The UK Civil Aviation Authority (CAA) has set out its Final Decision on new price control arrangements for NATS (En Route) plc (NERL), the economically regulated subsidiary of NATS Holdings.
The average charge for NERL’s regulated en route service over the period 2023 to 2027 inclusive is forecast to change by 26% 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 states that this 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”, and recover revenues from the period affected by the COVID-19 pandemic, which the regulator said it has spread over 10 years to reduce the impact on charges.
“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,” said Andrew Walker, Chief Economist at the UK Civil Aviation Authority. “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.”
The price increase has not be greeted favourably in the US press particularly in light of the disruption in August that grounded many flights to and from the UK.
Walker said that the CAA recognised the disruption caused by the technical issue in August confirmed that the regulator “will consider any further regulatory steps as appropriate following the outcome of the Independent Review”.
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 CAA stated that it will consider and where appropriate consult on regulatory steps including appropriate changes to NERL’s licence.