5 February 2002

Hefty landing fees may raise air fares

By Barrie Clement, Transport Editor

Airline passengers face a massive increase in fares to bail out the part-privatised air traffic control service after the attacks of 11 September caused a slump in air travel.

The new company demanded an inflation-busting rise in landing fees yesterday, which will inevitably be paid for by travellers.

Instead of a fall in the price paid by airlines, envisaged when 46 per cent of National Air Traffic Services (Nats) was sold off last year, management is calling for an annual increase in real terms for the three years beginning next January.

The banks that backed Britain's biggest airlines when they bought the shares in Nats have asked for state help.

Christopher Gibson-Smith, chairman of the board of Nats, insisted the application was necessary because of the "dramatic decline'' in traffic. In a submission to the Civil Aviation Authority, he said that the terrorist attacks would lead to a significant reduction in income and therefore invalidated some of the "key assumptions'' used when the company was sold off. "No one foresaw the events of 11 September and thus the decline in air traffic was not planned for and has proved unprecedented."

He said that against this background Nats sought permission for a "modest" increase in charges from January 2003. A statement said: "This increase is critical if both current service is to be fully maintained and if Nats is to be able to invest – as it must – in new capacity."

Under the licence issued to Nats the fees charged were to be reduced by the retail price index (RPI) minus 3 per cent for 2002, minus 4 per cent for 2003 and minus 5 per cent for 2004-2005. The company is asking the Civil Aviation Authority to adjust the price cap to RPI plus four in 2003, plus three in 2004 and plus two in 2005.