Eurocontrol: Charges (Hansard, 24 January 2000)

§ The Minister of State, Department of the Environment, Transport and the Regions (Lord Macdonald of Tradeston)

The UK Eurocontrol unit rate for 2000 is higher than the other states' rates for a number of reasons:

The pound has strengthened considerably against the euro, previously the ecu, in recent years. Restated at the 1997 published exchange rate, the UK Eurocontrol unit rate for 2000 would be euro 64.77—i.e. more than 20 per cent lower.

Under the Eurocontrol charging scheme, states recover the costs incurred in providing air navigation services. This is achieved through the operation of an adjustment mechanism whereby over- or under-recoveries arising in any year are taken into account two years later. Consequently, states' unit rates are affected by the over- or under-recoveries of earlier years. For 2000, the UK unit rate has been increased by 1.4 per cent as a result of returning an under-recovery from 1998, while most states' rates have been reduced by previous years' over-recoveries. In particular, the German rate is 8.7 per cent lower due to previous years' over-recoveries.

The UK interest charge is higher than that of other states, particularly those using the euro, due to higher capital employed and a higher cost of capital. Were the UK interest charge in line with states such as France and Germany, the 2000 rate would be a further 7 per cent or so lower.

The UK also continues to incur high levels of expenditure related to development of the new air traffic control centre at Swanwick. While some other states have recently developed smaller centres, the Swanwick centre will be one of the largest in Europe. The development of the Swanwick centre places the UK at a different point in the investment cycle when compared with other states, leading to an unfavourable comparison between cost bases. 168WA However, development of the Swanwick centre is essential if future traffic growth is to be accommodated. During the 1999 summer period, nearly all the other major European operators experienced worsening ATC delays, while delays due to UK ATC were reduced.

In addition to the above, differences between states' unit rates arise from the following:

(a) The peak flight demand for a specific volume of airspace (density of airspace). The greater the demand for a volume of airspace, the higher the cost of providing the services to meet that demand. The derivations of states' unit rates make no allowances for differing levels of peak demand. The UK is one of the busiest areas of airspace in Europe, if not the world.
(b) The traffic mix within a specific volume of airspace. The greater the percentage of aircraft wishing to descend and land and take off and climb within an airspace rather than overfly it, and the greater the mix of aircraft sizes affecting separation standards, the greater the cost will be to provide the required ATC. The derivations of states' unit rates make no allowances for differing traffic mix or complexity. Again the UK (especially SE England) has a very complex traffic mix.