Posted on Tuesday 21 August 2012 by Ulster Business

John Simpson

Welcoming the first British Airways flight to arrive in Belfast for 11 years are Willie Walsh, CEO of BA’s parent company International Airlines Group; Brian Ambrose, CEO of City Airport; Enterprise Minister Arlene Foster; and Secretary of State for Northern Ireland Owen Paterson. 

Northern Ireland has three commercial airports each competing for scheduled services from a number of airlines.

Belfast International and Belfast City are privately owned and both are profitable. Derry City is owned by the City Council with a co-operation agreement with County Donegal but, with only a modest level of traffic, is trading at a loss.

In the summer of 2012 each of the three airports has spare capacity and could, if airlines wanted to increase the number of services, provide more landing and departure slots. The only airport for which capacity might become a constraint is Belfast City.

It is constrained by a curfew on operating hours, (06.30 to 21.30 with restricted exceptions and excess charges for landing outside these hours), a requirement to keep peak noise levels within a limit, and a notional limit on the total number of aircraft seats sold. The seat limit is, at present, hypothetical since numbers have fallen following the withdrawal of some services, such as bmibaby and Ryanair.

AIRPORTS POLICY

The critical question that recurs is whether there should be any Government policy, wider than town planning decisions, affecting the development and range of airport activities.

The most significant suggestion in political debate is that there should be efforts to consolidate the main Belfast services, possibly at Belfast International, to improve the ability of Belfast International to compete with Dublin.

Management at Belfast International and diverse supporters of a possible consolidation optimistically envisage larger numbers of passengers attracting extra routes. Detractors disagree and argue that the balance between Belfast City and Belfast International has generated an acceptable degree of choice for passengers.

The balance of services between the two Belfast airports is evolving to suit customer preferences. Many of the city to city services, largely within the UK, or interlining routes which are more likely to draw on business travel and link to the catchment of most of the business community, tend to choose Belfast City. More of the leisure, holiday and low cost travel (with exceptions affected by convenience of location) has centred on Belfast International.

A major exception, because of both technical and runway needs, is the only daily scheduled service from Belfast International to New York.

The test for airport policy is whether any Government intervention, to alter the competitive process, would enhance the contribution of the airports and airlines either to the economy, to environmental protection or to social acceptability. The general judgement is that, subject to the existing carefully defined planning objectives for Belfast City, there is little justification for stiffer regulation.

Neither Willie Walsh, chief executive of the parent of the BA group, nor Christoph Mueller, chief executive of Aer Lingus, have raised any objection to either the existing curfew hours or noise contour limits that exist for the City airport.

AIRLINE COMPETITION

The ‘flagship’ service from Northern Ireland is the service to London Heathrow. British Airways and Aer Lingus will soon be in direct competition for the passenger services to Heathrow from the City airport. Flybe and Aer Lingus will also soon be in competition for an increased number of flights to Gatwick.

Over recent years, Heathrow services have been split between bmi at the City airport and Aer Lingus at the International. Passenger preferences gave the City an advantage. After the arrival of BA (which bought bmi) in July and the subsequent announcement that Aer Lingus will transfer to the City, the commercial judgement of these two international airlines confirms that flagship role for the City.

Willie Walsh believes that the City is the better airport for the Heathrow route. “This is now an important short-haul part of the bigger BA network. Belfast had been one of the better performing parts of bmi and we need to make it more efficient,” he told me.

One painful consequence of the takeover of bmi is that there have been up to 100 redundancies, particularly amongst the flight staff and cabin crew from bmi. Willie Walsh is sympathetic and critical.

“This is a reflection of how poor the business of bmi was. If we had not acquired bmi, all of the jobs would have been lost. Without question, the Belfast to Heathrow route would have disappeared,” he said.

For BA, initially, flights will continue to use Terminal 1 at Heathrow but that is until there is a chance to assess the demand for interlining and, desirably, finding space to transfer to the newer Terminal 5.

Aer Lingus has also decided to locate at the City. Does this portend a piece of cosy co-operation? Aer Lingus and BA, in words and actions, say that there will be a robust competitive relationship.

Willie Walsh – a former CEO of Aer Lingus – dismisses any suggestion of commercial co-operation. “There is no question of BA talking to Aer Lingus on co-operation or sharing services. There will be a competitive relationship,” he said.

With the confirmation there will be seven BA flights each day and three by Aer Lingus, there is a real prospect of keen competition possibly on fares, fare structures and timetable convenience.

Already there is intense interest in the scheduled timetables, particularly as they affect early morning departures and the latest evening arrivals. Early internet timetables seem less favourable to BA passengers.

HEATHROW IS ONLY ONE ROUTE

Northern Ireland is well served by several major airlines flying to most large cities in Great Britain, including four other airports in the London region.

Flybe has been the largest carrier from the City airport. EasyJet is the largest carrier from the International.

The Aer Lingus decisions have given new emphasis to the role of Gatwick as a destination, or hub, for Northern Ireland passengers. Three flights a day to and from Gatwick by Aer Lingus will represent a very large passenger carrying capacity increase (in contrast to the simpler transfer of capacity on flights to Heathrow). There may be eight flights a day, in total across the airlines, to Gatwick.

The new capacity on air routes to the bigger London airports has come at a price. The internal routes to Great Britain, formerly offered by bmibaby and also by Ryanair, have been reduced. Potentially, the low cost carriers will be assessing the viability of further proposals.

Scheduled services outside the UK to European destinations, over and above holiday charters, have only enjoyed modest success. Aer Lingus, from summer 2013, promises scheduled services from Belfast City to Faro and Malaga. Their aircraft, the Airbus 319, can comply with the technical demands of longer flights to Europe from the City airport.

Taking note of the proposals for Northern Ireland to be able to set its own local Air Passenger Duty (APD) to encourage travel, Willie Walsh has greater ambitions. He would like to see APD abolished altogether. Regional setting of APD could, he argues, distort travel plans that logically should go through Heathrow.

UK AIRPORT CAPACITY

An important question for air travel to and from Northern Ireland is whether there will be enough capacity at Heathrow to accommodate an increasing passenger flow. Again the opinion and influence of Willie Walsh is critical. What should Northern Ireland stakeholders wish for?

Mr Walsh has a preferred answer: a third runway. “I do not think that there is any other answer that makes sense. I would like to see all MPs, including Northern Ireland MPs, understand the need for extra capacity in the right place,” he said. That’s code for support for a third runway.

An ironic consequence of the separate decisions by BA and Aer Lingus is that, for the present, Northern Ireland is holding on to about 10 landing slots each day at Heathrow. Of course, that outcome comes with no long-term guarantee. Will the number of passengers justify the continuation of this capacity?

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