GRAHAM DUNN / LONDON
Public Accounts Committee accuses government of "blind optimism" and "raiding funds" for body's vulnerable position
A parliamentary committee has accused government officials of leaving the UK's National Air Traffic Services (NATS) in a "vulnerable" financial position following its partial privatisation in 2001.
The Public Accounts Committee - which examines UK government spending - blames "blind optimism" and the "raiding" of NATS funds for its precarious position.
In 2001 a consortium of seven UK carriers - the Airline Group - acquired a 46% stake in NATS as part of the UK's controversial public/private partnership (PPP) for its air traffic control service.
However, the slump in air travel after 11 September left NATS with a sharp shortfall in revenues. NATS later secured a fresh £130 million ($224 million) investment package, jointly financed by the UK government and airport operator BAA.
The committee suggests the transport department "dismissed too readily" alternative models and failed to "adequately test the robustness" of the Airline Group's proposed financial structure for NATS.
Committee chairman Edward Leigh says: "In pursuing the NATS PPP, the transport department dismissed the alternative not-for-profit solution operating successfully in Canada and ignored historical downturns in traffic."
It also criticises the government for taking £758 million out of NATS in sale proceeds, suggesting the latter's financial difficulties cannot be attributed wholly to 11 September.
"Blind optimism by the department...left the company in a vulnerable position with debts double what they were before PPP," adds Leigh.
Last summer a report by UK government oversight body, the National Audit Office, criticised the transport department over its handling of the PPP.
Source: Flight International