§ Lord Juddasked Her Majesty's Government:
Whether they have received advice from the Economic Regulation Group of the Civil Aviation Authority on the economic regulatory regime for the services which will be provided in the Oceanic sector by the National Air Traffic Services Ltd public/private partnership. [HL779]
§ Lord Macdonald of TradestonAir Traffic services in Oceanic airspace are provided on a monopoly basis. When the National Air Traffic Services Ltd public/ private partnership is established, charges for these services will be subject to price regulation by the RPI-X method, which is the standard model for monopoly regulation in the United Kingdom. The charge cap, or "X" factor, will be set for a period of five years and will, for the first five-year period only, be set by the Government.
We received advice from the CAA in August which set out how it proposed to approach the economic regulation of NATS and recommended that the "X" factor for NATS' Oceanic services be set at 10 per cent for the first year and 2 per cent for each of the next four years. We have considered the CAA's advice carefully, alongside representations from air users who will pay these charges and from NATS, which has also provided revised estimates of traffic levels and system costs which have a significant effect on the first year of the quinquennium. We have consequently decided to set a cap of 2 per cent for each of the five years, and that there should be no delay penalty term for the present.
The Government regard investment in the Oceanic sector as important and believe that the approach to charge control should reflect this. I have therefore agreed with the CAA that it should be receptive to any proposals, made with the support of air users, to revisit the price cap when investment is made with a view to significant improvements in the service.