Ryanair & NATS

[Buster the Bear]

The Independent.

Nats rescue threatened by Ryanair
By Clayton Hirst
08 December 2002

No-frills airline Ryanair is preparing to challenge the Government's bailout of the cash-strapped National Air Traffic Services in the courts.

Europe's second-largest budget operator, headed by Michael O'Leary, is to meet the Civil Aviation Authority (CAA) on Wednesday to spell out the grounds for a legal challenge under European competition law.

The rescue of Nats, which was part-privatised in March 2001, involves a £60m cash injection by airports operator BAA to be matched pound-for-pound by the Government. On top of this, the CAA has agreed to allow Nats to increase the charges it levies on the airlines.

Nats is 46 per cent owned by the Airline Group, whose shareholders include BA, Virgin Atlantic, easyJet and BMI.

In a letter sent to the CAA, seen by The Independent on Sunday, Ryanair says: "This is not only unfair but is, on the face of it, illegal."

Dated 28 November, the letter adds that the airlines which are not shareholders in Nats "are being discriminated against because we will not receive any return on this forced investment, whereas the Airline Group and other shareholders will". The letter concludes that unless the bailout is abandoned then legal action is likely.

Jim Callaghan, Ryanair's head of regulatory affairs, said: "The proposals have to be challenged in order for things to be fair and equitable. We'll get no financial return for the 8 per cent increase in fees and the forced investment we are expected to make in Nats."

Mr Callaghan refused to reveal details of the legal action. However, it is understood Ryanair believes that Nats' rescue infringes Article 86(2) of the European Union Treaty, covering competition.

Mr Callaghan also criticised others for not taking up the issue. "The airlines which are not shareholders in the Airline Group have not been vocal. I think that this is because so many of them have links with the shareholders of Airline Group. In my opinion, it's all stitched up through co-sharing agreements between the airlines," he said.

The CAA is due to make a final ruling on Nats' bailout before Christmas. It is understood that unless the rescue is abandoned – or amended to introduce stricter performance targets on Nats – then Ryanair will launch legal action early in the new year. Asked how serious the threat of legal action was, Mr Callaghan said: "We don't raise these things lightly."

News of the challenge will dismay Nats. After a tortuous year of negotiations with its banks, government ministers and the regulator, Nats' chief executive, Richard Everitt, had hoped that the turmoil was almost over.

CAA's last ruling on Nats in October, still subject to final consultation, gave the green light to a rise in charges. This triggered new cash from BAA and the Government.

The ruling came after a bust-up within the CAA. Its director of economic regulation, Doug Andrew, thought Nats should not be bailed out and resigned from the CAA's adjudicating panel.

The cash injection is critical to the survival of Nats, which was thrown into crisis following the terrorist attacks of 11 September 2001. The sudden drop in air travel exposed flaws in Nats' business plan, which did not sufficiently factor in a possible fall in passenger numbers.

The perilous state of the service was revealed in a report prepared by Nats and sent to the CAA this summer. It warned that unless the rescue package was approved by the regulator then "there is a very strong prospect of Nats' return to the public sector".

The news of possible legal action over Nats will also trouble the Government, which is facing criticism over the rescue of nuclear generator British Energy. It is also under fire for the indemnities offered to bidders in the London Underground sell-off.

If the rescue of Nats starts to unravel then the Government will face fresh questions over the use of private companies to run public services.

[2 six 4]

Well thanks Michael O'leary. You have either -

a. Exposed a great airline scandal and the £50 that each of the airline group would make out of this financial restructuring will now be denied them. :eek:

b. Shown up privatisation to be the complete con that most of the aviation world knows about and the politicians ignore :(

c. Forced the management of NATS to spend yet another year defending, to politicians, something the politicians will force them to do anyway while the operation slides further into chaos. :o

d. found a way of hamstringing your major competitors so much they will fail financially because you can expand your non UK bases while they get stuck in the decreasing service provided by NATS. ;)

e. won the undying respect of the whole of NATS staff who see you as the only person willing to challenge the governments of Europe on the impossible practical application of ATC privatisation - and while this rumbles through the European courts will lose their jobs. :p

Whichever of the above is true the immediate effect will be a serious delay in NATS restructuring and along with that all the investment needed to update the ATC system which before privatisation was on track for major expansion and now is on track for serious operational problems which will last for decades.

Thanks Mr O'leary and Mr Blair.

[WHBM]

Good to see that Michael O'Leary's mob will be spending next week with the British CAA having their interests "defended" on this.

Would this be the same Michael O'Leary who registers his Stansted-based fleet in Ireland, the Liberia of the European aviation world, so that the British CAA cannot have any input to his operation?

[DFC]

264, WHBM,

Ryanair started as an Irish Airline but with the widespread interest in it's shares, I expect that many beyond Ireland have an ownership stake.

Many of those holders of Ryanair Shares will be the London Fund managers who are earning the monies that will be used to pay our pensions and I am very happy for that to be the case based on their performance.

As for hamstrung airlines operating within the UK, Ryanair have done nothing that can not be done by other airlines by expanding their operation bases into other European countries. That is the whole idea of the EU.

Ryanair are proud to fly the Irish Flag on their aircraft....no doubt that irks many of those from the UK who can not tell the difference between a naval flag (a jack) and their national flag.

The CAA have been round long eough to know that the Ryanair operation meets the same safety requirements that every other operator flying from the UK meets.

Are you going to ban all non G registered aircraft from UK airports. If not then why do you complain about registrations from a particular country?.........Please list all the nationalities you would not like to see opeating from UK airports.

DFC

[Zulu]

Well, you could start with the following countries:

Afghanistan , Albania , Algeria , Andorra , Angola , Antigua and Barbuda , Argentina , Armenia , Australia , Austria , Azerbaijan , Bahamas , Bahrain , Bangladesh , Barbados , Belarus , Belgium , Belize , Benin , Bhutan , Bolivia , Bosnia and Herzegovina , Botswana , Brazil , Brunei Darussalam , Bulgaria , Burkina Faso , Burundi , Cambodia , Cameroon , Canada , Cape Verde , Central African Republic , Chad , Chile , China , Colombia , Comoros , Congo , Costa Rica , Cote d'Ivoire , Croatia , Cuba , Cyprus , Czech Republic , Democratic People's Republic of Korea , Democratic Republic of the Congo , Denmark , Dijibouti , Dominica , Dominican Republic , Ecuador , Egypt , El Salvador , Equatorial Guinea , Eritrea , Estonia , Ethiopia , Fiji , Finland , France , Gabon , Gambia , Georgia , Germany , Ghana , Greece , Grenada , Guatemala , Guinea , Guinea-Bissau , Guyana , Haiti , Honduras , Hungary , Iceland , India , Indonesia , Iran (Islamic Republic of) , Iraq , Ireland , Israel , Italy , Jamaica , Japan , Jordan , Kazakhstan , Kenya , Kiribati , Kuwait , Kyrgyzstan , Lao People's Democratic Republic , Latvia , Lebanon , Lesotho , Liberia , Libyan Arab Jamahiriya , Liechtenstein , Lithuania , Luxembourg , Madagascar , Malawi , Malaysia , Maldives , Mali , Malta , Marshall Islands , Mauritania , Mauritius , Mexico , Micronesia (Federated States of) , Mongolia , Monaco , Morocco , Mozambique , Myanmar , Namibia , Nauru , Nepal , Netherlands , New Zealand , Nicaragua , Niger , Nigeria , Norway , Oman , Pakistan , Palau , Panama , Papua New Guinea , Paraguay , Peru , Philippines , Poland , Portugal , Qatar , Republic of Korea , Republic of Moldova , Romania , Russian Federation , Rwanda , Saint Kitts , Saint Lucia , Saint Vincent and the Grenadines , Samoa , San Marino , Sao Tome and Principe , Saudi Arabia , Senegal , Seychelles , Sierra Leone , Singapore , Slovakia , Slovenia , Solomon Islands , Somalia , South Africa , Spain ,Sri Lanka , Sudan , Suriname , Swaziland , Sweden , Switzerland , Syrian Arab Republic , Tajikistan , Thailand , The former Yugoslav Republic of Macedonia , Timor-Leste , Togo , Tonga ,Trinidad and Tobago , Tunisia , Turkey , Turkmenistan , Tuvalu , Uganda , Ukraine , United Arab Emirates , United Republic of Tanzania , United States of America , Uruguay , Uzbekistan , Vanuatu , Venezuela , Viet Nam , Yemen , Yugoslavia , Zambia and Zimbabwe

:rolleyes:

Bring back Queen Victoria!

[unwiseowl]

As far as I'm concerned, operators from

Afghanistan , Albania , Algeria , Andorra , Angola , Antigua and Barbuda , Argentina , Armenia , Australia , Austria , Azerbaijan , Bahamas , Bahrain , Bangladesh , Barbados , Belarus , Belgium , Belize , Benin , Bhutan , Bolivia , Bosnia and Herzegovina , Botswana , Brazil , Brunei Darussalam , Bulgaria , Burkina Faso , Burundi , Cambodia , Cameroon , Canada , Cape Verde , Central African Republic , Chad , Chile , China , Colombia , Comoros , Congo , Costa Rica , Cote d'Ivoire , Croatia , Cuba , Cyprus , Czech Republic , Democratic People's Republic of Korea , Democratic Republic of the Congo , Denmark , Dijibouti , Dominica , Dominican Republic , Ecuador , Egypt , El Salvador , Equatorial Guinea , Eritrea , Estonia , Ethiopia , Fiji , Finland , France , Gabon , Gambia , Georgia , Germany , Ghana , Greece , Grenada , Guatemala , Guinea , Guinea-Bissau , Guyana , Haiti , Honduras , Hungary , Iceland , India , Indonesia , Iran (Islamic Republic of) , Iraq , Ireland , Israel , Italy , Jamaica , Japan , Jordan , Kazakhstan , Kenya , Kiribati , Kuwait , Kyrgyzstan , Lao People's Democratic Republic , Latvia , Lebanon , Lesotho , Liberia , Libyan Arab Jamahiriya , Liechtenstein , Lithuania , Luxembourg , Madagascar , Malawi , Malaysia , Maldives , Mali , Malta , Marshall Islands , Mauritania , Mauritius , Mexico , Micronesia (Federated States of) , Mongolia , Monaco , Morocco , Mozambique , Myanmar , Namibia , Nauru , Nepal , Netherlands , New Zealand , Nicaragua , Niger , Nigeria , Norway , Oman , Pakistan , Palau , Panama , Papua New Guinea , Paraguay , Peru , Philippines , Poland , Portugal , Qatar , Republic of Korea , Republic of Moldova , Romania , Russian Federation , Rwanda , Saint Kitts , Saint Lucia , Saint Vincent and the Grenadines , Samoa , San Marino , Sao Tome and Principe , Saudi Arabia , Senegal , Seychelles , Sierra Leone , Singapore , Slovakia , Slovenia , Solomon Islands , Somalia , South Africa , Spain ,Sri Lanka , Sudan , Suriname , Swaziland , Sweden , Switzerland , Syrian Arab Republic , Tajikistan , Thailand , The former Yugoslav Republic of Macedonia , Timor-Leste , Togo , Tonga ,Trinidad and Tobago , Tunisia , Turkey , Turkmenistan , Tuvalu , Uganda , Ukraine , United Arab Emirates , United Republic of Tanzania , United States of America , Uruguay , Uzbekistan , Vanuatu , Venezuela , Viet Nam , Yemen , Yugoslavia , Zambia and Zimbabwe

are welcome in UK airports AS LONG AS THEY DON'T TELL US HOW TO RUN OUR ATC!!!!!!!!

[Nassauman]

Unbelievable but true - FR have actually proposed to pay MORE to NATs than they asked for if the Service is improved! They suggest in their CAA proposal that any bonuses paid by FR and others go direct to the ATCOs who do a good job despite appalling management .

Meanwhile the non liberia blue blooded chaps who actually own and manage "your" atc system want to screw everyone including staff and public. I think any ATCO who actually reads the submissions might just take a different view - FR is proposing more money to ATCO's and some accountacbility for the management.

Check the facts before ranting.

NM

[fish food]

Personally, I couldn't give a 4X who jumps up and down about NATS just so long as the damned thing and ALL of us in it are brought back under 100% public ownership, get a competent team of managers in to run the show and are given the same freedom to raise cash outwith the PSBR framework that the Post Office currently enjoys.

If O'Leary is the guy who brings that about and does what none of the staff, public, Trade Unions or anti-PPP politicians could do then I for one will be happy to buy the man a drink!

:D

ps. attention all 'Little Englanders' (and others) - cut the xenophobic c**p will you!:mad:

[PaxmanwithInfo]

Here, here to Fish Food and Nassauman for making light of the rampant ex-imperialist zenophobia and pointing to what seems to be logical business requests and a response to anti-competitive behaviour. You asks for more money the recipient asks for more guarantees of improved service - logical and reasonable I would think - n'est ce pas?

The Notion of a Service Level Agreement is born (quite late in this case). Quite common in the financial services industry (where I work) with actual money and actual serious penalties for default. Debit interest rates are quite punishing so we do our best to avoid them and actually welcome SLAs.

Why oh why do the Nigels get so upset when The Ryans call some shots? Is it that the peasants are revolting? Or is it hard to swallow that NTAS appears to have a sub-standard service and want to charge more for it - this should be accepted and shut up everyone who dissents (especially if you're Irish and you will not bow to the all mighty CAA and be knighted by the sword of unthinking compliance and price-fixing cartels)?

Didn't Mr Blair recently think about giving additional monies for the Firefighters BUT ONLY predicated upon improved business practices et cetera? Isn't that just the same as what MOL and BILKO are saying? (Look at the FR article on NEWS on their site of 14 November 2002).

Wake up NATS! EU law funnily enough outweighs what passes for a constitution (with a Queen et cetera - you are Europeans whether ye like it or not)...

It looks like your turkey's cooked but there's no special sauce.

Give it up. How do you expect people to pay more for less? Bully boy corporatism on behalf of the big carriers linked with NTAS would appear to be anti-competitive and dangerous compromising safety standards BUT incurring higher costs. HOW DOES THAT WORK?

An interested bytsander.





:mad:

[Findo]

Paxman. Nobody has any problems with SLAs or changes to how we do things. NATS staff didn't get to be one of the best ATC services in the world by standing still or ignoring customer needs.

The big difference as recently shown in the Public Accounts Committee investigation is that this Government took over £700 million from the sale of NATS. By devious collaboration with the Government the airlines purchased NATS and only paid £50 million and the rest became NATS debts on start up of the new company. NATS paid to have itself privatised !!!! With that debt and a downturn in revenue NATS is sinking fast.

You can argue till the cows come home what was right or wrong and what should be done in the future but the plain fact is NATS needs cash immediately. If Ryanair's actions cause further delay to that cash injection more harm will be done to the ATC operation of the UK and Eastern Atlantic. That harm will take many many years to turn round.

I get the impression some people here know the score and there is a desperate warning to all the aviation community and Government that something needs doing now before it is too late. Even holding our Government to account at the next election would be a nice idea but too late to solve the crisis.

[PaxmanwithInfo]

I appreciate all of the points that you make and sympathise with your predicament. I don't mean to sound off-hand nor insensitive to real personal and professional crisis.

Surely NATS is for sale then? Was there not a tender by the IAA to actually buy or least run NATS that would NOT have resulted in the mess that has accompanied the current state and major UK airline sanctioned plan?

Why was the IAA route not an option at the time? Is it the Liberia thing again? Is it anti-competitive?

Why not liquidate it and start again with essential cover in the interim? We may then see a more efficient and unindebted outfit?

Why is it not up for tender from an EU perspective?


Paxmanwithinfo

[Radar]

Paxman,

Nope. The IAA were not positioning to bid for NATS at the time of privatization. This was an example of the rumour mill running out of control. The IAA was actually involved in the sucessful bid by The Airline Group .... as air traffic management (ATM) consultants to the bid. A role for which they have already been paid. In effect, once the ink was dry on the 'bill of sale', IAA interest in NATS ended (at least as far as the PPP was concerned).

As Findo explained, the root of NATS ills lies in its' level of debt. On paper, they should be one of the healthiest ATSPs around, given that traffic = revenue. Their current predicament shows all too clearly the pitfalls of privatisation in this arena. Having said that, it takes something special to sc**w it up this spectacularly.

Slan a chara.

[moggie]

Mr O'Leary describes the plans as "illegal". Well, there are some that would say with the number of court appearances his airline makes for mis-selling and mis-leading advertising that he should know all about "illegal".

And if the plans are stopped - what then? We let NATS go bust and cease operations? I suppose if NATS closed down then it would just be like Africa on a good day!

[Capt Homesick]

I'm not too keen on his idea to pay bonuses directly to ATCOs who are especially helpful; that would be bound to lead to allegations of bribery, queue jumping, etc....

[PaxmanwithInfo]

I agree, I think that the idea of paying individual bonuses would be reprehensible but I don't believe that that is what the proposal is saying. What I think the proposal refers to is increased cost must equal increased performance and that the individual airline would agree a sliding scale based on performance. The slide obviously would go both ways. Somewhat reminiscient of a free market idea. Poor service = an appropriate pre-arranged/agreed fee and by contrast a top class service = a payment over and above at an agreed upon additional levy.

Perhaps a minimum could be agreed upon simply making an upward sliding scale thereafter based on improved performance.

Since the top-end that Ryanair is proposing appears to be over and above the increase that NATS has proposed is this not reasonable? Is it unjust? Does it not make an arbitrary increase more sensible?

As for ATCOs being individually paid that was not the intention, I believe, rather a rising tide floats all boats.

The point Ryanair appear to making quite reasonably is why pay more with no gurantee of improved efficiencies (not to say that NATS or individual ATCOs are inefficient) but there is no agreement on service but yet an arbitrary increase is imposed - there's no comeback and everyone is running a business not a charity.

Intervention, however, seems very necessary in an "ideal" state-sponsored world but may be illegal as that's the law at an EU Competition level.

Therefore, perhaps a buyout is on the cards??? Does this not seem to make sense? Or an agreement to meet in the middle somewhere - before the wheels fall off and the NATS negotiating position vis-a-vis any solution is TOTALLY eroded and bankruptcy is the only outcome .

[Radar]

The irony of the current situation could possibly only be lost on the politicians who engineered this curent mess. The whole idea of ATS privatisation was to break up state sponsored monopolies which precluded (by their very nature) market incentives, performance benchmarking and flexible access to finance. In theory, sounds wonderful, but the full impact of getting the formula wrong is now becoming apparent. Hopefully even to Mr. T. Blair et al. In the end of the day, access to airspace and international air transport are vital elements in a nation's economic well being. As such, government retains ultimate responsibility for the maintenance of the system. There are occasions where full implementation of market rules is not appropriate. ATS is one such field, IMHO.

[Buster the Bear]

Ryanair outline recommendations on NATS refinancing
Shareholders should foot the bill - not the travelling public

Ryanair confirmed that it attended a hearing yesterday with the UK CAA on the CAA's proposals for refinancing NATS.

At the hearing Ryanair made the following points:

The NATS shareholders (which include the UK Government and the Airline Group) should be required to bear the financial burden of this refinancing, as they would have to do under normal commercial circumstances. The fact that the shareholders are backing out of their responsibility means that users and ultimately consumers are being forced to bail NATS out.
If users are forced to pay more, it must be on condition of
significant improvements in NATS' current abysmal service levels. UK passengers have been subjected to endless delays and cancellations due to NATS' service failures. Ryanair proposed a system that would reward front-line NATS personnel if service improves, but penalise NATS if its current poor performance continues.
Users must receive an equitable return on any contribution they are forced to make to support NATS' refinancing.
Ryanair awaits the final decision by the CAA at which stage it will be in a better position to decide whether legal action is necessary.

[mainecoon]

if thats ryanair's case then i as a nats controller and share holder i'am liable

therefore goodbye to direct routing higher levels or any other request made to manch centre and any other part of nats

they may try (and most often fail) to make other lo costs back down but
they are not a flag carrier of my country

this does not normally make a difference but to suggest that i lose money because my company lets me of more import and some foriegn airline down they screw it for themselves anyway

plus slightly off topic egcc charges weren't too much for ryanair last night the 12th with a weather div into manch just spouting and chansing their arm imho

[Nassauman]

mainecoon - if I am requesting direct routing from you - do I call the flying club direct or go to microsoft sim. As far as I know - perhaps you will correct me - NAT's employ only ATCOs who can read and write English - a gift which appears to have escaped you.

I read the FR proposal on the CAA site - have you, can you?

FR proposed bonus payments be paid to NATs and distributed to front line people for improvements in staffing levels,equipment - no one I know in FR has ever said anything negative about the quality of UK ATCO performance.In fact it would be great to see some of that individual efficiency nearer home.

Somebody screwed up big time this summer in NATs and I for one don't want to go through it again. Stop stirring S~*T when you clearly haven't a clue.

Speaking of home - what is your flag carrier and why would you in your imaginary world of virtual atc be biased towards a flag carrier?
Nassauman

[Bigears]

Nassauman Somebody screwed up big time this summer in NATs
Well, you reap what you sow, and the seed was sown years ago by people no longer there

[PaxmanwithInfo]

It doesn't get away from the "where to from here?" situation which is looking pretty awful at the moment. The shareholders should provide a solution or we look at liquidation/acquisition - end of story. De-privatisation is not an option nor is subsidy - as that would be illegal and anti-competitive.

If an increase in cost is introduced that is acceptable to all parties that would be an equally valid solution BUT it would appear that NATS needs huge increases to survive and service users are not willing to pay above the odds willy nilly to bail out a "balls up" situation.

[Whalerider]

MAINECOON

I certainly hope you do not give preference to our 'flag carrier' - which, may I remind you will not give us ID90 and treats us like s..t ! They look after foreign ATCOs all right though - especially the French who strike at least once every year.
Fortunately most foreign airlines - including RYR recognise the service the get - and DO give us ID90 !!
Good luck to RYR - they get my vote over our 'flag carrier' any day of the week.

[flowman]

Hmmm, ID90 off 99cents.

I save 90 cents! :)

Good for RYR I say. Why not rock the boat, it's sinking anyway.

mainecoon, I advise against submitting pprunisms after closing time, it makes you look a c*nt!

flowman

[411A]

Well now, isn't this a fine kettle of fish. The so called (by a misguided few) "best ATC" in Europe is failing miserably, operationally and financially. Perhaps the best course of action is to fold up the NATS shop and extend the French/Netherlands FIR to "take over" ATC services in the UK.

NATS apparently could not organise a p@ss-up in a brewery.

[Bigears]

411A, you've completely missed the point!

[Atropos]

What a thread! To those who can do anything about the NATS situation get on and fix it and don't let the inane rantings of a few celts and yanks bother you. I'd rather have a reassuring ENGLISH speaking professional looking after me than any one of the caretakers you can find elsewhere in this mad, apparently anglophobic aviation world of ours!!!!!

Oh and DFC a naval jack just happens to be the union flag, its identical to the union flag but is called a union jack when its flown at the jackstaff of a Royal Naval warship. Its the ensign at the other end that I think you were alluding to!

[411A]

Bigears,
Missed the point you say?
Well could be but consider, poor audio on some frequencies (not good), and deminishing cash available (really not good), not to mention a shortage of staff.
And no one around who seems to have a clue of how to fix the problem.
Lets face facts here. ATC is a government responsibility and should NEVER, EVER be privatised...partially or fully.

[kwaiyai]

411A,
Tell that to our PM.

[Bigears]

411A, I agree entirely with your last post :)
Your post previous to that, though, appeared to give no credit to the operational staff (and some ) managers who can organise a p1ss-up in a brewery. A lot of problems have been caused by decisions made years ago, whilst privatisation may prove to be a knock-out blow to an organisation already stunned.
Your comment about shutting the NATS shop and extending the French/Netherlands FIR was, with respect, not thought out, and implies that at least part of the problem is with the operational staff, not the decisions made by higher up.

[Findo]

Atropos when you castigate others you tend to fall into the same trap. As an English speaking Celt who does not work in England but shifts lots of traffic in the UK airspace I think your "angolophobic world" is actually myopic.