. We got across very clearly Mr Ambrose: I think, to help explain our position, our concern about this, to the extent they agreed I am going to come at this from a bit of angle just to meet us on a periodic regular basis, and they set to let you see what it feels like for the question to up programmes within the airlines to manage come our way. If you broadened the remit of this delays which were under their control—for Committee and asked would Northern Ireland be example provision of fuel, the servicing of aircraft, better served with one port, the port of Belfast, the the engineering, the turning round, meeting people port of Larne or Londonderry, I am sure people on the ground at other stations, or wherever. There would have opinions. We see the question was a priority to get to Belfast right away. We somewhat similar. The fact is there are three wanted it before 21:30. Through that work, I airports. Certainly the two Belfast airports are believe, we can demonstrate some success, in that growing and very profitable. The latest survey of in 2004 we achieved an improvement of 20% over the top 100 companies in Northern Ireland in the previous year. Obviously it is only January. We margins over sales Belfast International are the cannot say too much so far for this year, but the third most profitable business in Northern Ireland. delay pattern is sporadic, an example being So, there are three airports. Our position regarding yesterday. We had significant snow at home. There City of Derry—and we have read the transcribed were a significant number of delayed flights, and notes of the meeting at City of Derry—is after 21:30 there were six late flights last night. That tremendous pride in that part of the province with 3022631025 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

Ev 98 Northern Ireland Affairs Committee: Evidence

19 January 2005 Mr Brian Ambrose, Mr Alan Young, Mr Brian Carlin and Dr Chris Lundy the airport, what it is doing. Basically, if the local Mr Carlin: Chair, if we did have a runway tax-payer is willing to fund the airport, we do not extension there would obviously be a greater have an opinion on that one. We expect City of opportunity for more destinations from Belfast Derry will continue to be restrained in size because City. However, there is not a huge demand and of its location, the population mass and I think our most of the international destinations are currently position as to whether there should be three or not served by our colleagues up in Belfast is somewhat of an academic debate. What we International. would say, the fact that there are three, and particularly two Belfast airports, we see our Q304 Reverend Smyth: Against this background, position pretty much in line with where the White how many more destinations could or would be Paper had positioned City Airport. We see brought into range following the construction of ourselves as a niche player. We see the majority of the proposed “starter strips” at each end of the the growth going to Belfast International Airport runway? and we see ourselves much more as a having a niche Mr Ambrose: We have not actually done the role, probably growing at more of a 5% growth rate business case yet to determine whether any new than some of the spectacular growth you can get business that we might achieve would justify that elsewhere. Regarding competitive or type of expenditure. You are probably talking complementary, again it is diYcult in a market £3 million to £5 million to put on starter strips or environment in practical terms to see what that extend the runway slightly. It may be useful to would mean. If an airline comes along tomorrow look at the sectors themselves. The 24-hour cargo and we have the capacity to take that airline, it market between the two Belfast airports is 100% would be diYcult for us to go to our shareholders Belfast International. The charter market, Belfast in Madrid and say, “We have decided to be International get 95% plus of that market. The low- complimentary. We are going to turn this business cost business is Belfast International. If we were away. We think it should go to the other Spanish looking at extending into the charter market, it is owned airport Belfast International.” Part of it we probably 2, 3% of our business—it is not a major see as somewhat academic, the fact that the airports priority for us—and if we did look at it, it is the exist, but I believe that the fact that two Belfast northern part of Europe. Our target, if we could airports are both growing, both profitable and both get European destinations, would be the business experience a lot of success will probably suggest markets—your Paris, your Amsterdam, your that there is room for the current airports that exist Brussels, Frankfurt. Those are the ones that we in Belfast. would see as our sector. Your long haul sun destinations—your Gran Canaria—are not our market. We do not intend to go after that. So it is Q303 Reverend Smyth: I can understand the answer a small niche if it is worth going after. If we do you gave when you mentioned the ports, because decide it is worth going after, we would have to there is a degree of competition between the ports. apply for planning permission to extend the runway I am aware of that anyway, though they have their and there would be a similar public debate as we own niche markets as well. Can I go on and ask: are having at the moment over the hours. are there any physical constraints, including the Chairman: My apologies for being a little late back, runway length, which limit the range of gentlemen. destinations that you are able to serve from Belfast City, assuming Q305 Mr Beggs: What is the level and focus of the the use of currently available equipment and planned capital expenditure programme over the “representative loads”? next three years, and how much of this will be in Mr Ambrose: The physical infrastructure currently projects that seek to enhance the environmental is more than adequate to cope with any of the acceptance of the airport? aircraft types operating out of the airport. Brian Mr Ambrose: If I go back in time slightly first and may want to comment on the market opportunities then answer your question going forward. We have were we to extend the length of the runway, but spent somewhere in the region of £30 million in what I would say is that we have already made a recent years, and within the issues that had an business decision that the niche that we operate environmental impact we put in two additional within will not take us beyond the aircraft types taxi-ways onto the runway which reduced that currently operate out of the airport. The next backtracking. We used to have one taxi-way at the step up for the airport would be to go for what we Belfast side of the runway, which meant that any call wide-bodied aircraft—that is your Airbus 330/ aircraft taking oV over the city had to join the 340s, your Boeing 747s, that type of aircraft. We runway, taxi all the way to the bottom and then have no plans to target that market; we have no take oV, so two new taxi-ways has had a dramatic plans to upgrade our infrastructure to accept it. impact in reducing aircraft movement on the The infrastructure changes, if there was a market ground. We then made a capital investment, about opportunity, would be to extend the runway to 18 months ago, where we replaced all the diesel allow the existing aircraft to fly further but not to generators that are used to provide power, units go for diVerent aircraft types. Maybe Brian can that are used for providing services to the aircraft give a flavour as to whether there is a market there during turn-around, and, in all, 10 aircraft stands for that for ourselves or not. were put in, fixed electrical ground power: a silent 3022631025 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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19 January 2005 Mr Brian Ambrose, Mr Alan Young, Mr Brian Carlin and Dr Chris Lundy service. One particular resident group in Inverary, we can take the Bangor bound traYc out through which would be the group across if you are the D5 and over the Maryfield fly-over, which is standing facing the sydenham by-pass to your another suggestion we have made. I know in the right, they have noted a very marked improvement Belfast Transport Plan they are talking of in the lack of ground noise because the old terminal upgrading in Sydenham by-pass to three lanes from was about 150 metres from the houses. We have the Tillysburn roundabout to the M3 bridge, so we moved half a mile down and we are currently do not forecast any growth in traYc creating traYc opposite playing fields. So we have had quite congestion problems beyond what exists already on substantial investment in the last number of years. the busy Sydenham by-pass, but those are measures Going forward, capital plans would be about a £1 which would further enhance the project on which million a year, just maintenance capital, small we are actively engaged with both government and items. The next big items we are looking at would the private sector in reviewing the options there. be the radar, circa £3/4 million, and within that the main environmental issues would be that would Q307 Mr McGrady: Last week we took evidence give us the facility for the both active noise from the DETI regarding the operation of the monitoring and aircraft tracking, and that would Route Development Fund. I would like to know be considered as part of that project. That is the what your opinion is as to how that fund has been single biggest issue that the residents have brought promoted and operated, particularly whether your up and say they would like to see, and we are airport has received appropriate benefit from its hoping to do that. So we will do a feasibility study, V application. I do think, and correct me if I am see what we can a ord, and if it is a direction we wrong, that you have only one route operating out can take we are very open to that suggestion at of the city under those auspices. Would that be the moment. correct? Is that because the fund is failing you in terms of its parameters of application or because of Q306 Mr Beggs: Have you any concerns about the limitations of the City Airport itself? I suppose I current or future access to the airport? It has been should add a rider to that. Do you anticipate there suggested by one of the residents’ groups that any will be other routes in future, if that is not expansion of the airport would require more commercially unpublishable? capacity on the approach roads, and Flybe have Mr Ambrose: I will maybe ask our marketing highlighted problems with existing rail halt? manager to share with us why we got such a small Mr Ambrose: I will deal with the latter one first. slice of that pie. There is currently a rail halt at the Sydenham side, Mr Carlin: You are quite right. We did only receive which is close to the airport. Just over 1% of our assistance with a Norwich service. The vast passengers come by rail. It is not a very attractive majority of the growth within our industry at the option. You could get oV at the Sydenham halt. minute is within the low-cost sector, which is not You have to walk over a little uncovered footbridge a sector, as we have already mentioned, we are into. and then a courtesy bus from the airport takes you EasyJet and I think Jet2, perhaps, were the main to the terminal. We have met with both the DRD recipients of the funding. There is no case of sour and Translink and proposed a rail halt directly grapes. We think the funding was extremely facing the terminal with a covered walkway into the worthwhile, and it is extremely unfortunate we terminal. It does not mean much for us as a were not in a position to benefit from it in a much business, it probably reduces our car park revenue, greater way. but in the interests of a joined-up product we are Mr Ambrose: To reiterate what we said earlier, if very keen to invest in that type of solution. The there is success in the other airports we generally BMAP, which is the planning and potential for the welcome it. The fact that it has opened up a range next number of years, in its draft form is showing of destinations is good news for Northern Ireland a shared rail halt at Tillysburn. The idea is to share and there is room for success outside City Airport. it with a development on the Bangor side of the D5 which has got Sainsbury’s food store and B&Q. We Q308 Mr McGrady: Thank you very much for a think that would be ill-advised—it will not short precise answer to rather a long question. In encourage anyone to come to the airport by rail— general terms the criteria of the fund is to enhance and we will be registering that with the planning economic development of Northern Ireland itself. services. As far as any other congestion, we had a As a general comment, would you say that the fund major breakthrough a couple of years ago when it perhaps is encouraging the operation of short-term used to be that all Belfast traYc had to take a routes, which are very convenient and very traYc-light right-turn, which caused congestion of acceptable to the travelling public, but they actually the Sydenham by-pass. When they reconstructed confer an economic benefit in terms of the overall the railway bridge we also had an underpass built, economy of the north, and do you think they have which the airport invested in as well as the sustainability? Department, so that gives relief. All the Belfast Mr Carlin: I think that the number of routes that bound traYc now slips onto the Sydenham by-pass have been developed, have received funds aboard, with no disruption. We are also talking to the is tremendous. I do not think that they will all be harbour commissioners about the potential of a sustainable. I think it is unrealistic to think that a road linkage through the D5. I am sorry for anyone province with 1.6, 1.7 million of a population and who is not familiar with the geography of this, but relatively little inbound tourism can support all of 3022631025 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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19 January 2005 Mr Brian Ambrose, Mr Alan Young, Mr Brian Carlin and Dr Chris Lundy the services that have been started. I think over North America through Heathrow, interlining time we shall see some changes, perhaps some of through Heathrow, and that is to the various the routes changing to other destinations, but I airports in North American, so we do not see that certainly do not think they can all be supported. the impact of one additional flight to New York Mr Ambrose: One of the sanity checks we tried to will be that great. I do not think the airline view apply ourselves was we took a look at Dublin. that it will be that great either. There is a lot of play made of the number of direct Mr Ambrose: To put it in context, total passengers services out of Dublin, so we applied some numbers last year to Heathrow circa 750,000, rationale and said, okay, if a route can be sustained almost 800,000, so the eVect would be marginal. say three times a day out of Dublin with their population, with the attractiveness of Dublin as a major European capital with a well established Q311 Mr Bailey: You do not think there is likely tourism product, maybe in Belfast we could sustain to be a big impact when the Belfast International/ one a day. If you look at the routes where there are New York service starts? direct services out of Dublin, there are only a Mr Ambrose: No. handful of three plus routes a day, most of them are one a day, or two, and for sustainability we had Q312 Mr Bailey: Other witnesses have expressed to ask ourselves the question: if Dublin can sustain concern over the Heathrow route and suggested one a day to Rome, what are the chances of Belfast that consideration should be given to a PSO sustaining one a day to Rome? There are ways of mechanism for securing the slots for the Belfast addressing it. You do not necessarily have a daily City Services. It is also being suggested that there service, you can do Monday, Wednesday, Friday may be some progress on the EU/US Open Skies to Rome and Tuesday, Thursday to Madrid, so a agreement during this year and BMA may be faced service, if not a daily service. That is the type of with decisions over which slots it should reallocate thing I think we will end up doing in Northern to the North Atlantic long haul services, as well as Ireland, because, as Brian has said, we do have a India. What is your assessment of the risk to the limited population. So that would be a kind of a current Heathrow slots in the medium term and the sanity check on how sustainable some of these possible need for such a mechanism? routes might be. Mr Ambrose: We understand from the airline that the Belfast City to Heathrow route is one of the Q309 Mr McGrady: Last week, again, DETI told most successful in the network, but we are talking us that their £4 million fund was fully committed. about a route that is carrying, as I said, almost In the circumstances, where you perhaps have some 800,000 passengers a year. There are not many increase in your seat limitation, would the absence airlines that would walk away from that type of of that fund (ie it is not now available presumably) business. In the Northern Ireland context the next be detrimental to taking up new routes or engaging biggest route would be Liverpool, which is with new operators? approaching 600,000, or something in that region. Mr Ambrose: The fund is always a marginal thing. Then you drop down to the Birminghams and the If a route is just about capable of surviving in its Gatwicks, which is about 300,000. So Heathrow own right, the fund may be that trigger that makes from ourselves is a big route. The airline is it viable, but if a route has no chance of success, delighted with the performance of the route, both no matter what funds you put at it—. I think there in passenger numbers and the yield. They have said are opportunities for us out there without the fund. publicly that they have no intention of withdrawing Certainly if we believed that there was a route that or reducing the services on the route, and I think was marginal and would probably make a V if there is a market as solid as that we are very di erence, we would not be opposed to going back confident about its future. The case has been made and making our case to say could an extension of by the General Consumer Council and others that the fund be possible. with the limited number of slots available at Heathrow is that always going to be the case? All Q310 Mr Bailey: Is there any evidence—this is I can say is that, as far as we can predict into the concerning the Heathrow dimension—that the new future and from what the airline have told us direct services out of Belfast International Airport, directly, we are very confident of the future of that whether they are supported by the Route particular route out of Belfast City. Development Fund or not, have had any impact on Chairman: That is comforting to hear. passenger numbers travelling on the Heathrow flight, or have these new services been able to develop the market? Q313 Mr Campbell: On the issue of key hub Mr Carlin: There has been very little impact on the airports, apart from Heathrow, Gatwick, Heathrow service. Certainly on the transatlantic Birmingham and Manchester you have referred to, destination, which is due to start later this year and you have also mentioned that that provides from Belfast International, it is going to be potential to Charles de Gaulle and Amsterdam, do operated, I think, four times a week initially and you see any further potential, particularly to then increasing at some stage to a daily service from Charles de Gaulle, and is it dependent on the Belfast International to New York. There are planning restrictions being altered, or do you see slightly less than 20,000 passengers that travel to further development anyway? 3022631025 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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19 January 2005 Mr Brian Ambrose, Mr Alan Young, Mr Brian Carlin and Dr Chris Lundy

Mr Ambrose: The conclusion we came to in trying inappropriate and utterly financially unsustainable, to get connections out of Paris and elsewhere, a lot potential for any other cross border routes Ireland of airlines, or a number of airlines were very to Ireland? interested in Belfast City/Paris, Belfast City/ Mr Carlin: The only inter Ireland routes that would Brussels. Airlines look upon their aircraft as a have the numbers that might have supported it was product they can put on to any two city pairs, so the Belfast to Cork, because the alternative trip to they would go to a meeting in Belfast and Brian Cork is probably a six and a half, seven hour drive. would say, “If you put one on to Paris we believe The Cork route is doing very well. It is a very there are 100,000 passengers a year”, but the same popular business route. Dublin was started. It did airline goes to Bristol and they say, “We would like not work at all. It unfortunately coincided with the you to go Bristol to Toulouse, and we reckon that upgrade in the road system between Belfast and is 150,000 a year.” It is almost like a league table Dublin and also the fact that Dublin airport does of opportunities, and we have not been able to get not particularly well serve Dublin City Centre. If ourselves to the top of that table and secure a deal. you are flying to Dublin you could then be faced So there is an opportunity; the challenge we face is at times of the day with over an hour’s journey that there are currently better uses for the airline from the airport to the city centre, so it really did for their aircraft than the ones we are talking not work on a point to point basis. about. We are confident that we will secure some of those if we get an outcome of the current Q320 Mr Pound: Is there not a relief road currently planning review which allows us to grow, but for being built? Is that an aspiration rather than a firm the foreseeable future and what we are told by the commitment? airlines, Heathrow will continue to be the main hub Mr Carlin: No, there may well be one that is airport for people travelling from Northern currently being built. Alan might able to give us Ireland, purely because of the vast range of some more on that, but it is certainly not in place at destinations that are available from Heathrow. the moment, and I know that the trip from Dublin Airport to Dublin City Centre at times of the day Q314 Mr Campbell: How important is the planning can be quite diYcult. restriction to possible development? Mr Ambrose: Currently we are operating to our Q321 Mr Pound: And, presumably, the fact that the limit. Under the planning restrictions we are V train service takes about two hours, I believe? allowed to o er for sale each way 1.5 million seats, Mr Carlin: It does, but I think the greatest upgrade and we reached that point at the end of December. of the whole system between Belfast and Dublin If we do not get a relaxation on seats for sale, we has been the introduction of the toll road from cannot accept any future business. The only Dundalk basically to Dublin Airport joining the business we could accept is if some routes were to M50 outside Dublin. reduce in capacity or be removed we could replace Mr Ambrose: If people assess it on total journey it, but, as we said, at the moment we are on hold time—if you are flying you usually have to check until the planning review is complete. in an hour or so before your flight, then you have the flying time—it is quicker to jump in the car and Q315 Mr Pound: Mr Ambrose, I am very grateful drive, and that is going to become easier as we end for the written evidence you have submitted, which up with a dual carriageway all the way from Belfast has certainly been read with great interest, to Dublin. particularly the all Ireland dimension, the piece you wrote at the end on which I certainly congratulate Q322 Mr Pound: Following on from that, you were you. Could you establish one question for the very so generous with your time when we met you that ignorant, ie myself? Does the Belfast/Dublin route I cannot remember whether the following point was still operate at all? mentioned in casual conversation as we climbed up Mr Ambrose: No. viewing towers or whether it was in the formal evidence session, but the question of leakage of Q316 Mr Pound: There is no direct flight from passengers was mentioned. Have you done any Belfast to Dublin? analysis to produce some statistics to analyse the Mr Ambrose: No. numbers and the reasons why passengers from the Republic are using the north and vice versa? Q317 Mr Pound: In the context of the Ireland to Mr Ambrose: We have not done any analysis Ireland, the only cross border flights are Derry/ ourselves. We have heard figures banded around, Dublin, Belfast/Cork? but we have never seen anyone quantify what the Mr Ambrose: Belfast City/Cork, Derry/Dublin, yes. figures are based on. I think the honest position is the airport has enjoyed significant growth over the Q318 Mr Pound: Those are the only two? last decade and a lot of our time has been spent Mr Ambrose: Yes. planning for and catering for that growth, so we have not been in a position where we have been Q319 Mr Pound: Is there in your opinion, and the looking at other sectors to see how we can grow fact that this Committee has great aVection for even faster. There are undoubtedly people, Carrickfinn must not in any way be allowed to including myself, who are using the services from cloud your judgment as it would be completely Dublin as direct services, but I have not seen 3022631025 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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19 January 2005 Mr Brian Ambrose, Mr Alan Young, Mr Brian Carlin and Dr Chris Lundy anything verging towards scientific reasoning as to Q324 Chairman: I am not sure how sophisticated how many or why, apart from anecdotal type your customer database is, but it would be evidence that people would give. fascinating to know, if it was allowable, where your resident Northern Ireland customers are coming Q323 Mr Pound: I am sure you are basing your from and what is the furthest point from which decision on scientific reasoning. I am just your commuter based customers are travelling. Is wondering whether you have any anecdotal that something you would look at? evidence, if there is not any empirical evidence, as Mr Carlin: It is somewhat dated now, but the last to what the passenger preference input to the CAA passenger survey would certainly show that equation is here. You have talked about the we would be pulling people on occasion from the diYculties of getting from Dublin Airport into various counties on the southern side of the border, Dublin, and we all know the wonderful but it is a relatively small number of our total convenience of getting from Belfast City into the passengers, and that could easily just be a factor. City of Belfast, but are those the predominant There may be factors, such as ease of access from factors or are you aware of any others? parts of the southern counties. It would be easier to get to Belfast than to Dublin. It could be price Mr Ambrose: I think the predominant reason for and it could be a destination perhaps that we serve flying out of Dublin is the greater range of direct that is not served from Dublin. We have great services than you would have from any of the diYculty in getting, as Brian mentioned, any figures Belfast airports. For example, our headquarters is from the Republic of Ireland. The CAA are in Madrid: you do not have an option of flying meticulous about figures that they produce. direct to Madrid; you can either interline through Basically, anything that we want or anything that Heathrow or drive down to Dublin and take a we could want will be available with the CAA single flight. The business reason for going to archive. Dublin is a very wide range of direct services. Even if it is one a day, it suits our purposes. On the Q325 Chairman: Perhaps we could search out some charter market, which is another reason that people answers to that question, not just in respect of are going south, sometimes it is more cost-eVective Belfast City, but Belfast International and the City that the same holiday package out of Belfast is of Derry as well. It would be interesting to see cheaper out of Dublin, and that is probably to do where the passengers are coming from. Gentlemen, with the size and the critical mass and their ability at the start of the meeting I said that much of our to be more competitive because of the vast amount questioning could be repetitive given that we have of flights in the summer going from Dublin to met before, but we are grateful for the fullness of Palma on a daily basis verses the more modest your answers. It is good get those on record. Can market in the north. It can be price-driven we once again thank you both for the hospitality primarily in the charter market or the range of at your end and also for travelling to be with us direct services in the case of most of the business this afternoon. I am sure you will still be able to market. meet your return flight, and it should not be late, Mr Pound: That is very helpful. Thank you very weather permitting. On behalf of the Committee much. can I thank you for taking the time to be with us.

Memorandum submitted by the Confederation of British Industry, Northern Ireland

Background 1. CBI Northern Ireland welcomes the opportunity to contribute to the Inquiry established by the Sub- Committee of the Northern Ireland AVairs Committee. Aviation plays a crucial role in supporting the Northern Ireland economy and businesses as they compete in the global economy. It is therefore vital that policy makers are made fully aware of the importance Northern Ireland business attaches to the development of appropriate air services. 2. The beneﬁts of aviation are now under threat by a lack of airport capacity in Great Britain with demand for aviation set to double over the next 20 years—if expansion is constrained businesses will face a loss of air services, more delays and higher prices. This will have particular implications for Northern Ireland. Due to the increasing importance of air services we welcomed the Department of Regional Development’s research undertaken into Northern Ireland air services in 2001 to help assess key issues and needs. 3. Air transport will become more important to the Northern Ireland economy if we are to achieve the ambitious medium term economic priorities set out by the Economic Development Forum: — exports (measured as value of exports of goods per employee job) will need to increase from 83% of UK level (in 2000) to 100% of UK level by 2010. This will represent a doubling of exports over this decade; and — tourism numbers will need to double between 2000 and 2010. 3022631026 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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In addition Northern Ireland manufacturers have a major reliance on an external supply base— approximately 90% of supplies are imported. Current trends to outsource low value-added manufacturing to Eastern Europe and Asia are also resulting in the need for improved international air connections. Likewise with growth in tradeable services also required for the development of the economy, good air links will be an essential requirement. We do recognise that the use of video-conferencing facilities will grow in the years ahead—but this is unlikely to oVset the increasing demand for air services. 4. Air services will become increasingly important to Northern Ireland in the future. Some of the key factors driving the need for air services are as follows: — the development of a knowledge based economy servicing the needs of global customers; — Northern Ireland will increasingly have to compete in niche markets, on enhanced service capability, on responsiveness, reliability and speed to market, etc—air services both for passenger traYc and freight will become increasingly important; and — the need to be well networked with other European regions—companies will increasingly work in partnerships both formal and informal, and increasingly with international partners to service global customers.

Key Requirements for Northern Ireland—Creating the Best Place to do Business in Europe 5. We have set out in Exhibit 1 the key requirements for air services for the Northern Ireland economy over the years ahead.

Exhibit 1

KEY REQUIREMENTS

Issue Comment

— Good access and frequency of services to GB — Well served—though some concern about airports—essential requirement. over-capacity on some routes. — Good access to Heathrow for interlining— — Well served but lack of late night flight from essential requirement in short/medium term. Heathrow to Belfast is an issue for interlining passengers. — Direct European services to perhaps five/six — The service to Amsterdam was bolstered by key cities/commercial hubs—highly desirable. four new easyJet services launched in June 2004 and two Jet2.com routes. Route Development Fund now available. (There is also a Londonderr–Dublin service which benefits from a PSO provided by the ROI government.) — Direct access to a US hub—essential. — No direct services at present—New York (via Shannon) withdrawn in 2001. — Competitively priced fares—essential. — Traditionally air services have been expensive— but entry of low cost airlines has reduced prices over last few years. — Reliable flight times, good connections. — Generally has not been a problem. — Competitive air freight services. — Potential for development to exploit world wide express operator growth—British Airways withdrawal in 2001 removed some bellyhold capacity.

6. Air services to/from Northern Ireland declined in the period from the mid 1990s up to 2002— 10 scheduled airlines had ceased operations while only three had been added, while nine scheduled destinations have been lost and only one added. The Foreign Direct Investor (FDI) respondents to the DRD commissioned research generally considered that there had been a deterioration in air services in this period. 7. However in the last two years there has been a significant improvement in services (three UK/Ireland routes reinstated, much greater capacity added to key GB business routes, and six new direct scheduled European routes introduced albeit that several have a strong outbound tourist focus) and airfares have continued to reduce (in some cases significantly) on several routes and this has been strongly welcomed by business. There has also been considerable investment in airport facilities and infrastructure. Latest figures indicate that the two main Northern Ireland airports will have around 6.5 million passengers this year. 8. In terms of gaps in provision and general concerns regarding the development of air services, the key issues identified by CBI Northern Ireland members are as follows: 3022631026 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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— Continuing access to Heathrow—with Northern Ireland’s limited direct European/US air services, Heathrow remains an essential route for interlining. While there is little immediate threat to this route (with 800,000 passengers per annum, and good capacity utilisation on aircraft) there are some concerns that valuable landing slots at Heathrow could be used for more rewarding transaltantic traYc. Experience from 2001 with the withdrawal of British Airways’ services suggests we cannot be complacent. We have previously asked for consideration of the creation of a Public Service Obligation in respect of Northern Ireland’s current Heathrow slot pool. — Lack of direct European air services—currently eight routes exist (Amsterdam well established, together with new routes developed since June 2004 to Paris and Nice (both supported by the RDF) and Malaga, Alicante, Barcelona, Prague). This compares with around 50 from Dublin, together with nine north American services. CBI Northern Ireland has previously recommended that Northern Ireland should set a goal of developing five to six direct services over the next three to four years to diVerent European capital cities or commercial centres. This would provide a significant boost to the tourism industry and to NI based companies trading in Europe. The new European routes are welcome but many are clearly focused at “outward bound” tourism. — A direct service to New York (or a GB/Europe flight involving a Belfast stop-over) or other key US hub. — The availability of competitively priced air freight services both to and from Northern Ireland—CBI is contributing to a current study on the feasibility of developing “low cost” air freight services. At 50,000 tonnes per annum Belfast International Airport is the third largest air freight facility in the UK. 9. From a Northern Ireland perspective the key issues CBI wish to draw to the Sub-Committee’s attention are summarised below: — Good quality airlinks are essential for the development of Northern Ireland’s economy—these will become more important in a more networked and knowledge-based economy. Concerns have been expressed about the proliferation of low cost operators serving Northern Ireland. Lower prices have certainly followed their introduction but questions have been raised regarding their sustainability. — Recognise the importance of maintaining Heathrow services—these will remain essential in the short and medium term. Northern Ireland is unique within the UK due to our location with no other means of accessing Heathrow—we have argued for a PSO to ensure Northern Ireland has the necessary landing/take-oV slots — Recognise the benefits of more direct European services—beneficial to the economy and will help take some pressure oV Heathrow (suggested routes of interest to business include: Brussels; Frankfurt/ Cologne; Geneva). It will be important to ensure that any initiatives to develop these services follow market-led principles—we strongly welcomed the establishment of the Route Development Fund. These European routes also have the potential to oVer international interlining opportunities. — Manchester and Birmingham may increasingly oVer the potential to become important hub options for NI as these airports expand and develop services. Gatwick will also remain as an important hub. It will be important for Northern Ireland to retain/develop good links with these airports. — We need to maximise the use of existing assets. — Ensuring good surface access, including appropriate public transport services, to the Northern Ireland airports are maintained and where necessary improved. 10. It is also important to understand some of the broader issues which impact on service provision. We have attempted to summarise some of these key issues below: — aircraft are very mobile assets and routes can be easily opened/closed to take advantage of more attractive economic returns—Northern Ireland will remain exposed to this. It is clearly important that airline operators do make a satisfactory return on their investment. — low cost airlines are dramatically changing the airline landscape—it is unclear how this will fully develop in the longer term and their impact on traditional carriers, who have begun to respond aggressively. The recent enlargement of Europe has resulted in a significant interest by low cost airlines in Eastern European routes—this may increase the risks further of maintaining and developing Northern Ireland routes — London airports, and particularly Heathrow are almost certain to become more congested in the medium term—leading to less reliability and rising costs with the potential for some form of congestion charging. 11. Finally there is also the issue of Northern Ireland’s two main airports—Belfast International and Belfast City. Both airports are successful, providing a range of services and demonstrating an ability to grow and invest for the future. Business is concerned to ensure that the two main airports serving Northern Ireland continue to operate to meet its needs, in particular to maintain good linkages with GB and to support more direct international services. A key issue will be whether the airports should operate in a more complimentary or competitive way. Businesses in Northern Ireland have an open mind on this issue, though one that is favouring complimentarity rather than competition, recognising that Northern Ireland is well served by its airports but less so by air services—how best to increase service volumes and reduce costs should be the main objectives. While 3022631026 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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Derry City airport provides a valuable “sub-regional” service the sustainability of these services is questionable without ongoing subsidy, and some of our members are concerned that this fragmentation adds more cost and inhibits achieving economies of scale.

Key Challenges 12. On the horizon there remain a number of potential threats which could impact seriously on Northern Ireland’s peripheral position: — Air Passenger Duty—this has become a much more signiﬁcant part of the cost of airfares following the introduction of low-cost airlines. We would be concerned about the threat of further increases to APD particularly as Northern Ireland customers have no alternative method of travelling to say London within a reasonable time frame — Northern Ireland is already severely impacted by high energy costs especially electricity costs and natural gas costs. If decisions were made to introduce taxes on aviation fuel this would further penalise Northern Ireland’s peripheral location — The increasing reliance on low-cost airlines and the increased risks and uncertainties that are associated with these services. This is particularly the case as the market matures and existing overcapacity within Europe is addressed. Northern Ireland may be exposed with “lean routes” or on routes where several diVerent providers have resulted in overcapacity. This may mean that airports, and in exceptional circumstances Government, will need to be able to respond more rapidly to market developments — Lack of critical mass relative to Dublin, particularly as Northern Ireland has two main airports (with some duplication and costs of a range of services) and one regional airport (Derry City Airport). While we have undoubtedly good access links to most of Great Britain, this may make it more diYcult to develop and grow direct European and North American routes. The importance of improving Northern Ireland’s tourism product to entice people to come to Northern Ireland will be an important element in developing sustainable new direct European/North American routes.

Air Route Development Fund (RDF) 13. This initiative has been strongly supported by CBI Northern Ireland. It oVers the opportunity to help overcome start up costs and initial marketing costs of establishing new routes. However the RDF is only a pump-primer and helps to move Northern Ireland up the “attractiveness” league of potential services which an airline could develop. It will only assist those routes where the market demand is likely to exist. The fund will not signiﬁcantly reduce the risks being undertaken principally by airlines, and to a lesser degree by the airports, in investment in any new routes.

The Island of Ireland Dimension 14. Dublin airport is clearly the main point of entry/exit onto the island of Ireland for international business travellers and tourists. This has implications for inward investment, international tourism etc Key issues in respect to the island of Ireland are as follows: — Northern Ireland loses over 500,000 passengers to Dublin airport (and a further 250,000 tourists who overnight in NI)—largely due to Dublin’s direct European and US services—Northern Ireland has an opportunity to capture some of this market. — Considerable improvements to the Belfast–Dublin road over the next few years will increase the propensity to utilise Dublin airport (where signiﬁcant growth is anticipated and is being planned for)—wider range of services available and prices at peak periods can be much less. — Dublin airport—scale, critical mass, larger capital city, much stronger inward tourism dimension, well established low fare airlines, oVering competitive fares (even at peak holiday season). — No Air Passenger Tax and lower VAT rates provide important cost advantages in markets which are increasingly price sensitive. — Desire to encourage more intra-island traYc. The Belfast–Cork service is well established (recent new service provider). However we recognise that sustainable routes are required. Belfast–Dublin has not been a commercial success, and with an eYcient and reliable train service, backed by a high quality dual carriageway/motorway an air service on this route is unlikely to be commercially viable. Dublin will always have an enhanced range of services. However the Route Development Fund will hopefully act as a catalyst to improve the services available in Northern Ireland and reduce this signiﬁcant dependency and economic loss. There is an opportunity for Northern Ireland plc to work together in order to attract international airlines by oVering uncomplicated access to the island of Ireland. 30 September 2004 3022631027 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

Ev 106 Northern Ireland Affairs Committee: Evidence

Witnesses: Ms Barbara Anderson, Chair, Transport Committee, and Mr Denis Galway, Director, Larne Harbour, Confederation of British Industry, Northern Ireland, examined.

Q326 Chairman: Ms Anderson, Mr Galway, you are Q328 Chairman: At the risk of upsetting some of welcome. I am sure you have witnessed from the your members but making some of your members back the basis of the process that we go through in very happy, is there an obvious favoured route in terms of the Committee. Can we, as we did terms of development for Asia? previously, thank you for the work you have done Ms Anderson: I would not like to put a name to it at already in giving us your views in a written context. the moment, but what I could say, because we are I am afraid this session is a little truncated. We have also looking at this from a freight perspective as well, got a meeting of the main Committee to follow, but because obviously as manufacturing is moving out I wondered if I could launch straight into our into the Asian markets we are also bringing a lot of questioning with a couple of questions as to the products in from the Asian market, is that some of CBI’s view on access to Heathrow from Northern that product coming into Northern Ireland is for Ireland. One of recurring themes in the evidence added value services before it goes on to other given to us, and also reflected in your submission, markets. We currently have a study in train at the has been the vital importance that people give to moment looking at air freight, and it may well be maintaining the access to Heathrow, and they say that the freight route will line up with the passenger Heathrow as opposed to London. They mark down route, but it is a little too early to say. the importance of maintaining access to Heathrow. Chairman: Thank you for that. I understand the Can you elaborate briefly from a business point you have made and you may not at this stage perspective how important it is to maintain that want to put a name to that route. route? Ms Anderson: Certainly from a business perspective Q329 Mr Pound: Thank you for the written Heathrow is absolutely critical in keeping the submission you sent in earlier. It is very helpful. I business economy, both inbound and outbound, may not be more educated, but I am certainly more connected with the rest of the world, providing knowledgeable than I was before. You talk about access into the advanced network of flights from the importance of maintaining the slot at Heathrow Heathrow at timings which able to travel into and your preferred choice is a PSO to do that, but Europe and beyond within acceptable timescales obviously you are aware that that requires the and costs. To take the Heathrow link away would be European Commission to co-operate or change the a severe disadvantage to the Northern Ireland rules. In the absence of that happening—it is not business economy. Again, it is important as our impossible but it is pretty unlikely—what other economy develops and grows and as we go forward, mechanisms do you think could be used to maintain our potential customer-base is global, that our the Heathrow access? customers are able to get to us in Northern Ireland Ms Anderson: I think perhaps the most eVective with the minimum of fuss and eVort and therefore mechanism is going to be maintaining the demand. we can compete more eVectively with the rest of It is the old adage that if you do not use it you will the world. lose it. As long as the demand is there, then I think from the CBI point of view, we cannot become Q327 Chairman: I am glad you have mentioned that, complacent and say, “It will be okay, British because the other thing you mentioned in your Midland will look after us.” We have to watch the submission, which is obviously important for the situation very carefully, and, if it looks as though future of the Northern Ireland economy is at that is coming under jeopardy, we will have to take moment the lack of routes and available options for appropriate action at that that point in time. a lot of the Asian cities and countries given the need for manufacturers to have easy access into the Asian Q330 Mr Pound: It is a fairly obvious point, and it market and in return. How do you think that best factors into what you said earlier on about market could be developed to benefit the Northern Ireland driven solutions, but do you ever make that point to economy? Is it about new routes being developed your members, the point that you just eloquently from Northern Ireland airports or is there already an expressed, use it or lose it? acceptable service from Dublin and Heathrow? How Ms Anderson: Frequently, but perhaps we should be do you see an improvement? a little bit more vociferous about it. Ms Anderson: Certainly at this point in time it will Chairman: I am sure that the Committee derives have to be very much market driven. Yes, a lot of some comfort from the comments made by our last manufacturing is moving away from Northern witnesses from Belfast City International Airport Ireland into Asian countries. It is essential that we that that route is sustaining itself very well and is are able to move our customers backwards and showing a profit. It seems to be quite healthy in forwards. There are some discussions underway in terms of numbers and patronage. We take some terms of developing some routes, but again what we comfort from that, and I am sure you members will need to do is ensure we develop the right routes. We as well. We are going to move on to another issue cannot develop them all. That is not economically related to Heathrow. Could I ask Mr Eddie viable and it would be probably suicidal to do it. McGrady to bring a question in here, please? Therefore we need to be very careful that we have a sound business case for the routes that are going and Q331 Mr McGrady: In your submissions and it should match the market demand for people comments indeed from others there has been travelling into those locations. emphasis on the fact that there is not a late night 3022631027 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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19 January 2005 Ms Barbara Anderson and Mr Denis Galway

ﬂight particularly from Heathrow Belfast and vice Chairman: We have just mentioned the Route versa. Have you done any research to identify the Development Fund, and I know that Mr Beggs has demand for that to give it some quantity, if you like? some questions. Mr Galway: I think I will deal with that one for you, Y Chair. Our information is that there is insu cient Q335 Mr Beggs: You have strongly supported the demand at present. If such a demand was there, we Route Development Fund, and it appears to have would hope that allowance could be made through been very successful to date. Have you any concerns the airport operating hours, but I think it should be about the criteria currently used to decide which market led. routes to support and do you think business needs are adequately taken into account? Q332 Mr McGrady: Without the research, you are Mr Galway: I do not have the full detail of the cases still convinced that, for instance, the business being made for each route, but I think there is a community would beneﬁt from a late night facility review mechanism, I understand, built into the out of Belfast City. If you believe that, have you fed Route Development Fund and I do believe that they that comment and that opinion as a body into the are looking at the sustainability of these routes at the current consultation of the planning process? present time. The amounts of money that are being Mr Galway: CBI would have fed this in through directed to the routes are not vast in overall terms, the Regional Transportation Strategy, and I so I think it is certainly a very worthwhile investment would think probably also through the Belfast and can be a major kick-start for Northern Ireland’s Metropolitan Area Plan. economy, both for export business and for incoming tourism.

Q333 Mr Bailey: For brevity’s sake I will run a few Q336 Mr Beggs: You were about to say that the fund questions together. First of all, since your is only a pump primer that helps to move Northern submission, routes to Europe, Rome and Berlin in Ireland up the attractiveness league. How long do particular, have been announced. Do you think we you think the overall fund will continue to be are approaching saturation point. Secondly, do you needed? think there is too much bias in terms of tourist route Mr Galway: Obviously the routes which have started development as opposed to business route there, I think the fund is of three-years’ duration, development? Thirdly, how important do you think and that should be suYcient for those existing it is to develop routes to the new EU countries in routes, but if a new route comes along in a year and what was previously Eastern Europe? a half or two years time, it may well need a period of Mr Galway: I think that with the expansion two or three years to get it up and sustainable. eastwards of the EU it is absolutely essential that we have suYcient routes to enable Northern Ireland to compete eVectively and economically. To ensure Q337 Mr Beggs: Scotland has had a Route that the routes do become viable and remain Development Fund for some time and we sustainable, I think it will be necessary from a tourist understand that consideration is being given to point of view that suYcient marketing eVort and introducing a similar fund in other regions in Great resources are directed for incoming passengers. It Britain. Have you any concerns that this may mean will obviously need some time for that to build up that the fund will eventually be needed just to keep but we think that business and tourism will marry Northern Ireland on an even footing, it would no together. Tourism can expand very significantly on longer give any edge over other regions? a lot of the routes with the right marketing eVort, but Mr Galway: I think the intention, as I understand it, of the Air Route Development Fund was to give it needs resources directed to it, both money and a kick-start, and I would like to think that once the people, and I think on this score we do not yet think kick-start has been given the routes would be able to that the number of routes has reached saturation exist and the Northern Ireland economy would be point and we would hope that more money could be able to exist without continuing use thereof. We are directed to the Air Route Development Fund if the only significant part of the UK that does not sustainable routes are identified. have a surface link to the continent, and we have things like airport passenger tax and other security Q334 Mr Bailey: Following on from that, your issues at airports, which impact upon our submission mentioned three routes that you competitiveness, and certainly the Air Route considered important for business, the Brussels, the Development Fund enables us to get the market Frankfurt Cologne and Geneva. We have now got a growing to a state where it can be competitive. service available to Geneva. How important do you think the other two routes are? Q338 Chairman: One additional question. You will Mr Galway: There have been quite a few new routes have heard earlier on that we mentioned that in started there now. I am not au fait with the figures taking evidence from the DETI last week the £4 for these other two routes as yet. We hope that full million budget for the Air Route Development Fund and proper examination will be given and if the has now been fully committed, which in itself may business case is there that there would be assistance restrict further use. Is that something that the CBI given to give them a kick start, but I do not have would want to comment on in terms of seeing it as a figures at this moment in time. negative? 3022631027 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

Ev 108 Northern Ireland Affairs Committee: Evidence

19 January 2005 Ms Barbara Anderson and Mr Denis Galway

Mr Galway: We believe that more money should be we are in the process at the moment of collecting the made available if a good business case can be made detailed data so we can then look at what the options for additional routes, additional new routes. might be to service that requirement, and then we Ms Anderson: I think to add to that, we also have our will take it from there. Hopefully by the end of the work cut out immediately in ensuring that the new first quarter, by the end of March beginning of April, routes we have are sustainable. We must focus on we should actually have a little bit more what we have today and make that work, and then, information, more clarification on where we are as Denis has said, we justify future routes as and going. when they become available. Q341 Reverend Smyth: What is the extent of the Q339 Reverend Smyth: You did mention in your competition at the moment? Which airlines are evidence to us that there is potential to develop air involved? freight both to and from Northern Ireland. That Ms Anderson: At the moment the main air freight seemed to be the best primary way to go in the light out of Belfast is TNT and DHL, it tends to be very of earlier evidence we received today. Would you much express, and we are also looking at ways that like to elaborate on your views and perhaps tell us we can maybe change the thinking on that, because what sort of impact was made on the withdrawal of both of those companies have hubs across Europe, British Airways in 2001? so we might even be able to divert some freight away Ms Anderson: I will take that question. It relates from Heathrow and take it closer to the markets we back again to the study which is currently underway. are serving, but again those discussions are in play. As soon as that report is published, I will ensure it is There is a little bit of reluctance sometimes to change passed through to you. One of the issues with British their thinking, but we will get there. Airways pulling out of Northern Ireland was that we Chairman: With your agreement I may ask our clerk lost significant capacity for belly freight into to talk to you about output location dates and when Heathrow. There is some belly freight capacity with you think your study will be available to make sure British Midland into Heathrow, Heathrow being the that we can take full advantage of but also make sure major global cargo hub, and at the moment we include the findings of that study in the report. the majority of air freight leaves Northern Ireland as Thank you. the first leg of its journey by road and sea. Needless to say, when you are coming up against ever Q342 Mr Swire: The question of good surface increasing customer requirements for shorter lead access, which you mention, including public times, having to put more stock into your supply transport, to the Northern Ireland airports is chain to work for this duration of journey and delays something you consider to be a priority. Where in in Heathrow, in order to make us more competitive the list of your priorities does that come? in Northern Ireland we need to look at ways of Ms Anderson: I think it has to go fairly high up, shortening that supply chain and taking costs out, because if you cannot actually get into the airport and that is one of the key drivers behind the air you cannot fly anywhere, and if it is going to take an freight study that is going on. We need to have some hour and a half to get to the airport, then it is going lateral thinking and look at ways and means that we back to what was said in the earlier session about might be able to move product into and out of journey time and the duration. We are comfortable Northern Ireland using air freight in a more cost- that the Northern Ireland Regional Transport eVective, eYcient and innovative way. All of that is Strategy is addressing a lot of the access issues. There in play at the moment. will be some disruption once the work starts on the west link and subsequent work on the extension of Q340 Reverend Smyth: Is the remit then not just to the M2. All of those will have a short-term impact on deliver to Northern Ireland, Belfast to Heathrow but accessibility, but, again, it is important that to other airports, or what is the remit of the study wherever possible we are increasing the flexibility to and when is it likely to be completed? get into the airports in a reasonable time with the Ms Anderson: What we are looking at is the flow of minimum fuss and hassle. product into and out of Northern Ireland. The first part of the project would indicate that a Q343 Mr Swire: There has been a suggestion that the combination of textiles and engineering would be improved communications between the north and the sectors where we might get the most gains in the the south led to quite a lot of travellers from first instance, but if you think further ahead, there is Northern Ireland using Dublin as a hub or point of nothing to say that in years to come you will have a departure. I do not know if that is true, but if it is Tesco freighter leaving at Belfast International true, are you concerned about it and what are you Airport going into a regional hub somewhere in the doing to try and reverse that trend, in other words to UK. We are quite a long way away from ever get travellers from the Republic to fly out of Belfast? achieving that at the moment, but it gives a focus for Mr Galway: I think Dublin airport with the range of the future. What we are looking at is probably going services has attracted some business from the north, to be two long haul routes where we have identified but with the road improvement between Belfast and at the moment that there is potentially enough flow Dublin and also the diYcult congestion within of product and balance of inbound and outbound to Dublin city centre road traYc goes both ways, so be able to justify the freight service, and that is one there are opportunities to market people, to draw into North America and one into the Far East; and the catchment area for the Northern Ireland airports 3022631027 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

Northern Ireland Affairs Committee: Evidence Ev 109

19 January 2005 Ms Barbara Anderson and Mr Denis Galway further south. Hopefully, with the increased range of duty applying in the north of Ireland but not in the services which are now being oVered from the south, all of these things are competitive Northern Ireland airports, this will widen the disadvantages, and I certainly think that we would number of potential customers that we can attract to have liked to have seen airport passenger duty both the Belfast Airports and also possibly Derry abolished for services to Northern Ireland which airport, but certainly both the Belfast airports. would help the Northern Ireland economy, incoming tourists and business travellers, but Q344 Mr Swire: Can I add to a question which Mr certainly at the very worst we would not like to see Pound asked earlier. There is no requirement at all, any increase in it at all. is there now, for a flight from Dublin to Belfast given the train links and the road improvements? Is there Q346 Chairman: I am conscious that we have any suggestion that there might be a flight between galloped through this evidence session because of the two? the division earlier on which put us behind, but can I say to you how grateful we were for the written Mr Galway: I certainly think at the present time evidence and give you the opportunity to mention there is absolutely no case that could be made for a anything that you think we may have missed in flight from Belfast to Dublin. questioning you, because of the speed at which we have gone. Is there anything you were expecting us Q345 Chairman: So far in our inquiry we have not to ask which we have not? touched on air passenger duty, but it is a question Mr Galway: No, I think, Chairman, that since our that I would like to put to the CBI in as much as what submission last September there has been a lot of impact do you think the lower rate of VAT and the good news as far as air services, whether it be to absence of air passenger duty at Dublin has on the Europe and to America, and with good eVort being attractiveness of people flying from Dublin made to market those services we think that the International rather than using airport in Northern Northern Ireland economy can benefit suYciently. Ireland? Is there an impact? Is it a big issue? What we seek, particularly in the Air Route Mr Galway: Chairman, certainly every straw helps Development Fund, is that the pipeline is not just to build up a case, and with Value Added Tax, for closed down if the potential still exists. example, on accommodation in the south being 13% Chairman: On behalf of the Committee can I thank compared with our 17°%, with airport passenger you once again for giving evidence this afternoon. 3022631028 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

Ev 110 Northern Ireland Affairs Committee: Evidence

Wednesday 23 February 2005

Members present:

Mr Tony Clarke, in the Chair

Mr Roy Beggs The Reverend Martyn Smyth Mr Stephen Hepburn Mr Hugo Swire Mr Stephen Pound Mark Tami

Memorandum submitted by the Department for Transport

The Future of Air Transport White Paper

Introduction 1. The Future of Air Transport White Paper, published in December 2003, provides a 30 year strategic framework for the development of airport capacity in the United Kingdom. Prepared in conjunction with the administrations of Scotland, Wales and Northern Ireland, following extensive study and consultation, it sets out the case for the future expansion of airport capacity across the United Kingdom. It presents the Government’s considered view of where new capacity would be best located and the approach required to ensure it is developed in a sustainable manner. 2. It is important to emphasise that the White Paper does not itself authorise or preclude any particular development but sets out a policy framework against which interested parties can plan ahead and which will guide decisions on future planning applications. It is for airport owners and operators to bring forward speciﬁc proposals for airport development in the normal way, through the statutory land-use planning system. 3. In the case of Northern Ireland, the White Paper reﬂects the devolution of responsibility in certain aviation policy areas. Issues such as safety and airspace regulation, security, international negotiations including those with the European Union, regional access policy and the overall strategic framework for the sector in the UK remain reserved to DfT. However, a number of important areas are currently the responsibility of the Northern Ireland Administration, and if the Northern Ireland Assembly were to be reinstated would be devolved. These include land use planning, most surface access, assessment and mitigation of local environmental impacts, the funding of aerodromes in public ownership and economic regulation of Northern Ireland’s airports. The Administration would also exercise executive powers in relation to designation of an airport for the purposes of s78 of the 1982 Civil Aviation Act (Noise Controls) should that be considered necessary.

The White Paper Consultation 4. The consultation that preceded the publication of the White Paper, which centred around seven consultation documents covering all parts of the UK, was one of the largest and most extensive policy consultations carried out by Government. A large variety of events were held as part of the consultation process (approximately 50 seminars/workshops and 16 exhibitions around the UK) and around 500,000 responses were received. 5. The Northern Ireland Consultation Document (NICD) was prepared in close consultation with the Department for Regional Development. It invited detailed comments on a range of issues, both national and regional, of relevance to the aviation sector in the Province and a number of scenarios for future airport development in Northern Ireland and the UK more broadly. 6. In Northern Ireland over 4,500 copies of the main consultation document and over 10,000 questionnaires were distributed. A conference was hosted by the Northern Ireland Administration, at which the Northern Ireland Minister Angela Smith spoke. The event was attended by some 60 stakeholder organisations including airport operators, airlines, local authorities, community groups and representatives of local business. Forty written responses to the NICD and 220 to the accompanying questionnaire were received and the analysis of these responses was published alongside the White Paper, as were the responses to the consultation documents for each of the other UK regions. 7. That analysis pointed to strong support amongst key stakeholders for growth of air transport at a national scale and in Northern Ireland. Key stakeholders recognised that air services are important for Northern Ireland both in terms of access to the main airports in London (Heathrow, Gatwick and Stansted), but also for access to other destinations. Increasing the number of direct services to major business centres in the EU and access to other parts of the UK were identiﬁed as the most important route priorities. 3022631028 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

Northern Ireland Affairs Committee: Evidence Ev 111

8. There was support for development at all the Northern Ireland airports with diVerent stakeholders favouring one over another. But there were also some concerns expressed about the environmental impacts of airport development, most notably noise and air quality. However, weighing these against the perceived beneﬁts of further development of airports in the Province, the majority of Northern Ireland respondents supported development.

White Paper Policy of Relevance to Northern Ireland 9. The principal conclusions of the Air Transport White Paper relating specifically to Northern Ireland were as follows: — the Northern Ireland authorities should review the form of the planning agreement at Belfast City should the airport operator ask them to do so; — the scope to develop capacity within Belfast International’s existing boundaries is significant and should be supported; — the future development of City of Derry Airport needs early consideration in conjunction with the Government of the Republic of Ireland; and — all developments will need careful environmental assessment. 10. There are also a number of generic UK-wide or regional policy provisions in the White Paper which have particular significance for Northern Ireland, because of its unique geographical characteristics within the United Kingdom (ie its physical separation from Great Britain and its land border with another state). These include policies on Public Service Obligations, Route Development Funds, slot regulation, EU-US Open Sky negotiations etc, which are addressed later in this Memorandum. 11. The Department’s view on aviation policy aVecting Northern Ireland has not changed materially since publication of the White Paper, although we recognise that the air transport market within the Province has continued to evolve. The Government is committed to reviewing implementation of the White Paper in 2006. 12. DfT has established good working relations with DRD (who co-ordinate work on aviation policy for the Northern Ireland Administration) and are liaising closely with them to implement the White Paper. DRD lead on local and devolved issues, DfT retains lead responsibility for a range of generic issues and will remain closely engaged, particularly where high-level, supra-regional or politically significant issues arise.

Forecasts 13. In 2004 over 216 million passengers passed through UK airports. By 2030, the White Paper predicts that demand will have increased to between 400 and 600 million trips with a mid-point forecast of 500 million. Our forecasts suggest that mid-point demand for air travel at Northern Ireland airports will reach 12.9 million passengers per annum (mppa) in 2030 as set out in the table below, with a further 0.9mppa travellers to/from Northern Ireland using Dublin Airport.

2004 2030 Passengers ATMs Passengers ATMs Airport (mppa) (000s) (mppa) (000s)

Belfast City 2.1 33 2.2 42 Belfast Intl 4.4 43 9.8 115 City of Derry 0.2 3 0.9 10 NI Total 6.7 79 12.9 167

14. These ﬁgures assume that two new runways are built in the South East of England and new capacity is provided to facilitate airport growth in other parts of the UK as outlined in the White Paper. They also assume that the planning agreement at Belfast City is retained in its current form. Were the agreement to be revised to allow more seat capacity it is highly likely that passenger throughput at Belfast City would exceed this forecast and the overall outturn forecast for Northern Ireland as a whole may rise slightly as a result. Our forecasts suggested that demand at an unconstrained Belfast City could reach up to 4mppa by 2030.

Leakage to Dublin 15. The NICD addressed this issue at paragraphs 7.3.1–7.3.11; that remains our best assessment of the situation. However, the outturn forecast discussed above could also be inﬂuenced by the strong performance of the Northern Ireland Route Development Fund in attracting new direct services, helping to develop the low-cost airline “oVer” in the Province as a counter-balance to the draw oVered by Dublin. Over time this could contribute to reducing the potential levels of leakage of Northern Ireland traYc to that airport which have been forecast. 3022631028 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

Ev 112 Northern Ireland Affairs Committee: Evidence

Northern Ireland’s Airports

Belfast City Airport 16. With its location close to the centre of the dominant business community in Northern Ireland, Belfast City is ideally suited to servicing domestic and near European International routes with a high-frequency, full service business product focussed on regional jets and narrow bodied aircraft. The planning agreement at Belfast City, which restricts the number of outbound seats for sale to 1.5 million per year, is estimated to restrict throughput to 2.2mppa, and as the earlier table indicated it is already operating at very close to this level, although it remains some way below its ATM limit of 45,000 per year. Belfast City’s runway length also tends to favour this sector of the market. 17. In discussion with DRD, it was agreed that the NICD should not seek views on the removal of, or amendments to, the planning agreement at Belfast City. This was because the agreement was considered to be essentially a local planning issue and at the time of preparing the NICD it appeared unlikely to impose constraints on growth at Belfast City for some time to come. The airport operator also did not press for the issue to be raised by the NICD. But in the period since then, the airport has experienced strong growth so that by the time of the White Paper it became clear that the restriction on the sale of seats in particular could soon become a significant restraint on the airport. 18. We take very seriously the environmental impacts of airport operations, and in particular noise impacts on local residents. We also support in principle the use of agreements which limit operations at airports such as Belfast City, where there is a significant concentration of population very close to the airport. Recent practice elsewhere in the UK, for instance in the decision on Heathrow Terminal 5, is to impose limits on operations based upon a combination of a cap on Air Transport Movements and noise contours; restrictions on operating hours are also a legitimate measure. In this context, the relevance of a limit on the sale of seats in achieving this objective is more diYcult to understand. 19. We recognise that the weighing of the potential economic benefits for Northern Ireland of amending the planning agreement against the resulting environmental impacts is best addressed at a regional level. The White Paper accordingly acknowledged the importance of this issue to the development of air services in Northern Ireland. It went on to remit any future consideration of the issue, should the airport operator request it, to the Northern Ireland Administration. The airport operator has since sought a review of the limit on the sale of seats. Belfast International Airport 20. The period since the publication of the White Paper has seen considerable expansion of services from Belfast International, particularly by easyJet, which will operate 17 routes by July, and with the notable addition of a scheduled service to New York Newark by Continental Airlines in May. It has also, unusually in the UK market, shown a continued growth in charter operations. We expect Belfast International to further strengthen its position as Northern Ireland’s busiest airport. It has the runway length, capacity, scope for development within its boundaries and a better constraints environment to serve the scheduled no frills, charter, long haul and freight sectors. We believe that in the longer term it may develop a wider range of full scheduled services, and can grow to handle a throughput of up to 10mppa by 2030. It will also remaining the principal airport for cargo (ie freight and mail) operations by virtue of its ability to handle larger aircraft and to operate on a 24-hour basis.

Roles of the Belfast Airports 21. The physical and operational constraints at Belfast City, together with recent market developments, particularly BA’s withdrawal from many Belfast routes, bmi’s concentration of its services at Belfast City and the rapid build up of no frills carriers (especially easyJet) at Belfast International, have driven Belfast’s airports to develop in a largely complementary manner. However, it is necessary to have regard to the fact that both are privately owned operations driven by commercial pressures and consumer demands and they do continue to compete in a number of key markets (eg for point to point traYc to London and UK regions). 22. The recent addition of number of direct routes from Belfast International to continental destinations has been spearheaded by no frills carriers. The Government recognises the importance of no frills carriers in bringing air travel within the reach of more people and stimulating demand for air travel across the UK. They are increasingly important for business travel, especially for small and medium-sized businesses, providing the rapid connectivity that is vital to many modern businesses. 23. Experience suggests, however, that at airports where no frills carriers establish a signiﬁcant presence, the eVect is to drive down yields to the extent that full service carriers have diYculty in competing eVectively. The eVects can be seen at Belfast International, where the introduction of services to Luton and Stansted by easyJet (formerly Go on the latter route) probably contributed to British Airways’ decision to withdraw from the Belfast–Heathrow route and in bmi switching their operations to Belfast City. 24. While no frills carriers have been eVective in expanding, in some instances with the assistance of the Route Development Fund, direct connections to continental destinations, they do not make provision for interlining passengers wishing to connect with onward services, for instance though Stansted or Luton. Neither do they serve intercontinental destinations. There is considerable demand for such services; in 2003, 3022631029 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

Northern Ireland Affairs Committee: Evidence Ev 113

some 361,000 passengers on bmi’s Belfast–Heathrow route interlined with other services, 46% of those travelling. For Gatwick, served by easyJet from Belfast International and FlyBe from Belfast City, the figure was 140,000, or 31% of those using the services. 25. These points suggest that there will be a continuing need for full scheduled services connecting with onward services, not only at Heathrow but also at European hubs. This will particularly be the case in the next 10 years as Heathrow becomes increasingly congested, but also in the longer term if South East airports remain capacity constrained. 26. There is competition on their domestic and international routes between full scheduled and no-frills carriers operating from their preferred airport, and the prospect of similar competition on a small number of core near Europe routes. But with a population of 1.7 million the Northern Ireland market will not be able to sustain competition between carriers at a route level to second tier destinations. The key issue will be, therefore, whether single carrier routes are best served by full scheduled services from Belfast City or from Belfast International. The answer will be: — destination-specific; — dependent on the characteristics of the market (ie whether it is best served by full scheduled or no- frills carriers); and — operational parameters such as sector length, runway requirements for the most suitable aircraft, and opportunity for airlines to optimise aircraft utilisation. 27. Competition will also play an important part (ie the kind of charges or initial discounting that the two airports are willing or can aVord to oVer), as will the influence of the current planning constraints at Belfast City. 28. The fact that Belfast has two profitable airports, each serving its particular market eVectively, suggests that the competition between them is beneficial for air services in the Province. The Monopolies and Mergers Commission Report found that a 1995 oVer by Belfast International to acquire Belfast City was against the public interest. Despite the recent sale of Belfast City Airport, the issue could conceivably arise again in future years. Should it do so, questions such as whether single ownership would bring about a material reduction in competition between the airports, or whether competition between airlines would continue to drive consumer benefits, would have to be considered again in the context of a market which has changed significantly over the last 10 years.

City of Derry Airport 29. City of Derry Airport, in addition to serving the sub-region around Londonderry itself, is increasingly seen as an airport serving the north west of the island of Ireland. The Irish Republic operates an “Essential Air Services Support Programme” which is similar to PSO support and provides ﬁnancial support for regular scheduled services between Dublin and a number of regional Irish airports. They have established such a service between Dublin and City of Derry in order to serve County Donegal; this service is currently operated twice daily by Loganair, a British Airways franchise carrier. These subsidised services provide an opportunity to inhabitants of the north west of the island of Ireland to make connections via Dublin rather than Belfast. 30. We note that Ryanair has recently committed to using Boeing 737-800s on the City of Derry to London Stansted route, albeit with a restriction on the number of passengers carried on each ﬂight because of runway length, thus securing the route’s immediate future following the forthcoming phase out of the airline’s smaller 737-200s. In order to secure the long-term development of the airport, however, Ryanair have publicly stated that a package of improvements to the runway is needed. The improvements the airport has put forward would in their view help to secure the future of the Stansted route, which carries some 66% of the airport’s total traYc, but also potentially attract additional services operated by Ryanair or other no frills carriers. 31. DfT is currently considering with DRD whether the runway enhancement proposals for City of Derry Airport fall within the Commission’s rules on state aid. In particular, we will be examining whether the proposed works are necessary to permit the safe operation of the larger families of narrow-bodied jets and whether there will be any material anti-competitive eVects resulting from their implementation.

Airport Master Plans 32. The Air Transport White Paper introduced an expectation that the operators of larger airports should produce master plans setting out their proposals for future development. This would inform the regional and local planning processes, enable local people, businesses and other interested parties to assess the scale and timing of development proposals, and enable the Government to assess progress in delivering the White Paper. 33. DfT published guidance in July 2003 which gave an indication of the Government’s thinking on the scope and content of master plans, and the timescale and process of producing them, with a view to achieving a consistent approach by all airport operators. 3022631029 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

Ev 114 Northern Ireland Affairs Committee: Evidence

34. Airport operators were encouraged to produce at the least a master plan statement outlining their proposals by around the end of 2004, to be followed by a fully worked-up master plan by December 2005. 35. The guidance suggests that master plans should address the following core areas: — forecasts; — infrastructure proposals; — safeguarding and land/property take; — surface access initiatives; and — sitigation proposals. 36. Belfast City Airport has produced its Outline Master Plan which is to be published on its website very shortly, to be followed by consultation with a wide range of stakeholders to inform the ﬁnal version. We understand that Belfast International Airport is currently preparing a similar document.

Route Development Funds

37. Future of Air Transport White Paper supported growth of regional airports (for the purpose of the White Paper, all UK airports outside the London system) to serve regional and local demand, subject to the satisfactory addressing of environmental constraints. The beneﬁts of regional airports were seen as: — supporting the growth of local economies; — relieving congestion at crowded South East airports; — reducing the need for long surface journeys to airports; — making the best use of existing capacity wherever possible, thereby reducing need for airport development in new locations; and — giving passengers greater choice. 38. The White Paper recognised the valuable role Route Development Funds (RDFs) could play in stimulating the growth of regional airports. It noted the success of the Scottish fund, in its initial investment period, and the Northern Ireland Administration’s then recent decision to establish a similar fund. 39. The Department considers that the operation of an RDF should be targeted toward the support of services of marginal viability in their start-up phase that will assist in establishing new direct business links and stimulating inward investment and tourism. Such routes invariably entail a higher level of risk for airlines than those to traditional leisure destinations. Additionally, we consider that new services should only receive RDF support if it will generate additional traYc, rather than diluting existing traYc, for instance from a competing airport. We welcome the success of the Northern Ireland fund in securing new services, and regard it as having been eVective in targeting destinations which comply with our policy objectives. 40. The Department will monitor and oVer guidance on the structure and operation of both existing funds and others that are brought forward in other parts of the UK. To this end, DfT is developing a UK- wide protocol and appraisal framework for RDFs. The key objectives of the Protocol and appraisal framework are to ensure that RDFs across the UK: — are run consistently, with sound governance arrangements; — secure good value for money; — work with the market rather than distort it; and — are operated within state aid rules as set down in the Manchester case and Charleroi decision.

Access to London

41. As stated in the Air Transport White Paper, the Government recognises the importance of protecting regional air services to London. The mechanism available is governed by European Legislation which sets out rules for imposing Public Service Obligations (PSOs) for air services. 42. The intent of this Regulation is to protect lifeline services to peripheral or development regions, not commercially viable regional services into congested hubs. The European Commission intends to review this Regulation as part of its third package revision. In the interim, the Government felt it was necessary to develop clear guidelines, so that any application for the imposition of PSOs on routes from regional airports into London can be processed in an objective and transparent manner. 3022631029 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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PSO Consultation 43. The White Paper committed the Government to carry out a public consultation. This was launched in July 2004 and ran until November 8. It proposed: — the introduction of an early warning system whereby airlines would agree to give notice of their intention to withdraw services from a route. This would give regional bodies and the Government time to consider whether and how the route concerned could be protected. This may mean that a PSO would be imposed, if the withdrawal of the service was to lead to an inadequate service and the other criteria were fulfilled; — the clarification of criteria, which are set out, but not defined in European Regulations governing mechanisms to protect regional air services. These are listed below. 1. The service must be to a peripheral region; development region or on a thin route. 2. The PSO must be vital to ensure an adequate provision of services. 3. The service must be vital to the economic development of the region. 44. After the consultation closed, DfT oYcials then met with stakeholders who had expressed an interest in discussing their submissions in more detail. This included a meeting in Belfast, attended by representatives from both Belfast airports and the Northern Ireland General Consumer Council and oYcials from the Department for Regional Development for Northern Ireland. 45. We are now considering all views expressed as part of the consultation process. On the basis of the responses, Ministers will then decide how the Regulation governing PSOs will be applied in the UK and publish guidance. 46. There are currently 15 UK PSOs operating within Scotland, but none to any London airport.

Interface with the review of the Slot Regulation 47. One of the key concerns for regional stakeholders is retaining current levels of access to the congested hub airports in the South East. Demand for slots at these airports is far in excess of supply and this has placed pressure on airlines to use the slots for higher value services, which tend to be long haul services. 48. The European Commission produced a consultation document in September 2004. It sought views on options for introducing market mechanism into the slot allocation process during the second phase of revising the original slot allocation Regulation 95/93. These included: — secondary trading with a possible redistribution of a percentage of “grandfathered” slots; — primary trading through higher posted prices or auctioning; and, —oVsetting possible environmental impacts of commercial slot allocation. 49. A copy of the UK’s response is available from our website from www.dft.gov.uk/aviation. The key messages from that response were: — we are strongly supportive of the Commission’s intention to formalise secondary trading; — we favour auctioning in principle as the most eVective allocation method for new capacity and pool slots. However, the practicalities of implementing such a system in addition to secondary trading need further assessment; and, — we believe that a full assessment of the impacts of formalised secondary trading is required after an initial time period before the Commission considers proposing any further, more radical reforms. 50. The Commission is keen to address the potential risk that formalising secondary trading might exacerbate the trend towards long haul ﬂights as regional operators might be incentivised to sell slots and withdraw services or could alternatively be outbid in the market place when trying to obtain new slots. In our response to the Commission, the Government has highlighted the need for the Commission to carry out a full Regulatory Impact Assessment which would assess the impact of changes to the slot Regulation on the provision of regional services. 51. The allocation of new capacity at London’s congested airports is also of interest to regional stakeholders. We have been clear in our consultation response to the Commission that whilst we in theory support the auctioning of new capacity, we urge the Commission to undertake a study into the practicalities and impacts of such a mechanism.

EU–US Negotiations 52. Negotiations on a new air services agreement between the EU and the United States are currently in abeyance, but we anticipate resumption in the spring once the new US administration has bedded down. 53. The EU’s objective is to ensure that any agreement leads to genuine liberalisation in the market for North Atlantic air services, thus beneﬁting EU consumers and airlines. Securing improved access for EU airlines to the US market is an important policy aim for us. 3022631029 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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54. Improved access to London airports, particularly Heathrow, is an important objective for US airlines. It would also enable more European airlines to operate trans-Atlantic services from the UK. Should a deal be agreed, this could further increase the level of demand for slots at London airports. February 2005

Witnesses: Mr David McMillan, Director General of Civil Aviation, and Mr Chris Cain, Head of Regional Airports Policy, Department for Transport, examined.

Q347 Chairman: Good afternoon, gentlemen. First 500,000 trips currently. The fact is, we do not of all, I should explain that the Committee has been actually know but that would be a reasonable sitting since 2.30. My apologies if this last bit of our estimate. If you continue to extrapolate that business may seem to be—not a sprint, but perhaps forward, you would get to the sort of number that a bit of a gallop in terms of the need to make sure we was set out in the consultation document, and which conduct business and get Members away to other underpins our forecasts in the White Paper. Now, commitments that they have. That said, please feel clearly, the issue is whether some of the free to make sure that before you leave you have put developments that have taken place more recently in on record anything that you want to put on record. terms of route development in Northern Ireland We do, of course, have written submissions anyway, have slowed that process down, and the honest so in many ways this part of our evidence-taking is answer is we do not know. about us endorsing and getting on record additional points to the evidence that you have already given. I Q348 Chairman: You have very helpfully answered wondered if I could start the questioning in a general my next question in terms of route development. Are sense by saying that during the inquiry we have we saying that it is too early to measure the impact talked quite extensively about the impact that that the Route Development Fund is having in terms leakage to Dublin has on Northern Ireland airports, of slowing down the rate of leakage? although there is some confusion as to the extent of Mr Cain: Basically, what the Route Development that leakage. Even within the Department and Fund has done is oVered a wider range of services within the Government, there are mixed figures: the direct from Northern Ireland, and if passengers are White Paper estimates that leakage in 2030 will availing themselves of that opportunity, you would be 0.9 million passengers per annum, yet the expect to see some slowing of that growth. I think consultation document currently circulating what needs to be done is that the impact of the Route suggests that it already may be 1.5 million to 1.75 Development Fund needs to be monitored carefully. million. So we have a bit of a contradiction there, One of the issues that could be looked at is whether inasmuch as we are consulting saying that we could this is having an eVect on the amount of leakage. have as high a leakage as 1.75 million, yet we have a White Paper that says that leakage will reach less Q349 Chairman: A quick word on the VAT than that, 0.9 million, by 2030. What is your general diVerential. Is there anything that you can do view on the true figure of leakage to Dublin Airport about that? and what can we do about it? Mr McMillan: I think it is very much the case that Mr McMillan: First of all, thank you very much for taxation is a matter for the Chancellor. What we do having us along here this afternoon. We are very when there is a budget submission period is that we pleased to be here and to give evidence to you. In make our views known as to the impact which relation to the specific question which you have various levels of taxation, various taxation options, asked, I am delighted to say that to my right is the have on the aviation industry. If you are putting man who is responsible for a lot of this material on together the issue of taxation with the attractiveness the figures. So if, Chris, you want to start talking of Dublin, I am not sure that, in the scale of things, about the figures, then we might talk about the it makes a huge amount of diVerence, but one of the policy response. arguments which it might be interesting to see the Mr Cain: The main thing to say at the moment is Committee develop in its final report is the extent to about the quality of data that the CAA collects in the which you have been persuaded that it is a significant UK. There is not similar quality data collected in component of the attractiveness of Dublin, set other parts of the European Union, so it is actually against the fact that Dublin is a substantial airport quite diYcult to come up with a definitive, accurate, with a wide range of services which are always going surveyed view of the number of passengers who are to be attractive to people from Northern Ireland. using Dublin or other Republic of Ireland airports to fly from. What we basically have is a series of Q350 Reverend Smyth: In your evidence you estimates, and there are diVerent methodologies that do suggest that the Northern Ireland Route have been used to come up with those estimates. Development Fund is a success and you regard it What we tried to do was reflect that range. Some also as having been eVective in targeting destinations work that has been undertaken after the which comply with your policy objectives, and consultation document suggests that at the moment earlier you did make reference to monitoring. What there are around about 180,000 passengers, so that monitoring have you done actually to back up that is about 360,000 trips. That was in 2001 and, if you viewpoint, and what is your assessment of the look at the pattern, you would see growth over that Northern Ireland Fund that you have undertaken period, so it is potentially between 450,000 and that leads you to the conclusion? 3022631030 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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23 February 2005 Mr David McMillan and Mr Chris Cain

Mr Cain: At the moment, the Fund is going to go with the region. We understand that a number of through a period of formal review. It has been other regions are considering setting up funds. The announced that they are looking at exactly what role of the protocol is eVectively to set a UK-wide they have achieved and what is yet to be achieved. I framework so that any funds operate consistently, think success; when you look at the fact that there that they do not distort the market, and that they are was one international route out of Northern Ireland in line with EU state aid rules. I think that initial two years ago, and once all of the new routes have discussions we have had about this with the come on stream there will be 11 international routes, European Commission suggest that they very much that is quite a significant change in international welcome this approach that we have adopted and we connectivity direct from Northern Ireland. Clearly are working on trying to finalise that protocol, which though, what we want to look at is the extent to comes with an appraisal framework which allows which the new services are being used, the kind of diVerent route options in diVerent regions to be viability assessments that were undertaken before looked at on an entirely consistent basis. the route development funds were oVered on the particular routes that have come to pass, and the Q353 Reverend Smyth: You yourselves and others kind of routes that have been invested in, and what have advised us that route development funds can other routes might create opportunities for new actively distort the market. Do you see that there business links and inbound tourism potential for might be a possibility of so much competition that, Northern Ireland. I think that process of review is in the end, we will have to be more selective, or quite an important one so that we can look at a range should I put it the other way round, that the no-frills of measures of success but also where to target any airlines will have to go to the routes which have future funding. I should just point out that that will support? be work that would largely be done by the Northern Mr McMillan: One of the purposes of establishing a Ireland departments rather than DfT but, as UK-wide protocol and establishing that protocol in throughout on route development funds, they have a way which meets EU state aid rules is to ensure that shared any information on what they are doing there is a pretty level playing field across the piece with us. and people know what is allowed and what is not allowed. It should also ensure that airlines are not Q351 Reverend Smyth: So the monitoring is to come. involved in bidding up with the various regions so We welcome the international context, but on the that people, as it were, pay the fair price for this other hand, you do make reference to the fact thing. The other thing to be said about route that the no-frills airlines have no interlining development funds is that they are intended to relationships. How important do you think it is to stimulate services which are essentially viable going have an interlining pattern in extending these routes? forward and to ensure that these services are Mr Cain: It depends. The no-frills carriers and full provided rather earlier than might otherwise be the scheduled carriers to a certain degree serve diVerent case. They are not intended to be long-term, ongoing markets. The no-frills carriers, for example, are quite subsidy arrangements. These are things which are eVective, and certainly the Scottish experience intended to incentivise people to share the risk, if suggests that they have been quite eVective in you like, between the airport and the administration attracting inbound tourism, and particularly where oVering the route development fund and the airline. the carriers have an established base in a European If they are properly operated within that context, I country and therefore have a marketing presence think the risk of them generating unfair competition within that country. Equally, the issue is about or over-competitive markets is a pretty minimal one getting connections to a wide range of destinations, but clearly, it is the sort of thing which, when the both long haul and some of the more unusual devolved administrations and the RDAs in England destinations on short and medium haul. That is come to review these things, they will want to take where connections to established hubs and the into careful consideration. opportunities of online interlining can be very useful. Clearly, what is probably the optimum mix is Q354 Mr Swire: In your evidence and in the White to have a combination of those two things, serving V V Paper there is an assumption about the two new those di erent markets and o ering passengers runways at Stansted and Heathrow. How sensitive choice. to these developments are your forecasts for Northern Ireland passenger numbers to either of the Q352 Reverend Smyth: Thank you. Can you following: in what way will they be altered if there is elaborate on the purpose of the UK-wide protocol a delay of five years to each of the runways, the and appraisal framework the Department for suggestion in the White Paper, or no new runways Transport is actually developing for route are built in the South East before 2030? development funds, and do you foresee the day Mr McMillan: Chris might want to say a word or coming when all regions of the United Kingdom will two about the impact on the forecasts. In terms of actually be using route development funding? the White Paper’s support for there being two new Mr Cain: If I can answer the second part of your runways in the South East by 2030, I think it is fair question first, the White Paper invited English to say that that policy remains something that you regions and devolved administration areas to could say is on track. The White Paper was subjected consider whether they wanted to set up funds, but to a judicial review, which you may have seen was there was no obligation; that choice is very much concluded last week, and the essential conclusion of 3022631030 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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23 February 2005 Mr David McMillan and Mr Chris Cain that was that the White Paper’s support for two new Mr Cain: Yes, because whilst Heathrow is a very runways was found to be legally sound, just and the important route, it is also worth bearing in mind that right way to go. So now it is a matter of the airport there are significant flows into Gatwick and into operators at Stansted and at Heathrow taking those Stansted. There are also smaller flows into Luton projects forward. If I take them in turn, at Stansted, and London City as well. So constraints on one where it is very much a matter for BAA, as the specific airport would not necessarily have a big airport operator, they are planning to lay a planning eVect, but constraints on the system as a whole application in the course of this year to take the possibly would. existing runway up to its maximum use, and then in Mr McMillan: If I could just add, you talk about the course of next year to lay a planning application Heathrow in particular, and I understand why, and for what they call Stansted G2, which is the second you talk in particular about the provision of an extra runway and the associated terminal capacity and so runway at Heathrow, and I also understand why, on. We are working with them to see that is a sensible but that is not the only means by which you can set of plans which they have in place. Our impression secure more capacity at Heathrow. The White Paper is that it is very much a sensible set of plans. In did say that the Government would look at whether relation to Heathrow, I think it is more a matter for it was possible to make better use of the existing two the Government in the initial case to take forward runways at Heathrow, and that work is also ongoing because the White Paper said that what we favoured at the moment, and we will look to address that at was the provision of a third runway at Heathrow, the end of 2006 as well. provided various environmental constraints could be met, and we are doing the work to see whether they can be met. The proposition is that we will come Q357 Mr Swire: Can I just move you on to the forward with a progress report on how the White question of the consultation process relating to Paper is going at the end of 2006, which will explain PSOs, which you mentioned in paragraph 45 of your what has happened and where we have got to. In submission? Are you able to share your current terms of providing the extra capacity which will be thinking on this with the Committee, and in available for services from Northern Ireland or particular, if you are, do you consider that PSOs elsewhere to make use of, I think at the moment we might be used as a support to have the Belfast- are on track to provide that capacity within the Heathrow service on the basis of some payment to timescales which we outlined. Perhaps Chris will say represent the diVerence earned on this route and the a word or two about the forecasts. next more profitable alternative? If you have not yet Mr Cain: I think what the forecasts we set out in the reached a conclusion, when might we expect some consultation document showed was that if capacity news? were quite severely constrained, and the kind of Mr McMillan: The consultation period has finished, developments that David has just described did not as you say, and we are considering the responses. I come to pass, there would be a material eVect on the do not think I can anticipate what our consideration level of passenger trips being made from Northern will lead to. I think it was very clear from the Ireland. That is primarily because one of the biggest material we had from the four responses we had markets from Northern Ireland is flying to London, from Northern Ireland interests, and indeed the either on a point to point basis or to interline, meeting we subsequently held in Belfast with those particularly over Heathrow and to a certain extent interests, that the key issue for the Northern Ireland V over Gatwick. So e ectively, what it was saying was people is, despite the fact, as Chris has made very that, if the capacity becomes very heavily clear, that there are an excellent range of services to constrained, there is pressure on the use of slots, and London, and there is concern about the the capacity was therefore reduced, it would be even Y continuation of the important link to Heathrow for more di cult to make those journeys. I think the the reasons which we mentioned earlier in terms of converse of that, which we call the UK-wide inter-connectivity. There is worry about whether we unconstrained case, and that underlies our forecasts could define in the PSO rules going forward diVerent that underpin the White Paper, indicated that, degrees of peripherality which might give rise to particularly at Belfast International, the level of diVerent considerations. Is it really the same to throughput would be significantly higher because worry about a PSO, say, from Leeds Bradford as a those markets would be able to expand and continue to expand. PSO from Belfast? There is a worry also about our propositions on the early warning system we are proposing to put in place under the PSOs. Q355 Mr Swire: So you would accept that, in the International slot allocation is another issue. We did absence of a further capacity runway—and one is detect some doubt about the issue which we floated probably talking realistically about Heathrow that it might be possible for entities other than here—profitable regional routes like Belfast- airlines to acquire an interest in the slots, which Heathrow would or could be threatened? would be a possibility of paying for some of this Mr Cain: If you were in a scenario where there was access. What I can say is that those are clearly very no new capacity in the London system—that is what important issues. They were raised not just by we looked at—then the forecasts would suggest that. interests for Northern Ireland but by others as well, and I think it behoves us to give those things proper Q356 Mr Swire: By “London”, you are including consideration, which I fear means it will be a wee Stansted? while before we come to conclusions. 3022631030 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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23 February 2005 Mr David McMillan and Mr Chris Cain

Q358 Mr Swire: Is there any precedent or experience Mr McMillan: A lot of our modelling has assumed in the rest of the EU that could be drawn upon that twothings,whichare,ifyoulike,the might support such an approach for the Belfast- technological fixes we know about, that is, that the Heathrow route? average size of aircraft at Heathrow is likely to Mr McMillan: Not that I am aware of, though Chris grow, and the second thing is that the average load might oVer a view from his wider experience. There factor of those aircraft is likely to become higher was a piece of European case law called the Air as well. So you are already meeting capacity in Anter (?) case, which is not specifically directed to those two ways. The other thing is to use the PSOs but it comes under the same regulation, and it existing two runways in a more eYcient way, is very clear from that that in terms of the possibility which eVectively means one variant or another of of using a PSO to designate services to an airport something called “mixed mode”, where you use within that airport system, that is not allowed. So we the two runways for both landing and take-oV at have that case law, which is unhelpful, if you like. In the same time. That is one of the things we are terms of whether other people have found more looking at very intently at the moment. Of course, imaginative ways of doing this, not as yet. Chris, do that in itself would have environmental you want to add something? consequences, and we have to evaluate how Mr Cain: No. Sometimes there is a number of serious those would be and the extent to which examples of connections into Orly airport, but these they could be mitigated and the rest. In terms of V were set up under a di erent regulation, under 4/93, whether we have coming along aircraft which are which would not apply in the same way, so that is fundamentally quieter than the current generation Y one of the core di culties with the PSO regulation of aircraft, or aircraft which pollute as it is currently framed in terms of the kind of thing fundamentally less than the current generation of that you are talking about. aircraft, I very much regret to say the answer to that at the moment is no. Most people think we Q359 Mr Pound: Chairman, before you move on, need to do more research and development on this could I possibly just revert to the Heathrow issue? It but we are nearing the end of the technology gains is mentioned somewhere in the submission that a which we have secured out of the current type of third runway would not be popular with residents of aircraft. Looking beyond 30 years, who knows? West London. May I, as a resident of West London, But I am afraid that is the position at the moment. and one who represents 80,000 residents of West Chairman: We are very grateful for that. Now we London, make a quick point? When BAA went for have dealt with the interests of the Northern Ireland terminal five, the statement was made at the time community living in Ealing Broadway. that there would be then no subsequent request for a Mr Pound: It was included in the evidence, third runway. We now realise that people are talking Chairman. about a third runway, but equally people are saying that the new types of carriers, which are much higher capacity, much steeper take-oV, much steeper angle Q361 Mr Beggs: What is the current status of your of descent, might in fact obviate the need for a third request to the European Commission in respect of runway. At the moment, as you know, we just have giving consideration to the possible consequences the east-west, west-east runways. Do you think that for regional air services arising from slot trading and there is any technological prospectus which might what is the likelihood of such a review being obviate the need for a third runway, or do you undertaken? honestly—and I appreciate it is in 2030, when you Mr McMillan: The European Commission has will be running the country and I will be dead—think consulted on the slot trading which already exists in that there is an inevitability about a third runway at Europe, and the consultation period has closed. Heathrow? Their original ideas I think you could describe as Mr McMillan: All I can do in answer to that pretty radical. They were looking at possibilities of question is to repeat the White Paper analysis to you, trying to use the slot rules so as to engender more which was pretty clearly that the economic case for competition in the market in particular. I do not producing and providing a third runway at think they had a particular focus on regional Heathrow is extremely strong and the demand which services, though they did recognise that was an issue. would be met by the provision of that third runway Their idea was that they would sequestrate slots is very high. The third runway proposition which the from people who already had them and put them White Paper outlined is not for the same type of into a pool for auctioning. That was the principal runway as the two runways which are there at and main idea which they came up with. I think it is present. It would be a relatively short third runway fair to say that that was not well received by the which would be used in mixed mode operation, airline or airport industries and they made some very which would primarily cater for regional and short serious representations to the Commission, who to medium range aircraft. In terms of is there a have reflected. We do not yet know to what purpose technological fix which would provide the capacity they have reflected but they have told us that they without . . . intend to drive forward and to produce a communication on slots in time for the UK Q360 Mr Pound: It is always a question that presidency in the second half of this year to take politicians ask as elections get closer. account of it and perhaps have initial discussions. 3022631030 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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23 February 2005 Mr David McMillan and Mr Chris Cain

Q362 Mr Beggs: Is there any support for such a near future. It is really not possible to say whether study from other European governments, or is the that is going to happen any time soon. If it were to issue of regional services to a country’s principal hub happen, it is certainly the case that if Heathrow just a problem for the United Kingdom and Airport is opened up to a wider range of carriers Heathrow? than is currently the case—under the current Mr McMillan: I do not think it is only a problem for arrangements, only American and United have the the UK, but I think I can tell you that it is not an right to serve that airport—pressure for use of issue which raises its head very often in EU or ECAC Heathrow airport would increase. In the case of the discussions, so I think it is probably true to say that, UK, you would also have bmi, your principal or with the exception perhaps of Paris, the UK is in an your sole supplier from Belfast to Heathrow, also unfortunately unique position in having such a able to use Heathrow airport to serve the United congested hub airport. States. So there are clearly potential downsides. On the other hand, if bmi is in there and it is seeking to Q363 Mr Beggs: Further to your response to Mr serve the United States, it would seek to secure feed Pound, do you consider that a move to a mixed for its US services, and I think there is a very high mode operation at Heathrow would have any chance that the Belfast-London route, which is, I impact on safeguarding retail services in general and think, one of its more profitable routes, would be services to Belfast in particular? What is the something it would look fairly long and hard at likelihood of such a move and how would the before it sacrificed. Clearly, there are plusses and additional slots be distributed? minuses here. Mr McMillan: I do not know how likely it is that this could be developed. There are variants on what Q365 Mr Hepburn: On this subject of the Belfast mixed mode could be. There is already a mode of City Airport Planning Agreement, what is the operating Heathrow called TEAM, tactical Department’s view on the seats for sale limit at enhanced arrival mode, which they use in the early Belfast City Airport? Can you give us any other morning if there is a serious imbalance between examples in the UK of measures to limit operations arrivals and departing aircraft. They obviously do for environmental reasons? not want to have too many aircraft on the ground. It Mr McMillan: I think it fair to say first that this is is conceivable that you could do a bit more TEAM. primarily a matter for the Northern Ireland That is one thing we could do. The other way you Department rather than for ourselves. We said in can use mixed mode is that within the existing air our memorandum, and it is true, that it is entirely traYc movement limit you can make the airport legitimate to seek to control on an environmental more resilient by having mixed mode operations of basis an operation at an airport. It is also, I think, the airport. Neither of those two things are likely to becoming the case that the normal way of doing that increase capacity, so I think they are neutral in would be through a limit on air transport relation to services from Northern Ireland or movements, coupled with a noise contour limit set anywhere else. The third mode in which you could on the basis of the aircraft using the airport. A “seats use mixed mode is to use it so as to secure more for sale” thing is a little bit unusual. If you look at capacity, that is, it is conceivable. We do not yet the White Paper and what it proposed for Heathrow, know how much more capacity you could attain or it set out conditions for the development of to what extent that would be environmentally Heathrow which were precisely in line with what the acceptable. We hope to reach conclusions on that ATM would be and what the noise contours would work by the end of 2006, and then we will see. be. So while it is entirely a matter for the planning authorities in Northern Ireland to look at, this seats Q364 Mr Beggs: You suggest that the introduction for sale thing is a little bit unusual and it is not for us of an open skies agreement could further increase to comment, except to say I guess you ought to look the level of demand for slots at London airports. at the objective you are seeking to achieve and then What impact do you think this would have on use the measures which get you there. regional services to Heathrow? Mr Cain: I think that covers it. Mr McMillan: The first thing to say is that, although we gave the European Commission negotiating Q366 Mr Hepburn: Ten years down the line, if rights with the US to negotiate what we call an open Belfast International wanted to acquire Belfast City, aviation agreement, which would involve the ability what do you think the public interest issues would be for EU carriers, EU interests, to buy US airlines and and how would you seek to remedy that? vice versa, which will open up our cabotage markets, Mr McMillan: I think there was an MMC report which would open up 3rd and 4th freedom markets, into this some years ago, and that was looked at. The which would be extensions of the 5th and 6th basic questions which were looked at at that time freedom markets as well, they failed to produce an were the consumer benefit from either its requiring acceptable agreement when last they tried, and the these two things to remain in independent ownership Transport Council rejected what they came up with as opposed to coming together, as against the likely in the Council in the summer. There has then been a eVect on the range of services which would be oVered hiatus, with the new American administration and the eVective competition as between the coming into place, and indeed a new Commission, airports, and the eVective competition as between but I think the expectation is they will re-open the airlines using those airports, which is the normal set negotiations—I think that is a safe word—in the of public interest tests. 3022631030 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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23 February 2005 Mr David McMillan and Mr Chris Cain

Q367 Chairman: Has it changed since 1995, since under the kind of proposals there, but clearly it that report? The market has changed. Has the view would be remiss of us to allow public funding that of the Department changed? could ultimately be regarded as illegal state aid to go Mr McMillan: The view that was taken was the view forward. At the moment the simple fact is we do not of the MMC, and the MMC found that that was the know and we want some confirmation before any position. Clearly, there has been a change in the action is taken. market. If people felt that that had changed in a way which was anti-competitive, it is always open to Q370 Mark Tami: Do you accept there is a danger come back to the OFT in the first case to take that, in the length of time that process takes, damage another look at it and see what they think. may be done, and that damage may be irreversible? Mr McMillan: I think it is the case that Ryanair are Q368 Mark Tami: We have been told earlier that the having to take a payload penalty on the service bid for funding to develop the City of Derry airport which they are operating at the moment to Stansted, is with Paul Murphy, hopefully for a decision fairly and that is clearly less than satisfactory for that soon, but what is the role of the Department for airline, and indeed for the airport. If you want Transport in this? reassurance that we are aware of the urgency and we Mr Cain: We have been liaising quite closely with the are trying to pursue it urgently, that I can give you. Department for Regional Development in Northern We are certainly doing that in full consultation with Ireland on the proposals that have been put forward the Northern Ireland authorities. to improve a number of safety aspects of the airport and to address some infrastructure enhancements, Q371 Chairman: Have you expressed that view to and we have been looking basically as to the the airport and to its operators? compatibility of those proposals with European Mr McMillan: I have not personally. state aid. We are seeking to have discussions with the Mr Cain: No, but we liaise closely with colleagues in Commission on those areas to see if we can clarify DRD, who certainly will be passing that on, and we whether they are content that the kind of proposals have pressed—in fact, we did it yesterday; we asked that have been put forward for public funding would again for a meeting on the City of Derry issue. be compatible with the kind of state aid we are Obviously, that is in their hands. We have done it talking about. I think it is important to mention at through the usual channels and we are waiting to get the moment that there is a consultation on a range an opportunity to speak to them. of new EC guidelines intended to clarify that Q372 Chairman: The Committee has expressed a position, and that may be why we will need a little keen interest in this matter, and we would want to while longer yet before we can have that ensure that the operator and the airport are well conversation with our opposite numbers in the aware of the views you have just expressed in terms Commission. One of the things we will obviously be of the speed at which you are trying to go. It could looking at with them is the extent to which any final make the diVerence between the sort of catastrophe proposals they bring forward are actually that Mr Tami mentioned happening and not incompatible with the kind of things that have been happening. proposed for City of Derry. Mr McMillan: We can certainly undertake to pass those messages back. Q369 Mark Tami: While this is all going on, obviously, we are told there is a threat to the Q373 Chairman: Are there any further questions Stansted service and obviously, the position of from the Committee? Gentlemen, thank you for Ryanair as well. What do you see as the outstanding your time. We went through that rather swiftly, but issues and when do you think we might actually see I think we have got everything down on record we a decision on this? wished to. Is there anything else that you would wish Mr Cain: If you look at the guidelines, some of the to add? things that the guidelines outline as being Mr McMillan: I think you have covered the ground compatible with the treaty are probably covered very adequately. Thank you very much. 3022631031 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

Ev 122 Northern Ireland Affairs Committee: Evidence

Tuesday 1 March 2005

Members present:

Mr Tony Clarke, in the Chair

Mr Roy Beggs Mark Tami Mr Greg Campbell

Memorandum submitted by Belfast International Airport

1. Introduction 1.1 Belfast International Airport Ltd (BIAL), as the largest and most important civil and military airport in Northern Ireland, welcomes the Committee’s invitation for BIAL to make a submission regarding their Inquiry into Air Transport Services in Northern Ireland and commends the Committee’s initiative on this vital subject for the region. 1.2 We believe that such an inquiry is long over-due. The current situation which allows for unstructured and separate development at airports fails to recognise the strategic economic needs of the region and serves to undermine the region’s competitiveness when it comes to the development of new routes and services. Two major Inquiries by the House of Commons Transport Select Committee on Regional Air Services in 1998 and Aviation in 2001 have pointed to the need for greater cohesion, but little has happened that would give practical eVect to any of their findings. The Department for Transport’s “The Future of Air Transport” (December 2003) fell short of expectation and, in our view, gave no firm direction for the future. BIAL believes that there is an onus on the Government to come out categorically with a policy that places Belfast International at the centre of a structured drive for the development of Air Transport Services in Northern Ireland that fully exploits this major strategic asset for the benefit of the entire region.

2. The Development of Capacity At Existing Airports 2.1 We contend that Belfast International Airport should be the airport of choice when it comes to meeting the strategic economic needs of Northern Ireland. It is the largest, most important civil airport and the only 24-hour air transport facility in Northern Ireland, catering for both passenger and air cargo requirements (See annex 2 regarding air cargo), including intercontinental flights. The site is also shared with RAF Aldergrove, which plays such a strategically important role in the nation’s security. 2.2 Given its location, size and scope to expand in line with published traYc forecasts, BIAL believes that other existing airports could close with minimal short term adverse economic impact, but the loss of BIAL would be tantamount to a crippling body-blow which would restrict or retard Northern Ireland’s wider economic growth. 2.3 It should be borne in mind that the indigenous population of NI and the surrounding catchment is less than two million people. There is limited current in-bound demand to Northern Ireland, partly due to the lack of a cohesive network of air services as compared with Dublin. Competition for airline assets across Europe is becoming increasingly intense and it is recognised that, unless a critical mass of passenger activity is attained at an airport, major airline investment will go elsewhere. Maintenance of a major commercial airport remains a capital-intensive challenge as much of the prospective growth emanates from low cost operations oVering increased passenger throughput at lower margin to the airport operator. It is, therefore, critical for the future prosperity of the region that business at the key air transport facility is not rendered unsustainable through an inadvertent policy of diluting the available traYc base across too many airports. 2.4 In terms of Northern Ireland, BIAL is unique. It operates on a 24-hour, unconstrained basis with two cross runways, capable of coping with all weather/wind conditions. The main runway can accommodate the largest aircraft in service. Existing runway capacity means that growth can easily be met in line with anticipated demand for the entire region. Planning permission has been granted for a Terminal extension enabling BIAL to cope with up to 10 million passengers per annum (ppa)—more than double its current annual passenger throughput. Further development can easily take place on the 1,000-acre site which has no significant environmental or pollution issues. 2.5 No other airport in Northern Ireland oVers the same combination of strengths. Other facilities are physically constrained by insurmountable obstacles such as location, proximity to built-up urban areas and nature reserves, environmental and noise restrictions, available land and serious infrastructure deficiencies such as surface links, runway limitations and night-time curfews. There is already considerable public concern about the number of aircraft breaking the night-time curfew at BCA and about further growth at the airport. 3022631031 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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2.6 On this basis, the optimum strategy for air transport services is that BIAL would be the only logical facility for future development. BIAL acknowledges the fact that quirks of history have delivered the current spread of airport facilities within the region. However there are clear attractive employment and investment implications inherent in concentrating additional future growth and development in one centrally located, showcase site, in order to benefit the overall competitiveness and economic performance of the Province. At BIAL passenger traYc has now increased to 4.028 million ppa with that number expected to rise to 4.5 million in the current year. BIAL already accounts for approximately 4,000 on-site jobs. For every additional 1 million passengers, 1,000 immediate jobs are created, notwithstanding the secondary, tertiary and catalytic downstream employment implications brought about by large-scale aviation development. The overall benefit can be as high as 3,500 jobs per million passengers. 2.7 In reality the concentration of air services leads to greater sustainability. Bmi’s transfer of Heathrow services from BIAL to Belfast City Airport three years ago has been detrimental for “NI plc”, due to the implicit restrictions present at that airport. Had bmi been exclusively in situ at Belfast International Airport when British Airways announced termination of their six daily services from Belfast to Heathrow in Autumn 2001, bmi would have had the unconstrained option to increase capacity on their existing schedule between Belfast International and Heathrow. 2.8 Sustainability of routes out of NI is a major issue. Diluting critical mass by trying to operate to the same destination from three airports does not make economic sense either for the airlines or Northern Ireland. Over the last decade, several routes have disappeared and airlines have come and gone. Three airports are not commercially sustainable given the size of the catchment area. In our opinion, there is too much capacity to several of the UK airports and there will be “casualties” within the next year. If we are to pursue a two-airports for NI philosophy, then complementarity rather than competition is a sensible way forward. This can only be achieved if the Planning Agreement at Belfast City Airport remains intact. Moves to develop piecemeal operations around various airport locations in the Province at inherently reduced frequencies weakens the general sustainability of all routes and, in terms of long-term contribution to the region’s economic development, amounts to moving “deckchairs on the Titanic”. The possibility of Government infrastructural aid to extend the runway and enhance facilities at City of Derry Airport on the basis of an underlying plan to develop business by “poaching” from other airports in the region would appear to only serve to compound the problem. For the sake of comparison an analysis of other world cities which have two or more airports, and an assessment of the population they serve is included as Annex 5. For the sake of completeness we have enclosed Annex 6 in respect of issues at City of Derry Airport and BIAL’s ongoing challenge to maintain a level playing field in terms of airport investment and funding transparency.

3. Specific Challenges Facing Northern Ireland as a Peripheral Region of the UK 3.1 We consider that there has been a historic absence of a co-ordinated strategy for the development of airport capacity for Northern Ireland as a region. A fragmented approach to the development of air transport services will only continue to undermine Northern Ireland’s wider competitiveness and economic prospects. It is imperative for Northern Ireland to be treated as a single unit with decision-makers adopting a focused and unwavering attitude in order to achieve the necessary strategic objectives for the Province. 3.2 The template already exists. It is perhaps worth taking some time to consider a cameo of another community in Western Europe which has been beset by strife and division and now faces similar challenges of economic regeneration and social integration to those faced currently within Northern Ireland. 3.3 For many years the city of Berlin has been served by three separate airports—Tegel, Tempelhof and Schoenefeld—albeit under common ownership. The city centre airport of Tempelhof was a member of the erstwhile “Conference of City Airports” in the early 90s, along with Belfast City, London City, Stockholm Bromma and Toronto Island. All of these city centre airports operate under very strict environmental conditions and notwithstanding the future of Tempelhof there are major questions over the future development and operation of Stockholm Bromma and Toronto Island. 3.4 In recognition of the need to make a huge infrastructure statement about the new Berlin, the German authorities made a consensus decision in 1996 clearing the way to combine all of Berlin’s aviation activity and create Germany’s third largest airport (Berlin Brandenburg International) on the least environmentally constrained site of Schoenefeld in the former Eastern Bloc. The final construction permit for BBI has recently been secured following the biggest such approval process ever conducted in Germany and this includes strict environmental requirements. Tempelhof is now planned to close imminently, while Tegel is expected to close shortly after the completion of development at BBI, in approximately five years time. 20 million annual passengers are expected to use BBI by 2010, around 50% more than the three Berlin airports combined in 2003. 3.5 This is a prime example of a co-ordinated strategic approach for the broader benefit of a region. In contrast, any semblance of over-arching aviation strategy in Northern Ireland and the prospect of complementarity in respect of air service provision appears to have been eVectively eradicated since Short Brothers made their announcement on 5 January 1983 stating that they planned to “develop Belfast 3022631031 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

Ev 124 Northern Ireland Affairs Committee: Evidence

Harbour Airport for use by commuter and regional airlines operating passenger services to and from Belfast” not being “at all interested in competing with Aldergrove which is clearly the Province’s major gateway airport”!

3.6 Due to our location as an island to the west of an island there is also signiﬁcant cost in being remote. It is vital for the region to remain competitive and maintain eYcient transport links in order to move people and goods to market. However, remote location by deﬁnition adds to an airline’s operating costs and makes the balance between incurred cost and revenue potential more marginal. Cohesive, imaginative thinking can make the diVerence between operators developing or bypassing services into Northern Ireland.

3.7 The current make-up of the Northern Ireland economy also presents a major challenge. A large proportion of the workforce are employed within the public sector, there is a low manufacturing base, limited extent of private enterprise and comparably few SMEs. The make-up of the economic landscape is best illustrated through the fact that small ﬁrms, employing fewer than 50 people, make up more than 95% of all businesses and provide 56% of all jobs in the private sector (Northern Ireland Yearbook—2002), a circumstance which impacts upon levels of inbound business travel.

3.8 The challenge, however, for Northern Ireland is most vividly illustrated in relation to our neighbours and competitors within the island market. Due to the geographic location of Northern Ireland within the UK (having a land border with another EC State) the onus is on the region to match and exceed competitiveness levels.

3.9 In sharp contrast to Northern Ireland, the Republic of Ireland has forged ahead through a combination of eVective Government-driven and co-ordinated, business-friendly capital-intensive measures. A common sense of purpose and a cohesive, buoyant and “can-do” approach have led to the aviation, travel and tourism sectors receiving fillips such as the abolition of Government Air Passenger Duty and significant tax breaks in order to create an access bedrock upon which the wider economy can flourish. The VAT rate in the Republic of Ireland stands at 13.5%, while Northern Ireland imposes a rate of 17.5%, in line with the rest of the UK. BIAL wholeheartedly shares the view expressed by NITIC in its Manifesto, namely “VAT should be reduced for accommodation or the diVerence in VAT rates between the Republic of Ireland and Northern Ireland (4 percentage points) should be ringfenced and these funds used to support tourism product and promotion.”. These legislative breaks have combined to assist wide-scale development of private enterprise (including high-tech industry, e-commerce and financial services) in the Republic of Ireland, which continues to sustain annual economic growth rates significantly ahead of the rest of Europe.

3.10 Another key challenge for Northern Ireland is to develop and sustain links to key airport hubs so that travel to and from the region becomes “one stop from anywhere”. Although Boeing’s decision to commit to development of the B7E7, in expectation of greater future demand for point-to-point air services, bodes well for increased direct access from Northern Ireland and similar geographic regions in the longer term, dependence upon interline access to one major hub (London Heathrow) operated by one legacy (full service) carrier is not a healthy position for the economy of any region.

3.11 BIAL recognises that world links or connections to major hub airports, remain critical to Northern Ireland’s competitive status. New services to long-haul hubs, (eg, North America, Middle East) will help oVset the requirement for services to London hubs. Current traYc analysis of the Belfast City to London Heathrow service (CAA Survey) indicates that 25% of the 800,000 annual market transfers to international destinations. Upwards of 50% of these passengers transfer to destinations in North America. A direct New York service would save time, and link directly into one of the biggest hubs in the world. For example, Continental Airlines, and its partners, connect to over 170 destinations in the USA out of the same Newark Terminal. Direct services into Europe will again reduce the demand for interlining over Heathrow. Likewise, direct ﬂights to Frankfurt/Dubai would service the Middle East and Asian markets.

3.12 Currently, PSO’s can only be issued on a city-to-city basis, not city-to-airport. Therefore, it is unlikely that Government would consider PSO’s to Heathrow and/or Gatwick as the city of London is well served with ﬂights to Luton and Stansted. In the short term, access to Heathrow is important to NI. However, its importance should decrease as direct services are developed from Northern Ireland. It is in this area that we should be seeking support from ARD and the various other Government bodies.

3.13 In summary, Northern Ireland critically needs to lose any hang-ups and impediments to expansive thinking. The joined-up progressive approach inherent within bodies such as Tourism Ireland must take precedence if the region is to develop wide-scale, cheaper access and help practically overcome the obvious image problems which have dogged the last few decades of our history.

3.14 While not strictly a peripherality issue, we at Belfast International Airport carry substantial costs due to the need to maintain a police force. We will always put safety and security ﬁrst; however, this additional cost is over and above those which are normally incurred by airports throughout the UK. There is an ongoing need to ensure that the activities that we carry out actually make sense in view of the terrorist threat. 3022631031 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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4. The Effectiveness of the Route Development Fund 4.1 In the opinion of BIAL, the Northern Ireland Air Route Development Fund has been a good initiative. However, to keep the impact of the Fund in context, it has not changed basic airline rationale in terms of route development, rather altered the timing of certain developments. For instance, it has proven valuable in pump priming discussions with Continental Airlines regarding scheduled transatlantic access from Northern Ireland, where the basic quantum of necessary support would have been preclusive for a private airport operator/PLC to speculate upon. 4.2 It is critical to bear in mind that the core issue in respect of route funding is sustainability. Recent experience in Scotland has illustrated that a “scatter-gun” approach towards certain developments can be detrimental to the image of such a Fund, not to mention wasteful of taxpayers’ money. It is critical that the use of such funds needs to be applied consistently and carefully. 4.3 It is also our contention that use of funding to simply shift passengers within the general round of the region (cf support for new Derry—Manchester/Birmingham services) is a misuse of resource and counterproductive to the overall aims of the initiative. 4.4 We suggest that alternative/supporting approaches should be considered in order to level the general playing ﬁeld within the island, for example: (a) Abolition (or ringfencing of monies for route development) of UK Government APD (£5 within EU/£20 to Rest of World) on routes from Northern Ireland, as already accepted in the Highlands and Islands of Scotland (which would have a much wider and more meaningful impact upon airline economic performance and route development), and (b) Designation of Public Service Obligation (PSO) status for marginal routes which are of economic importance for the region. It seems highly invidious that the only current PSO route from Northern Ireland links Derry with Dublin, eVectively taking traYc out of the Northern Ireland system, and by association, money out of the economy. 4.5 Ultimately all of these initiatives would contribute to overall job creation and economic competitiveness for Northern Ireland. It cannot be overstated how fundamental it is for international air access developments to take place into the region. 4.6 It is perhaps pertinent to place the competitive conundrum in full context. A £12 million annual budget is presently ascribed by various tourism bodies for international marketing and promotion of the island of Ireland. However Northern Ireland currently gains minimal value from 75% of this expenditure due to the blanket absence of direct access from core markets such as USA, Germany, Italy and Belgium, and value can only now be extracted from a further 16% of this expenditure due to the recent introduction of services from France (Paris, Nice), Spain (Barcelona, Malaga, Alicante) and Eastern Europe (Prague). Meanwhile 83% of all European visitors coming to Ireland arrive through Dublin Airport. For Northern Ireland to beneﬁt more from the £12 million investment, direct access into the region is critical.

5. The Potential Impact for Northern Ireland of Wider Air Transport Issues on the Island of Ireland

5.1 Dublin Airport (DUB), backed by eVective and concerted Government action, regards the entire island of Ireland as its marketplace. In the aggressive search for business opportunities, it ignores the border and, with the range of routes served from the airport, has considerable success “poaching” passengers from Northern Ireland. 5.2 Investment in roads (M1) has dramatically cut travel times, thus creating further pressure on Northern Ireland airport operators and the National Roads Authority in the Republic of Ireland has committed investment to make further major improvements on the Belfast-Dublin road corridor. In contrast a proposed single carriageway link estimated to cost £13.8 million (the 6.5km M2/A57 project) which would link Belfast International Airport to the M2 to/from Belfast, has been relegated by DRD(NI) to the Reserve List rather than being included in the schedule of works for the 10-year period up to and including 2011/2012. BIAL contends that this project would be a more substantial application of Government money than investment in City of Derry Airport infrastructure. Further evidence of surface displacement comes in the form of a recently launched coach service from Belfast city centre to Dublin Airport which operates 15 return trips per day with the potential to carry 480,000 passengers per year. With two home-based airlines to assist, Dublin Airport’s goal is to bring passenger numbers up to 44 million ppa by 2030 and with no alternative or competition to DUB on the eastern seaboard of the Rol, this growth level is viewed as achievable. 5.3 Dublin Airport is a serious competitor to the fragmented airport and air services structure in Northern Ireland, made all the more so because of the planned and structured manner in which growth has been concentrated at the facility. 3022631031 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

Ev 126 Northern Ireland Affairs Committee: Evidence

5.4 A proposal by Ryanair to develop commercial operations from the Irish Air Corps airfield at Baldonnel on the western outskirts of Dublin was rejected by Government in recent times, a decision that avoided damaging fragmentation and dilution of the business base at DUB. A similar single-minded commitment is required from the UK Government. 5.5 Dublin Airport has been nurtured by Government policy to the point where it now oVers 90 scheduled destinations, two-thirds of which are outside the British Isles, not to mention an extensive range of charter and air cargo services. 5.6 Clearly, the experience in the Republic of Ireland has been to husband resources in such a way as to ensure that internal competition does not undermine or threaten their principal “gateway” and that gives tangible expression to the importance that aviation plays to the Irish economy. 5.7 The break-up of Aer Rianta, the state-owned airport operator in charge of Dublin, Shannon and Cork, presents both a threat and an opportunity. 5.8 On the one hand, Dublin, as the only serious revenue generator, could end up having to shoulder the burden of the significant, ongoing debt accumulated at both Shannon and Cork. In order to oVset part of the financial handicap and service the debt of the smaller airports, Dublin may well have to increase charges. This would have an adverse eVect on their competitiveness and could have consequential benefits for Northern Ireland. 5.9 The break-up might also provide Dublin with greater autonomy to develop new air-links without the retarding arrangements currently in place to maintain Shannon services. The advent of Dublin/Shannon de- coupling would most likely result in operators gaining added impetus to gravitate towards Dublin. However, the prospect of oVering direct unconditional access for international airlines to Ireland through Belfast is an opportunity which could be exploited for the benefit of Northern Ireland plc under the prevailing conditions. 5.10 At present, the Rol is considerably ahead of Northern Ireland when it comes to trips per capita (approximately 5.2 trips per capita in Rol against 3.7 trips per capita in NI). A number of factors contribute to this situation including available disposable income, the absence of Government Air Passenger Duty and, most importantly, greater choice of destination and frequency. The diVerence of 1.5 trips per capita already leaves Northern Ireland with 2.5 million less annual passengers than would be the case if it matched Dublin performance. That would in turn create a further 2,500 direct on airport jobs and more than 8,000 additional jobs for the Northern Ireland economy. 5.11 Greater choice, cost and access will enhance DUB’s ability to further erode the Northern Ireland customer base. A suggested spur from the main Belfast-Dublin line at Balbriggan, to connect rail passengers directly into Dublin Airport, could exacerbate the situation. 5.12 While the Republic of Ireland has been single-minded in the development of modern surface infrastructure on the approaches to DUB, Northern Ireland has seemed content to put major investment on the long finger or to content itself with less capital intensive schemes and leave the development of air transport services without any structure or cohesive direction. BIAL believes this is short-termism of the worst kind, as it does little or nothing to address our regional infrastructural shortcomings which are certain to place barriers in the path of future inward investment and tourism growth.

6. Conclusions 6.1 Northern Ireland needs a coherent air service strategy that embraces all key commercial, economic, tourism and social policies for the region. The Government “Future of Air Transport” White Paper has failed to provide a strategic direction for air services in Northern Ireland. 6.2 Northern Ireland needs a single focus for future airport and air service development to enable it to compete eVectively with Dublin and other airports across Europe. That focus should be BIAL. This will maximise service provision, increase the economic contribution from air services and potentially generate thousands of new jobs. The current policy has fragmented traYc and services, reducing Northern Ireland’s competitiveness. 6.3 Northern Ireland Air Service Policy priorities should include: — BIAL should be allowed to grow to fulﬁl demand as outlined within the Aviation White Paper. — Belfast City Airport should continue to operate within existing planning constraints. — No further Government infrastructural aid should be given to any airport in Northern Ireland. — Improved roads should be constructed from BIAL, both to Belfast via the M2 motorway and to the north west of the Province. — UK Government APD should be removed on services from Northern Ireland, and VAT levels should be harmonised with those of the Republic of Ireland. 29 September 2004 3022631032 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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Annex 2 AIR CARGO All peripheral regions need their companies to be competitive, and air services help companies to keep their products in the marketplace. This is even more important when at least one stretch of water separates buyer from seller, and there are two such stretches between Northern Ireland and its European markets. It is vital for Northern Ireland to have at least one airport which is open 24 hours for the necessary mail and parcels links with the wider world, and for there to be at least one runway with suYcient length to accommodate direct cargo flights to North America. Belfast International Airport is by far the dominant air cargo gateway in Northern Ireland because it is the only airport in Northern Ireland that oVers 24 hour availability, operates without environmental constraints and has a runway length that can accommodate virtually all commercial cargo aircraft currently in operation without any significant payload restrictions. 24 hour availability and lack of environmental constraints allows the unfettered operation of air express services that enable the next day delivery of consignments to and from most destinations in Europe and North America. Such services are helping to drive the time based economy, where stock inventories are minimised by guaranteed delivery times, where ability to respond rapidly to orders is paramount and where strategically-located warehouses meet urgent demands. Air express services have been the fastest growing air cargo market segment and are forecast to continue to drive future air cargo market growth. The development of these new supply-chain philosophies has led to a diVerent approach to manufacturing, to wholesaling, to retailing, and to all the support functions upon which the conduct of global business relies. The ability of Belfast International Airport to facilitate air express services at night assists in facilitating trade and investment in Northern Ireland and enables companies already located in Northern Ireland to improve their customer service and compete eVectively in the “new economy”. In the White Paper, The Future of Air Transport, the Government acknowledges that: “A third of the goods we export by value go by air, and that figure is increasing. Indeed the amount of airfreight at United Kingdom airports has doubled since 1990”. “The speed of delivery that air freight can oVer is an increasingly important factor for many modern businesses, especially where just in time practices and high value commodities are concerned. Work carried out in connection with the consultation exercise suggests that specialist express carriers could account for over 50% of the air freight market by 2030”. “The ability to meet the world-wide rapid delivery and logistics requirements of modern businesses is an important factor in assuring the future competitiveness of both the UK and regional economies”. “The Government wishes to ensure that there are airports in the UK able to accommodate the anticipated growth in demand in this area, subject to satisfactory resolution of environmental concerns, especially in respect of night noise”.

Annex 5

COMPARATIVE ANALYSIS OF INTERNATIONAL CITIES WITH MULTI-AIRPORT SYSTEMS

Population 2,000 No of airports Terminal Pax Pax per City (millions) in System (2003) Population New York 8.08 2 61,163,432 7.6 London 7.17 4 118,603,327 16.5 Montreal 3.43 2 9,917,438 2.9 Berlin 3.39 2 11,443,834 3.4 Madrid 2.94 1 35,854,293 12.2 Chicago 2.89 2 86,508,672 29.9 Rome 2.55 2 27,192,077 10.7 Paris 2.12 2 71,370,902 33.7 Milan 1.26 2 25,163,077 20.0 Stockholm 0.76 2 17,430,419 22.9 Dublin 0.49 1 15,771,177 32.2 Belfast 0.28 2 5,928,468 21.2 Source: ONS; ACI; CAA. 3022631032 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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Annex 6

RYANAIR FUNDING/CITY OF DERRY AIRPORT (CODA) Belfast International Airport is committed to a level playing field for all and is in no way deterred by competition. However, in the case of Ryanair and City of Derry Airport (CDA), the situation is anomalous. The Northern Ireland Tourist Board (NITB) awards an annual grant of £70,000 towards the marketing of CDA. The grant is paid to the North West Air Access Consortium which, in turn, assists in the marketing of the Ryanair City of Derry–Stansted route. BIAL believes that this grant is eVectively a subsidy to a private company to help it compete with other private operators who are not in receipt of similar funding. BIAL has questioned, and will continue to question, the funding criteria that are applied and how the allocation is audited to ensure value for money. Our views on proposed developments at CDA were communicated to Ministers in the Northern Ireland OYce and senior departmental oYcials. CDA has applied for funding to extend its runway and carry out related infrastructural works. BIAL believes that if allowed to proceed with grant assistance, this expansion could harm the development of BIAL, lead to passenger displacement and involve the wholly inappropriate use of public funds in order to assist a publicly-owned facility compete with a profitable private sector undertaking. In expert opinion obtained by BIAL, the reality is that the suggested runway extension is unnecessary as the capability already exists to handle aircraft of the size the airport says it wants to accommodate. The plan is at the insistence of Ryanair which has threatened to pull out of the airport unless the runway extension gets the go ahead. Elsewhere, Ryanair operate larger aircraft on longer routes to European airports that have shorter runways than CDA. In the opinion of BIAL, this calls into question the application for public funding to finance a project of highly questionable value.

Extracts from supplementary memorandum submitted by Belfast International Airport

Why the White Paper Logic is Flawed in Respect of Belfast City Airport — BCA stated in their letter to the Planning Service of 25 August 2004 (requesting a review of their planning limits) that the mix of aircraft using the airport in 1995 yielded an average of 39 seats per Air Transport Movement (ATM). — Due to the introduction of larger aircraft, including the bmi A321 to Heathrow, average seats per ATM had increased to 59 by 2003. — If BCA were to achieve the 4 million passengers per annum throughput envisaged within the Aviation White Paper, while honouring their commitment not to exceed the existing 45,000 ATM per annum limit in existence, they would need to average 89 seats occupied per movement. — To compound this statistic, on the assumption of an average 70% load factor, this would mean that average seat capacity per ATM would have to increase to 127—signiﬁcantly more than double the ﬁgure reported in 2003. — To place this in context, Birmingham and Edinburgh, both substantial international airports with a full range of air service mix, including widebody, long haul, currently average 78 and 77 passengers per ATM respectively. 3022631033 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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Comparative Growth in London Area Services 1991–2003

Annex 1 Comparative Growth in London Area Services 1991-2003

50000000

45000000

40000000

35000000

30000000 Belfast Dublin 25000000 Glasgow 20000000 Edinburgh

15000000

10000000

50000000

0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Multiple airports in NI not achieving same growth levels

Potential Vulnerability of Existing Routes

No of Carriers No of Carriers Airport Belfast Dublin Airport Belfast Dublin London Irish Republic London Gatwick 2 2 Cork 2 1 London Heathrow 1 2 London Luton 1 1 Europe London Stansted 1 1 Amsterdam 1 1 Kent International Airport 1 1 Paris 1 3 Brussels 0 2 Scotland Berlin 1 1 Aberdeen 2 1 Prague 1 2 Edinburgh 2 2 Rome 1 2 Glasgow 2 2 Barcelona 1 2 Inverness 1 0 Malaga 2 3 Alicante 1 1 England/Wales Palma 1 1 Newcastle 2 1 Nice 1 1 Birmingham 2 2 Geneva 1 1 Blackpool 1 1 Bounemouth 1 1 International Bristol 2 2 Barbados 1 0 CardiV 12 NewYork 12 East Midlands 1 1 Exeter 1 1 Isle of Man 1 1 Leeds Bradford 2 1 Liverpool 2 2 Manchester 2 2 Durham Tees Valley 1 1 Norwich 1 1 Southampton 1 1 3022631033 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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Recent Development of Belfast Airports (Heathrow “Status Quo“”)

Figure 1 Recent Development of Belfast Airports (Heathrow “Status Quo”) 5,000,000

4,500,000

4,000,000

3,500,000

3,000,000 Total BHD 2,500,000 BHD net of LHR 2,000,000 Total BFS BFS + all LHR 1,500,000

1,000,000

500,000

0 1998 1999 2000 2001 2002 2003

UK Regional Service Development from Belfast Airports

Figure 2 UK Regional Service Development from Belfast Airports

600,000

500,000

400,000 1998 1999 300,000 2000 2001 2002 200,000 2003

100,000

0 BHD BFS BHD BFS BHD BFS BHD BFS BHD BFS BHD BFS Gatwick Liverpool Bristol Newcastle Glasgow Edinburgh

All growth being initiated at BHS 3022631033 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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Supporting Road Infrastructure — White Paper (Surface Access—Clause 7.15): “Surface access links to Northern Ireland’s three major airports are unlikely to require any signiﬁcant enhancements before 2015. The existing roads and bus links are considered adequate to cater for the levels of growth envisaged.” — From DRD(NI)’s Regional Strategic Transport Network Transport Plan this position is conﬁrmed with a proposed £13.8 million 6.5km section of single carriageway linking the M2 to the International Airport held in reserve for the Forward Planning Schedule. — Meanwhile the National Roads Authority in the Republic of Ireland have invested over 700 million Euros (circa £500 million) on a 72km stretch of the Ml Dublin ⁄Belfast Road, with further investment ongoing.

What can be Achieved with Vision — Bizarrely the resident population within the 100 km radius around Dublin Airport is similar to the resident population in the same catchment around Belfast International Airport (circa 1.6 million in both instances)—Northern Ireland Yearbook 2005. — However DUB has been enabled to radically increase its overall air traYc volume through supportive Government policy and a concerted and highly eVective drive in external markets to attract increasing numbers of international visitors.

Basis of Dublin Traffic Leakage Figure (2002) 1. From Dublin Airport Departing Passenger Survey 344,000 annual passengers from NI (equates to the notional 2–3% of DUB business previously cited). 2. An additional 125,000 holidaymakers (% 250,000 charter passengers)—equates to booking trends reported by tour operators operating from DUB and BFS. 3. From Failte Ireland—123,000 visitors to Ireland arriving via Dublin Airport and subsequently spending at least one bed night in Northern Ireland (% 246,000 air passengers). GRAND TOTAL for Displaced TraYc % 344,000 ! 250,000 ! 246,000.

840,000 passengers per annum

APPENDIX 1

PREVIOUSLY REQUESTED INFORMATION

Income Ratio (BIAL) 2004 v 2001 Aeronautical (%) Commercial (%) 2001 68.3 31.7 2002 61.8 38.2 2003 56.8 43.2 2004 52.7 47.3

Witnesses: Mr Albert Harrison, Managing Director, Belfast International Airport and Mr Uel Hoey, Business Development Director, Belfast International Airport, examined.

Q374 Chairman: Good morning, gentlemen. I could kick oV with getting to the bottom of the should start by oVering an apology for the fact that desire, it would seem, from Belfast International for you were due to give evidence some five weeks ago a single airport for Northern Ireland. I say “it would and, having travelled to Parliament to be with us, of seem” because in terms of the evidence that has been course, we all fell foul that day of fire alarms and given you expressed disappointment at the outcome votes. I am afraid that is how Parliament is; in fact, of the White Paper, saying that it “fell short of the Committee today will be depleted because of last expectations” and argued strongly that Belfast night’s events in Parliament in terms of the vote on International should be “the airport of choice”. Do terrorism. Mr Tami left London at some ungodly you want Belfast International to be a single airport hour this morning to be with us, and I am grateful for Northern Ireland? to him for doing that, Mr Campbell is en route, but Mr Harrison: Mr Chairman, good morning, and rather than waste any more of your time five weeks thank you for giving me the opportunity to speak— after you first appeared, as we have a quorum I I feel somewhat vertically challenged sitting here. thought we would start the evidence session and let Belfast City Airport is a fact of life; if we were our colleague join us when he is able. I wonder if I starting oV with a clean sheet of paper there is no 3022631034 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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1 March 2005 Mr Albert Harrison and Mr Uel Hoey doubt about it, that you would have one airport for are over-served. Northern Ireland has suVered Northern Ireland, in my opinion. You would gain compared to most regions in the UK; in the last 10 from the economies of scale and there are lots of years we have lost 56 services that have started and advantages. We would probably, I think, be about failed. Dublin, in the meantime, has lost about 15— the 45th biggest airport in Europe—my colleague will in fact, somewhere along the line there is a reason for correct me if I am wrong with the numbers—if we it. I am sure a question on competition will come up, had one airport, if you take the number of people but the thing is that the UK is well-served, Europe is who fly to City of Derry Airport, Belfast City under-served, North America is slightly under- Airport and Belfast International, but we are where served, we need more hubs towards the East, so if we are. We are not saying that Belfast City Airport Belfast City Airport grows there will be should be closed in any way, shape or form. Since I displacement. The displacement could weaken us, have arrived at Belfast International I have never which makes it more diYcult for us to then go out actually voiced that particular opinion; it is there, it and compete in the wider marketplace. Already we is an asset, it should be used for the benefit of carry a burden of £1.2 million a year having our own Northern Ireland PLC, but what we have to try and police force. We are the only airport—that is an do is make sure that the airport assets that we have undesignated airport in the UK—that has got a got are used for the betterment of the whole of the police force. There is no assistance from province and we are ideally situated for the whole of Government for that amount of money and it is a the province. There was a major disconnect between burden that we have to carry; somewhere along the the Regional Air Services Study and the White line there has got to be a balance achieved. Paper. Basically there was a RASCO stakeholders Hopefully that answers it. meeting in Clarence Court on 25 March 2002 and that was a publicly debated document. That Q376 Chairman: We also understand that you have document showed that Belfast City Airport, with the been granted leave to seek judicial review of the planning constraints, would be about 2.2 million application. people, but the airports could work together in a Mr Harrison: Basically it is the process that actually complementary type role and Belfast International concerns us at the moment. The situation is that we could grow to just under about 10 million. The City are querying the process that has been deployed. We of Derry number was half a million, 800,000, had RASCO, RASCO was public and then out something like that. The White Paper when it came comes the White Paper, completely diVerent. There out in December 2003 bore no resemblance to what are some discrepancies in BCA’s terminology, the had been debated in public, there was a major nature of their request varies. They want a review of disconnect, and that showed that Belfast City the form of the Planning Agreement, then they want Airport was then growing to something like 4.4 an increase in the number of seats on oVer for sale, million people. Technically, I believe there are some then they want the cap removed on the number of flaws in that logic; I can go into the detail if you want seats oVered for sale. They are talking about a 5% or we can drop you a little note on it. That was growth until 2030 which would give them 7.5 million something that was never debated, so that was why V people. If you take 45,000 air transport movements we were e ectively disappointed: there was a public and you divide that figure into those sorts of debate, everything understood, the stakeholders forecasts, you are looking, even on just what is in the were fairly comfortable with it—you can argue White Paper, at 89 passenger seats per aeroplane. about some of the forecasting models that they used For Edinburgh the current average number of seats etc -but the punch line was that the White Paper that is 77 and for Birmingham 78, so somewhere along came out bore no resemblance to RASCO, and we the line there is going to be a step function change in believe there are technical flaws with it. What we the size of aircraft for all those targets to be achieved. need to do in our opinion, and we have said so in our We just want to make sure that the process is open document, is that we are happy to work with Belfast and that it is a full public debate; primarily that is City Airport, we can complement each other for the what we are interested in, which is why we have been benefit of Northern Ireland PLC and without any delighted with the fact that this Committee has been negative environmental impacts for Belfast. formed to look into the strategy for Northern Ireland. Q375 Chairman: You are opposed to the change in the Planning Agreement at Belfast City, is that Q377 Chairman: Do you accept that some just see correct? the judicial review as a way of pushing the decision Mr Harrison: EVectively, yes. We do not actually further back? believe it does any benefit for Northern Ireland PLC. Mr Hoey: Thanks, Mr Chairman. It is not especially If you have a look at the market, the marketplace at in our interests to delay the process because in the the moment, the UK is pretty well served and there local press the planning service have stated that are some areas in fact where we have, in my opinion, while the whole matter is under review they will take too many services, and in the back-up document we no action, so there is no logic in us delaying the have given you we have actually carried out a process in that regard because the airport will comparison of the number of airlines operating from continue to grow, which would serve us no purpose. Dublin to various destinations in the UK, Europe Mr Harrison: City Airport are currently breaking and beyond, and when you compare that with what the Planning Agreement, they are over the limit, so is out of Belfast then there are some areas that actually delaying the process is of no benefit to us. If 3022631034 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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1 March 2005 Mr Albert Harrison and Mr Uel Hoey we had not done this then theoretically the planners is from Edinburgh, Blackpool is from Manchester or should have actually taken action against Belfast Brighton is from London; indeed, to put it into more City Airport for breaking the Planning Agreement, local terms, Mullingar from Dublin. Our biggest and they have acknowledged that they are breaking concern would be if state subsidy were forthcoming the Planning Agreement. There is not a lot of benefit to facilitate development of City of Derry Airport, in us actually delaying it under those sorts of we would clearly have to look at that in terms of how circumstances; what we want is to have a clear, open that aVected us as a private company from a debate that actually then can come up with a competitive perspective. strategy for Northern Ireland. The DoE will look at this on a narrow basis, purely from the planning Q379 Chairman: Do you think that if City of Derry regime point of view; DRD will obviously have to Airport failed—I am not suggesting for one moment get involved with the strategic issue and I think we that it would do—that you would simply see more need to sit back—because the White Paper did fall services going to Carrickfinn? short of expectations—and decide what is the best Mr Harrison: I personally do not, but we can thing for Northern Ireland in the round. disagree, it is not a problem. People will want to go where there is frequency of service to a range of Q378 Chairman: To a lesser degree some have said destinations that they want to go to. We are 57 miles that opposition by Belfast International for further apart, in the grand scheme of things that is not far. Government aid to City of Derry Airport could be If we can improve the roads throughout the North seen as trying to restrict another competitor. Would West then that will open up the whole of the region, that be a fair analysis? not just for passengers but for freight and everything Mr Hoey: Our view of City of Derry Airport is that else that is associated with it. No, I personally do not it is fine for the airport to function; if the local see Carrickfinn growing. The other thing on the authority wish to maintain the airport we have Ryanair question, they currently operate a 180 absolutely no issue, however we are very aware that seater aircraft from Lubeck to Stansted; it is a two the people in the North West are an important part hour sector, the runway is exactly the same length. of the catchment for Belfast International Airport. How can they operate out of Lubeck but they cannot We are very supportive of getting access to that operate out of City of Derry? It has nothing to do, I region and we would wholeheartedly support believe, with runway and safety areas; we have infrastructure development which would assist both actually had some consultants look at it and they the people living in the North West and visitors to cannot come up with an answer. We believe Ryanair that region, availing them of the range of services tankers fuel in, so they are actually landing a bit on which operate through Belfast International. We the heavy side; if they picked up more fuel at City of believe that there will always be a greater range of Derry, City of Derry Airport would actually make services and a greater frequency of services available more money and the aircraft would be able to land through Belfast International and we believe that at a lighter weight, with a shorter runway. road infrastructure and surface infrastructure development will assist the market to flourish if Q380 Chairman: Finally on my list of questions, I given access to that range of services. In terms of the noticed in your evidence that you draw parallels current bid to, as we understand it, lengthen the between your airport and Berlin Brandenburg. That runway, we are slightly confused as to the reasoning was a diYcult one for me to get my head around for it. We understand that Falcon Holidays operate because, of course, one is a showcase airport in a 200 plus seat aircraft on a two to three hour range capital city, owned by the Government, whereas from City of Derry’s runway to Spain, yet yours is a privately owned airport. They would not apparently Ryanair can carry no more than 140 seem to be similar in either management or passengers on a sector which is about a third of the organisation; how do you come up with that length, to London. We do not understand the comparison? background to that. We also are aware from some of Mr Hoey: Albert has already mentioned that we are the background work that has been done regarding where we are in terms of airports in Northern City of Derry Airport, Cranfield University Ireland and the ownership structure surrounding presented I believe at an open forum at the Guildhall them, but we feel on a larger scale that Berlin has in October 2003 some estimates of how traYc at City been beset by some of the similar types of problems of Derry Airport could grow, and that the basis of it as Northern Ireland as a region has faced in recent was that around 90% of the growth which was years in terms of division and having to socially foreseen to take the airport up towards a million integrate and develop the economy in the region. passengers a year would be displacement of existing The opportunity which has availed itself in Berlin is traYc which already operated through Belfast for them to take the Schonefeld site, which is in the International and Belfast City Airport. We would least environmentally sensitive part of the former question the value for Northern Ireland as a region East Berlin, and take a decision backed by the should that happen. Broadly speaking, we are very various partners of federal government, the Berlin supportive of the northwest region, believe there and Brandenburg authorities, to concentrate should be development of road infrastructure and development on the site at Schonefeld for the greater would wholeheartedly support that, but at the end of good of the region. They estimate that they will have the day City of Derry Airport in distance terms is the 50% additional traYc going through Berlin same distance from Belfast International as Dundee Brandenburg in 2010 than they currently have going 3022631034 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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1 March 2005 Mr Albert Harrison and Mr Uel Hoey through the three airports. It is a hypothetical stage. There is a considerable number of people who example in that obviously we have a diVerent set of go to Dublin; we have had some new data in from circumstances in Northern Ireland; however, we our friends in Aer Rianta that has proved to us that were using it to illustrate how a region can work in there is a considerable number of people who a co-ordinated manner and how Berlin Airport now actually go to Dublin, and we can pull those as a single entity, as a single showcase entity, can be people back. presented as a much more attractive destination airport for prospective carriers. A 20 million airport, as they foresee it will be by 2010, will become much Q383 Mr Beggs: Would further development of more attractive and much more visible on the radar Belfast City Airport help or harm the development of world airlines. of air services in Northern Ireland, customers and Chairman: Thank you. Mr Roy Beggs. the economy? Mr Hoey: We would consider that further development would be harmful to the overall Q381 Mr Beggs: Good morning. Would Northern prospects for Northern Ireland, it would just lead to Ireland have more or less air services if it had either further fragmentation of eVort. In the long run we one airport or both its airports were in common believe that Dublin would continue to grow and ownership? would continue to gain from the fragmentation that Mr Harrison: If there was one airport, yes. There would occur. We have already mentioned that we would be considerable economies of scale; that have lost 56 air routes in the last 10 years; that again would allow us then to kick on with benefits to grow would be likely to continue. We currently have, the market. Airports are high fixed cost base almost by default, airports in Northern Ireland businesses; the more passengers you can get through operating in a pseudo-complementary manner and the more income you generate and that can be City Airport market themselves as a niche business pumped back into improving facilities and doing operation where the volume traYc tends to go deals. So my answer is if it is a single owner, one through Belfast International and City of Derry has airport, yes, but we are not there. In terms of its own catchment. If you brought all the airports common ownership, it is a hypothetical question, onto the same footing in terms of how they operate, my bosses might wish to take a view on it at some we believe you would end up with carriers operating stage. The answer is yes, again there are economies head to head in a small, constrained market, and of scale that can be achieved. that may lead to a compound eVect in terms of route failures. The diYculty we believe we have in Q382 Mr Beggs: Such as? Northern Ireland as a region is historically we Mr Harrison: You do not need two managing obviously have an image problem, we have a small directors, I can retire and Brian Ambrose can take catchment, albeit that the catchment around Belfast my job to start with, which would save a International within a 60 mile radius is similar to the considerable amount of money. Take air traYc catchment around Dublin. However, clearly the control as an example: currently our primary radar impact on air traYc is not the same in terms of our will need replacing in about two years time; Belfast capacity to attract inbound visitors into the market, City Airport’s primary radar needs replacing in two but we believe as things stand that the City Airport years time roughly. They are £3.5 million each, niche operation serving business commuters under common ownership you could buy one radar. actually does complement Belfast International. If Belfast International via NATS could handle they moved to larger aircraft, as is suggested in some approach and take down aircraft all the way to the of the recent press coverage, then we have our ground at Belfast City, you do not need an approach concerns as to whether the market can sustain that control at Belfast City, you only need one, so there with two competing airports in a small catchment. would be some saving in manpower and there would Mr Harrison: Basically, where would they grow? be a considerable saving in capital. Group Their current aircraft types and the length of runway procurement—for example, we as part of our group do not allow them to go long haul. They do not have get together and we buy in equipment, vehicles, de- the aircraft type that would operate eVectively into icing materials. There would be standardisation of Europe, so the only place that they could basically procedures and systems, once-over command, better grow is into the UK. If they grow into the UK and training, one training rig for the fire service. Every you compare ourselves with Dublin, the number of time you buy a fire tender it is a third of a million carriers that operate out of Dublin to the major cities pounds each; with the size of group we have we gain and compare what we have, it would actually mean economies of scale. There is a whole raft of things that you would have more people operating into the with common ownership—marketing, for example. UK than Dublin would have. There would therefore It would make life an awful lot easier for people like be displacement; displacement means it has an eVect Tourism Ireland, Northern Ireland Tourist Board on airline profitability. Our current operators would and Belfast Visitor and Convention Bureau to go then be looking at the bigger picture and saying out and say as an entity, rather than having to should we continue to operate out of Belfast because pander to the two organisations and the diVerent of the big picture type of thing. Basically, therefore, airlines. All of that actually creates money and that the displacement, if any were to take place, would money can be reinvested in obtaining new routes. weaken us, damage the airlines and in all probability You have to remember that our main competition is would end up with more services cancelled. A good Dublin, and I am sure that that will come up at some example is Jet 2 wanted to go to Cork. If you actually 3022631034 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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1 March 2005 Mr Albert Harrison and Mr Uel Hoey have a look at the document we prepared, we Mr Harrison: That is okay. highlighted that Cork would be one of our concerns. Mr Hoey: I can add to that in so much as we would We are a public licence airport, somebody wants to say that we see Belfast as being very much a natural operate to Cork, we cannot stop them. They did not extension for Aer Lingus as a carrier. They have get a deal in Cork, they have pulled the route before been in the market before, they have changed their it started. It was not exactly rocket science that two business model and there are a number of carriers was not going to work in Cork. We have a opportunities that we would foresee that would be service to Aberdeen with small aircraft, Flybe want advantageous for Aer Lingus to take up from to go, but two carriers is too much for Aberdeen, so Belfast. there will be a failure and we will go from 56 to 57. Mr Harrison: We are discussing other European Whenever airlines look at ﬂying in and out of destinations with other carriers. Brussels is Northern Ireland, they are faced with a situation of something we are quite keen to get and also Aberdeen having been tried and started 10 times Frankfurt, because to connect with another hub and failed. going east is important for Northern Ireland. We are doing our best in that area.

Q384 Mr Beggs: We are pleased that there is growth and development and we welcome the fact that Q387 Mr Beggs: In your evidence you suggest that Continental’s service to Newark is starting in May. there will be “casualties” on routes to the United Are there any other services to North America under Kingdom in the coming year. What has led to this active discussion, and if so which destinations are conclusion and which routes in particular do you likely to be served? How important would support consider at risk? Do you think services from Northern Ireland to the rest of the United Kingdom from the Route Development Fund be for this? have now reached saturation point? Mr Harrison: I will answer your last question first. Mr Harrison: The UK is very well saturated. If you The Air Route Development Fund was absolutely compare where Dublin have services, we have essential in obtaining a service to North America, we concerns over Aberdeen as I mentioned previously; could not have done it without it, it made a big Dublin have only one carrier, it is a small number of diVerence, without it we would not have got the V people who want to go to Aberdeen and to have two service, we simply could not have a orded to take carriers operating on the route we think is not the hit that was required. Yes, we are under further sustainable. We have mentioned Cork already and discussion for the North American destinations, we we actually had identified Cork as being somewhere have been approached by American Airlines— where two carriers would be too many. In Newcastle they have actually approached us—and they are there is only one operator from Dublin and we have considering Boston and/or Chicago currently. It is got two; my gut feel is that in the next year we will unlikely that such a service would start before be down to one. Bristol—I think there is a little bit 2006–07 but they are interested. We have worked too much capacity on Bristol and two carriers on with the air route development people and the Leeds Bradford is a little bit too much. The question exercises that have been carried out by the you have to ask yourself is, is it better to have two consultants prove that there is a market. I am flights a day from Airport A and Airport B with pleased to advise you that the forward bookings on poor timings, or three flights a day from Airport A/ the Continental service to Newark are good; we B with better timings. It makes more sense for the actually got the latest figures this week, they have airlines, for the population as a whole, to have substantial bookings already for Business Class, greater frequency. Greater frequency and one Economy, some of the flights are almost full in June carrier does not mean to say that fees and charges and July already, we are ahead of our close friends necessarily go up; there is always the fear in the from Bristol. background that if there is only one carrier on a route that fees and charges are actually going to go through the roof. There is only one example where Q385 Mr Beggs: We understand that in November fees and charges are fairly high at the moment, and Aer Lingus was close to announcing a number of that is to Heathrow; everywhere else where there is a services from Belfast International, including single carrier the fees and charges are actually quite probably one to Heathrow. Given the developments low and it is the mantra of low cost airlines to at Aer Lingus since then, are you still expecting continue to keep fees and charges low, otherwise that they will establish services from Belfast people will not fly. International and, if so, which routes are they likely Mr Hoey: Just to add to that, the issue that we would to consider? see from a competitive point of view—and we have Mr Harrison: I think all I am prepared to say at the already touched on competition within the local moment is that we are discussing various market—is that we would see our competition very opportunities with Aer Lingus. We met them last much on the basis of the European and global arena. week. We compete with airlines right through Europe for assets, and to take our principal customer, Easyjet, as an example, Easyjet has over 100 aircraft on Q386 Chairman: Mr Harrison, we appreciate that a order. They already operate to 60 airports in lot of this is commercially sensitive; please, do not Europe, every time there is an opportunity to place feel that you must answer some of these questions. an aircraft they consider the 60 airports that are 3022631034 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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1 March 2005 Mr Albert Harrison and Mr Uel Hoey already within their portfolio in terms of how they better, our roads to the North West need to be link up. Belfast is in there competing, but I suppose improved and we need bypasses through our issue from a strategic point of view or part of the Templepatrick and links to the motorway. We point that we are making is that a weakening of the should have a look to see what could be done about traYc base weakens our capability to compete harmonisation of VAT; if that is not possible can the 1 1 with the other airports in Europe for service diVerence between the 132 and the 172 be pumped development. We are competing in a very wide arena back into tourism, and we need to have a long, hard, and, more pertinently, close to home we are serious look at airport departure tax—and I know competing very directly with Dublin. As I say, I am the Chancellor would have a cardiac arrest but the sure we will touch on this but Dublin has a number sums stack up. The guys in Dublin did their sums of major advantages over Northern Ireland as a and they figured out that you can actually make region in terms of attracting air services. more money by getting rid of airport departure tax, by jobs being created, people coming in and Q388 Mr Beggs: You have concluded that Northern spending money in the economy. Ireland citizens make fewer journeys per capita than Mr Beggs: Thank you. citizens in the Republic; does this not suggest that there is scope for further growth? Q390 Mark Tami: turning to the Route Mr Harrison: Clearly there is scope for growth into Development Fund, you indicated that you think Europe, and if you look at some of the initial the Fund is a good initiative, but I think you have evidence that we gave and you compare the range of some concerns about it too, would that be fair to destinations served out of Northern Ireland, there is say? still a long way to go in Europe. There is scope to Mr Harrison: Yes. grow and there are advantages that Dublin has over us: airport departure tax, they do not have any; V Q391 Mark Tami: Just before you explain that, you VAT, there is a di erence in VAT. If you take a used the term “scatter-gun approach” particularly in family of four—and this one gets mentioned to me connection with Scotland; could you elaborate on by several of my friends on a regular basis—for those that and do you feel that that is the same for Northern Irish in this room just ask yourself, how Northern Ireland? many people do you know who have flown out of Mr Harrison: Mr Hoey will answer the scatter-gun. Dublin in the last year. I can assure you that Back in 2001 we actually approached Government everyone will know someone. Why have they done at that time and said “We believe that Northern it? (A) The range of destinations, and (B) it is Ireland needs an Air Route Development Fund.” cheaper. Airport departure tax is expensive, we are We approached Sir Reg Empey who was then the an island to the west of an island so operating costs minister responsible for DETI and Sir Reg I believe are actually quite high, so we need to get the cost of then spoke to the civil servants, spoke to the overall tickets down, which is why we suggest that Northern Ireland Tourist Board and said “This the Government have a look at disposing of airport sounds logical, please let us get on with it.” The departure tax. An exercise that we did showed that Assembly died, the civil servants continued to it would more than wash its face because of growth develop the concept and the idea and my chief of jobs—going back to the 1,000 for every million executive, Keith Brooks, and I met Mr Pearson in passengers carried etc. London and we pushed for the Air Route Development Fund. Mr Pearson, we are delighted to Q389 Mr Beggs: Finally, chairman, what do you say, said “Yes, we are carrying it forward and we will consider to be the key priorities for the development develop an Air Route Development Fund, but it will of air services in Northern Ireland? be very focused, it will have to be of economic value Mr Harrison: Get rid of airport departure tax. We to Northern Ireland PLC, which was what we were have to recognise that our main competition is after. Whenever we talked about it originally, we Dublin, the Government should actually focus in on were talking about Northern Ireland PLC as a the fact that Belfast International Airport has no whole and we were quite happy for either City of constraints, we should be the focus of further growth Derry Airport or Belfast City Airport to benefit and for City Airport it should be suggested or from it, no odds, provided that there was no proposed that the Planning Agreement stays and we displacement. Whenever we are talking about a 60 work together on a more complementary basis. Each miles one hour radius we are talking about the inner airport should stand on its own feet; if the citizens in catchment area of an airport. City of Derry is 57 the North West want to continue to keep the City of miles away from Belfast International, Manchester Derry going at a loss then that is their prerogative, is served from Belfast International, Birmingham is but we would be unhappy with any funding or state served from Belfast International, so it just seemed subsidies that break EU legislation, especially when to me that we are putting money into a region that is we are paying for a £1.2 million a year police force. 57 miles away when it is already served with greater Roads and rail should be improved; we have just frequency by bigger aeroplanes and reasonable seen in today’s paper an £84 million improvement on fares, so that does not actually sound logical to me. the road from Newry to Dundalk; the southern It does open up the window of opportunity for Government have spent over £500 million Mr O’Leary or someone like that to come in and say improving the Dublin–Belfast road in the last “Okay, we now want to go to Amsterdam.” number of years and the roads to Dublin are getting Northern Ireland will not be able to sustain two such 3022631034 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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1 March 2005 Mr Albert Harrison and Mr Uel Hoey operations on Amsterdam so there will be another done its job, will have moved us up the pecking casualty. Belfast City Airport to Norwich, Norwich order, so I do not think there are actually that many is not served, not a problem. more routes that need pump-priming. Mr Hoey: Just to touch on the scatter-gun issue, we would recognise, as Albert says, that air route Q394 Mark Tami: Do you feel overall that it is development schemes are very important in terms of distorting the market, both in the short term and driving forward the air access for a region. We would longer term as well? see air access into Northern Ireland and the Mr Harrison: No, all it has done is actually moved us development of a broad range of air access as being up in the pecking order. Coming back to the Easyjet absolutely critical for economic development in the scenario, aircraft number “67” comes oV the region, where we would see that from an investment production line; where are we going to put it? They point of view it is almost like an intravenous have 60 airports currently that they have got to look injection of cash into the economy. The issue in at. They recognise that Northern Ireland is an respect of the Scottish approach is that while we important market, that people want to travel out of would recognise that the Scottish scheme pre-dated here, and tourism is picking up, we now handle over the Northern Ireland scheme and has been very two million tourists a year. It moves us up the successful in terms of development of long haul pecking order, it makes a diVerence. If you take routes—and some routes with Ryanair I believe out Easyjet, the average profit per passenger is £2.50, so of Prestwick, there have been a number of failures in if you can get a few pounds knocked oV somewhere a very short timescale, notably the Snowflake on a cost then, yes, that actually makes a diVerence. operation between Stockholm and Inverness which Mr Hoey: Could I just elaborate, I think the issue for only lasted a matter of weeks, the Germania service Northern Ireland that we faced prior to the from Prestwick to Berlin and, I suppose, most inauguration of the Route Development Fund, notable of all, the Duo operation from Edinburgh we had one international scheduled route to which saw the demise of half a dozen routes, all Amsterdam which compared very unfavourably to supported by Scottish Enterprise funding. We are similar UK regions and extremely unfavourably to not saying that the Scottish scheme has been poorly Dublin. As I say, we perceive that Dublin is the administered in any shape or form; obviously the principal competition that we face, we struggle development of Edinburgh to Newark, services into already with a number of things that we have already the Middle East with Emirates and others have been outlined in terms of the image and the attractiveness hugely important, but we would hope that in terms of Northern Ireland as a visitor destination, and also of how the Northern Ireland scheme is developed a number of the measures which have been and administered going forward, that the routes undertaken by the Republic of Ireland Government which are chosen on the basis of economic merit in terms of supporting road infrastructure, the would be sustainable through time and that we abolition of APD, VAT reduction and suchlike. The would not suVer such short term casualties as have big issue that we faced as a region prior to the been experienced in Scotland. instigation of routes to Paris, Rome, Berlin etc and New York in particular was that Tourism Ireland, which is largely supported by Northern Ireland Q392 Mark Tami: Taking that point a bit further, funding, were spending multi-million pounds on what would you see as the necessary changes, how marketing in various countries and destinations would you change the criteria to perhaps not have across the world, but 75% of the money that was some of these problems that you have identified? being spent by Tourism Ireland in foreign markets to Mr Harrison: We have to look at Northern Ireland attract tourists was gaining no benefit whatsoever as a region; it is Northern Ireland as a region that has for Northern Ireland because we had no direct to be served so if someone wants to operate from access. So we see that actually acquiring direct access Belfast International to Frankfurt, that makes and having the channel to actually sell to people and sensible funding; if somebody wants to operate from encourage them to visit Belfast is a huge step City of Derry to Frankfurt, Frankfurt is not served, forward and allows us to compete on a much more yes, give it funding, but look at the region as a whole equal level with Dublin as an entry point to the because everything is close, it is a very small place. island. There are bigger game parks in Southern Africa than Northern Ireland, we are a very small region. Scatter-gunning, duplication of services, all it does is Q395 Mark Tami: Thank you. Much is made of the displace. It has to be more focused, it is new routes. importance of demonstrating net economic benefit. How do you quantify that, is it in terms of new airport jobs overall or is it creating greater choice Q393 Mark Tami: Particularly in the light that the and obviously the benefits that flow from that? It is budget has been fully committed, what do you see as a bit of a catch-all I know. needing pump-priming? Mr Harrison: For every million passengers grown Mr Harrison: I do not think there are many places you create 1,000 jobs on airport; Chris Tarry will that actually need pump-priming any more. To confirm that, I am sure. There is another statistic summarise them I would say Brussels, one or two which is about 3,500 jobs created in the wider destinations further in Germany, perhaps another economy for every million passengers grown. Italian destination, perhaps one French destination, Airports are economic drivers, we spend lots of but then I think that is it, the Government will have money. This year we are spending over £6 million 3022631034 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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1 March 2005 Mr Albert Harrison and Mr Uel Hoey upgrading facilities at the airport; in the next five build throughput to the airport so I suppose what I years we will spend at least between £6 and £8 am looking for is how dependent do you see million a year upgrading facilities, and in some years yourselves on that? we will actually spend more than that. So over the Mr Harrison: We are not overly dependent in the next five years we will pump £40 million into the long run, once the three years are up then the routes economy, which is not an insignificant chunk of will be sustained, they are up and running. change. We create jobs to work on airport and for Mr Hoey: The Fund is extremely useful in possibly tourism, and we pump prime money back into the changing the timing of some of the route economy. We are working right now to develop our developments. We have mentioned the Newark business park, we are working with a major service in particular, from a purely commercial integrator to develop a facility which should be up perspective we could not have bridged the gap in and running hopefully before Christmas of this year, terms of the quantum required to compete in order and that in itself will make deliveries for cargo etc to get that service, given we were competing with much cheaper out of Belfast, it will create more jobs airports all across Europe for it. On the European on an annual basis and it will create jobs in the services the Air Route Development Funding is very construction industry in the short-term. welcome and very helpful, but we would certainly look to be developing routes which would be Q396 Mark Tami: Have you carried out surveys of sustainable three years beyond, we do not see any people who are using the new routes and, if you merit in developing routes which would start and have, how does that split between business and stop as soon as the funding disappears, so it is an tourist type? assistance but hopefully not a critical assistance in Mr Harrison: Overall business is approximately 30 the long-term. odd% of our business, but that includes charters, Chairman: We are running slightly behind the clock everything. Of the new routes we have only basically so we may need to speed up one or two of our had Paris and Nice up and running, the others do not questions. Mr Gregory Campbell. start until basically July, Continental starts in May. If you have a look at the Continental figures, it is 159-seater aircraft with 16 seats in Business. I would Q400 Mr Campbell: On the issue of the Route say, based on the forward bookings, a quarter of the Development Fund, just following on from your last Business seats are taken already for the period we answer, the timing of the Paris route does not appear looked at. It is diYcult to give an overall picture. to be ideal for business and yet one of the requirements for the Route Development Fund Q397 Mark Tami: Is the pattern changing more would be in that category. How do you see towards business or more towards tourists, or are progress there? they both growing? Mr Hoey: The issue as we would see it is that we are Mr Harrison: Business is picking up, more and more starting from a very low base. I know the criteria in people are using low cost travel and the direct terms of the four segments for evaluating whether a services make a diVerence because people prefer to route should be supported by air route developing fly direct rather than go through a hub, so there are funding is that if it stacks up on any one of three more and more business guys using the product. segments, be that outbound business, inbound business or inbound tourism, it would then potentially qualify subject to economic assessment Q398 Mark Tami: When we came to see you in for funding. We would see this as being on a number November we had quite a tour of all the retail outlets of these routes, hopefully, a step process. If you do that you had there. Is that growing, what sort of not have a route to Paris we would foresee having V impact is that having, and is that helping to o set one a day as better than having two a day and then perhaps some of the other issues? having none a day, so we would consider that to get Mr Harrison: In the back of the pack we gave you, a route up and running on a daily basis, to develop we gave details of how things have changed over the in the short term largely the leisure flows on it, get last year, if I can find it. Aeronautical charges are the inbound tourist flows which are not time- falling, the amount of money that we get per sensitive, and also pick up a certain amount of passenger is shrinking. Most of our deals are RPI business for people who still prefer to be able to fly minus, so basically in 2001 aeronautical fees and non-stop rather than transfer terminals in Heathrow charges were 68% of our income and commercial and all the hassle that that involves. People are still 31.7%; that changed to 2004 to 52.7% and 47.3%, so able to fly to their destination non-stop in a day, we are more dependent on making money on sticky albeit they have to spend an overnight at their buns and pints and pies and car parking than we destination while they are there, but we would have been in the past. Aeronautical charges are foresee an awful lot of people who do business would coming down, non-aeronautical revenues are plan an overnight stay into their business trip in any going up. case. We do not therefore see that as being hugely detrimental to the development of the service, but Q399 Mark Tami: Where in that league table, if you the aspiration for some of the larger routes like like, does that put the Route Development Fund? Amsterdam, Paris etc would be to increase the How vital is that, and obviously you are looking to frequency on them through time. 3022631034 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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1 March 2005 Mr Albert Harrison and Mr Uel Hoey

Q401 Mr Campbell: The Committee has heard on the traYc carried by British Airways and British evidence about the need to maintain links with Midland, even though BA and BM in some manner Heathrow because of the hub that Heathrow now almost complement each other on the provides. Your contention as I understand it is that Heathrow and Manchester services by sharing each the direct links to Europe will almost reduce the need other’s service, the point to point carriers like for dependency on Heathrow, is that right? Easyjet carry significantly more passengers. So the Mr Harrison: Heathrow is vital for Northern Ireland market behaviour has changed and we would foresee PLC. Currently, about 800,000 people a year fly to with more direct routes that that will continue to be Heathrow and according to the CAA statistics about the case. 35% of that 800,000 interline, which is 360,000. Of Mr Harrison: Easyjet were actually concerned about that between—depending on who you talk to and Paris, that a lot of people actually went to Paris via there is some variance between statistics—150,000 Liverpool and Stansted, so whenever we were and 200,000 of those people fly to North America. talking about the viability of the route, they were Our Continental service should make major inroads actually worried about a loss of traYc on Liverpool, into that, which leaves about 150,000 to 200,000 the loss of traYc on Stansted and what impact that people who need to interline to go long haul. On the would have. A lot of people do now fly direct, but CAA statistics the numbers are in the thousands, people were actually flying to Luton, flying to very few in the tens of thousands, that are scattered Stansted, reclaiming their bags and checking in between Sydney, Auckland, Hong Kong, again because it was a hell of a lot cheaper than Johannesburg, Durban and Beijing, so they are not going via Heathrow. big numbers of people who have to go to Heathrow or to another hub. The direct services into Europe V Q402 Mr Campbell: I will resist the thought of will make a di erence because some of the tens of returning to the issue you raised of the 100,000 of the thousands are those airports in Europe such as Paris 300,000 that you say use Heathrow as a hub when and Rome where there are large numbers going. The V going to North America, and I suppose there is an North American connection will make a di erence, obvious question there about your direct North you can connect with Continental to 140 cities non- American service and displacement there, but I want stop, 170 cities with one stop, so that will make a big to move on to the issue of the interlining that was impact there. Direct services into Europe will have referred to. If you have potential for Brussels and an impact but in the foreseeable future, Heathrow is Frankfurt, would there not be a big issue there about still an important hub for Northern Ireland. interlining for potential customers that you hope to Mr Hoey: Could I just add, the issue is that attract there? Heathrow probably gains on two fronts in terms of Mr Harrison: It opens up options. Coming back to the long haul connections which Albert has your comment that you did not want to comment mentioned, that there will always be a requirement on, yes, you could say that there is displacement. If for people to access Heathrow in order to get to you actually look at the cost, people are doing it Sydney or Hong Kong or wherever. We also believe because it costs a damn sight less. If you want to buy that there are people who will continue to pay a a fully flexible ticket to the likes of Brussels and you premium for access to Heathrow Airport in terms of go via Heathrow, you can fly to North America just point to point access to London, and that is cheaper, it is very, very expensive. Heathrow is completely inherent if you look at the numbers on expensive and the ability to be able to go direct saves the British Midland aircraft at the moment in terms an awful lot of time for business guys. Something of the location of the curtain and the fares that are like 12 to 15% of the flights that actually go over being charged on it. We would foresee that the Belfast are going to North America, so people are market is changing, we think that people in spending an hour flying to Heathrow, two hours on Northern Ireland as is the case elsewhere are the ground and an hour back again, it has taken you becoming much more aware of their capacity to four hours to get to 35,000 feet. Four hours from travel independently, but interlining as an issue is Belfast and you are practically in North America, probably overrated, not to put too fine a point on it. which allows you to do more. Our flight is going to Transferring terminals in Heathrow is not the way be the first flight into Newark from Europe in the that we would foresee people choosing to go, if you morning, it is going to enable you to connect to can either fly non-stop to your destination or you practically everywhere in the States, you will be able can transfer through a much less-congested airport to get to most destinations in the States quicker, with much more ease, even if that requires you to cheaper, with less jetlag and less time in the air. So take two flights. Certainly, the market has changed there may be displacement but I think it is actually locally, Easyjet would not be the largest carrier in better in the long run. Northern Ireland, carrying more passengers than all Mr Hoey: The other issue is that on both Brussels other airlines put together if the habits of the local and Frankfurt, which you mentioned, I do not market had not changed. Notionally, Boeing have foresee that we would have any level of service on invested significantly in the Boeing 787 which is an either. Brussels as a hub probably does not hold the aircraft designed to fly people point to point, so we same value that it held three or four years ago would foresee through time that whilst global hubs whenever Sabena were in their heyday in terms of are important for regions like Belfast, their value long haul service, although it is building up. It is would diminish over time and from a point five or six probably more diYcult to get slots in Frankfurt than years ago where this market was totally dependent it is to get them in Heathrow, so we are not going to 3022631034 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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1 March 2005 Mr Albert Harrison and Mr Uel Hoey ever command any level of service into these hubs, the island through Belfast. We would see that as an so Heathrow will remain important as the key hub important issue in terms of supporting the fact that for long haul travel from that point of view. I think we have completely unconstrained operations at the other issue in terms of displacement is that I Belfast International on a 24 hour basis and could recall going to a seminar with the General Consumer add significantly to the freight throughput going Council at which British Midland attended in through the airport. respect of retaining the Heathrow link. The British Mr Harrison: We will respond, Mr Chairman, in Midland person who was attending was at pains to writing with regard to the leakage in tonnage, I just point out the fact that while interlining was of value have not got that number oV the top of my head. to British Midland as an airline, the pro-rates that Clearly there is a market to North America for they get on interlining with their Star Alliance cargo, there is also a market to the Far East. I was partners in economic terms is not of anything like amazed to find out that something like 40 tonnes of the same value to British Midland as putting a chicken wings are sent to Bangkok every week by business passenger at the front of the aircraft, in ship from Moy Park, to be sold on the street front of the curtain, point to point to London, and markets. 40 tonnes is a fair bit of freight on a that the point to point business market to London weekly basis. was the core thing that British Midland were seeking to protect on that service. I would envisage that even with the advent of non-stop international service Q405 Mr Campbell: It is quite a lot of chickens. and any attendant impact that that may have on Mr Harrison: It is a hell of a lot of wings; if you interlining through Heathrow, British midland joined them all together they could probably fly would still remain very committed to the Belfast- there. We are looking into that and we will be talking Heathrow service in terms of the point to point to a couple of long haul cargo guys such as Cargolux business traYc that travels on it. about the possibility of North America as well.

Q403 Mr Campbell: Two questions to finish, chairman, one about the potential for a service to Q406 Chairman: I actually wonder what they do Dubai to bring you into the Far East and the other with the 80 tonnes of wingless chickens. one on freight; what is the likely situation to be over Mr Hoey: I overlooked to answer part of the point the next two or three years on Belfast International’s that was raised. One of the notional pieces of freight operations, and what sort of competition on information we have, which is now several years old, freight do you face from Dublin again? is that whenever Bombardier were manufacturing Mr Harrison: We are talking to Emirates, but this is regional jets they could not keep up with the not a short term solution, I would say it is two years production requirement, but at that stage over 90% away possibly before we see a Dubai service. If we of the freight movement of Bombardier stock, get it in two years I will be very pleased and certainly despite being 20 miles away from Belfast a Dubai link into an Emirates hub I think would be International, with completely unconstrained great for Northern Ireland because it opens up the freight capacity, was being road freighted to Dublin whole of Africa, Asia and Australia etc. We were the to go through Dublin Airport. That is just to give it fourth biggest regional airport in the UK in terms of in symptomatic terms. freight with 50,000 tonnes of cargo a year; Dublin has considerably more so there is a lot of competition where stuV is actually trucked down Q407 Chairman: You have mentioned on a number to go. of occasions in the last hour that you thought we would be mentioning Dublin, but we have mentioned Dublin so many times that I think you Q404 Mr Campbell: What amount are you talking have answered most of the questions that we had for about? you. One of the questions that has not been Mr Harrison: I cannot remember the number oV the answered is that there seems to be, at best, unreliable top of my head. figures as to the extent of the leakage. How could we Mr Hoey: We are working with the CBI at the moment and we have engaged a number of major get to a more reliable analysis of the amount of shippers in Northern Ireland, we are looking at a leakage that is going to Dublin? project to try and develop non-stop freight access, Mr Harrison: There are a couple of things. Chris which we are working on as we speak. The issue as Cain and the evidence that he gave last week far as we are concerned, to go back to the original identified that he thought it could be over half a strategy in terms of how Northern Ireland develops, million currently. We have actually contacted Aer we believe it is critically important from a cohesive Rianta and we have got two bits of evidence that we regional perspective that road infrastructure can talk about—I will talk about one and Uel can develops to support airport infrastructure, because talk about the other. Basically, Aer Rianta carry out that is absolutely critical from a freight perspective. research every four weeks, all year round. The We have got central location, not only within statistics that they gave us last week basically cover Northern Ireland but within the northern part of the two segments of a three segment market: people island of Ireland and if road access is developed to going from Northern Ireland constitute well over assist access into the airport we can draw more and half a million trips. That is fairly robust data and I more of the cargo traYc from the northern part of will contact our friends in Aer Rianta to make sure 3022631034 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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1 March 2005 Mr Albert Harrison and Mr Uel Hoey that they are comfortable with actually releasing the the buses the fact that there are services from Belfast data they have given us. That only covers the six International to these destinations. Every time I provinces of Northern Ireland, it does not cover appear on RTE or anything like that with a new anything basically to the north west and it also does service, I always make the point that our car parks not cover, as far as I am aware, those people who fly are considerably cheaper than those at Dublin. in long haul, who come up to Northern Ireland and Mr Hoey: The one thing I would say is that what we spend more than one bed night, so it is well in excess are about in terms of access at this point in time is of half a million if you add in the North West and retaining the passengers within our own catchment. you add in those people who come to Northern Dublin already has eight or nine trans-Atlantic Ireland via Dublin, 650,000 to 750,000 is probably services, we are not going to bring people from reasonable, but that is based on research that is Swords to fly through Belfast. However, we should carried out every four weeks, so it is fairly robust. I not be losing people from Lisburn to Dublin, so the am sure the DfT, if they actually put their mind to it, initial issue as far as we are concerned is to retain our could actually come up with some numbers as well. home catchment and make sure that they have the Uel has got some historical data to give you as well. option to fly through Belfast, and whenever we have Mr Hoey: The figure that we have quoted in the past succeeded on that front then we can hopefully make was not far shy of a million passengers, and the basis greater inroads into the more marginal border areas that we used was figures which were actually given to which are the in-between catchment. us by various sources in the Republic of Ireland, the Mr Harrison: The job creation impact as well, if we figures are about three years old. The actual figures can actually pull those people back, is substantial. If which I think we forwarded onto the Committee we can pull back 600,000 people that is 600 jobs at were from the departing passengers survey at the the airport, it is 2,000 jobs scattered throughout the time, and it equated to about 3% of their traYc, Province. I do not under-estimate as well the impact being 344,000 annual passengers travelling on of direct services on tourism. One last boring business to destinations from Dublin. To that they statistic and then I will wind up, Mr Chairman: added another 125,000 charter passengers at that basically, if you look at a piece of data that was time which equated to 250,000 round trip prepared by Tourism Ireland in 2000/2001 passengers, and also we were given some something like 148,000 people came to Northern information suggesting that 123,000 annual visitors Ireland from North America. We had a direct to Ireland arrived via Dublin and spent at least one service at the time and they contributed £45 million bed night in Northern Ireland. Our contention on to the local economy, an average of £304 a head. We that issue is if you are prepared to come to Northern lost our direct service and the number of North Ireland, having arrived via Dublin, had the access American visitors was 97,000 but they only been available to Northern Ireland you probably contributed £14 million to the local economy, an would have come here in the first place. When all average of £144 per head. When the direct service those figures are added up they come to 840,000 was here they came in, they picked up a car and they passengers, but as Albert says the figure varies. The Y spent more money in our pubs, they spent more bed di culty I think Chris Cain outlined in the evidence nights here, so it doubled the eVect. Direct services which he gave last week is that there is nobody who with inbound tourism can make a big, big diVerence delivers the type of research which the CAA deliver to the local economy. in the UK, so we cannot get robust information in Mr Hoey: In that regard, Mr Chairman, certainly in this regard but we know, notionally, that there is a the CAA evidence they suggested that the better strong flow. Even last week we were in discussion connection of services between Dublin and Belfast with one of the Irish airlines and they cited that they would be something to be welcomed rather than to believe, in trans-Atlantic terms, as we stand at this be suspicious of. On the basis of that statistic, point in time, that where there are one million plus whereby bringing people directly into the local passengers travelling from Dublin on trans-Atlantic market has huge knock-on eVects in terms of services, over 10% of that traYc comes from economic growth and income, a final statistic which Northern Ireland. That is notional evidence in itself we have to bear that out is that we have evidence to from an airline perspective. suggest North American consumers, booking on the far side of the Atlantic, when faced with the option Q408 Chairman: In that case, given that the of flying to Ireland and the prospect of paying air improved transport infrastructure might be seen by passenger duty to come into Belfast, the savings some to have added to the problem, it also means which can be made on a group booking often dictate that people in the Republic could get to Belfast that people fly to Dublin rather than Belfast. On a International a lot quicker. group booking they can often pay for a week’s car Mr Harrison: Absolutely. hire on the basis of the saving that you make against APD, so there are a number of things which we feel Q409 Chairman: Have you marketed the Newark need to be equalised in order to ensure that Northern Continental service within the Republic? Ireland as a region competes most eVectively and Mr Harrison: We have been working with not only becomes more visible as an alternative to Dublin for Continental but our friends in Easyjet to spend more access to the island of Ireland. marketing in the border counties and around the Chairman: Thank you, gentlemen. We have gone Omagh area. We have also been working with the slightly over time and I am conscious that my Airporter service to the North West to advertise on colleague, Mr Tami, rose from his bed at 3022631034 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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1 March 2005 Mr Albert Harrison and Mr Uel Hoey four o’clock to be with us and is probably in need of Chairman: I do feel we must come to a close there caVeine more than most of us. I do appreciate the and allow the caVeine input to take place. Thank you time you have given and the evidence you have for your evidence, thank you for being with us, it is given. much appreciated. The Committee is suspended Mark Tami: It was 3.30 actually. until ﬁve past eleven.

Memorandum submitted by Department for Regional Development, the Department of Enterprise, Trade and Investment and the Department of the Environment

1. Introduction 1.1 This memorandum on behalf of the Department for Regional Development (DRD), with input from the Department of Enterprise Trade and Investment (DETI) and the Department of the Environment (DOE) provides information about: — The development of capacity at existing airports; — Speciﬁc challenges facing Northern Ireland as a peripheral region of the UK; —TheeVectiveness of the Route Development Fund; and — The potential impact for Northern Ireland of wider transport issues on the island of Ireland.

2. Responsibilities 2.1 Under the Northern Ireland Act 1998, civil aviation but not aerodromes is a reserved matter. Policy on air services is largely determined at United Kingdom and European level rather than at regional level and the Department for Transport (DfT) takes the lead on issues such as safety and airspace regulation; security; international negotiations (including with Europe); regional access policy; and the overall strategic framework for the aviation sector in the UK. 2.2 Within Northern Ireland the Department for Regional Development has a number of responsibilities in relation to aviation matters. These are set out in the Airports (Northern Ireland) Order 1994 and include land use planning; the assessment and mitigation of local environmental impacts; (including noise control at airports) surface transport; the funding of aerodromes in public ownership; and the power to make byelaws. DOE is responsible for planning related issues at all the airports and any applications from the airports are processed following normal procedures including consideration of all material factors and consultation with relevant bodies. DETI is responsible for the funding of the Air Route Development fund, which is administered by Air Route Development (NI) Ltd, a subsidiary of Invest NI.

3. Policy Context 3.1 In December 2003, DfT published the White Paper, The Future of Air Transport. This sets out a strategic framework for the development of airport capacity in the UK over the next 30 years. In doing so, it sets out a policy framework against which the relevant public bodies, airport operators and airlines can plan ahead and which will guide decisions on future development. The White Paper includes sections on government policy on air transport in Northern Ireland and regional air services to London. 3.2 Against a background of limited services to European destinations, the government has sought to promote the development of new air routes that are of economic beneﬁt to Northern Ireland. As indicated above, a Route Development Fund has been established under the auspices of the Department of Enterprise, Trade and Investment. The scheme is administered by Air Route Development (NI) Ltd, (ARD), a company created by Invest Northern Ireland for this purpose. The Fund has been given an initial budget allocation of £4 million.

4. The Development of Capacity at Existing Airports 4.1 Belfast International Airport (BIA) (privately owned) is the largest airport in Northern Ireland and the majority of its services are in the “low cost” and charter markets. Forecasts suggest that by 2030 demand may increase from around 4 million passengers per annum (mppa) currently to between 8mppa and 9mppa. BIA is situated in a sparsely populated area and is able to operate 24 hours a day. There is adequate space within the airport boundary to serve the forecast demand and well beyond. The White Paper supports the development of the airport within the existing airport boundaries to serve the forecast demand. 4.2 Belfast City Airport (BCA) (also privately owned) provides a wide range of scheduled services to destinations within the UK. Forecasts suggest that by 2030 demand may be slightly over 4mppa. However, BCA is governed by a Planning Agreement which imposes signiﬁcant operational constraints. The most 3022631035 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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important of these are: the requirement that air transport movements should not exceed 45,000 a year; early evening and night scheduling restrictions; and a limit on the number of aircraft seats provided to 1,500,000 in any period of 12 months. This last restriction is broadly equivalent to BCA having a capacity of 2.2mppa. The White Paper invites the Northern Ireland authorities to review the form of the Planning Agreement, if and when they are so requested by the airport operator. 4.3 In July 2004 Belfast City Airport formally submitted to DOE Planning Service a request to review the current Planning Agreement in relation to the current seats for sale restrictions contained within the Planning Agreement. 4.4 City of Derry Airport (CODA) is owned by Derry City Council and provides air services in the north west of the island. It operates a limited number of low cost and charter services, but could have potential to develop routes to a number of other destinations. Proposals for a runway extension have been submitted by Derry City Council, and these are currently under consideration. The White Paper recommends that given the cross-border market served by the airport, the Northern Ireland authorities should consider the airport’s future infrastructure requirements carefully, in conjunction with the government of the Republic of Ireland. 4.5 The White Paper states that it will be for airport operators to decide how to take forward plans for airport expansion in the light of the policies set out in the White Paper. The timing of any developments will be a matter for commercial decision by the operators. 4.6 As is the case with the other major airports in the UK, DfT has asked BIA and BCA each to produce a master plan, which would set out their proposals for development to 2015 taking account of the conclusions on future development set out in the White Paper. (City of Derry Airport is not required to produce a master plan as it is not forecast to handle 20,000 air transport movements by 2030.) It should be noted that airport master plans have no statutory basis, but would be regarded as a clear statement of development intent on the part of the airport operator and are being encouraged by DfT as a mechanism for explaining how airports propose to take forward the White Paper proposals. 4.7 DRD’s role in the production of the master plans involves: — Ensuring airport operators follow the guidance; — Representation on steering groups; — Provision of local contextual information; — Checking progress against timetables; — Bi-lateral discussions of “assigned” and other regional/local issues aVecting master plan proposals; — Providing a sounding board for airport related issues of concern to local authorities and other regional interests; — Reporting of progress/problems to DfT. The role of DfT will be to address generic queries, give advice when necessary, review drafts of master plans and report to Ministers on progress across UK at key milestones.

5. Specific Challenges Facing Northern Ireland as a Peripheral Region of the United Kingdom 5.1 Given its geographical location, good air links to Great Britain are particularly important for Northern Ireland and its future economic development. Northern Ireland is well served for travel to and from London and other parts of Great Britain. Also it currently has seven direct connections to airports on the European mainland (Amsterdam, Prague, Paris, Nice, Malaga, Barcelona and Alicante). 5.2 In addition to Northern Ireland’s requirement for point-to-point access to Great Britain and the European mainland, there is also need for interlining capacity to cities in Europe and further afield. None of the low cost airlines flying between Northern Ireland and Great Britain airports oVers anything other than point-to-point services, even to passengers using the same carrier flights for onward destinations in Europe. Furthermore, all of Northern Ireland’s direct flights to the European mainland are provided by low-cost carriers which do not have interlining capability. The main airport for interlining to and from Northern Ireland currently is London Heathrow which is the UK’s main international hub. Currently only one airline flies from Northern Ireland to Heathrow—bmi British Midland from Belfast City Airport. 5.3 The White Paper recognises the importance of regional air services and states that the government is prepared to intervene in well-defined circumstances to protect slots at London airports for such services by the designation of Public Service Obligations (PSOs) under European regulations. However, as Northern Ireland is currently well served with, commercial services between Belfast and the London airports, it is unlikely that there would be a requirement to impose a PSO. Even were one to be imposed, it would not necessarily protect slots at Heathrow which is the UK’s main international hub and the main airport for interlining to and from Belfast as there is currently no mechanism to safeguard services to a specific London airport. In response to the consultation on the Air Transport White Paper, the Northern Ireland Administration argued that steps should be taken to protect Northern Ireland access to Heathrow and that 3022631036 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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slots should be protected in respect of services to peripheral regions and, if it were judged not possible under existing EU regulations, DfT should be strongly urged to pursue with the European Commission the necessary amendments. 5.4 Following the White Paper, DfT published a consultation document in July 2004 seeking views on criteria for the implementation of the policy to protect existing regional air services to London. In line with its existing policy, DRD has pointed up the importance to Northern Ireland of interlining capacity and the need to be able to protect slots at particular airports.

6. The Effectiveness of the Route Development Fund 6.1 To help promote the development of new air routes that are of economic benefit to Northern Ireland, a Route Development Fund, similar to that implemented by the Scottish Executive and Scottish Enterprise, has been established. The success of route development funds both in Scotland and Northern Ireland was recognised in the Air Transport White Paper. 6.2 The objectives of the scheme are: — To encourage the development of new air links, particularly with continental European centres, for the benefit of promoting business linkages, enterprise development and tourism; — To allow a day’s business to be transacted at a wider range of European cities; — To improve the competitiveness of Northern Ireland’s businesses by developing close links with international markets and through travel time savings; and — To encourage inbound tourism, particularly in the short-break and city-break markets, which are key priorities for future tourism developments in Northern Ireland. 6.3 The scheme operates by encouraging investment in the development of new routes through incentivising airports to reduce airport charges to airlines. The scheme is designed to oVer investment to airports for specific routes, on a per passenger basis for a period up to three years from commencement of the new route. In addition to direct financial support, the scheme enables the eVorts of a range of organisations, including the airport, tourism bodies and inward investment agencies, to be more eVectively focused and co-ordinated. The overall aim is to ensure the success of the new routes. Existing routes already served do not qualify under the scheme. Investment is on a risk-sharing basis and does not exceed discounts oVered by the airports themselves to airlines. Support is oVered only if there is a clear net economic benefit to Northern Ireland. At the end of three years the new route should be self-sustaining. 6.4 In 2003, prior to the introduction of the scheme, only one international scheduled destination was served from Northern Ireland (Amsterdam). This compared to 12 destinations served from CardiV and 40 from Dublin. The establishment of the scheme has succeeded in attracting the attention of airline operators. In the past year, over a dozen airlines have been involved in discussions over proposed new routes. 6.5 To date, four new routes have been introduced with the support of the Route Development Fund. These are Belfast International to Paris; Belfast International to Nice; Londonderry to Manchester; and Londonderry to Birmingham. The Paris service provides access to a major international airport, namely Charles de Gaulle. 6.6 The economic benefits expected to flow from the introduction of these new routes fall broadly into three categories: improved access for inbound tourism; improved connectivity for business travellers in and out of Northern Ireland; and increased employment at airports and in businesses related to aviation generally. For example, it is estimated that the Paris and Nice routes will generate over 200 jobs at Belfast International Airport. 6.7 The scheme has also generated indirect benefits. For example, EasyJet has introduced leisure services to Malaga and Alicante in order to maximise the utilisation of aircraft stationed at Belfast to serve the new Paris and Nice routes. Thus investment by the scheme enabled the airline to base an additional aircraft at Belfast. 6.8 ARD is aware of continuing interest from a number of airlines in the establishment of further new routes. An announcement of a North American route is anticipated shortly, and negotiations are continuing over new European destinations.

7. The Potential Impact for Northern Ireland of Wider Transport Issues on the Island of Ireland 7.1 The White Paper notes that the “leakage” of passengers from Northern Ireland using airports in the Republic of Ireland is an issue of concern. A consultants’ report commissioned by DRD estimated that in 2001, 360,000 people from Northern Ireland used Dublin Airport. Conversely, in the same year about 100,000 passengers per annum, resident in or destined for the ROI, used an airport in Northern Ireland. Therefore, the estimated net leakage was 260,000. Such leakage decreases the potential beneﬁts which increased passenger numbers at Northern Ireland’s airports would bring to the economy. Furthermore, if Northern Ireland were to lose its Belfast-Heathrow route, and thus its access to a major international hub, leakage to Dublin Airport might well increase. (On the other hand, the presence of Dublin Airport does increase the choice available to travellers to and from Northern Ireland.) With the ongoing cross-border 3022631036 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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roads improvements, there will be increasing competition from Dublin Airport for both outbound and inbound visitors. However, the White Paper states that establishment of the Route Development Fund, which is aimed at assisting airlines to fly to new destinations from Northern Ireland, has provided a potentially significant policy response. 7.2 The Republic of Ireland, like the UK, has the option of invoking Public Service Obligations (PSOs) under European Legislation. In 2000, the Republic of Ireland imposed a PSO on the Dublin-Londonderry route which is currently operated by Loganair. There is the potential for the ROI to impose PSOs on other cross-border routes. This could have a positive impact for Northern Ireland in that it provides a wider range of destinations for Northern Ireland’s consumers and may attract more business and investment into Northern Ireland from the Republic of Ireland. However, there is a negative side to a PSO, in that because it is a subsidised service, it reduces the likelihood of another airline starting up a service on the same route, and thus hinders free competition. 7.3 The National Spatial Strategy for Ireland 2002–2020 sets out a planning framework for development. It supports the development of Letterkenny/Derry as a new regional gateway. One of the characteristics of a gateway is that it should be within one hour of an airport with international access or linking to one with such access. There are two airports in the area—City of Derry Airport and Donegal Airport, neither of which are named as the key airport for the gateway. Donegal Airport operates a route to Dublin which is limited to two daily return flights. City of Derry Airport oVers a greater range of destinations, including access to Dublin, London Stansted, Birmingham, Manchester and Glasgow. Therefore, the Republic of Ireland has a strategic interest in the continuing operation and potential development of City of Derry Airport. 7.4 In 1998, City of Derry Airport received financial support totalling £3.75 million to provide runway improvements to facilitate year round use by large aircraft, thus enabling both daily scheduled services to London Stansted, and charter flights to continental Europe. The grant aid was provided from the EU Special Support Programme for Peace & Reconciliation in Northern Ireland and the Border Counties of Ireland 1995–99. The funding package was constructed as follows: — Northern Ireland contribution £1.4 million. — RoI contribution £1.35 million. September 2004

Witnesses: Rt Hon John Spellar, a Member of the House, Minister for Regional Development, Mrs Doreen Brown, Deputy Secretary, Department for Regional Development, Mr Robin McMinnis, Department of Enterprise, Trade and Investment and Mr Harry Baird, Planning, examined.

Q410 Chairman: Minister, thank you and your team the wishes of customers obviously have a significant for being with us this morning. We appreciate the role in this. At the same time demand is also rising at diYculties we have caused in terms of bringing Belfast International, which also has the significant people across to Belfast to give evidence. I advantage of being a 24 hour airport, and also the understand you are on a tight schedule, we are on a geographic location is in a position—I know they tight schedule, so I have suggested to my colleagues have some concerns on this—to actually draw in that we ask short questions that are to the point, but traYc from the Republic of Ireland as well with hopefully questions that enable us to get out all of route development especially. Unfortunately, the evidence that we wish to. I wonder if I could start yesterday, I had to be across in Westminster but I straightaway by asking you to pass comment on the was due to be with the Irish Transport Minister, situation with regard to the Belfast Airports? The cutting the first sod on the final stage of the White Paper says that both airports in Belfast can motorway dual carriageway between Belfast and co-exist, that they can complement each other rather Dublin; there may be some concerns that that may than be competitors, and yet we have heard evidence enhance the attractions of Dublin, but that road from Belfast International that it “believes that [the] runs in both directions and there is considerable other existing airports could close with minimal scope there as well. Frankly, we go along with the short term economic impact”, and certainly Belfast Department for Transport White Paper that there is International would hold the view that one airport scope for both airports, both of which play a role. for Northern Ireland is a good idea rather than three. What are your views on their view against that that exists in the White Paper? Mr Spellar: I am not sure that I should admit to Q411 Chairman: I suggest that you may have been previous convictions in terms of the White Paper, listening to our last evidence session where we in fact having had a hand in the writing of it. As we said that the road does go both ways and called for indicated in the White Paper, there is considerable marketing more eVectively of the services from scope for both Belfast City and Belfast International Belfast International. Airport. Belfast City as we know is actually pressing Mr Spellar: Also, I accept, there is scope for doing up against its limit and is obviously, therefore, some work on the route between the motorway and meeting a demand and the interests of customers and the airport as well, I fully accept that we need to be 3022631037 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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1 March 2005 Rt Hon John Spellar, Mrs Doreen Brown, Mr Robin McMinnis and Mr Harry Baird looking at that aspect too. There is scope, however, Q414 Chairman: We appreciate very much, of for actually digging into much of that traYcinthe course, that planning is the responsibility of your Republic of Ireland. colleague Angela Smith, but we also recognise that in respect of the Planning Agreement on Belfast City Q412 Chairman: The White Paper is suYcient it touches over into your responsibilities. We now enough, we do not need an overall Air Transport know that the consultation period on that agreement Strategy which has been called for by some; do you is over, but we understand that Belfast International think that is covered within the White Paper? has been granted leave to seek judicial review. Some might judge that as a further delay, as a way that Mr Spellar: Yes. The idea of a strategy in this V particular regard—and I fully accept I am possibly Belfast International can a ect its competitor echoing points that have been put to you—in the unfairly. Do you have a view on the Planning way you are putting it is that somehow with two Agreement and/or the judicial review that has been private enterprise operators operating in the market, allowed? and also I accept with one public sector operator, the Mr Spellar: It is really, as you rightly indicated, the City of Derry Airport, we should adjudicate between responsibility of Angela Smith and the Department those airports as to which should stay open and of Environment, Planning Service to adjudicate on which should close. That is very diVerent, I have to that, and I think it would probably be imprudent of say, from saying where expansion should take place, me to intrude into their domain in that regard. As and in all of that context I think that is quite well- you will know, the White Paper invited the Northern recognised by the White Paper. We need to look at Ireland authorities to review the form of the where customers want to ﬂy to and from, and for Planning Agreement, and obviously to take into some customers International is quite convenient account the views of local residents because as you with parking, access to the west of Northern Ireland, will see as you come into Belfast City it does lie quite later ﬂights and so on. For those who are doing close to residential developments, and that is the business, particularly with Government or indeed in reason why not only is there the overall limit on air Belfast city centre, then City is a more attractive movements but also a limit on the number of seats prospect. Obviously there is overlapping, but in a for sale, which is getting close to the maximum. We way they are separate markets and I certainly do not would hope that these matters could be decided think it would be the role of Government to fairly shortly and that the judicial review will not adjudicate between one airport and the other in that delay that unduly; I think that is important, not just context, let alone, I would argue, the public for Belfast City but also for Belfast International as expenditure consequences of such a decision, unless well because both airports need to know the of course International was proposing to buy out regulatory environment within which they will be City or whatever. operating.

Q413 Chairman: You pre-empt my next question Q415 Chairman: You have just mentioned the because of course you will know that in 1995 restrictions on numbers of aircraft. The Department International did indeed attempt to purchase City for Transport described as “diYcult to understand” Airport, but that at the time was adjudged by the the restrictions on seats for sale. Is this a sentiment Monopolies and Mergers Commission to be against that you would share? the public interest. Were the International Airport Mr Spellar: I think it was an understanding come to to make a similar bid today, do you think there at the time as a method of constraining the volume would still be public interest issues? of traYc going through, and it may be that a number Mr Spellar: Partly that would obviously have to be of planes with larger capacity may put greater for the OYce of Fair Trading to make such a pressure on that, and I would hope therefore that decision. We would obviously have to review such those would be considerations that would be taken an application and make a decision at the time. I into account by DoE in their review of the merely point out that we are trying to actually make planning limits. Northern Ireland an attractive destination in a variety of ways—in many ways quite successfully. I mean, Tourism Ireland has had a signiﬁcant impact, Q416 Chairman: Thank you for that. OYcials tell us something like two million visitors came to that the relevant Minister Angela Smith will be Northern Ireland, Belfast is now about the fourth “taking stock” in February; are we then to expect most visited destination for tourists in the United that a decision and/or a statement is imminent? Kingdom, there are big developments, as you may Mr Spellar: I have not had any immediate have seen last night, in the city centre, with Victoria notiﬁcation, I pass the ball to one of the oYcials Square and others which again I was announcing who will maybe be able to give you further only yesterday moving forward with international enlightenment. developers. So there is all of this and therefore I Mr Baird: We have indicated in our evidence, think we need to look at the range of travel services, chairman, that the Minister would be getting a accepting the slightly geographically peripheral further as it were options paper before the end of nature of Northern Ireland, that will in fact attract February and would be taking a decision then on the widest number of tourist visitors but will also be how best to take the rest of the review forward. Since of attraction and interest to inward investment and that of course there has been the judicial review, and general business interests anyway. we are not sure yet if that will delay, as it were, taking 3022631037 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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1 March 2005 Rt Hon John Spellar, Mrs Doreen Brown, Mr Robin McMinnis and Mr Harry Baird a decision on those options, but we are continuing to Mr Spellar: This is why I said that I anticipate it will work on the review as we prepare for the judicial form part of the discussion tomorrow with the Irish review. Government; we will also of course have to satisfy the European Commission regarding state aid, so there are really three stages. The first one is about the Q417 Chairman: I am conscious that I am not financing of the possible extension of the runway etc exactly the planners’ friend at the moment, having at the airport, the second one is about the criticised them on waste management and on governance of the airport and the third one is about housing recently, but I do hope that we can expect a European Commission regulations on state aid; all quick decision, I believe it would be in everybody’s of those come together. We are hopeful of trying to interest if cards were on the table and people know get a decision in the not too distant future. where we stand as soon as possible. Mr Spellar: I think Ministers will be interested to see the report which may be useful guidance to us. Q422 Mr Campbell: We understand the implications Chairman: Thank you, Minister. Gregory Campbell. and those three considerations regarding any decision, but given that they were in place in the summer of last year when the Secretary of State Q418 Mr Campbell: Moving north west, Minister, to received a very substantial deputation, including a the City of Derry Airport, there have been optimistic number of Members as well as myself and Mr Hume forecasts for growth there and as you probably included, nothing really has changed since that and know the throughput there is roughly at about yet we are six or seven months on from that. Are we 250,000 at the moment. How important do you rate likely to get a decision within weeks or is it likely to that airport and its future to business and tourism be a month or two? for the North West? Mr Spellar: I do not think you can rightly say that Mr Spellar: We regard City of Derry Airport as nothing has happened since that because arising . . . significant for the North West as a whole, and that includes both sides of the border, which is why of Q423 Mr Campbell: I did not say nothing has course there has been active discussion between our Y Y happened but nothing has changed in terms of those o cials and the o cials of the Department of the considerations. Irish Republic as to support for the City of Derry Mr Spellar: What I mean is that as a result of that Airport, and I anticipate that this may well form a deputation a working party was set up that involved subject of discussion in tomorrow’s British-Irish the City of Derry and oYcials and some external inter-Governmental conference which we are advice as well. That has actually put a proper shape holding in Dublin, as a normal scheduled meeting. to this, and in parallel with those discussions there Looking at City of Derry Airport within the context have been discussions about the provisions of of the North West of the island, that actually shows governance, not just a few months but 10 years after quite a sizeable hinterland for the airport and it was originally suggested from sage quarters. So we therefore the importance in maintaining connections have the consideration of governance arrangements to elsewhere in Ireland, but of course very much also and also we are going to need to run state aid issues into the United Kingdom, and that is obviously a past the European Commission. So there has been significant factor in our considerations of support quite a bit of work in the meantime, but I do take for development of the airport. your point that irrespective of any other considerations—that we are for example getting Q419 Mr Campbell: Would that be significant close to local council elections and that period of enough to impact on the decision regarding the purdah—if we can pull these elements together, financing of the extension of the airport? hopefully we can get a decision before that. Mr Spellar: That is clearly part of those discussions, not only our internal review of the situation and Q424 Chairman: Two minor technical points, evaluation of the scheme, but the involvement of the Minister, we were told when we were at City of Republic of Ireland who, as you are aware, Derry Airport that they are paying £600,000 per year previously have also had a financial involvement. At to the Government to repay capital and loan charges the same time we are also looking at the governance at what was described as “exceedingly high” rates of of City of Derry airport which is obviously an interest. Is that an area that the Government may be important factor as well. We believe that a more able to assist City of Derry Airport in, given that that commercial structure rather than a local money could be better spent? government structure is an important aid to success Mr Spellar: Essentially, Treasury’s position is this, for that airport. that public bodies can borrow from Treasury at rates that are generally favourable to whatever the current Q420 Mr Campbell: Modesty would forbid me market rates are, but that if one was looking at a saying who first suggested that about 10 years ago, refinancing that is really then transferring the benefit Minister— from one part of the public sector to another. Mr Spellar: I am sure you will read it into the record. Therefore, their view is that public sector debt, taken on by public authorities, is at the rate that they take it on rather than refinancing it, and of course that Q421 Mr Campbell: At some point. When might the works in diVerent ways depending on where we are council there expect a decision on any funding? in the cycle. While it may be superficially attractive, 3022631037 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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I suspect on the basis of discussions that have been already seen, for example, an agreement with the had with Treasury, it is not likely to be an area within Republic of India for increased capacity and also which there is the prospect of movement, and extra flights going to Australia, and one would therefore it may not be worth pursuing particularly anticipate that China will not be far behind in that. assiduously. So this is a matter that we keep under very careful review because it is very important for Northern Q425 Chairman: The other interesting point that we Ireland and its clear connection to the Middle East. were given when we were with City of Derry was that the Airports Act 1986 does not apply to Northern Q428 Mark Tami: You accept that as the value of Ireland and if it did there could be considerable the slots at Heathrow goes up then the pressure on benefit in enabling them to set up a public airport regional airports must mean that they become less company. Is that something that you are considering valuable. changing? Mr Spellar: Sorry, more valuable. Mrs Brown: That is one of the options that will be looked at as part of the review of governance Q429 Mark Tami: The slots become more valuable arrangements to establish what would be the best but the usage as for regional becomes less desirable. context for the airport to work in. It is not the only Mr Spellar: This is still a pretty intensively used option and we would want to do a thorough route, and as I indicated earlier there is a significant examination of other options before we would increase in tourism to the island of Ireland generally; conclude whether enacting that legislation for Tourism Ireland are doing an excellent job there, but Northern Ireland was appropriate. At this stage Northern Ireland’s tourism is actually increasing therefore the answer is that we do not have firm faster than that of the Republic. One of the areas plans to do so. We have not ruled anything out, we that we need to be focusing on is actually making just are not at the stage of having taken a decision. Belfast the first port of call rather than coming into Chairman: Thank you for that. Mr Mark Tami. Dublin and then moving north, and there are a number of the new routes that are being supported Q426 Mark Tami: Minister, we have been made by the route development programme. All of that aware and I am sure you are aware that there is helps to reinforce that. concern about access to Heathrow in the future. With the latest Stansted decision that is likely to Q430 Mark Tami: The new direct services to Europe build up; what really are you doing or do you intend like the Paris Charles de Gaulle one, that obviously to do further than just consult to really look at this gives people scope to use diVerent hubs rather than situation? just Heathrow, but do you accept that because they Mr Spellar: We would be concerned on that because are low cost carriers and there is not that interlining something like 30 to 40% of the passengers who are that you mentioned before, they do not link up heading out of Belfast to Heathrow in fact interline very well? elsewhere and that becomes very important in terms Mr Spellar: I am not entirely sure that that is the case of access, not just for tourists but very much for because while you may not have the same company, business as well. It becomes a very significant factor, a number of companies are linked in alliances, even particularly when you look at the number of with flag-carriers, and therefore going to one of the international businesses that are now investing in other hub airports does increase that. Obviously, the Northern Ireland, so access is important. The slight core point that we have to identify is one that is diYculty is that PSOs only apply to cities and not to elsewhere in the aviation White Paper which is about individual airports, so that does not necessarily give capacity at Heathrow, which is under considerable us any particular scope, but we would obviously be pressure but of course is still, by a huge margin, the very concerned if there was a reduction or world’s biggest international airport. I do have to elimination of that service and we would lobby say I think that is really something you may even extremely hard on it, as indeed I am sure would wish to pursue in correspondence with DfT, about other regions. the significance of decisions at Heathrow and the impact that that has on other regions of the country, Q427 Mark Tami: Would that include looking at quite apart from any impact on London. things like mixed mode at Heathrow to try to make Mark Tami: Thank you. the slots? Mr Spellar: The question about the use of the Q431 Mr Beggs: You have already referred to the capacity at Heathrow is really one that you would opportunities in both directions arising from road need to direct to my colleagues at my previous improvements that have taken place recently which department, at Transport. Raising capacity at are perceived to have made Dublin Airport more Heathrow in terms of runway capacity, using the attractive to Northern Ireland passengers. The existing capacity in the meantime, let alone any extent of this leakage to Dublin was an issue questions about runway 3, may well be a significant considered in the White Paper and raised with us in a issue. I suppose it would be reasonable to see some number of submissions; have you any concerns that more pressure coming on to the system when there are no reliable estimates of the actual number Terminal 5 comes into use because then, obviously, of people from Northern Ireland who use Dublin there will be increasing pressure for inter-continental Airport or indeed the numbers of the Republic of slots to actually be using that capacity. We have Ireland who use Belfast Airport? 3022631037 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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1 March 2005 Rt Hon John Spellar, Mrs Doreen Brown, Mr Robin McMinnis and Mr Harry Baird

Mr Spellar: My recollection is that there was an passenger traYc. We do of course have the benefit of estimate of something like 360,000—this was in ongoing surveys by the Northern Ireland Tourist 2002, it was a consultant’s report for DRD and there Board, by the airlines and so forth, of passenger data was an estimated 360,000 passengers resident in or which they obtain, and we would hope that that destined for Northern Ireland who used Dublin and would provide an insight as to the pattern which is about 100,000 went the other way, so a net leakage unrolling as it were following the introduction of the of about 260,000. You are right, we have not Air Route Development scheme. updated that figure since then but I do not think we need necessarily to update it to know that this is a significant figure. We also need to look at the fact Q434 Chairman: Minister, having earlier asked you that the road surface runs in both directions and as to comment on the responsibilities of your colleague we are seeing a significant route network flying out Angela, I am now going to ask you to do likewise in of Northern Ireland, particularly Belfast, airports, respect of the responsibilities of your other then actually access to the south may also tend to colleague, Barry Gardiner, in respect of the Route bring some of the traYc north. After all, when the Development Fund, but of course it will again leak road system was being improved on the main over into your responsibilities. I wonder if you could Belfast-Dublin route, the argument was that this help and assist the Committee in trying to would draw the retail traYc further down to the understand how the Route Development Fund is republic; interestingly enough, particularly with the applied. At its launch it was stated that it would promote the development of new routes of economic movement on the euro, there has been a quite benefit to Northern Ireland and that “carriers on significant move north, and indeed one of the driving selected and targeted new routes” would benefit. forces behind a number of planning applications OYcials later told us that, “Frankly, we did not that we are receiving in Belfast and surrounding know what the market was going to produce so we areas is actually not just serving the immediate did not want to rule anything out.” Since then we Belfast area but actually a whole Ireland market as have seen a number of new routes being supported well. This could work in both directions and what it by the Route Development Fund which could be then becomes about is the attractiveness of the considered to be social rather than economic in product and the marketing of the product. widening the number of destinations to the passenger and including holiday destinations, rather Q432 Mr Beggs: The White Paper states that the than those that would be perhaps seen as business Route Development Fund “has provided a destinations. In addition, the business type traYc potentially significant policy response” to cross which is often looking for a daily service to a border leakage. Was this seen as part of the role of European destination and back has not, in the main, the Fund when it was developed and how will the developed and what we have found in many cases is impact be measured in the absence of any reliable a weekly service on some of these routes which could figures? not necessarily be seen as serving very well business Mr Spellar: Developing the funds is part of creating traYc. It is a very large question but I just wondered a denser network, creating a more attractive if you could give us a view as to whether or not the network and starting to build the critical mass of the Route Development Fund is operating in the way airport. I think we are already seeing a considerable that it was envisaged and, if not, whether or not the amount of interest in those areas and I think that this way it is operating still gives an economic benefit to will be part of making Belfast, particularly Belfast Northern Ireland. International, a more attractive destination. Mr Spellar: It is very much about building the Obviously, part of that would be retaining traYc critical mass of the airport, but I will ask Robin to from Northern Ireland that would have gone to talk about the detail. Dublin but also, I would hope, bringing in some Mr McMinnis: Thank you, Minister. You were cross-border traYc that would then see maybe an actually referring to my evidence, chairman, in front easier facility. As we are aware, there is considerable of this Committee last time, so I put my hand up pressure on facilities at Dublin—we know that if there. I repeat what I said then, when we started this only because Michael O’Leary complains about it all scheme we did not really have much of a feel for how the time. Therefore, with that pressure we hopefully the aviation industry was likely to react, and we have may be able to absorb some of that. been very pleasantly surprised. Everyone, certainly in the business community, within the tourism industry, the three airports have all applauded the Q433 Mr Beggs: Has any study been carried out on success of the Air Route Development Scheme to the factors that influence passengers from Northern date. In my evidence in London I explained that Ireland to use Dublin Airport and what other policy whilst it may appear that some of the routes have responses, if any, have been considered? more of a social than an economic weight to them, Mr McMinnis: If I may, Minister, not as yet in in reality no route that we have subsidised under the Northern Ireland. In terms of the Air Route Air Route Development Scheme has been subsidised Development Scheme, although it has been unless it is shown that there is a clear economic operational for just about a year or so we have only benefit for Northern Ireland. There is a detailed had about four of the routes in operation since last economic appraisal undertaken by PriceWaterhouse summer so it is rather early days to assess whether or Coopers outside of the appraisal work which is not there has been much movement in terms of undertaken by Avia Consultants who work for the 3022631037 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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1 March 2005 Rt Hon John Spellar, Mrs Doreen Brown, Mr Robin McMinnis and Mr Harry Baird

Board of Air Route Development, and I might add do obviously advertise the scheme, we do make that unless we were completely satisfied on that the contact with the airlines, but at the end of the day we public accountability issue forces us—not that we are reliant on them coming to us. need to be encouraged in that direction—to make sure that we only subsidise those routes which are of Q437 Chairman: Please do not think we are being real economic benefit to Northern Ireland. too critical, we all accept the huge benefits that the Fund has brought with it. The criticism, if there was criticism, was that it was at times diYcult to Q435 Chairman: Through you, Minister, I wonder if understand the mechanisms and the workings of I could ask Mr McMinnis whether or not the cost of the scheme. those consultants could be seen by some as being Mr McMinnis: I accept that it is a complicated quite high in terms of the number of consultants we arrangement and we have tried our best in sharing brought in to assist us in developing the criteria for papers with the Committee to give insight into that. the Fund? Might I just add one point, chairman, and that is Mr McMinnis: There are in fact two or three that we have just embarked on a review of the diVerent elements to the consultancy costs. There scheme and I would be happy to share with the were the legal costs involved, there were the costs Committee clerk the terms of reference for that review. It is the first part of a review which will look associated with the economic appraisal and then at, if you like, gap analysis and so forth, really there were the general on-going costs of consultancy general stocktaking. We would then be looking at to set up the scheme and so forth. I have to say—and the findings of the research and as those routes come several of us have worked with the consultants, on-stream we would be looking at what it is telling including the chairman Bill McGuinness of Air us about how successful the scheme has been. Route Development—we have all been impressed by the value for money that the consultants have given Q438 Chairman: You pre-empt my next question, us in relation to the Air Route Development that the only part that is not answered is that of Scheme, and I would also add that were it not for the course we are told that the initial budget of assistance that we received from Avia Solutions we £4 million is already fully committed. would not have been able to support the number of Mr McMinnis: It is. routes that we have in such a short timeframe. Q439 Chairman: Therefore, will the review look at issues such as additionality to that figure? Q436 Chairman: There also seems to be some Mr McMinnis: It will look at the need for additional concern that the consultants’ studies did not routes, the prospects of new routes, the likely necessarily bring with them the fundamental economic benefit to Northern Ireland of new routes research, it seems that they are doing the studies and then, having done that, on the basis of the after the event. Should the consultants not have been findings of that review—and I do not want to brought in earlier rather than after the Fund was anticipate here the outcome of the review—if the operating? review found that indeed there are other routes Mr McMinnis: I do not accept that, chairman. Two which are worth going after which are of economic or three years ago, remember, we had only one benefit to Northern Ireland, then we will certainly make a bid for additional funding. international route for Northern Ireland, and we Chairman: Minister, as is always the case when you have transformed that scene in a very, very short appear before the Committee your knowledge of the period of time. We could not be sure how successful subject means you have answered all of our the scheme would be in Northern Ireland. The questions, without sometimes us having the need to scheme in Scotland had only been operating for a ask them. I will just check with my colleagues, are very short time before ours so we had nothing to go there any other questions that my colleagues have? by. The scheme in Northern Ireland has proved to be In that case, Minister, thank you very much for very, very successful, but it is a reactive scheme, we being with us. We do appreciate it, we appreciate are dependent on the airlines approaching the your time and your knowledge. Thank you, the airports here and the airports approaching us. We Committee is adjourned.

APPENDIX 1

Memorandum submitted by the Ulster Unionists

The Ulster Unionist Party welcomes this opportunity to contribute to the Northern Ireland AVairs Sub Committee Inquiry into Air Transport.

Ulster Unionists believe that a sustainable air strategy for Northern Ireland is necessary to maximise economic beneﬁts and address our peripheral location. 3022631038 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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The Development of Capacity at Existing Airports Northern Ireland has benefited from the increase in domestic services in recent years and the development of services to locations within mainland Europe. We have been seeking more international airlines flying in and out of Belfast airports for many years now and our Party welcomed the recent news that Continental Airlines has agreed in principle to operate a new Belfast to New York route. We are conscious of the estimate that between 5% and 15% of air passengers originating in Northern Ireland choose to travel from airports in the Republic of Ireland and believe that this is a market that could be captured by enhancing services from Northern Ireland’s airports. Belfast International Airport and Belfast City Airport have in recent years become complementary with regards to the various air routes. As discussed below we believe there are compelling economic reasons to develop Belfast International Airport as Northern Ireland’s key competitor with Dublin Airport in terms of international flights. However we believe that the existing competition between Belfast International and Belfast City, in terms of access to other regional airports, is good for the consumer. We would be concerned about any plans to increase the number of permitted flights to and from Belfast City Airport, due to the airport’s proximity to residential areas. The frequency of flights arriving at Belfast City Airport between 21.30 and 23.59 is a serious cause for concern and must be addressed as a matter of urgency. We consider the viability of the City of Derry Airport to be questionable. The limited number of passengers and its almost complete reliance on business from Ryan Air gives cause for serious concern. This Airport is a huge burden on Londonderry’s ratepayers and its future viability could not be guaranteed on this basis. There remains considerable doubt as to whether a region with a population of 1.7 million can sustain 3 airports?

Specific Challenges Facing Northern Ireland as a Peripheral Region of the UK

Strong, competitive and viable air connectivity is vital for Northern Ireland business, education and tourism. Ulster Unionists strongly support the campaign to ensure that the Belfast—Heathrow slots are maintained because of the unrivalled position of Heathrow as an international hub. Whilst ﬂights to other London airports are useful for those visiting London, those wanting to travel further must usually make onward connections from Heathrow. This is particularly important for long-haul travel. Ulster Unionists believe that an additional shorter runway at Heathrow would be suitable for ﬂights to and from Belfast. We believe that a proportion of the new capacity created by an additional shorter runway should be reserved for use by regional services. In the meantime, Northern Ireland needs guaranteed access to Heathrow and we recommend that this be achieved either through an amended Public Service Obligation or through the reservation of slots for regional services.

Effectiveness of the Route Development Fund

Ulster Unionists welcome the new air routes established with the assistance of the Air Route Development Fund and support the Fund’s intention of providing start-up funding for new routes. This relatively new initiative will require ongoing value-for-money assessment.

The Potential Impact for Northern Ireland of Wider Air Transport Issues on the Island of Ireland

As noted above we believe that there is the potential for the number of passengers in Northern Ireland airports to increase by between 5% and 15%. Dublin Airport presently has a number of competitive advantages. It oVers an extensive range of direct air services to European and North American destinations; travel time from Belfast has been considerably reduced; access by coach service has been greatly improved and business beneﬁts from the Republic’s low Corporation Tax rate and reduced VAT rate on tourist services. Consideration must be given as to how best to compete with Dublin Airport. It may be necessary in order to achieve critical mass and given the small geographical catchment area in Northern Ireland to focus air transport activity in Belfast International Airport, a model recently adopted by Germany in the development of Berlin’s main airport. September 2004 3022631039 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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APPENDIX 2

Memorandum submitted by Councillor Ken Robinson MLA In response to the Northern Ireland AVairs Sub-Committee: Air Transport Inquiry I should like to submit for your consideration the following comments: 1. The maintenance of the Belfast to Heathrow link is absolutely vital to the economic welfare of N Ireland and for the total inclusion of its citizens. 2. The provision within the UK and Global air network of a sustainable link between Belfast and Brussels is also vital if N Ireland is to play a full part in the economic and social integration of an expanded EU. 3. The further expansion of Belfast City Airport is a vital component to the growth of domestic air travel. The proximity of this airport to the centre of Belfast is a huge selling point for business travellers from within the UK and should be developed in a more coherent manner with additional input from bodies such as DETI, IOD, INI, CBI etc being involved in maximising this advantageous location. 4. The expansion of the direct flight opportunities from Belfast International to holiday destinations is to be welcomed. The encouragement oVered to these operators to widen the range of European destinations should be encouraged. This would attract back many of these “package” type flights which currently are forced to use Dublin Airport and this unnecessary practice consequently inhibits future potential growth at Belfast International. 5. A serious drive should be made to attract and sustain a cross Atlantic service from Belfast which could target a NE city in the USA or a Canadian hub airport such as Toronto. If properly marketed this could enable those travellers who currently are forced to disperse to Dublin, Manchester and the London airports to be encouraged to begin their cross Atlantic journeys directly from Belfast. This has a two-way tourist market potential if a regular and convenient flight pattern could be established. The involvement of the Route Development Fund in pursuit of this objective could make a significant diVerence. 6. Generally improved air traYc links from the Belfast Airports have the potential for breaking the psychological barrier which condemns N Ireland to be viewed as peripheral in terms of the UK, EU and cross Atlantic air travel. An opportunity to think outside that box exists in this Inquiry which, I trust, will lead to a coherent and comprehensive expansion of sustainable routes. If I may comment on a related matter ie the continuing high costs associated with ferry travel on the Irish Sea routes, which is leading to a steady move away from surface travel towards air travel within the UK domestic market. While this inquiry is charged with investigating matters aVecting air transport I feel these two forms of transport cannot easily be separated when forecasting future trends. It may be beneficial to the sub-committee if, in their deliberations, they consider the trends within both these forms of travel between Northern Ireland and the rest of the Kingdom. 13 August 2004

APPENDIX 3

Memorandum submitted by Billy Armstrong MLA There can be no question of the importance of air travel for business and tourists and the fact that nearly 5 million passengers used the three main airports in Northern lreland illustrates the importance of air travel to the province. In the last 10 years overall traYc has almost doubled.

Belfast International Airport This is the main airport and handles the largest number of passengers (3.6 mppa) and since its opening in 1963 has undergone major investment and is now one of the most modern airports in Europe. It currently handles 103,000 Domestic and International flights per year and has the capacity to handle up to 6.5 mppa, has plenty of land and is also convenient to Belfast and the rest of Northern Ireland. The focus of our attention should be on the Belfast international Airport and the need for European connections. The International Airport used to have direct scheduled flights to Amsterdam and Brussels; unfortunately neither of these routes is now in operation. In recent years we have seen the introduction of no- frills airlines introducing flights to Amsterdam and Prague. A scheduled flight into a European hub would be infinitely preferable and the question does the demand justify the supply? It is interesting to note that nearly 80% of Belfast International Airport’s scheduled service capacity is produced by low cost airlines. Internet Communications, enlargement of European Union and a general move towards international trading has meant local companies must have the opportunity and facilities to market exports on a global basis. The International Airport should capitalise on strong ties with North America and oVer a gateway 3022631040 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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to the 370 million people in Europe. No other region in the UK has poorer connectivity to major European Airports than Northern Ireland and the lack of convenient air services from the rest of Europe means that Northern Ireland is missing out on the short break tourist. It is vital that Northern Ireland’s future access to Heathrow Airport is protected, and no further erosion takes place, since 2001 the number of daily flights has fallen from 15 to 8. The importance of Heathrow for many business and leisure travellers is that it provides a gateway to the world, unrivalled by any other UK airport and must be maintained and secured for the long-term. Any further cutbacks in the Heathrow services will mean that customers will be forced to consider alternatives and consider travelling to Dublin Airport and flying direct to any destination in the world. Belfast International Airport is the only European International Airport, which does not have a rail link from the airport to city centre, and one has to look at other regional airports in the UK, which have metros and proper rail links. I am concerned that in the Regional Development Plan that no provision was made to include the possibility of extending a rail link from Templepatrick to the International Airport, which is only four to five miles away and this would have provided a fast and eYcient service for passengers and helped reduce traYc congestion.

Belfast City Airport This airport is certainly centrally located on the main arterial road into Belfast, in a densely populated area, handles 1.3 mppa, and operates a mainland service from traditional scheduled airlines. The Belfast City Airport due to its location has restrictions on total number of flights and the number of late flights. There is a concerted eVort to push forward the case for expending Belfast City Airport but before any decision is reached full account must be taken of residents’ concerns about safety, noise and extension of hours for flights to land after 9.30pm.

City of Londonderry Airport It is certainly important to maintain an airport to serve the North-Western part of Northern Ireland and extending into Donegal and West of Ireland. The airport will require major expansion to terminal and extension to runways to accommodate more medium haul ﬂights. Strong opposition from local residents and genuine concern about more ﬁnancial assistance from public funds. 19 August 2004

APPENDIX 4

Memorandum submitted by Dr Esmond Birnie MLA

Introduction Northern Ireland needs to create a sustainable air strategy with a specific regional identity and market focus. This should create maximum economic benefits and address the peripheral nature of the Province whilst allowing for the social costs generated by airport activity. The number of passengers using domestic services has grown substantially in recent years and this sector continues to dominate despite growth in the volume of international traYc. We need to improve direct services avoiding London in order to increase tourism while maintaining regular daily flights to London and other key commercial European cites for the busy business traveller. We are only capturing some of the benefits, others are leaking away to the Republic of Ireland or not being created at all. A sustainable long-term strategy for Northern Ireland means finding the right balance between benefits and impacts, and determining how impacts on people living close to airports, the built and natural environment and surface access infrastructure and services might be mitigated and managed. This submission should be considered as complementary to one by the Ulster Unionist Party as a whole. I attempt to deal with the four main items listed in your letter of 29 July though my concentration is on the subject of most particular concern to the Belfast constituencies; the growth in traYc at the City Airport relative to the International. My conclusion is not necessarily that the International be the sole airport serving the entire Province but certainly most growth in passenger numbers should be concentrated there. There are three main reasons for this: — The avoidance of risk and disamenity in terms of over-flights in the most densely populated part of Northern Ireland. 3022631041 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

Ev 154 Northern Ireland Affairs Committee: Evidence

— Achieving the necessary critical mass at the International Airport allowing it to better compete with Dublin. — Reduction in strain on the already heavily congested roads network through central Belfast.

The Development of Capacity at existing Airports Lately there has been a concerted eVort to push forward the case for expanding Belfast City Airport. It has been argued that there is consumer demand and that such a development would benefit the Northern Ireland economy as a whole—a case yet unproved. Local residents in parts of South and East Belfast and North Down are concerned by the prospect of further development at Belfast City Airport. Belfast City Airport is already a source of noise pollution; is responsible for increased road congestion in the Belfast conurbation and has placed significant numbers of people at some level of risk under its flight path. For local residents on the flight paths at Belfast City Airport, aircraft noise is a problem. Both the total number of flights and the number of late flights have recently increased sharply. It is a stronger economic and social argument to foster and develop Belfast International Airport which is fortunate to be in open country, easily accessible to all and capable of development without environmental problems. In detail: 1. Belfast City Airport has been allowed to develop as a competitor to Belfast International Airport but has now reached a scale that if it wishes to develop any further changes will have to be made to current planning controls. In almost no circumstances should the present planning controls and restrictions be relaxed. 2. Belfast City Airport operates under a Planning Agreement that imposes a series of limitations on the way the airport operates—airport operating hours (operative services between 6.30 am and 9.30 pm), air traYc movements and air flight paths (the maintenance of the present bias in favour of the main flight path over Belfast Lough). 3. The Department for the Environment in Northern Ireland has always recognized that growth at the Belfast City Airport creates problems for its environment and a Public Inquiry was set up to consider objections to the Belfast Harbour Local Plan 1990–2005 which included objections to the growth of Belfast City Airport. After a lengthy Public Enquiry which opened on 23 October 1990 and closed on 14 January 1991, a Report was published setting out the findings of the Commissioner who presided over the Enquiry and his Report was endorsed by the Planning Appeals Commission in Northern Ireland. Subsequently, the Department for the Environment in Northern Ireland accepted the recommendations of the Planning Appeals Commission in their Adoption Statement 1991. Both the Report and the Adoption Statement 1991 clearly recognized that because of its situation in a city setting only 2° miles from the City centre there had to be operational and environmental constraints on the future growth of Belfast City Airport. 4. Belfast City Airport has been classified as a “City Airport” by European Directive 2002/30(EC). It is recognized by that Directive that any increase in noise at a “City Airport” will give rise to particular high annoyance. 5. Belfast City Airport has now reached a scale where it is in breach of the prescribed and acceptable noise levels. Recently commissioned acoustic research by Kinnegar and Cultra residents shows that: — The average noise level at Kinnegar is 3DB outside that allowed by the 1991 Planning Enquiry. It is therefore highly likely that the average noise in parts of South Belfast also requires to be measured. — The maximum noise in at least one East Belfast School, Mersey Street Primary exceeds World Health Authority guidelines and BB98. This has serious implications for local educational authorities, in terms of statutory responsibility and likely claims. — The maximum noise in bedrooms in Kinnegar exceeds PPG 24 levels. — There is concern about the eVect of noise on the quality of life of many people living under the approach and or departure flight paths of Belfast City Airport. 6. Belfast City Airport’s curfew on flights from 9.30 pm to 06.30 am has to be retained and protected. Local residents have consistently complained about aircraft noise after 9.30 pm. It is estimated by local residents that approximately 50 flights every month breach the night time flying curfew. In no circumstances should this curfew be relaxed. 7. Belfast City Airport is located on the main arterial road into Belfast from the south and east. The road is already congested and as house building and commercial development is continuing in North Down, can only become more congested. Increased usage of the airport would be a major issue for commuters using the Sydenham bypass, as it will come on top of additional traYc generated by the D5 development. Any increase in activity at Belfast City Airport is likely to force significant public expenditure on road improvements at the expense of other public spending priorities. 3022631041 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

Northern Ireland Affairs Committee: Evidence Ev 155

8. It is understood that the West Link Public Enquiry was told that any new capacity created in terms of widening that urban motorway would be ﬁlled up again by growth in traYc within a fairly short space of years and that dedicated freight lanes are needed to avoid strangling the Ports of Belfast and Larne. To allow Belfast City Airport to take up additional capacity would render pointless substantial public expenditure. 9. Belfast City Airport might seem more convenient for some living and working in East and South Belfast for the other two-thirds of the Northern Ireland population, who can get to the City Airport, (particularly those wishing to connect to the London, Heathrow hub) only by using the West Link, M2 or other congested commuter routes it is often not the case—a point acknowledged by a number of Northern Irelands biggest employers. 10. There is dense residential property, commercial property and approximately 39 schools right on the edges of Belfast City Airport and which are being over ﬂown at very low heights. 11. Among local residents there is concern about the economic eVects of any increased aircraft noise on house values. 12. Belfast International Airport should be our focus for regional development because it has virtually no surrounding population, two runways, plenty of land and accessed by roads which are not essential parts of Belfast conurbation roads system. 13. Belfast International Airport was carefully and deliberately located in open countryside convenient to Belfast after a selection process about forty years ago which considered and then eliminated the Shorts factory site which is now know as Belfast City Airport. Belfast International Airport has received around £50 million of public money. 14. There is no further need for competition between Belfast City Airport and Belfast International Airport. Dublin is already providing all the competition that is needed at airport level and competition between airlines is well developed.

Specific Challenges Facing Northern Ireland on a Peripheral Region of the UK

Considerations should be: 1. The population of Northern Ireland is around 1.7 million, of whom around 4,000 are employed directly in the aviation industry. 2. Northern Ireland’s has a small catchments population and limited tourist inﬂow. Furthermore, the situation is made more diYcult given that both airports are only 16 miles apart and compete to attract carriers to the same destinations. 3. Northern Ireland has a small domestic market and relies on exports to create economic activity and employment. 4. Northern Ireland urgently requires more direct scheduled services to European Business destinations. Having frequent air services would assist local business in trading outside Northern Ireland and help attract foreign direct investment. 5. A priority for Northern Ireland’s airports should be to continue to develop and encouraging sub/core air transport hubs with the UK mainland, the rest of Europe and North America. In particular, Belfast International Airport should be urged to seek new services particularly to Germany, Geneva and US. Direct scheduled ﬂight to Brussels should, ideally, be re-introduced.

Effectiveness of the Route Development Fund

Considerations should be: 1. The fund seems to have been a success on the surface—recently attaching a number of new routes to Europe from Belfast International Airport—which is welcomed. 2. The dangers of over reliance on “low cost” airlines given their tendency to move when ﬁnancial incentives end. 3. The Government should be encouraged to release future funding when required. 4. The diYculty of attracting passengers arriving at Belfast City Airport from Heathrow to transfer to Belfast International for any new transatlantic service. 3022631041 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

Ev 156 Northern Ireland Affairs Committee: Evidence

Potential Impact for Northern Ireland of Wider Air Transport Issues on the Island of Ireland Considerations should be: 1. It is estimated that between 5% and 15% of air passengers originating in Northern Ireland choose to travel from airports in the Republic of Ireland. 2. Northern Ireland’s airports are at a disadvantage compared to the Republic of Ireland because of RoI’s low Corporation Tax rate, individual member state in the EU and a reduced VAT rate on tourist services. 3. Dublin Airport has pre-emptily developed an extensive range of air services to direct European and North American destinations. 4. The completion of the Dundalk by-pass has reduced the time from Belfast to Dublin to around one hour and 15 minutes. Improved coach services have also increased the number of Northern Ireland passengers using Dublin Airport. 5. Perceived congestion and security risk associated with transiting through Heathrow and other London airports have encouraged passengers from Northern Ireland traveling from Dublin. 6. Dublin Airport and the Republic of Ireland Government encouraged and maximized the economic beneﬁt of concentrating nearly all air transport activity at one airport. This is a pattern recently adopted by Germany in the development of Berlin’s main airport. 7. Given the small geographical catchment area and population size of Northern Ireland there is certainly an economic argument for concentration on just one airport. 8. Northern Ireland is likely to share in the very rapid growth in overall UK air passenger numbers envisaged for the 2000–30 period. Consideration should be given as to how this might be reconciled with certain national and regional environmental objectives (notably in terms of carbon emissions).

Conclusions Aviation is very important to economic development and helps reduce the peripherality of Northern Ireland. Northern Ireland is fortunate in that it may not have to make as stark a choice between economic activity and the environmental problems caused by airport expansion as that faced in other UK regions. This is because it has a major airport, Belfast International, with virtually no surrounding population, two runways, plenty of land and accessed by roads which are not essential parts of Belfast conurbation roads system. Therefore, there is no little justification for intensification of use at Belfast City Airport which is located only 16 miles away and in a densely populated residential area. Local residents on the edges of Belfast City Airport including those living in my constituency, South Belfast, feel that Belfast City Airport is a major source of noise pollution, is responsible for road congestion in the Belfast conurbation and has placed significant numbers of people at some level of risk under its flight path. Therefore, here is no need to change the current planning restrictions at Belfast City Airport.

APPENDIX 5

Memorandum submitted by Antrim Borough Council Antrim Borough Council welcomes the opportunity to contribute to the inquiry into Air Transport Services in Northern Ireland. It is acknowledged that this is a very complex matter. However, it has been agreed by Council to contribute to the inquiry and a few matters of general considerations are noted below. The Council would commend the recent performance of airport management in developing the range of international destinations available. This is a very positive contribution to the social and economic well- being of the region. There is a need, not least in the interests of equity, within the developing community of Northern Ireland to ensure that access to services and opportunities are no more diYcult than for other parts of the UK. In particular air travel and access to it can play an important role in supporting social and economic development within the region. Existing as a peripheral region of the UK, and indeed Europe, Northern Ireland has to address certain diYculties or constraints that can add costs to doing business in an international marketplace. Improved accessibility to aVordable air travel can help address some of the more negative factors for business and the wider community. Increased physical capacity should be primarily focused on Belfast International Airport given its current location, land availability, planning designation and positive environmental attributes. Support for route development should continue only in circumstances where it contributes to the growth in air travel in the medium- to long-term. It should not be continued if it results in dilution of capacity as this could be 3022631042 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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counterproductive in the long run. Continued development of more international destinations from Belfast International Airport can also contribute positively to UK air travel generally by relieving pressure on other main hubs such as Heathrow. Given that air travel must have a reasonably well deﬁned growth ceiling for Northern Ireland, largely due to population size, it would appear to be more eVective to optimise growth potential by creating the most attractive facilities and travel experience at one main centre. To do otherwise may dilute concentration of eVort with consequentially reduced socio-economic impact and under achievement for the region as a whole. Growth at Belfast International Airport therefore would seem to be the most sustainable, medium- to long- term option for Northern Ireland air travel. In developing air travel facilities, regard should be given to the needs of supporting infrastructure for modern travel. Integrated transport arrangements should provide for increased capacity, comfort and accessibility. This may require upgrading road links to dual carriageways or motorways servicing main urban centres, speciﬁcally the greater Belfast area. It may also be necessary to improve direct rail links to Belfast and the northwest. Steps should be taken to increase the priority given to upgrading existing road links currently on the reserve list in the Department of Regional Development 10-year plan. To improve the supporting infrastructure is particularly important if Belfast International Airport is to be able to compete with Dublin airport, which has become more attractive due to improvements in its supporting infrastructure and consequential reduction in travel times. 30 September 2004

APPENDIX 6

Memorandum submitted by the Royal Society for the Protection of Birds

Summary — The RSPB acknowledges that whilst aviation has economic and social beneﬁts, it can and does have many widely recognised adverse eVects on the environment, at both a local and global level. — These adverse eVects mean that it would be misguided to use estimates of unconstrained demand to support a simple “predict and provide” policy. — We believe that aviation-related emissions must be checked unless they are tc swamp the UK’s other climate change measures. We therefore seek a UK emissions charge. — The RSPB also believes that growth in aviation transport should be constrained by using economic instruments to reduce demand, and providing insuYcient capacity to meet demand. — We advocate that future decisions on the development of Northern Ireland’s airports must address options that avoid impacts on biodiversity, especially those internationally protected wildlife sites in close proximity to Belfast City and Derry airports. — In the event of proposed development that could aVect designated sites, we highlight the legal justiﬁcations necessary to satisfy the requirements of the Habitats Regulations.

1. Introduction 1.1. The Royal Society for the Protection of Birds (RSPB) is a wildlife conservation charity supported by a subscribing membership of over 1 million people, of whom more than 10,000 live in Northern Ireland. We seek to inﬂuence society, including Government, to encourage the adoption of environmentally sustainable policies which embrace economic, social and environmental objectives. Conservation of biodiversity is regarded as a key test of sustainability. We seek to ensure that our views are informed by sound scientiﬁc understanding and policy analysis.

2. Policy 2.1. The RSPB recognises that during the 20th Century, the growth in aviation contributed beneﬁcially to the economic development and social life of the UK. This is particularly true in Northern Ireland where there is a high propensity to ﬂy, explained by the high level of migrant workers originating in the province and the poor surface access links with other parts of the UK. 2.2. However, this growth was not without considerable cost to the environment at both local and global levels. Widely accepted adverse impacts include: (i) climate change; (ii) local pollution—both noise and decreased air quality caused by aircraft and also by associated ground transportation; and 3022631043 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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(iii) site based loss in the area and quality of wildlife habitat due to airport construction and related infrastructure, and associated disturbance. 2.3. At the start of the 21st century, we believe the case for further growth in aviation to be questionable; the marginal economic and social beneﬁt of additional growth in aviation is outweighed by its environmental and social costs and, indeed, the economic implications of addressing these costs. Authoritative bodies such as the Royal Commission on Environmental Pollution10 and the House of Commons Environmental Audit Committee11 share this analysis. 2.4. We have considered the key policy issues under the following headings: (i) Aviation emissions, (ii) Growth constraint, and (iii) Meeting residual demand.

Aviation emissions 2.5. According to the Government’s own statistics12, if aviation growth continues unconstrained and the UK’s target of a 60% cut in carbon dioxide emissions by 2050 is met, then aviation emissions could account for 20–25% of all UK emissions by 2050. This ﬁgure does not take into account the fact that emissions from aviation have a 2-4 times greater eVect on global warming than carbon dioxide emitted at ground level. If the Department for Transport’s unconstrained aviation growth forecasts are anywhere near correct, aviation emissions wili wreck the eVects of the UK’s other climate change measures. In the next 10 years, the eVect of renewable energy development will be swamped by the increase in aviation emissions, unless these are checked. 2.6. In the aviation White Paper13, the Government recognises the impacts of aviation on climate change but proposes no immediate solution. They rightly identify emissions trading as a long-term solution but state this could not start before 2008 at the earliest. Whilst international emissions trading should be the ultimate objective, it may take time to achieve. In the meantime, other instruments should be used starting with a UK emissions charge, moving towards an EU emissions charge and then an EU emissions trading scheme. This approach will lead to increasing geographical coverage, economic eYciency, time-scales of implementation and ultimately, a real chance to mitigate the climate change impacts of aviation. A UK emissions charge is administratively feasible and should begin immediately.

Growth constraint 2.7. The RSPB advocates two main policies in order to address the environmental impacts brought about by the growth in aviation transport: (i) economic instruments should be introduced to ensure that aviation meets its environmental costs and (ii) airport capacity should not be increased to meet unconstrained demand. 2.8. UK Government models suggest that demand is very price sensitive yet, unlike other transport sectors, aviation attracts little or no tax. According to the Government’s own analysis, simply holding prices constant would halve forecast demand for aviation14. Therefore, the RSPB believes demand should be constrained by the use of economic instruments so that airfares are at least held constant and, if necessary, increased. 2.9. The second method to manage demand is to constrain provision. The RSPB was disappointed that the Government in its White Paper, in eVect, adopted a “predict and provide” policy towards the provision of new capacity, having rejected the suggestion that it would do so in its consultation document15.Inthe event, the Aviation White Paper signalled Government’s intention to provide for 47mppa of the forecast demand of 500 mppa by 2030.

Meeting residual demand 2.10. Where there is residual demand, the Government should demonstrate that all alternative ways to meeting constrained future air travel demand in Northern Ireland have been exhausted before embarking on incremental additions to capacity. This would be done using an iterative approach: (i) Deﬁne unconstrained demand. (ii) Introduce ﬁscal measures to reduce demand. (iii) Increase capacity on alternative transport modes.

10 Royal Commission on Environmental Pollution (2002) The Environmental EVects of Civil Aircraft in Flight: Special Report. RCEP. 11 House of Commons Environmental Audit Committee Pre-Budget Report (2003) Aviation Follow-up. Third Report of Session 2003–04. Volume 1. 12 Source: response by Mr Morley. House of Commons Written Answers 25 Feb 2004: Column 409W. 13 The Future of Air Transport (2003) Department for Transport. 14 Sewill, B (2003) The Hidden Cost of Flying Aviation Environment Federation. www.airportwatch.org.uk/publications/Hidden%20Cost%20Final.doc 15 Paragraph 5.2 in The Future Development of Air Transport in the UK South East: consultation document—second edition (2003) Department for Transport. 3022631043 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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In Northern Ireland, this would be principally improved rail links between the urban centres, the airports, and with the Republic of Ireland. The RSPB believes that steps i-ii may prove adequate to meet constrained demand within existing capacity, and should be applied before embarking on incremental additions to existing airport infrastructure. However, should Government determine further capacity is required, then the following process should be followed in decreasing order of desirability: (iv) Make best use of existing facilities, accompanied by increased investment in measures to mitigate impacts of noise and aircraft emissions on people. (v) Adoption of new technology to increase the eYcient use of the current airport estate (eg air traYc control, wing design to reduce air vortexes and reduced landing separation). (vi) Additions to the existing airport estate (eg additional taxiways, runway extensions and additional terminals and runways). The RSPB considers no additional runway capacity should be provided in Northern Ireland. As the aviation White Paper states, Belfast International “has adequate space within the airport boundary to serve the whole of the forecast demand and well beyond”.

3. Implications for Biodiversity Conservation and Protected Wildlife Sites 3.1. In our experience, aviation and airports can aVect protected sites and species. The RSPB manages reserves at Belfast Lough and Lough Foyle. In respect of the latter, proposed airport developments led to the RSPB’s decision to undertake a judicial review of the Department of Environment’s (“DoE”) decision to grant planning permission for a runway-end safety area. 3.2. Potential impacts on biodiversity can be direct or indirect. Examples include: (i) Direct land-take associated with airport construction and associated service and transport infrastructure. (ii) Measures to reduce the risk of bird strike (eg habitat modification such as sward management, and disturbance including bird scaring). (iii) Local impact of emissions (eg impact on pollution sensitive species such as lichens, and eutrophication of nutrient poor habitats such as heathland). (iv) Local hydrological impacts due to increased demand on water resources. (v) Land-take by associated development, such as ancillary commercial development. 3.3. In this section, we outline the main legal and policy framework that applies to the assessment of the eVects on statutorily designated nature conservation sites of airport development. 3.4. Under national and international wildlife legislation the Government has legal responsibilities to conserve and enhance certain sites that are of recognised importance for their wildlife. The most important sites for wildlife are those designated as being internationally important for birds as Special Protection Areas (“SPAs”) under the EU Directive on the conservation of wild birds 79/409/EEC (the “Birds Directive”), for other species and habitats as Special Areas of Conservation (“SACs”) under the EU Directive on the conservation of natural habitats and of wild fauna and flora 92/43/EEC (the “Habitats Directive”), and under the “Ramsar Convention” on Wetlands of International Importance. Nationally important sites are Areas of Special Scientific Interest (“ASSIs”) notified under the Nature Conservation and Amenity Lands Order 1985, as amended. 3.5. SPAs and SACs together form an EU-wide network of sites of European nature conservation importance known as Natura 2000. It is Government policy, as set out in Planning Policy Statement 2 (PPS2), to aVord Ramsar sites the same level of protection as SPAs and SACs. Key protective provisions in respect of SPAs, SACs and Ramsar sites are set out in the Habitats Directive. Articles 6(2) to 6(4) set out the main protection regime that must be applied to SACs. This regime also replaces that which previously applied to SPAs under the Birds Directive. 3.6. The protective regime of Articles 6(3) and 6(4) of the Habitats Directive is transposed into Northern Irish law through the Conservation (Natural Habitats, etc) Regulations (Northern Ireland) 1995 (the “Habitats Regulations”). Regulations 43, 44 and 48 set out the main tests that the DoE, as the competent authority, would have to apply to any plan or project likely to have a significant and (if applicable) adverse eVect (or risk of this) on an SPA and/or SAC. As stated above, it is Government policy that the same protection be aVorded Ramsar sites. The main tests can be summarised as follows: (i) Following the completion of an appropriate assessment, can it be ascertained that the plan or project will not have an adverse eVect on the integrity of the site, subject to any conditions or restrictions necessary? (ii) If not, are there any less (ecologically) damaging alternative solutions to the plan or project? (iii) If not, must the plan or project be carried out for imperative reasons of overriding public interest? 3022631043 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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(iv) If it is decided that no alternative solutions exist and that there are imperative reasons of overriding public interest, the Secretary of State must secure the necessary compensatory measures to ensure the overall coherence of the Natura 2000 network is protected. 3.7. The tests set out in Regulations 43, 44 and 48 are extremely strict as they concern the protection of sites that are of recognised international importance. Relevant eVects on a site may be direct (eg direct loss of habitat) or indirect (eg eutrophication due to increased nitrogen dioxide emissions or bird hazard management measures). They may also arise from operations outside the boundary of a site eg changes to drainage systems. The extent to which any such eVects can be removed or reduced by mitigation measures will vary. 3.8. Where it is not possible to conclude there will be no adverse eVect on a site, it is necessary to consider whether there are alternative solutions. European Commission guidance16 states that this must examine whether there are alternatives to the plan or project that better respect the integrity of the site in question ie are there alternatives that are less damaging to the SPA, SAC or Ramsar site? Such alternatives could include diVerent designs, locations or even policy approaches that meet the public interest objectives of the plan or project. 3.9. If no such alternatives exist, it would then be necessary to assess whether there are imperative reasons of overriding public interest (IROPI). The grounds for derogating from the protective provisions of the Habitats Directive must be exceptional and not every kind of public interest will be suYcient when weighed against the objectives of the Directive. 3.10. Finally, if the DoE considers that all these tests have been passed, it is under a further duty to ensure habitat compensation is provided so that the overall coherence of Natura 2000 is protected. It would be necessary to have legal and ecological certainty that such habitat compensation could be secured. 3.11. Additionally, there is a duty on the Government under Article 6(2) of the Habitats Directive to take appropriate steps to avoid deterioration of habitats and habitats of species as well as significant disturbance of species for which an SPA or SAC has been designated. While Article 6(2) has not been directly transposed in to Northern Irish law, the Government must have regard to it by virtue of Regulation 3(4) of the Habitats Regulations. 3.12. In respect of nationally protected sites, the Government has a duty under Article 38 of the Environment (Northern Ireland) Order 2002 to take reasonable steps to further the conservation and enhancement of the flora, fauna, geological and physiographical features for which an ASSI has been designated. This duty applies to all ASSIs and is in addition to those duties described above in respect of ASSIs also designated as SPAs, SACs or Ramsar sites. 3.13. These are the justifications that the RSPB would expect to apply, as appropriate, to the consideration of proposed aviation developments with the potential to aVect European or nationally designated sites.

4. Airports in Northern Ireland 4.1. This section outlines the nature conservation implications of expansion at the three airports in Northern Ireland, having regard to the conclusions drawn in the White Paper.

Belfast International 4.2. Belfast International holds a market share of around 65%, handling just under 4 million passengers in 200317. It beneﬁts from unrestricted 24-hour operations. The Government stated in the White Paper that they support “the development of the airport within the existing airport boundaries to serve the forecast passenger and freight demand in full, subject to consideration of any local environmental impacts”. The RSPB does not consider that the operation of this airport has signiﬁcant impacts on the biodiversity or protected sites of the area.

Belfast City 4.3. Belfast City has a market share of 32%, with restricted opening hours18. There is currently a very high level of competition with Belfast International. Resulting discounts on landing charges have been oVered at City, which incurred a substantial loss of £2.6 million in 2002–0319. 4.4. The White Paper states that the Northern Ireland authorities are invited to review the form of the current planning agreement which restricts aircraft movements and passenger numbers, if they are so requested by the airport operator. The RSPB identiﬁes no particular impacts on biodiversity under existing planning restrictions. The impact of lifting the planning cap is unknown, but could lead to pressure for

16 Managing Natura 2000 sites: the provisions of Article 6 of the Habitats Directive 92/43/EEC (2000) EC. 17 Source: CAA statistics. 18 Source: CAA statistics. 19 Source: Annual Report and Accounts lodged with Companies House. 3022631043 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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additional or extended infrastructure which, given the airport’s proximity to designated sites, could result in direct or indirect eVects on those biodiversity interests, eg habitat loss through expansion, or disturbance to birds through an intensiﬁcation of bird hazard management measures.

City of Derry 4.5. The application for the runway-end safety area at City of Derry airport (see paragraph 3.1 above) has already illustrated the problems of airport development near sites protected for their bird interest. The RSPB is aware of other possible runway extension proposals and has concerns over potential impacts, both the immediate footprint of the development and the eVects of intensified bird scaring measures as a result of more, or larger, aircraft. 4.6. City of Derry airport is a peripheral player, currently commanding just 3% of the market20.It incurred significant operating losses in each of the three financial years 1999–2000—2001–0221. The White Paper is rightly more neutral in respect of City of Derry airport. While recognising the role of the airport in facilitating access to the northwest, the report suggests that Northern Ireland authorities will want to give early consideration to the airports future infrastructure requirements carefully, in conjunction with the Government of the Republic of Ireland and that all developments will need careful environmental assessment (paragraphs 7.5 and 7.14).

Conclusion 4.7. Developments at Belfast City and City of Derry Airports should be subject to the tests outlined in paragraph 3.6, given the likely signiﬁcant eVect on internationally important protected wildlife sites. Developments determined to have an adverse eVect on the SPA’s concerned may not pass the “alternatives and IROPI tests”, given that Belfast International appears to be an suitable alternative to both Belfast City and City of Derry Airports. September 2004

APPENDIX 7

Memorandum submitted by InterTradeIreland InterTradeIreland appreciates the invitation to respond to a request for evidence by the Northern Ireland AVairs Committee. We welcome the inquiry, led by the SubCommittee, into air transport services in Northern Ireland. InterTradeIreland agrees that air transport is of growing importance to future economic development and can be a key catalyst for economic growth. Although transport infrastructure is not an area which comes within our current legislative remit, we welcome the opportunity to raise some issues which we believe have an important “all-island” dimension and we commend the Committee’s foresight in recognising the cross-border dimension to this important subject. InterTradeIreland’s strategic mission is to enhance the global competitiveness of the all-island economy particularly through the development of collaborative, knowledge intensive all-island trade and business development networks. In 2003 InterTradeIreland published a report—Developing All-Island Air Services on the Island of Ireland. The report was carried out with the cooperation of an advisory committee comprising representatives from the air transport industry drawn from both Northern Ireland and the Republic of Ireland. The report highlighted the then limited availability of cross-border air services within the island of Ireland as a signiﬁcant gap in the range of transport facilities of vital importance to cross-border business development. The report identiﬁed three new cross-border routes that had demand potential, depending upon timings and frequency, for point to point and interlining traYc. These were: Belfast–Dublin, Belfast–Cork and Belfast–Shannon. The potential for interlining at Dublin relates not only to international travel to mainland Europe and North America but also to “mini-hubbing” within the island. Subsequent to the launch of the report, services on two of these routes were introduced, Belfast–Dublin and Belfast–Cork. The Belfast–Dublin service was withdrawn, prematurely in our view, but the Belfast–Cork service is enjoying a high load factor. Given the two Governments’ commitment to developing cross-border trade and business development on this island, InterTradeIreland would encourage a joint “island dimension” to be recognised when responding to important international issues such as the European Commission’s proposals for a Single European Skies policy and also the proposals for an EU/US open skies agreement. Taken in this context

20 Source: CAA statistics. 21 Derry City Council Financial Statements for years ending 31 March 2001 and 2002. 3022631044 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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the reference to “cross-border leakages” in the UK White Paper on the Future of Air Transport (chapter 7 on Northern Ireland) is perhaps archaic. We do however support the conclusion contained in this paper that the City of Derry Airport is important to the development of the wider North West economy. Finally, with regard to the implications on the island of the Open Skies proposals, InterTradeIreland is aware of an ongoing study commissioned by the Chambers of Commerce of Ireland which is investigating the eVects of the EU Open Skies Policy on Ireland’s airports, airlines and consumers. We are informed that this study is taking an all-island perspective and will be published in November. 30 September 2004

APPENDIX 8

Memorandum submitted by London Redhill Airport London Redhill Airport would like to address the second bullet point, relating to the problems facing Northern Ireland as a peripheral region of the UK, and suggesting that the Committee may wish to address in more detail the associated issue of runway capacity in South East England. We believe that if this issue is left unresolved for 15 to 20 years as is highly probable under the current Aviation White Paper proposals, it is inevitable that more and more UK regions will either have their frequency of air services to London reduced or lose them altogether. This is the most critical air transport issue facing the UK regions today. The purpose of the recent White Paper on Aviation was to solve the current and increasing crisis in runway capacity in particular the London area. We believe that the recommendations of the White Paper are too little, too late and partly in the wrong location. Your Committee will be aware that the solution favoured by the Department for Transport is agreement for BAA to seek planning permission for one extra runway at Stansted by 2011–12, and one new short runway at Heathrow between 2015 and 2020. If the Heathrow proposal fails to meet environmental concerns, it could be replaced by planning permission being sought for a second runway at Gatwick “after 2019”. A speech by BAA’s Chief Executive Mike Clasper to the Institute of Logistics and Transport earlier this year acknowledged that Stansted would not be ready until 2014 at the earliest. Many privately believe that it will take longer, and some that it may never be built. Some of the major UK airlines are actively lobbying against the development of a runway at Stansted, a runway which would do very little to enhance regional air accessibility to the UK’s major hub airports, Heathrow and Gatwick, and to London and the Southeast generally. Thus, while demand continues to increase, the capacity to serve it will not. The pressure that this will place on existing runway capacity will be enormous, and the first victim is regional air access to London and the SE, as the smaller, regional aircraft are forced out of London’s airports by larger and more profitable services. This process is well under way now (Heathrow has lost over half its regional services and Gatwick has also lost services whilst others cannot be developed or increased in frequency due to lack of appropriate runway slots). As an example British Airways pulled out of the London Heathrow Belfast route to use the slots for other more lucrative routes after over 50 years service. Without new runways or slot protection, which the Government seems to disfavour, more regional routes will be lost over time. It is worth noting that if PSO slot protection is introduced, particularly for a third runway at Heathrow, such slot protection will have the eVect of lowering the income to the Airport Operator, and thereby its ability to fund the runway. London Redhill Airport is a privately owned and managed airport, totally independent of the BAA, which operates just four miles north of London Gatwick Airport. Detailed plans have been put before the Department for Transport to upgrade the current grass runway into a reliever runway for Gatwick, the two terminals linked by a short stretch of dedicated rail track, while the airport itself will be linked to the adjacent M23 by a short spur. The proposed 2,000 metre runway at London Redhill Airport, with full parallel taxiway, would enable short and medium haul jets to operate up to 250,000 air transport movements a year, and could be in operation within four years of planning approval. It is intended to find a mechanism whereby a significant number of these “slots” can be reserved for domestic regional scheduled routes. Not only will this runway provide links to central London by road and rail as good as those already enjoyed by passengers to London Gatwick, but the direct rail link between the Redhill and Gatwick airports will be frequent and fast, and oVer onward connections as quick as those today between the two separate terminals at Gatwick. This will be at no cost to the taxpayer. The Future of the Air Transport White Paper neither supported nor discounted the development of Redhill. It said that in the “absence of evidence to prove or disprove Redhill’s contentions, we remain unconvinced that development of Redhill would be a feasible proposition”. The Government’s reservations were based on unsubstantiated concerns expressed by NATS and the CAA about ATC and airspace issues. We understand that these concerns were based entirely on limited work done in 1992 for a completely diVerent project. NATS have told us that none of the short-listed runway sites in the White Paper have been 3022631045 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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subject to detailed ATC or Airspace appraisal or simulation and they are therefore in exactly the same position as London Redhill. Air TraYc Management and Airspace Planning work on the Stansted and Heathrow options is, we understand, currently taking place.

The signiﬁcance of the Redhill proposal to Northern Ireland—and indeed to all peripheral regions of the United Kingdom—is that there appears to be no other way of protecting lifeline routes from the remoter parts of the nation to London, and speciﬁcally to an airport with onward links to the wider world. In the wake of British Airways withdrawal from Heathrow to Belfast, we could understand that bmi, as a member of the Star Alliance, will increasingly come under pressure to use its scarce Heathrow slots for the intercontinental services of its part owners, Lufthansa and SAS and others. We are aware that FlyBe has recently sold some of its Heathrow slots for £12 million a pair to British Airways, Qantas and Virgin Atlantic, and now recognises that its slot portfolio is worth more to its shareholders than most of the routes currently operated, which probably includes its services to Belfast.

The root cause of all these problems is the shortage of runway capacity in the South East of England, and the lack of any plans to rapidly increase such capacity to protect routes from the regions to London.

Your Committee will be aware that the Department for Transport is currently holding its own consultation on the Protection of Regional Air Services to London, to which we will also be responding.

You may have noticed the paragraph away on page 4 of Appendix A of that Consultation which states: “there are currently 17 routes from UK regions to London airports. We have no evidence that any of these services is about to be withdrawn or reduced and consider that there is very little risk of reductions to trunk domestic routes. However the pressure on slots at London hubs will increase in future years and it is possible that more regional services out of London might be threatened”.

We ﬁnd the relaxed attitude of the Department to this major threat to the regions surprising and worrying in view of the market pressure.

We wish the Northern Ireland Committee to be aware of the possibilities that could be available to the Northern Ireland community so that, if it so chooses, it may follow up this concept by seeking discussion with the House of Commons Transport Committee who have twice endorsed the unique potential of Redhill in their reports on Regional Air Services in 1998 and Aviation in 2003, or directly with the Department itself. 16 September 2004

APPENDIX 9

Memorandum submitted by Mr Trevor Evans on behalf of some residents who would be aVected by the proposed expansion of the runway at City of Derry airport

I am writing to you on behalf of the large majority of residents (who have signed this letter) who live in the houses aVected by the proposed expansion of the runway at City of Derry airport.

Unfortunately, the ordinary residents of this area were not informed about your inquiry and in particular, your recent visit to the airport. We understand that during your visit, you were presented with evidence from a group calling itself “Stop Eglinton Airport Evictions” and we are concerned that you may have gained the impression that this very vocal group represents the majority of the residents aVected by the current proposals for expansion by City of Derry Council, the airport operators.

The City Council assures us that the proposed runway extension is vital for the development and sustainability of the airport and we know that the airport is considered to be an important economic and social asset for the area. In these circumstances therefore, we have most reluctantly decided to take a pragmatic approach and accept that if our houses have to go, then there is little point in ﬁghting against the situation. We would prefer to have the situation resolved to enable us to move on with our lives. Most of us feel that, with the recent and planned increases in ﬂights to and from the airport, and the use of larger and fuller planes, there is an increasing health and safety threat to our homes and we note from the City Council’s evidence to your Inquiry, that the airport operator shares that view.

I should be grateful if you would take our views into account, especially to balance any impression that you may have gained that all the aVected residents oppose the planned runway extension. 4 December 2004 3022631047 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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APPENDIX 10

Memorandum submitted by Jet2.com

Introduction Jet2.com is pleased to contribute to the Committee’s Inquiry into Northern Ireland Air Services. As a company we have operated air cargo services from Northern Ireland for many years before expanding into scheduled passenger services during 2003. We are keen to develop our presence in the Northern Ireland market and, as such, we believe that any formal and inﬂuential guidance which provides strategic direction to the aviation industry in Northern Ireland is to be strongly welcomed.

The Company Jet2.com is a trading name of Channel Express (Air Services) Ltd which is a wholly owned subsidiary of Dart Group PLC. Dart Group PLC is an aviation services and distribution group whose shares have been quoted on the London Stock Market since 1988. Dart Group’s annual sales are around £250 (ƒ350) million with net assets of £47 (ƒ66) million. As a company Channel Express (Air Services) Ltd has been flying commercial aircraft for over 25 years. Originally operating up to 14 Dart Herald aircraft, the company introduced, during the 1990s, Lockheed Electras, Airbus A300B4 “Eurofreighters” and in 2001, Boeing 737-300s. Jet2.com commenced operations in February 2003, initially flying daily from Leeds/ Bradford International Airport to and from Amsterdam. For 2004–05, in response to customer demand, our choice of destinations has widened. Now 9 Boeing 737-300 aircraft, based at Leeds Bradford Airport, all of which are owned by the company, fly to 14 key destinations; Alicante, Amsterdam, Barcelona, Belfast, Faro, Geneva, Ibiza, Malaga, Murcia, Nice, Palma, Paris, Prague and Venice. Having launched services from Belfast International Airport in November 2003 we now fly to Barcelona, Bournemouth, Cork, Prague and to Leeds Bradford. On 29 September 2004, Jet2.com announced its second base, Manchester Airport. In doing so Jet2.com unveiled the largest ever single commitment—thirteen routes—made to Manchester Airport by any scheduled airline.

Mission Statement Our aim is to be the safest, most responsive and reliable operator of low cost services in Europe.

Development of Capacity at Existing Airports As stated Jet2.com passenger services from Belfast International Airport are a relatively recent event. However the experience of our company in launching low fare services has been very positive and has entirely vindicated the research findings which we acquired prior to launch, confirming the strong appetite of the public for our brand of service. Our experience thus far has taken us from Leeds/Bradford to Belfast to Manchester, the common train being major population centres with a clear economic growth record and obvious potential for further significant development. At present we operate six daily rotations from Belfast International Airport covering five routes. However we foresee considerable development potential, especially to European destinations, given the geographic remoteness of Northern Ireland and our positive experience in launching both Prague and Barcelona services, which were inaugurated following strong feedback from our Northern Ireland customer base. Belfast International Airport has been a strong factor in our development from the region, not only oVering us unconstrained potential to grow our business but also oVering the flexibility of round-the-clock operations which provide us with the aircraft utilisation eYciency of operating night time cargo contracts (through Channel Express for the Royal Mail) and oVering daytime scheduled and charter passenger services, with no range limitations. We would concur entirely with the view expressed in the Government White Paper (2003) that the development of Belfast International Airport over the next 25 years should be supported in full. We would also push for strong strategic direction from Government on future development of airport capacity which establishes a framework of complementarity of airports which airport operators must respect. The current situation where two private airport operators and a third local council develop their businesses separately and without central co-ordination has led to diVerent airlines competing on the same routes from diVerent airports. The resulting fragmentation of the already small passenger base, relative to other European regions, can seriously undermine the viability of routes. 3022631047 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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Moreover, where direct European services are concerned, competition on the same route from another airport would result in closure of one service; viability of international routes especially cannot outlast any such fragmentation. Furthermore we believe that there is a strong case for integrated transport planning in Northern Ireland to ensure that Belfast International Airport’s status as the primary gateway is fully supported by a programme of enhanced road and rail access from all key towns and cities within the region.

Specific Challenges facing Northern Ireland as a Peripheral Region of the UK

Clearly the key issues with regard to Northern Ireland’s location in the UK are its separation from the rest of the country and its land border with the Republic of Ireland. The existence of water creates obvious opportunity for the viable provision of air services and in this respect we would consider that the Province is largely very well catered for in terms of links to other UK points. The future challenge is to ensure that UK services remain profitable in the face of prospective over-saturation of the market, and a clear strategy for the development of services from Northern Ireland’s airports would be helpful in safeguarding against this. There is not, however, a level tax playing field for air and sea transport providers, a situation which we would like to see addressed. Sea travel to and from Northern Ireland is not taxed by the Government, yet air travel is, creating an unfair advantage for ferry operators where sea and air serve the same regions. NI has a unique dependency on air and sea transport due to its peripheral location. Given this dependence, and the lack of a level tax playing field between airlines and ferry operators, Jet2.com would strongly support abolition of Air Passenger Duty on flights departing Northern Ireland airports. In our opinion the major opportunity for Northern Ireland is to develop links across two seas into mainland Europe, in order to integrate the Province fully into the European market for maximum economic benefit. Of course the challenge will continue to be to ensure eVective marketing of Belfast routes within Europe in light of Dublin’s head start as the recognised entry point for the island of Ireland.

The effectiveness of the Northern Ireland Route Development Fund

Although any form of assistance is welcome in supporting the development of an air route in its early stages we would contend that Government funding would be best channelled towards supporting the promotion of new services at the destination end of the route. We have not received Air Route Development assistance for Prague or Barcelona, both of which we chose to launch on the basis of stand-alone commercial analysis. Obviously we have sought to maximise the prospect of success for these services by negotiating good commercial terms with our suppliers, including the airports. However real, practical marketing support to encourage inbound activity would be a further beneﬁt which Government agencies could deliver.

The Potential Impact for Northern Ireland of Wider Air Transport Issues on the Island of Ireland

Ultimately the whole island is the air market in which we operate, and as such, any developments within neighbouring jurisdictions impact the commercial operation of air services from Belfast. In this respect the sheer size and extent of activity at Dublin Airport has an inﬂuence on air service activity in Northern Ireland. We have partially realised the opportunity which exists to create a more extensive network from Belfast in recent months. However it is vital that the Northern Ireland community optimises the use of its assets to compete eVectively for business with Dublin. In this respect the region could be assisted by developing further infrastructure and scale of activity at Belfast International Airport, and it would also be helpful to the region’s competitiveness for the UK Government to explore how VAT and Air Passenger Duty levels could be equalised with those in the Republic of Ireland.

Conclusion

It is Jet2.com’s intention to continue our network development in Northern Ireland. We commend the Committee for their work in evaluating what is best for the region in terms of an aviation development framework and look forward to reviewing the ﬁndings of the Inquiry in due course. 20 January 2005 3022631048 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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APPENDIX 11

Memorandum submitted by easyJet

Introduction

easyJet warmly welcomes the invitation to contribute to the Committee’s Inquiry into Northern Ireland Air Services. We believe that such an Inquiry is timely and strategically important in evaluating the views set forward in the Government’s Aviation White Paper (“The Future of Air Transport”), published in December 2003 and in providing an up-to-date, extensive assessment of the aviation industry in Northern Ireland and recommendations for its future development. In our opinion, a strategic view of air service development from Northern Ireland is critical in terms of the essential nature of air access from the Province. However it is also highly pertinent to carry out this Inquiry in light of the unique nature of two airports serving a city the size of Belfast and in respect of the unique location of Northern Ireland within the UK and the associated implications of diVerent regulations being applied towards what is essentially the same general air market within the Republic of Ireland.

Background on easyJet

easyJet commenced air services within the UK in November 1995 with a business plan largely replicating that of Southwest Airlines, the highly successful pioneer of low cost travel in the United States. Having undertaken a stock exchange listing in November 2000 and the subsequent acquisition of Go in August 2002 to become the principal operator of low cost air services throughout Europe, easyJet are currently the fourth largest airline in Europe in overall terms, operating 700 ﬂights per day and facilitating aVordable air travel for 26 million passengers per annum. Our mission is: To provide our customers with safe, good value, point-to-point air services. To eVect and to oVer a consistent and reliable product and fares appealing to leisure and business markets on a range of European routes. To achieve this we will develop our people and establish lasting relationships with our suppliers.

The Development of Capacity at Existing Airports

easyJet commenced operations from Belfast International Airport (“BIA”) in September 1998, initially oVering two daily return services to London Luton. Having recently announced the introduction of new routes from Belfast to Rome and Berlin, completing the flying programme for a fifth based aircraft to operate from Belfast with eVect from July 2005, easyJet will be operating up to 84 flights per day through Belfast on 18 diVerent routes, nine of which are domestic and nine international. In conjunction with other aircraft operating from UK bases easyJet have nine aircraft operating through Belfast accounting in traYc terms for over 12% of our network. Over the past six years easyJet have carried over 11 million passengers on the Belfast route network, with over 3 million alone in the last 12 months. This accounts for over 50% of Northern Ireland’s annual scheduled air traYc and our research indicates that 73% of our passengers are repeat users, with a broad base of support right across Northern Ireland and beyond into the border counties of the Republic of Ireland.

Introduction of Northern Ireland Services

Following our initial evaluation of the Northern Ireland market we chose to launch flights from BIA for a variety of reasons. The easyJet model is based upon a number of key principals encompassing the removal of unnecessary costs, maximum utilisation of aircraft and eYcient use of airports. BIA provided us with an operationally sound airport with flexible facilities and growth potential, no constraints to flying hours and utilisation and central access to the entire passenger base within the region. We have developed a strong base of both business and leisure support and since our initial launch in Northern Ireland we have consistently added routes and aircraft, developing the scale of our own operation, providing direct and indirect employment and delivering wealth and economic opportunity to Northern Ireland. We see Belfast as a vibrant and highly attractive market and as we add new airbus aircraft to our fleet and increase destinations served throughout Europe there is potential to link Belfast with a broad range of other points. 3022631048 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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Belfast has been a particularly important element of our network development in that it provides for high aircraft utilisation through the option to mix short and mid-range domestic sectors with longer international sectors.

Developing Capacity

As previously stated we see potential to develop traZic ﬂows through Belfast. easyJet seeks to provide an attractive network, low fares and a reliable service that consumers vlaue. The prospective challenges we foresee for Northern Ireland include to ability to compete eVectively with Dublin and Shannon for visitors to the Island and to develop a coherent strategy, which will encourage development of suYcient infrastructure and a level of inward investment in order to maintain sustainable growth on both domestic and European routes.

Specific Challenges Facing Northern Ireland as Peripheral Region of the UK

As is the case with all other peripheral points in the UK there is an essential requirement to be eYciently connected to London and other key UK commercial centres. The onus placed on air services linking Northern Ireland to these points is even greater given the separation from the mainland and the ongoing competition with the Republic of Ireland for economic growth opportunities. We recognise that Northern Ireland still has a signiﬁcant challenge in developing strong inbound traYc ﬂows due to the hangover of its recent history. However, we have uncovered many positive aspects throughout our own development in the region, not least the high propensity of the home market to travel which has helped us to deliver a strong platform of service to three London airports and a high level of frequency to some other major UK business destinations.

The Effectiveness of the Route Development Fund

In our opinion the Northern Ireland Air Route Development Fund has been a positive initiative. easyJet has now successfully applied for support on five new European routes to Paris, Nice, Geneva, Rome and Berlin. The provision of support funding assists significantly in the early stages of new market development, providing comfort in the initial route proving period and confidence to enter uncharted territory in the first instance. The fund has helped to greatly improve Northern Ireland’s reach into European markets and we believe that the continued provision of such support is vital for any new routes, which may come online in future.

The Potential Impact for Northern Ireland of Wider Air Transport Issues on the Island of Ireland

While recognising that Dublin is a major European capital city and that there are certain obvious diVerences in terms of exchange rate, VAT levels and taxation in respect of air travel which perceptibly favour Dublin, there is an obvious opportunity to grow the route network from Belfast to the economic beneﬁt of Northern Ireland as a region. However, the home market is ﬁnite and it is essential that the Northern Ireland authorities adopt a strategic view in order to optimise the use of key assets. It is evident that there has been a strategic approach deployed towards transport infrastructure development in the Republic of Ireland (and in Wales, where a 15-year £8 billion integrated transport programme has recently been announced combining air, road and rail developments). We regard it as essential that the Northern Ireland authorities mirror this approach and support the growth of activity at BIA by ensuring that road access development from all key commercial towns and cities within Northern Ireland keeps pace with BIA’s air network growth.

Conclusion

easyJet would like to thank the Committee again for the opportunity to contribute towards this vital issue for Northern Ireland. We will be available to expand upon our thoughts and aspirations towards the Northern Ireland market should you wish to do so. 25 January 2005 3022631049 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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APPENDIX 12

Memorandum submitted by bmi

Introduction 1. bmi welcomes the opportunity to submit comments to the sub-committee’s inquiry into air services in Northern Ireland. bmi

2. bmi is the UK’s second largest full service airline and has its base at London Heathrow airport. bmibaby—a “low cost” unit—and bmi regional are wholly-owned subsidiaries of bmi. The bmi group operates over 3,000 ﬂights a week to over 90 destinations on domestic, European and transatlantic routes. The group has a ﬂeet of 56 jet aircraft. In 2004 the bmi group carried over 10 million passengers. 3. bmi has been operating services to Ireland for nearly 50 years. This is a record of commitment and dedication which is hard to match.

Background 4. As a group, bmi refocused its eVorts on serving the Belfast community in early 2003. bmi now oVers an eight times a day service between Belfast City and London Heathrow. bmibaby flies to other UK and European destinations from Belfast International Airport. In simplistic terms, Belfast City primarily serves the business market and Belfast International primarily serves the leisure sector. 5. bmi’s current scheduled services to and from Northern Ireland are as follows: 6. Northern Ireland is dependent upon aviation links to the rest of the UK and Europe. There are no surface transport alternatives without a sea crossing. 7. bmi has no current plans to alter its pattern of service at Belfast City though, of course, the company will respond to commercial and other pressures as and when these arise. We are committed to serving the Northern Ireland community as we have done with success for many years. 8. Our eight times daily service helps form the vital link between Northern Ireland and London. The community sees that link as important to the economic development of Northern Ireland. In addition, the service provides a link to Europe and beyond through interlining and codeshare services. bmi is a member of the Star Alliance, the world’s largest airline alliance. Our links with other Star carriers at our Heathrow hub allow for convenient connections to the four corners of the globe. This helps foster inward investment and inward tourism, both essential for the Northern Ireland economy. 9. The sub-committee’s announcement dated 21 July 2004 stated that the inquiry would focus on four areas: — the development of capacity at existing airports; — specific challenges facing Northern Ireland as a peripheral region of the UK; —theeVectiveness of the Route Development Fund; and — the potential impact for Northern Ireland of wider air transport issues on the island of Ireland. Our response deals with these issues in turn, concentrating on the first and third points as these are key to bmi’s business.

Airport Capacity Development 10. As noted above, bmi refocused its Northern Ireland operations in 2003. Prior to that, in 2001, our mainline operation had transferred some services from Belfast International to Belfast City. 11. Belfast International is a 24 hour operation and has suYcient land available for growth. For bmi there are no day-to-day or long term issues inhibiting our business or our ability to serve the market. 12. The position at Belfast City Airport is somewhat diVerent. Its convenient location near the city centre means that it is in a built-up urban area. There are physical limitations that limit operations—primarily the short runway length and insuYcient taxiways. In addition, the airport is subject to a planning agreement with the Northern Ireland authorities. bmi has on several occasions noted that this agreement encumbers our business and the ability to serve the market. 13. The UK Government’s White Paper on Aviation made several recommendations with reference to airports in Northern Ireland. One of these was that the relevant authorities should review that planning agreement. Such a review is now underway and bmi has submitted its views to the Planning Agency. Our comments are summarised below. 3022631049 Page Type [O] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

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14. On the question of opening hours, the 2130 closing restricts our ability to provide a late evening service from London to Belfast. bmi’s last daily ﬂight departs Heathrow at 1940, arriving at Belfast City at 2100. This restriction restricts the ability to do a full day’s work in London or Europe. 15. Prior to moving our Heathrow services to Belfast City in 2001 we provided a late arrival into Belfast International Airport in order to serve the business community. It was always our intention when moving to Belfast City to be able to oVer a similar service at this airport: ie a later Heathrow departure aVording better European connections. 16. bmi’s position remains that the opening hours restriction limits our ability to provide the service demanded by the public and we support a reasonable extension of the opening hours at Belfast City Airport. We fully appreciate community concerns about increased operating hours. Yet, bmi believes that the opening hours restriction hinders economic development in the region. The restriction hampers bmi’s ability to grow business into and out of Belfast City in the face of unhindered competition from other carriers operating from other airports in the region, most critically, Dublin. 17. We are concerned that the ATM cap of 45,000 a year may become a potentially critical issue in the future if, for example, the airport attracted new operators or we wished to expand the range and/or frequency of our services. Whilst there is existing headroom within the current ATM cap for minor operational changes, the existence of a cap does limit future potential operations and reduces the marketability of Belfast City Airport for customers. 18. bmi supports the removal of the seat sale cap—currently 1.5 million per annum. We can see little reason for retaining this cap, which appears to be based on terminal operational issues rather than air traYc, runway operational or environmental grounds. The UK Government forecasts a potential increase to over 4 million passengers a year by 2030. The cap will be under severe pressure well before that date, particularly if an existing or new operator increases aircraft capacity. 19. bmi supports retention of noise monitoring and preferential routeings over Belfast Lough subject to continued review based on experience and operational requirements.

Challenges Facing Northern Ireland 20. Air services linking Northern Ireland to the rest of the UK and Europe are an economic lifeline. Retention of services must be an issue for the region. For our part, bmi remains committed to the investment we have made to serving the community. However, we understand that concerns remain about links to London and Heathrow in particular. Heathrow is the UK’s world class hub and bmi believes it will remain so for the foreseeable future. 21. But, Heathrow success is its own downside. Slots at Heathrow are now at a premium because there is eVectively no capacity. We recognise that this raises questions as to safeguarding of services between London and the UK regions. 22. bmi, for its part, has made a strong case for the need to address this problem. We see the provision of additional runway capacity as the main solution to the capacity problem in the South-east of England. The Government’s White Paper on Aviation establishes a sound strategic framework in which that capacity can be delivered in a sustainable way. Additional capacity, through a third runway and, in the interim, measures to make best use of the existing capacity—such as mixed mode operations—are essential to ensure that Heathrow retains its position as UK’s global hub—linking the peripheral UK regions to London, the south-east and the world. 23. bmi does not support the use of tools to safeguard slots for regional services, such as the imposition of the public sector obligation (PSO). Bmi submitted evidence to the UK Department for Transport’s consultation paper on the guidelines for the use of PSO for regional air services. We made it clear in that submission, that the best way to address the issue is through additional capacity at Heathrow. In fact, the use of PSO is not an appropriate mechanism for services to London.

Route Development Fund 24. bmi has general concerns about the interference of Government into the provision of air services. Providing subsidy to private sector operators distorts the market. We are also concerned about those airlines that remain in the public sector. In several instances, state aid has been used to prop up loss making concerns again leading to market distortion. 25. Nevertheless, we accept that for legitimate public policy reasons legislators may wish to provide public funds to support transport services meeting the public good which would otherwise not be able to operate on a commercial basis. 26. Our understanding is that the route development fund, pioneered by the Scottish Executive, is designed to kick start air services using public funds to defray some of the cost of airport charges. We note that RDF is a favoured method of Government to help launch international routes from regional points in the UK. 3022631049 Page Type [E] 12-04-05 15:57:37 Pag Table: COENEW PPSysB Unit: PAG2

Ev 170 Northern Ireland Affairs Committee: Evidence

27. bmi has used the Scottish RDF scheme to help start-up a new route between Aberdeen and Groningen in the Netherlands. This is a good example of the type of route that bmi believes might benefit from such assistance—ie a thin route with some potential, connecting two peripheral regional points. bmi regional operates the service Monday to Friday, five times a week. 28. We have no pursued the RDF scheme set up in Northern Ireland. We are not, as yet, aware of any significant issues arising out the Northern Ireland experience. 29. In analysing potential routes, bmi considers carefully the potential market and the profitability of a route. As a private sector operator we will look to maximise profitable routes. We do not ignore less profitable routes as there are broader strategic reasons for maintaining these—such as network coverage and interlining. 30. We will continue to look to grow our business. We will examine the potential usage of the NI route development fund, as appropriate. At the same time, we will want to analyse the eVect that RDF awarded for competitors’ services has or might have on the bmi’s market share.

Impact of Wider Air Transport Issues 31. As mentioned above, bmi ﬁnds that its London-Belfast is in competition with services from London to Dublin. The proximity of Dublin, which is a hub for the no frills operator Ryanair and Aer Lingus now recast in the low-cost mould, will continue to have an impact on Belfast City Airport’s ability to attract and retain passengers. The opening of the Dundalk-Dublin motorway only exacerbates that position.

Conclusions 32. bmi has a long and successful connection with Northern Ireland. Our current plans are to consolidate and, where feasible, grow our business within the region. The planning restrictions at Belfast City are a hindrance to growth at that airport and we look to the relevant authorities to carefully consider easing some of the restrictions. 33. We recognise the importance of air travel to Northern Ireland and we believe our company provides a valuable economic input. We are concerned that new subsidised services may have an increasing eVect on the air travel market. bmi does not believe that subsidies are appropriate except where absolutely necessary. 34. We look forward to continuing to serve Northern Ireland in the future and we will work with the community to help provide the right air travel package to the region. 1 February 2005

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