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

Examination of Witnesses (Questions 100 - 115)



Mr Donohoe

  100. What are your predictions for business on, say, 11th September 2002?
  (Mr Cahn) I believe that the business will pick up. I think it will take between one and two years to get back to previous traffic levels, though that is pure speculation at the present time. I would hope by 11 September in 2002 we would see traffic figures getting back towards the levels of a year earlier, but that is a guess.

  101. Mr Parker-Eaton, I am interested in knowing in your business as to what you predict? You seemed to give an impression you do more predictions than, say, British Airways.
  (Mr Parker-Eaton) No. We do not. We have to make predictions all the time because of the investment required in the airlines. The problem that we face is that it is a total unknown in the future. We have never faced an occasion like this previously. The Gulf War and the Falklands Crisis had a firm ending. Currently, next summer continues to book at only 50 per cent of the rate achieved in the same period last year. January is a key month for people coming back. We have to await what happens in January. We are doing so. We are hopeful that next summer will recover and people will pull back in January, but we do not know. It is a very big unknown.

  102. A final question, do you not think this is now overdue, instead of examining this on a UK basis we should look at it on a European basis as an industry and you should reflect that in terms of the way we might come to conclusions?
  (Mr Wiltshire) I will try to take that question. My initial reaction—I will ask my colleagues to add to this—is that dealing with it on a European basis is already happening in many ways but until there is truly a level playing field across European states, until regulation is standard across the States, then we are all interested in our individual ways in ensuring that competition is fair between one airline and another.


  103. Mr Wiltshire, I want to release you but I have got a number of important questions to ask you. What proportion of the UK's airlines' fleets has been grounded as a result of September 11?
  (Mr Wiltshire) Our estimate is that in the order of 50 aircraft which is in the order of seven per cent of the whole.

  104. How many of those will return to service?
  (Mr Wiltshire) You will have to ask individual airlines.

  105. What proportion of that 50 would be Annex 16 Chapter 3 compliant?
  (Mr Wiltshire) Again, I would have to respond in writing to that.

  106. Will you give us a note on that?
  (Mr Wiltshire) Yes.[2]

  107. I think it would be important for us to know whether as an Association you support the call by ABTA and the CAA for greater protection for airline customers against airline collapse?
  (Mr Wiltshire) Of course we would wish passengers not to be affected by crises like this. The UK airlines, I think their response to the current crisis and their maintenance of their operations has proved that they are resilient to crises even of this major nature.

  108. Have you taken a view of the suitable measures which should be suggested?
  (Mr Wiltshire) No, we have not.

  109. Because we are very concerned about this business of slots, Mr Cahn, if you have not been storing them at Heathrow, could you tell us do you think that we can get an agreement on Open Skies without resolution of the slot position at Heathrow?
  (Mr Cahn) In the long term what is needed, clearly, is more infrastructure in the South East of England. One way of achieving more slots at Heathrow is to change the way traffic is handled there and introduce mixed mode. It is possible by making changes like that to get more slots. Slots do become available anyway in the natural course of time. There are always slots being made available. I do believe, yes, to answer your specific question, Chairman, it is possible to negotiate Open Skies with the United States of America, it is possible to gain anti-trust immunity for the two British carriers who are seeking it with their American partners, and I hope very much both these things will be done. I believe it will be possible then for other US carriers to get into Heathrow and get slots.

  Chairman: Mr Cahn, you know that there is very little—very little—that becomes available at Heathrow in terms of slots. We are talking about a very, very tiny percentage. I ask you again, without resolving the problem of slots at Heathrow is it going to be possible to conclude an airline agreement? Mr Bennett wants to ask something else on this.

Mr Bennett

  110. What you are really telling us is you are not actually storing the slots as not used, they are all the regional slots and you would be happy to give up the regional slots in order to get the Open Skies?
  (Mr Cahn) Absolutely, I am not telling you that at all. In our submissions to the competition regulators we have made it clear that we believe that there are no competition issues at stake which should require any divestiture of slots, that is our position. We serve the regions of the United Kingdom. We are very pleased and proud to. We are by far the largest regional operator and we wish and intend to continue to serve the regions. We are not storing or hoarding slots at Heathrow, we use our slots at Heathrow effectively and fully both for regional services and for European services and for long haul services and we will continue to do that.


  111. Mr Humphreys, on this point?
  (Mr Humphreys) If I may, very quickly. The answer to your question is absolutely not. British Airways keeps repeating this claim that there are slots available at Heathrow for North Atlantic services, there are none. A week ago Richard Branson wrote to British Airways offering to contribute £2 million for 10 pairs of slots to charity—

  112. Shall we start again. What is he offering?
  (Mr Humphreys) I am sorry. He is offering to pay to charity £2 million for each of 10 pairs of slots if British Airways can produce them for us. If they cannot then he invited British Airways to contribute the money to charity. They failed.

  113. Normal level of intellectual negotiation.
  (Mr Cahn) Two comments. The first comment is that we would all be sent to prison in breach of our fiduciary duty to our shareholders were we to give slots to Virgin. So it was a pretty odd wager to offer. Second comment, I would like to ask Mr Humphreys how come since 1996—

  114. No, no, you are not asking questions.
  (Mr Cahn)—Virgin has managed to get extra frequencies to Los Angeles, to New York, new services to Chicago, Shanghai, Delhi and Lagos.

  115. Please. If anybody asks the questions around here, strangely enough it will be me. Now then, I just want one final question to you, Mr Wiltshire, on behalf of everybody. What particular measures should Her Majesty's Government take at the present time to assist the industry?
  (Mr Wiltshire) We believe Her Majesty's Government should maintain their support on insurance. We believe there should be a review at an international level of the costs of security which the UK Government should positively contribute to. We believe there should be a fair distribution of costs in that area. Also, we believe that the EU Commission's proposals on support that are available should be followed by the UK Government.

  Chairman: Thank you. Thank you, gentlemen, you have been, as usual, very entertaining.

2   Note by witness: 100 per cent of the aircraft grounded following 11 September are Annex 16 Chapter 3 compliant. Back

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