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Thursday, 12 April, 2001, 14:20 GMT
Air traffic control

Will air traffic control be privatised - and where do the parties stand?

While most transport issues are devolved matters, regulation including air traffic control remains a Westminster matter.


BACKGROUND

One of the most controversial privatisations in UK history could go ahead later this year.

Labour, in government, agreed to sell a 46% share of the National Air Traffic Control Service (Nats) to a private buyer for 350m.

Nats facts
Nats handled 2m flights last year
On one day it handled 6,635 flights
UK airports handled 90m passengers in one year
Passenger numbers are rising by 4.5% a year
Skies above London are among the busiest in the world
Passenger numbers will double by 2015
Labour says the sale is essential to finance the service.

While critics say even partial privatisation will jeopardise safety, the party said that the new-look service would be strictly monitored by the Civil Aviation Authority.

Currently, Nats makes the British taxpayer a profit.

But its technology is ageing and demand for air travel is rapidly growing.

The existing service will not be able to cope with the expected doubling in passenger numbers to about 200 million a year by 2015.

An extra 1.3bn investment in people and technology will need to be spent before then, at a rate of 100m a year, says Labour.

There will be no requirement on the new owners to make this sizeable investment.

But Labour is confident it will be in the new owner's interests to finance such an expansion.


BIDDERS

There were three bidders for a 46% stake in Nats, worth up to 900m.

Nimus, backed by Serco, a UK facilities management group, was thought to be leading the race.

The Novares consortium, led by aerospace equipment supplier Lockheed Martin was held in reserve.

But the government awarded preferred bidder status to the Airline Group, a consortium of eight UK airlines including British Airways and Virgin.

The choice of bidder lifted a threat of strike action by air traffic control unions, which had raised concerns over safety and job security if Serco had won.

Announcing the decision, Deputy Prime Minister, John Prescott, said that this would be the first real public private partnership in operation.

The Airline Group will pay the government 800m if they do become Nats' strategic partner on 1 June 2001.

They have also promised to spend 1bn on Nats over the next 10 years, replacing their outdated systems.


POLICY U-TURN

However, Labour has faced a barrage of criticism after declaring its vehement opposition to any such privatisation while out of power.

But the party defended its decision in government, saying that it had come up with a workable compromise.


Where are the new owners going to get their profit? By cutting costs. Where are the bulk of costs? Staff. Who protects safety? Staff

Air traffic controllers' union
This includes giving the air traffic controllers, among the most vociferous critics, a 5% share.

The Conservatives, in turn, have rounded on the Labour plan as little more than a clumsy compromise.

It would prefer to see Nats sold in its entirety, though not to a foreign owner.

Like both Labour and the Conservatives, the Liberal Democrats agree that money for Nats cannot be found from Treasury coffers.

But rather than a private sale, it has proposed turning Nats over to a publicly-owned company which can raise funds through bond issues, similar to schemes put forward for investment in the London Underground.

The Liberal Democrat's transport spokesman, Don Foster, argues that this would introduce investment without putting safety at risk.

The part-privatisation critics are not confined to opposition parties.

Nearly 50 Labour backbenchers voted against the plan last summer.

And the cross-party transport select sub-committee has joined the chorus of critics.

The committee, chaired by Labour MP Gwyneth Dunwoody, said the government proposals were "the worst of all possible worlds" which would not bring cost savings and could risk safety.

The committee recommended the Canadian government's model, which raised large-scale investment through a bond issue.

Furthermore, the service is jointly managed by a non-profit trust, comprising airlines, the unions, and government officials.


PLANS DEFENDED

But a defender of the plan is Nats' chief executive, Bill Semple.

"If air traffic control has to ... join the queue for hard-pressed public funds behind schools and hospitals it will never have the certainty over its investment plans it so desperately needs."

Fear of flying?
Air passengers are more likely to be killed by lightning than on a UK airline
Flying is six times safer than car travel, twice as safe as rail
700m UK air passengers between 1989-98
56 people died between 1989-98
He was confident safety would not be compromised.

Not only would the CAA be a "tough" regulator, the law already provided "safety locks", said Mr Semple.

"There are already a whole series of laws and regulations governing air traffic control - how it operates, how many hours controllers can work, how they are trained, what systems are required."

But the staff were less convinced and have fought a two-year campaign against the part-privatisation of Nats.

The union which represents 3,000 controllers, the Institution of Professionals, Managers and Specialists [IPMS], argued that a drive for profits will necessarily compromise safety.

The union feared that the new joint-owners would seek profits by cutting costs - and cutting costs would mean cutting staff and their training.

But when the government selected its preferred bidder out of three, the IPMS approved.

The Airline Group promised to operate Nats on a 'not-for-commercial-return' basis to minimise any conflict between safety and profit.

The airlines also said they would maintain the safety system operated by Nats.

However, the IMPS have warned that they are still ready to ballot their members on industial action if any measures threaten air safety.

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