NATS overcharging TBI?

[Buster the Bear]

Small airports owner accuses Nats of overcharging

Andrew Clark
Monday May 26, 2003
The Guardian

Britain's part-privatised air traffic control service is accused of abusing its near-"monopoly" position by imposing excessive costs on smaller airports.
TBI - the owner of Luton, Cardiff and Belfast International - is calling for the civil aviation authority to regulate the fees levied for controllers in airport towers, who look after take-offs and landings.

The airport company has been in dispute with Nats this year over the cost of equipment at Luton, including communications systems for ground staff, controllers and pilots.

TBI wants to be a "low-cost" operation but claims Nats is insisting on installing state of the art hardware of the same sort used at BAA's London airports. "We're constantly being given the Bentley when what we want is something mid-range," said Luton airport's managing director, Paul Kehoe.

TBI pays £3.6m a year for air traffic control at Luton, £2.5m at Belfast International and £2m at Cardiff. The company is particularly concerned by the fairness of pricing after Nats' recent financial bailout, in which rival BAA took a 4% stake in the air traffic control service and nominated two board members.

TBI claims Nats has an effective monopoly, providing services for 14 of the UK's biggest airports. Its only significant competitor is outsourcing firm Serco, while some smaller airports have in-house air traffic control.

TBI's chief executive, Keith Brooks, recently met Nats boss Richard Everitt to complain about costs. The firm pointed out that fees levied on airlines for "en route" control, once planes are in the sky, are already subject to regulation.

A Nats spokesman rejected the complaint, insisting airports had a choice of suppliers. He added that as a condition of its investment, BAA had agreed not to interfere with Nats' airport business.

"We are not overcharging our airport customers," the spokesman said. "Our prices reflect cost plus a reasonable return for the expertise we provide."

[LostThePicture]

A Nats spokesman rejected the complaint, insisting airports had a choice of suppliers.

This is indeed true; there is nothing stopping TBI finding an alternative service provider if they feel uncomfortable with the costs imposed by NATS.

The fact that NATS provides the service at 14 UK airports is probably indicative of the level of service provided. However, in no way do these 14 constitute a monopoly, or even a near-monopoly, on aerodrome services. NATS does not provide aerodrome or approach services at East Midlands, Liverpool or Leeds, to name but three airports with similar traffic levels to the three owned by TBI.

The whole airline industry has suffered financially following recent events; TBI, as an American company, have probably suffered more than most and are attempting to cut costs for next year's budget.

If TBI have serious concerns with the cost or level of service provided by NATS, then they should indeed consider jumping ship and getting another supplier. However, despite their grumblings in the press, they probably realise that if they pay peanuts, they could well be lumbered with monkeys.

[Red Dragon]

However, despite their grumblings in the press, they probably realise that if they pay peanuts, they could well be lumbered with monkeys.

Oh Please!! This is obviously written by a NATS ATCO who is so far up their own ar*e they've lost sight of reality. When will you guys realise that you operate on an identcal licence to everyone else, passed the same courses and and are regulated by the same body. What makes you think that just because you work for a pseudo government agency you're better than anyone else?
NATS is just A N Other service provider doing the same job to the same standards. So please, lose the high and mighty attitude. It does you no favours.

:*

[Buster the Bear]

Luton ATC is in its third year of a 10 year deal which saw radar re-locate to West Drayton and all staff transfer onto the NATS pay roll. I understand the ATC staff at the time forced the airport operators to transfer control to NATS once it had been decided to contract out ATC, rather than face certain redundancies proposed by other bidders.

TBI is a British company but they did however, purchase Airports Group International (A US based company which was once part of Lockheed) who had a share in the consortium that runs Luton airport on behalf of Luton Borough Council, therefore TBI are large shareholders within the current consortium having obtained another share of the business from Barclays bank.

Many of the staff have moved onwards and upwards within the NATS career structure since changing employers.

[Legs11]

way to go Red Dragon, really couldn't have said it better myself.:ok:

NATS does have a near "monopoly" position at contracted out airfields of this size due mainly to a NATS controller driven strike-threat mentality.:uhoh:

As you say, we are all under the same regulatory body and working to the same rules and standards, but other companies do not stand a chance in hell of free competition when there is scaremongering and threats going on.:E

Having said that, TBI must have known what they were signing up to, oh and Paul Kehoe is an ex serco plc director and BAE systems manager - would he really be happy with something 'mid-range'? :D

[LostThePicture]

OK, so the peanuts/monkeys comment was a bit of a cheap shot. I apologise.

However, the ATCOs at Luton, Cardiff and Belfast are probably very pleased with their current salaries. Now obviously the cost of supplying an aerodrome service is far from solely dependent on ATCO salaries, but it is something that any alternative supplier would have to strongly consider.

So TBI offers the contract to someone else. For argument's sake, we'll call them "Orces". This is what the ATCOs will be thinking:
1) Will I be expected to take a pay cut?
2) Will the nice pension fund I've been building up for XX years be affected?

If the answer to either of these questions is yes, and let's face it, it could well be, then Orces are going to have trouble convincing many of the ATCOs to stay.

The resulting ATCO shortage could be devastating for a couple of years until Orces can validate new recruits. The financial damage could be worse than keeping NATS as the supplier.

And yes indeed, TBI probably knew what they were getting into. In a materialistic world, it's easy to offer people more for doing the same job than to try and convince them to take less. I dare say if NATS walked into Red Dragon's ATCU tomorrow and said, "We're running this operation now, your new salary will be £#####", then he'd graciously accept.

[Special VFR]

TBI are also paying for Luton's approach to be done by ATCO IIs at TC.

[hatsoff]

It would be nice for me if all of the Airport Operators employed their own staff and then competitive pay levels could take-off.
They aren't stupid. . ..
By shouting " Monopoly" they hope to get a cheaper deal while NATS bears the loss.

Meanwhile NATS continues to "subsidise" them by accepting contract terms that are less than ideal , by tightly integrating Terminal Area and Approach sectors and by providing a stream of rejected trainees - who , given more time , train up into useful airfield controllers.

It's a free market out there unless you're involved in NATS Enroute.

[OLNEY 1 BRAVO]

Sadly this is yet another example of TBI trying to blame somebody else for their inability to pick up significant levels of new business at Luton ... yet despite everything, the management's attitude seems to be one of "we know best".

In the final analysis, TBI is run by beancounters who are only concerned about the price of all the services it outsources (not just Air Traffic) rather than the quality.

The only justifiable complaint that TBI can have is the BAA shareholding in NATS, which does give rise to an interesting conflict of interests .. but then it's only a 4% shareholding.

Mind you, the new comms system in the tower makes all the controllers sound as if they have got their heads in a cardboard box!!!

[Red Dragon]

LTP,


Apology gracefully accepted!! Of course I would take the money........who wouldn't?!!

:p :p

[almost professional]

the question is-did the airport save money when it contracted out what was a very professional 'inhouse' ATC unit, and is the service provided now as good as it was before (or am I looking back thirteen years with rose tinted specs!)
based on my present unit-probably not on both counts

[Slaphead]

SVFR

You are correct that TBI are paying for ATCO 2s to provide the Luton Approach function from Terminal Control but that isn't the whole story.

When NATS were awarded the contract there were approximately 25 valid approach controllers at the in-house unit but only 14 of these were transfered as ATCO 2s to TC, the remainder stayed in the tower under various contracts. The Luton Approach function is now provided at TC by 12 of the 14 who transfered, two are currently unavailable due to sickness, plus about 12 ATCO 2s who were already at TC, already valid on Essex Radar or Gatwick and already paid by Area Services. Of the 12 Luton originals who transfered, 3 are now valid on Essex Radar or Gatwick.

I'm not sure how the funding of the approach services provided by TC works but you could argue that:

TBI are having the Approach Service for Luton subsidised by the BAA, who presumably pay for the Essex Radar and Gatwick radar function and the staff who provide it;

and/or

TBI are subsidising the Essex Radar and Gatwick Radar functions because staff that they pay for under the contract with NATS are also providing a service to BAA airports.

If and when Thames and SVFR arrive at TC it probably won't be too long before those services are also partly provided by ATCOs
who are currently valid on one or more of the existing approach units at TC.

[Spitoon]

If what OLNEY 1 B says is correct maybe there is some truth in TBI's assertion that NATS always go for the same gold-plated equipment. I hear the radios at LACC sound much the same.

More seriously, the near monopoly position that NATS has at the UK's major airports is based more on history than on the service provided by the current contractor. Things have grown up with NATS doing ATC - and to be fair they probably do a pretty good job - but the business risks of changing to another contractor are simply too great for the likes of BAA plc and MA plc to seriously consider.

Although NATS may provide a good service, other companies could provide an equally high quality service - and many airports directly employ their own staff very sucessfully, as Luton did not so long ago. The staffing and training issues are not insurmountable but would need careful management. But can you really see the Board members taking on the risk of it not working out well?

[Special VFR]

Slaphead

The fact remains, immaterial on who does what, that approach services are based on ATCO II salaries. Don't get me wrong, I'm not knocking it, just stating the bleedin' obvious! :D


SVFR

[Slaphead]

SVFR

The issue for TBI is not just how much the ATCOs providing approach services into Luton are paid but also how many people are being paid to do it and who by.

On a more general point, TBI, BAA and all of the other airport operators who contract NATS to provide their ATC have a fundamental problem because once you contract NATS to provide ATC the decision is not reversible. If they decide to end or not renew their contract with NATS who will provide their ATC? If they want to do it in house, how many staff will leave the relative security of NATS to work for an airport? If for example you currently work at Luton, would you opt to work directly for TBI who admit that they don't want a premium service, or at least they don't want to pay a premium price. If you want a contractor other than NATS, who is available who can demonstrate a good record at one or more of the major airports and who can guarantee the supply of sufficient staff to keep the contract running?

I don't know if TBI are unhappy with the NATS service and want to take ATC back or if they are just unhappy with the price. It is possible to provide an excellent service by running an in-house unit and there are numerous examples around the country of this. However, once the decision is taken to do away with an in-house unit there is no turning back and little opportunity to then try to negotiate over price.

[niknak]

The facts are:

1 - TBI signed the contract with NATS with their eyes wide open, NATS contracts clearly explain what they will provide now, next week, and in 5 years time - it's a bit late to start bitching now.

2 - The ONLY other ATS provider who would stand a chance of getting the ATC contract at Luton are Serco.
In the unlikely event of them doing so, NATS would withdraw all the equipment and procedures they have installed, leaving Serco to start from scratch, i.e. providing a fully staffed and fully equipped ATC (aerodrome and approach radar) service from day one - something they would almost certainly find impossible to do physically and financially.

3 - Could this be the same TBI that (allegedly) agreed to buy Norwich Airport for £xxxxx? but a few days later, when the contract was due to be signed, (allegedly) said "Oh, we've changed our mind, we'll offer you £xx", and were promptly shown the hypothetical door.

I get the distinct impression that TBI are struggling, perhaps they should get out of airports and back into running the pie factories.:rolleyes:

[Buster the Bear]

I think that you will find Luton ATC needed a small injection of capital. The then airport management felt that it was not commercially viable to invest in non revenue generating infrastructure so elected to contract out.

Faced with this, staff within LUTON ATC elected to ride on the NATS horse rather than lame CoSir.

As I understand it, no one has lost any money nor been made unemployed.

FACT (Rumour), had CoSir taken control, both would HAVE HAPPENED (Money reduced and staff made redundant)!

The unit at Luton needed a bit of up dating, management then decided to contract the brilliant in house service out.

TBI can bleat, but the service is never going back 'in-house'. Previous management have secured this.

NATS could now have TBI over a Cardiff/Belfast/Luton barrel.

Actually, TBI get very good value for money.

Now if, Now if, Now if airlines had actually turned into proper business for summer 2003, then TBI would be proudly announcing their tremendous association with NATS.

Sadly all the new business is passing TBI by:

Iceland/Astreus
Norwegian
Flying Finn
Basiq Air
PIA?
SkyEurope

[Packem Inn]

......but, tis' a shame that the "Bentley's" new radio packed up this morning........

Of course, this could be the reason so many airlines are passing TBI-by. They simply cannot make contact !!

:=