Competitiveness White Paper: Air traffic: Share offer plan for national control service

SHARES IN a privatised air traffic control company could be offered to the public as early as the end of 1995 if plans published yesterday are approved after consultation. The sale plan has been prompted by fears that the massive investment programme of nearly pounds 150m per year for air traffic control services can no longer be funded by lending from the Government because of restrictions on the public sector borrowing requirement.

The National Air Traffic Services (NATS) is a civil and military partnership operated jointly by the Civil Aviation Authority, with a turnover of pounds 500m and a staff of 5,500 plus 400 secondees from the military. About 80 per cent of its income comes from charging aircraft flying over Britain for air traffic control (ATC) services and most of the remainder from providing services at 12 major airports.

Under the plan, the new privatised company would provide air traffic control services to the Civil Aviation Authority under a contract at a fixed fee set for a five-year term, which would offer the incentive of allowing the company to make profits if it is efficient. This arm's length relationship is being suggested because under rules set by the European- wide air traffic control regulator, Eurocontrol, charges for air traffic control are supposed to only pay for costs and investment, and surplus profits are banned.

The plan was endorsed by Christopher Chataway, the chairman of the CAA, who stressed it had the unanimous support of his board. He dismissed fears that it would diminish safety or lead to higher charges for passengers. 'The ultimate beneficiary will be the passenger. There is no reason why safety should be affected. In addition, this will ensure NATS secures the necessary funding for its investment programme.'

Mr Chataway said legislation could be introduced in the next parliamentary session which would allow a sale by late 1995 or early 1996. He recognised that competition cannot be allowed for 'en route' services to aircraft overflying Britain but said there was already a good deal of competition for providing services at airports to aircraft taking off or landing. Small aircraft would continue to receive free ATC services.

Brian Wilson, Labour's transport spokesman, condemned the privatisation plans as 'another piece of doctrinaire nonsense'. He added: 'All sensible people agree that there are some activities that should not be subjected to pressure for profits and ATC is one of them.' Joe Magee, the aviation officer for IPMS, the body which represents 4,000 people in the service, said: 'Our air traffic control system is cost-effective, efficient and accountable to its customers - the airlines and the travelling public.'

The Department of Transport's consultation will end on 30 June.

The Government also said it would consult about ways of using Northolt airport, an RAF airport, for business jets and other private aircraft.

(Photograph omitted)

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