DAVID LEARMOUNT / LONDON
Fearing another drop in traffic from future wars or terrorist attacks, the UK Civil Aviation Authority has raised the price cap on UK air traffic control fees. The pressure, however, to reduce the fees charged by the part-privatised National Air Traffic Services (NATS) remains. In exchange for allowing the less-stringent price capping, the CAA has ordered a radical restructuring of NATS.
If the CAA's recommendation is accepted after a final 28-day consultation period, user charges will rise by two percentage points lower than inflation in 2003-05: the CAA had proposed five percentage points lower than inflation. By 2005, airlines face projected prices 8% higher than present. The CAA points out that under NATS' original proposals charges would have increased 24% in the same period. The CAA adds that the reductions already implemented mean that NATS is no longer Europe's most expensive air traffic services provider and is now behind Switzerland and Belgium.
A key change facing NATS is to shift its organisation from a project finance model to a regulated operating company. CAA chairman Sir Roy McNulty - formerly head of NATS - says the government made a mistake setting up the new company on the project finance model, and notes that the National Audit Office has come to the same conclusion. Other reorganisation measures include:
A £130 million ($203 million) investment from the UK government and airport operating company BAA, split 50/50, which will reduce senior debt to £600 million; commitment to achieving more reductions in the ratio of senior debt to regulatory asset base (RAB); restructuring or refinancing the senior debt to allow a repayment rate closer to the RAB rate of depreciation; revision of the terms of existing debt to allow NATS to access to alternative financing.McNulty denies that the system's complexity is an indictment of the public-private partnership used to part-privatise NATS.
He says: "Under the older, simpler system, the reaction [to the post-11 September income fall] would have been to hike the prices for the users."
Source: Flight International
