Ministers set to bail out air traffic control network

The Treasury is ready to rescue Britain's air traffic control network from a financial crisis partly caused by the 11 September terrorist attacks.

The Treasury is ready to rescue Britain's air traffic control network from a financial crisis partly caused by the 11 September terrorist attacks.

National Air Traffic Services (Nats), controversially part-privatised by the Government earlier this year, has suffered a collapse in revenue since the terrorist attacks in America. It has been forced to revise its business plan and will hold a board meeting on Monday. Among the options it is considering are to request more public money, to seek extra help from its bankers or to increase charges to airlines entering British airspace.

The Independent has learnt that ministers will look "sympathetically" at a plea for a state handout to see Nats through the crisis. The move would be embarrassing for the Government, which repeatedly insisted that its plans would deliver much-needed investment for the air-traffic control system.

Ministers accept that the present crisis is so severe that emergency steps will have to be taken. One said that taxpayers would have had to absorb the cost of the post-11 September crisis if Nats was still in state hands.

A Nats source confirmed that it had made initial contacts with ministers over special help for the network. "The Government is sympathetic and they want to sort it out," he said.

Labour received £750m earlier this year after it sold a 51 per cent stake in the network, with a consortium of airlines, including British Airways and Virgin Atlantic, taking 46 per cent and staff receiving a 5 per cent share.

Nats agreed a 17.5 per cent cut over five years in the fees airlines paid to enter British airspace in return for improved cost-effectiveness. But because of the slump in passenger numbers – particularly on transatlantic flights – Nats has warned the Government its financial targets are proving impossible to meet. The network is understood to be about to approach the Civil Aviation Authority to request a renegotiation of the planned cuts in air fees. Last year it received some £600m from the fees, but the income this year is certain to fall sharply.

Meanwhile, Tony Blair ruled out large-scale subsidy of Britain's struggling airlines to help them through the crisis. He told the Commons yesterday: "Our airline and aviation industry ... have obviously experienced very difficult times. We believe, however, the European Commission has been right to say there should be no general bail-out of companies."

Mr Blair said the Government was looking at other ways of compensating carriers for revenue lost in the immediate aftermath of 11 September.