Memorandum from the Consumer Council 1. Introduction 1.1 The Consumer Council is an independent consumer organisation, working to bring about change to benefit Northern Ireland (NI) consumers. Our aim is to make the consumer voice heard and make it count. 1.2 We have a statutory remit to promote and safeguard the interests of consumers in NI and we have specific functions in relation to energy, water, transport and food1. These include considering consumer complaints and enquiries, carrying out research and educating and informing consumers2. 1.3 The Consumer Council is also a designated body for the purposes of supercomplaints3, which means that we can refer any consumer affairs goods and services issue to the Office of Fair Trading4, where we feel that the market may be harming consumers’ best interests. 1.4 In taking forward our broad statutory remit we are informed by and representative of consumers in NI. We work to bring about change to benefit consumers by making their voice heard and making it count. To represent consumers in the best way we can, we listen to them and produce robust evidence to put their priorities at the heart of all we do. 1.5 The Consumer Council for Northern Ireland has statutory responsibility under the General Consumer Council (Northern Ireland) Order 1984 to represent the interests of passengers travelling to, from and within Northern Ireland. 1.6 In addition, the Consumer Council has been designated to handle passenger complaints made under Regulation (EC) No 1107/2006 (the Access to Air Travel Regulation) relating to an airport in Northern Ireland or a flight departing from an airport in Northern Ireland by the Civil Aviation (Access to Air Travel for Disabled Persons and Persons with Reduced Mobility) Regulations 2007 (SI2007/1895). The Consumer Council also handles passenger complaints made under Regulation (EC) No 261/2004 concerning the rights of passengers in instances of flight delay, cancellation and denied boarding 1.7 In its response to the Department for Transport’s March 2011 consultation on its Developing a Sustainable Framework for UK Aviation: Scoping Document the Consumer Council stated that in addition to the importance of the UK Government recognising the unique needs of Northern Ireland passengers in its aviation framework, the Northern Ireland Executive should also produce a strategy to guide development of the region’s aviation sector. 1.8 A Northern Ireland air transport strategy is required to assist the sector develop in a manner that best serves the long term interests of Northern Ireland consumers by: • Promoting competition and choice for consumers and the development of sustainable routes • Ensuring proposed service and infrastructural developments at Northern Ireland airports are assessed rigorously and promptly with full consideration afforded to all relevant economic, social and environmental impacts 1 The Consumer Council undertakes its specific functions in relation to food recognising the role of the Food Standards Agency (FSA). The FSA has responsibility for the development of food policy and for the provision of advice, information and assistance, in respect to food safety or other interests of consumers in relation to food. Therefore, to ensure good value and use of public money, the Consumer Council and FSA have a memorandum of understanding and the Council's strategic focus on food is primarily in relation to food prices and customer experience. 2 The General Consumer Council (Northern Ireland) Order 1984, 1984 No. 1822 (N.I. 12), http://www.legislation.gov.uk/nisi/1984/1822/contents 3 The Enterprise Act 2002 (Part 9 Restrictions on Disclosure of Information) (Amendment and Specification) http://www.legislation.gov.uk/uksi/2003/1400/schedules/made 4 The OFT is the UK’s consumer and competition authority. Its mission is to make markets work well for consumers. It is a non-ministerial government department established by statute in 1973 http://oft.gov.uk/about-the-oft/ 1 • Addressing issues concerning surface access to airports and public transport links to towns and cities across the region. • Ensuring the NI Executive promotes the unique aviation needs of Northern Ireland consumers in order that they are fully recognised at UK Government level. 2. Regional and International Connectivity 2.1 Northern Ireland passengers are dependent on air travel to access GB destinations and further afield. In its report Air Passenger Duty: implications for Northern Ireland, the Northern Ireland Affairs Committee recognised “that for many people in Northern Ireland travelling by air is not a luxury, but is an essential element of family and economic life”5. 2.2 The high level of dependence on air travel amongst Northern Ireland consumers is highlighted by the Consumer Council’s examination of 2011 transport statistics. In 2011 UK airports handled6 219 million passengers7. Passengers travelling on domestic services account for 17% of all UK passenger movements. By comparison, Northern Ireland airports handled 6.9 million passengers during 20118 and passengers travelling on UK domestic services account for 75% of all Northern Ireland passenger movements. These are journeys which GB consumers are not required to make by air given they can access GB destinations by road or rail. Northern Ireland’s domestic air services are therefore vital in terms of enabling mobility between NI and GB. 2.3 In addition to the importance of facilitating regional connectivity, air links to Heathrow Airport are essential because they enable Northern Ireland passengers to access worldwide destinations by travelling on connecting services. 2.4 In light of the UK Government’s decision not to permit development of a third runway at Heathrow, the Consumer Council believes it is essential the Government takes action to ensure slots are reserved for airlines operating regional services from areas from which it is not practicable to access Heathrow by road or rail. 2.5 The Airports Amendment Bill, a Private Members’ Bill sponsored by Lord Empey, proposes amending the Airports Act 1986 to give the Secretary of State for Transport the power to direct an airport operator to take action considered to be in the interests of ensuring sufficient national air infrastructure between hub and regional airports. The Bill also proposes amending the Airports Act 1986 to require that the CAA has regard to the need to ensure adequate services between hub and regional airports. The Bill is awaiting examination at Committee stage on the House of Lords. 2.6 Our air links, both international and domestic make an important contribution to the region’s economic growth and social well-being. Our air services support trade and inward investment and are also essential to facilitating tourism. 2.7 In order to increase consumer choice, CCNI would also welcome the development of additional services to European hub airports to provide improved options for interlining. Currently Northern Ireland has only point-to- point services to European Hub airports. 3. Implications of the proposed takeover of bmi by IAG 3.1 Currently Northern Ireland is served by air routes to Heathrow operated by bmi from Belfast City Airport and Aer Lingus from Belfast International Airport. In 2011, approximately 10% of passenger traffic through Northern Ireland airports was to or from Heathrow9. 5 House of Commons Northern Ireland Affairs Committee Air Passenger Duty: implications for Northern Ireland (July 2011). 6 Civil Aviation Authority passenger statistics 7 Approximately 38 million travelled to a domestic airport, approximately 115 million travelled to an EU airport and approximately 67 million travelled to a non-EU international airport. 8 Approximately 5.2 million travelled to a UK airport and approximately 1.7 million travelled to a non-UK airport 9 In 2010 751,214 passengers travelled on Northern Ireland’s Heathrow services. 2 3.2 CCNI is concerned regarding the potential impact on the service operating between George Best Belfast City Airport and London Heathrow following the acquisition of bmi by IAG, and has brought its views to the attention of the European Commission and IAG. 3.3 bmi’s Belfast City – Heathrow service is the busiest service operating from Northern Ireland. bmi operates seven return services on weekdays and carried 426,000 passengers in 2011, accounting for 6% of all Northern Ireland passengers that year. 3.4 Acquisition of bmi gives IAG ownership of bmi’s 56 daily slots at Heathrow, which represent 8.5% of the take-off and landing slots at the airport. There is a danger that IAG may reallocate the slots currently used by bmi for services between George Best Belfast City Airport and Heathrow to more profitable routes. 3.5 Such a move would significantly diminish the frequency of services between Northern Ireland and Heathrow, disadvantaging Northern Ireland consumers by limiting access to the UKs hub airport. Willie Walsh, IAG Chief Executive, has commented publicly that IAG’s acquisition of bmi will give security to those who depend on the Belfast – Heathrow link, however, despite repeated requests, IAG has not provided the Consumer Council with an assurance that the takeover will not result in the current level of provision being reduced in terms of either frequency or capacity of service. 4. Tax Policy 4.1 The Consumer Council welcomes the proposed devolution of APD rates for direct long-haul flights to the Northern Ireland Assembly as prescribed by Schedule 1 of the UK Finance Bill 2012. 4.2 The Consumer Council believes however that the planned devolution of APD bands B, C and D to the Northern Ireland Assembly falls far short of adequately addressing the APD burden borne by Northern Ireland consumers. Given Northern Ireland consumers’ high dependence on air travel, APD, in its current structure, is unfair as it financially disadvantages NI consumers in comparison to their GB counterparts. Not only does the duty impede NI consumers, it represents an additional cost to business and tourism, discouraging trade with, and foreign investment into Northern Ireland.