Murnaghan 7.10.12 Interview with Jim French, Chairman and Chief Executive of Flybe

ANY QUOTES USED MUST BE ATTRIBUTED TO MURNAGHAN, SKY NEWS

DERMOT MURNAGHAN: The future of Britain’s transport network has never perhaps been in more doubt. There’s little confidence in the government’s ability to manage the railways and confusion over where and even if to build more runways. I am joined now by Jim French, the Chairman and Chief Executive of one of Europe’s largest airlines, it’s Flybe. A very good morning, Mr French. I take it that you agree that we are very far away from having a joined up transport policy at the moment?

JIM FRENCH: Yes, you’ve got to say that since the 2003 White Paper, there really hasn’t been a clear policy and I think the danger of no clear long term strategy at the moment is that in a coalition government there are short term compromises made and I think that’s very dangerous for the country as a whole. I would certainly like to see the debate on what we do for the south east of England particularly, come forward in the agenda, a far closer time scale than is currently being proposed.

DM: How do you look at it from your point of view with Flybe flying out of a lot of regional airports as well, in terms of this debate about a major international hub which I know services some of the regional networks as well?

JF: Well let’s deal with the question of a south east of England hub. Twenty years ago there were almost twenty airports in the UK serving London Heathrow and now there are only six. Those passengers use Amsterdam, Paris, Dubai etc. The need for a hub, and let’s look at a long term strategy here, we’re not talking about the need in the next five years, it’s the next 20, 30, 40, 50 years. The emerging nations – Brazil, India, Russia, China and many others, there is an explosion of middle class people coming and they do three things. They want to educate their children internationally and Britain’s schools and Britain’s universities are world leaders. They want to buy iconic goods, and we are demonstrating through our manufacturing of motor cars etc that we are world leaders in manufacturing and designing iconic good and of course they’ll want to do what we’ve done for the last fifty years, they’ll want to travel, they’ll want to come to Europe, they’ll want to come to England, to Scotland, to Wales and Ireland and see the tradition and the heritage of those countries. In order to capture that potential market, all those three sectors, we have to have sufficient runway capacity to bring them into the south east of England. Now Manchester, we are a massive operator at Manchester and at Birmingham, yes, these are tremendous relief valves for the London congestion and at Manchester we are growing a hub very successfully there but you cannot get away from the fundamental issue that Paris, Amsterdam, Frankfurt, Madrid, all have four, five, six runways. They are designing themselves for forty, fifty, sixty years’ time. Heathrow is 99% full, that’s not a hub, you can’t have a hub with waves and banks of traffic converging together. The very reason those airports have four, five, six runways is to allow flights to bank at peaks and troughs. Also if one runway at Heathrow becomes closed, there is absolutely chaos for days. In Amsterdam they switch on the fifth runway or the sixth runway. So there is no doubt in my mind, the regions are critically important, regional prosperity means that you have to access into and out of those regions and therefore if we are going to build a long term strategic airport in the south east of England it must have guaranteed access into the regions from the UK to cover those fourteen or fifteen airports that are no longer served.

DM: Mr French, you also believe, don’t you, that we have a specifically British problem for our airlines in the form of air passenger duty?

JF: Well again, if you just look at our business, Flybe, Willie Walsh recently, the boss of British Airways IEG was complaining that his APD bill is now 4% of his revenue. Our APD bill, tax bill by the government, is now 11%. A family of four wanting to go back to Edinburgh to see their grandparents for Christmas, say from Southampton or Exeter, are paying £100 tax for that privilege. If you go by train, not only are they only going to pay about £400 on their ticket but the government is going to put £400 in to match that rail fare. No, air travel, the domestic air passenger is being penalised in a way they have never been done before. This idea of being taxed both ways on a domestic flight is proving to be punitive. Domestic air travel has fallen 25% in the last five years. I understand the arguments of rail travel from London to Paris, Brussels, Manchester or Birmingham but you try and catch a train from Southampton to Edinburgh or Manchester to Belfast or Exeter to Glasgow, you can’t do those things and regional air traffic is key to helping regional communities thrive and survive. The current doubling of transport tax for domestic passengers is punitive and is crippling the industry.

DM: Well, Mr French, thank you very much indeed for sharing your thoughts with us there on that transport policy in particular reference there to airlines. That’s Jim French there, chairman and chief executive of one of Europe’s largest airlines, Flybe.