Select Committee on Transport, Local Government and the Regions Appendices to the Minutes of Evidence


Memorandum by Manchester Airport PLC (PRF 37)

PASSENGER RAIL FRANCHISING

Rail Franchising—The Transpennine Express Franchise and the Manchester Airport Ground Transport Interchange

1.  INTRODUCTION

  1.1  Manchester Airport welcomes the opportunity to set before the Select Committee its views on rail franchising and in particular, how the decision to use the Transpennine Express franchise as a vehicle for investment has influenced the development of the Manchester Airport Ground Transport Interchange. This state-of-the-art project is now underway, and is a stunning example of how to achieve high quality public transport links to a major employment and commercial centre. It is vital to the future sustainable growth of the Airport.

  1.2  High quality, reliable and efficient rail services are important to Manchester Airport. They:

    —  provide a realistic surface access alternative to the private car;

    —  assist in reducing the level of car parking on site and promoting sustainable land use;

    —  reduce the number of vehicle trips on national and local roads around the airport; and

    —  limit the need to make long road journeys to south east airports.

    —  Maximise the airport's ability to meet air travel needs arising in the region, avoiding the need for expensive and environmentally damaging transfers over European hub airports.

  1.3  Achieving high quality, integrated public transport via rail franchises such as the proposed Transpennine Express franchise is central to Manchester Airport's ability to play a full part in achieving the objectives of the Integrated Transport White Paper, and the 10-year Transport Plan.

2.  MANCHESTER AIRPORT

  2.1  Manchester Airport is the third largest airport in the UK, and the largest outside the South East of England. Now handling over 19 million passengers per year, and forecast to grow to over 40 million per year by 2015, Manchester is not only the major airport for travellers in the North West, but for many North of England air passengers it provides the only realistic alternative to travelling to the London or EU airports for long haul and transatlantic flights.

  2.2  Manchester Airport, in common with other major airport operators in the UK and elsewhere, has recognised that maintaining excellent surface access to the site is a fundamental requirement for future growth if it is not to become strangled through road congestion. Manchester Airport enjoys direct links to the motorway system, but we have long acknowledged that reliance on the roads for airport access is not going to serve either the local communities or the Airport business. It is not a sustainable approach.

  2.3  As part of the package of environmental measures associated with the now complete second runway, we made a commitment to our local communities through a Section 106 Planning Agreement that by 2005, 25 per cent of all trips to the Airport will be made by public transport. We are committed to revising our Ground Transport Plan to increase this target for the period post 2005.

  2.4.  Whilst Manchester has benefited from the growth of the national motorway and trunk road network, it has actively promoted the development of public transport alternatives. A rail link to Manchester Airport opened in 1993 enabling trains from Manchester and the north of England to access the airport, this was followed by completion of the southern rail chord, to enable access by trains from Crewe. Funding from the Airport was critical to levering out the total investment required for both parties. But Manchester Airport's surface access strategy for rail is not confined to heavy rail. It has supported and invested in the scheme to bring the Greater Manchester Metrolink light rail system to Manchester Airport. The Phase 3 Metrolink lines currently out to tender include an extension to Manchester Airport. These extensions are expected to be completed by 2006.

  2.5  Government policy set out in the 1998 Transport White Paper is to:

    —  Develop airports as transport interchanges and be partners in improving the quality of public transport services;

    —  Improve access to airports by rail, encourage the development of regional and long distance feeder services; and to

    —  Look for opportunities to facilitate public transport links to airports with particular focus on improved rail access.

  Government has set targets in its 10-year Transport Plan to increase the use of rail by 50 per cent, and to invest £60 billion in rail.

  Manchester has been working to deliver Government policy on Airport access through the development of the Manchester Airport Ground Transport Interchange. This state of the art project costing £64 million is now underway, and will combine bus, coach rail and light rail (Metrolink) stations into a single site on the airport with provide check-in for air passengers. The project has attracted EU support, receiving

1.8 million in grants from the Trans European Networks programme. It will provide a highly integrated public transport terminal at the heart of Manchester Airport that meets all the objectives of government policy. A core element of the project is to provide a third rail platform and lengthen the existing two platforms to accommodate longer trains, and a further phase will extend the rail line westwards under the airfield to create a through running station. The Capital cost estimate for the rail works is £17 million.

3.  RAIL SERVICES TO MANCHESTER AIRPORT

  3.1  The pattern of rail services to Manchester Airport was set out by British Rail from opening in 1993. Briefly the original pattern provided two half hourly local shuttle services into Manchester and two hourly longer distance services, one to Scarborough, and one to Blackpool. The combination of the trains provided four services per hour into Manchester. From very early on, it became apparent that Manchester Airport passengers favoured direct trains from their home destination, and changing trains was a barrier to use. British Rail and its Regional Railways operating division sought to meet the demand by introducing more direct services from other destinations. Experience also showed that rail was at its most effective for longer distance journeys, particularly on Transpennine routes.

  3.2  Over 1.5 million passengers now use the station annually, and almost 7 per cent of air passengers use rail for their airport journey from over 1,000 stations across the country. However, with proper development, rail can make a more effective contribution to the airport's and Government's public transport targets. Public transport use at Manchester is lower than at other major European airports, and Manchester's ground transport strategy and policies have set the ways in which this can be achieved.

  3.3  The limitations of the Manchester Airport station, a two platform terminus, were apparent following the introduction of these new services. A lack of platform capacity to accommodate any new services, coupled with a chronic lack of capacity in the Manchester rail hub network, has limited growth of airport train services.

  3.4  Manchester Airport has undertaken analysis and research into the need for more rail services to support the development of the Ground Transport Interchange. This work concluded that it was necessary for more new train services from unserved destinations if the Airport's ground transport targets were to be met. The lack of capacity at the airport rail station could be met with the construction of a third rail platform.

  3.5  Criteria for new services to generate significant passenger uplifts were identified:

    —  Manchester Airport passenger volumes are high (>100,000).

    —  Current rail shares from the district are low (<5 per cent).

    —  The destination is a significant distance from Manchester Airport (>30 miles).

    —  Relative road/rail journey times favour rail, especially Transpennine.

    —  Rolling stock is of high quality.

    —  Services are frequent (at least 15 per day).

  3.6  Studies have pointed to significant benefits that can be achieved from new services in particular from West and North Yorkshire, and from the West Midlands. Significantly, realising the full value of these benefits requires a commitment to long term investment over at least a 15 year life.

  3.7  The SRA has set out plans to change the rail franchise map, and the new Transpennine Express franchise has great significance for Manchester Airport. This new franchise builds on the Transpennine Express services operated by Arriva Trains Northern. These are already the most popular routes used by Manchester Airport passengers, and the SRA's proposals will see this franchise become an "inter city" franchise the North of England. In its instructions to bidders, the SRA has stressed the importance of Transpennine train service to Manchester Airport, and cited the Airport as the growth engine for Transpennine.

  3.8  The SRA has also identified Transpennine Express as the route for investment in infrastructure, not only for the Airport, but also for the Manchester area. The Manchester hub rail network is chronically short of capacity, and has been the subject of a separate study by the SRA. This study has now concluded, and within a £1.5 billion package of improvements, recommended the urgent development of the Transpennine Franchise and capacity for new airport train services.

4.  THE RAIL INDUSTRY AND INVESTMENT IN PARTNERSHIP—MANCHESTER AIRPORT GROUND TRANSPORT INTERCHANGE AND TRANSPENNINE EXPRESS

  4.1  Whilst Manchester Airport has been a heavy investor in public transport for many years, it cannot provide all the investment in transport systems that serve many other users and destinations outside the airport. It has always adopted a partnership approach to new public transport projects. The Ground Transport Steering Group has senior representation from GMPTE, Railtrack, Government Office, Highways Agency, Cheshire County Council, Rail and Bus operators and now the SRA has agreed to join. This group has developed the Airport's Ground Transport Strategy and overseen major developments such as the Ground Transport Interchange.

  4.2  Manchester Airport engaged in active consultation with the rail industry very early in the development of the Ground Transport Interchange and the provision of additional rail capacity within the scheme. Initially the focus was through Railtrack, and latterly through the SRA.

  4.3  The process has been influenced, and stymied by the economics of the rail industry. Railtrack as the owner of the network infrastructure, was originally responsible for new investment, however Railtrack whilst being outwardly supportive about the need for additional platform capacity, has been a reluctant investor. The reason for this is linked to the Track Access Funding regime through which Railtrack derives most of its income from train operators. Railtrack will not speculatively invest in new infrastructure unless it can show an income stream from track access charges from new train services. In the case of Manchester Airport rail station, whilst there was a demand-led pressure for more services, operators were prevented from introducing new services because of lack of capacity, and were unwilling to provide investment for new capacity because many only had seven year term franchises due to expire in 2004. Given that the payback time for new rail services can be between 5 and 25 years, the reluctance of the operators was understandable. Major enhancement projects require long-term commitments from parties that have a role, and will benefit from, a substantial part of the project life. Why invest in something that will only start to pay back at the end of the franchise? Nor is it clear that a train operator is always the best route to lead infrastructure projects, especially where these have a strategic role, and many beneficiaries beyond those reflected in income from fares.

  4.4  It is now the role of the SRA to lead the case for new investment and services. The SRA's methodology requires a demonstration of need and assessment of benefits for a new project to gain funding approval. Franchise replacement allows for testing of benefits and value where enhancements are bought by the franchisee however it does preclude any major work commencing until a franchisee is in place. Although there was an Industry wide acceptance that more capacity was needed at Manchester Airport, the burden of proof has largely fallen on Manchester Airport, as there is no rail franchisee in place to take forward the work. The incumbent franchisees would not take up the promotion because their franchise term would be over before the enhancement was in place.

  4.5  In order to demonstrate the need, and business case for capacity enhancement, Manchester Airport undertook a comprehensive series of studies that:

    —  Reviewed the capability of existing public transport services to meet the airport and government's targets.

    —  Benchmarked Manchester as a public transport interchange with other airports.

    —  Identified the criteria for new rail services.

    —  Identified potential rail service improvements.

    —  Demonstrated the rational for station capacity enhancement; and

    —  A cost benefit analysis for the capacity enhancement.

  4.6  The cost of these studies in excess of £300,000 has been significant for a project that self evidently meets Government's strategic priorities, and where the total costs are relatively modest when compared to the £60 billion funding for rail under Government's 10-year plan. It is questionable as to whether it is necessary to undertake such rigorous analysis of smaller (capital) cost schemes, in favour of a fast track approach.

  4.7  The SRA's preferred route to channel investment is through a train operator, asking the operator to price and tender for enhancements in the franchise, and thus establish the affordability of the enhancements. In the case of the Manchester Airport Ground Transport Interchange, the SRA ultimately decided to link the investment in the airport third platform to the award of the Transpennine Express franchise.

  This is not necessarily the optimum route for the Ground Transport Interchange. The Interchange is a complex project involving several partners as well as Manchester Airport. The new rail platform and track shares its alignment with the Metrolink extension to Manchester Airport. Both schemes thus benefit from common civil engineering works, but financial and operational benefits are only maximised if both are constructed together. This approach relies upon the train operator having the necessary skills to project manage major infrastructure schemes, and that by involving themselves in projects, their ability to manage and develop the train services is compromised.

  4.8  The weakness in this approach is that no investment in rail infrastructure can take place until the franchise is awarded. In the case of the Manchester Airport Ground Transport Interchange the Airport Company has committed investment, and the Airport Metrolink line is at tender stage, and on programme to begin construction works in 2003. The Metrolink contractor will need to know the scope of works to be undertaken jointly with the railway operator. In the absence of a decision by the rail industry, Metrolink would opt to construct only those works necessary for Metrolink. The consequence of this would be to delay the or even prevent the eventual completion of the rail works.

5.  RECOMMENDATIONS

  5.1  Manchester Airport's experience from developing rail infrastructure at the Ground Transport Interchange has been protracted and fraught with difficulty. Whilst some of this can be attributed to the timing of the Airport work coinciding with the changes in way in which the Rail Industry is managed and funded, it has highlighted weaknesses in the way in which investment schemes are appraised and handled by the SRA.

  5.2  Linking investment for infrastructure enhancement with the award of a new franchise does enable the SRA to test for affordability and best value. However taking into account that it takes time to develop schemes, it is unlikely that work on new schemes will start until later in the life of the franchise. This may not be an issue where the franchisee is in place for a long duration, and the work is necessary to deliver the franchise plan targets. It may not be appropriate for smaller schemes that are strategically important and have many beneficiaries or interfaces with other transport schemes. A fast track approach is needed for smaller schemes to free up time and resources to manage major schemes.

  5.3  The Transpennine Express franchise needs to be progressed urgently to avoid further delay to investment in the Manchester rail network, and for stakeholders involved in rail schemes to know who is responsible for progressing schemes.

  5.4  Future franchise extension or replacement bidders should not be required to price and manage infrastructure enhancements that can more effectively be delivered by others.


 
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