The UK National Air Traffic Services (NATS) may not raise char- ges to make up for post-11 September traffic falls, says a Civil Aviation Authority consultation document published last week.
The CAA rejects NATS' application for a relaxation of the existing price cap formula, calling it an attempt "simply to repair its balance sheet". NATS chief executive Richard Everitt has reacted angrily, saying: "Given the 17% downturn in traffic revenue since September, I am astonished that the CAA has not accepted that a price increase is justified." The price cap, Everitt points out, condemns NATS to a "real-term" 1% charges reduction this year when its European counterparts have, on average, raised charges by 12%.
NATS is a public/private partnership, 49% owned by the UK government, 46% by a consortium of UK airlines, and 5% by its employees. The CAA points out it is a statutory monopoly with potential to make money through cost savings from improved efficiency and to raise earnings through boosting traffic flow management capacity.
The CAA admits that "NATS' debt levels are very high, particularly for a company embarking on a major capacity enhancement programme", and has made some suggestions. These include: specifying a traffic volume floor, below which the price cap may be relaxed, and a volume ceiling above which the price cap would tighten; and "a more limited increase in charges than specified by NATS but conditional on…new equity and adjustments by existing shareholders and financiers".
The present mechanism entails NATS adjusting its charges by inflation minus 2.25% this year, increasing to inflation minus 5% for 2004/05. NATS had asked for 4% above inflation in 2003, 3% above in 2004, and 2% for 2005. The CAA will announce a final decision in late June.
Source: Flight International
