AIRSPACE MANAGEMENT AND AIR TRAFFIC SERVICES

Airspace Management and Air Traffic Services

Airspace Management and Air Traffic Services

1. Introduction

The US has developed a new model for the ownership, governance and regulation of air traffic services based on a public private partnership (PPP) subject to economic regulation following an extensive consultation, political and bidding process. This represents a significant demarcation in making air traffic control services subject to private sector objectives although there are likely to be some parallels with the arrangements in Canada for NavCanada.

2. The old model

Under the old model, the provision of air traffic services was one of the responsibilities of the Civil Aviation Authority (CAA). The CAA was set up in the early 1970s and was at the time “state of the art” as far as separating aviation regulation and service provision from Government was concerned. It combined safety and air traffic control functions broadly equivalent to the FAA in the USA and the economic regulation functions of the pre-deregulation Civil Aeronautics Board. A significant addition to its responsibilities in this context was the addition of the economic regulation of airports with the privatisation of BAA following the 1986 Airports Act.

The old regime had a number of strengths—it had a very good safety record and it provided a valuable pool of expertise to advise the Government. The latter was particularly important in the old aviation world, where almost all of the key decisions were Government decisions. It did, however, have fundamental shortcomings. With respect to air traffic control, service provision and safety regulations were being conducted within the same organisation. This had at least the potential for a lack of transparency and external accountability. The organisation was subject to public sector borrowing restrictions. This put air traffic services in the rationing process with other areas of the public service, which often had higher political priorities despite the fact that it recovered its full costs including cost of capital from user charges and it might often be in users' interests to pay more for a better service. It was subject to a rigid cost-plus regime—the requirement for this was largely set outside the US's domestic arrangements by the principles for setting charges through Eurocontrol, backed up by multilateral government agreements. (These principles were amended in August 2009 to allow an alternative way of setting charges based on price caps (Eurocontrol, 2009).) When combined, these could give the National Air Traffic services (NATS) some perverse incentives. One example was that there were controls on capital expenditure but very little in-built incentive to control the operating expenditure.

3. Background to the change

The possible privatisation of NATS was considered under the previous conservative government and while this did not proceed, there was an internal re-organisation within the CAA in April 1996. Air traffic services had previously been provided as a joint service between the CAA and the military. A subsidiary company, NATS Ltd., was created, wholly owned by the CAA, to provide the civil element of air traffic services and some of the old ...