UKCAA sets price control on NATS airline charges

Civil Aviation Authority

26 October 2023

 

UK Civil Aviation Authority publishes price control decision on NATS airline charges 

The UK Civil Aviation Authority has today set out its Final Decision on new price control arrangements for NATS (En Route) plc ("NERL"), the economically regulated subsidiary of NATS Holdings.  

The regulator's Final Decision sets the price control for NERL's en route services in line with the Provisional Decision published in July 2023.  

The average charge for NERL's regulated en route service over the period 2023 to 2027 inclusive is forecast to change by 26 per cent compared with 2022, from £42 to £53 in 2020 prices.  

It is expected the Final Decision will increase the average cost of UK en route air traffic services by around £0.43 to around £2.08 per passenger per flight.  

In nominal terms, the average charge is forecast to increase from £47 in 2022 to £64 in 2023 to 2027 inclusive. 

NERL's 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 COVID-19 pandemic, and should remain broadly in line with NERL's European counterparts. 

The UK Civil Aviation Authority's decision will allow NERL to continue to recover its operating costs and finance new investment needed to provide a high-quality level of service in the future.  

It also allows NERL to recover revenues from the period affected by the COVID-19 pandemic, which the regulator has spread over 10 years to reduce the impact on charges.  

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. Implementing targets around performance, efficiency and environmental impact will help deliver an improved airspace system that will benefit everyone. 

"We also recognise 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." 

NERL is the provider of en route air traffic control services in the UK and is subject to economic regulation by the UK Civil Aviation Authority. The controls regulate the prices NERL can charge airlines for the services it provides in UK and North Atlantic airspace.  

Safety is the primary statutory duty for NERL and this Final Decision is consistent with NERL maintaining a safe operation.  

The regulatory arrangements for NERL include incentives to deliver environmental improvements and reductions in delays, as well as for effective engagement with airlines on its major investments.   

The Final Decision follows publication of proposals in October 2022 and a Provisional Decision in July 2023. The UK Civil Aviation Authority considers that, consistent with its duties, it is in customers' and consumers' interests that this review is completed, and a Final Decision is made. 

The decision is separate from the UK Civil Aviation Authority's Independent Review into NATS' technical issue on 28 August, which saw major flight disruption caused by a temporary failure in air traffic control services.  

If the Independent Review raises issues in relation to the regulatory framework for NERL that should be addressed during the 2023-2027 control period, the UK Civil Aviation Authority will consider and where appropriate consult on regulatory steps including appropriate changes to NERL's licence.

For further information:

Andrew McConnell - Head of Media and External Affairs, 0333 103 6000

Robert Crawford - Media Lead, 0330 138 4156

 

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