National Air Traffic Services (Hansard, 17 April 2002)

§ Lord Filkin
My Lords, since 11th September, the principal parties involved in the public/private partnership have regularly reviewed NATS financial position. All of these parties are making a contribution towards ensuring that NATS has a robust financial structure for the foreseeable future. Against this difficult background, NATS has successfully brought into operation the most technically advanced air traffic control centre in the world at Swanwick and, additionally, has made a capital investment of £78 million in 2001–02.

§ Baroness Scott of Needham Market
My Lords, does the Minister accept that the decision of easyJet to consider writing off its £7 million investment in NATS must at least call into question his use of the word "robust" in describing its financial future? Is he prepared to tell the House how much public money the Government are prepared to put into NATS—or is this the Railtrack of the skies?

§ Lord Filkin
My Lords, easyJet has made an intimation—it has not yet made a decision. If it did make such a decision, in many ways it would not be inconsistent with the stance of the Airline Group members. In essence, this was an identity of interest with the Government to ensure that there was an air traffic control system of the highest quality in Britain. They were happy to put in investment—as the noble Baroness will recall, they were willing bidders—and to be active partners, with the Government as a shareholder, in ensuring that those objectives were fulfilled. It was in the public's interest and their commercial interests. Therefore, in most cases, they were not particularly seeking a vigorous financial return but the long-term, high-quality air traffic control that we expect.

§ Viscount Astor
My Lords, does the Minister agree that the Government hold a 49 per cent share of NATS, which is, by any regulatory definition, a controlling interest? Will the Government make a further £30 million available to NATS, or will they support the proposal by NATS to increase its charges by 5 per cent?

§ Lord Filkin
My Lords, I am grateful, as ever, to the noble Viscount, for allowing me to answer the second part of the Question, which I failed to do. The Government have made available, along with money from the four banks, a £30 million loan—providing £60 million of short-term additional loan finance. The House will be aware of the reason for that. Some seven 943 weeks after NATS came into existence, it faced the biggest disaster that the airline industry across the world had ever experienced. Unavoidably and naturally, that significantly damaged its business plan and prospects.
The short-term loan facility has been put in to give appropriate time for the board of NATS to arrange for an injection of additional equity, on which discussions are under way. It is well likely that if, as is expected, additional equity is put in, the Government will match-fund that as a stakeholder to preserve their 49 per cent—they do not have a majority holding; the Airline Group and the employee interest control 51 per cent.
As regards the charges imposed by NATS on its customers, the airlines, the Government do not have a free hand, as the noble Viscount well knows. That is a decision for the Civil Aviation Authority. NATS has made a proposal to the CAA that instead of the pretty tough financial targets that it had of RPI minus 4 per cent and RPI minus 5 per cent for the two subsequent years, the figure should be above RPI but not massively so. That will be a decision not for the Government but for the CAA.

Lord Berkeley
My Lords, is my noble friend aware of recent reported NATS computer failures, which caused serious air traffic control delays? Presumably, those computers are not the new ones to which he referred previously. Under the new structure, does NATS have to pay compensation to the airlines or to the passengers affected by the delays?

§ Lord Filkin
Yes, my Lords, I am well aware of those delays. I well recollect hearing about them on the "Today" programme and seeing the prospect of a Starred Question coming over the horizon.
For the avoidance of doubt, the computer failures were not at Swanwick, which continues to be a very successful roll-out of a large-scale and complex new system. They were in the flight data processing system at West Drayton, and were similar to problems that occurred last summer. They involved some 19 minutes and some 16 minutes of down-time on separate occasions. At one level, that is not seen as particularly disastrous, as 99.95 per cent reliability is being achieved. However, the consequences of any downtime are severe for passengers. Therefore, the management of NATS is examining the situation very seriously. It has already introduced replacement software which it believes should have cracked the problem. It has also established an internal inquiry, separate from the responsible management, in an attempt to see whether anything else could or should be done to avoid a repetition of the inconvenience. NATS is also re-appraising its investment strategy to see whether it might require reconsideration in the light of those events. I should stress that there was no safety problem for the public, although there was clearly inconvenience to the travelling public on those two days.

§ Lord Avebury
My Lords, the Minister hinted that NATS would pay compensation to passengers who 944 suffered loss as a result of the computer failures. Will he expand on that and say whether any payments are due from NATS to the airlines, which also lost substantial sums of money?

§ Lord Filkin
My Lords, I apologise: I missed the point about compensation. No, to my knowledge there is no liability to pay compensation, nor any intent to pay it.

§ The Earl of Northesk
My Lords, the Minister referred to computer glitches at West Drayton. Will he indicate how reliant on West Drayton the Swanwick system is? My understanding is—and perhaps he can confirm this point—that the West Drayton system is hopelessly obsolete and relies on computer code written in the 1970s, and that there is no prospect of its upgrade much before 2007, if then.

§ Lord Filkin
My Lords, the noble Earl is right: the basic software for the West Drayton system is not the most modern or recent. I do not think that it was a high priority in terms of immediate replacement. By and large, it was operational and was not a safety-critical system; therefore, it appeared to be working reasonably well. However, in the light of those events, because it is crucial that the public have confidence in the air traffic system, I am sure that the management and the board of NATS will be reconsidering the position. Whether they will consider that it justifies a change, I do not know. It might not. But they are certainly giving the matter their consideration.