ANY QUOTES USED MUST BE ATTRIBUTED TO MURNAGHAN, SKY NEWS

DERMOT MURNAGHAN: It has just become more expensive to fly away on holiday. The Chancellor’s increase in air passenger duty comes into effect today putting up to 8% on the cost of a flight. Now Virgin Atlantic is one of the four airlines in this country which has called on the Chancellor to suspend the rises, it’s chief executive Steve Ridgeway is here, a very good morning to you Mr Ridgeway.

STEVE RIDGEWAY: Good morning.

DERMOT MURNAGHAN: Now this is one issue, I mentioned four airlines there, this is one issue that you actually agree with British Airways on, that air passenger duty increases are bad for flying and bad for the economy.

STEVE RIDGEWAY: Yes, amazing and Ryanair agree with EasyJet, when have you seen that happen before?

DERMOT MURNAGHAN: So it must be bad in your book.

STEVE RIDGEWAY: Yes, I think it is. Air passenger duty has gone up between 160 and 360% since 2007, it’s the biggest increases of any tax and it is now costing families and people coming here to do business and business travellers going abroad for the UK, a huge amount of money and actually very interestingly when I was just in make up with your lovely make up lady, she didn’t manage to make it any better but she just said to me, the best example you could get, that she and her family are thinking of going to Australia, it is going to cost them £90 each just in APD taxes and they are seriously thinking about going via Paris or going via Amsterdam to avoid that where it will cost them £9. Now who is going to lose that? Virgin Atlantic or British Airways.

DERMOT MURNAGHAN: But there are environmentalists and others listening to this interview saying, well listen, you get away with things like not paying VAT on your fuel, it’s enormously damaging to the environment flying anyway, it should be discouraged, particularly short haul flying?

STEVE RIDGEWAY: Well actually in that case, if she did go via Paris and then down to Australia it would be even worse wouldn’t it, in terms of emissions? APD is not an environmental tax, it’s a tax raising money and it has risen excessively steeply and that’s why we are so exercised about it because 29 million fewer tourists came to the UK between 2007 and last year. Yes, we’ve had bad economic times and …

DERMOT MURNAGHAN: I was going to say, that’s not all air passenger duty is it?

STEVE RIDGEWAY: It’s not all but some of it is and I think this tax has gone past the tipping point and even as we are today it is projected to go up by another 46% between now and 2016. UK is 134th out of 138 countries in competitiveness of taxation and that’s not a very good place to be.

DERMOT MURNAGHAN: Okay, you talk about constraints, particularly on tourism, now let’s talk about Heathrow, the major hub in the United Kingdom. There has been this campaign for a long time to get a third runway, the previous government said it would happen, the incoming government has now said no it won’t but say they might look at a third runway at Heathrow again. Presumably you’d encourage them in that?

STEVE RIDGEWAY: Well I think the starting point is that this country has to remain competitive and every major economy needs a hub airport that works really efficiently and enables you to fly to lots and lots of destinations and the fact is that Heathrow is absolutely ram jam full, it is still the largest international airport in the world but it cannot grow and meanwhile airports are growing in Paris, they are growing in Holland and they are growing in Germany. We welcome the debate, let’s have the debate, let’s get everything on the table, let’s look at all the options but to have an option that wouldn’t include looking at Heathrow seems mad to us, so yes, let’s get down and do it but above all, let’s get on with it and let’s make some decisions but we must include Heathrow.

DERMOT MURNAGHAN: The so-called Boris island out to the east, do you think that’s just too long term?

STEVE RIDGEWAY: It is extremely long-term, I think it’s a massive project that is fraught with cost issues and just the whole issue of the infrastructure. Building the airport is quite easy, it’s just what goes with it but let’s have the debate and get on with it. Terminal Five alone took twenty years just to build a shed basically and we are damaging this country just at a time when we are trying to turn the economy around, we need to get it growing don’t we?

DERMOT MURNAGHAN: Terminal Five a shed? Well I’m sure BA who operate out of it ….

STEVE RIDGEWAY: Well I had to say that didn’t I?

DERMOT MURNAGHAN: I thought you might. I didn’t want to raise the issue of BA because even if Heathrow had a third runway I suspect Virgin Atlantic would be saying we’re still not getting enough slots there and this issue of BA or IAG, it’s parent group, taking over BMI, does that further restrict the number of slots and make IAG an even bigger competitor?

STEVE RIDGEWAY: Look, certainly Friday was a very bad day for travellers, particularly travellers in Manchester and the north and Scotland, for the fact that the EU pushed through the acquisition of BMI by IAG in the way it did without the full scrutiny that could have taken place, I think was very regrettable because as we said, Heathrow is absolutely full, it is going to limit choice for customers and it just makes the landscape much tougher. Anyway, I can’t say a lot more about it today because it came out six o’clock on Friday.

DERMOT MURNAGHAN: Sure but would Virgin look at some of the so-called feed routes? I know that Willie Walsh of IAG was a bit rude about Virgin saying it is rather humiliating that your Virgin passengers going long haul have to use BA flights as the feeder net.

STEVE RIDGEWAY: Well I think that rather tells a story about what he thinks about whether airlines should be able to compete fairly but yes, absolutely, we made it very clear and that’s why we were interested in BMI, that we would fly those routes to provide competition. We have provided classic competition to BA for over 25 years now and look at how consumers have benefited from that and we would do the same thing on those routes which is why I think there has been so much emotion in Scotland and in places like Manchester about making sure there is that choice and actually there is a stronger choice than there’s been historically.

DERMOT MURNAGHAN: Steve Ridgeway, thank you very much indeed, a fascinating chat there. the chief executive of Virgin Atlantic.

STEVE RIDGEWAY: Thank you.