Tories size up air-traffic sell-off

Privatisation of Britain's air-traffic control network is back on the Government agenda and an announcement could be made as early as next month at the Tory party conference.

The controversial plan to sell off the air-traffic control system, worth pounds 600m, was shelved last year after united opposition from airlines, pilots' trade unions and concern from other European countries that their airlines would be overcharged.

However, the Treasury is keen to see National Air Traffic Services (Nats) privatised before the election.

Although this would require primary legislation, officials are convinced it could be carried out in time if it were done through a trade sale to an existing company rather than flotation on the Stock Exchange.

The revived plan has emerged because of doubts over the future of the planned Scottish control centre at Prestwick. This pounds 230m facility was due to have been given the go-ahead as a Private Finance Initiative, which means it would have been funded by private money.

Air-traffic control is now highly profitable and airlines pay both for overflying Britain and landing or taking off. However, ministers have long been concerned that new investment is stymied because of public-sector borrowing requirements.

The initial solution was to have used the Private Finance Initiative to fund the new centre at Scotland, which will be one of only two for controlling overflying aircraft in Britain.

The other, at Swanwick, in Hampshire, and costing pounds 350m, has also been hit by delays and is now not due to open until next year.

Now, though, there are serious doubts whether the centre in Scotland will ever be built and whether all operations will be concentrated at Swanwick.

The Civil Aviation Authority has launched a secret review of the two- centre strategy following concerns that both bids for Prestwick are too high.

A leaked letter to Brian Donohoe, Labour MP for Cunninghame South, which covers Prestwick, from Ron Stafford, the project director of AyrTec, one of the two consortia on the shortlist to build the centre, says: "It is now our understanding that the two-centre strategy review will conclude that two centres are not required and that an announcement may be imminent." Mr Stafford warns that to have only one centre would jeopardise safety, as a failure would lead to overworked foreign centres having to take on the work, and suggests the risk is too great.

Moreover, he says that the existing control centre at Prestwick, "which controls all high-altitude traffic from a line near Manchester to the Arctic Circle, is over 20 years old and suffers frequent failures".

Mr Stafford adds in a reference to privatisation: "Nats's decision to abandon the two- centre strategy may be driven by wider agendas. We do not believe that these considerations should be placed ahead of passenger safety and the national interest."

The unions have long campaigned against privatisation because of fears that safety would be compromised by the profit motive. Joe Magee, aviation officer for the air-traffic controllers' union, IPMS, said: "The Government is seeking to resurrect the discredited policy of privatisation to get out of the shambles created by the Private Finance Initiative. Privatisation was rejected two years ago by the industry, MPs and staff, but now the plan is being resurrected in a plan to raise cash for tax cuts."