Examination of Witness (Questions 420
THURSDAY 23 JULY 1998
420. That is very interesting. We have had
a number of witnessesfrom Brussels, from the Government,
from the airlines and now from yourselvesand everybody
is very coy on this subject. Would it be correct, in your opinion,
that in the most recent KLM annual report there is a credit item
of some $3 million, which we understand was for the giving up
of slots by Air UK to Guernsey? That seems to imply that they
are worth money.
A. My Lord Chairman,
I think it is fair to say that, like any scarce resource, they
have value. I have some difficulty with this questioning at the
moment, because you may be aware that the States of Guernsey Transport
Board has actually taken out a legal action in the High Court
against ACL, alleging that ACL is in breach of EC Slot Allocation
Regulations because we allowed the transfer of Air UK's Heathrow
slots to Guernsey to British Airways (BA). That matter, I am sure,
will come to the High Court probably in September.
Chairman] Very well,
I fully appreciate that that is sub judice. Equally, I
should make it clear that although I am sure we will have questions
alluding to it, it is not part of our enquiry to look into the
details of the BA/American Airlines (AA) proposals. I am sure
there will be questions, because we would like to knowand
I am not asking the question right nowwhat is going to
happen to the 267 slots, how are they going to be allocated, etcetera.
I am sure some of my colleagues will charge into that one. Lord
421. Thank you, my Lord Chairman. Mr Morrisroe,
you made the point that the airport operator is the baker of your
cake, and that ACL is the catererin other words, it slices
it up. Given that the baker has ingredients and the ingredients
consist of the British Airports Authority (BAA), the Civil Aviation
Authority (CAA) and the Department of Environment, Transport and
the Regions (DETR), in the sense of planningfor example,
moving the sewage works at Heathrow or whateveris it not
rather odd that none of these ingredients is part of your organisation?
A. My Lord, the
structure of ACL was developed in 1992 from a previous arrangement
in which British Airways was responsible for the allocation of
slots in the United Kingdom. That was quite a normal pedigree
for this kind of work, and in many parts of the world slot allocation
is still undertaken by the national carrier. Europe has generally
moved forward on that, and there are increasing numbers of independent
agencies like ACL. When ACL was formed, there was a full consultation
process with the Government, the Commission, the airports, the
capacity providers, and NATS, as to what the appropriate arrangements
would be for the management of this task in future, whilst needing,
if you like, to draw on and to keep the expertise which existed
in the United Kingdom in this subject, which at that time was
centred in British Airways. We have developed thisto the
outside view perhapsrather odd structure of a company which
is owned by airlines and partly funded by airlines.
422. For the benefit of airlines?
A. For the benefit
of all airlines, not particularly the United Kingdom airlines;
they receive no different treatment by ACL from any airline. However,
we are also under contract to the airport operators. Effectively,
control is exercised over us by the airport operatorsthe
bakersthrough these contracts, and these contracts oblige
us quite strictly to make sure that whatever we do is in absolute
conformity with industry guidelines, Slot Allocation Regulations
and so on and so forth, so we have no alternative but to follow
423. Then can I take you slightly sideways.
When the 15-year agreement at Gatwick against a second runway
comes to an end and DETR, CAA and the rest of them agree that
yes, it is about time to have a second runway, there will be vast
numbers of new slots, will there not?
424. So in my analogy, is that a new cake?
A. That is a
425. It is a larger cake, but it is not
a new cake?
A. It is a larger
cake. If I may, twice a year there is a process of assessing the
capacity of the airports, making a judgment about whether the
cake can be made any larger, even within the current infrastructure.
There has been a progressive increase in efficiency in the use
of airports in the United Kingdom over the years, which has led
to an incremental increase in capacity and a few more slots available
each season to be shared out. The scenario which you describe
is a step change, as indeed we shall see in a couple of years'
time in Manchester when the second runway becomes available. There
is a runway under construction at the moment.
426. Following up Lord Skelmersdale's point,
you have these airline representatives who you say are part of
management. How do you stop them influencing the decisions of
the coordinators? Do you have Chinese walls? Are they allowed
to speak to each other? What happens?
A. The airlines
which own ACL each have one share in the company and each appoint
one director. The board of directors meets quarterly. I am accountable
to the board for the running of the company. In general terms,
the issues which we are dealing with are the management of the
business, the funds, the resources, the manpower, investment in
new computer systems. The only scheduling issues which are even
considered by the board are examples I cited a moment ago as to
where a legal action is being taken by the company. Beyond that,
those directors have no involvement in the decisions made by their
appointed coordinators. I would describe it as slightly stronger
than a Chinese wall. It is a taboo subject. They do not get involved
in any of the decision-making process.
427. One of the major problems, nevertheless,
is that the history was that BA owned this operation until 1991?
A. That is correct.
428. So there are an enormous amount of
"grandfather rights" which really the new system does
not seem radically to have changed. In other words, you seem to
be dealing with the fringes rather than the heart of the problem.
Putting it another way, suppose ACL has been set up, say, 20 years
ago; do you think the pattern of slot allocation would be very
different from what it is now?
A. I can only
speculate. I will just say that the structure of ACL has served
this country, I believe, quite well over the last few years. We
are already in the process of debate as to whether or not as an
organisation its relationship with the other organisations in
the United Kingdom should be changed in the future. Indeed, we
are holding a meeting on 30 July to discuss those very subjects.
So it is an evolutionary step, I think, in the management of airport
capacity in the United Kingdom.
429. Can I follow that up, if I may, so
we can get a feel for the overall size. You mentioned the present
Gatwick capacity at 48 slots per hour, is that right?
430. Can you give us the statistics of how
many slots you administer over your 12 airports?
A. It is about
1.4 million flights a year.
431. That is 1.4 million landings or take-offs?
A. Yes, that
432. Movements, in other words?
that is correct.
433. Of those, how many are what I would
describe as "grandfather righted"?
A. If I may say
so, that is quite a difficult question to answer in the broad.
Can I bring it back perhaps more locally to home, to Heathrow,
if that is possible?
434. Yes. Before you do that, could you
tell us how many slots there are per annum at Heathrow?
A. There are
440,000 flights a year at Heathrow, which is something like 95
per cent, I believe, of the available capacity. There are a few
spare slots in the evening.
435. We want to come to that in a minute,
but let us just go step by step. Of those 440,000, how many of
those are "grandfather righted"?
A. I am calculating.
436. I thought I was trying to help you,
because you said you wanted to go to Heathrow.
A. Thank you,
my Lord. I would say at Heathrow, out of that 440,000 around 425,000
are operations by airlines and the balance are things like helicopter
movements and ambulance flights, one off operations, we call them
ad hocs, which do not have any rights associated with them. Of
the 425,000 flights that are there, all those flights have historic
rights. The definition of historic rights is if an airline has
an operation approved by an ACL and operates that flight then
they build up historic rights for that service.
437. For that service?
A. For that particular
438. If they change the service those rights
disappear, do they?
A. No, that is
not the way the system works, my Lord. The slots are not route
specific. A slot is an approval to operate an arrival or a departure
at a particular time or on a particular day.
439. To anywhere in the world?
A. Anywhere in