Labour backs away from selling air traffic control

THE GOVERNMENT is set to delay the privatisation of National Air Traffic Services - which is responsible for air traffic control in some of the busiest skies in the world - until after the next General Election, following pressure from Labour backbenchers.

Insiders says the party's rank and file MPs have argued that throwing air safety into the stew of late trains, clogged roads and jammed London tubes would be political suicide.

"More and more planes in the sky mean you have to improve standards to maintain an excellent safety record," said Gavin Strang, the former transport minister.

On Wednesday, the Transport Select Committee will publish a report on air safety looking into such issues as near misses, air rage and the aging of pilots.

"Two fully laden jumbo jets colliding over a densely populated area of London would cause horrendous carnage," declared Desmond Turner in a little noted Commons debate on the NATS privatisation last week.

The Government has toyed with a compromise for NATS. Its idea was to find a halfway house between public and private ownership along the lines developed two weeks ago for the Post Office, which is to become a publicly owned plc.

But insiders say that the Government has decided that even the compromise Post Office model is too politically risky for NATS. The new plan is to sit on the matter until the furore over transport policy dies down.

"With transport hitting the headlines daily, and with the transport agenda in a mess, I think the Government would be foolish to do anything now," said Tom Brake, the Lib Dem aviation spokesman.

Deputy Prime Minister John Prescott's Department of Transport, the Environment and the Regions declared its preference for the privatisation of NATS in a consultation document published last year. The chairman of NATS, Sir Roy McNulty, told Flight International last week that an announcement on privatisation could come before Parliament rises on 27 July. On Friday, NATS still believed an announcement was "imminent".

Sir Roy declared last month that NATS needed an extra pounds 1bn over 10 years to keep the British air traffic control system - widely considered the best in Europe - up to speed.

The Treasury does not want this investment inflating the Public Sector Borrowing Requirement. The blueprint was to spin 51 per cent of NATS - currently a unit of the Civil Aviation Authority - off into the private sector in a sale that would net the Government up to pounds 500m.

But now, insiders say, the Government has decided to leave NATS out of the Queen's Speech setting out the Government's legislative agenda for the autumn. Two months ago, officials leaked word that the privatisation of NATS would be included.

The delay means no sell-off of NATS is likely to be organised before spring 2001, a probable date for the next General Election. It also suggests NATS will not be able to tap the private capital markets for funds either.

Instead, air traffic controllers are likely to put themselves in a holding pattern. Completion of the new air traffic control centre at Swanwick, Hampshire, which is due to begin operating in the winter of 2001/2 - four years late - will probably have to be financed with public money.

Overruns have virtually doubled the cost of Swanwick to pounds 620m. Construction of a planned new centre at Prestwick Airport in Scotland may also be delayed.

Air traffic controllers responsible for the 600 million plane movements a year through the "Clacton Corridor" - the swarming airspace over the south of England - say politicians are sensationalising the air safety issue.

But they concede that any move to transform NATS into a privately controlled company - or even one operating by private-sector disciplines - creates a tension between safety and profits.

The Government says it can guarantee air safety through an independent safety regulator. But air traffic controllers point out that privatisation, or even quasi-privatisation, could lead to a spider's web of contracted- out services that would undermine NATS's control over the air traffic control system.