UK NATS seeks higher user fees to make ends meet

 - May 15, 2008, 6:56 AM

Britain’s partly privatized National Air Traffic Services (NATS) has asked the government to allow it to raise en route charges to make up an estimated £230 million ($327 million) revenue shortfall over the next three years. It has also had to request approximately £60 million ($85 million) in loans from the government and the consortium of banks that last year backed seven leading UK airlines when they acquired a 46-percent stake in NATS. However, contrary to recent press reports, these loans have yet to be agreed or paid.

NATS has also provoked controversy by pushing for a £200 million ($284 million) package of cost-cutting measures, including the loss of several hundred administrative positions and the deceleration of investments in the planned new en route control center at Prestwick in Scotland. The moves have provoked plenty of “told you so” sentiment among trade union leaders and opposition politicians, who have said that NATS has failed to deliver the promised efficiency improvements and private-sector funding for infrastructure upgrades. The government has retained a 49-percent stake in the company and employees hold the remaining 5 percent of its equity.

NATS’ new management suffered further embarrassment in mid-February when a 200-mi stretch of airspace north of London had to be closed overnight due to a shortage of controllers (reportedly from a single controller’s calling in sick on short notice). Low traffic levels meant that the shutdown did not cause serious delays. However, the incident did highlight the service’s vulnerability to staff shortages–attributed to low morale among employees–according to NATS’ critics.

The U.S. National Air Traffic Controllers Association (Natca) has seized on NATS’ recent woes in support of its argument that part privatization is not an acceptable model for reform of air traffic management services. In a February 26 statement, Natca president John Carr condemned the Bush Administration’s commitment to privatization, saying that “the Administration is foolishly and recklessly theorizing that a business model used for expanding fast-food restaurant chains could somehow be applied to the U.S. air traffic control system, which holds the safety of air travelers as its sacred trust.”

The UK Civil Aviation Authority is weighing a request by NATS to raise its fees by
an average of 5 percent annually over the next three years, starting next January. NATS has pointed out that other European ATC services reacted to the post-September 11 downturn in airline traffic by increasing en route charges by between 12 and 20 percent, whereas NATS’ rates actually had to be reduced by 1 percent this past January.

The company has pushed back the opening of the new Prestwick ATC facility from 2007 to 2009, arguing that significantly revised traffic projections now suggest that the additional capacity will not be required until then.