As many of our members will be aware NERL is economically regulated as it is a monopolyprovider of ATS services. This regulation is a dual layer process, both at national level via the CAA and at an EU level by the European Commission.
Economic regulation is managed in blocks of years (normally 5) known as reference periods. NERL, the CAA and the European Commission are currently undertaking the regulatory process for the next reference period, RP3, which runs on a calendar year basis from 2020 – 2024.
The CAA has set out in consultation documents (available on the CAA website) the process and timescale it expects NERL to follow with respect to how to determine its business plan for RP3.
NERL is required to publish an initial RP3 business plan (IBP), this – published today, is now subject to consultation with the airlines, airports and any other interested stakeholders (such as the branch). More information and the plan itself will be communicated via NATS’ Hub and the CAA website.
The branch as a key stakeholder in UK ATM follows this process very carefully as the economic regulation of NERL has a direct and sometimes significant impact on our members. We are pleased to report that the branch and NERL have been liaising closely in the past few months with respect to the formation of the initial business plan.
The branch has made its position clear, that it expects the RP3 plan to have a very different focus than that for RP2, and that it should be a fit for purpose, socially responsible, self-assertive plan, which is based on a total economic value approach (as opposed to just price), and provides the investment needed both in technology and staff to allow the plan to be delivered. It must also allow for a degree of resilience.
The branch has also held meetings with the CAA and consultants that the CAA have appointed to assess the plan. These meetings are the start of the consultation process in which the branch is able to put our views directly to the regulator.
The IBP now enters a consultation process which includes a formal customer consultation with airlines. This is a requirement that NERL must undertake, and we are pleased to announce that for the first time (after unsuccessful attempts before) the unions have secured observer status. This allows us to directly understand the priorities of the airlines and gives us insight into their thoughts on the plan. Consequently, this helps us tailor our responses and strategies towards influencing the CAA in our own consultation response.
The targets for RP3 are not yet set, this will be the focus of much work over the coming months – at European level as well as nationally, and the branch will be actively engaging in this process too – though its European affiliation with the European Transport Workers Federation.
We are not yet clear how Brexit may affect RP3, but it is certain that NERL will still remain subject to economic regulation, as it always has been nationally since privatisation, and it is further likely that economic regulation decided by the CAA will closely mirror that from the European Union anyway.