NATS agrees to CAA charging proposals for 2011-14

19 October 2010

NATS, the UK’s major air traffic services provider, said it would accept price control proposals for its En Route and Oceanic businesses, published today by the Civil Aviation Authority (CAA).  NATS’ consent is required by the Transport Act 2000 before these proposals can be implemented.

Chief Executive Richard Deakin said that the CAA had set tough new service quality and efficiency targets, but had at least made sufficient allowance for capital and operating expenditure plans to meet these targets.

He said: “Make no mistake, these service targets are tough and we will be required to make further challenging efficiency savings.”

He highlighted that the CAA’s review had taken place against a backdrop of lower traffic and rising pension costs, which were the major contributors to the proposed increases in charges to airlines.

“The CAA is clear that this is a time of economic uncertainty – in fact the worst downturn since the Second World War,” he said.

“The company has reduced controllable costs by some 30 per cent in real terms since PPP, and has reformed its pension arrangements.  These are major achievements and have gone a long way to avoiding bigger price increases; they also contributed to Eurocontrol describing NATS as ‘best in class’.

“Importantly, the CAA’s proposals enable us to embark on the next phase of investments to help create the new generation of streamlined air traffic systems in Europe and ultimately the Single European Sky.”

A major innovation is the proposal to introduce in 2012 the world’s first environmental metric to incentivise better flight efficiency, minimising fuel burn and CO2 emissions. In so doing, the CAA acknowledges the company’s proactive stance in setting fuel efficiency targets for itself.

Mr Deakin said: “We have gone through a two-year process to reach this point, including several stages of consultation with airlines. It is clear that we need to continue delivering value to our customers. That means continuing to make the right investments and delivering outstanding service quality. The next four years will be very challenging.”

The CAA’s final decision will be published in December.

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