CAA dismisses Nats as costing too much

Britain's aviation regulator served notice yesterday that it is likely to push for big, efficient improvements in the part-privatised body which runs the UK's air traffic control service.

The Civil Aviation Authority said there was clear evidence that National Air Traffic Services (Nats), which is 46 per cent owned by a group of UK airlines and the airport operator BAA, was a "high-cost provider" compared to similar organisations elsewhere in Europe.

The scope for cost savings will be taken into account when the CAA fixes the charges that Nats can levy on airlines using UK air space over the five year period from 2006 to 2011.

Under the current formula airlines pay £410m a year, and Nats has to reduce its charges in real terms by two per cent. It also has a target of lowering operating costs by around 10 per cent or £35m a year.

A consultation document issued yesterday by the CAA showed that Nats is more costly to run than its French or German counterparts and is three times more expensive than Spanish air traffic control.

For every £1 Nats spends on employing an air traffic controller it incurs a further £6.20 in support costs. For Germany the comparable figure is £4.70 and for France, £4.90. Harry Bush, the director of economic regulation at the CAA, said one of the priorities of the review will be to get to the bottom of these differentials to see if they could be narrowed. He said the aim would be to cut support costs of Nats while keeping the number of front-line air traffic control staff intact. Last year £216m of Nats' £340m running costs were accounted for by staffing.

Mr Bush said the CAA would also look at ways of encouraging Nats to run its £1bn investment programme more efficiently. Under the present price control, which runs until January 2006, Nats is allowed to pass on £374m of investment on to the airlines.

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