This week, the UK Civil Aviation Authority (CAA) set out its Final Decision on new price control arrangements for NATS (En Route) plc (NERL), a subsidiary of NATS Holdings that provides en route air traffic control services in the UK and North Atlantic airspace.
This decision, which sets the price control for NERL’s services, is of significant importance to both the aviation industry and passengers.
In this article, we look into the key aspects of this decision and its implications.
Understanding the NATS Price Control Decision
The CAA’s Final Decision aligns with the Provisional Decision released in July 2023. It focuses on the price control for NATS en route services, encompassing the period from 2023 to 2027.
The central point of interest here is the average charge for NERL’s regulated en route service, which is projected to increase by 26 percent, from £42 to £53 (2020 prices).
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In nominal terms, this translates to a rise from £47 in 2022 to £64 from 2023 to 2027. What this essentially means is that passengers can expect a slight increase in the cost of en route air traffic services.
Impact on Passengers
The Final Decision is anticipated to result in an average cost increase of approximately £0.43 per passenger per flight. This increment, while modest, could influence the travel expenses of passengers.
However, it’s important to note that the charges, in 2020 prices, are anticipated to remain below the average levels observed during the 2015 to 2019 price control period, which was prior to the COVID-19 pandemic.
Moreover, these charges are expected to remain competitive with NERL’s European counterparts, offering some reassurance to travelers.
Ensuring Service Quality
One of the core objectives of the CAA’s decision is to ensure that NERL continues to recover its operating costs and secure funding for essential investments that will enable the provision of high-quality air traffic services in the future.
This is a vital aspect of maintaining the efficiency and safety of the airspace system. The decision also facilitates NERL’s recovery of revenues that were affected by the COVID-19 pandemic.
To minimize the immediate impact on charges, the CAA has spread this recovery over a ten-year period, demonstrating a practical approach to financial recovery in the aftermath of the pandemic.
A Statement from the CAA
Andrew Walker, Chief Economist at the UK Civil Aviation Authority, emphasized the significance of the Final Decision:
“Our decision will provide the resources and investment required for NERL to provide a resilient, high-quality service for passengers and modernize its services, while recovering costs from the pandemic, which is consistent with the traffic risk sharing arrangements in NERL’s license at the time.”
“Overall, the price control should ensure that NERL provides an efficient service and value for money. Implementing targets around performance, efficiency, and environmental impact will help deliver an improved airspace system that will benefit everyone.”
Focus on Safety
It’s crucial to underline that safety is the primary statutory duty for NERL. The Final Decision aligns with NERL’s commitment to maintaining a safe operation.
The regulatory framework not only addresses pricing but also includes incentives for NERL to enhance its environmental impact and reduce delays, while fostering effective engagement with airlines regarding major investments.
The Final Decision comes after the release of proposals in October 2022 and the Provisional Decision in July 2023.
The CAA, in fulfilling its duties, deems it essential for customers and consumers that this review be completed and a Final Decision be reached.
Independent Review and Future Considerations
The CAA’s decision on the price control for NERL is distinct from its Independent Review of NATS’ technical issue on 28 August, which caused significant flight disruption due to a temporary failure in air traffic control services.
If the Independent Review identifies issues related to the regulatory framework for NERL that warrant attention during the 2023-2027 control period, the CAA will contemplate regulatory steps, including potential modifications to NERL’s license, after due consultation.
The Final Decision can be found on the UK Civil Aviation Authority website.
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