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


Examination of Witnesses (Questions 200 - 219)

WEDNESDAY 19 DECEMBER 2001

MR IAN FINDLAY, MR ROBIN MORRIS, MR JOHN MCGURK AND MR ROGER KLINE

  200. All our questions are very good.
  (Mr Findlay) Some are more excellent than others.

Mr Donohoe

  201. You are not getting any money.
  (Mr Findlay) I think the thing is you have to consider what is going to happen in the future because if there is an upturn—this is one of our fears—we will not have the capacity to deal with that upturn, certainly if we do not start spending money now on the system. That is why we fear this traumatic downturn. Okay it has happened but we have got to train people, we have got to be there ready because airlines can much more easily pick up and go again with pilots, etc., and planes that have just been stacked in the desert, you cannot actually mothball a radar system, it still has to work whether you have got one plane—if you had only one plane it would be easy, you would not need one—if you have got 200 planes or 2,000 planes you still have to keep that going and replace it.
  (Mr Morris) Can I give a supplementary answer to that, Chairman. One of the problems we are finding at the moment is though the traffic levels on the Atlantic have fallen and the large capacity aircraft have fallen off, a lot of these have been replaced by smaller capacity aircraft, and actually the workload in National Air Traffic Services amongst the air traffic control system has not changed, it has changed very little. I think November is probably the biggest change month on month. I have suddenly realised from earlier evidence why that may have been, because that coincided with the problems with the railways, and it will be interesting to watch the trend on that.

Chairman

  202. Do not worry, Virgin Railways are recruiting for shuttle services.
  (Mr Morris) We are getting reports back from all the centres and the airports that the peaks are there. What has happened is one refers to the shoulders of the day, the earlier and the later, where a lot of capacity that has been delayed to later on in the day is not there. The peaks are still there and the heavy traffic levels are still there. Because there was always a shortage of capacity at the peak times, there is always demand waiting to fly into the slots.

Mr Stevenson

  203. Does that indicate that NATS get a larger income from the high capacity aircraft than you do the smaller ones?
  (Mr Morris) Absolutely.

  204. So there is a discriminatory charging regime as far as you are concerned and yet the airports have told us that they have a standard charging regime. Why the difference?
  (Mr Morris) If you look at the type of traffic on which we earn the income, the majority of the traffic which flies transatlantic is 757 and larger, most of them 767 and larger. Most of them will travel the full length of the United Kingdom and then go into the ocean.

  Mr Donohoe: Not literally.

Mr Stevenson

  205. Would you like to rephrase that?
  (Mr Morris) It depends on distance.

  Chairman: Go over the ocean.

Mr Stevenson

  206. I just want to clarify that NATS gets less income from smaller aircraft than from larger aircraft and that is discriminatory.
  (Mr Morris) Absolutely.

  Chairman: You have a sliding scale.

Miss McIntosh

  207. Is there any evidence at all that bags are still travelling unaccompanied by passengers? This relates to supplementary evidence from the TGWU, so I regret Mr Morris is not here. Is there any evidence that bags are travelling without their passengers?
  (Mr McGurk) We get regular security briefings and we have not had any evidence that that is happening. That is not to say that the T&G do not have specific evidence. That could be addressed to them.

  Miss McIntosh: Perhaps we could ask for a supplementary note.

Chairman

  208. We are going to ask the Transport and General Workers' Union to come back. You will forgive us if they come back without you.
  (Mr McGurk) Definitely.

Miss McIntosh

  209. Are there any reasons to take hand luggage and put it all in the hold? Would there be any advantage to that? Would you advocate body checks?
  (Mr McGurk) I think I would leave specific security issues to one side, not because I am trying to be secretive but because it is an area of expertise which we did make clear in our submission that we would not address, detailed security operational issues.

  Chairman: That is entirely your privilege, please do not feel under any obligation.

Miss McIntosh

  210. Of the job losses that have been announced is there any evidence at all that it is easier to sack people based in Britain than in continental Europe?
  (Mr McGurk) Yes.

  211. Even after the reforms of the Government?
  (Mr Kline) One of the issues that has come up in one charter company we have dealt with is the issue of whether under the 1995 Regulations, without becoming too technical, it is appropriate to divide an airline up into a number of different bases in order to hit a 30 day consultation period rather than a 90 day consultation period. It did not come to court because the threat of court action, in our view, meant that consultation was appropriate. We reduced the number of job losses in that company from 77 to 24. There is an issue there that that tactic having been tried in one company was attempted in one other major company that sought redundancies and it was knocked back. Industrial relations in some of the airlines is excellent, others perhaps are still on a slight learning curve.

  212. Can I ask a couple of questions of Prospect. One is in your memorandum at paragraph 13 you state that "Capital investment in vital infrastructure projects such as the New Scottish Centre and the Radar Replacement Programme have been postponed." That presumably is not in relation to anything that happened on September 11?
  (Mr Findlay) I think it is in relation to the combined effect of the less traffic before 11 September and the big drop in transatlantic traffic after 11 September. I think it is a combined effect. Because the airline group actually had to borrow every penny that they put in or gave to the Government for it they are facing a huge debt mountain and they can no longer see the way forward to going through this part of the capital investment at this point in time. They are looking to see whether the money will come in but the cash flow is not as good as had been predicted.

  213. At paragraph 18 you say: "There are proposals for significant cutbacks well in excess of previous NATS proposals, not only in personnel but also in Service Level Agreements" and you talk about the direct correlation to the number of engineering staff required. Are you able to say more about what the impact of that will be?
  (Mr Findlay) The Service Level Agreements are the restoration times in the main if a radar goes down or a screen goes, when that will be replaced. That is a very important feature obviously in safety. What we have seen is they are looking to extend these times. We are fighting this at the moment. The other effect of not actually putting more money in investment for new equipment is that you need more engineers to look after it because it is ageing and it needs more maintenance, it needs a lot of people who know the system.

Chairman

  214. As we know from Heathrow, I think?
  (Mr Findlay) Yes. This is one of the big issues that we are finding. This Service Level Agreement incidentally has not yet gone through all the safety measures that it will need to go through. That is something we are very, very aware of and very fearful of.

Miss McIntosh

  215. Changes in airline ownership rules, how would that affect members of the two bodies?
  (Mr Findlay) In our case it would depend on those changes and how they affected the group that currently own National Air Traffic Services. Part of the reasoning in the past was that the privatisation would actually give us some capital to finance and would be safe out of the clutches of the Treasury but that, of course, has not quite happened. What might well change is if there were more airlines or a different set of airlines looking after NATS we may well have consequences on the charging procedure because all airlines want to fly in air traffic regions and it should be free according to them, they do not want to be charged anything. Therefore, they do not want the charges put up. The effect is NATS cannot put the charges up because the airlines do not want it to happen either. It is a little circle.

Chairman

  216. Thank you. Mr McGurk, what effect will it have on your staff?
  (Mr McGurk) I think the UK is more likely to be a prospective beneficiary of takeovers rather than a target. The European rules are going to change and we are relatively agnostic about them. We do not openly call for them to be abolished but we do not see really see that they are going to remain in the long term.

Miss McIntosh

  217. My understanding is that $5 billion has been paid by the US Government to US airlines. Do you have any idea if some of that money has made its way to the 100,000 staff who have been laid off by US carriers?
  (Mr McGurk) We have got lots of evidence from our US colleagues in the Airline Pilots' Association and from other US unions representing general workers like the Teamsters and the IEM that very little of that money has found its way into preserving jobs. This is one of the issues that will have to be addressed. There is a huge lobbying effort from the airlines to the Air Transport Association in Congress and they have managed to get their revenues, their security, underwrit10 as a federal responsibility. The wider point I have to make is that presents a very unlevel playing field for us in the compensation that our Government has contemplated purely by comparison proportionately.

Mr Stevenson

  218. Are you aware that the Airline Group have asked the Government for £300 million to meet their anticipated revenue shortfall?
  (Mr Morris) We have read the newspaper reports that they have. They have not confirmed to us that they have asked for it but it would be very sensible to ask and that would make it a true partnership as we wanted it in the first place.

  219. So, if you are not aware other than the press reports, presumably you are not aware of the what effect on your part of the industry it would have if that £300 million were not agreed?
  (Mr Morris) If that £300 million were not agreed we know in the base case that NATS are working to that they will be £170 million short in the next two years.


 
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