Northern Ireland Affairs Committee
Oral evidence: Tourism in Northern Ireland, HC 2014
Wednesday 5 June 2019
Ordered by the House of Commons to be published on 5 June 2019.
Members present: Kate Hoey (Chair); Gregory Campbell; Maria Caulfield; Lady Hermon; John Grogan; Nigel Mills; Jim Shannon; Ian Paisley; Sir Desmond Swayne.
Questions 122–193
Witnesses
I: Rob Griggs, Policy and Public Affairs Director, Airlines UK; Uel Hoey, Business Development Director, Belfast International Airport; Brian McGrath, Chief Executive, Foyle Port; Niall McKeever, Chairman, Federation of Passenger Transport Northern Ireland.
Written evidence from witnesses:
– Belfast International Airport
Witnesses: Rob Griggs, Uel Hoey, Brian McGrath and Niall McKeever.
Q122 Chair: Thank you all very much for being here, so early in the morning too. As you know, this is an inquiry into tourism in Northern Ireland. We are particularly interested today in evidence on the infrastructure issues and connectivity, which is why you are all here. We look forward to hearing from you. Could we have literally a couple of sentences from each of you on who you are and your organisation?
Brian McGrath: Good morning. I am Brian McGrath. I am chief executive of Foyle Port from the Londonderry Port and Harbour Commissioners. I am also the president of the Londonderry Chamber of Commerce.
Rob Griggs: Good morning. My name is Rob Griggs. I am the director of policy and public affairs at Airlines UK. We are the trade body for UK registered airlines. We have 13 members, and all but one of our commercial carriers operate services out of Northern Irish airports.
Uel Hoey: Good morning. I am Uel Hoey—no relation. I am the business development director at Belfast International Airport.
Niall McKeever: I am Niall McKeever. I am the chairperson of the Federation of Passenger Transport Northern Ireland.
Q123 Chair: Could I ask you all to perhaps give me the one most important thing that, that if it happened or changed, you think would make the way we connect to Northern Ireland better, the infrastructure better and overall tourism better? Is there one burning thing that you really think would make a difference?
Niall McKeever: As a representative of the transport association, the infrastructure is certainly underfunded in Northern Ireland. We have been making great strides on the A6 and the A26 most recently. As the backbone of the skeletal service that provides the movement of people in Northern Ireland, the infrastructure would be a key priority for us.
Uel Hoey: Thank you very much for inviting me to attend today. There are two things and I cannot really decouple them. We have an issue in terms of equal opportunity on the island of Ireland with regards to air passenger duty. We have been grappling with UK air passenger duty for about 25 years. Frankly, we cannot get the air routes set up to bring in the tourists. We are competing, effectively, with a burden versus Dublin in that regard.
Secondly, if we do succeed in getting those air routes, we need to be able to sell them proactively as a Northern Ireland product at the far end, because getting them is only part of the challenge; we need to sustain them once we have them. We need to look carefully at how Northern Ireland is promoted in market in order to sustain those tourism-related routes.
Rob Griggs: I would chiefly echo comments from my colleague at Belfast International. We consider APD to be a UK-wide problem but it is one that is particularly acute in Northern Ireland, given the direct competition with Dublin Airport. We know that the majority of inbound tourism to Northern Ireland comes from the UK. Passengers within the UK face paying APD twice: you pay it on your outbound and you pay it on your inbound. At the moment, we are particularly focused on that issue of what we are calling the anomaly of the double domestic air passenger duty. We think the abolition would make a particularly significant impact to UK connectivity but connectivity in Northern Ireland in particular.
Brian McGrath: We need to better link policy with delivery in terms of breaking down some of the siloes that exist within the system to capitalise on a lot of the really good work that has been done. That sometimes gets stymied because we are maybe not as focused on delivery as we might be, with a recognition we are in competition with other areas, not only in the UK, Ireland, Europe or wherever. We can sometimes be a little parochial in terms of how we look at things.
In the area that I represent, in the north-west, there is a more regional approach to delivery for tourism within Northern Ireland as part of those broader policy issues. On top of that, of course, is the need to have foundational infrastructure in place that allows us to move people around if we are going to increase the volumes of people for the improving products that we are developing. We are doing it from a deficit in terms of our basic infrastructure.
Q124 Jim Shannon: Gentlemen, it is nice to see you here. Following your direction, madam Chair, I will ask one question to each person, if that is okay. The first one, Brian, is in relation to yourself. You are down here as a chief executive of Foyle Port. That is very clearly your responsibility. In Northern Ireland, I am very keen to show how we can increase the passenger experience across all of the ports in Northern Ireland. The reason why I ask the question is because we are very fortunate in the constituency I live in, Strangford. When the cruise ships come into Belfast, we have had for a long time—probably 15-odd years—buses and cruise passengers coming down to visit my constituency to visit Mount Stewart and the abbey in Greyabbey, because they are historical but also very visually attractive. I have often thought that when the cruise ships go to Belfast, it would be great if they were going to Londonderry as well. I know some of them are but is there a potential to grow that?
The second question, to follow through on that, is in relation to ferry connections, which is something that is overlooked. Years ago, we were taking the ferry from Larne over to Stranraer in Scotland, or from Belfast to Liverpool or whatever the case may have been. We do not hear so much now about ferry connections. I am wondering if that is something we need to be doing more for, because air travel is more attractive, quicker and cheaper. That is a question to Brian.
Brian McGrath: I will start with the second one first, if I may. Connectivity in the broadest form is something that we need to develop and have a strong offering on, whether it is in ferries, airports or other forms of transport. That absolutely is central.
Northern Ireland is a small area. Cruise companies that come in particularly tend to look at a trip that would take them an hour from base to go to wherever, whether it is in your constituency or wherever it might be. What we have seen is that Titanic particularly attracts a tremendous number of cruising passengers. The industry is very joined up in this respect.
It was in Londonderry where the first cruise ships came into Northern Ireland in the 1990s. Ironically, it was not in Belfast at all. The growth of the industry and the size of the ships effectively then became too big for the infrastructure in the north-west to handle. That is why Belfast has made such significant strides over recent years. They are looking to do somewhere in excess of 150 cruise ships this year. We will do 17. The reason we are doing so few is because the infrastructure is just not there in place to safely disembark those passengers.
To remedy that, the Harbour Commissioners have developed a plan to develop a deep water cruise terminal in Greencastle, which is in Donegal but sits within the jurisdiction of the Londonderry Port and Harbour Commissioners. Whilst the Harbour Commissioners were formed in 1854 and predate partition, Lough Foyle in its entirety is under the control of the Londonderry Commissioners, recognised by both the British and Irish Governments in terms of that navigability and operations of trade. We are a unique enterprise in terms of being a United Kingdom trust port and operating in Europe at the same time. That gives a tremendous opportunity to do something in the north-west. Those plans are well advanced. We are looking at the ownership and operational model of those. That would bring somewhere in the region of 100,000 passengers into the north-west.
The significance of that in itself is that Lough Foyle is the physical entity that links the Wild Atlantic Way, the Causeway Coast and Glens and also the historical walled city of Derry/Londonderry. This is a way to naturally bring in significant numbers of people where there are already World Heritage Sites. There are leading tourism products. We can disseminate them and disperse them into the region very simply in that respect. That is how we are looking to address it.
There were 400 cruise ships in Ireland last year. Cork, Dublin and Belfast are all doing around 150 ships. The physical deficit in the island of Ireland and in Northern Ireland sits within the north-west and Derry/Londonderry. We need to address that. We have made significant inroads in that, and I would like to think that we could move that forward. Brexit is not helping in that respect in terms of our linkages into dealing with Donegal County Council and the stakeholders across the border, but we are optimistic we can overcome those. That is a very practical way not to redress an imbalance but to open up our product of Northern Ireland in a very significant way.
Q125 Jim Shannon: I have a question for Niall. I was rather surprised when I saw these figures. It says that there has been a 3% reduction in travellers in Belfast City Airport and a 36% reduction in Derry Airport. Again, if those figures are correct, and ever mindful of your position in relation to passenger transport, could you possibly tell us what your thoughts are on why there should be a reduction in those two airports and not the other one? What do you think can be done to address that?
Niall McKeever: Uel is probably best placed to answer in terms of the operations of the international airport, but in terms of how the north-west is served by airports in this region, the accessibility into the island through the three airports does contribute quite a lot. The reduction into one airport will mean a gain to another airport. There is an opportunity for airlines, perhaps, to use the availability of competing airports and to take their service that way. As a region, we would benefit from all three.
Q126 Jim Shannon: It is worthwhile recording for Hansard that Belfast City Airport won the award as the best, most punctual airport for passengers in the whole of the United Kingdom of Great Britain and Northern Ireland, so there are some good things in relation to it and where we are.
For Rob and Uel, transatlantic air connections are so important and there is really only one airport in Northern Ireland that can do that, that being your own, Uel. To be realistic, the most we can hope for is one or two cross-Atlantic connections. How would you see that working, ever mindful that Dublin Airport seems to be the one, by history and by the number of airports and connections they have? It is more realistic to go for one or two, is it not?
Uel Hoey: Without unduly labouring history, if you go back to the time of the Troubles, which we do not want to dwell on in Northern Ireland, we had very regular transatlantic service on jumbo jets between Canada and Belfast through the 1980s and 1990s. We also had regular services to New York.
In the intervening period, what seems to have happened is Dublin has pursued a policy of developing transatlantic hub access, growing with US carriers, Aer Lingus and IAG. You are correct in what you are saying, Jim, in that realistically we cannot really aim for more than two or three transatlantic routes. We have the benefit in Northern Ireland since 2013 of not having an air tax applied to long-haul services. That has helped us, for a period of time, to sustain the United service, over a 13-year period, to New York and also to acquire Norwegian services to New York and Providence.
Unfortunately, neither of those services are there anymore. That is a function of the dual problem that I mentioned at the start: that we can get the routes if we do not have the tax. We can go to the airlines and we can encourage them to put on a flight to New York or Toronto because there is clearly a huge tax advantage, of £78 in the economy cabin and £172 in the front cabin, over other competing UK points. If we are not seeing the sales pitch for Belfast at the far end of the route, you have 2 million people in Northern Ireland who are going to travel out, you have 350 million in North America who are going to travel in, and we are only appealing to the 2 million people in Northern Ireland because nobody is telling anyone about Belfast.
Q127 Chair: Whose job should that be?
Uel Hoey: We are set up under the auspices of the Good Friday agreement to be sold externally by an all-Ireland tourism body, and a very good job they do for the island of Ireland in terms of marketing and getting green lights on things on 17 March. That brings people into Dublin. It brings people exclusively into Dublin. When they get into Dublin, they stay in Dublin. The problem that everyone else then has with regard to extracting dwell and spend from tourists is that it does not really matter whether you are in Belfast, Cork, Derry or Waterford; you are not seeing the benefit of that. They are literally arriving in Dublin, staying in Dublin and leaving from Dublin. The best that you can hope for in realistic terms is to get a day trip, which is not delivering the kind of return that we need. If we cannot get the 350 million Americans to consider Belfast as an option as an entry point, we are wasting our time trying to develop the routes, because we have to be able to sustain them and we can only sustain them on American visitors.
Q128 Jim Shannon: Rob, this is a question for you. We all know that if APD was abolished we would then be able to increase flights. Almost a joint plan needs to be done on the APD. This goes back to your point, Rob, so hopefully you will be able to answer this one. In relation to the Tourism NI or Tourism Ireland contacts that there are, there are so many officials across America and Canada as well. I have always thought that the Canadian diaspora is one that we have not fully developed. It is interesting you brought it up again because it is very much in my mind. What do you think we should be doing in this Committee, in the recommendations, to ensure that the potential that can be realised can actually happen?
Rob Griggs: As Airlines UK, we are taking perhaps more of a big-picture view of UK connectivity and what needs to be done. This is a really opportune moment because we have an aviation strategy Green Paper out for consultation; we are responding to that. That paper is a very long document that covers all aspects of UK aviation, which is fantastic and it is great that the Government are looking for a strategy towards 2050 for UK aviation. APD within that gets around half a page. It gets a note saying, “We are aware that some of our stakeholders are concerned about APD. Feel free to give us your views”. From our perspective, the UK Government need to focus on the core strategic issues about how we make the UK continue to be such a successful aviation hub, which we are. It is a success story for the whole UK. For us, APD is certainly part of that.
In terms of long haul in Northern Ireland, it would be fantastic to get more of that from Belfast International. There will always be limitations given scale in comparison to Dublin. You cannot forget short haul as part of that, because short-haul feeder services are part and parcel of what make long-haul routes viable. Our airlines tell us it is often part of a whole package. You achieve economies of scale and all those benefits that can draw in and make routes viable if you have that short-haul connectivity as well as long haul. For us, you cannot entirely disconnect the long-haul APD from the short-haul APD.
We are always looking for support for the clear message that it is difficult to run an airline. Margins are low in running an airline. It is about 3.2%. Figures this month or last month from IATA, which is the International Air Transport Association, show that within Europe—it is not specific to Northern Ireland—the average profit on an airline ticket is around €6. An awful lot of your ticket price goes into fuel, operations and other things. Airlines have to be very clever and very careful about where they put routes and their capacity. Ultimately, it is moveable capacity. These are aircraft. Key to that is route viability. In a European market, you can put your aircraft pretty much wherever you want.
Within the UK, all the factors around APD are hugely important and we need to keep talking about those. It is even more important for Northern Ireland. Geography-wise, it is a little bit further away from most of mainland Europe, which adds fuel costs. When you have margins that are so low, you need to do everything you possibly can to make the environment as competitive as possible, because ultimately, as I have said, we have seen a number of airlines failures this year. We have sadly seen the demise of Flybmi, which had routes operating from Belfast and possibly Derry as well. It is really important that we give that message that we need to do everything that we can to make sure the UK has as competitive an offer as possible. APD is part of that; it is not all of it. Our message would be that all those issues apply fully to Northern Ireland but are perhaps in some ways even more acute. We need to keep labouring that message.
Q129 Jim Shannon: I have one quick last question. I am not sure who wants to answer this one. It is in relation to tourism. The responsibility seems to be for individual councils to promote their area. For example, there is Irish Fest in Milwaukee. There is an Ulster-Scots event as well, down in Carolina. There are other events across the United States and Canada as well. I have noticed that the responsibility for tourism to really do that in a good way is on the councils.
The problem we have in Northern Ireland, which is a factual problem, is that Causeway and the National Trust go to Milwaukee every second or third year. That may well be down to cost. It is now made in East Antrim, but it was Larne way back then. They have stopped going. We now have no representation at all at that event for Northern Ireland council areas. I am wondering, when it comes to promoting tourism, whether there should be councils collectively coming together to promote their areas, or maybe all of Northern Ireland, in a more proactive way? I think if we do not do that, unfortunately we are going to find ourselves in a position where we are not promoting anywhere in any of these events. For instance, the Irish Fest in Milwaukee has over 120,000 visitors. Potentially it is incredible to do that. I am wondering if there is a different way of doing it. I am not sure who would answer that.
Brian McGrath: I will try to answer it. I come back to the point I made earlier about the need to break down the siloes and get into a much more joined-up approach. That is exactly where that sits. Councils inevitably are parochial by nature. It is not that they are not doing their very best and doing a good job but there needs to be a much more rounded approach, so we are not just selling what is in our back garden but being uninterested in promoting what is in the next constituency or whatever. We need a much more joined-up approach. Let us move the policy and the delivery in a way that can really add some sort of drive and commitment to the thing.
Uel Hoey: To touch on what Brian is saying, we are in a very noisy environment out there. We are in a global sales environment. We are light years behind even our closest competitor in Dublin in terms of how we pitch our external sales pitch. If it is fragmented, it further dilutes our likelihood of success. We have almost the invidious scenario where, if you look at external garnering of tourism, you have to say that whatever Dublin directs in the direction of Belfast is likely to be something that Dublin loses for itself. It does not make any sense for them to do that.
We find ourselves currently in a situation that is tantamount to Belfast being sold by Dublin. It is like Barcelona being sold by Madrid or Edinburgh being sold by London. Would that be acceptable to those communities? I do not think so. We have to seriously look at how we pitch our sales pitch out on the international stage.
Finally, to cover off the Canadian point, I have some stark statistics. Up until 10 years ago, we had six flights a week from Canada to Belfast; Dublin had 10. We have gone through a process, in the intervening 10-year period, where we have obviously gone through an economic downturn, we have gone through a resurgence of the Irish economy and we have gone through how Tourism Ireland and all the agencies in Dublin have set about being joined up in their thinking. Now Belfast for the last 10 years has no flights a week to Canada; Dublin has over 40.
You can see in that regard that we are failing. Even as late as last year, I had a conversation with a Canadian airline, who I had been talking to over a lengthy period of time. The people I was talking to understood the opportunity in Belfast but they were saying that the barrier for them was that senior management in their organisation, stationed in Canada, still thought people were shooting each other on street corners in Northern Ireland. The message about Northern Ireland is not travelling. That is because Northern Ireland is not carrying the message out.
Q130 Chair: Could I push you a little bit on that? What you are really saying is that, even if air passenger duty was changed completely and we were similar to or the same as Dublin, the trade to America and Canada will not change unless more people are coming in, and no one is promoting it. Are you being a little bit diplomatic perhaps about Tourism Ireland’s role?
Uel Hoey: I can tell you that I travel to conferences with my job internationally and I speak to people all across Europe, trying to encourage European routes. I speak to people in North America. Almost exclusively what I hear is that nobody has ever heard of Belfast. Belfast is not mentioned internationally. It is not a concept that comes up. It is not mentioned as a specific brand. I was talking to a very senior figure in America very recently and their view was that Northern Ireland is simply not getting the bang for its buck.
Q131 Chair: Do you think the original agreement that was put in right at the end of the agreement—that the Northern Ireland Tourist Board would not be able to promote Northern Ireland but that it had to be Tourism Island—might be something we should look at?
Uel Hoey: I believe that Northern Irish people are best equipped to sell Northern Ireland. It is not that we do not have anything to sell. I am sure you are aware of the quote from a senior figure—a Northern Ireland-based board member of Tourism Ireland—who has a view that Northern Ireland has been a hopeless case over the years when it comes to tourism business, that the traffic comes into Dublin, Cork and Shannon, and that the only way to grow Northern Ireland tourism is by attracting people who arrive in the Republic of Ireland to spend three or four nights in the north.
My experience is that we hosted the Routes Europe event for all the aviation industry in Belfast in 2017. In the two and a half years since, we have had nothing but compliments and accolades from the entire industry about Belfast and about the desire for people to come back and visit Belfast. There is something askew in that view for a Northern Ireland-based person. From our perspective, we simply need to be in a position to put our pitch out and talk about the many, many things that will bring people to Northern Ireland and keep them. If you think about the golf, Game of Thrones, the Causeway, Titanic and everything else in between, there are many things that will bring people to Northern Ireland and keep them, but they are not being sold up front.
Chair: I will repeat the true story I have told before of a person going to the trade fair and telling Tourism Ireland that they wanted to go to the Giant's Causeway and were immediately told, “Yes, you can fly to Dublin and then you can come up to the Giant's Causeway”.
Q132 Ian Paisley: Gentlemen, thank you so far for your evidence. Can I focus on this issue that you have put your finger on today, Uel, which is the issue of lack of equal opportunities in terms of our airport availability? Who owns Dublin Airport?
Uel Hoey: The Irish Government own it ultimately through the vehicle of DAA.
Q133 Ian Paisley: Who owns DAA?
Uel Hoey: The Irish Government.
Q134 Ian Paisley: Dublin Airport is a standalone, state-owned airport.
Uel Hoey: It is a state-owned entity, yes.
Q135 Ian Paisley: That makes it different from your airport and makes it different from Belfast City Airport.
Uel Hoey: The two airports in Belfast are private and have been for almost 30 years.
Q136 Ian Paisley: Tourism Ireland is responsible for marketing Northern Ireland and the Republic of Ireland around the world. Taxpayers’ money from the UK goes into TI and Irish taxpayers’ money goes into TI. When most of TI’s money is spent on marketing Dublin Airport, who therefore gets the biggest advantage out of marketing around the world? Is it a state-owned airport at Dublin or is it your airport?
Uel Hoey: I would not classify it as them necessarily supporting Dublin Airport directly. The issue is that in terms of how Ireland is sold—successfully, externally—it is sold through marketing. It is sold through grand marketing initiatives. For example, on St Patrick’s Day we will see the greening initiatives and those type of broad marketing initiatives, which are very successfully highlighting Ireland as a destination.
Q137 Ian Paisley: Let us get very specific. How much does TI spend on your airport?
Uel Hoey: It is minimal in terms of direct spend. The way it works is in co‑operative marketing. They put together campaigns for co‑operative marketing and they then look for other partners: the airlines and other partners.
Q138 Ian Paisley: TI does not market your airport anywhere.
Uel Hoey: No, because, as I say, the experience we are getting back is that Belfast is not mentioned externally as an entity.
Q139 Ian Paisley: The head of Tourism Ireland would never use your airport.
Uel Hoey: It is doubtful if he is based in Dublin, I suspect.
Q140 Ian Paisley: Has he ever been to your airport?
Uel Hoey: Yes, I recall a meeting with him, probably over 10 years ago, when he was the finance director of Tourism Ireland, I believe.
Q141 Ian Paisley: Would he ever travel with you on your international travels trying to promote your airport and bring flights to your airport at international trade shows?
Uel Hoey: Not in my experience.
Q142 Ian Paisley: When he tweets that the head of Tourism Ireland is travelling with the Dublin Airport Authority, a state-owned airport, to Japan, to a major tourism trade show, to attract the Irish diaspora from Japan and Japanese airlines into the Republic of Ireland, that really is a disadvantage to you, is it not?
Uel Hoey: I suppose he is doing what he feels he needs to do in order to support Ireland through Dublin. We do not get the level of exposure, which is perhaps a scale issue, but certainly we have had some challenges, as I said, on the co‑operative marketing, where we have gone seeking co‑operative marketing initiatives externally on the international side and it did not stack up in terms of how the metrics are taken or because the airport did not contribute to it. At the end of the day, the airport is a business that is there to provide a facility that meets regulation. We ultimately deal with our airlines in order to provide a basis for them to grow. We are not responsible as a business for getting out to the outside world externally and telling people to come to Belfast. That is somebody else’s role.
Q143 Ian Paisley: I picked up on your very strong comments at the beginning about equal opportunities and the lack thereof, that you cannot get air routes set up and that you cannot sell those air routes at the far end, which obviously completely disadvantages you.
Uel Hoey: The fundamental problem, Ian, is that we cannot get the air routes set up. To put this in very simple terms and to use Ryanair as an example, which is a very panoramic example of many things, if you look at Ryanair, I think their profit figure is something like £1.5 billion last year on an annual passenger throughput of 130 million across their entire network. You are talking about a figure of around £11 or £12 profit that they make. The simple analysis that Ryanair make is that they are the biggest carrier in Dublin, they are known in Dublin, they have over 100 routes in Dublin, they can put on new services in Dublin, they could put on additional frequencies in Dublin and everybody knows what they are and what they are doing. They can also get the advantage of having £13 less to put on the ticket.
What they say to us effectively is, “Why would we put those services on in Belfast when, if we make £11 profit on our passenger and the Government want to scoop £13 from us, we are into a £2 loss to put on a service in a market that we are going to struggle to get traction in? We will just put more flights on from Dublin.” We cannot get airlines of that nature to put the flights on in Belfast unless we have an equal opportunity on the same level of tax. If we achieve that then we can only be successful in the long term, in terms of building the network and bringing in German, Scandinavian and Canadian tourists, and all these people who will throng the streets of Belfast because we have a fantastic product. We can only then be successful in sustaining those routes if we are selling Belfast at the far end of the route. The two things are sequential but we cannot get the routes without the tax being right in the first place.
Q144 Ian Paisley: I want to come to tax in a moment, but this is a deliberate strategy by the Irish Government, is it not?
Uel Hoey: They have been opportunistic. Again, I have a few quotes that are relevant. I would like to put them on the record because they contextualise this better than I can.
Q145 Ian Paisley: Please do because I was going to ask you about the then Transport Minister, Leo Varadkar. I do not know if you are familiar with his strategy in 2014, when he was Tourism Minister.
Uel Hoey: These are three quotes. They are very relevant quotes in terms of the taxation issue and the sales pitch. The first is from Willie Walsh, who is a CEO, chairman and well-known figure within British Airways and IAG. He was quoted on BBC Northern Ireland in February 2014. He said, “I speak to airline chief executives around the world and when I ask them about starting new routes to Northern Ireland, they are not interested because of the tax issue. Look at the carriers flying into Dublin and you have to ask why”. That is somebody who has a global view.
Secondly, in terms of the proactive and successful approach that has been adopted in Dublin, at an international aviation conference in Dublin two months after that quote from Willie Walsh in April 2014, Leo Varadkar who was then the Minister for Transport and Tourism, said, “Air passenger duty in Britain is very high and we saw it potentially added to our advantage. We could have more people fly through our hubs if air tax was zero. We intend Ireland to have the most favourable tax regime for aviation”. You can see there is an active targeting, specifically, of the disadvantage in Northern Ireland.
Thirdly, moving forward about three years after that, in the immediate aftermath of Brexit discussions, which have obviously created some uncertainty, there is a comment from the CEO of the Irish Tourism Industry Confederation, which is the body responsible for managing the bodies within tourism in the Republic: “Regulatory divergence will also be an issue as Britain will no longer have to abide by rules restricting state aid to commercial enterprises. You could have possibilities such as the Belfast airports incentivising airlines to land there rather than in Dublin, Cork or Shannon, which wouldn’t be a level playing field so it’s something we have a concern about”. The simple point I would make is that it is effectively goose and gander: it is okay to target whenever Northern Ireland is on the back foot, but it is not okay if it gets equalised.
Q146 Ian Paisley: You are not the only airport that complains about Dublin, though. There could be a perception that our media like to paint that just Belfast International and the Belfast airports cry about Dublin, but Cork and Shannon are also appalled at Dublin Airport’s behaviour. There is this idea that Dublin should be the place where everybody comes in and lands, because it is a big airport. It is state-owned. It has all the money. It has a tourism arm pumping money into it. It is British taxpayers’ money that is going into it.
I have a quote here from Alan Kelly, who is the TD for Cork. He says, “The truth will be hard to swallow as, instead of being a day for Cork, it was instead part of DAA’s relentless march to an all-out and wholly unhealthy monopoly of Irish aviation”; they hoover up all aviation opportunities in Ireland. Cork Airport complains about this. Your airport complains about this. Shannon Airport complains about this. I understand from the figures that he has produced that Dublin Airport has 86% of aviation in Ireland, Cork has 6% of it and Knock has only 2% of it. That has fallen. Those airports—Cork, Knock and Shannon—have all fallen and all of that business appears now to go to Dublin.
Uel Hoey: There is a risk of smaller airports across the entire island becoming uncompetitive due to the scale of Dublin, but the issue is that we are all looking for equal opportunity. Simply in Belfast, the issue for us, to go back to the original two points, is that we cannot pitch with the airlines on an equal level to acquire the services to begin with. We are certainly, as things stand, not in a position to put our best foot forward, in terms of how it is sold, to sustain them. From our point of view, it is a challenge and it is something that we are going to struggle badly under unless there is some kind of a change made to it.
Q147 Maria Caulfield: We have covered the issue of airport duty quite significantly. Looking at the figures of passengers, there overall seems to be a 3% increase in the number of passengers in the last 12 months. That is really all in Belfast International Airport. The other two airports have seen declines. We have asked other witnesses in previous evidence sessions their opinion about whether three airports are too many for Northern Ireland and whether one big airport would be a better strategy. What is your view on that?
Uel Hoey: You would possibly be better to speak on that, Rob.
Rob Griggs: It would be hard for me to say. From our perspective, our airlines tell us that they will put on routes where they are viable, where there is demand and where they can sustain those routes, taking into account the whole operational cost of running them. The tax is very relevant there. We understand, in terms of APD but also more generally, that airline routes are more price-sensitive when they are in what tend to be smaller airports, smaller markets and smaller aircrafts.
At a previous evidence session we had one of our members, Flybe, the UK’s largest domestic operator, talking about how they have to take those factors into account. They have run several routes they have had to pull because of the impacts of domestic APD on those routes operating out of small airports.
Q148 Maria Caulfield: From an airline’s point of view, is it more attractive to have one big airport that is able to provide lots of facilities than three smaller airports? Is there a difference?
Rob Griggs: I would not say they would characterise it as a stark preference between smaller airports versus larger airports, but they would categorise it in terms of, “Which airport and which opportunity gives us the ability to invest in a new route and sustain that new route?”
The point I would return to is it is a tough operating environment out there. Fuel is 30% of an airline’s operating cost. That can be volatile. Airlines have to be very careful where they put those assets that are movable. If you have a situation in which larger airport hubs are able to provide those economies of scale and provide those opportunities and incentives, you are more likely to seek capacity and move to those areas.
The last thing I will say on APD—and this applies to smaller airports in Northern Ireland but also in the wider UK—is that the south-east of England is more able to accommodate large and increasing levels of APD than other airports in the UK, where the demand is more sensitive to that price. All our airlines tell us, as with the airports, is that they want a level playing field to put on competitive services. They will do that, but they can only do that where those routes will be sustainable and viable over the long term.
Q149 Maria Caulfield: The City of Derry Airport has seen the biggest reduction in passenger numbers—a 36% reduction. For any of the panel who want to answer this, how can the Derry and Strabane city deal try to turn those passenger figures round?
Brian McGrath: You need to realise that the prerequisite around the City of Derry Airport is its existence to allow for connectivity for a peripheral region where the infrastructure is not adequate to link us to the big airport that you describe. In the meantime, the council has effectively subsidised that airport and the rate payers pay for the privilege of it. There may have been some previous assistance through the Irish Government in that, in some way or other. The point is that we need to get back to those proper levels of what one would expect to be reasonable infrastructure, to get to the point where you may look at whether or not three airports is too much.
Last week, Loganair announced a new route out of the City of Derry to Manchester, which is actually very significant in that it links hubs in the UK, taking you through Emirates, KLM and BA, and significantly increases the connectivity of that airport. While the figures that you have in front of you did show a worrying decline, it is actually the case that if you can connect people, it may be there is a slightly brighter future than one might otherwise think.
Q150 Maria Caulfield: Niall, I want to come to you on that point around connectivity. We have heard from other witnesses that road and rail links around Northern Ireland are not great. From a passenger’s point of view, is that impacting people using the airports in terms of connectivity between, say, Derry, Dublin and Belfast? If so, what would give the greatest bang for your buck? Is it road infrastructure, rail infrastructure or both?
Niall McKeever: Certainly the road infrastructure would be a priority in terms of improving the movement of passengers around Northern Ireland. Last year, we moved 85 million people, as an industry, around the north. Regardless of the conditions the roads are in, we are providing quite a high level of service and product in moving passengers around.
Specifically in terms of your question on airports, I have a company in the north-west that connects Derry to the two Belfast airports. We run 30 services a day connecting the airports. Translink provides networks through Belfast to Dublin, and to Belfast airports. We are like the supporting agency moving passengers when they move in and out of the island. We have been working through a lot of changes in terms of the infrastructure currently. We are seeing great improvements but there is certainly much more room for improvement in terms of the infrastructure development.
Q151 Maria Caulfield: Who should be leading on improving connectivity? Should it be Tourism Ireland? Should it be some of the councils? Should it be the Assembly? From my point of view, there does not seem to be anyone taking overall responsibility for improvements.
Brian McGrath: Can I maybe answer that in respect of the question about the city deal for Derry‑Londonderry? The city deal is essentially around innovation. Infrastructure projects sit largely outside the city deal. They are the responsibility of the Department for Infrastructure. This is another one of these areas where you get into the silos. We need infrastructure for tourism and how we join up all of those things. A lot of the policies we have are draft policies, because we do not have an Assembly. Getting the Assembly re‑established would definitely be a very positive area there. We operate in silos, but the scale of the infrastructure means that the cost would be beyond a city deal.
Mr Campbell: In terms of the overall issue of trying to increase the tourism product, next month is probably going to be the biggest inward drive for tourism we have ever seen, potentially, with the Open coming to Royal Portrush. Given the desire amongst the travelling public and the holidaying public for convenience, I would have thought that was the maximum opportunity. Very few people are going to want to fly to Dublin to come to Royal Portrush, I would have thought, for convenience. Why would you fly to Dublin if you can fly to Belfast City, Londonderry or Belfast International? My question is not surrounding the Open itself, because that is going to take care of itself. It is booked out; it is huge; it is mega; it is going to be a tremendous week. What potential is going to be derived, however, post the Open?
Niall McKeever: Certainly, the hosting of big occasions always has a multiplier effect in terms of what happens to the region at the time of the event. More significantly, after the event, when the visitors have come here, they return back home and talk about the shared experiences they have had. Tourism is a very intangible product. It is based on how you have experienced a place rather than how you have seen the place. It is based on what the region offers in terms of authenticity and service delivery. That is the product. These are things that are experienced by the visitor. We live in a world now where we are sharing those experiences across our phones.
If you think about the impact that events like the Open will have, it is unquantifiable in terms of the outreach that these shared experiences will be having in terms of the visitors who are coming now but, more importantly, in terms of the benefits of returning customers as a result of that. When we had the City of Culture in the north-west or the Clipper events, there was a substantial feel‑good factor in terms of the region and being able to host the event. You feel a lot more confident and ambitious about your product. That is then shared with the visitors and the visitors are then sharing that back.
Post the big events that we have had in the north-west, there was a subsequent rise in visitors afterwards. As you were saying, the Open will look after itself, but we will benefit extremely as a result of the shared experiences the visitors will have when they arrive.
Q152 Mr Campbell: That was quite helpful., I have been raising both with Invest NI, the Northern Ireland Office, the Secretary of State and the Minister of State that what I would like to see is the greater potential for maximising what the Open potentially offers. In other words, you are going to have a huge number of visitors and a relatively smaller number of high‑net worth individuals who come to golf tournaments, who may have never been to Northern Ireland before. Unless they are given the time of their lives, they may never come again. If they are given the time of their lives, they may well return.
In terms of that concept of trying to treat people exceptionally well for a one‑off event in the hope and expectation of getting more bang for your buck, have you seen any evidence of that? Is there evidence of it? Where has it manifested itself?
Brian McGrath: Maybe I could give you some insight into that. In recent times, what we are looking to do on the regional offering is to join the dots much better so that we are going beyond those parish boundaries. For instance, from conversations with the chief executive of Causeway Coast and Glens in recent days, I know for a fact that there is a very intensive effort to address the interface with those high‑value people that you are referring to and that there are very strong efforts in train that will capture that as best as they possibly can. What we would like to see is that people from Derry City and Strabane would also be looking to that so that we can break those sorts of boundaries.
In terms of the golf and how the council officials are looking at it, it is full steam ahead on that. The evidence I saw in speaking to that chief executive was very impressive indeed. The Londonderry Chamber of Commerce and the Causeway Chamber of Commerce are important here as well. At a practical level, businesses are looking to them as self‑help groups. They are very much engaging with each other to make sure that we are not missing out on any of those opportunities. We do see that Londonderry/Derry are benefiting very much from the amount of people who are coming, where they are staying and what they are doing beyond the golf, so it does have a complementary effect and it has been very positive.
Uel Hoey: Earlier Jim made the point about councils selling externally. Fragmentation is our biggest enemy in terms of selling what Northern Ireland has. We have had a few opportunities: we have had the G8; we have had the Giro; we have the Open, which is clearly a massive thing, bigger than anything we have ever had before. However, we need a plan that not only incorporates product, which we are working on, but that certainly incorporates infrastructure. At the moment, there are things that need to be done to prioritise key roads and access channels to and from the ports and airports to join everything up.
Most pertinently, the two things that are going to make a difference to tourism in Northern Ireland are access and marketing. Those are the two things they focus on in the south of Ireland. They do them right, and they have gained a massive benefit over many decades from doing it. From that point of view, there needs to be a plan to improve access and marketing. I know I am repeating myself on that, but if you look at where people have stepped up, Barcelona was probably a much less attractive place to go to 30 years ago, before somebody decided that they would have the Olympics. Now many more people go to Barcelona than go to Madrid. Vietnam, on the other side of the world, has been through the same kind of trouble that Belfast has been through. It is now one of the fastest‑growing tourist destinations in the world.
There is a great opportunity that exists for tourism, if it is packaged and marketed right and if we have an entire plan rather than a fragmented plan to deliver it. The places that people are currently going to, like Amsterdam and Dublin, are overheated in terms of the numbers of people who are going there and they are overheated in terms of the price, to the point where they are trying to turn people away. The visitor opportunity exists. We have the authentic product in terms of bringing them here. Everybody shares in the advantage of it, from the coast of Antrim to the coast of Donegal. It is not something that is boxed into a particular corner. Everybody gains from the benefit of it in terms of the cascading wealth that accrues from people visiting. If we have a plan, we have everything to gain from this, but the plan needs to be structured, it needs to incorporate all of the elements and it needs to be driven by Government.
Q153 Lady Hermon: Thank you very much for coming to give us evidence here this morning. I will start with you, Mr McGrath. I will just go back to Brexit. You said in your evidence that Brexit is not helping with relationships in the Foyle area, but you did add that you were optimistic that those difficulties could be overcome. Could you explain why you are optimistic about Brexit?
Brian McGrath: The Brexit comment is not a political statement for or against; it is about the uncertainties that exist in the current situation. We need certainty as to whether we are going to come out, get a deal or whatever. It cannot be denied that, in dealing with the interfaces with stakeholders that have cross‑border interests, some of the progress we were making has definitely been slowed up significantly. I do not know whether it is a policy of the people who work in councils in Donegal, for instance, or whether the people in the Irish Government side are stepping back a little bit, but our experience has been that progress was stalled somewhat.
There is positivity about when we come out of the other end of this process, whatever that looks like. There is positivity because of the fundamental location, geography and product. This is the whole point about why we are looking to promote tourism. Those foundational things are absolutely there, and they are not dependent on whether we are in the European Union or not. The optimism is that we believe there will be very strong bilateral Irish arrangements, which will facilitate the development of those cross‑border ideas, notwithstanding Brexit. That is the fuller answer in that respect.
Q154 Lady Hermon: Both the British and Irish Governments have made great play about how the Common Travel Area is going to continue, how it was in place before both countries joined the EU and how it is going to continue afterwards. The Common Travel Area only benefits British and Irish citizens. You do not think that Brexit is going to impact the tourists who are coming from the Republic of Ireland to visit Derry City and the environment around it or, indeed, who are coming to Northern Ireland to visit other tourist destinations.
Brian McGrath: No. In terms of the work the Londonderry Port and Harbour Commissioners do, we are very concerned about what a no‑deal scenario and the consequences that Brexit could bring purely because of where we are located. As much as 30% of the staff who work in the Harbour Commissioners travel in from Donegal every day. That is a different thing from bringing European tourists in. Our big concern in the port is that there will be bureaucracy that will threaten our efficiencies. This might mean that some of the day‑to‑day work we do might be transferred to other places. We are very concerned about Brexit and its consequences.
What I am really saying is that we expect that there will be an accommodation made in due course to accommodate international tourists travelling across the border between the Republic and Northern Ireland. At the minute, Lough Foyle is very seamless in that respect. We have the jurisdiction to operate across two jurisdictions, and no one would be able to tell you where the border was in that regard. If it were to become a hard border and there was a lot of bureaucracy around the movement of tourists, then of course it would impact negatively on what we are trying to do.
Q155 Lady Hermon: Can I just ask something else? We have had various Brexit Secretaries and we have had ex‑Brexit Secretaries. There have been quite a number of them. Have any of the Brexit Secretaries, whether serving or those who have resigned, actually visited and spoken to you about the problems that Brexit might cause?
Brian McGrath: Yes, indeed. Albeit I would say that a lot of those visits came fairly late in the day, the idea or the understanding of the Northern Irish border question came into play around 2017. We had a flurry through last summer of some very senior Government officials, both in the Conservative Party and—
Q156 Lady Hermon: Did you have the Brexit Secretary?
Brian McGrath: Yes, I think they have pretty much all been there.
Q157 Lady Hermon: Which ones?
Brian McGrath: In terms of my own personal engagement, I met with David Lidington, Brandon Lewis from the Conservative Party and some other officials.
Lady Hermon: But not Brexit Secretaries.
Brian McGrath: No, but he had been there, as I understand it, and taken to the border. A number of them have been. In the last year, certainly from last summer, there has been a significant level of interest from the main parties in Parliament here to come and hear first-hand, particularly stories of people’s movements. We have played into that as a stakeholder. I would not be complaining about the level of interest. Perhaps had they come earlier in the day it might have been helpful.
Q158 Lady Hermon: Mr Griggs, may I just move on to a different topic? I just wonder how you and your colleagues can reconcile what are two irreconcilable challenges. On the one hand, we have the increasing demand that we hear from young people and older people in their thousands and their millions about climate change and addressing climate change. On the other hand, we have the demand we have heard—we have heard it expressed this morning—from airlines about increasing connectivity. How do you reconcile those two irreconcilable problems?
Rob Griggs: It is a big challenge. We would say that it is not irreconcilable.
Q159 Lady Hermon: Is it not?
Rob Griggs: No. The sector appreciates that we essentially need to gain a licence to grow. The only way we can grow is to demonstrate that we are doing so in a way that is sustainable and credibly sustainable. A few years ago, the sector came together to form a coalition called Sustainable Aviation, which is airports, airlines and manufacturers, so the big companies like Airbus and Boeing, et cetera. We set out a pledge that we will reduce our net carbon emissions to 2005 levels by 2050. That is cutting the net amount of carbon. Essentially, that assumes a doubling of capacity and a doubling of passenger numbers from 2005 but reducing the network carbon by 50%. Essentially, that is done through cleaner aircraft. We need to do a better job at saying what has already happened. The aircraft we fly today are significantly cleaner than they have been previously.
Of course, there is an economic incentive to do that because fuel is one of the significant costs, but there has been a step change in the higher load capacity. Load factors are also important for low‑cost carriers in particular but also for all carriers. The load factors are much higher now. They make a much more efficient use of aircraft, because they are essentially filling them up.
There is a huge amount of work going on. There is no silver bullet. We are investing in cleaner aircraft and better engines. We are working towards a future where we are expecting to see hybrid and fully electric aircraft. That is not going to happen for several decades. You may have electric aircraft for short‑haul flights. You might see some smaller or regional aircraft by the 2030s, but you are not going to be flying to Australia in an electric aircraft until after 2040 or 2050.
Lady Hermon: I have to live until 2050 to see a change.
Rob Griggs: Indeed, but in the meantime there are some huge opportunities through sustainable fuels. This is a massive piece of work being done globally, and we think the UK could be a leader in it. This is about fuels created using different biofuels and waste gases. We have created a roadmap, which is how we are going to get to that net 50% reduction. The updated roadmap suggests that around a quarter of that, 25% of the benefit, will potentially be through sustainable aviation fuels and airspace modernisation. Our airspace was designed post war. It is quite inefficient. You have lots of stacking and all of these things. If you make the airspace more efficient, you can have aircraft fly more direct routes. That cuts carbon and that will help take down the level.
We also need offsetting. In aviation, there is CORSIA. It is not a great name, because no one knows what it is, but it is an international agreement for aviation offsetting. It is the only global sector where there is an international agreement about cutting carbon emissions. The UK is fully signed up to that, as are the majority of developed nations.
Q160 Lady Hermon: The UK has signed up to that.
Rob Griggs: Indeed.
Q161 Lady Hermon: As we know, we have three airports in Northern Ireland. What is the contribution that Northern Ireland has made to the overall commitment by the UK?
Rob Griggs: I could not speak to the specifics of the airports, but our members that fly out of those airports will be fully signed up to that pledge and they will be doing various things, such as new fleet investment. Our message is that there is a lot going on through things like the aviation strategy to help the sector as a whole move towards that cleaner future.
Q162 Lady Hermon: If you do not have that information with you today, perhaps after the Committee you would write to each of the managers of the three airports and ask them to outline how they are contributing to the UK’s commitment to reduce carbon emissions.
Rob Griggs: Absolutely. I would be happy to.
Q163 Lady Hermon: That would be very helpful. Mr Hoey, could I come back to you, please, on the air passenger duty that you have outlined to us? Air passenger duty was removed, as you have said, for international flights from Northern Ireland. What year was that?
Uel Hoey: It was 2013.
Q164 Lady Hermon: That was 2013, when we had the Assembly functioning in Stormont. Who picked up the tab? Who picked up the bill for the cost of that lost revenue to the Treasury?
Uel Hoey: My understanding of this, which I have only recently established, is that, in terms of the loss in long‑term tax, which has escalated in the intervening period, there was a fixed amount set that had to be paid, I am assuming, from the Northern Ireland block grant in order to accommodate the provision of zero tax on APD. I do not know what the figure was that was negotiated. I have a feeling that it was possibly around the £2 million mark, but I am not sure.
Q165 Lady Hermon: Yes, but you are confirming that it was the Assembly.
Uel Hoey: I am given to understand that. What I was not clear on before, which has come as a bit of a surprise to me latterly, is that logic would say that, in undertaking that deal, the Treasury get an income if a long‑haul passenger flies from Belfast. As an example, if we had 50,000 long‑haul passengers at £13, there would be £650,000 due. I am sorry; it is a higher number. It is the £70 number. If we had 50,000 passengers at £50, to make it easier, it would be £2.5 million that would be paid to the Treasury to offset the fact that those passengers travelled and no tax was lifted.
What I am given to understand is that there was actually a blanket agreement of an amount of money that was to be paid over annually from Northern Ireland to accommodate this provision.
Lady Hermon: Thank you. You have confirmed the point.
Uel Hoey: The simple point on that is that if we do not have long‑haul passengers, we are apparently still paying the £2.5 million or so for not actually delivering anything to the Treasury in the first place. The money is being taken without the exercise being conducted to create the money in the first place, which seems a little invidious.
Q166 Lady Hermon: Do you have evidence to back up that assertion?
Uel Hoey: We had a technical working group discussion in Belfast in March this year on APD. That seemed to be the confirmation from Treasury and the DFP in Northern Ireland that the money was signed off as a fixed amount and it had to be paid every year irrespective of whether there was actually any tax being generated as a result of long‑haul passengers flying or not. It seemed a bit invidious.
Q167 Lady Hermon: So that was discussed at a meeting in Belfast.
Uel Hoey: Yes, on 7 March.
Q168 Lady Hermon: Are the minutes of that meeting public? Can they be made public?
Uel Hoey: I am not sure whether they are. It was a Treasury‑conducted meeting. It is an ongoing process. We asked for air passenger duty to be addressed, and this is part of the process that came from the Autumn Statement to review that. We are always in attendance. There may well be minutes from the meeting, but that was certainly a discussion point that was raised and discussed.
Q169 Lady Hermon: Could those minutes be shared with us? They would be very interesting.
Uel Hoey: Yes. I do not know whether they were public, but I can ask.
Q170 Lady Hermon: Thank you. The point is that it was the Northern Ireland Assembly that picked up the tab and paid for this. Yes, you are nodding in agreement.
That was in 2013. To a large extent, APD on internal domestic flights is the issue you have focused on in your evidence this morning. Presumably the Assembly continued to pay this. The Assembly had been working in a solid block from 2007, when the late, senior Ian Paisley and the late Martin McGuinness worked superbly well as the First Minister and Deputy First Minister. We have had a solid block of devolution for 10 years until 2017.
Can I assume that, since APD was such a big issue, you and your colleagues lobbied the series of First Ministers—we had several First Ministers—and the Deputy First Minsters about APD on domestic flights? Of course, it is open to the Assembly to have picked up the tab for APD for domestic flights. You are nodding in agreement. Can you confirm that you did in fact lobby the Assembly and the First Ministers and Deputy First Ministers?
Uel Hoey: We have lobbied over a long period of time across the spectrum. I could not specify. I certainly remember having discussions with Ian Paisley senior; I remember having discussions with Peter Robinson; I remember having discussions with Martin McGuinness and Mitchel McLaughlin. I remember having many different discussions with many people who were senior figures in the Assembly on this subject over a long period of time.
There is a simple issue with regard to air tax. The point has been raised—and it is a valid point—with regard to environmental contribution. The issue for Northern Ireland is not necessarily about whether the airports in Northern Ireland should or should not contribute to the environmental set‑up. Obviously the industry has to bear its burden. What we are talking about is equality. We are talking about a scenario where an airport 100 miles down the road from us, which is five times the size of us and state‑owned, has had its tax removed, and that places us at a competitive disadvantage. That has always been our argument.
Q171 Lady Hermon: Yes. So why were you unable to persuade Ian Paisley senior, Peter Robinson, Mitchel McLaughlin, et cetera?
Uel Hoey: I am not so sure we were unable to persuade the politicians that there was a merit in the removal of the air tax. We struggled to persuade the system in Northern Ireland because the civil servants were unwilling to look at an alternative means of—
Q172 Lady Hermon: You are blaming civil servants now. This is a political decision. They had done this for international routes. They had picked up the APD bill for the international routes. Since it was impacting on hundreds and hundreds of families, it could easily have been picked up, if the political will had been there. Would you not agree with that?
Uel Hoey: When it went into the system, the argument was effectively that the money would come off the grant to Northern Ireland. Therefore, it was not something that was a priority as far as the system was concerned.
Q173 Lady Hermon: I am sorry. When you say “the system”, do you mean it was not a priority for the politicians you have named?
Uel Hoey: You could say yes, if you want to roll the two—
Q174 Lady Hermon: No. I was not at the meetings. I am asking you. You confirmed that you had raised this issue with Ian Paisley senior; you confirmed that you had raised it with Peter Robinson; you confirmed that you had raised it with Mitchel McLaughlin; you confirmed that you had met with other politicians about this issue. It has not been resolved. I was not at those meetings, so I would like you to explain to the Committee how it is that we are still sitting here today, in 2019, talking about APD on domestic flights when it was an issue that you clearly raised with senior politicians. Was there no political will to deal with this issue?
Uel Hoey: There was a presiding view in Northern Ireland that the figure, whether it is £50 million or £100 million—people cannot seem to agree—which is the tax take that would be removed on short‑haul tax, is too big an extraction from the block grant to be able to make up on health, education or some other part of the block grant. Therefore, there has been a resistance to delivering that change locally.
Q175 Lady Hermon: Even with the confidence‑and‑supply arrangement between the Democratic Unionist Party and the Conservative Party, which involved a large chunk of additional funding being allocated to Northern Ireland, the argument was not made at that stage that APD on domestic flights could be costed from that.
Uel Hoey: As I understand it from the feedback I have had, it is an ongoing discussion. We were very hopeful as an industry. I speak absolutely for the international airport, for the city airport and for the City of Derry airport, which are entirely co-joined on this issue. We all have the same problem. We were hopeful that there would be a change made in the Autumn Statement and there would be some direction that would give Northern Ireland the equal opportunity we are seeking in this regard versus Dublin. It was not forthcoming.
Lady Hermon: Absolutely, yes. That is the point.
Uel Hoey: We now have a technical working group, which is designed to work through the elements of that. We will work with that system through the process to see whether we can get the outcome we are looking for. It has been an onerous process. It has been years of effort and endeavour. We would like to see a positive outcome, because we absolutely believe that tourism cannot flourish in Northern Ireland to the extent it has the potential to unless the access issue is addressed.
Q176 Lady Hermon: You must be disappointed that greater priority was not given to resolving this issue since 2017. The confidence‑and‑supply arrangement has been there for—
Uel Hoey: Everyone has their priority. My priority is that we address the air tax and the selling of Northern Ireland. I am therefore disappointed that we have not made more progress on that. Other people would undoubtedly be more disappointed if that were changed and there was money perceived to be taken out of something else. I will continue to argue the case as to why tax and the sell‑ability of Northern Ireland need to be addressed. I hope I am successful before I retire.
Lady Hermon: When is that? I have to wait until to 2050 to see a reduction in air pollution from planes.
Uel Hoey: I will continue to argue it, because I feel it is needed.
Chair: It is something the Committee is very concerned about. We have done a report on it before.
Q177 Ian Paisley: You do accept that APD is not just a Northern Ireland‑exclusive issue. Essentially, it is a unionist issue, because airport passenger duty would affect Scotland and flights into the rest of the UK. An approach that addresses APD across the whole of the UK is probably the best way of solving all of these issues.
Uel Hoey: I do understand that entirely. The point has been raised about domestic APD, and that is a very fair point. Domestic APD is a ludicrous double tax on essential services within the United Kingdom. We have a system of short‑haul flying. It is a very delicate system for airlines to make money. They make very limited profit on air services, particularly if they are short‑haul. If the Government want to take £13 off a Belfast departure and £13 off the return from Manchester, that makes these services very fragile indeed.
Q178 Ian Paisley: Can you briefly explain something? If I wanted to fly to Cape Town as my final destination, if I left Dublin Airport on a British Airways flight and I had to go through London, which I would, I pay zero APD to London and zero APD from London to Cape Town. If I travel from Belfast on a British Airways flight to Terminal 5, get off that and get on to the same flight, I pay APD going from Northern Ireland to London and APD internationally.
Uel Hoey: It is a further ludicrous anomaly of the UK air tax system.
Q179 Ian Paisley: If you were British Airways, you would say, “I am going to stick my flights into Dublin”.
Uel Hoey: Of course, yes. As I understand it, when air passenger duty was set up in 1994, there was a desire to protect the hub status particularly of Heathrow. The only way that Heathrow could be protected in that regard was for anyone transiting as a passenger through Heathrow, if they moved through Heathrow within a 24‑hour period, to be regarded as being taxed from the initial point of departure.
That works fine if you are coming from Beijing, Buenos Aires or anywhere else. The anomaly, again, exists on the island of Ireland, because we have an open border on the island of Ireland yet we have a European jurisdiction in the southern part of Ireland and a UK jurisdiction in the northern part. Because people can travel freely and seamlessly across the border, what happens is Dublin qualifies as an international point of departure where they do not apply a tax. If you depart from Dublin, fly to Heathrow Terminal 5 and travel to Tokyo or Cape Town, as you used in your example, within a 24‑hour period, you have no tax to pay. If you depart from Belfast, because you are departing from a UK point of departure within the UK jurisdiction, you are charged full tax.
That effectively means that all long‑haul passengers departing Northern Ireland on transit routes, not non‑stop because there is no tax on the non‑stop, if they travel through Heathrow, are not inclined to travel Belfast‑Heathrow‑Cape Town; they are inclined to travel an hour and a half down the road to Dublin, take a flight from Dublin to Heathrow and travel from there. You save a massive amount of tax if you are going to Heathrow. That tax is lost to the UK Exchequer due to the simple anomaly that you can drive down the road to Dublin in order to catch a flight.
Q180 Ian Paisley: That explains the reluctance of the Exchequer to give up that stealth tax.
Uel Hoey: They are not getting the tax, though. They are losing it in Northern Ireland.
Q181 Ian Paisley: No, but they are reaping APD from Northern Ireland, Glasgow and Edinburgh. That is why the Exchequer is so reluctant to give it up. You mentioned the civil service. This is a budget line that they get; APD is a tax line for them. There is a huge resistance to removing APD.
Uel Hoey: I understand that. It started off as an environmental tax and it is now a revenue‑raising tax, and that is accepted. It is quite a significant sum of money, particularly when you look at Great Britain and the airports in London. I am sure Rob would agree with that. It is a substantial amount of money.
Q182 Ian Paisley: I would love to wave a wand and make it disappear. I wish we could do it, but there is a resistance within the Government and government structures to remove that tax.
Uel Hoey: There is an issue, however. You have heard this before, but I would argue that Northern Ireland is a special case. Northern Ireland is geographically a special case.
Ian Paisley: Glasgow tells us the same thing.
Uel Hoey: I have explained the reasons as to why it is a peculiar case. I believe it is understood that we have a problem. We have a very avaricious neighbour who wants to take the business that we have. They are actively targeting it. People can go there quite easily, and they save the tax. If someone in Cardiff or Edinburgh wants to drive to England to get a flight, they still have to pay the same tax, whether they are in England, Scotland or Wales. There is no problem existing in the UK mainland in the way that it exists in Northern Ireland.
Our argument is that there must be a way of looking at Northern Ireland as a special case that will put that into its true context and recognise the problem that Northern Ireland has. We have to say, “Okay, this can be devolved to Northern Ireland”. In being devolved to Northern Ireland, it can be removed. It can truly give Northern Ireland a fair chance to generate the latent wealth from tourism that Northern Ireland has the potential to generate.
Q183 Lady Hermon: You used the word “avaricious”. I did not like the word. They are doing their job.
Uel Hoey: I agree.
Q184 Lady Hermon: Would it not be really helpful if in fact we had the Assembly up and running and we had a designated Minister for Tourism in Northern Ireland? Then they could sell Northern Ireland. I found it extraordinary that in your evidence you said that there are people—I do not know where they must be—who have never heard of Belfast. We have had Game of Thrones; we have had Van Morrison; we have had Rory McIlroy; we have had George Best. I could go on. Do we or do we not need a Minister for Tourism, a dedicated Minister for Tourism, when the Assembly is up and running? I will remain optimistic that at some stage we will have one.
Chair: Could you just all answer that? Yes or no.
Brian McGrath: Yes.
Rob Griggs: Anything that will help increase demand is good.
Lady Hermon: I will take that as a yes.
Uel Hoey: Yes.
Niall McKeever: Yes.
Lady Hermon: That is unanimous. Thank you so much.
Maria Caulfield: To pick up on the point around air passenger duty and Northern Ireland as a special case, I have a lot of sympathy for that, but are you seriously suggesting that there are people in Derry/Londonderry or Belfast who would drive down to Dublin to avoid £13 air passenger duty on their fare? What I am trying to get at is this. Is there any evidence that, if air passenger duty was dropped, passengers in Northern Ireland would start to use the airports in Northern Ireland? Would there be the demand?
Uel Hoey: It is a layered problem. Essentially, in simplistic terms what you are saying is that you could understand that someone would drive to Dublin to save £78 or £172 on a long‑haul service. Indeed, the system is set up for people to commute from Great Britain to Dublin to catch an Emirates flight back over Great Britain to Dubai in order to avoid the tax in the UK system. That is happening a lot.
Q185 Maria Caulfield: Do you have the evidence? Do you have the figures and the numbers to put forward that case?
Uel Hoey: We garner information from OAG sources, Sabre and analysis of that type, so we have some evidence in that regard. I would need to trawl through it to see how absolutely specific it is, but that is certainly something that is happening. It is logical that it happens. If you are saving £178 and you are travelling in a group, it makes sense to fly to Dublin to have a lower fare even though you are flying back on yourself. It certainly happens on transatlantic flights.
The issue about people driving south to save £13 is perhaps less of an issue. However, the difficulty we have on the GB and European routes, as I explained earlier with the Ryanair position, is a more fundamental problem. We cannot get the airlines to put the routes on from Belfast to offer from Belfast in order for people to fly from Belfast while the tax exists. They do not have the choice to fly from Belfast; they have to go to Dublin to get the flights.
Q186 Maria Caulfield: Okay, but is there evidence that, if air passenger duty was erased tomorrow, passenger numbers would increase at the three airports in Belfast? I travel to Southern Ireland all the time. I will fly to Knock so I do not have to pay on the two toll roads to Dublin, pay for the parking at the airport and deal with the congestion going into Dublin. Even though I pay more for my fare at Knock, I would rather do that because, from an ease and convenience point of view, it is much easier. Is there evidence that people are driven to Dublin just to avoid air passenger duty?
Uel Hoey: We have had discussions with the airlines. They are all involved in the technical working group discussion that took place when we attended the meeting in Belfast with EasyJet, Ryanair, IAG and Flybe. All of the major airlines were in attendance. They have all committed to saying that, if the tax position were resolved in Northern Ireland, they would grow significantly. For Belfast International, that means EasyJet would grow; having taken services out of Belfast because they are uncompetitive versus the services they have in Dublin, Ryanair would put them back in and grow. Wizz Air would grow, because their cost base is designed to avail of low taxes. We would have a range of major European airlines that would grow services from Belfast if the tax position was right in order to put the routes in.
Q187 Maria Caulfield: To follow up on Lady Hermon’s point, if there were a Minister for Tourism, do you have the figures to show that, if the Assembly were to absorb that cost and take money away from health or education, that would be money well spent because there is data to show that tourists would start to use those airports?
Uel Hoey: As part of the APD preparation, we did an independent analysis through Mott MacDonald, which we possibly attached to the original submission to the Committee. There is certainly evidence in that about the wider economic benefit of the immediate spend in the air transport sector, the catalytic spend in the wider tourism industry, the onward spend into the local economy and the upswing and upturn in terms of tax receipts, wages and everything else. That would more than offset any change that had to be made to tax. If it has not been shared, we are happy to share it.
Q188 John Grogan: I have been listening intently. Could I ask a question about road and rail to Mr McKeever, possibly, to start off with? I am actually going to the Open as well. In that context, first, I will be staying in Belfast. Will it be easy to get to Royal Portrush? Could it be chaos? Are the plans well in place? That is the opener for the immediate future.
Could you then just say where you think road and rail improvements are most needed in Northern Ireland? There is a state‑owned railway. I hear that there are plans for improvements on the line between Belfast and Derry. Where do roads need to be improved as well?
Niall McKeever: I will take your first point. Getting to the Open will never be easier for you. In terms of getting from Belfast to the north coast, certainly, the Causeway is very much the jewel in the crown. Royal Portrush is one of the top golf courses in the world. The approach road has now been massively improved. There is a dual carriageway going from Belfast. The A26 and the M22 now merge seamlessly to take you towards Coleraine and the intersection roads around Coleraine go straight into the Portrush Triangle area.
As of last week the Portrush rail station has just been completely refurbished. They will be enjoying a brand-new facility to cope with the hundreds of thousands that will be coming in. Certainly, Translink has been doing a tremendous job in Northern Ireland, both in terms of their provision of the Belfast Rapid Transit system throughout Belfast city and the outer regions and the railway network in itself. They have now developed a ticketing system that reflects the mode of transport and the transitions that passengers are making.
There is always room for improvement. Certainly the main key hubs and roads are improving. Certainly, the road between Derry and Londonderry in the north-west, the A6, is now well on its way to completion in 2023, when you will see the two major cities now more or less having a dual carriageway connecting the regions. Certainly, there have to be improvements in access to the airports. Unfortunately, the road that connects the M2 to the international airport is single‑lane traffic. It has been like that all my life. There are certainly key areas of development.
Certainly Translink, the public network that exists and the provision of transportation within that are exceptional. There is a call for training requirements in terms of drivers and in terms of helping the private industry to help them commodify more their product offering. Certainly, tourism is dependent on product being put together. Golf tours have been in existence in Northern Ireland for many years. Certainly, we have a product offering that is exceptional on a global level. The operators that provide those are basically connecting the honeypot areas of the region and moving the passengers around. In terms of last year, the contribution to GVA was £300 hundred million in terms of what the transport industry is providing. As we are looking at moving forward, we need to look at industry training and certainly in terms of infrastructure. The roads are certainly very much improved.
Q189 John Grogan: Thinking about access to the airport by land, how good is that? Are there plans to improve it?
Uel Hoey: I can speak for Belfast International. Obviously, Belfast City is in the city centre.
John Grogan: Yes, and then there is Derry as well.
Uel Hoey: Belfast International is geographically reasonably well placed between the two motorways in Belfast. The access from Belfast on the M2 motorway is good on the motorway section, and it is also reasonably good heading south and west towards the M1.
The immediate challenge we have is one of time. If you take the measure of time elapsed in terms of travelling from the international airport to the city, you travel seven miles initially from the airport to the start of the motorway, the M2. You probably have twice that distance to go on the M2. You can probably do the 14‑mile journey on the M2 in 40% of the time it takes you to do the first part. The problem we have is that we need a better road to take us from the airport to the M2 motorway.
That is an issue on two fronts. It is an issue in practical terms, in that people are taking longer to get to the city, but it is also an issue when we talk about trying to encourage airlines to consider Belfast, if they are considering Belfast and Dublin for service. If they come to an international airport in Belfast and they have a look at the infrastructure outside the door and then they come to Dublin and they look at the infrastructure outside the door, they are more inclined to favour Dublin.
Q190 Chair: They see a lot of nice sheep, cows and so on around the airport. What about trains? Is there no chance of getting a train link? Are there going to be lots of extra trains to Royal Portrush for the Open?
Niall McKeever: Certainly there is a transportation plan that is ready to roll out. The actual finishing of the Portrush railway station was a key catalyst in that. It is a really good facility. Obviously, Coleraine is a central hub in terms of the training station. There will be a connecting service taking people from Coleraine to Portrush. There is almost military precision in terms of the delivery of bus transit as well connecting to the Triangle area and the movement of people.
Q191 Chair: Personally, I think trains are underused in Northern Ireland. A lot more investment should be going in to get that Derry/Londonderry link to Belfast.
Niall McKeever: Yes.
Q192 Chair: That is wonderful. Are you working on that?
Niall McKeever: I know Translink are certainly developing the rail network. I know from the north-west in Derry/Londonderry we have the new railway station that is coming to completion in two years’ time. It is a multimodal platform. Again, we have an hourly connection now between Derry/Londonderry and Belfast, and connections via Coleraine as well.
Q193 Sir Desmond Swayne: In the last hour and a half, have we addressed all the silence that Mr McGrath said needed to be broken down in his opening remarks? If not, what remains outstanding?
Brian McGrath: What we have done is we have identified and highlighted that there are these opportunities to improve delivery. To do that, we need to be joined up, whether that is through a Minister for Tourism, an engaged Assembly or the various Departments that relate into that. The very fact that we have to come to Westminster—we are very pleased to be able to do it—shows that this is where we are. We are having to come here to make these pleas on behalf of the people we represent. Without trying to disrespect this place, a much more engaged system at home would be eminently preferable. I do not think anybody would really object to that.
Chair: That has been very helpful to us in terms of this aspect of tourism. I am very grateful. Thank you very much indeed for coming and giving evidence.