National Air Traffic Services (NATS) today expressed its 'surprise' at the 'over ambitious' approach of the Civil Aviation Authority (CAA) in proposing tough new price controls for the next five years, which could impact on service performance and investment in new capacity.
Paul Barron, NATS' Chief Executive, said: "Customers have impressed on me that they need continuous service improvements, extra capacity when and where required, delivered efficiently and economically. At first glance, the CAA's proposals seem to place more emphasis on year-on-year real price reductions (limiting annual price increases to an average of between RPI minus 4.5 per cent and RPI minus 5 per cent).
"Its initial proposals for the next five year period look complex and appear to be a good deal tougher than we expected. We will, of course, now study these proposals in detail to understand the implications for productivity, financial robustness, and shareholder returns.
"The CAA acknowledges that there is no obvious efficiency gap between NATS and the average European air traffic service provider and that significant progress has been made to improve the performance of the business and to begin the challenge of delivering a £1 billion modernisation programme. However, I am surprised that the CAA appears not to have taken these factors fully into consideration in reaching its initial conclusions."
Mr Barron said he welcomed the fact that the CAA was sticking to the existing regulatory framework, including the volume sharing arrangements.
He added: "Over the coming months, we intend to consult with our customers and engage with the CAA, to influence the outcome of this review. We want to be sure that the good work that has been done in the current charge period to improve our operational and financial performance, will not be undone by an over ambitious emphasis on price reduction.
"However, it is reassuring that like us, the CAA remains absolutely committed to safety. Indeed, as the Authority has said today, that is its overarching duty."
NATS says that upgrading its infrastructure to enable future capacity and efficiency benefits, and playing a leading role in shaping the future of air traffic management in Europe, are priorities that sit alongside the delivery of efficient, high quality services. It says it can only do so with a motivated workforce, committed to continuous improvement in productivity.
NATS points out that its charges reflect the complexity of providing a safe air traffic service in the UK, one of the busiest and fastest growing aviation markets in the world.
For further information, contact:
NATS Press Office 01489 615945
