The UK government's moves in 2002 to bolster National Air Traffic Services' (NATS) finances will cost over £120 million ($215 million) - most of which will fall on airlines, according to the National Audit Office (NAO).
The NAOsays that the 11 September crisis revealed that the 2001 part-privatisation of UK air traffic control was seriously flawed. While the sale had raised £800 million for the government, "the high proceeds were partly achieved by increasing the level of NATS's bank debt...[making] the organisation vulnerable to downturns in traffic".
The rescue bid involved raising £130 million from airport operator BAA and the UK government; making £170 million in cost savings; and issuing £600 million in bonds.
But the UK Civil Aviation Authority's move to strengthen NATS in the long term, by allowing it to partially reverse planned fee cuts, will cost airlines an estimated £100 million by 2012. NATS remains the fourth most expensive air traffic service in Europe, behind Switzerland, Belgium and Germany - although it was the most expensive before part-privatisation.
In addition, setting up the rescue package cost around £20 million, with £13.9 million to be paid by NATS, compared with the £60 million cost of putting the privatisation itself through in 2001. The system also suffered from "18 months of disruptive uncertainty" while the rescue bid was put through, the auditors say, adding that this was "far longer than that endured by its peers in other countries, most of which simply raised their prices".
The problems could have been reduced if NATS's own management had been asked for advice on the privatisation, and if fewer investors had been involved originally, the report concludes.
Source: Flight International
