Civil Aviation Auth.

CAA Statement on NATS

Civil Aviation Authority
05 August 2005


CAA STATEMENT ON NATS' RESPONSE TO PRICE CONTROL PROPOSALS

National Air Traffic Services (NATS) indicated in its response of 29 July 2005
to the Civil Aviation Authority's firm price control proposals that it intends
to accept those proposals, but subject to clarification of a number of issues.

In the CAA's view, the issues raised by NATS are not of sufficient scale to
merit a reference to the Competition Commission at this stage.  Instead, the CAA
will proceed to the next stage of the review, which will involve considering the
specific points raised by NATS and other interested parties in response to the
consultation, and then formally consulting on the NATS licence modification in
September 2005.  Subject to any further comments on that proposed licence
modification, the CAA would subsequently expect to give effect to the
modifications in December 2005.

Notes to Editors
                    
     1.   The CAA published its firm proposals on 24 May 2005 and invited 
          comments by 29 July 2005.

     2.   The CAA's review timetable going forward is:

          September 2005 publish formal licence modification
          October 2005 deadline for comments
          December 2005 modify licence
          January 2006 new Eurocontrol price cap takes effect
          April 2006 new Oceanic price cap takes effect.

     3.   The CAA's proposals cover the main price control, which applies to 
          charges levied by NATS' Eurocontrol business, which ceases on 31 
          December 2005, and the control on charges levied by NATS' Oceanic 
          business, which expires on 31 March 2006.
          
     4.   The Eurocontrol business provides air traffic services to aircraft 
          using controlled UK airspace.  In 2004, the Eurocontrol business 
          served around 2 million flights.

     5.   The Oceanic business is a much smaller business than the Eurocontrol
          business.  It provides air traffic control services for the North 
          Eastern area of the Atlantic.  In 2004/05, the Oceanic business served 
          356,000 flights.
          
     6.   As its starting point, the CAA has taken the objectives set out in the
          Transport Act 2000.  Subject to maintaining a high standard of safety, 
          these are: to further the interests of users; to promote efficiency 
          and economy by NATS, to secure that NATS will not find it unduly 
          difficult to finance its activities; to take account of the UK's 
          international obligations.  The CAA must also impose the minimum 
          restrictions consistent with the exercise of its duties.  It has also 
          sought to follow Better Regulation Task Force Principles, namely that 
          regulation should be proportionate, accountable, consistent, 
          transparent and targeted.



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