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U.K. CAA Approves 26% Increase in Air Traffic Services Charges
The agency is facing backlash from airlines who will be forced to absorb additional cost.
The provider of enroute air traffic control services in the United Kingdom has been given approval by the U.K.’s Civil Aviation Authority (CAA) to raise prices over the period from 2023 to 2027. In an announcement on Thursday, the UK’s regulatory body ‘set out its Final Decision on new price control arrangements for NATS (En Route) plc (“NERL”), the economically regulated subsidiary of NATS Holdings.’ The NATS Holdings group also has an unregulated business, NATS Services, that provides air traffic control (ATC) services to airports and aviation-related organizations.
According to the authority’s calculations, the decision ‘will increase the average cost of U.K. en route air traffic services by around £0.43 ($0.52) to around £2.08 ($2,52) per passenger per flight.’ These are the prices charged to airlines flying through the U.K. and North Atlantic airspace by the air traffic management operator.
Andrew Walker, Chief Economist at the UK Civil Aviation Authority, said: “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 licence at the time.”
“Overall, the price control should ensure that NERL provides an efficient service and value for money,” added Walker. “Implementing targets around performance, efficiency and environmental impact will help deliver an improved airspace system that will benefit everyone.”
Backlash from Airlines
News of the increase from £47 in 2022 to £64 in 2023 to 2027 inclusive was met with disapproval from some airlines. Jonathan Hinkles, chief executive of U.K. regional carrier Loganair, wrote in a LinkedIn post: “We’ve progressed from highway robbery in the 18th century to airway robbery in 2024, based on today’s Civil Aviation Authority decision on the UK air traffic control charges NATS can levy.”
Mr. Hinkles suggested that airlines would seek to avoid U.K. airspace even though it may increase flight times and environmental impact. “For a routine flight such as Glasgow to Faro or Tenerife, airlines will now take-off and turn right to leave expensive U.K. airspace as soon as they can, to reach cheaper Irish airspace,” he wrote. “Ireland’s ATC charges are less than a third of the U.K.’s, so even though an airline will burn more fuel flying this longer route – and generate more emissions – the saving driven to avoid these rapacious NATS charges is worth it.”
The NATS group is 49 percent owned by the U.K. Government with a further 42 percent owned by an ‘Airline Group.’ British Airways, easyJet and Virgin Atlantic together make up about a third of a share in the ‘Airline Group’ with the U.K.’s second-largest pension fund Universities Superannuation Scheme (USS) owning 49 percent.
News of the price rise comes after a meltdown of the U.K.’s air navigation system in late August resulting in the cancellation or delay of over 2000 flights. The U.K. CAA advised that the decision on the price rise is separate from the Authority’s Independent Review of NATS’ technical issue on the U.K. Bank Holiday weekend at the end of the summer holidays. A recent NATS report on the event was branded by Ryanair Group’s chief executive Michael O’Leary as “factually inaccurate and full of rubbish” with NATS making “false claims.”
As to the effect on airline operations following the CAA’s decision, Loganair’s Hinkles wrote the following: “We held out on some unprofitable regional routes which haven’t recovered from the pandemic in the hope of improvement. The CAA and NATS have today removed one of the few causes for hope. We need to carefully consider our next steps, and decide what we now have to do. At its core, this is a really bad decision with consequences for customers, the economy and our environment. Airway robbery indeed.”
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