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


Examination of Witnesses (Questions 80 - 99)

WEDNESDAY 19 DECEMBER 2001

MR ROGER WILTSHIRE, MR BOB PARKER-EATON, MR ANDREW CAHN, MR BARRY HUMPHREYS AND MR TOBY NICOL

  80. Out of 179?
  (Mr Cahn) No. We have relinquished for this season 179 weekly slots and for the coming summer season we have already announced that we will relinquish 132 weekly slots.

  81. And you have got the total as well?
  (Mr Cahn) But I do not, unfortunately, have the total of our slot numbers, I will let you have a note on that.[1] Two-thirds of what you asked.

  82. The break down of freight?
  (Mr Cahn) Cargo was certainly badly affected.

  Mr Donohoe: Is that scared to travel as well?

Miss McIntosh

  83. And the other factors I mentioned.
  (Mr Cahn) I would certainly agree with you that foot and mouth disease was a particularly major impact on our traffic prior to 11 September and it is something that affected the United Kingdom airlines and did not affect continental airlines. It is noteworthy that prior to 11 September inbound tourists into countries like Spain and France registered substantial percentage increases and we were experiencing substantial reductions, I believe, of the order of 10 per cent because of foot and mouth. We were coming out of that, which after all by its nature was a temporary phenomenon, a very important one but temporary, when we were hit by 11 September.

  84. Does anybody else have freight figures?
  (Mr Humphreys) Sorry, we do not.

  85. I take the point Mr Wiltshire made about an attack on the state, yet I think the most alarming thing was that it was a civilian target, a civilian plane and civilian passengers that really affected everybody. In writ10 evidence that we have had from BMI they are particularly concerned that there should be a co-ordinated approach to security across Europe. Does the panel think that we have seen sufficient recognition of this through the EU measures that have been proposed?
  (Mr Wiltshire) We would agree with that approach and activity is taking place in Europe. We would hope and wish that well and a speedy confirmation. I believe there is a meeting due in March of Ministers that should ensure that those standards are endorsed.

  86. I am particularly alarmed to see an announcement that 200 security officers, some of them are permanent, some of them are temporary, are going to lose their jobs at Manchester Airport. Is that a recognition of the fact that they are not expecting as much charter holiday traffic from airports like Manchester next year?
  (Mr Parker-Eaton) I think this is a question that you are going to have to address to the airports when they come and give evidence. From our understanding of it, we do not believe that there is any reduction in security efficiency because we are obviously very concerned about that and have had assurances from Manchester that they are reflecting the realities of Manchester and the requirements that the Government has laid down for security. The question really needs to be addressed to Manchester.

Chairman

  87. Mr Cahn?
  (Mr Cahn) Chairman, I may be a bit slow but I do now have some figures for cargo if you would find those useful.

  88. It is very nice to have people with second sight, Mr Cahn.
  (Mr Cahn) British Airways does do everything with a five minute delay. In September our cargo measured in cargo tonne kilometres fell by 38 per cent, by October in cargo tonne kilometres it was falling by 23.8 per cent. Obviously it is improving but it is still a very, very substantial reduction.

  Miss McIntosh: To Virgin, would you agree with BMI that the Government should pressure the European Commission to set a mandate to remove foreign ownership and control restrictions in air transportation?

Chairman

  89. Now, there is a simple question, yes or no, Mr Parker-Eaton?
  (Mr Parker-Eaton) Yes, but it was addressed to Mr Humphreys.

  90. Mr Humphreys, yes or no?
  (Mr Humphreys) Yes.

Miss McIntosh

  91. In view of what we have heard about the freight figures, could I ask easyJet, do you think in part their figures have been so good, not just easyJet but low cost carriers generally, because their percentage of freight is relatively less than passengers?
  (Mr Nicol) Absolutely. We carry an absolute fraction in terms of freight, it is occasional newspapers on an occasional route. The business model is built around not carrying freight, not holding up the aircraft and getting them away quickly.

  Mr Donohoe: How many slots are unused at present?

Chairman

  92. Mr Parker-Eaton is indicating none.
  (Mr Humphreys) I am sorry, where do you mean?

Mr Donohoe

  93. Say at Heathrow, how many slots are unused?
  (Mr Humphreys) Very, very few.

  94. How is it possible in these circumstances to have a 50 per cent drop?
  (Mr Humphreys) What has happened is a lot of services have transferred from other airports, particularly Gatwick to Heathrow. There has not been the same reduction at Heathrow as there has been at Gatwick.

  95. Has there been any drop in Heathrow traffic?
  (Mr Wiltshire) I think the drop in traffic reflects a reduction in the load factor, in other words the number of passengers on a flight rather than the number of flights.

  96. To Mr Nicol, when you talk about your business growing, it is my experience that there are people flying now that never flew before and that is the mainstay of your business, is that the case?
  (Mr Nicol) It is not necessarily the mainstay. Certainly it is true that if you offer fares at a significantly lower price than people used to pay, you just get people saying "I will not do my decorating this weekend, I will go to Barcelona". It does happen, people who use to take a train will fly, people who used to drive will fly.

  97. What proportion of your business is in that category?
  (Mr Nicol) I would say, over the history of the airline, probably in the region—this is slightly off the top of the head but an educated guess—of 50 per cent of the traffic is new. It traditionally comes at the leisure end of the market and people that might go and buy a second home in the South of France, for example, because the flights are so cheap, and they have never been able to afford it beforehand—

  Chairman: You are telling me a flight to Barcelona is an alternative to a second home in France. Oh, I see what you mean. You had me there for a moment, Mr Nicol.

Mr Donohoe

  98. On a general point, do you not think that the airlines over reacted to the events of 11 September?
  (Mr Humphreys) As far as Virgin Atlantic is concerned, I do not think so at all. We identified the problem. We took the corrective action. We have brought in outside financial advisers to review what we did. Their conclusion was we did exactly what was needed. The underlying business is viable, we have a long term future, and unless we had done what we did that would not have been the case.

Chairman

  99. Mr Cahn, different from that?
  (Mr Cahn) Yes. I simply want to say I believe that the crisis of 11 September was either one of or the most grave crisis faced by the industry globally over the last 50 years. The very fact that over 120,000 jobs have been lost in the industry globally shows that. I think our reactions were swift, they were appropriate. All of us have been focusing on making our businesses effective and able to pick up the upturn when it comes, but it was a remarkable and grave crisis at the time.


1   Note by witness: In the Winter 2001-02 season, 5369 slots are available at Gatwick between the hours of 0600 and 2200. Following the recent return of a considerable number of slots to the pool, British Airways now controls 1825 slots, representing 34 per cent of the total. These figures are applicable for the peak week of the season, that is 11-17 March 2002. A further 980 slots are available between the hours of 2300 and 0500. British Airways has one slot in this period. Back


 
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