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Tuesday, 30 July, 2002, 15:08 GMT 16:08 UK
Air traffic 'penny pinching' criticised
Air traffic controllers
Flights have declined in the wake of 11 September
The "cost-cutting and penny-pinching mentality" foisted on the UK's air traffic control system since its part-privatisation has been attacked by MPs.

The House of Commons transport select committee describes as "incredible" the decision to cut back staff at the National Air Traffic Services (Nats).


The PPP should be reviewed before it does terminal damage to the UK's aviation industry

Commons transport committee
"We are not convinced that Nats' systems are sufficiently robust to enable it to reduce the numbers of safety-critical staff," say the MPs.

They urge the Transport Department to publish its plans for a Railtrack-style "complete failure" of the Nats finances.

The Department of Transport, which said it will study the report before publishing its response, said it recognised that Nats' financial situation needed strengthening.

Ministers also insisted comparisons cannot be made between the public-private partnership (PPP) used for Nats and what they call the "botched privatisation" of the railways.

Falling demand

The MPs warn that lack of investment could leave Nats ill-equipped to compete with new satellite-based air traffic control services being developed elsewhere in Europe and in North America.

The committee's broadside comes after the National Audit Office last week said Nats was running into severe funding difficulties.

The PPP was not appropriate and should be reviewed before it does terminal damage to the United Kingdom's aviation industry and vital national interests

Transport committee report

The UK aviation industry has already been hit by a sharp fall in demand in the wake of the US terror attacks.

Those problems have been aggravated by the part-privatisation of the service, say the MPs.

Their report continues: "The weaknesses of the financial structure suggest a failure of due diligence at the time of the sale of Nats, when traffic was already declining and there were already moves towards the use of smaller aircraft."

The Civil Aviation Authority has refused to let Nats ease its debts by raising its charges.

Improvements doubted

The MPs say the law allows air traffic control to be put into administration as a last resort.

But they warn: "The recent experience with Railtrack demonstrates that the existence of a legal mechanism to place such a vital company administration is not sufficient.

"We expect the department to publish details of its full contingency recovery plan in the event of a complete failure of Nats' finances."

The MPs say there is little evidence of the introduction of private sector managers improving the way the company is run.

They continue: "The PPP was not appropriate and should be reviewed before it does terminal damage to the United Kingdom's aviation industry and vital national interests."

Defence of PPP

A Department of Transport spokesman said air traffic control centres across the world suffered a drop in revenue after 11 September 2001.

He said: "If the PPP had not been in place, taxpayers would have paid all the additional costs. Because of the PPP, the costs have been shared between the public and private sectors.

"We recognise that Nats' financial position needs strengthening. All parties with an interest in Nats are working together towards a long-term solution that will put its finances on a sound footing."

The government says it is prepared to match pound for pound investment in Nats by a third party, with discussions on-going about this with the British Airports Authority (BAA plc).

Earlier this year, the government and the banks each made 30m available to ensure the short term financial viability of the air traffic control system."

The Nats public private partnership was established when the government sold a 46% stake in the company to the Airline Group, a consortium of seven UK-based airlines (British Airways, Virgin Atlantic, British Midland, Airtours, Monarch, Britannia and EasyJet).

See also:

24 Jul 02 | Politics
17 May 02 | UK
20 May 02 | Business
23 Jul 02 | Politics
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