Dr Paul Golby CBE
From late February 2020 it became clear that Covid-19 would have a very significant impact on commercial airlines and airport operators on which we depend for the majority of our income. The company has endured several demand shocks over the years: the 9/11 terrorist attacks; volcanic ash; the global financial crisis and Gulf wars, but none has posed such a significant threat and level of uncertainty to its business model.
While the regulatory framework largely protects our revenue, the reduction in profit for the year to £25.3m (2019: £98.2m) in large part reflected our assessment of the likely impact of Covid-19 on the value of our assets and investments, and is explained in the Financial review.
Covid-19 is presenting an unprecedented challenge to the aviation sector, in terms of its impact on the demand for air travel and the level of uncertainty of its recovery.
As provider of the essential ATC service our role throughout this crisis has been to continue to provide customers and the public with the safe and resilient service they expect and to ensure that we are well placed to facilitate the recovery.
- Flights. We handled 2.48m flights (2019: 2.54m) in the financial year. There was a steep reduction in March 2020 as governments sought to control the outbreak of Covid-19.
- Airprox. One airprox was attributed to our operation during the financial year (2019 restated: one).
- Space-based surveillance. Our North Atlantic en route service began using space-based surveillance, with the aim of improving safety, flight efficiency and reducing emissions.
- Competition and Markets Authority. We rejected the Civil Aviation Authority’s (CAA) price control for Reference Period 3 (RP3: 2020-2024) leading to a referral to the Competition and Markets Authority (CMA). CMA’s findings upheld key elements of our referral while sustaining other aspects of the CAA’s proposals. However, many of their findings have been overtaken by the impacts of Covid-19 on the sector. The CAA will need to redetermine the price control by the start of 2023.
- Airspace Change Organising Group. In conjunction with the CAA and the Department for Transport, we established the Airspace Change Organising Group (ACOG) to coordinate essential airspace modernisation in RP3 across the industry.
- Contracts. The MOD renewed its military area radar contract to 2030 and the Aberdeen Glasgow and Southampton airports group extended its ATC contract to 2029.
- Covid-19. Our response to Covid-19 was to protect staff and continue to ensure a safe operation while controlling our expenditure and managing our liquidity and, in August 2020, we secured an additional £380m bank facility.