Will Heathrow link ever be viable?

Aug 8 2007 by Bill Gleeson, Liverpool Daily Post

The Government’s new Open Skies policy will make securing a link with London even harder. Bill Gleeson reports

LAST week, it was revealed that Liverpool John Lennon Airport and six local authorities around Merseyside had launched a campaign to establish an air service between the airport and London Heathrow.

The move came in the wake of last month’s closure of an airlink between JLA and London City Airport. A fall in passenger numbers and “unfair” competition from the railways were blamed.

VLM’s five-times-a-day Liverpool to London service started in February 2004, after the Daily Post’s “Fight for a Flight” campaign, which saw a petition of 10,000 names presented to the then transport minister, Dr Kim Howells.

Since then, VLM has carried more than 100,000 people to and from London, including more than 70,000 in 2005 alone.

Three months ago, however, the service was cut to just two flights a day after passenger numbers dwindled to as few as 15-20 a day.

JLA management pointed the finger of blame firmly at Gordon Brown, the then Chancellor of the Exchequer, claiming the Treasury’s doubling of Air Passenger Duty (APD) in February caused the fall.

Airport managing director Neil Pakey said at the time: “Since the tax increase, demand for the service has slowed down. VLM is a Belgian company and they can’t understand why this tax is levied because no other country has it.

“This has come at a time when the railways are increasingly competitive, but they are subsidised as opposed to taxed.

“The result is that we are not dealing with a level playing field.

“The whole reason for the success of the Daily Post’s campaign was that it listened to the business community and its readership.

“My view is that, as we approach the Capital of Culture year, this link is important. It needs to be addressed with the UK government because its loss is not a good thing for the city.”

Yet there are those in the aviation industry who think that blaming cheap trains and taxes misses the point. Instead, they argue, there is a much more fundamental cause, namely the scarcity of landing slots at all of London’s airports, but particularly at Heathrow.

However passionate locals are about a link to Heathrow, the business case doesn’t appear to stack up.

Landing slots at Heathrow are fought over by airlines as if they were gold dust. All existing slots are fully utilised and on the rare occasions they come on to the market, they change hands for up to £15m a pair. That price tag alone undermines the viability of a link to Liverpool.

Laurie Price, director of aviation strategy at management consultants Mott MacDonald, points out that JLA isn’t the only British regional airport to lose its air link to London: the same recently happened to Humberside. He expects others to follow suit as the new Open Skies agreement between United States and the European Union comes into force next spring.

The much anticipated Open Skies agreement will result in an increased number of transatlantic flights between all EU countries and North America by replacing the more restrictive current treaty. The new agreement will mean more transatlantic flights vying for slots at Heathrow.

Mr Price explains: “Landing slots are as rare as hens teeth.

“I would imagine that even services from Manchester will be sacrificed when Open Skies comes next year. Just do the sums. Airlines can get ten times the revenue from a pair of slots by flying larger aircraft to say North America or the Middle East.

“Compare a 737 with 150 seats charging £100 for a domestic flight to using the same slots for a 747 with 450 passengers paying a mix of fares such as first class and business class as well as charging for 30 tonnes of cargo. Its obvious what they are going to choose.”

THE big constraint is the lack of runways and airports in the South East of England. Something known as the Cranford Agreement limits the number of flights that can use each of Heathrow’s two runways. The deal, put in place to respond to environmental concerns from residents close to Heathrow, means that one runway must be used for take-offs only while the other is used for landings only. At other airports the same runways are used for both landings and take-offs. Changing Heathrow’s runway arrangement would increase capacity by around 15%, allowing more slots to be made available.

The Government’s aviation White Paper, published two years ago, recommended a third runway at Heathrow. If that is ever built, and it was to be used for domestic services, it would alleviate the scarcity of landing slots for regional airports. Even then, Mr Price believes that there is such strong demand for international flights that regional routes would still miss out.

In contrast, Robert Hough, deputy chairman of Peel Holdings, the owner of JLA, believes that a business case can be made for a service between Liverpool and Heathrow.

Mr Hough argues: “It would link into the premier airport in the UK with access to the City of London, all of the tourists facilities and also as a major international hub.

‘IT’S a great prize for any regional airport. There are hard fought battles engaged in for that purpose. It’s an obvious ambition and elevates the status and perception of any regional city.

‘Realistically, the pressure on landing slots is increasing because of Open Skies. That makes the battle even more important.

“But there can be commercial reasons why links to regions are important for airlines. They bring people into their hubs. That’s what is happening at Manchester, Glasgow, Edinburgh and others and there is no reason why Liverpool can’t join that group.

“The importance of achieving that is as critical as it’s ever been when global connections are so important these days.

“But what we really need is policy changes which would be instrumental in taking forward such an initiative. We need the recognition of a balance in the available network that includes linking major British cities.”

Over the years, Liverpool has seen many air links with London come and go. British European Airways, BA, BMI and, most recently, VLM have all tried and failed.

Mr Hough believes that was a different era. He said: “Liverpool then isn’t what it is today.”

Nor does the proximity of Manchester Airport, closer to Liverpool than Gatwick is to central London, dilute demand.

“There is a distinct market for Merseyside, Cheshire, Wirral and west of the M6. There is no doubt that the presence of Manchester doesn’t make it easier, but it is entirely possible.”

Yet to many passengers, the debate about whether Liverpool should be a spoke to Heathrow’s hub will feel a bit academic. BA flies direct to London from Manchester, Air France flies to another major hub at Paris Charles de Gaulle, Aer Lingus goes to Dublin and KLM flies to Amsterdam Schiphol. All are capable of offering high standards of service to passengers transferring to onward flights.

Marianne Sammann, Lufthansa General Manager UK & Ireland based at Manchester Airport, said: "Lufthansa’s 83 flights a week out of Manchester offer a real alternative for people travelling from the North of England. In 2006 more than half of Lufthansa’s Manchester passengers transferred to onward connections in the airline’s global network offering almost 13,000 flights a week to a total of 183 destinations in 78 countries.

‘WITH all Lufthansa and Star Alliance partner flights operating from the same terminal, onward connection times at the airline’s newly opened Munich hub facilities are as short as 30 minutes with flights through Frankfurt offering minimum connecting times of an hour. This helped Lufthansa to increase the number of passengers carried to and from Manchester in 2006 by 13.5% to almost 576,000 – setting a new airline record for the second year running.”

And to top all of these arguments against a link is the emerging consensus about the need to reduce carbon emissions. When train travel is so much more carbon efficient, domestic flights seem to be an extravagance the environment can do without.

billgleeson@dailypost.co.uk