UK Airlines Criticize CAA Approval Of NATS Traffic Charges Increase

UK airlines have criticized a decision by the UK Civil Aviation Authority (CAA) to approve an increase in air traffic charges by NATS, the UK air traffic control service provider, saying a different approach to how NATS, which caused widespread flight disruption over a technical glitch in August, is regulated. 

The CAA said its final decision sets the price control for NATS’ en route services in line with the provisional decision published in July 2023. 

The average charge for NATS’ regulated en route service over the period 2023 to 2027 inclusive is forecast to change by 26% compared with 2022, from £42 ($51) to £53 in 2020 prices, the CAA said Oct. 26. 

Tim Alderslade, CEO of Airlines UK, whose members include British Airways, easyJet, Ryanair and TUI Airways, said: “This is yet another kick in the teeth for passengers who have been plagued by issues this summer including the August NATS IT failure and will inevitably end up footing the bill of millions of pounds for increases that simply cannot be justified while it remains unclear what action will be taken to ensure airlines and their customers do not see a repeat of this disruption.”

“It is clear that a wider independent review into how NATS is regulated is needed to protect passengers and ensure that airlines are not always forced to act as the insurer of last resort and bear millions of pounds of costs for failures that are not their fault,” Alderslade added. 

The CAA said the final decision was expected to increase the average cost of UK en route air traffic services by around £0.43 to around £2.08 per passenger per flight.  

The charges, in 2020 prices, are expected to stay below the average level experienced in the price control period from 2015 to 2019, prior to the impact of the coronavirus pandemic, and should remain broadly in line with European counterparts, the CAA said.  It added that its decision should allow NATS to continue to recover its operating costs and finance new investment needed to provide a high-quality level of service in the future as well as allowing it to recover revenues from the period affected by the pandemic, which the regulator has spread over 10 years to reduce the impact on charges.

“We are astonished at the CAA’s decision to award NATS another 26% increase in their already high charges after a summer where NATS repeatedly delayed flights due to badly managed staff rosters and mismanaged operations which collapsed altogether on 28 August in circumstances which remain unexplained,” said Ryanair CEO Michael O’Leary. He added NATS continues to call for last-minute schedule cuts at London Gatwick airport through September and October due to mismanaged rosters in the ATC tower.

Ryanair said it already pays NATS almost €100 million per year for UK ATC services.

The airline called on the CAA to reverse its “illogical decision” and said it believes no increase should be awarded “until NATS delivers the service it is already being paid for without staff shortages, without capacity restrictions and without complete system shutdowns such as that delivered by Martin Rolfe [NATS CEO] and his team on 28 August last.”

“Our decision will provide the resources and investment required for NERL to provide a resilient, high-quality service for passengers and modernise its services, while recovering costs from the pandemic, which is consistent with the traffic risk sharing arrangements in NERL’s license at the time,” CAA Chief Economist Andrew Walker said. 

NERL stands for NATS (En Route) plc, the economically regulated subsidiary of NATS Holdings.

“Overall, the price control should ensure that NERL provides an efficient service and value for money,” Walker said. “Implementing targets around performance, efficiency and environmental impact will help deliver an improved airspace system that will benefit everyone.”

He added: “We also recognize the disruption caused by the technical issue in August, and we will consider any further regulatory steps as appropriate following the outcome of the independent review.”

The CAA said Sept. 6 that it would be conducting an independent in-depth review into what went wrong Aug. 28, causing flight delays and cancellations for many travelers over a busy long holiday weekend.

Separately, the UK’s biggest airport, Heathrow, released financial results for the first nine months of the year which showed overall adjusted losses before tax narrowed to £19 million from €442 million in the same period a year earlier.

“Following a strong summer, we have revised our 2023 traffic forecast to 79.3 million passengers and we expect 2024 traffic will be in line with 2019,” Heathrow said. “Consequently, adjusted EBITDA [earnings before interest, tax depreciation and amortization] for 2023 is expected to be around £2.2 billion.”

EBITDA reached £1.7 billion in the first nine months of the year, up 35.9%. 

The airport said passenger numbers reached 29 million over the summer, taking the nine-month total up to 59 million.