17 August 2002

Air traffic chief may quit in cash crisis

By Barrie Clement Transport Editor

The air travel industry's financial regulator has accused the Government of exerting improper
pressure on him in its attempt to avoid financial meltdown at Britain's part-privatised air traffic control service.

Doug Andrew, director of economic regulation for the Civil Aviation Authority (CAA), has warned the Department for Transport that he will resign unless it stops trying to undermine his independence, industry sources said.

Mr Andrew has refused to bow to demands from the National Air Traffic Services (Nats) for permission to introduce a £200m increase in the fees it charges to airlines, to offset the slump in revenue after 11 September. Under the terms of the regulatory framework devised at the time of the part- privatisation, Nats should be reducing charges each year.

Ministers want to avoid offering more state support to the company, which is the only major organisation privatised since Labour came to power in 1997.

Mr Andrew has reminded ministers that the CAA warned the Government last summer, before 46 per cent of Nats shares were sold to airlines, that the planned financial structure would not be able to withstand a severe shock. The equity was sold to seven British carriers only weeks before the terrorist attacks in America, which led to a slump in air travel.

Mr Andrew has said that while airlines are prepared to accept the "upside", they now expect taxpayers to bail them out to cover losses. The sources say Roy Griffins, director general of civil aviation at the Department for Transport, has been attempting to "lean" on Mr Andrew to win concessions for Nats.

BAA, the privatised airports operator, has agreed in principle to take a 10 per cent stake in Nats, a figure the Government has said it will match. But BAA's £50m investment is on condition that agreement is reached over Nats' charges.