Future of aviation (HC 499-ii) Transport Committee 13 May 2009

Q151 Mr. Eric Martlew (Carlisle): I am a bit disappointed by the witnesses because they have downplayed the high-speed train. It is my opinion that you are doing that because you want to boost aviation. The reality is the Edinburgh and Glasgow shuttles would be almost totally destroyed if you had a high-speed train going to Heathrow. The Manchester one has nearly been destroyed anyhow and it is still two hours. Mr Snelling, you said you will not be able to get on the high-speed train and that is totally inaccurate, you have no evidence for that, you are just saying high-speed lines are not going to make any difference. We all know that with the high-speed line from Amsterdam we will be in the centre of London in just over three hours, so it will make a difference. I accept that aviation will grow, but let us not downplay the effect that high-speed lines will have on the aviation industry especially in near Europe and the UK.

Mr Wilson: In fairness, I specifically quoted the Manchester example as one where ---

Q152 Mr. Eric Martlew (Carlisle): I was expecting you to quote the Scottish examples as well, for obvious reasons.

Mr Wilson: But they remain hypothetical. As journey times increase the use of the shuttles will decrease, there is absolutely no doubt about it.

Mr Snelling: To address your point about rail freight, we are certainly assuming that if a high-speed rail link is built then freight will not be allowed access to it.

Q153 Mr. Eric Martlew (Carlisle): Why?

Mr Snelling: That is based partly upon the practice on the continent. Freight trains do not operate on the high-speed network in France. That is also the assumption across the industry. The only bit of high-speed rail that we get access to at the moment is the Channel Tunnel and its links because obviously that is literally the only rail line, so you have to use it, but even there we are priced off it, to be honest, and it has been very hard to get a successful service.

Q154 Mr. Eric Martlew (Carlisle): I would have thought you would be coming here advocating that we should allow you on it, not just saying, "We're not going to get on". That is a bit negative.

Mr Snelling: It does not work very efficiently if you are trying to combine a high-speed passenger service with freight services which do not need to travel at that speed and, therefore, there is no industry justification for spending the money on getting services that would travel at that speed.

Q155 Mr. Eric Martlew (Carlisle): There is going to be about a six or seven hour gap during the night when we are not going to put high-speed trains on, are we?

Mr Snelling: If we had a good experience of getting access to the rail network at night rather than it being closed down for maintenance we might be more excited about that.

Q156 Mr. Eric Martlew (Carlisle): I would have thought you would have been a bit more optimistic.

Mr Snelling: It does not really work with the air freight industry is all I am saying. When we talk with our rail freight operator members about where they want Government to concentrate its efforts to improve rail performance and get trucks off the road they are not talking to us about airports, it is all about Southampton, Felixstowe and the London ports and improving those links. That is where the massive upscale for rail freight lies.

Q157 Chairman: Are your comments about high-speed rail based on experience of High Speed One?

Mr Snelling: High Speed One has proved, and is proving, very difficult for freight combined with the Channel Tunnel. We are charged very high access charges to be able to get on it. I would say our impression is that the people who run it are obligated to allow a certain quantum of freight pass on their line but they have no real incentive in that the design of the lines and their business is around delivering high-speed passenger services. Certainly we anticipate that with High Speed Two there will not be any freight access at all anyway.

Q158 Chairman: Have you been told that or is that an assumption?

Mr Snelling: It is the industry assumption and that certainly has not been challenged by DfT telling us that is not the case.

Q159 Mr. Eric Martlew (Carlisle): I was talking to the Minister and that is not his view at all, so where did you get that from?

Mr Snelling: As I say, it is common practice whenever high-speed lines have been developed and, in terms of how to optimise rail freight, having freight services on the high-speed line might not be the best way to do it. If there is money available to spend on rail freight there may be areas you could spend it on that would produce far more improvement in terms of getting trucks off the road.

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Q234 Mr. Eric Martlew (Carlisle): I have to say that I was probably the one member of the Select Committee who supported the Government. Mr Cooper, you mentioned somebody paying maybe £16 with their credit card but does that not give them insurance cover?

Mr Cooper: Only if the total cost they have paid is more than £100 and there are various other conditions. The restriction about it having to be made in the UK has now lapsed.

Q235 Mr. Eric Martlew (Carlisle): But in the main people who do pay with a credit card and they pay over £100 are covered, are they not?

Mr Cooper: It covers the cost of the refund of what they have paid for their journey. If I am stuck in Latvia, having to get back to the UK and there is no alternative flight so I have to pay four times as much to get back, I am not going to have four times as much back.

Q236 Mr. Eric Martlew (Carlisle): If I was going to Latvia I would take out holiday insurance as well but is there not a danger that a lot of the people you are talking about, if you put a tariff on, could well be paying three times: they could be paying through their credit card and they could be insured three times through your holiday insurance as well.

Mr Cooper: The travel insurance does not cover you.

Mr. Eric Martlew (Carlisle): If you want it to it can.

Q237 Chairman: Can you explain to us what are the biggest problems that air travellers face in terms of insurance in that they might be insured or not?

Mr Cooper: Most travel insurance policies do not include any protection for scheduled airline failure. You can buy separate scheduled airline failure insurance or you can potentially buy it as an add-on to existing insurance policies. It is not included as a matter of course and the actual cost of scheduled airline failure insurance is relatively low and can be available at a cost of £1 or £2 per passenger. The vast majority of travellers nowadays are buying annual policies which do not routinely contain scheduled airline failure insurance.

Q238 Mr. Eric Martlew (Carlisle): But they are if they pay by card.

Mr Cooper: Even if you pay by credit card the card itself does not give you any protection of that type. You as the consumer are paying the provider to use your card with that provider, you are not actually paying that as insurance or any additional protection.

Q239 Mr. Eric Martlew (Carlisle): The two large holiday companies were mentioned, and I will come back to that in a moment, but what you are really saying is that somebody who travels on British Airways or Virgin should pay this tariff as well.

Mr Cooper: Yes, absolutely.

Q240 Mr. Eric Martlew (Carlisle): But again you come back to the situation where the strong are protecting the weak.

Mr Cooper: No, they are not; the customers who have chosen to travel on this particular occasion with Virgin Airlines have paid £1 but if they decide to travel next week with Sky Europe or with Ryanair they have also paid £1, so it is not about the strong subsidising the weak, it is an air traveller paying an insurance premium to travel.

Q241 Mr. Eric Martlew (Carlisle): I am very impressed with the way you dealt with that but I do not think it actually deals with the situation at all. Can we come to the situation about the two big travel companies? My understanding is that the money in the pot would not cover a major problem at the moment - we got this from the CAA - and if we increase the pot is it not likely that these two companies will move away from that and take out their own insurance?

Mr Cooper: At the moment that is not an option that is available to them per se in the sense that if you sell a flight and you are not the airline operating that flight you have to hold an ATOL to do so; you cannot simply walk away from it. What the big two operators could potentially do for some of their seats - because a certain proportion of what they sell are seat-only arrangements - is say "If I am selling to Mr Martlew a flight on a Thomson Fly aircraft" at the monument that is sold to you by Thomson Holidays. Thomson Holidays as an ATOL holder have to charge you the levy to pay on to the CAA. If they chose to sell that flight to you as Thomson Fly and sold it directly then they could potentially avoid paying the levy in that instance. That would take a certain proportion of seats out of protection but it would not take all of them out of protection.

Q242 Mr. Eric Martlew (Carlisle): You are saying they cannot actually opt out.

Mr Cooper: They cannot opt out, no, because the ATOL scheme is a compulsory scheme. What they could do is rearrange their business model to reduce the number of customers who are protected. Where they are at the moment philosophically is saying we would prefer all of our customers to be protected so that is what we are doing; there comes a point where economically it becomes challenging if you are paying a lot more than your competitors to behave in a certain way, and then at that point they may well review their position, but where they are at the moment is that they want their customers to be protected.

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Q253 Mr. Eric Martlew (Carlisle): Surely a lot of people actually travel by car to the airport so that would not cover you.

Mr Smith: Outside London a lot of people travel to rail stations by cars and there is a great issue about sufficient capacity.

Q254 Mr. Eric Martlew (Carlisle): The point you were making is that it is from the start of the journey to the end, and all I am saying is that a lot of people travel by car to the airport, so that is not the case for them, is it?

Mr Smith: We look at access to stations whether it is by bus or foot or by car and we would hope to do the same, obviously, for airports.

This is an uncorrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee. Neither witnesses nor Members have had the opportunity to correct the record. The transcript is not yet an approved formal record of these proceedings.

The full transcript may be read here.

On behalf of Eric Martlew, 3 Chatsworth Square Carlisle Cumbria CA1 1HB