The Aviation White Paperand the Highlands & Islands

Tom Matthew

Highlands & Islands Enterprise

“The Highlands”

Inverness MedicalPart of Johnson & Johnson Group1,200 employeesExporting world-wideStaff travelling world-wide on a daily basis

Ensuring Access To Hub Airports

“We cannot have a situation where the regions are denied access to London”

Alastair Darling

Inverness Services:Present Provision Airport Operator Started Frequency

Per WeekDay

Aircraft Base

Gatwick BACitiexpress

- 3 Inverness

Heathrow bmi 04 1 HeathrowLuton easyJet 96 1 Luton

Gatwick easyJet 03 1 Gatwick

• Other Cross-Border Services:

* Manchester* Birmingham* Stockholm

Research Into The Impacts Of Loss of Inverness-Gatwick Service (1)

• Independent study, undertaken in December 2001

• This was before:

* easyJet Gatwick service * bmi Heathrow service

• Based on loss of full service operator with additional services to Luton or Stansted

Research Into The Impacts Of Loss of Inverness-Gatwick Service (2)

• Short-run employment loss of 1,400 Full-Time Equivalent jobs

• Long term impact could be greater - not least through perceptions of the region being:

“peripheral, with minimal interlining and premier routes from the South East”

• Impacts generally felt in “premier” businesses

• “Traditional” cost-benefit analysis cannot quantify the negative impacts in terms of trips no longer made…

• Yet when Inverness-Heathrow ceased in 1997, traffic between London and Inverness fell by 20%

The Findings In Context

• Impact equals one in every hundred jobs in the region

• Loss of “premier” businesses:

* regional GDP per capita is only 75% of the UK level

* under 3% of the region’s businesses employ more than 50 people

• Low population (434,000) means that business base needs to be outward looking-exports and tourism

• Limited business base means that we require the “import” of external expertise

• Impacts would be felt widely in geographic terms

Inverness & Nairn43%

Moray, Badenoch & Strathspey29%

Ross and Cromarty18%

Skye & Lochalsh3%

Caithness & Sutherland7%

Origin of residents using the BA Inverness-Gatwick service

Significance of Interlining

• In the case of Inverness:

“some firms were there on the assumption that they could easily get to London and the US” (Alastair Darling) but…..

• The White Paper defines “London” as: Heathrow, Gatwick, Stansted, Luton and City

“London” Airports:Service Profiles

0 50 100 150 200

Heathrow

Gatwick

Stansted

Luton

City

Number of Destinations

Full Service-Long Haul

Full Service-Short Haul

No Frills

At August 2003

Interlining: Gatwick and Luton Compared

0 10 20 30

BA Gatwick

EZY Luton

% of pax interlining Source: CAA Data

LTN

GATWICK LHR

Possible Alternatives?

• Markets too thin to support extensive direct services to non-UK hubs

• Interlining opportunities at regional airports are much less than at south east hubs

• Surface access: only one direct daytime train between Inverness and London which takes 8 hours

Conclusions• Air services to London generate very significant economic benefits

• Need a mix of services to London airports-no frills and full service

• This must include connections to hub airports, with adequate frequencies and timings

• Interlining opportunities are essential, especially where the remote airport has limited connectivity

• “Defined circumstances” for a PSO should reflect surface travel alternatives

• Good air services are essential to growing regional prosperity