Select Committee on Transport, Local Government and the Regions Appendices to the Minutes of Evidence


Supplementary memorandum by National Air Traffic Services (NAT 6C)

NATS' FINANCES

  Thank you for the letter of 18 June setting out the additional information that the Sub-Committee wished to have following the further evidence session held on 11 June.

  Taking the issues in the order set out in your letter, the additional information requested by the Sub-Committee is as follows:

ATC CHARGES COMPARISON WITH OTHER EUROPEAN AIR TRAFFIC SERVICE PROVIDERS

  The en route unit rates of the Eurocontrol states for 2002 are set out below. These are the national rates which, in the case of the UK, include the charges levied by the CAA for meteorological services and the services of the Directorate of Airspace Policy, and the UK's contribution to Eurocontrol running costs. NATS charges for 2002 were capped at RPI—3 per cent and the NATS element of the national rate for 2002 is euro 73.61. Average charges in Europe increased by 12 per cent.

(all rates are in Euros)

(2002 increase held over to 31/3/02)

  
2001
2002
Belgium-Luxembourg
66.91
90.47
Switzerland
78.40
86.50
UK*
84.69
85.14
Germany
68.03
77.22
Austria
65.57
70.82
Spain—Canaries
50.22
62.55
Spain—Continental
49.20
62.20
Slovenia
59.69
61.85
Norway
54.50
60.89
France
52.42
59.91
Netherlands
53.09
59.81
Slovak Republic
58.32
59.39
Italy
56.47
58.57
FYROM
53.11
58.54
Sweden
47.69
57.76
Portugal—Lisbon
40.46
57.41
Bulgaria
55.29
55.30
Denmark
52.21
54.28
Moldova
45.14
50.54
Romania
42.52
47.06
Croatia
43.47
43.48
Malta
40.37
40.38
Finland
38.68
39.27
Greece
37.07
38.76
Czech Republic
35.99
36.00
Hungary
29.58
35.95
Turkey
30.10
30.11
Cyprus
19.61
26.44
Portugal—Santa Maria
12.78
23.67
Ireland
19.67
22.15


  It is not possible to draw meaningful conclusions from these figures because they do not take into account such factors as the allocation of costs and charges between en route, terminal area and airport ATC services, the additional costs arising from the complexity of the ATC task in the South East of England, the strength of the pound against the Euro, and the extent to which costs in some countries are directly funded by Government.

  The Performance Review Commission (PRC) has been established under the auspices of Eurocontrol to benchmark the efficiency of air traffic service providers in Europe, though this work is at an early stage. However it is clear that a higher proportion of NATS' air navigation service costs are recovered through en route charges than in some other European states, whereas terminal charges in the UK (for approach and airport ATC services) are lower. NATS also has a significantly lower proportion of "overflights" (yielding the most revenue for the least workload under current charging arrangements).

  The following table is based on PRC data and indicates that, on a total cost per flight basis, NATS was already broadly on a par with other major states in Europe prior to the PPP. The table also indicates the proportion of overflights in these states. As noted above, NATS charges have since come down and average European charges increased by 12 per cent in 2002.

  
En Route
euro million
Terminal/
Airport
euro million
Total
euro million
per cent
charged to
En route
Flights
(million)
Cost per
Flight euro
Overflights
per cent
of total
NATS UK
705
123
828
(85)
2.1
394
12
DNA France
821
196
1017
(81)
2.6
391
40
DFS Germany
605
246
851
(71)
2.6
327
31
ENAV Italy
434
140
574
(76)
1.4
410
25
Source: PRC Benchmarking Report July 2002, using data for 2000.


THE HEALTH AND SAFETY EXECUTIVE'S (HSE) REPORT

  The HSE's Report was sent to NATS on 15 March and made seven recommendations. NATS accepted all of these recommendations without dispute and responded accordingly to the HSE on 21 May. The current position is as follows:

Recommendation 1

  The clarity and readability of the information on the radar screens should be reviewed with a view to making further improvements. From the figures provided it appears that the character heights comply with the minimum set out in ISO 9241-3 when viewed from about 750mm (ie 16' of arc), but it is clear that readability is an issue. It may be possible to further enlarge the text so that it falls within the preferred range (20'-22' of arc). If not then clarity will need to be improved using other techniques such as improving the luminance contrast, or through the judicious use of colour.

  A full evaluation is ongoing and different screen fonts, sizes and colours are being evaluated. Changes to the fonts have been prototyped and the results of initial consultations with staff, including some of those who had expressed concerns, have been encouraging. A general consensus needs to be established amongst operational staff that any changes proposed will meet earlier concerns. Subject to that being achieved, the aim will be to incorporate changes in the next main software build scheduled for November or before if possible.

Recommendation 2

  The display screens are limited by their 60 Hz refresh rate. In order to minimise the perception (and effects) of flicker a fundamental review of the screen design should be considered with increased use of negative polarity images (ie light text on a dark background), although care will be needed that this does not increase the effect of any reflections on the screen. Ultimately the screens should be replaced with ones which are capable of a 75 Hz refresh rate or better. Information has been provided demonstrating that NATS has been investigating the use of large LCD screens as a possible future replacement.

  An evaluation of LCD and emerging technology screens is underway at the Air Traffic Management Development Centre, in conjunction with Swanwick. An engineering order has been raised to investigate the possibility of increasing the refresh rate of the existing displays.

Recommendation 3

  The design of the keyboard is not ideal and does not comply with ISO 9241-4 in terms of its overall height and lack of adjustable tilt. The risk of upper limb problems from use of the keyboard appears to be greatest, but still fairly low, for Planners and Assistants. Further work in the form of a suitable and sufficient risk assessment may be required to more accurately determine the level of risk. Appropriate steps should be taken to minimise this risk. These might include provision of some form of movable wrist support in front of the keyboard, and ultimately replacement of the keyboard with an ISO 9241-4 compliant design.

  Engineering work is being undertaken to assess the feasibility and complexity changing the existing keyboard case for a slimmer design. An assessment is underway regarding the function of the specialized keys in relation to proposed operational changes. In the event of a complete keyboard change being necessary, compliance with ISO 9241-1 will be specified for the replacement.

Recommendation 4

  The usability of the mouse should be reviewed to ensure that its setup (sensitivity/gain) is appropriate, even when used with a mat. All staff should be offered a suitable mouse mat for use with the mouse. NATS should check that there is sufficient space available for resting the wrist/forearm whilst operating the mouse and take appropriate steps if there is not.

  Mouse mats are available for all operational staff who wish to use one. No comments have been received to date regarding lack of space for using the mouse, but this remains under review via the in house "observations" process.

Recommendation 5

  The position of the auxiliary SIS display should be reviewed. Its overall height should preferably be reduced so that the top of the screen is no higher than the user's eyes.

  An internal order has been raised to undertake an engineering assessment of the feasibility and complexity of changing the SIS display position.

Recommendation 6

  The suitability of the chairs for all operators should be checked. In particular NATS needs to ensure that when the chair is adjusted to the appropriate height for the user that the armrests (even if adjustable) do not prevent them from pulling the chair close to the workstation.

  1.  A Memo has been sent to all Ops room staff advising on the importance of the need to select a suitable chair and set up the workstation correctly.

  2.  All staff have been being instructed on correct setting up of the chairs.

  3.  Chairs have been marked to allow easier identification of the different sizes.

  4.  Certain Ops room staff have been instructed in how to demonstrate correct setting up of chairs and to monitor their use in the Ops Rooms.

  5.  A number of chairs have had their arms removed to assess if this will allow better use of the workstation.

Recommendation 7

  The design of the footrest should be evaluated to ensure it provides adequate support to all shorter users, and a suitable replacement provided if it does not.

  Different types and sizes of footrest are available. The importance of the use of these, where appropriate, is also covered in the work undertaken for addressing Recommendation 6.

NATS' FINANCIAL STRUCTURE

  The Sub-Committee has asked for further information on the impact of additional equity for NATS' financial structure.

  The Sub-Committee will recall from the memorandum submitted on 7 June that the aim is to develop a composite solution to the financial situation that would involve current and prospective shareholders, the lending banks, the CAA and NATS itself. For its part, NATS has committed to delivering significant additional cost savings over the remainder of the first Control Period to 2005. Good progress has been made on the process of attracting new capital into the business, and the Government has indicated that it will be prepared to match an appropriate level of private sector investment. In addition, we are looking to our lenders to make a number of concessions and a further part of the solution is a decrease in the amount by which en route charges must be reduced, which requires the approval of the CAA. The outcome on each of these components has the potential to affect the outcome on the others.

  As regards the current position on the potential financial contribution from BAA plc, the Committee will appreciate that the negotiations have not yet been completed and therefore that the precise details of the arrangements remain commercially confidential and subject to confirmation. BAA plc have indicated that they would be prepared to make a contribution in the range £50 million—£65 million and the Government has said that it remains committed to matching an appropriate level of investment. Not all of the contribution from BAA plc is expected to take the form of equity. A proportion is likely take the form of subordinate debt, but the whole will be structured in such a way as to ensure a strengthening of the company's balance sheet.

  We are not yet in a position to reveal the final breakdown in the share ownership structure but the Government has said that it remains committed to retaining a 49% stake in the business. It remains NATS' understanding that the Government contribution will be made contemporaneously with that of the new investor.

THE COSTS OF PROFESSIONAL ADVICE

  The total cost to NATS of professional advice for work relating to the PPP was £13.6 million. Of this amount, £10.6 million was incurred up to 31 March 2001 and was reimbursed by the Government. The balance of £3 million was incurred after 31 March 2001 and was absorbed by NATS. Some additional costs relating to the physical separation of NATS from the CAA, and advice on the New Scottish Centre contract, were also reimbursed.

  Ongoing costs for professional advice in relation to NATS financial structure to date have amounted to £2.5 million.

Andrew Picton

Company Secretary

10 July 2002


 
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Prepared 30 July 2002