History of the PPP – up to the completion of the Airline Group’s purchase of 46% of National Air Traffic Services on 27 July 2001
Background
The future status of NATS has been under review since the early
1990s. With capital funding for new air traffic control systems
reduced by the Government from a peak of £130 million in 1993/94
to £36 million in 1998/99, it has long been recognised that to
meet the predicted traffic demand NATS needs freedom to invest.
The only mechanisms available for financing major investments are
funding approved by DETR and HM Treasury, or the Private Finance
Initiative (PFI). NATS regards PFI as an inappropriate mechanism
for financing large, complex software systems.
Additionally, NATS has long argued, as has the House of Commons
Transport Committee, that separating the provision of air traffic
services from the CAA would improve accountability. Freeing NATS
from public sector financial constraints will enable the company
to plan ahead with more certainty and take advantage of the air
traffic service opportunities that are opening up throughout the
world.
The Process Begins
In July 1997, NATS submitted a paper, NATS and Commercial
Freedom: A Review of the Options (PDF), to Government identifying the
need for an alternative funding mechanism together with an
analysis of the various options available.
In July 1998, the Government announced its proposal to create a
public private partnership for NATS. The Department of
Environment, Transport and the Regions (DETR) issued A Public
Private Partnership for National Air Traffic Services: A
consultation paper by the Secretary of State for the Environment,
Transport and the Regions (PDF), on 16 October 1998 to gather the views
of interested parties on its proposals by 31 January 1999.
The Consultation
During the consultation NATS and the Civil Aviation Authority
jointly issued a number of position papers.
NATS and the CAA submitted a single joint one document, A PPP
for NATS: Response to DETR consultation document (PDF).
The Report
On 27 July 1999 the Government issued its report on the
response to the consultation which confirmed the Government's
intention to proceed with the PPP proposals for NATS.
Parliamentary Progress
The Government’s plans for a PPP for NATS were included in a Transport Bill which proceeded through the parliamentary process during 2000.
On 29 November 2000, the Bill completed its passage through
parliament and on 30 November it received Royal Assent.
Bidders for NATS
Meanwhile, on 3 November 2000, the Government announced that three consortia, Nimbus, Novares and the Airline Group had moved into the next round of bidding.
The Government subsequently made the following statement on 21 February 2001:
‘The Government has received and evaluated three bids for the NATS PPP as scheduled. The Government’s objective remains to implement the PPP in Spring. The Government has not selected a preferred bidder at this stage and is continuing discussions with Nimbus and the Airline Group. Novares is being held in reserve and has not been eliminated from the process.’
On 27 March 2001, the Government chose the Airline Group as the strategic partner for NATS.
On 11 April 2001, the Airline Group announced that Richard Everitt would be the new NATS Chief Executive Officer and on the 27 July 2001 the Airline Group completed its purchase from the Government of a 46% controlling stake in NATS.
Following the terrorist attacks on New York and Washington in September 2001,
the aviation industry suffered its worst downturn in five decades.
The impact on NATS was significant, and the company embarked on a major financial
restructuring, to make sure the business could still deliver the promises of the PPP,
but also to protect it from future shocks.
Details of the steps the company took are chronicled in the announcements
made in 2002 and 2003.
© National Air Traffic Services Ltd. All Rights Reserved.
|
