Does the future lie in planes, trains or cars?

[John Ashworth]

DOES THE FUTURE OF TRANSPORT LIE IN... PLANES, TRAINS OR AUTOMOBILES?

Express
Sunday August 26,2012
By Tracey Boles

SIR Richard Branson’s next departure from London to Manchester will be a plane, not a train. A week after the Virgin tycoon railed against losing the franchise on the West Coast mainline to FirstGroup, his long-haul airline Virgin Atlantic has launched a new venture into short-haul flying.

From Easter Sunday next year, Virgin Atlantic will offer three each-way services a day between Heathrow and Manchester. Return fares start at £95 undercutting the lowest fares from British Airways, ending its monopoly on the route.

With rail fares already 30 per cent above those on the Continent even before the latest inflation-busting rises, could the new flight herald a mass shift from the road and rail network to domestic air services?

Certainly this may be just the start of a much larger short-haul ­operation at Branson’s airline.

It has eyes on 12 daily take-off and landing slots previously owned by BMI. The airline, which already flies to Glasgow, would use them to launch services to Edinburgh and Aberdeen. It has just submitted its business case to the EU which is ­examining how or if the slots should be divided after BMI’s takeover by BA. Aer Lingus and Flybe are thought to be rival contenders.

Branson’s short-haul plan is ambitious. Full-service airlines have struggled to make money on European short hops. BMI was haemorrhaging cash.

The tycoon remains undaunted, and hopes to spark a price war.

Virgin Atlantic chief executive Steve Ridgway said: “The rivalry ­between Virgin Atlantic and BA on long-haul for three decades has ­ensured the UK traveller has a great customer experience and paid low fares. We now aim to fill the gap that BMI has left on short-haul.”

Virgin says its move to domestic flights is unconnected to the loss of its rail franchise, though travellers may be lured from trains to planes as Virgin’s lowest fare is £200 less than the full price of a London-to-Manchester train ticket.

In reality, rail and air serve different markets and so there is room for both as passenger numbers continue their relentless rise. Train ­passengers tend to be commuters, while holidaymakers and business people often opt to fly for ease of connection. Two thirds of passengers flying from Manchester to London transfer on to long-haul flights.

Despite Branson’s obvious faith in the appetite for air travel, there are significant constraints in the form of capacity limitations and air taxes levied on long-haul flights.

Britain has the highest air passenger duty in the world. Half the cost of a ticket is typically tax with more rises in the pipeline. Airlines are ­lobbying furiously against them.

As for capacity, there are simply not enough slots at Heathrow to lay on more flights although passenger traffic worldwide is growing at an estimated five per cent a year.

Lack of capacity is allowing rival airports such as those at Frankfurt and Paris to steal a march on Heathrow. This means the UK is losing business and tourists every day.

Ridgway said: “Germany and France attracted three times more Chinese tourists last summer and the chasm will only grow unless the Government creates a policy that enables aviation to grow.”

A recent consultation on aviation policy put off the thorny question of more runways until the autumn.

The Cabinet is wrangling over whether there should be a third ­runway at Heathrow despite a manifesto commitment ruling it out. Transport secretary Justine Greening is against it, Chancellor George Osborne is in favour, while Prime Minister David Cameron has quietly shifted towards the idea. Greening, MP for Putney in west London, led the campaign against the expansion of Heathrow and is not likely even to consider allowing a third runway while responsible for the policy, ­although she is being tipped to go at the next Cabinet reshuffle.

Virgin backs a new hub airport for the South-east but sees it as a long-term project. Others suggest interim expansion of Stansted.

Old foes BA and Virgin agree that action is needed now. Virgin’s ­Ridgway said: “Every day that ­Government dithers on aviation ­policy is a day that the economy ­loses millions in revenues.”

Last week BA chief executive ­Willie Walsh branded the lack of progress on aviation a “disgrace”. A lot is at stake. Aviation contributes £49.6billion to gross domestic output and supports 921,000 jobs.

Mr Walsh said: “I don’t believe this government has the political will to address the issues.”

It is thought that the Coalition has devised a compromise whereby any big decision about aviation capacity in the South-east would be postponed until 2015.

It is not only in aviation where policy is struggling to keep up with rising demand. The rail industry cannot put down tracks fast enough.

GREENING has pushed through plans for a new £32.7billion line between London and the North. It would see 225mph trains go to Birmingham and eventually Leeds and Manchester.

Yet critics of the HS2 project have long questioned its economic cost and environmental impact. With the proposed route carving a line through prime Tory heartland, a grassroots backlash is brewing.

The Confederation of British ­Industry believes transport infrastructure of all kinds is needed to boost Britain’s recovery, including road schemes. Again, the Government is accused of dragging its feet.

Spending cuts and a lack of ­planning have left trunk roads more than £10billion short of funding. A review is considering whether to ­privatise the strategic roads network. This could open the door to more controversial toll roads.

The CBI wants three motorway projects brought forward and ­reinstatement of a further 14 major road schemes delayed in the 2010 ­spending review.

All types of infrastructure are needed but transport policy is stuck in a holding pattern. The foot must be taken off the brakes, or the ­economy could be left in first gear.