Cash crunch for air traffic control

THE TAXPAYER could be forced to bail out Britain's air-traffic control system to stem safety fears and huge delays - just three months after the Government part-privatised it. The move would be hugely embarrassing for Transport Secretary Stephen Byers, echoing the fiasco over Railtrack.

Opponents of the Government's decision to privatise the National Air Traffic Services (NATS) had warned it would become 'the Railtrack of the skies'. Now, with fewer passengers boarding planes following the atrocities in the US on 11 September, the service, which relies heavily on fees from airlines flying through UK airspace, is strapped for cash.

There are also fears that a planned cut in support staff, along with delays in a scheme for an air traffic control centre at Prestwick, Scotland, could seriously increase the chances of air disasters - a scenario vigorously denied by ministers - and lead to delays for millions of passengers.

Bankers for the service are now reported to be encouraging it to seek urgent financial help from Mr Byers. This would be seen as a blow to the future of the Government's flagship public-private partnerships (PPPs) such as the London Underground proposals.

The service described as 'speculation' reports that it is under pressure from its bankers to ask the Government for an emergency injection of funds. But ministers admit they are braced for a request for cash. Paul Noon, general-secretary of the Institution of Professionals, Managers and Specialists (IPMS) which represents air traffic controllers and opposed part privatisation, said: ''We always feared this would end in tears. Now the banks are calling the shots and they are looking for the Government to bail the service out.' He added: 'We have concerns about the impact on safety, and on delays for passengers.'

With two million flights over the UK a year, and each plane paying the service an average £30, its income was £600m last year. It had expected that to increase but now predicts it will drop to around £480m.

Since July, the Airline Group, a consortium of seven airlines including British Airways and Virgin Atlantic, has held a 46% stake in the service. The Government retains a 49% stake, and staff hold 5%.

A consortium of four banks provided £700m to help acquire the airlines' stake, plus a £760m facility to help fund its £1bn capital expenditure programme over ten years.

A spokesman for NATS, which employs 3,500, said: 'September threw all our figures out. Until then, we had been planning for an increase. Now we are looking at a downturn. With British Airways cutting 10% of its flights, and others following suit, it has created deep uncertainty. We had to go back to the drawing board. We are keeping the situation under review and continuing to liaise with our stakeholders.'